In a significant victory for bank-fintech partnership models, the Los Angeles County Superior Court on May 19, 2026 has now issued its final Statement of Decision granting summary judgment in favor of Opportunity Financial, LLC (“OppFi”) in its long-running litigation with the California Department of Financial Protection and Innovation (“DFPI”). The final opinion follows the court’s February 24, 2026 tentative ruling, which we previously discussed on this blog.
The case, Opportunity Financial, LLC v. Hewlett, concerns loans originated by Utah-chartered FinWise Bank through OppFi’s lending platform. DFPI alleged that OppFi, not FinWise, was the “true lender” and therefore subject to California’s Fair Access to Credit Act (“AB 539”), which caps interest rates on certain consumer loans at 36%.
The court ultimately rejected DFPI’s position and concluded that the record did not support DFPI’s claim that FinWise was merely a “dummy” lender or that the bank-fintech arrangement was a sham designed to evade California usury limits.
Court Focuses on Whether the Loans Were “Usurious at Inception”
The court framed the dispositive issue as whether the loans were usurious when made. Relying heavily on longstanding California usury precedent, including Sharp v. Mortgage Security Corp. of America, Strike v. Trans-West Discount Corp., Montgomery v. GCFS, and WRI Opportunity Loans II LLC v. Cooper, the court reiterated the traditional principle that a loan “not usurious in its inception does not become usurious by subsequent events.”
Applying that principle, the court concluded that DFPI failed to raise a triable issue of material fact showing that FinWise was merely a sham lender. The court emphasized multiple undisputed facts demonstrating FinWise’s substantive lending role, including:
- FinWise was identified as the lender on the promissory notes;
- FinWise independently underwrote and approved the loans;
- FinWise funded the loans with its own money;
- FinWise retained ownership interests in the receivables;
- FinWise bore economic risk and received financial benefits from the program;
- FinWise controlled marketing approvals and compliance oversight; and
- FinWise conducted ongoing audits and supervision of OppFi.
The court contrasted these facts with the classic “dummy lender” arrangement in Janisse v. Winston Investment Co., where the purported lender contributed no capital, bore no risk, and merely served as a nominal intermediary.
Court Rejects DFPI’s Receivables and Funding Arguments
One of DFPI’s principal arguments was that OppFi’s prearranged purchase of loan receivables effectively made OppFi the real lender. The court rejected that theory, explaining that California law and federal law both recognize that a valid loan does not become usurious merely because receivables are later assigned or sold.
Importantly, the court again relied on Section 27 of the Federal Deposit Insurance Act and the FDIC’s “valid-when-made” regulation, 12 C.F.R. § 331.4(e), which provides that the permissibility of interest is determined when the loan is made and is not affected by a subsequent sale or transfer of the loan.
The court also rejected DFPI’s attempt to argue that OppFi effectively funded the loans because OppFi affiliates maintained collateral accounts tied to receivable purchases. The court found no evidence that OppFi’s funds were actually used to originate the loans and noted evidence showing the collateral accounts were often insufficient to cover FinWise’s funding obligations.
Court Declines to Reach Broader Statutory and APA Issues
Although OppFi advanced multiple independent grounds for summary judgment, including arguments that:
- the California Financing Law’s bank exemption independently barred DFPI’s claims, and
- DFPI’s “true lender” theory constituted an unlawful underground regulation under the California Administrative Procedure Act,
The court expressly stated that it was unnecessary to reach those issues because OppFi prevailed on the “dummy lender” analysis alone.
That aspect of the ruling is noteworthy because it leaves unresolved broader questions regarding the legality of DFPI’s asserted “true lender” doctrine under California administrative law.
Important Changes from the Tentative Decision
The final Statement of Decision appears largely consistent with the court’s February 24 tentative ruling, but several notable refinements and additions were made before entry of the final decision.
1. Expanded Discussion of Federal Preemption and FDIC Regulations
The final opinion adds more extensive discussion of Section 27 of the FDIA and the FDIC’s interest-rate exportation regulations, including explicit citation to 12 C.F.R. § 331.4(e). The court emphasized that interest permissibility is determined at origination and is unaffected by subsequent loan sales or assignments.
The final opinion also strengthened its discussion of potential federal preemption concerns, stating that interpreting California law to invalidate loans after assignment “may stand as an obstacle to the full purposes and objectives of Congress.”
2. Greater Reliance on Prior Preliminary Injunction Findings
The court repeatedly incorporated and reaffirmed factual findings from its October 30, 2023 order denying DFPI’s preliminary injunction motion. The final decision expressly states that DFPI failed to provide any basis for the court to reconsider those earlier determinations regarding FinWise’s substantive role in the lending program.
3. More Detailed Rejection of DFPI’s Evidentiary Arguments
The final decision methodically addressed each of DFPI’s remaining factual theories concerning receivables sales, title transfers, collateral accounts, and underwriting control. The court repeatedly characterized DFPI’s theories as unsupported speculation insufficient to create a triable issue of material fact.
4. Clarification that the Decision Resolves the Entire Case
The final opinion expressly notes that both parties agreed during the summary judgment hearing that granting OppFi’s motion would dispose of the entire case.
Implications
The decision represents one of the most important state-court victories to date for bank-fintech partnership programs facing “true lender” attacks by state regulators. The court’s analysis strongly reinforces several principles that have become central to modern bank partnership litigation:
- loans are evaluated for usury at inception;
- subsequent assignment of receivables does not retroactively create usury;
- federally insured state banks retain broad authority under Section 27 to export interest rates; and
- courts will examine whether the bank meaningfully participates in underwriting, funding, compliance, and risk retention when evaluating “true lender” claims.
The ruling will likely be cited extensively in future litigation involving state efforts to challenge bank-fintech lending programs. At the same time, because the court declined to decide the broader APA and statutory interpretation issues, those questions may continue to surface in future California enforcement actions and litigation.
An appeal by DFPI to the California Court of Appeals, Second Appellate District appears highly likely. DFPI has 60 days to file an appeal.