District Court Extends Federal Preemption Of State Consumer Claims Under the National Bank Act
On January 14, 2011, a federal court in West Virginia extended and strengthened the preemption defense available to national associations under the National Bank Act protecting them from liability under state consumer protection statutes. The decision is significant because the Court expanded the scope of the defense beyond previous rulings by applying an express preemption analysis rather than a field/conflict preemption analysis.
The Court affirmed its dismissal of plaintiffs’ claims for servicing violations under the WVCCPA finding that they were expressly preempted by section 34.4(a) of the OCC regulations. The Court explained, “By express intention, state laws attempting to limit a bank’s processing or servicing of a mortgage conflict with federal law” (original emphasis). Therefore, the Court denied plaintiffs’ motion for reconsideration of its order dismissing all claims alleging illegal debt collection under state law. Staats v. Bank of America, NA, et al., No. 3:10-cv-68 (N.D.W.Va. Jan. 14, 2011) (Bailey, J.). A copy of the Court's order granting Defendants' motion to dismiss is attached here. A copy of the Court's order denying Plaintiffs' motion for reconsideration is attached here.
John Lynch and Jason Manning are counsel of record for Bank of America, N.A. and BAC Home Loans Servicing LP. Please do not hesitate to contact John Lynch or Jason Manning if you have questions.