§ 1601 which sets out the purpose of the Act cannot be used to overrule the more specific language." Stavrides, 353 F. Supp. at 1079. The Fourth Circuit Court of Appeals, in affirming dismissal of a TILA claim against H&R Block in a virtually identical case, refused to find that "the broad purpose of the Act should override its specific provisions." Cades, 43 F.3d at 876. The same check and check stub disclosures were held to satisfy TILA's explicit timeliness requirements. Accord Beckett v. H&R Block, Inc., 1994 U.S. Dist. LEXIS 17714, 1994 WL 698505 (N.D. Ill.), appeal docketed, No. 95-1391 (7th Cir.) (disclosures given at the same time as loan agreement and check were timely).
Completeness of the disclosures is also at issue.
In particular, plaintiffs claim that "the RAL agreement did not contain a statement that the consumer had a right to receive a written itemization of the amount financed, nor did it contain a space for the consumer to indicate whether such an itemization was desired as Regulation Z requires." Response to motion for summary judgment at 13. However, under section 226.18(c)(2) of the Code of Federal Regulations, once the creditor complies with paragraph (c)(1), a statement of the consumer's right to receive a written itemization is unnecessary. Here, the strictures of (c)(1) were met. Defendant Mellon Bank's motion for summary judgment, exhibits D, E.
According to plaintiffs, the electronic filing fee should be considered a part of the finance charge and APR
calculations. Response to motion for summary judgment at 23.
Under TILA, the finance charge is defined as "the cost of consumer credit as a dollar amount. It includes any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit." 12 C.F.R. § 226.4(a) (1995). TILA regulations do not require inclusion of a fee as a finance charge where the fee is "of a type payable in a comparable cash transaction." Id.
The electronic filing fee is a charge "required" by Mellon Bank in connection with the loan. Sur-reply to motion for summary judgment at 8. However, H&R Block offers an independent electronic filing service for the same fee - $ 25 - as for the loan service. Defendant H&R Block's motion for summary judgment, exhibit A P 5. So viewed, the electronic filing fee is a charge "of the type payable in a comparable cash transaction" and is not an element of the finance charge. 12 C.F.R. Pt. 226, Supp. I at 303 (1995) (" § 226.4(a) expressly excludes from the finance charge amounts payable in comparable cash transactions ... the general test for a finance charge now focuses on a comparison of cash and credit transactions.")
The amended complaint further alleges a violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Act, 73 Pa.C.S.A. § 201-2(4). Specifically, plaintiffs contest the annual percentage rate charged by Mellon Bank. Amended complaint P 60; response to motion for summary judgment at 43. Defendants claim federal jurisdiction over this issue by virtue of preemption under the National Bank Act, 12 U.S.C. § 85.
"It is well settled that, 'since Congress has provided a penalty for usury, that action preempts the field and leaves no room for varying state penalties.'" M. Nahas & Co., Inc. v. First Nat'l Bank of Hot Springs, 930 F.2d 608, 610 (8th Cir. 1991) (citations omitted).
"The interest rate a national bank may charge is governed by section 85, which looks to the interest rates allowed by the state where the bank is located." Cades v. H&R Block, 43 F.3d 869, 874 (4th Cir. 1994). That state's law controls the rate the national bank can charge in all states. Marquette v. First of Omaha Serv. Corp., 439 U.S. 299, 308, 99 S. Ct. 540, 545, 58 L. Ed. 2d 534 (1978).
Mellon, a national bank, is governed by the National Bank Act. Defendant Mellon Bank's motion for summary judgment at 32; amended complaint P 7. Inasmuch as plaintiffs' unfair trade practices claim arises from the bank's interest rate charges, it is preempted by the National Bank Act. See Cade v. H&R Block, No. 4:92-1454-21, 1993 U.S. Dist. LEXIS 19041 at *18 n.16 (D.S.C. July 16, 1993).
Mellon is located in Delaware. Under Delaware law governing closed-end transactions, a bank may charge "loan fees, points, finders fees and other front-end and periodic charges; provided . . . that the agreement governing . . . the loan so provides." Del. Code Ann. tit. 5, § 965 (1975). Here, since the loan documents expressly refer to collection of the $ 29 bank fee, the finance charge amount does not violate Delaware or federal law. See Cades, 43 F.3d at 874 (in similar fact situation $ 29 finance charge found valid under Delaware law).
This memorandum and previously entered order dispose of all federal matters in the complaint. Jurisdiction over the remaining state claims has been declined, see United Mine Workers of America v. Gibbs, 383 U.S. 715, 726, 86 S. Ct. 1130, 1139, 16 L. Ed. 2d 218 (1966); Ditri v. Coldwell Banker Residential Affiliates, Inc., 954 F.2d 869, 874 (3d Cir. 1992);
and remand ordered.
Edmund V. Ludwig, J.
AND NOW this 24th day of July, 1995 defendants' motions for summary judgment are granted as to the Truth in Lending Act claim and as to usury under federal law. The remaining claims are remanded to state court. Memorandum to follow.
Edmund V. Ludwig, J.