Garrett v. ReconTrust Company, N.A.
546 F. App'x 736
10th Cir.2013Background
- Garry Garrett sued after ReconTrust (a national bank) conducted a nonjudicial foreclosure sale of his Utah home, asserting Utah law barred Recon from acting as foreclosure trustee because Recon has no Utah offices.
- Recon is a national bank; its fiduciary activities are governed by 12 U.S.C. § 92a, which makes a national bank’s fiduciary powers coextensive with those of state banks in the “State in which the national bank is located.”
- The dispositive question was what “State” § 92a refers to when fiduciary acts span multiple states (here, Utah for the property and Texas for Recon’s operations).
- The OCC promulgated 12 C.F.R. § 9.7 in 2001 to interpret § 92a for multi-state fiduciary operations, identifying three core acts that locate a bank for § 92a purposes: (1) acceptance of the appointment, (2) execution of documents creating the relationship, and (3) discretionary decisions about fiduciary assets.
- The OCC (as amicus in a related panel) stated that if those acts occur in the bank’s home state (Texas here), the bank is “located” there for § 92a and may act as a foreclosure trustee even if the property state (Utah) restricts such trustees; Utah foreclosure conduct requirements (e.g., notice) still apply.
- The district court dismissed Garrett’s claims under Rule 12(b)(6); on appeal the Tenth Circuit affirmed, concluding Garrett failed to show the § 9.7 fiduciary acts occurred in Utah and thus Recon was "located" in Texas where the sale was permitted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which “State” § 92a refers to when fiduciary acts occur in multiple states | § 92a’s plain language points to the state where the property/foreclosure occurs (Utah) | § 92a is ambiguous; OCC regulations determine the state where the bank acts in a fiduciary capacity (Texas here) | Court: § 92a is ambiguous; apply OCC Rule 9.7 to determine the state |
| Whether OCC’s Rule 9.7 applies to nonjudicial foreclosure trustee roles | Rule 9.7 inapplicable because it covers express trusts with multi-state property only | OCC and Recon: Rule 9.7 covers multi-state fiduciary business including foreclosure trustee roles | Court: Rule 9.7 applies to scenario; OCC views are authoritative absent timely challenge |
| Whether Recon was “located” in Utah or Texas under Rule 9.7(d) | Garrett: the three fiduciary acts occurred in Utah (documents filed, sale in county of property) | Recon: the three acts (acceptance, execution, discretionary decisions) occurred in Texas; Garrett did not meaningfully contest this below | Court: Garrett failed to show the acts occurred in Utah; Recon was “located” in Texas |
| Whether a national bank located in another state may conduct a nonjudicial foreclosure despite property-state restrictions | Garrett: Utah law prohibiting out-of-state entities should block Recon | Recon/OCC: A national bank authorized by its located-state law may act interstate under § 92a; property-state may still impose conduct requirements | Court: A national bank may act if authorized by law of the state where it is located; affirmed for Recon (subject to Utah’s foreclosure conduct rules) |
Key Cases Cited
- Citizens & Southern Nat’l Bank v. Bougas, 434 U.S. 35 (word "located" not rigid)
- Clarke v. Securities Industry Ass’n, 479 U.S. 388 (agency charged with enforcement of banking laws)
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (deference framework for agency interpretations)
- Auer v. Robbins, 519 U.S. 452 (deference to agency interpretation of its own regulations)
- Decker v. Northwest Environmental Defense Center, 133 S. Ct. 1326 (limits on deference where interpretation is plainly erroneous)
- Gee v. Pacheco, 627 F.3d 1178 (standard of review for Rule 12(b)(6))
- Blaney v. Florida Nat’l Bank at Orlando, 357 F.2d 27 (competitive equality principle cited)
- Robinson v. Shell Oil Co., 519 U.S. 337 (textual interpretation in statutory context)
- In re Walker, 959 F.2d 894 (appellate courts generally do not consider issues not passed upon below)
- McDonald v. Kinder-Morgan, Inc., 287 F.3d 992 (arguments raised first on appeal ordinarily not considered)
- Murrell v. Shalala, 43 F.3d 1388 (perfunctory allegations insufficient for appellate review)
- Anderson v. State Farm Mutual Automobile Insurance Co., 416 F.3d 1143 (consideration of unappealed post-trial motion limited)