Alert January 29, 2008

Federal Trial Court Grants Motion to Dismiss TILA and California UCL Challenges to Payment Option Loans

In the first merits decision in more than 30 putative class actions challenging so-called “payment option” loans, a California federal court granted the lender’s motion to dismiss in its entirety. Bigverdi v. Countrywide Bank FSB involved Truth in Lending Act, California Unfair Competition Law and common law challenges to payment option loans. In dismissing the claims, the court accepted all of Countrywide’s arguments for dismissal, including that (1) plaintiffs’ state law challenges to the loans were preempted under TILA, the National Bank Act and the Home Owners’ Loan Act, and (2) plaintiffs failed to state a claim for violation of the UCL. Goodwin Procter partners Tom Hefferon, David Permut and Brooks Brown represented Countrywide. Click here for a copy of Bigverdi v. Countrywide Home Loans, Inc., C.D. Cal. No. 07-3454-AHS (FMOx) (Jan. 8, 2008), and here for defendant’s briefs which amplify the grounds for the order.