Thomas v. U.S. Bank Nat. Ass'n Nd
| Decision Date | 07 August 2009 |
| Docket Number | No. 08-3302.,08-3302. |
| Citation | 575 F.3d 794 |
| Parties | Deanthony THOMAS; Susan Jelinke-Thomas; Steven M. Rich, Appellants, v. US BANK NATIONAL ASSOCIATION ND; Ace Securities Corp. Home Loan Trust 1999-A Asset Backed Notes, Series 1999-AA; U.S. Bank N.A.; Wilmington Trust Company; FirstPlus Home Loan Owner Trust 1996-2; FirstPlus Home Loan Owner Trust 1996-3; FirstPlus Home Loan Owner Trust 1996-4; FirstPlus Home Loan Owner Trust 1997-1; FirstPlus Home Loan Owner Trust 1997-2; FirstPlus Home Loan Owner Trust 1997-3; FirstPlus Home Loan Owner Trust 1997-4; FirstPlus Home Loan Owner Trust 1998-1; FirstPlus Home Loan Owner Trust 1998-2; FirstPlus Home Loan Owner Trust 1998-3; FirstPlus Home Loan Owner Trust 1998-4; FirstPlus Home Loan Owner Trust 1998-5; The Associates; CIT Group; Contimortgage Corporation; Goleta National Bank; Master Financial; Norwest Home Improvement, Inc.; PSB Lending; Residential Funding Corporation; Household Finance Corporation; Challenge Realty; German American Capital Corporation; Sovereign Bank; Pain Webber Real Estate Securities Inc.; UBS Real Estate Securities, Inc.; Countrywide Home Loans, Inc.; Banc One Financial Services Inc.; Federal Deposit Insurance Corporation, as Receiver of PFF Bank; Western Interstate Bancorp, Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Roy Frederick Walters, Kansas City, MO, argued, (Kip Dudley Richards, Robert Keith Johnston, J. Michael Vaughan, DAvid M. Skeens, on the brief), for appellant.
David J. Bird, Pittsburgh, PA, argued, Mark A. Olthoff, Kansas City, MO, argued, (Louis Francis Bonacorsi, Geoffery Gerald Gerber, St. Louis, MO, William Edward Quirk, Scott Martin, Leslie A. Greathouse, Gregory Thomas Wolf, Daniel L. McClain, Randolph Glenn Willis, Jennifer A. Donnelli, Michael S. Hargens, David A. Schatz, J. Loyd Gattis, III, Miriam C. Bailey, Lynn S. McCreary, Todd W. Ruskamp, Kansas City, MO, Roy W. Arnold, Thomas L. Allen, Pittsburgh, PA, Michael J. Cereseto, Los Angeles, CA, Paul R. Dieseth, Minneapolis, MN, Thomas M. Hefferon, Washington, DC, on the briefs), for appellees.
Before MURPHY, HANSEN, and BYE, Circuit Judges.
Deanthony Thomas, Susan Jelinke-Thomas, and Steven M. Rich (collectively Thomas) brought claims in Missouri state court against a number of banks and lending institutions (collectively the lenders) alleging violations of the Missouri Second Mortgage Loans Act (MSMLA), Mo.Rev. Stat. §§ 408.231-.241, arising out of loans originated by FirstPlus Bank (a California lending institution which is now defunct) and subsequently purchased by the lenders. The lenders removed the case to federal court arguing the state law claims were completely preempted by the Depository Institutions Deregulation and Monetary Control Act (DIDA), 12 U.S.C. § 1831d. Agreeing with the lenders, the district court denied Thomas's motion to remand to state court and then dismissed the claims. Thomas now appeals. We reverse with instructions to remand this case to state court.
Thomas and the other appellants are Missouri homeowners who obtained "high loan-to-value" second mortgages (reflecting a total debt of 125% of the appraised value) on their homes from FirstPlus Bank. FirstPlus Bank was a federally insured, state-chartered bank when the loans were made. FirstPlus Bank became defunct, and the loans were purchased or assumed by other banks as assignees, including some national banks.
In June 2004, Thomas brought suit in Missouri state court on behalf of himself and others similarly situated against thirty-three assignee banks of FirstPlus alleging the loans they had received violated the MSMLA, which places limits on the type and amount of closing costs and fees a lender can charge on residential second mortgage loans secured by Missouri real estate.1
Specifically, Thomas alleged the subject loans violated Missouri law because: 1) the borrowers were charged nonrefundable finder's fees or broker's fees which were not allowed by or in excess of the fees allowed by the MSMLA; and 2) FirstPlus charged certain closing costs and fees on behalf of third parties which were in excess of the costs actually charged by those third parties and then retained the difference. Thomas sought to recover the interest paid on the allegedly unlawful second mortgage loans and an order barring the collection of additional interest. Notably, none of the subject loans violated Missouri law with respect to the maximum interest rate chargeable on a second mortgage loan, which exceeded the rate allowed by federal law pursuant to DIDA.
