John F. Nalore and Norma L. Nalore v. San Diego Federal Savings and Loan Association

The Nalores purchased property in 1976, subject to San Diego Federal Savings and Loan Association’s loan to the previous owners. The loan, negotiated in 1973 at 8% interest, was secured by a promissory note and trust deed with a due-on-sale clause.

In 1977 San Diego Federal demanded an increase in the interest rate and a transfer fee. It exercised the due-on-sale clause when the Nalores refused its demands.

The Nalores sought declaratory and injunctive relief in state court and obtained a temporary restraining order enjoining the foreclosure attempt.

San Diego Federal removed the case to federal court under 28 U.S.C. § 1441 (b), asserting that the suit arose under federal law within the meaning of 28 U.S.C. § 1331 (a), and under an act of Congress regulating commerce within the meaning of 28 U.S.C. § 1337 .

The district court denied the plaintiffs’ motion for remand and for injunctive relief. Finding that the Home Owners Loan Act of 1933, 12 U.S.C. §§ 1461-1468 , preempted state prohibition of due-on-sale clauses, the court granted summary judgment to the defendants.

Plaintiffs appeal under 28 U.S.C. § 1291 . They contend that the district court lacked jurisdiction because…