Lyons v. PNC Bank, Nat'l Ass'n

Citation26 F.4th 180
Decision Date15 February 2022
Docket Number No. 21-1289,No. 21-1058,21-1058
Parties William T. LYONS, Individually and on Behalf of Others Similarly Situated, Plaintiff - Appellee, v. PNC BANK, NATIONAL ASSOCIATION, Defendant - Appellant. Consumer Financial Protection Bureau, Amicus Curiae. William T. Lyons, Individually and on Behalf of Others Similarly Situated, Plaintiff – Appellant, v. PNC Bank, National Association, Defendant – Appellee. Consumer Financial Protection Bureau, Amicus Curiae.
CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)

ARGUED: Daniel J. Tobin, BALLARD SPAHR LLP, Washington, D.C., for Appellant/Cross-Appellee. Ellen Louise Noble, PUBLIC JUSTICE, Washington, D.C., for Appellee/Cross-Appellant. Kevin E. Friedl, CONSUMER FINANCIAL PROTECTION BUREAU, Washington, D.C., for Amicus Curiae. ON BRIEF: Matthew D. Lamb, BALLARD SPAHR LLP, Washington, D.C., for Appellant/Cross-Appellee. Scott C. Borison, BORISON FIRM LLC, San Mateo, California; Phillip R. Robinson, CONSUMER LAW CENTER LLC, Silver Spring, Maryland; Karla Gilbride, PUBLIC JUSTICE, Washington, D.C., for Appellee/Cross-Appellant. Stephen Van Meter, Acting General Counsel, John R. Coleman, Deputy General Counsel, Steven Y. Bressler, Assistant General Counsel, CONSUMER FINANCIAL PROTECTION BUREAU, Washington, D.C., for Amicus Curiae.

Before GREGORY, Chief Judge, QUATTLEBAUM, Circuit Judge, and FLOYD, Senior Judge.

Affirmed in part, reversed in part by published opinion. Chief Judge Gregory wrote the majority opinion, in which Senior Judge Floyd joined. Judge Quattlebaum wrote a separate opinion concurring in part and dissenting in part.

GREGORY, Chief Judge:

William Lyons, Jr. filed suit against PNC Bank, N.A., alleging violations of the Truth in Lending Act ("TILA") related to PNC's set-off of funds from two of Mr. Lyons's deposit accounts to pay the outstanding balance on a Home Equity Line of Credit ("HELOC"). PNC moved to compel arbitration of the dispute based on an arbitration provision in the parties' agreement applicable to the two deposit accounts, and the district court granted the motion as to one account and denied the motion as to the other account.

We find that a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act") that amends TILA prohibits consumer agreements related to residential mortgage loans from requiring the arbitration of claims. Because we find that this provision precludes arbitration of Mr. Lyons's claims related to both of his deposit accounts, we affirm in part and reverse in part.


Mr. Lyons opened a HELOC with National City Bank on February 4, 2005. J.A. 32–33. To do so, he signed an Equity Reserve Agreement that did not contain an arbitration provision. J.A. 80–84. Five years later, on May 3, 2010, Mr. Lyons opened three deposit accounts at PNC Bank.1 J.A. 32. One of those deposit accounts was an account ending 2553 ("2010 Account"). J.A. 34, 44. In opening the 2010 Account, Mr. Lyons signed a document that stated he was "bound by the terms and conditions of PNC Bank's Account Agreement for Checking Accounts and Saving Accounts" ("2010 Account Agreement"). J.A. 32, 44. The 2010 Account Agreement included a provision authorizing PNC to set off funds from the account to pay "[a]ny loans, overdrafts, obligations or other indebtedness ... now or hereafter owing to us by you." J.A. 176. It also included a clause allowing PNC to amend the Account Agreement and explaining the procedures it must follow to do so.2 See J.A. 177.

In 2013, PNC added an arbitration clause3 to the Account Agreement. J.A. 160, 211–13. The amended version of the Account Agreement ("2013 Account Agreement") stated that it took effect on February 1, 2013, but customers were given forty-five days to opt out of the arbitration provision. J.A. 199, 211–12. PNC kept track of the opt-out deadline for each customer, and its records show that Mr. Lyons had until June 11, 2013, to opt out of the arbitration provision. J.A. 161.

Mr. Lyons opened another deposit account with PNC Bank on June 6, 2014 ("2014 Account")4 and again agreed to be "bound by the terms and conditions" of the 2014 version of the Account Agreement, which included the same arbitration clause as in the 2013 version. J.A. 162. Mr. Lyons was again provided an opportunity to opt out of the arbitration provision and did not. Id.

