Lusnak v. Bank of America, No. 14-56755 (9th Cir. 2018)
Annotate this CaseAlthough the Dodd-Frank Act significantly altered the regulatory framework governing financial institutions, with respect to National Bank Act (NBA) preemption, it merely codified the existing standard established in Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25 (1996). The Ninth Circuit applied that standard and held that the National Bank Act did not preempt California's state escrow interest law. In this case, the panel reversed the district court's dismissal of a putative class action alleging that Bank of America violated both California state law and federal law by failing to pay interest on his escrow account funds. The panel held that plaintiff could proceed with his California Unfair Competition Law and breach of contract claims against Bank of America.
Court Description: Preemption / National Bank Act. The panel reversed the district court’s dismissal of a putative class action; held that that the National Banking Act did not preempt California’s state escrow interest law, Cal. Civil Code § 2954.8(a); and remanded so that the plaintiff could proceed with his California Unfair Competition Law (“UCL”) and breach of contract claims against Bank of America. Plaintiff filed his lawsuit on behalf of himself and a proposed class of similarly situated Bank of America customers, alleging that the Bank violated both California state law and federal law by failing to pay interest on his escrow account funds. In 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act. Titles X and XIV of Dodd-Frank aim to prevent, and mitigate the effects of, another mortgage crisis. The panel held that although Dodd-Frank significantly altered the regulatory framework governing financial institutions, with respect to National Bank Act preemption, it merely codified the existing standard established in Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25 (1996). Applying that standard, the panel held that the National Bank Act did not preempt Cal. Civil Code
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