JPMorgan Chase Bank v. Daniel Johnson
719 F.3d 1010
8th Cir.2013Background
- JPMorgan Chase, a nationally chartered bank, attempted non-judicial foreclosures in Arkansas using the Arkansas Statutory Foreclosure Act (SFA).
- Arkansas amended the SFA in 2003 to add § 18-50-117: entities may not use the SFA "unless authorized to do business in this state."
- Several homeowners (and Chapter 13 debtors) disputed JPMorgan's use of the SFA because JPMorgan was not registered with the Arkansas Secretary of State or Arkansas Bank Department; bankruptcy court held JPMorgan was not "authorized" and disallowed foreclosure fees in plan arrearages.
- District court reversed, reasoning § 18-50-117 is ambiguous as to how authorization may be conferred and that authorization can come from federal law; it concluded the National Bank Act (NBA) authorizes JPMorgan to do business in Arkansas and that foreclosure is incidental to mortgage lending.
- Eighth Circuit affirmed: state registration is not the exclusive route to be "authorized to do business" under § 18-50-117, and the NBA (as interpreted with OCC authority and incidental powers) authorizes national banks like JPMorgan to use the SFA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 18-50-117 requires state registration as the exclusive means to be "authorized to do business" in Arkansas to use the SFA | Homeowners: "authorized" means state registration (Secretary of State or Bank Dept.) | JPMorgan: "authorized" can include federal authorization; statute ambiguous | Held: Ambiguous; state registration not exclusive; federal authorization possible |
| Whether the NBA authorizes a national bank to use Arkansas's non-judicial foreclosure procedures | Homeowners: NBA permits judicial foreclosure but not use of state statutory non-judicial foreclosure (SFA) | JPMorgan: NBA grants mortgage lending power and incidental powers necessary to foreclose, including use of state SFA | Held: NBA authorizes JPMorgan; foreclosure is incidental to mortgage lending and SFA use is permitted |
| Whether OCC regulations or § 34.4(b) exclude SFA-related activities from incidental powers | Homeowners: § 34.4(b) lists areas (contracts, debt collection, property transfer) not preempted, implying they are not incidental federal powers | JPMorgan: Regulation lists state law not preempted; it does not cabin incidental powers or forbid SFA use | Held: Regulation does not negate incidental powers; homeowners' reading is incorrect |
| Whether JPMorgan must register under state-specific banking statutes to invoke SFA | Homeowners: Related statutes (Wingo Act, Branching Act) show legislature knows how to require registration and intended to do so here | JPMorgan: Absence of an express state-registration requirement in SFA means authorization can derive from federal law | Held: Because legislature omitted an express registration requirement in SFA, registration is not the exclusive means; federal authorization suffices |
Key Cases Cited
- Watters v. Wachovia Bank, N.A., 550 U.S. 1 (2007) (federal supervision of national banks shields them from duplicative state regulation)
- Beneficial Nat'l Bank v. Anderson, 539 U.S. 1 (2003) (federal law can preempt conflicting state regulation of national banks)
- Barnett Bank of Marion Cnty., N.A. v. Nelson, 517 U.S. 25 (1996) (grants of federal banking powers preempt contrary state law when they would significantly interfere)
- Davis v. Elmira Savings Bank, 161 U.S. 275 (1896) (national banks remain subject to state laws of general application that do not conflict with federal law)
- First Nat'l Bank of E. Ark. v. Taylor, 907 F.2d 775 (8th Cir. 1990) (incidental powers are those closely related to express powers and useful to carry on banking business)