Cline v. Bank of America, N.A.

• Decision Date: 13 October 2011
• Docket Number: Civil Action No. 2:10–1295.
• Court: U.S. District Court — Southern District of West Virginia
• Parties: Mark C. CLINE, Plaintiff, v. BANK OF AMERICA, N.A., Defendant.

823 F.Supp.2d 387

Mark C. CLINE, Plaintiff,

v.BANK OF AMERICA, N.A., Defendant.

Civil Action No. 2:10–1295.

United States District Court, S.D. West Virginia.

Oct. 13, 2011.

Wesley Harrison White, Attorney at Law, Gilbert, WV, for Plaintiff.

Carrie Goodwin Fenwick, Deanna R. Stone, Victoria L. Wilson, Goodwin & Goodwin, Charleston, WV, for Defendant.

MEMORANDUM OPINION AND ORDER

JOHN T. COPENHAVER, JR., District Judge.

Pending is the motion of Bank of America, N.A. (“BOA”), for judgment on the pleadings filed April 4, 2011.

I.

A. The Complaint and Removal

Plaintiff Mark C. Cline is a West Virginia citizen. Defendant BOA is a North Carolina citizen and a national bank engaged in the business of consumer lending.

Cline's complaint offers very few factual allegations. It appears that he is self employed as a chiropractor. At some unstated time he financed the purchase of a motorcycle through BOA. BOA engaged in loan collection activities following his default. It made over 400 telephone calls to Cline and his business during an unspecified interval.

Cline complains about several abusive practices related to the collection calls. Some of the contacts are alleged to have occurred after he told the caller that he had retained counsel relating to the loan obligation. Other calls were placed to Cline's employees, who then learned the details of his indebtedness.

On September 15, 2010, Cline instituted an action in the Circuit Court of Mingo County. He alleges claims for (1) violation of The West Virginia Consumer Credit and Protection Act (“WVCCPA”), West Virginia Code sections 46A–2–125(d), 46A–2–126(a), and 46A–2–128(e) ¹ (“Count One”), (2) negligence arising out of “making numerous telephone calls with the intent to annoy, harass, and oppress the Plaintiff in an effort to collect a debt....” (Compl. ¶ 10) (“Count Two”); (3) intentional infliction of emotional distress arising out of “annoying, inconveniencing, harassing, and oppressing the Plaintiff even after the Plaintiff informed the Defendant [he] ... was represented by an attorney” ( Id.¶ 16) (“Count Three”); (4) invasion of privacy due to interference with the right “to be free from harassing, oppressing and annoying telephone calls ...” ( Id.¶ 21) (“Count Four”); and (5) nuisance inasmuch as BOA caused Cline's telephone “to repeatedly or continuously ... ring several times a day for many days even after” a request to desist and contact his lawyer ( Id.¶ 26) (“Count Five”). Cline seeks injunctive relief, tort damages, statutory damages and interest, expunction of the underlying loan obligation and recovery of any amounts previously paid to reduce it, punitive damages, and fees and costs.

On November 12, 2010, BOA removed. It now seeks judgment on the pleadings. It asserts Cline's claims are preempted by the National Bank Act (“NBA”) and, if not, that portions of Counts One through Six fail as a matter of law.

B. The Parties' Contentions Respecting NBA Preemption–Prior to the Dodd–Frank Wall Street Reform and Consumer Protection Act (“Dodd–Frank Act”)

BOA relies generally upon the notion that, under the NBA, “federal control shields national banking from unduly burdensome and duplicative state regulation.” Watters v. Wachovia Bank, N.A., 550 U.S. 1, 11, 127 S.Ct. 1559, 167 L.Ed.2d 389 (2007). The decision in Watters provides the general parameters governing day-to-day agency implementation of the NBA:

National banks' business activities are controlled by the [NBA and] ... regulations promulgated thereunder by the Office of the Comptroller of the Currency (OCC). OCC is charged with supervision of the NBA and, thus, oversees the banks' operations and interactions with customers. The NBA grants OCC, as part of its supervisory authority, visitorial powers to audit the banks' books and records, largely to the exclusion of other state or federal entities.

Watters, 550 U.S. at 1, 127 S.Ct. 1559 (citations omitted).

Central to its claim that Counts One through Five must give way to federal law is a regulatory provision promulgated by the Office of the Comptroller of the Currency (“OCC”), namely, 12 C.F.R. section 7.4008(d)(1). At the time this action was filed on November 12, 2010, section 7.4008(d)(1) provided pertinently as follows:

Applicability of state law.

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.

Id. Subsection (e) additionally states this:

State laws on the following subjects are not inconsistent with the non-real estate lending powers of national banks and apply to national banks to the extent that they only incidentally affect the exercise of national banks' non-real estate lending powers:

(1) Contracts;

(2) Torts;

(3) Criminal law; ...

