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TitleMax of Del., Inc. v. Weissmann

TitleMax of Del., Inc. v. Weissmann

United States Court of Appeals for the Third Circuit

December 8, 2021, Argued; January 24, 2022, Filed

No. 21-1020

Opinion

OPINION OF THE COURT

SHWARTZ, Circuit Judge.

In this case, we are required to determine whether applying Pennsylvania usury laws to an out-of-state lender violates the dormant Commerce Clause. We conclude that it does not.

TitleMax Delaware, TitleMax Virginia, TitleMax Ohio, and TMX Finance Virginia (collectively "TitleMax") provide motor vehicle loans. When any customer, including a Pennsylvanian, seeks a loan from TitleMax, "[t]he entire loan process—from the application to the disbursement of funds—takes place . . . at one of TitleMax's brick-and-mortar locations . . . . If a loan is approved and TitleMax [*2]  is the lender, TitleMax and the borrower execute a loan agreement . . . and the borrower receives the loan proceeds," App. 19, in the form of "a check drawn on a bank outside of Pennsylvania," App. 96. The loan agreement sets forth an interest rate as high as 180% and terms to secure the loan.

Under the agreement, the borrower grants TitleMax a security interest in the vehicle. To perfect the lien, the borrower provides TitleMax with the vehicle identification number, license plate number, and title certificate number. TitleMax then records its lien on the motor vehicle with the appropriate state authority, such as the Pennsylvania Department of Transportation ("PennDOT").

In addition to perfecting the lien in the borrower's state, TitleMax conducts servicing activities there, such as collecting payments, sending "phone calls[] or text messages," and "repossess[ing vehicles]." App. 326, 337. Borrowers can make payments while physically present in their home state in a variety of ways, including mailing, calling TitleMax to use a debit card, or visiting a "local money transmitter . . . to have fees transmitted to a TitleMax location." App. 181, 339.

TitleMax does not dispute that, prior [*3]  to 2017, it engaged in these activities with Pennsylvania residents and repossessed vehicles located in Pennsylvania when a Pennsylvania-resident borrower defaulted.

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2022 U.S. App. LEXIS 1937 *; 24 F.4th 230

TITLEMAX OF DELAWARE, INC., d/b/a TitleMax; TITLEMAX OF OHIO, INC., d/b/a TitleMax; TITLEMAX OF VIRGINIA, INC., d/b/a TitleMax; TMX FINANCE OF VIRGINIA, INC. v. ROBIN L. WEISSMANN, in Her Official Capacity as Secretary of the Pennsylvania Department of Banking and Securities, Appellant

Prior History:  [*1] On Appeal from the United States District Court for the District of Delaware. (D.C. Civil No. 1:17-cv-01325). Magistrate Judge: Honorable Mary Pat Thynge.

TitleMax of Del., Inc. v. Weissmann, 505 F. Supp. 3d 353, 2020 U.S. Dist. LEXIS 229025, 2020 WL 7186833 (D. Del., Dec. 7, 2020)

CORE TERMS

interstate commerce, subpoena, borrower, abstention, consumers, contempt, loans, local benefit, transactions, residents, lender, extraterritorial, regulates, interest rate, repossessed, in-state, violates, dormant

Civil Procedure, Summary Judgment, Entitlement as Matter of Law, Appropriateness, Judgments, Entitlement as Matter of Law, Appeals, Summary Judgment Review, Standards of Review, Standards of Review, De Novo Review, Genuine Disputes, Preliminary Considerations, Federal & State Interrelationships, Abstention, Constitutional Law, Congressional Duties & Powers, Commerce Clause, Dormant Commerce Clause, Limitations, Interstate Commerce, Tests, Real Property Law, Financing, Mortgages & Other Security Instruments, Usury