Source: http://openjurist.org/284/f3d/990
Timestamp: 2013-12-12 15:47:34
Document Index: 450630677

Matched Legal Cases: ['§ 407', '§ 704', '§ 17200', '§ 1383', '§ 659', '§ 407']

284 F3d 990 Lopez v. Washington Mutual Bank Fa | OpenJurist
284 F. 3d 990 - Lopez v. Washington Mutual Bank Fa	Home284 f3d 990 lopez v. washington mutual bank fa
284 F3d 990 Lopez v. Washington Mutual Bank Fa 284 F.3d 990
Luis LOPEZ, individually and on behalf of the General Public; Barbara Bowman; Gary D. Miller, Jr., individually and on behalf of all others similarly situated, Plaintiffs-Appellants,v.WASHINGTON MUTUAL BANK, FA, Defendant-Appellee.
No. 01-15303.
Filed March 14, 2002.
Amended May 9, 2002.
Robert D. Newman (argued), Western Center on Law & Poverty, Los Angeles, CA. Appearances only by Helen H. Kang, Golden Gate University, San Francisco, CA; Kyra Kazantzis, Mental Health Advocacy Project, Law Foundation of Silicon Valley, San Jose, CA; Gerald A. McIntyre, National Senior Citizens Law Center, Los Angeles, CA; and Dean Paik, Cohen & Paik, San Francisco, CA, for the plaintiffs-appellants.
Matthew L. Larrabee (argued), Heller Ehrman White & McAuliffe, San Francisco, CA. Appearance only by Scott E. Morgan, Heller Ehrman White & McAuliffe, San Francisco, CA, for the defendant-appellee.
Appeal from the United States District Court for the Northern District of California; Ronald M. Whyte, District Judge, Presiding. D.C. No. CV-99-20890-RMW(PVT).
Before: D.W. NELSON, NOONAN and HAWKINS, Circuit Judges.
Opinion by Judge HAWKINS; Concurrence by Judge NOONAN.
We must decide whether the statutory protections afforded Social Security and Supplemental Security Income ("SSI") beneficiaries are offended by a bank's practice of using directly deposited Social Security and SSI benefits to cover overdrafts and overdraft fees. We must also decide whether plaintiffs' related state law claims are preempted by Office of Thrift Supervision ("OTS") regulations.
The facts of this case are not extremely complex. Each of the named plaintiffs1 receive Social Security and/or SSI benefits. Each had an account with Washington Mutual, and their benefits were directly deposited into these accounts. At the time the plaintiffs opened their accounts with Washington Mutual and/or its predecessors-in-interest, they executed account agreements which included provisions regarding overdrafts. Though differing in specific language, the agreements generally explained that if an account holder had insufficient account funds to pay a check, the bank had the option of rejecting the check or paying the check, creating an overdraft on the account accompanied by an overdraft fee. Each account agreement also contained a promise to immediately pay the overdraft amount to the bank. In addition, the bank would notify the account holder in writing in the event an overdraft occurred.
Each of the named plaintiffs then overdrew their accounts, creating overdrafts and incurring overdraft fees. In each case, the next deposit of Social Security and/or SSI benefits was used to satisfy the account deficiency.2
The plaintiffs filed their first amended complaint in December 1999, alleging that Washington Mutual's practice of using the directly deposited Social Security and SSI benefits to set off overdrafts and overdraft fees was prohibited by 42 U.S.C. §§ 407(a) and 1383(d)(1). The complaint also alleged several state law claims, including a violation of California Civil Procedure Code § 704.080, California Business and Professions Code § 17200, and the tort of conversion. The parties filed cross-motions for summary judgment. The district court granted Washington Mutual's motion, finding that the bank's practices did not violate federal law and that the state law claims were preempted. Plaintiffs appeal.
This court reviews a grant of summary judgment de novo. Robi v. Reed, 173 F.3d 736, 739 (9th Cir.1999). Questions of statutory interpretation are reviewed de novo, Alexander v. Glickman, 139 F.3d 733, 735 (9th Cir.1998), as are questions of preemption. Williamson v. General Dynamics Corp., 208 F.3d 1144, 1149 (9th Cir.), cert. denied, 531 U.S. 929, 121 S.Ct. 309, 148 L.Ed.2d 247 (2000).
I. Federal Exemption for Social Security and SSI Benefits
42 U.S.C. § 1383(d)(1) extends these protections to SSI benefits as well.
These provisions offer Social Security and SSI recipients broad protection from creditors. The Supreme Court has recognized that the Social Security Act is "unusually protective" of claimants. Bowen v. City of New York, 476 U.S. 467, 480, 106 S.Ct. 2022, 90 L.Ed.2d 462 (1986). The Court has also noted that there are no implied exceptions to the protections of Section 407(a), and that "Section 407(a) unambiguously rules out any attempt to attach Social Security benefits." Bennett v. Arkansas, 485 U.S. 395, 397, 108 S.Ct. 1204, 99 L.Ed.2d 455 (1988). When Congress has created exceptions, it has done so expressly, as with enforcement of child support orders. 42 U.S.C. § 659(a).
A. "Other Legal Process"
As a preliminary matter, we must consider whether Washington Mutual's offset practice constitutes a type of "other legal process" within the meaning of Section 407(a). In light of our current caselaw, which has broadly construed this phrase, we conclude it does.
In Crawford v. Gould, 56 F.3d 1162 (9th Cir.1995), we addressed California's practice of taking Social Security benefits from institutionalized patients' hospital accounts to pay for the cost of their care and treatment, whether or not the patients had signed a form authorizing such deductions. California argued that its actions were not prohibited by Section 407(a) because they had not resorted to any type of "other legal process" similar to those expressly listed in the statute. Id. at 1166. We rejected this argument, noting that Section 407(a) was designed "to protect social security beneficiaries and their dependents from the claims of creditors" (quoting Fetterusso v. New York, 898 F.2d 322, 327 (2d Cir.1990)), and that the "cramped reading of § 407 California urges would enable the state to obtain Social Security benefits through procedures that afford less protection than judicial process affords." Id. We therefore determined that reading "other legal process" to include the practice o