Pennsylvania Department of Banking v. NCAS of Delaware, LLC

Summary

The Supreme Court of Pennsylvania considered whether NCAS of Delaware, LLC violated the Consumer Discount Company Act by charging Pennsylvania borrowers a monthly participation fee in connection with a line of credit. The court held that the statutory provision aggregates interest and other charges when determining whether an unlicensed lender exceeded Pennsylvania's six-percent limit, and that the contractual Delaware choice-of-law provision could not bind the Department of Banking in its enforcement action. The court affirmed the Commonwealth Court's permanent injunction.

Holdings

1. A private contractual choice-of-law provision cannot bind the Department of Banking or exempt a lender from investigation and enforcement of Pennsylvania's public policy against usurious lending when the Department acts pursuant to its statutory police power.
2. Section 3.A prohibits an unlicensed lender making loans under $25,000 from charging interest and any other additional charges that, in the aggregate, exceed 6% annual simple interest; the statutory phrase referring to the amount actually loaned or advanced modifies the benchmark interest, not every listed charge.
3. A lender may violate the Consumer Discount Company Act independently of violating the Loan Interest and Protection Law because the Consumer Discount Company Act aggregates interest with fees and other charges, while the Loan Interest and Protection Law addresses interest alone.

Questions Presented

1. Whether NCAS's contractual Delaware choice-of-law provision bound the Department of Banking in an enforcement action brought under Pennsylvania's police-power authority.
2. Whether Section 3.A of the Consumer Discount Company Act aggregates fees and other charges with interest when determining whether an unlicensed lender exceeded the permissible rate.
3. Whether a violation of the Consumer Discount Company Act requires a separate violation of the Loan Interest and Protection Law.

Disposition

affirmed