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Epps v. JPMorgan Chase Bank N.A.

November 19, 2010

DONNA EPPS
v.
JPMORGAN CHASE BANK N.A./ CHASE AUTO FINANCE



The opinion of the court was delivered by: William M. Nickerson Senior United States District Judge

MEMORANDUM

Before the Court is a motion to dismiss filed by Defendant JP-Morgan Chase Bank, N.A. (Chase). Paper No. 11.*fn1 The motion is fully briefed. Upon a review of the pleadings and the applicable case law, the Court determines that no hearing is necessary, Local Rule 105.6, and that the motion should be granted.

I. FACTUAL AND PROCEDURAL BACKGROUND

On December 29, 2007, Plaintiff purchased a used car from Thompson Toyota Scion (Thompson) pursuant to a retail installment sale contract (RIC).*fn2 The RIC was a form contract, drafted by a legal forms company, and there is no allegation that Chase had any role in its drafting. The RIC included the following provision: "Applicable Law: Federal law and Maryland law apply to this contract. This contract shall be subject to the Credit Grantor Closed End Credit Provisions (Subtitle 10) of Title 12 of the Commercial Law Article of the Maryland Code." Compl. ¶ 27; RIC (Def.'s Ex. A) ¶ 6.*fn3

The Credit Grantor Closed End Credit statute (CLEC), Md. Code Ann., Comm. Law § 12-1021, provides that a credit grantor can repossess property securing a loan but only by following certain notice provisions. Specifically, CLEC requires that a notice be sent within five days after repossession that includes the borrower's rights to redeem the property, the borrower's rights as to a resale and liability for a deficiency, and the exact location where the property is stored. Id. § 12-1021(e). Furthermore, CLEC requires that, ten days before any sale, notice be given by specified means as to the time and place of the sale. Id. § 12-1021(j)(1)(ii). After a sale of repossessed goods, CLEC also requires a full accounting to the borrower which includes: expenses related to the sale; the purchaser's name, address, and business address; and the number of bids sought and received. Id. § 12-1021(j)(2).

Shortly after Plaintiff purchased the vehicle, Thompson assigned the RIC to Chase.

Approximately two years after executing the RIC, Plaintiff stopped making payments and on December 9, 2009, the vehicle was repossessed. On December 11, 2009, Chase sent a written notice to Plaintiff explaining that it had possession of the vehicle and would sell it at a private sale "sometime after 12/28/2009." Compl., Ex. 2. The vehicle was sold on January 25, 2010. On February 19, 2010, Chase sent Plaintiff a notice informing her that the car had been sold to "Manheim Fredericksburg" and that a deficiency balance of $11,904.53 remained after the sale proceeds were applied to the debt owed and the expenses of the sale. Compl., Ex. 3.

On April 27, 2010, Plaintiff filed suit in the Circuit Court for Baltimore City alleging that Chase had violated the provisions of CLEC in that the pre-sale notice given to Plaintiff failed, inter alia, to give the location of the car once repossessed and the specific date and location of the sale. She also alleges that the post-sale notice failed, inter alia, to specify the number of bids sought and received. In addition to a claim for violation of CLEC (Count I), the Complaint also included claims for Breach of Contract (Count II), Declaratory and Injunctive Relief (Count III), Restitution and Unjust Enrichment (Count IV), and for a violation of the Maryland Consumer Protection Act (CPA) (Count V). Plaintiff acknowledges, however, that all of these additional claims are related to and derived from Chase's alleged failure to abide by the provisions of CLEC. See Opp'n at 2. As relief, Plaintiff seeks not only relief from paying the deficiency, but also, pursuant to Md. Code Ann., Comm. Law § 12-1018(b),*fn4 the award of three times the amount of any interest or charges Plaintiff has paid to Chase. Compl., Prayer for Relief ¶ F; Opp'n at 24.

Chase timely removed the case to this Court pursuant to the provisions of the Class Action Fairness Act of 2005. Chase then filed the instant motion to dismiss asserting that all of Plaintiff's claims are preempted under federal banking law. It is undisputed that Chase is a national banking association, organized and operating under the National Bank Act (NBA), 12 U.S.C. §§ 21 et seq., and regulated by the Office of the Comptroller of the Currency (OCC). Chase contends that the NBA and OCC regulations preempt any state laws that would impair, prohibit or condition a national bank's lending practices, including state laws seeking to regulate disclosures and notices related to repossessions such as those contained in CLEC.

II. LEGAL STANDARD

To survive a Rule 12(b)(6) motion to dismiss, "a complaint must contain sufficient factual matter... to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, --- U.S. ----, ----, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 556). "Detailed factual allegations" are not required, but allegations must be more than "labels and conclusions," or "a formulaic recitation of the elements of a cause of action[.]" Iqbal, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 555). "[O]nce a claim has been stated adequately," however, "it may be supported by showing any set of facts consistent with the allegations in the complaint." Twombly, 550 U.S. at 563. In considering such a motion, the court is required to accept as true all well-pled allegations in the Complaint, and to construe the facts and reasonable inferences from those facts in the light most favorable to the plaintiff. Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997).

III. DISCUSSION

Congress enacted the National Bank Act in 1864 to establish a national banking system. Through the NBA, Congress granted national banks broad authority to exercise "all such incidental powers as necessary to carry on the business of banking," including "loaning money on personal security." 12 U.S.C. § 24 (Seventh). Also through the NBA, Congress gave OCC the authority to implement the NBA and regulate the national banks.

12 U.S.C. § 93a.

Under the Supremacy Clause, federal law preempts state law where Congress so intends. U.S. Const., Art. VI, cl. 2; Fid. Fed. Savs. & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 152 (1982). While the NBA does not expressly preempt state regulation of national banks, the OCC has issued regulations expressly preempting state laws that interfere with a bank's ability to make non-real estate loans. See 12 C.F.R. § 7.4008(d).*fn5 Courts have recognized that regulations issued by a federal agency like OCC have no less preemptive effect than federal statutes. de la Cuesta, 458 U.S. at 153. Furthermore, because the history of national banking legislation has been "one of interpreting grants of both enumerated and incidental 'powers' to national banks as grants of authority not normally limited by, but rather ordinarily pre-empting, contrary state law," Barnett Bank of Marion Cnty., N.A. v. Nelson, 517 U.S. 25, 32 (1996), the usual presumption against federal preemption of state law is inapplicable to federal banking regulations. Wells Fargo Bank, N.A. v. Boutris, 419 F.3d 949, 956 (9th Cir. 2005).

The preemption regulations issued by OCC state:

(1) Except where made applicable by Federal law, state laws that obstruct, impair, or condition a national bank's ability to fully exercise its Federally authorized non-real estate lending powers are not applicable to national banks.

(2) A national bank may make non-real estate loans without regard to state law limitations concerning...

(iv) The terms of credit, including the schedule for repayment of principal and interest, amortization of loans, balance, payments due, minimum payments, or term to maturity of the loan, including the circumstances under which a loan may be called due and payable ...


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