Case Information
*3 Before BYE, MELLOY, and SMITH, Circuit Judges.
____________
BYE, Circuit Judge.
In these consolidated cases, we consider whether a national banking association chartered by the Office of the Comptroller of the Currency but not registered to do business with the Arkansas Secretary of State or the Arkansas Bank Department may use the non-judicial foreclosure procedure provided by the Arkansas Statutory Foreclosure Act. Ark. Code Ann. §§ 18-50-101–18-50-117. We conclude it may and affirm thе dismissal [1] of the five cases before us.
I
In Arkansas, a mortgagee ("bank") may foreclose on real property by using one
of two methods. First, it may file a complaint in Arkansas court alleging the
mortgagor ("borrower") is in default on a promissory note. If it is successful, the bank
may obtain a judgment allowing the borrower's property interest to be foreclosed and
the property sold to satisfy the borrower's debt. See Ark. Code Ann. § 18-49-103(b).
Second, the bank may use the Arkansas Statutory Foreclosure Act ("SFA"). Id. §§ 18-
50-101–18-50-117. The SFA authorizes foreclosure proceedings without judicial
supervision if, among other things, the bank properly notifies the borrower that he or
she is in default and the bank intends to foreclose on and sell the property. Id. §§ 18-
*4
50-103, 104; see Union Nat'l Bank of Ark. v. Nichols,
The Arkansas General Assembly amended thе SFA in 2003. Responding to an "emergency," it found
foreign entities not authorized to do business in the State of Arkansas are availing themselves to [sic] the provisions of the Statutory Foreclosure Act of 1987; that often times it is to the detriment of Arkansas citizens; and that this act is immediately necessary because these entities should be authorized to do business in the State of Arkansas before being able to use the Statutory Foreclosure Act of 1987.
2003 Ark. Acts 1303 (S.B. 879). The bill added to Arkansas law the provision at issue in this case:
No person, firm, company, association, fiduciary, or partnership, either domestic or foreign shall avail themselves of the procedures under this chapter unless authorized to do business in this state.
Ark. Code Ann. § 18-50-117. The provision applies if the mortgagee is a bank, savings and loan, or mortgage company. Id. §§ 18-50-116(c), 101(5) (defining "mortgage company").
In each of these consolidated cases, JPMorgan Chase Bank ("JPMorgan") attempted to use the SFA to foreclose on the borrower's home. Daniel and Susan Johnson, Tracy Estes, and Tammy Renae Peeks each filed a petition for relief under Chapter 13 of the Bankruptcy Code to halt the statutory foreclosure. See 11 U.S.C. § 362. Each debtor's repayment plan listed JPMorgan as a long-term secured creditor which was owed an arrearage of a stated figure. A debtor in a Chapter 13 case may cure a default on a debt for the debtor's home mortgage through the plan. Id. § 1322(b)(3). To confirm the plan and cure the default, the debtor must repay the *5 arrearage, the amount of which is "determined in accordance with the underlying agreement and applicable nonbankruptcy law." Id. § 1322(e). JPMorgan filed a plan confirmation objection in each case, arguing the debtors failed to include in their plans the fees and costs JPMorgan had incurred in pursuing the foreclosures, and as a result, the arrearage figure listed in the debtors' respective confirmation plans was too low. Thus, to calculate the proper arrearage amount, the bankruptcy court had to determine whether JPMorgan was entitled to use the SFA and claim the foreclosure fees from its use.
The bankruptcy court held a consolidated hearing regarding JPMorgan's
objections. The parties stipulated that JPMorgan was not registered with the Arkansas
Secretary of State as an entity authorized to conduct business in Arkansas, see Ark.
Code Ann. § 4-27-1501, and was not registered with the Arkansas Bank Department
as an out-of-state bank doing business in Arkansas. See id. § 23-48-1001. The
bankruptcy court concluded this stipulation established JPMorgan was not "authorized
to do business" in Arkansas. In re Johnson,
In the fourth consolidated case, Jere T. Jones and Teri Jones filed a civil action against JPMorgan in Arkansas court. They requested a declaratory judgment JPMorgan was not in compliance with the SFA, as well as a temporary restraining order (TRO) enjoining the foreclosure of their property. The Arkansas court issued the TRO. JPMorgan then removed the case to federal court and moved for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c).
In the final case, Karen Rivera sought to recover damages and restitution on behalf of a class of persons subject to non-judicial foreclosure by JPMorgan. Her *6 complaint alleged, among other things, that JPMorgan's unauthorized use of the SFA violated the Arkansas Deceptive Trade Practices Act. Ark. Code Ann. § 4-88-101 et seq . JPMorgan moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).
