only case right now is how overshoes the huntington national bank mr rico not pronounce that pretty close name please the court good afternoon my name is keith and i represent i think the national bank in this case and i wish to reserve seven minutes for rebuttal three unanimous supreme court decisions interpret ng section eighty five held that a national bank made its federal rate of interest that it may charge is determined by a law of where its main office is located and that then then that rate of interest may be exploited on a fifty state can you charge for a month following the money where you can charge has nothing to do with the rate as i understand it right well your honor a late fee is an c s regulation interpret section eighty five giving it deference under the chevron doctrine and they have to determine whether it was reasonable and they went and they looked at it you may not find this persuasive but it was persuasive the nine justices they looked at the definition of what interest rate and it rate of interest was and eight hundred seventy one the national bank act was enacted and included flat fees of interest and on top of that the third unanimous supreme court case when you put them all together is an opinion by justice all over wendell holmes also for nine justices which held that the rate of interest determined under section eighty five includes the frequency with which interest is charge section eighty five interest where you look to the home state and then under justice president's decision and market where you can export that based on what the home state says you have a problem here because ohio law which is the national banks made off the state says that a national bank can charge late fees in a posting a lot or in a manner and a frequency with which they did it here pursuant to the dee allegations of the complaint this is true correct or could charge a late fee when there was no like i mean well that is only if there is no only no late payment if the west virginia statute is preempted under the market because the deed itself allows for the charge under the complaint was a late fee charge when no late payment was made in october and then again in november a controlling whether there's a preemption or something i'm not sure what the what this question is even but but i know that the judge johnson says the complaint who he raised it alleges that why he ruled on the basis of well being the fact that he had to take them now do you think you know but your honor you're you're not making an allegation of fact you're making an allegation of law he's taking a fact but and that you can't do that so you have to accept that you can tell us that you don't have to accept the allegation is the owner of the complaint on the judgment on the  i think everyone does not dispute that there was only one game and that was not received the question at issue is whether under the contract and under federal law you took the money off the top because the late no no no so that that actually did not happen here but what happened is we took the october payment and we applied it to the september payment and there was no october payment then so a late fee was charged and then that happened again in november the november payment was received it was october and that is allowed under section three of the d and that is allowed on earth you have got me like you all you and you a what how does donald help well donal is a case that says the frequency with with interest can be charge is part of the interest calculation or you look at the home state and you put that into section eighty five of what and then when you sort of churn that through marquette it's exportable and it's has more to do with late fees so i mean if it's late fees sort of are not everyone's favorite thing you have to think more maybe more broadly about what that donald role was not there and they didn't allow the frequency with which it was charged and that's in fact what donna was about was about compound ing of interest well that's basically what this is here to problem is you got seduced by the notion of complete preemption on the removal and all this stuff you've been talking about is about matters and the well know your honor you know oh poor dence and you're trying to convert all kinds of questions of factual do was wait until the case was at issue maybe a little discovery and then follow your motion because this is a question of defensive preemption well that's what's going on here and you raise a defense of preemption an exception to the well played a complaint role but then it's also governed by section eighty five and so what happened here as judge king pointed out the district court here didn't view this as a user re now you can disagree with that and you do but that's the record before us so if it's not used to reclaim it's not to use a reclaim for purposes o section eighty five and the fact is we don't need complete preemption but we've always asserted section eighty five defensive preemption because that's part and parcel it was a motion for judgment on the pleadings it mortgage loan documents is that the security instrument says that it will be governed by federal law and the law of the property in which the law of the state in which the property is located which here is west virginia o propellers the other issue in terms of the trial ninety two jurisdiction is the question of complete versus defensive preemption in this case and the need to move to dismiss solely on the grounds that sections eighty five and eighty six completely preempt claims that is a move to dismiss solely on the ground that the exclusive that the cause of action created by section eighty six provides the exclusive remedy for the type of claim at issue here such that the claim is in fact a federal claim and then they argue that we have not stated a federal cause of action that's what complete preemption means that the federal statute provides exclusive cause of action that was the only argument in their motion to dismiss and the only preemption issue decided by the court below and because of that it's the only issue before this court under twelve ninety to be huntington has now made clear it's not relying on complete preemption or the exclusive remedy in section eighty six particularly preemption includes you know they looked at it he did say that complete they do incorporate the same standard and we particularly do think that any violation of section eighty five or anything that section eighty five s would then be covered by the exclusive review provision of section eighty six but the theory that they moved for preemption wasn't that they had a defense their theory was that these claims were actually federal claims and that we didn't state a cause of action so they are theories one is about what type of cause of action it is whether it's federal or state and therefore can be removed and the other is a defense and so we think that that defense i s not before the court moving on it to the merits of section eighty five and eighty six those provisions are usury provisions they they're concerned with the interest rates charged banks they set the maximum interest rate that a banking charge they provide a cause of action for claims that a bank charge a higher interest rate than allowed and together they completely preempt state law usury claims claims that  national bank charged a greater interest rate than allowed here though the powells claims are not about the interest rate charged by the charged by the bank what the it's about charging late fees when no late fees were owed not about the amount of the interest your claim is that once you miss a payment or make a late payment but you make all subsequent payments on time in effect what they're doing is on your obligations is there