McShannock v. JP Morgan Chase Bank N.A., 354 F. Supp. 3d 1063

Plaintiffs (Chandler, McShannock, Meky) are former WaMu mortgage borrowers whose loans were acquired by Chase after WaMu's failure; they paid escrow funds but received no escrow interest.
Deeds of Trust contained a clause disallowing escrow interest unless required by law and a notice-and-cure provision requiring pre-suit notice and an opportunity to cure.
Plaintiffs allege Chase violated California Civil Code § 2954.8 (requires ≥2% interest on escrow funds) and thus committed unlawful and unfair acts under the UCL; they initially asserted a Dodd-Frank provision but loans predate that statute.
Chase moved to dismiss for failure to comply with the deed’s notice-and-cure provision and on the ground that HOLA preempts California’s escrow-interest law for loans that originated with a federal savings association (WaMu).
The district court denied dismissal: it held plaintiffs were not required to satisfy the notice-and-cure provision for statutory claims grounded in § 2954.8, and HOLA does not preempt § 2954.8 as applied to claims based on post-transfer conduct by Chase.
Chase’s alternative request to stay pending Supreme Court review of Lusnak was denied as moot after certiorari was denied.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether plaintiffs had to comply with deed notice-and-cure before suing	Notice requirement doesn’t apply because claims are statutory (§ 2954.8/UCL) independent of the deed	Deed bars any judicial action arising from the Security Instrument until notice and cure	Court: no pre-suit notice required for statutory claims; deed construed against drafter and statute creates independent duty
Whether HOLA preempts § 2954.8 for loans that originated with a federal savings bank but are now held by a national bank	HOLA preemption should not apply to conduct by a national bank after it acquires loans	HOLA (and 12 C.F.R. §560.2) preempts conflicting state law for loans originated by federal savings associations	Court: HOLA does not preempt § 2954.8 as to plaintiffs’ claims based on Chase’s post-acquisition conduct; follows trend limiting HOLA preemption to conduct by the thrift
Whether plaintiffs could rely on Dodd‑Frank escrow provision (15 U.S.C. § 1639d(g))	Plaintiffs initially cited Dodd‑Frank provision as basis	Chase: loans predate Dodd‑Frank so provision does not apply	Court: Lusnak controls — Dodd‑Frank escrow provision does not apply to loans established before it took effect; plaintiffs must rely on § 2954.8
Whether to stay the case pending Supreme Court resolution of Lusnak	Oppose stay; proceed	Move to stay pending Lusnak	Court: stay denied as moot because certiorari was denied

Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleading)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must show more than possibility)
Levitt v. Yelp! Inc., 765 F.3d 1123 (9th Cir. 2014) (application of plausibility standard)
Lusnak v. Bank of Am., N.A., 883 F.3d 1185 (9th Cir. 2018) (NBA does not preempt § 2954.8; Dodd‑Frank escrow rules apply only to accounts established after enactment)
de la Cuesta v. FDIC, 458 U.S. 141 (1982) (preemption analysis and congressional intent)
Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996) (congressional intent is touchstone of preemption)
Aguayo v. U.S. Bank, 653 F.3d 912 (9th Cir. 2011) (state consumer‑protection laws in traditional police power sphere)
City of Columbus v. Ours Garage & Wrecking Serv., 536 U.S. 424 (2002) (presumption against preemption of state police powers)
Flagg v. Yonkers Sav. & Loan Ass'n, F.A., 396 F.3d 178 (2d Cir. 2005) (background on escrow‑interest preemption in thrift context)