• August 10, 2009

A large number of lender defendants bought FirstPlus Bank loans (a California lending institution, now defunct) and were sued by a putative plaintiff’s class under Missouri’s Second Mortgage Loans Act in Missouri state court (which places limits on closing costs and fees in connection with second mortgages). Plaintiffs removed the case to federal court.

Lenders defended, claiming that the claims under Missouri law were preempted under the federal Depository Institutions Deregulation and Monetary Control Act, 12 U.S.C. Sect. 1831d (“DIDA”). The district court agreed, denied plaintiffs’ motion to remand and dismissed the case. The Eighth Circuit (Murphy, Hansen, Bye) reversed the district court.

“Complete preemption does not exist here because the language of DIDA, unlike the National Bank Act, 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.”

The Eighth Circuit recognized that the Fourth Circuit has ruled otherwise. Discover Bank v. Vaden, 489 F.3d 594 (4th Cir. 2007), rev’d. on other grounds, (U.S. S. Ct., March 9, 2009 2009 WL 578636) but the Eighth Circuit faulted the Fourth Circuit’s decision for omitting the import of a particular clause in the statute.

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