In Perez v. Midland Funding, LLC, 2010 WL 4117461 (N.D.Cal. 2010), Judge Koh held that the National Bank Act and OCC regulations pre-empted Rees-Levering’s disclosure requirements that afford post-repossession reinstatement/redemption rights to consumers who have had their vehicles repossessed. Judge Koh followed the Aguayo decision, and held that:


Thus, although this Court agrees with the holding of Alkan, it is the holding of Aguayo that applies in this case. The National Bank Act “contemplates broad participation by the national banks in lending activities,” including “not only creating loans, but also purchasing, participating in, and dealing loans.” Aguayo, 658 F.Supp.2d at 1234. Indeed, several of the lending activities specifically listed in the OCC’s express preemption provision extend beyond the loan origination process to the bank’s ongoing relationship with the debtor. See § 7.4008(d)(2)(iv) (“circum-stances under which a loan may be called due”); § 7.4008(d)(2) (viii) (“billing statements”); § 7.4008(d)(2)(ix) (“[d]isbursements and repayment”). This suggests that national banks’ lending powers, and the scope of OCC preemption, encompass the entire lender-debtor relationship, from the initial ex-tension of credit to its repayment, withdrawal, or re-instatement. Here, the ASFA post-repossession no-tice requirements are part of the ongoing lending relationship between the buyer of the vehicle and the lender. The ASFA’s post-repossession provisions do not regulate the methods a bank may use to repossess a vehicle or collect a deficiency after the vehicle is sold; rather, they ensure notice to the buyer of what steps she must take to restore her credit relationship and either redeem her vehicle (thereby concluding her credit relationship) or reinstate her installment contract (thereby continuing the credit relationship). As such, the notice required by the ASFA is a “credit related document” as described in the OCC’s express preemption clause. 12 C.F.R. § 7.4008(d)(2) (viii). The ASFA clearly requires the holder of the contract to make nine specific disclosures in that document. Cal. Civ.Code § 2983.2(a) (1)-(9). Accordingly, the ASFA post-repossession notice provision is a state law concerning “[d]isclosure …, including laws requiring specific statements, information, or other content to be included in … credit-related documents,” and the Court must conclude that it is expressly preempted by the OCC regulation. 12 C .F.R. § 7.4008(d)(2) (viii).


Judge Koh rejected the argument that the defendant voluntarily subjected itself to Rees-Levering’s regulation, explaining:


In this case, Plaintiff’s claims are predicated not on privately ordered contract terms, but on violations of obligations imposed by the state of California in the Rees-Levering Act. Moreover, to the extent that a bank may contractually obligate itself to comply with preempted state laws-an issue this Court need not decide-the Court does not agree that the general references in the installment contract to California law and “notices required by law” are sufficient to bind Wells Fargo to specific statutory notice requirements that it is otherwise free to disregard. The Wolens Court stated that the “distinction between what the State dictates and what the airline itself undertakes confines courts, in breach-of-contract actions, to the parties’ bargain, with no enlargement or enhancement based on state laws or policies external to the agreement.” Id. at 233. In this case, to find Wells Fargo contractually obligated to comply with the ASFA notice requirements would enhance the private terms of the contract and subject the bank to state-imposed obligations that are federally pre-empted. [para.] Under OCC regulations, Wells Fargo was entitled to “make non-real estate loans without regard to state law limitations” concerning disclosures and free of state laws that condition its ability to fully exercise its lending powers. 12 C.F.R. § 7.4008(d) (1)-(2). The OCC regulations preempt the post-repossession notice requirements of the Rees-Levering Act, and the language of the contract Wells Fargo assumed from the dealership does not change that. Because Wells Fargo was not required to comply with the Rees-Levering Act, any alleged non-compliance with the Act’s notice requirements cannot serve as a bar to collection of a deficiency by Wells Fargo or its as-signees. It follows that Plaintiff’s claims against Defendant Midland Funding, which are premised on Well’s Fargo’s non-compliance, lack a cognizable legal theory. Johnson v. Riverside Healthcare System, LP, 534 F.3d 1116, 1121 (9th Cir.2008). Accordingly, Plaintiff’s claims under the FDCPA and the UCL must be dismissed. Because no facts alleged could cure the preemptive effect of the OCC regulations, the Court finds that amendment would be futile. The Court therefore GRANTS Defendant’s motion to dismiss these claims with prejudice.


The decision of Aguayo v. U.S. Bank, 658 F.Supp.2d 1226 (S.D.Cal.2009), on which this decision relied heavily, is currently on appeal before the Court of Appeals for the Ninth Circuit.  The Aguayo briefing before the Ninth Circuit is here:  Opening Brief, Answering Brief, and Reply Brief.