Supreme Court gives homeowners
another chance in escrow dispute
with Bank of America
The court unanimously threw out an appeals court ruling in favor of Bank of America, which has refused to pay interest on money it collects to pay borrowers’ insurance and property tax bills. New York requires banks to pay at 2% interest on escrowed funds.
Thirteen other states have similar laws: California, Connecticut, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, Oregon, Rhode Island, Utah, Vermont and Wisconsin.
A federal judge initially ruled in favor of the borrowers, but the federal appeals court in New York granted Bank of America’s request to dismiss the suits, arguing that the federal law governing national banks does not permit such state-by-state regulation.
Justice Brett Kavanaugh wrote for the Supreme Court that the appeals court did not perform the kind of nuanced analysis required by federal law and prior Supreme Court decisions to determine if a state law must give way to a federal statute.
In particular, Kavanaugh noted that the Dodd-Frank Act, enacted after the 2008 financial crisis, made clear that not all state banking laws are pre-empted.
Jonathan Taylor, who argued the case for the homeowners, said in an email that the decision is a victory for consumers because it “vindicates Congress’ determination in Dodd-Frank to rein in the kind of aggressive preemption of state consumer-financial laws that helped lead to the financial crisis.”
Bank of America did not immediately comment on the decision.
NRA can sue ex-NY official it says
tried to blacklist it after Parkland shooting,
Supreme Court says
Giving the NRA a new chance to prove its case, Justice Sonia Sotomayor wrote that “the critical takeaway is that the First Amendment prohibits government officials from wielding their power selectively to punish or suppress speech.”
The NRA said ex-New York state Department of Financial Services Superintendent Maria Vullo violated its free-speech rights during her investigation of NRA-endorsed insurance policies. The group had been working with insurance companies to offer its members Carry Guard policies that covered losses caused by firearms, even when the insured person intentionally killed or hurt somebody. Critics have called the policies “murder insurance.”
In an unusual alignment, the NRA was represented in the case by the American Civil Liberties Union, and the Biden administration argued some of its claims should go forward.
The high court ruling favoring the NRA reverses a lower-court decision tossing out the gun rights group’s lawsuit against Vullo. The decision means the NRA’s lawsuit can go forward, but it does not decide the merits of the claim. It also should not be read to shield the NRA and other advocacy groups from regulation, Sotomayor said.
But, she wrote, the NRA’s complaint “plausibly alleges that Vullo threatened to wield her power against those refusing to aid her campaign to punish the NRA’s gun-promotion advocacy. If true, that violates the First Amendment.”
Vullo argued that she rightly investigated NRA-endorsed insurance policies. She said she did speak out about the risks of doing business with gun groups but didn’t exert any improper pressure on companies, many of which were distancing themselves from the NRA on their own at the time.
The NRA said Vullo leveraged a state investigation into the legality of NRA-endorsed insurance products to pressure insurance companies, saying she would go easier on them if they cut ties with the group.
The products clearly violated state law, Vullo said, including by covering intentional acts and criminal defense costs. The probe started before the Parkland massacre, which left 17 people dead, and the insurance providers ultimately agreed to pay $7 million and $1.3 million fines.
Vullo also sent out guidance letters to banks and insurance companies warning about the “reputational risks” of working with the NRA. The NRA said her words had significant sway because of her position and several companies cut ties with the group, costing it millions of dollars in revenue.
Vullo said the letters were evenhanded, and her attorney argued that letting the lawsuit go forward would improperly muzzle public officials.
