Philip Decohen v. Capital One, N.A.
2012 U.S. App. LEXIS 26369
4th Cir.2012Background
- Decohen bought a used Chrysler Pacifica (2007) financed by Nation Auto of Marlboro Heights; total price included a $600 Optional Debt Cancellation Agreement.
- CLEC requires the lender to cancel the remaining loan balance upon total loss if insurance does not cover it in full.
- Decohen’s car was totaled in 2010; insurance paid $12,839 while $1,504 remained on the loan.
- Nation Auto assigned the loan to Capital One, which argues preemption under the NBA and regulations.
- The district court dismissed CLEC and breach claims as preempted and failing to state a breach, respectively.
- This court vacates and remands for consideration consistent with its opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CLEC is preempted by the NBA and OCC regs. | CLEC not preempted; applies to assignee loans; assigns terms binding Capital One. | NBA preempts state regulation of debt cancellation contracts entered into by national banks. | CLEC not preempted as to assignment; district court erred. |
| Whether Capital One breached the CLEC by not canceling the remaining balance. | CLEC incorporated into RIC; assignment does not negate CLEC obligations. | As assignee, Capital One not bound by CLEC terms reportedly negotiated by Nation Auto. | Capital One is bound; breach claim plausibly stated. |
| Whether the assignment of the RIC affects preemption analysis. | Assignment does not remove CLEC terms or shield from state law. | Assignment to a national bank places contract under NBA considerations. | Assignment does not extinguish CLEC obligations; preemption analysis limited. |
Key Cases Cited
- Epps v. JP Morgan Chase Bank, 675 F.3d 315 (4th Cir. 2012) (binding assignee to voluntarily chosen contract terms; not shielded by preemption when contract includes CLEC)
- Aguayo v. U.S. Bank, Inc., 653 F.3d 912 (9th Cir. 2011) (assignment of loan does not remove state protections under Rees-Levering Act; non-preemption under OCC savings clause)
- Thomas v. U.S. Bank, N.A., 575 F.3d 794 (8th Cir. 2009) (assignee banks subject to state claims against originated loans as well)
- Wells v. Chevy Chase Bank, F.S.B., 832 A.2d 812 (Md. 2003) ( Maryland allows incorporating external terms by reference; contract may define rights via external documents)
- Watters v. Wachovia Bank, N.A., 550 U.S. 1 (S. Ct. 2007) (preemption of national banks by federal law; states may regulate non-bank aspects of banking)