Last week, the Supreme Court granted review in a UCL preemption case, WFS Financial, Inc. v. Superior Court (De La Cruz), no. S145304. According to the main case screen, the case raises the following issue:
Are the provisions of the Rees-Levering Automobile Sales Finance Act (Civ. Code, § 2981 et seq.) that require a creditor to include certain disclosures in a notice of intent to dispose of a vehicle after it has been repossessed and that condition the creditor's right to seek a deficiency judgment on compliance with these requirements (Civ. Code, § 2983.2), preempted by the federal Home Owners' Loan Act (12 U.S.C. § 1461 et seq.) when the creditor is a federally chartered savings institution?
As explained in my original post on this case, the Court of Appeal held that because HOLA preempted the Rees-Levering Act as applied to federal savings and loan associations, the defendant's alleged Rees-Levering violation could not support a UCL "unlawful" prong claim. WFS Financial, Inc. v. Superior Court (De La Cruz), ___ Cal.App.4th ___, 44 Cal.Rptr.3d 561 (June 15, 2006) (Third Appellate District).
De La Cruz is to be contrasted with the McKell case, decided last week (and discussed in this post), in which the Court of Appeal held that HOLA did not preempt the plaintiff's UCL "unlawful" prong claim. In McKell, the "unlawful" prong claim was predicated on an alleged violation of a federal law (RESPA), whereas in De La Cruz, the "unlawful" prong claim was predicated on an alleged violation of a state law (the Rees-Levering Act):
Insofar as plaintiffs are using the UCL to enforce federal law as set forth in RESPA, they are not seeking to enforce “state laws affecting the operations of federal savings associations.” ([12 C.F.R.] § 560.2(a) [HOLA's preemption provision].) The UCL does not “purport to regulate or otherwise affect [a savings association’s] credit activities” (ibid.) but only provides a means of enforcing federal requirements. It thus is the type of state law not preempted by federal law.
McKell v. Washington Mutual, Inc., ___ Cal.App.4th ___ (Sept. 18, 2006) (slip op. at 29).
Many thanks to the reader who emailed to advise of this development.