In August 2004, the defendant banks removed the case to federal district court. The banks alleged removal was proper because FirstPlus, the originator of the loans, was a federally-insured, state-chartered bank and DIDA (which applies to federally-insured, state-chartered banks) completely preempted the state law claims brought under the MSMLA. The banks relied primarily upon the Supreme Court's decision in Beneficial National Bank v. Anderson, 539 U.S. 1, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003), which held that the National Bank Act (NBA), 12 U.S.C. §§ 85-86, completely preempted state law usury claims against national banks. Id. at 10-11, 123 S.Ct. 2058. The banks alleged the similarity in language between DIDA and the NBA compelled the conclusion that DIDA, like the NBA, created the exclusive federal remedy for usury claims against federally-insured, state-chartered banks.
Thomas filed a motion to remand the case to state court. He argued the language of DIDA differed in material respects from the language in the NBA, and DIDA only preempted state usury laws in limited circumstances, that is, when the state laws set a lower allowable interest rate than that allowed by federal law. Because Missouri law allowed a higher allowable interest rate than the rate set forth in DIDA, preemption was not triggered. The district court disagreed and denied the motion to remand, concluding DIDA provided the exclusive remedy for usury claims against federally-insured, state-chartered banks. Thereafter the banks brought a motion to dismiss the case, which the district court granted.
Thomas filed a timely appeal. On appeal, he renews his argument that DIDA differs in material respect from the language of the NBA, and preemption does not apply in circumstances where state law allows a higher interest rate than the interest rate set forth in DIDA. The banks renew their claim as to the statutory language in DIDA being the same as the NBA, and federal law completely preempts the state law claims brought here. The national bank defendants alternatively argue that the NBA should apply whether they are the originator of a loan or purchase a loan as an assignee, and therefore completely preempts the claims brought against them even if DIDA does not. Finally, some of the assignee banks argue the named plaintiffs lacked standing to sue them because none of the named plaintiffs (as opposed to unnamed class member plaintiffs) have loans that have been assigned to them.
The district court's denial of the motion to remand the case to state court is reviewed de novo, Menz v. New Holland N. Am., Inc., 440 F.3d 1002, 1004 (8th Cir.2006), as is the district court's dismissal of the case, Harris v. The Epoch Group, L.C., 357 F.3d 822, 824-25 (8th Cir.2004).
The general rule is when a claim filed in state court alleges only state law claims, the existence of a federal defense, e.g., preemption, is not enough to support the removal of the case to federal court. Rivet v. Regions Bank of La., 522 U.S. 470, 475, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998). An exception to this rule is when the preemptive force of a federal statute completely displaces state law and it is clear Congress meant the federal statute to be the exclusive cause of action for the type of claim asserted. Beneficial Nat'l Bank, 539 U.S. at 8, 123 S.Ct. 2058. Complete preemption, as opposed to ordinary or conflict preemption, is rare, however, and only applies if the "federal statutes at issue provide[] the exclusive cause of action for the claim asserted and also set forth procedures and remedies governing that cause of action." Id.
Complete preemption does not exist here because the language of DIDA, unlike the NBA, does not reflect Congress' intent to provide the exclusive cause of action for a usury claim against a federally-insured state-chartered bank. To the contrary, a close examination of the statutory language indicates Congress very clearly intended the preemptive scope of DIDA to be limited to particular circumstances.
Two provisions of DIDA are at issue— the subsection discussing the circumstances under which a federally-insured state-chartered bank may charge the interest rate allowed by federal law notwithstanding state law to the contrary, 12 U.S.C. § 1831d(a) (the substantive provision), and the subsection setting forth a consumer's remedy when a bank charges interest in excess of that allowed by DIDA, 12 U.S.C. § 1831d(b) (the remedy provision). The substantive provision is set forth as follows:
In order to prevent discrimination against State-chartered insured depository institutions, including insured savings banks, or insured branches of foreign banks with respect to interest rates, if the applicable rate prescribed in this subsection exceeds the rate such State bank or insured branch of a foreign bank would be permitted to charge in the absence of this subsection, such State bank or such insured branch of a foreign bank may, notwithstanding any State constitution or statute which is hereby preempted for the purposes of this section, take, receive, reserve, and charge on any loan or discount made, or upon any note, bill of exchange, or other evidence of debt, interest at a rate of not more than 1 per centum in excess of the discount rate on ninety-day commercial paper in effect at the Federal Reserve bank in the Federal...
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