South-Western Legal Studies in Business

Contract Financing Terms Do Not Violate State Law Regarding Health Clubs
Description

Appeals court held that the financing over 36 months of a health club membership did not violate a state statute prohibiting a requirement that a club member pay fees for more than a month beyond membership term. The member chose the option of financing rather than paying up front.

Topic Contracts
Key Words

Health Club Contract; Class Action

C A S E   S U M M A R Y
Facts

Ruiz signed a 36 month membership at a Bally Total Fitness club for $1,565 plus $8 a month dues. The $1,565 was financed at 14.74% interest for $48.88 per month plus the dues. The contract stated that if she cancelled during the 36 months, she could stop paying the $8 a month, but the $1,565 fee was still owed. Soon after joining, she wanted out, but Bally said she owed the $48.88 monthly fee regardless. She sued, contending the contract violated the Massachusetts Health Club Services Contracts Act (HCSCA). She claimed class action status on behalf of similarly affected persons and the suit was moved to federal court. The district court dismissed the suit. Ruiz appealed.

Decision

Affirmed. The HCSCA states that “No contract for health club services shall require payments or financing by the buyer over a period that extends more than one month beyond the expiration of the contract.” Ruiz claims the financing of the $1,565 over 36 months violates this. It does not. The HCSCA provision prohibits service contracts that require payments or financing running more than one month beyond the expiration of the contract’s term. This contract does not do that. Ruiz chose to finance the membership fee over the 36 months of the life of the contract; she was not forced to do that. She could have paid the fee when she joined, and it would not have been refundable any more than it is given the method of payment she has chosen. The terms of the contract were clear.

Citation

Ruiz v. Bally Total Fitness Holding Corp., 496 F.3d 1 (1st Cir., 2007)

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