(4) Rights to collect debts;

(5) Acquisition and transfer of property;

(6) Taxation;

(7) Zoning; and

(8) Any other law the effect of which the OCC determines to be incidental to the non-real estate lending operations of national banks or otherwise consistent with the powers set out in paragraph (a) of this section.

12 C.F.R. § 7.4008(e) (emphasis added) (footnote omitted).

The parties in their briefing, which concluded May 4, 2011, suggest that there are two divergent lines of authority (1) interpreting these regulations, and (2) addressing their preemptive scope. BOA principally relies upon Lomax v. Bank of America, N.A., 435 B.R. 362 (N.D.W.Va.2010), and In re Jones, 449 B.R. 494 (Bankr.N.D.W.Va.2011) (applying Lomax). The precedential weight of those cases, however, appears to have been supplanted by a decision rendered in recent days. O'Neal v. Capital One Auto Finance, Inc., No. 3:10–0040, 2011 WL 4549148, at *7 (N.D.W.Va. Sept. 29, 2011) (concluding, in contrast to Lomax, “that section 128(e) of the WVCCPA does not prevent or significantly interfere with [a national bank's] exercise of its powers under the NBA.”).

Cline relies upon Smith v. BAC Home Loans Servicing, LP, 769 F.Supp.2d 1033 (S.D.W.Va.2011) (Goodwin, C.J.), a decision which was implicitly found persuasive in O'Neal. In Smith, the court interpreted 12 C.F.R. § 34.4(a), which governs real estate lending. Like its non-real-estate-lending counterpart found in section 7.4008(d)(1) and applicable here, section 34.4(a) provided, at the time Smith was decided, that “state laws ... obstruct[ing], impair[ing], or condition[ing] a national bank's ability to fully exercise its Federally authorized real estate lending powers do not apply to national banks.” 12 C.F.R. § 34.4(a).

In Smith, the court noted that “[j]udicial opinions considering NBA and OCC preemption often borrow from the ... [Office of Thrift Supervision's (“OTS”) ] preemption regulation because it is similar in many respects to the OCC's regulation.” Smith, 769 F.Supp.2d at 1043 (citing as an example, inter alia, Lomax, 435 B.R. at 369–70). The court explained its decision to take a different approach:

I do not find it appropriate to import wholesale the ... [Home Owners Loan Act of 1933 (“HOLA”) ] and OTS analysis into the context of NBA and OCC preemption. Significantly, the OTS's preemption regulation and many of the authorities construing that regulation and HOLA preemption arose before the Supreme Court clarified in Wyeth [ v. Levine, 555 U.S. 555, 129 S.Ct. 1187, 173 L.Ed.2d 51 (2009) ] the level of deference to be applied to agency views on preemption. See, e.g., Fidelity Fed. Sav. & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 153–54, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982) (describing the preemptive effect of federal regulations). It appears to me that Justice Blackmun's analysis in de la Cuesta of the standard of review to be applied to preemptive agency regulations is in direct conflict with the majority opinion in Wyeth.

Smith, 769 F.Supp.2d at 1043–44 (some citations omitted) (“I conclude that the WVCCPA provisions implicated by Counts II [ (alleging false and misleading representations in violation of W. Va.Code section 46A–2–127) ] and III [ (alleging unconscionable debt collection methods in violation of W. Va.Code section 46A–2–128) ] are not an obstacle to the policies and purposes underlying the federal regulation of national banks.”).

The court in Smith also noted that the NBA lacked an express preemption provision. For that reason, the court confined its analysis to conflict preemption principles, concluding, inter alia, as follows:

I look to the intent of Congress, as best demonstrated by the text of the NBA, and conclude that there is no significant federal regulatory objective at play that would merit displacing the generally applicable state consumer-protection claims presented in the Complaint. It is apparent that even if BAC must comply with West Virginia's statutory prohibitions on misrepresentations and unconscionable conduct in the field of debt collection (as every debt collector doing business in West Virginia must also do), BAC will remain free to engage in the federally regulated and sanctioned business of mortgage servicing. Obstacle preemption is not triggered merely because West Virginia's broad statute prohibiting unlawful forms of debt collection happens to ensnare certain practices of national banks.

Smith, 769 F.Supp.2d at 1046.

The impact of the Dodd–Frank Act is addressed, infra, at 13.

II.

A. Governing Standard

Federal Rule of Civil Procedure 12(c) provides that “[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). A Rule 12(c) motion “is assessed under the same standard that applies to a Rule 12(b)(6) motion.” Walker v. Kelly, 589 F.3d 127, 139 (4th Cir.2009); Independence News, Inc. v. City of Charlotte, 568 F.3d 148, 154 (4th Cir.2009) (citing Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir.1999)).

Rule 8(a)(2) requires that a pleader provide “a short and plain statement...