Summary
The Washington Supreme Court held that federal regulation of federal savings associations did not preempt the McCurrys’ breach of contract, unjust enrichment, and Consumer Protection Act claims based on fax and notary fees charged in connection with reconveyance of a deed of trust. The court concluded that generally applicable contract and consumer protection laws had only an incidental effect on lending operations under 12 C.F.R. § 560.2(c). It also declined to adopt the federal plausibility standard for dismissal under Washington CR 12(b)(6), reversed the Court of Appeals, and remanded for further proceedings.
Topics
Practice areas
Questions Presented
- Whether Washington should replace its existing CR 12(b)(6) standard with the federal plausibility standard articulated in Twombly and Iqbal.
- Whether federal regulation of federal savings associations, particularly 12 C.F.R. § 560.2, preempts the McCurrys' state contract and Consumer Protection Act claims concerning fax and notary fees.
- Whether dismissal was appropriate on alternative grounds asserted by Chevy Chase.
Holdings
- Washington retains its existing CR 12(b)(6) standard and declines to adopt the federal plausibility standard from Twombly and Iqbal.
- The McCurrys' state contract claim was not preempted because it sought to enforce the parties' deed of trust, rather than regulate the amount or permissibility of loan-related fees, and any effect on lending operations was only incidental.
- The Consumer Protection Act claim survived preemption to the extent it was based on an alleged misrepresentation of the deed-of-trust terms; it would be preempted to the extent it directly regulated how or when loan-related fees could be charged.
- The court declined to consider Chevy Chase's alternative grounds for dismissal because the trial court had dismissed solely on preemption grounds and no factual record had yet been developed on the alternatives.
Key quotations
“But these laws are generally applicable with only an incidental effect on lending operations, thus we reverse and remand the case to the trial court for further proceedings consistent with this opinion.” (96)
“We decline.” (101-102)
“State contract law does not purport to impose requirements on loan-related fees; state contract law instead requires parties to adhere to the terms of their contracts.” (104-105)
“Because the state contract law and the CPA, to the extent the CPA claim is based upon the contract, are generally applicable laws with only incidental effect on lending operations, they are not preempted.” (109)
Factual background
Anne and Chris McCurry conveyed a deed of trust to Chevy Chase Bank, FSB. In a payoff statement for reconveyance of title, Chevy Chase included a $20 fax fee and a $2 notary fee, which the McCurrys paid. They alleged that the deed of trust did not permit those fees and asserted breach of contract, unjust enrichment, and a Consumer Protection Act claim based on an alleged misrepresentation that payment was required under the deed of trust.
Procedural history
The King County Superior Court dismissed the McCurrys' claims, concluding that federal regulation of federal savings associations preempted the state laws supporting them. The Court of Appeals affirmed in McCurry v. Chevy Chase Bank, FSB, 144 Wn. App. 900, 193 P.3d 155 (2008). The Washington Supreme Court reversed and remanded because the contract and consumer-protection theories, as pleaded, were not preempted, and it declined to reach alternative grounds for dismissal without a developed factual record.
Remand instructions
Remand to the trial court for further proceedings consistent with the opinion. The trial court may address Chevy Chase's alternative grounds for dismissal after development of an appropriate factual record.