Cades v. H & R Block, Inc.

• Decision Date: 30 December 1994
• Docket Number: No. 93-2555,93-2555
• Citation: 43 F.3d 869
• Parties: -498, 63 USLW 2401 Benjamin F. CADES, individually, and on behalf of all persons similarly situated, Plaintiff-Appellant, v. H & R BLOCK, INCORPORATED; Beneficial National Bank, Defendants-Appellees. State of West Virginia; State of Michigan; State of Kentucky; State of Connecticut; Iowa Division of Banking; Arkansas State Bank Department; American Bankers Association; American Financial Services Association; Consumer Bankers Association; Delaware Bankers Association; Maryland Bankers Association; North Carolina Bankers Association; South Carolina Bankers Association; Virginia Bankers Association; Illinois Commissioner of Banks and Trust Companies; Delaware State Bank Commissioner; State of Ohio; Commissioner of the Nevada Division of Financial Institutions; Commissioner of Financial Institutions of the State of Utah; South Carolina Department of Consumer Affairs, Amici Curiae.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 869

43 F.3d 869

75 A.F.T.R.2d 95-498, 63 USLW 2401

Benjamin F. CADES, individually, and on behalf of all persons similarly situated, Plaintiff-Appellant, v. H & R BLOCK, INCORPORATED; Beneficial National Bank Defendants-Appellees State of West Virginia; State of Michigan; State of Kentucky; State of Connecticut; Iowa Division of Banking Arkansas State Bank Department; American Bankers Association; American Financial Services Association Consumer Bankers Association; Delaware Bankers Association; Maryland Bankers Association; North Carolina Bankers Association; South Carolina Bankers Association; Virginia Bankers Association; Illinois Commissioner of Banks and Trust Companies; Delaware State Bank Commissioner; State of Ohio; Commissioner of the Nevada Division of Financial Institutions; Commissioner of Financial Institutions of the State of Utah; South Carolina Department of Consumer Affairs, Amici Curiae.

No. 93-2555.

United States Court of Appeals, Fourth Circuit.

Argued June 7, 1994.

Decided Dec. 30, 1994.

ARGUED: George Grice Reaves, Reaves & Moore, Florence, SC, for appellant. Jeffrey S. Saltz, Wolf, Block, Schorr & Solis-Cohen, Philadelphia, PA, for appellees. ON BRIEF: Benjamin D. Moore, Reaves & Moore, Florence, SC; John B. Long, Dye, Tucker, Everitt, Wheale & Long, Augusta, GA, for appellant. Alan S. Kaplinsky, Wolf, Block, Schorr & Solis-Cohen, Philadelphia, PA; Thornwell F. Sowell, J. Calhoun Watson, Barbara E. Brunson, Nelson, Mullins, Riley & Scarborough, Columbia, SC; N. Louise Ellingsworth, Smith, Gill, Fisher & Butts, Kansas City, MO; Wheeler Neff, Asst. Gen. Counsel, Beneficial Corp., Wilmington, DE, for appellees. Darrell L. Dreher, Steven T. Catlett, Charles M. Oellermann, Jones, Day, Reavis & Pogue, Columbus, OH, for amici curiae, Tennessee Department of Financial Institutions; Director of Banking of South Dakota; Arizona Superintendent of Banks.

Before HAMILTON, Circuit Judge, BUTZNER, Senior Circuit Judge, and GARBIS, United States District Judge for the District of Maryland, sitting by designation.

Affirmed by published opinion. Senior Judge BUTZNER wrote the opinion, in which Judge HAMILTON and Judge GARBIS joined.

OPINION

BUTZNER, Senior Circuit Judge:

Benjamin F. Cades appeals district court orders denying his motion to remand his complaint to state court and granting defendants H & R Block and Beneficial National Bank summary judgment. We affirm.

I

This action arose in connection with a financial service known as a refund anticipation loan (RAL), which enables a consumer to borrow funds on a short-term demand basis in the amount of the consumer's expected federal income tax refund. Block, like many tax services, offers its customers an electronic filing and rapid refund program. In connection with the rapid refund program, Beneficial agreed to loan qualified Block customers the amount of the taxpayer's expected refund, less a flat finance charge of $29.

On February 1, 1991, in the course of processing Cades's 1990 federal tax returns, a Block representative orally explained to Cades the terms of Beneficial's RAL. He informed Cades that Beneficial charged a $29 financing fee. In addition, he explained that Block charged either $25 or $35 for electronic filing. For $25 plus the $29 finance charge, a taxpayer would receive his federal income tax refund less charges from Beneficial and Block in eight days; for $35 plus the finance charge, the net refund would arrive in two days. Cades chose the latter option.

The Block representative gave Cades Beneficial's RAL application. The Block representative entered Cades's credit and other information on the application, and Cades signed it. By signing, Cades transferred to Beneficial his interest in his tax refund to the extent of his RAL. Cades also signed Internal Revenue Service Form 8453, the Federal Income Tax Declaration for Electronic Filing. He requested on this form that his federal income tax refund be directly deposited into an account in his name at Beneficial. Block submitted the application to Beneficial's office in Delaware for approval by Beneficial.