repeating a late charge that's not due in owing no matter what the rate is yes your theory exactly so they have continued to charge a late fee for every month even though there was only one month where the payment was late exactly and that's not without fundamentally your september rate is september and then they charge late at all why our claim doesn't isn't that they couldn't charge fifteen dollars on a late fee or even that there aren't circumstances in which they could have charged forty five dollars over three months it's not about the amount of the late fees charged it's about was never very i am not aware of that you know where we're being paid or you know if you don't know what the answer i'm i don't i don't know what the answers to that i'm sorry but that seems to hurt but if if in fact there was no september payment at all and then the october payment included a late charge even though you're saying the october payment was not late that makes it look like the september payment what the west virginia law forbids them from doing that the west virginia statute provides that they have to apply payments to current installments rather than past installments and we believe that the note requires that loan payment made in that month that was the amount that was not a member you said no not by not in september but in october october and november yes and i'm very that under the west virginia statute at issue here they had to apply they were required to apply that payment for our payments for october and november to the installments due in october and november not to the instalment due in september and what if you all that's what they violated he question is no longer at at issue here but we also do think that none of the claims that are at issue here are preempted by sections eighty five and eighty six either as a matter of complete preemption or on defense of preemption because they not going to the interest rate they challenge the illegal accounting practices of applying payments to prior months in violation of west virginia law that that led to the charging of late fees that were not due at payment at the end of the long term eventually that payment will go to many years later they think they collect a little more money and presumably then if they carry over the interest then you know interest could i would think continue to accrue but in terms of making a payment the payment has to be applied under west virginia law to the current installment before it's applied to the prior installment and that's not a law about interest rate it's a law about accounting practices ones that were paid on time because the payments would have to be applied to the current installment rather that it was funny and or the conference yes which one and that's partially because the contract that you're using  only question presented there was about what constitutes interest and we don't question that late fees are in trust huntington has argued fees but that's not what our claim is we're not challenging the fees here because they were fixed at fifteen dollars rather than as some percentage our claim is is not about the amount of interest at all about the fifteen dollars that the bank engaged in a practice of applying top line payments to past installments that led it to charge fees that were not do at all in the months in which the or brought under used the statute our claim is that they have to be used to the claims claims challenging the excessive rate of interest but again our claims here aren't about an excessive interest rate charged by the banks they're about the practice of applying payments to past installments contrary to west virginia law that led to the charging of late fees that were not that the claims here also are not otherwise preempted by the national bank act huntington brought up a conflict preemption theory but regardless of whether defense of preemption is before this court under twelve ninety two that theory is not it was not addressed by the district court and in any event the claims here are not preempted under that theory which would require the claims that the law issue to prevent or significantly interfere with the banks ability to engage in the business and here huntington has made no showing sure very much for having me back your honor i think well first just as a policy matter i think you know judge davis you have it exactly right that what we've heard from the  of the lesser of all evils is being charged thirty dollars extra in interest as opposed to you know having your mortgage declared in default and you know going through foreclosure or something horrible like that and so you know i think it just sort of is buried in mind that that sort of is hanging out there and i think that that was sort of you know very very well put in the in the prior questioning now i do want to take issue  only issue is whether west virginia law requires that payment that's received to go to say october as opposed to september and that we submit is an issue that is quote material to the determination of interest which is then determined by the boat home state law under section eighty five in exportable under market so that sort of the basic claim now you know when we further look at the complaint about whether they have alleged a breach of contract there is no claim that there's a breach of contract and it's not even an element of any claim in the complaint a further the remedies saw are not remedies for breach of contract in the complaint it's for statutory penalties under the west virginia consumer protection act it's for attorneys fees and certainly i i don't think this case goes away  much as you may want to if if there are even worse breach of contract because you have those remedies out there that are being sought that are based solely on whether this west virginia statute is preempted or not me that he did it right you know that in my twenty years of practicing that's the first time ever and then you all came and went and where you got this well so you know i think we've gotten this far and there certainly are some twelve ninety two big cases out there that say it be and could it be properly applied to the september and whether that west virginia law under those circumstances is preempted by section eighty five of the national bank that's pretty complex i've been laboring and he's been there for considering the district court so that we have the benefit of your learning what you teach the district court process kinds of issues shouldn't pop up out of the with all due respect i mean it hasn't you know we believe there's one hundred fifty years of precedent both agency and otherwise behind this and you know it certainly caught the district court's attention and he's actually entered a stay of discovery because he does think come along normally doesn't have to do right so you're saying it's gone if you're but as i said i mean in my twenty years of practicing and certainly you know my specialty is in the national bank act the national bank act preemption but you know we litigated on a lot of cases and i terms of the question of whether the west virginia statute is empted again we think that what what the district court decided was a question of complete preemption not a question of defensive preemption and they're no longer arguing complete made based on the language in the note and then although the contract does talk about a late fee if the monthly payment is made i mean that also with the security instrument provides that the late start provides that it will be governed by federal law and the law in which the property is located and the property was located in west virginia so that the bank has voluntarily agreed to be bound by west virginia law which would include the law about the application of payments to prior instalment