Court Opinion

ID: 9745465
Source: CourtListenerOpinion
Date Created: 2023-08-26 23:00:10.918874+00
Date Added: 2024-06-11T12:26:24.635699
License: Public Domain

YEGAN, Acting P. J., Dissenting.
I respectfully dissent.
The effect of the majority’s decision is to permit a trial court in California to exercise regulatory control over the conditions under which national banks make refund anticipation loans (RAL’s) and, acting pursuant to cross-collection agreements with other national banks, apply tax refunds deposited into special accounts to satisfy balances due on RAL’s made in prior tax years. Regulations adopted by the Office of the Comptroller of the Currency (OCC) preempt state laws that purport to regulate the deposit-taking and non-real-estate-lending activities of national banks. Here, appellants seek a state court injunction invalidating a federal banking practice approved by the *549OCC. In my view, the majority should stay out of the federal banking business. Because the trial court correctly concluded that appellant’s claims are preempted by federal law, I would affirm.
The majority errs, in my view, when it applies a presumption against preemption. This is a dispute over the performance of contracts by and between federally regulated national banks. As the United States Supreme Court has noted, the presumption against preemption is “not triggered when the State regulates in an area where there has been a history of significant federal presence.” (United States v. Locke (2000) 529 U.S. 89, 108 [146 L.Ed.2d 69, 88, 120 S.Ct. 1135].) National banking has been the subject of federal legislation and regulation for more than a century. “Indeed, since the passage of the National Bank Act in 1864, the federal presence in banking has been significant.” (Bank of America v. City & County of San Francisco (9th Cir. 2002) 309 F.3d 551, 558; see also Barnett Bank of Marion Cty., N.A. v. Nelson (1996) 517 U.S. 25, 32 [134 L.Ed.2d 237, 116 S.Ct. 1103] [noting federal courts’ history of interpreting statutory grants of authority to national banks as “not normally limited by, but rather ordinarily pre-empting, contrary state law.”].)1 As a consequence, “the usual presumption against federal preemption of state law is inapplicable to federal banking regulation.” (Wells Fargo Bank N.A. v. Boutris (9th Cir. 2005) 419 F.3d 949, 956.) We should presume that state laws are preempted and that respondents’ obligations to RAL borrowers are defined by the federal regulations.
With respect to non-real-estate-lending, the federal regulations expressly preempt state laws purporting to regulate “terms of credit,” “disbursements and repayments,” “impound accounts, and similar accounts” and “[s]ecurity property.” (12 C.F.R. § 7.4008(d)(2)(iv), (ix), (v), (vi) (2006).) Appellants challenge the terms under which respondents make short term loans that are secured by the borrower’s expected tax refund, and respondents’ seizure of tax refund checks from specially created, temporary bank accounts to repay similar loans made by other national banks in prior tax years. Their claims fall squarely within the categories of claims expressly preempted by federal law.
*550The OCC deposit-taking regulations also authorize national banks to employ special purpose savings services “without regard to state law limitations.” (12 C.F.R. § 7.4007(b)(2)(vii)(2006).) The RAL process involves the creation of a special purpose savings account to receive the tax refund. State laws purporting to limit the terms under which those savings accounts are created or managed are expressly preempted.
Appellant’s claims are not preserved by the “saving clauses” included in both the deposit-taking and non-real-estate-lending regulations. (12 C.F.R. §§ 7.4007, subd. (c), 7.4008, subd. (e)(2006).)2 These general savings clauses do not control over the more specific express preemption regulations. “A general ‘remedies’ saving clause cannot be allowed to supersede the specific substantive pre-emption provision .. ..” (Morales v. Trans World Airlines, Inc. (1992) 504 U.S. 374, 385 [119 L.Ed.2d 157, 168, 112 S.Ct. 2031].)
Moreover, each saving clause provides that state laws may “apply to national banks to the extent that they only incidentally affect the exercise of national banks’ deposit taking [or non-real-estate-lending] powers.” (12 C.F.R. § 7.4007, subd. (c) (2006); see id., § 7.4008, subd. (e)) State laws “incidentally affect” a national bank when they are laws of general application that “are not designed to regulate lending and do not have a disproportionate or otherwise substantial effect on lending. To the contrary, they are part of the legal infrastructure that undergird all contractual and commercial transactions.” (Gibson v. World Savings & Loan Assn. (2002) 103 Cal.App.4th 1291, 1303-1304 [128 Cal.Rptr.2d 19].)
Here, appellants are using state laws of general application, including the common law tort of conversion, the unfair competition law (Bus. & Prof. Code, § 17200 et seq.), the Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.) and the Rosenthal Fair Debt Collection Practices Act (Civ. Code, § 1788 et seq.), to enjoin a national bank from performing under its cross-collection agreements with other national banks. This is more than an individual claim for money damages based on a breach of contract or tort. It is a class action that seeks to regulate not only the terms under which national *551banks make and collect on RAL’s, but also the manner in which they conduct business with other national banks. The remedy sought by appellants would dictate the terms under which national banks make RAL’s and would vitiate their cross-collection agreements. By any standard, that is more than an incidental impact on the banks’ deposit-taking and non-real-estate-lending powers. As a result, appellants’ claims fall outside the regulations’ savings clauses. The trial court correctly recognized this and found appellants’ claims expressly preempted by the OCC regulations. Its judgment should be affirmed.
A petition for a rehearing was denied October 26, 2006, and respondents’ petition for review by the Supreme Court was denied January 3, 2007, S147931. Werdegar, J., and Corrigan, J., did not participate therein.

 The OCC reached the same conclusion in its commentary on the adoption of the final rules at issue here, noting that “there is no presumption against preemption in the national bank context.” (Bank Activities and Operations, 69 Fed.Reg. 1895, 1896 (Jan. 13, 2004).) Congress expressly charged the OCC with the regulation of national banks. We should defer to its reasonable interpretation of the preemptive scope of that legislative mandate. (Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 568 [59 Cal.Rptr.2d 186, 927 P.2d 296]; see also Presley v. Etowah County Com’n (1992) 502 U.S. 491, 508 [117 L.Ed.2d 51, 112 S.Ct. 820]; Ford Motor Credit Co. v. Milhollin (1980) 444 U.S. 555 [63 L.Ed.2d 22, 100 S.Ct. 790].)

 The savings clauses provide: “State laws on the following subjects are not inconsistent with the deposit-taking [or 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’ deposit-taking [or non-real-estate-lending] powers: (1) Contracts; [j[] (2) Torts; [][] (3) Criminal law; PH] (4) Rights to collect debts; Q] (5) Acquisition and transfer of property; [][] (6) Taxation; [][] (7) Zoning; and [1] (8) Any other law the effect of which the OCC determines to be incidental to the deposit-taking [or 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. § 7.4007, subd. (c) (2006), fn. omitted; see § 7.4008, subd. (e) (2006).)