Sheppard Mullin Financial Institutions Law Blog

Question: May a non-California consumer loan company enforce a non-California choice of law provision in its loan agreements to avoid application of the California Financial Lenders Law?

Answer: No, according to the Fourth District court of appeal in Brack v. Omni Loan Company, Ltd. (D049198), decided June 17, 2008.  There, a Nevada loan company unsuccessfully sought a ruling from the Commissioner of Corporations to make loans in California to nonresident members of the military without complying with California's Finance Lenders Law.  Nonetheless, it  opened various loan offices in California to make such loans.  (When California residents entered, they were directed to a computer to go on line to contact an affiliate.)

Question:        Section 484(a) of the National Bank Act provides that, "[n]o National Bank shall be subject to any visitorial powers except as authorized by Federal law."  Does this statute, which preempts state laws of general application that conflict with the letter or purposes of the NBA, also apply to operating subsidiaries of National Banks?

Question:        Are the preference provisions of section 1800 of the Code of Civil Procedure regarding a general assignment for the benefit of creditors preempted by federal bankruptcy law?