Lender TitleMax Loses Appeal in Bid to Block Dallas Ordinance

TitleMax, among the nation’s largest title lending companies, fell short in its case before a federal appeals court challenging a Dallas law restricting short-term lending.

TitleMax failed to show it was likely to prevail on its claims that the Dallas ordinance, expanded in 2021, violated the company’s due process rights or that it was preempted by state law, the US Court of Appeals for the Fifth Circuit ruled Tuesday.

“Although we agree that the district court erred in applying the heightened standard of proof applicable to mandatory injunctions, we conclude that even under the lower standard of proof applicable to prohibitory injunctions, TitleMax has not shown the requisite likelihood of success,” the majority opinion, authored by Judge Priscilla Richman, said.

TitleMax didn’t immediately respond to a request for comment.

Dallas in 2011 issued an ordinance regulating “credit access businesses” physically located in the city, limiting the amounts that could be loaned relative to a borrower’s income, among other restrictions.

A decade later, the city expanded the regulatory framework to include “credit services organizations” and it imposed new restrictions on fees and other loan terms. TitleMax arranges title-secured loans and unsecured loans that are both covered by the revised policy, according to the ruling.

Dallas at the time said the amended ordinance was intended in part to “to assist low-income borrowers and limit the abusive and predatory terms of loan broker fees, assessments, and charges,” according to the Fifth Circuit’s opinion.

TitleMax argues the amended ordinance severely harmed its business in Dallas. The company sought a ruling that the city exceeded its powers and that the local policy improperly prohibits operation of a business authorized by Texas statutes.

But a city ordinance can’t be preempted just because one business is unable to profitably comply while competitors might, the Fifth Circuit said, upholding a ruling from the US District Court for the Northern District of Texas.

In addition, TitleMax failed to assert a constitutionally protected interest in the case, the majority opinion said. The company’s due process claims ignore “both Texas’s and the nation’s long tradition of prohibiting usury and excluding it from the freedom of contract,” the panel said.

In a dissenting opinion, Judge Don R. Willett said he concurs with the majority on TitleMax’s due-course-of-law claim but disagrees with the ruling on preemption. The amended Dallas ordinance “makes it effectively impossible for TitleMax to operate its unsecured-loans business,” Willett said, calling it a “virtual prohibition.”

Judge Jacques L. Wiener Jr. also sat on the panel.

TitleMax in 2023 agreed to pay $15 million in a separate case to resolve claims from the Consumer Financial Protection Bureau that the company issued thousands of auto title loans to military service members above a federally mandated 36% interest rate cap and tried to conceal the loans.

Frost Brown Todd LLP represents TitleMax.

The case is TitleMax of Texas v. City of Dallas, 5th Cir., 21-11170, 7/1/25.