Interest rate caps
TMX Finance Corporate Services Inc. vs. Spicher
Date: Jan. 9, 2026
Issue: Whether TMX Finance Corporate Services Inc. (TMX FCS) can use Texas federal courts to challenge Pennsylvania’s enforcement of its consumer-lending interest-rate cap.
Case Summary: In a unanimous decision, a Fifth Circuit panel affirmed the dismissal of TMX FCS’s lawsuit challenging a $52 million enforcement action by Pennsylvania’s Department of Banking and Securities (the department) over its alleged lending practices.
TMX FCS is an affiliate of TitleMax, one of the largest title lending companies in the U.S. In 2017, the department launched an investigation into several TitleMax-affiliated entities. After issuing multiple subpoenas and conducting years of discovery, the department issued an order to show cause (OSC) against TitleMax. The department sought more than $52 million in monetary sanctions for allegedly entering into and enforcing loan agreements with Pennsylvania consumers in violation of the state’s usury laws.
Afterward, TMX FCS sued the department seeking equitable relief from the state enforcement action. In August 2024, TMX FCS sued the department in the Northern District of Texas, arguing the OSC violated the U.S. Constitution because, as a separate corporate entity, it does not engage in lending activity, and the department failed to allege any wrongful conduct by TMX FCS itself.
Judge David Godbey dismissed the case under Younger abstention. This doctrine directs federal courts to avoid hearing cases that would interfere with ongoing state criminal, civil, or administrative proceedings, in recognition of federalism and comity.
The panel rejected TMX FCS’s argument that the district court erred by failing to make a threshold determination in the Younger abstention analysis, as well as its broader merits challenges. TMX FCS contended that courts must first determine whether a parallel state proceeding falls into one of three categories: state criminal prosecutions, civil enforcement proceedings, or civil proceedings involving orders that uniquely further a state court’s ability to perform its judicial functions. The panel explained, however, that it reviews judgments rather than a district court’s reasoning and may affirm when the result is legally correct. Applying that approach, the court concluded that the Pennsylvania OSC qualified as a civil enforcement proceeding, satisfying the threshold requirement.
The panel then applied Younger’s three-factor framework and held that abstention was appropriate because the federal suit would interfere with an ongoing state enforcement action, Pennsylvania has a strong interest in enforcing its usury laws, and TMX FCS had an adequate opportunity to raise its constitutional challenges in the state proceedings. The court rejected arguments that the state case was no longer ongoing, that TMX FCS sought only prospective relief, and that personal jurisdiction or Dormant Commerce Clause concerns defeated abstention. Because TMX FCS could and did raise its constitutional objections before the state tribunal and through state judicial review, the panel affirmed dismissal.
Bottom Line: The panel ruled that TMX FCS cannot use Texas federal courts to challenge Pennsylvania’s usury-law enforcement.
Documents: Opinion
