Roger Deming v. Merrill Lynch & Co Inc

FILED
NOT FOR PUBLICATION MAY 01 2013
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
ROGER J. DEMING, No. 11-35957
Plaintiff - Appellant, D.C. No. 3:09-CV-05418-RJB
v.
MEMORANDUM *
MERRILL LYNCH & CO., INC.; et al.,
Defendants - Appellees.
Appeal from the United States District Court
for the Western District of Washington
Robert J. Bryan, Senior District Judge, Presiding
Argued and Submitted April 10, 2013
Seattle, Washington
Before: D.W. NELSON and CALLAHAN, Circuit Judges, and COLLINS, District
Judge.**
Roger J. Deming sought to bring an action on behalf of himself and others
who were similarly situated, alleging that administrative and compliance review
fees charges by First Franklin Financial Corporation (“Franklin”) on two real estate
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable Raner C. Collins, District Judge for the U.S. District
Court for the District of Arizona, sitting by designation.
loans violated Washington state law and his rights under the common law.1 The
district court granted summary judgment for Franklin holding that Deming’s
claims were preempted by the National Banking Act and regulations promulgated
by the Office of the Comptroller of the Currency (“OCC”). We affirm.2
The district court properly determined that Deming’s claims under
Washington state laws are preempted by federal law. In Watters v. Wachovia
Bank, 550 U.S. 1, 18 (2007), the Supreme Court held that a national bank could
engage in real estate lending through an operating subsidiary. In Martinez v. Wells
Fargo, 598 F.3d 549, 555 (9th Cir. 2010), we held that state laws that “obstruct
impair, or condition a national bank’s ability to fully exercise its Federally
authorized real estate lending powers” are preempted. See also 12 C.F.R. §
34.4(a). Here, applying the Washington Consumer Protection Act or the
Washington Consumer Loan Act (“CLA”) to the administrative and compliance
review fees charged by Franklin would obstruct Franklin’s ability to exercise its
1
Appellees Merrill Lynch & Co., Inc. and Bank of America Corp. are
successors in interest to First Franklin Financial Corporation. Appellees are
collectively referred to as “Franklin.”
2
Appellees’ “motion to strike or disregard new argument in appellant’s
reply brief” is denied.
2
“Federally authorized real estate lending powers.” Accordingly, all of Deming’s
claims based on Washington state laws are preempted.
The district court dismissed all of Deming’s claims, including his alleged
common law claims, on the ground that they were “premised on a violation of the
CLA and/or its regulations.” At oral argument, Deming asserted that he had
alleged claims under the common law, independent of Washington state statutory
laws. To the extent that such claims are implicit in Deming’s complaint, he has
failed to make the requisite factual showings necessarily to proceed. First, as
Deming procured the underlying loans through an independent broker and did not
have any conversations with anyone from Franklin, he has not shown that Franklin
had a duty toward him necessary to give rise to a claim of negligence. Second, it
appears that the charges in issue were disclosed in the loan documents, thus
negating Franklin’s claim for fraud through concealment. Third, Deming has not
shown that his contracts with Franklin specified how the administrative and
compliance fees were to be calculated or charged. Fourth, as Deming is
proceeding on a contract, under Washington law, he cannot proceed by way of
unjust enrichment, but must prove a breach of contract. See U.S. for Use & Benefit
of Walton Tech., Inc. v. Westar Eng’g., Inc., 290 F.3d 1199, 1204 (9th Cir. 2002)
3
Accordingly, the district court did not err in dismissing Deming’s common law
claims as well as his claims based on Washington statutes and regulations.3
Finally, at oral argument Deming asserted that he had alleged a claim under
the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2607(b).
Assuming that such a claim was embedded in Deming’s complaint, it is factually
and legally foreclosed by our decision in Martinez, 598 F.3d at 553-54. RESPA
“prohibits only the practice of giving or accepting money where no service
whatsoever is performed in exchange for that” and “does not extent to
overcharges.” Id. (internal quotation marks and citations omitted). Here, the
record shows that Franklin did undertake some administrative tasks and paid
Mavant, Inc. to undertake some compliance review. In addition, to the extent that
Deming asserts that Franklin violated RESPA by not adhering to “safe and sound
banking principles” as required by 12 C.F.R., §7.4002(b)(2), in Martinez we held
that a lawsuit claiming that a national bank failed to abide by OCC regulations, “is
fruitless because the regulation of a national bank’s adherence to OCC regulations
is within the exclusive purview of the OCC.” Id. at 556 n.8.
3
Because Deming failed to allege sufficient facts to constitute a
common law cause of action, we need not, and do not, decide whether an
adequately pled common law cause of action would be preempted by the National
Banking Act and OCC regulations.
4
The district court’s grant of summary judgment for Franklin and dismissal of
Deming’s claims is AFFIRMED.
5