TOLEDO COURT FINDS PREDATORY LENDING ORDINANCES INVALID
The Court of Common Please of Lucas County granted the American Financial Services Association motion for summary judgment concluding that the Toledo predatory lending ordinances were in direct conflict with Ohio law and that therefore Ohio law preempts the Toledo ordinances. American Financial Services Association v. City of Toledo, Ohio, Case No. C1 03-1547 (C.P. Lucas County July 21, 2004).
AFSA sought summary judgment on the basis that the Toledo ordinances conflict with Ohio H.B. 386 and therefore are preempted under Ohio Constitutional law. H.B. 386 was enacted in 2002 and contains predatory lending provisions. Under the Home Rule Amendment to the Ohio Constitution local governments are authorized to exercise all powers of local self-government and are permitted to adopt police regulations that are not in conflict with state general laws.
The court found specific areas of conflict between the Toledo ordinances and various provisions of Ohio law enacted in H.B. 386. In reaching its conclusion the court found that (i) the city’s predatory lending ordinances are an exercise of police powers, (ii) state lending laws such as those contained in H.B. 386 are general laws and (iii) the Toledo ordinances conflict with provisions of H.B. 386. The court found that the provisions of the ordinance that conflict with state law were not capable of being severed.
The court noted that its conclusions were consistent with court decisions regarding the Dayton and Cleveland predatory lending ordinances.
Although the court stated that AFSA argued that the ordinances put the city in direct conflict with the wide range of state lending laws, the court only looked to the predatory lending provisions of H.B. 386 to find conflict.
Based on the findings of direct conflict, the court held the Toledo ordinances invalid under the Home Rule Amendment. The court order is final and appealable.
For more information regarding this ALERT, please contact Elizabeth Anstaett at (614) 628-1604 or [email protected] or Darrell Dreher at (614) 628-1601 or [email protected].
Darrell Dreher and Elizabeth Anstaett