Achee Holdings, LLC v. Silver Hill Financial, LLC

2009 U.S. App. LEXIS 19231 (2009)

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Achee Holdings, LLC v. Silver Hill Financial, LLC

United States Court of Appeals for the Fifth Circuit
2009 U.S. App. LEXIS 19231 (2009)

Facts

Achee Holdings, LLC (Achee) (plaintiff) took out a 30-year, $280,000 adjustable-rate loan from Silver Hill Financial, LLC (Silver Hill) (defendant). The loan note defined the first 36 months of the loan’s term as a lockout period, during which Achee could not pay off the loan without paying a prepayment consideration and a lockout fee based on the loan’s stated interest rate. Achee subsequently decided to pay off the loan within the lockout period, when the principal and interest payments currently due totaled approximately $283,000. Silver Hill’s loan servicer informed Achee that with the lockout fee and prepayment consideration, it would cost Achee about $389,000 to close out the loan. Achee sued Silver Hill in federal district court, under Texas law, arguing that the lockout fee was disguised interest that effectively raised the loan’s stated interest rate to a level exceeding Texas’s usury threshold. The district court dismissed the suit. Achee appealed to the Fifth Circuit.

Rule of Law

Issue

Holding and Reasoning (Per curiam)

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