Beneficial approved the loan, and on February 3, 1991, it transmitted to Block's offices a cashier's check in the amount of $1145, representing Cades's federal income tax refund of $1234, minus $89 in charges. On the reverse of the check and on an attached stub were the terms of the loan agreement. The agreement provided, in part: "By endorsing this check above, you promise to pay us on demand the amount set forth in the 'Total of Payments' section on the attached check stub." The stub stated that the annual percentage rate on the loan was 2.406 percent. Cades endorsed the check.

Beneficial is a national bank with chartered address and headquarters in Delaware. Block is a Missouri corporation with retail offices and franchisees nationwide. No corporate affiliation exists between Beneficial and Block.

Cades brought suit against Block and Beneficial in the South Carolina Court of Common Pleas, alleging that the fees charged by them violated numerous provisions of the South Carolina Consumer Protection Code and the South Carolina Unfair and Deceptive Trade Practices Act. He asked the court to certify a class action, and sought treble actual damages (in the amount of the electronic filing fee and finance charge), punitive damages, and attorneys' fees.

The defendants filed a timely notice of removal to federal court under 28 U.S.C. Sec. 1446(a), alleging diversity jurisdiction under 28 U.S.C. Sec. 1332. Cades moved to remand to state court. The defendants amended their notice of removal to allege federal question jurisdiction under 28 U.S.C. Secs. 1331 and 1337. Cades responded to this amended notice nearly three months later. The district court denied his motion to remand. Cades then amended his complaint to allege violations of the National Bank Act, 12 U.S.C. Sec. 86, and the Truth in Lending Act, 15 U.S.C. Sec. 1601 et seq. The district court granted summary judgment to the defendants on all counts in Cades's amended complaint.

II

Cades contends that the district court improperly assumed removal jurisdiction. He asserts that although the parties are of diverse citizenship, the requisite amount in controversy is lacking.

We need not address Cades's concern about the amount in controversy, for it is clear that after Cades amended his complaint to charge violations of the National Bank Act and the Truth in Lending Act, federal jurisdiction appeared on the face of his amended complaint. Had the action set forth in the amended complaint been brought initially in federal court, the district court would have had original jurisdiction. See Burns v. American Nat'l Bank and Trust Co., 479 F.2d 26, 29-30 (8th Cir.1973) (National Bank Act); 15 U.S.C. Sec. 1640(e) (Truth in Lending Act). At the time the district court decided the case on its merits and entered final judgment, federal jurisdiction was firmly established. In American Fire & Casualty Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702 (1951), the Court explained that an initial lack of the right to removal may be cured when the final posture of the case does not wrongfully extend federal jurisdiction:

There are cases which uphold judgments in the district courts even though there was no right to removal. In those cases the federal trial court would have had original jurisdiction of the controversy had it been brought in the federal court in the posture it had at the time of the actual trial of the cause or of the entry of the judgment. That is, if the litigation had been initiated in the federal court on the issues and between the parties that comprised the case at the time of trial or judgment, the federal court would have had cognizance of the case.

341 U.S. at 16, 71 S.Ct. at 541 (citation omitted); accord Able v. Upjohn Co., 829 F.2d 1330, 1333 (4th Cir.1987).

Cades protests that the defendants' amended notice of removal specifying federal question jurisdiction was untimely and that the district court improperly considered it.

A motion to remand the case because of a defect in removal procedure must be made within 30 days after filing the notice of removal. 28 U.S.C. Sec. 1447(c). An untimely removal is a defect in removal procedure. Comment on the 1988 Revision of section 1447 following 28 U.S.C.A. Sec. 1447 (West 1994).

Cades did not object to the amended notice of removal until nearly three months after the defendants filed the amended notice. We agree with the district court that, even assuming the amended notice of removal was filed late, Cades's objection was untimely.

III

Title 12 U.S.C. Sec. 85 authorizes a national bank to charge interest at rates permitted by the laws of the state in which the bank is located. The district court found that Beneficial was located in Delaware and ruled that its $29 finance charge complied with Delaware law. Cades assigns errors to these rulings.

In Marquette Nat'l Bank of Minneapolis v. First of Omaha Service Corp., 439 U.S. 299, 99 S.Ct. 540, 58 L.Ed.2d 534 (1978), the Supreme Court held that, even though a national bank solicited credit card customers through agents in another state, it was authorized to charge interest on card indebtedness at the rate allowed by the state where it was located. Beneficial and Block contend that section 85 as applied in Marquette governs this case. Cades attempts to distinguish Marquette from the present case. Essentially, he asserts that in Marquette, cards were issued, credit was advanced, and finance charges were assessed in the national bank's home state. He argues that in this case, by contrast, the loan transaction occurred in South Carolina: he signed all the relevant documents there; he had face-to-face dealings with Block representatives relating to his loan there; and finance charges were assessed there.

These asserted distinctions are not convincing. It is undisputed that the loan was approved in...