California Holiday Statutes Preempted by OCC Regs
In Miller v. Bank of America, N.A. (USA), the Third District California Court of Appeal has held that California's holiday statutes, which extend the time to perform an act if the performance would fall on a holiday, does not extend the time for a credit card payment, because the holiday statutes are preempted by federal law.
In Miller, a putative class action, plaintiffs were credit card customers of Bank of America, a national bank. Plaintiffs alleged that so-called holiday statutes in California and Arizona prohibited Bank of America from charging late fees or interest on payments posted after a holiday, where the payment would not have been late absent the holiday. Plaintiffs alleged three violations of California Business and Professions Code §17200, one violation for each holiday statute at issue: California Civil Code §§9 and 11; and Arizona revised statutes §1-303. The trial court sustained Bank of America's demurrer without leave to amend, holding the holiday statutes are preempted by federal law. Plaintiffs appealed.
On appeal, the Court of Appeal affirmed, holding that the California holiday statutes are preempted by 12 C.F.R. §7.4008(d), OCC regulations governing non-real estate lending by National Banks, implementing the National Bank Act. Specifically, the Court held that Section 7.4008(d) provides that a National Bank "may set the schedule for repayment on non-real estate loans [and set the payments due] without regard to state law limitations.”
The Court also specifically rejected plaintiffs' arguments that the holiday statutes fall within the preemption exemption provision of 12 C.F.R §7.4008(e).
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