Non-California Loan Company Could Not Enforce Nevada Choice Of Law Provision To Avoid Californ

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 Californias 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.)

Plaintiff Joshua W. Brack was a nonresident member of the military who applied for a loan in one of Omnis California offices.  The loan agreement he signed included a Nevada choice of law provision.  After Brack repaid his loan, he filed a class action against Omni contending that its lending practices violated the Finance Lenders Law.  Omni defended by asserting the Nevada choice of law provision.  The trial court ruled in Omnis favor, holding that California had no fundamental interest that would override choosing Nevada law.

The Fourth District reversed.  It held the Nevada choice of law provision was unenforceable because even though Omnis status as a Nevada corporation meant there was a "substantial relationship" with Nevada that would render the choice of California law reasonable, enforcing such a provision would violate the fundamental California public policy.  The Court noted that in enacting the Finance Lenders Law, the California Legislature made clear that the legislation was a matter of significant importance to the State and could not be waived.

Authored by:

Robert J. Stumpf, Jr.

(415) 774-3288

rstumpf@sheppardmullin.com

Read more detail on Legal News Directory – Banking and Finance law

Legal notice about the Non-California Loan Company Could Not Enforce Nevada Choice Of Law Provision To Avoid Californ rubric : Hukuki Net Legal News is not responsible for the privacy statements or other content from Web sites outside of the Hukuki.net site. Please refer the progenitor link to check the legal entity of this resource hereinabove.

Do you need High Quality Legal documents or forms related to Non-California Loan Company Could Not Enforce Nevada Choice Of Law Provision To Avoid Californ?

This entry was posted in Banking and Finance law and tagged , , , , , , , , , . Bookmark the permalink.

Leave a Reply