Mr. Lyons's HELOC ended on February 4, 2015, as expected, but he did not finish paying off the credit until June 17, 2020. J.A. 33–34. On September 26, 2019, PNC applied a set-off of $1,396.97 from Mr. Lyons's 2010 Account to pay the overdue HELOC payment. J.A. 17, 34. On February 26, 2020, PNC applied another set-off of $1,589 from the 2014 Account, which was also used to make a payment on the HELOC. J.A. 18; 23–25; 35.

Mr. Lyons filed suit against PNC in Circuit Court in June 2020 raising claims under TILA.5 J.A. 12–29. PNC removed the suit to federal court and filed a motion to compel arbitration. J.A. 90–106. In its filings, PNC discussed only the most recent, August 11, 2019, version of the Account Agreement. Id. ; J.A. 30–89. On November 15, 2020, after the matter was fully briefed, the district court requested supplemental briefing on two questions: "(1) whether the Arbitration Clause existing in the 2019 version of the Account Agreement also existed in the Account Agreement at the time [Mr. Lyons] opened the accounts in 2010 and 2016; and (2) if not, whether [Mr. Lyons] can be considered bound to an Arbitration Clause added to the Account Agreement after the accounts were opened." J.A. 141; see also J.A. 107–22; 123–40. Both parties submitted supplemental memoranda simultaneously on December 1, 2020. J.A. 143–280; 281–85. PNC's supplemental memorandum described for the first time the various versions of the Account Agreement. J.A. 143–55.

On January 6, 2021, the district court issued a memorandum opinion granting in part and denying in part PNC's motion to compel arbitration. J.A. 290–96; 302. The court found that amendments made by the Dodd-Frank Act to TILA barred arbitration of Mr. Lyons's claims related to the 2014 Account because it was opened after the effective date of the provisions but that those restrictions did not apply retroactively to bar arbitration of his claims related to the 2010 account. J.A. 297–98. The court explained that the 2010 Account was updated to include an arbitration provision with an effective date of February 1, 2013—several months before June 1, 2013, the effective date of the relevant provisions of Dodd-Frank.6 J.A. 298. The court then found that the relevant Dodd-Frank provisions did not apply retroactively to the 2010 Account because there was no language in the statute evidencing an intent for the provisions to overcome the presumption against retroactivity. J.A. 297.

PNC filed an appeal on January 12, 2021, and Mr. Lyons filed a cross-appeal on January 25, 2021. J.A. 303–06. PNC appeals the district court's partial denial of its motion to compel arbitration, and Mr. Lyons cross-appeals the district court's partial grant of the motion to compel arbitration.


We review a district court's determination regarding the arbitrability of a dispute de novo. See Mey v. DIRECTV, LLC , 971 F.3d 284, 288 (4th Cir. 2020) ; Aggarao v. MOL Ship Mgmt. Co., Ltd. , 675 F.3d 355, 365 (4th Cir. 2012) ("We review de novo a district court's determination on arbitrability of a civil action."). In applying the de novo standard, we must "give due regard to the federal policy favoring arbitration and resolve ‘any doubts concerning the scope of arbitrable issues ... in favor of arbitration.’ " Hill v. Peoplesoft USA, Inc. , 412 F.3d 540, 543 (4th Cir. 2005) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24–25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) ). But, while there is a general policy favoring arbitration, "the [Federal Arbitration Act's] mandate [can be] overridden by a contrary congressional command." See Compucredit Corp. v. Greenwood , 565 U.S. 95, 98, 132 S.Ct. 665, 181 L.Ed.2d 586 (2012). "If such an intention exists, it will be discoverable in the text of the [statute], its legislative history, or an inherent conflict between arbitration and the [statute's] underlying purposes." Gilmer v. Interstate/Johnson Lane Corp. , 500 U.S. 20, 24, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). The burden of establishing that "Congress intended to preclude a waiver of a judicial forum" is on the party challenging arbitration. Id. at 26, 111 S.Ct. 1647.


The Dodd-Frank Act, which was passed in response to the 2008 financial crisis, amended TILA, including by adding a section§ 1639c(e)—entitled "Arbitration," which imposed restrictions on the use of mandatory arbitration agreements for mortgage-related transactions. See 15 U.S.C. § 1639c(e). Two provisions of § 1639c(e) are relevant to this case. First, § 1639c(e)(1) states:

No residential mortgage loan and no extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer may include terms which require arbitration or any other nonjudicial procedure as the method for resolving any controversy or settling any claims arising out of the transaction.

15 U.S.C. § 1639c(e)(1) (emphasis added). Second, § 1639c(e)(3) states:

No provision of any residential mortgage loan or of any extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer, and no other agreement between the consumer and the creditor relating to the residential mortgage loan or extension of credit referred to in [ § 1639c(e)(1) ], shall be applied or interpreted so as to bar a consumer from bringing an action in an appropriate district court of the United States , or any other court of competent jurisdiction, pursuant to section 1640 of this title or any other provision of law, for damages or other relief in connection with any alleged violation of this section, any other provision of this

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