Because the five cases turned on the same legal issue, the district court consolidated the three bankruptcy cases, Jones, and Rivera. After holding a hearing, the district court issued a memorandum opinion, accompanied by separate judgments, which reversed the bankruptcy court's decision, granted JPMorgan's motion for judgment оn the pleadings in Jones, and granted JPMorgan's motion to dismiss in Rivera . First, the district court noted JPMorgan's stipulation was more limited than the bankruptcy court recognized. JPMorgan stipulated only that it was not registered to do business in Arkansas with the Secretary of State or the Bank Department. It did not stipulate it was not authorized to do business in Arkansas as § 18-50-117 required. Second, it reasoned a plain reading of § 18-50-117 allowed JPMorgаn to acquire authorization to do business in Arkansas pursuant to state or federal law, rather than exclusively by state law. Third, and finally, it determined federal law authorized JPMorgan to do business in Arkansas. Therefore, the district court concluded JPMorgan met § 18-50-117's authorized-to-do-business requirement and could lawfully use the non-judicial foreclosure procedure the SFA provided. The homeowners appealed.
II
Our analysis proceeds in two parts: (1) whether an entity seeking to use the SFA may be "authorized to do business" in Arkansas only by virtue of state registration, or whether federal law may provide such authorization; and (2) if federal law may provide such authorization, whether the National Bank Act ("NBA") does, in fact, authorize JPMorgan to do business in Arkansas.
"As the second court of review in a bankruptcy appeal, we apply the same
standard of review as the District Court, reviewing the Bankruptcy Court's legal
conclusions de novo and its factual findings for clear error." In re Usery, 123 F.3d
1089, 1093 (8th Cir. 1997).
[2]
We review a district court's grant of a motion for
judgment on the pleadings and grant of a motion to dismiss for failure to state a claim
de novo as well. Faibisch v. Univ. of Minn., 304 F.3d 797, 803 (8th Cir. 2002)
(quotation and citation omitted) (judgment on the pleadings); Detroit Gen. Retirement
Sys. v. Medtroniс, Inc.,
[t]he basic rule of statutory construction is to give effect to the intent of the General Assembly. In determining the meaning of a statute, the first rule is to construe it just as it reads, giving the words their ordinary and usually accepted meaning in common language. This court construes the *8 statute so that no word is left void, superfluous, or insignificant, and meaning and effect are given to every word in the statute if possible. When the language of a statute is plain and unambiguous and conveys a clear and definite meaning, there is no need to resort to rules of statutory construction. However, this court will not give statutes a literal interрretation if it leads to absurd consequences that are contrary to legislative intent. This court seeks to reconcile statutory provisions to make them consistent, harmonious, and sensible.
Mamo Transp., Inc. v. Williams,
When, as here, a statute is ambiguous, and again seeking to determine
legislative intent, Arkаnsas courts examine the whole act of which the statute is a part.
Cent. & S. Cos. v. Weiss, 3 S.W.3d 294, 298 (Ark. 1999). They also consider
"legislative history, the language, and the subject matter involved." Id. "[S]tatutes
relating to the same subject are said to be
in pari materia
and should be read in a
*9
harmonious manner, if possible." Rose v. Ark. State Plant Bd.,
Section 18-50-102(a) determines who may serve as a trustee in a non-judicial
foreclosure proceeding. As initially enacted,
[3]
it allowed any "[b]ank or savings and
loan authorized to do business under the laws of Arkansas or those of the United
States" to be a trustee. Ark. Code Ann. § 18-50-102(a)(2) (2003) (emphasis added).
Construing § 18-50-117 to allow only state law to authorize banks to do business in
Arkansas would mean a national bank could be a trustee in a non-judiсial foreclosure
without prior registration, but simultaneously could not avail itself of the benefits of
the SFA. The homeowners see no inconsistency here. We believe the homeowners
misread the statute. Section 18-50-117 requires authorization for an entity to avail
itself of "the procedures under this chapter," not just initiating a non-judicial
foreclosure. Because the appointment of a trustee is part of the "procedures"
contained in the SFA, the two provisions are inconsistent. Reading the statute in the
manner JPMorgan suggests—in other words, an entity may initiate a non-judicial
foreclosure pursuant to Arkansas law or the laws of the United States—produces this
consistency because the phrase "authorized to do business" means the same thing in
different parts of the statute. It is therefore a preferаble interpretation. See Williams,
Other Arkansas banking statutes lead to a similar conclusion. The Wingo Act
provides a foreign corporation may become authorized to transact business in
Arkansas by obtaining a certificate of authority from the Secretary of State. Ark.
Code Ann. § 4-27-1501(a). Elsewhere, the Branching Act requires an out-of-state
bank to file an application with the Arkansas Bank Commissioner bеfore it may open
*10
a branch in Arkansas. Id. § 23-48-1001(a). These statutes, which contain express
state certification requirements, demonstrate the General Assembly is capable of
articulating a certification requirement when it desires one. Yet the SFA contains
none. Arkansas courts presume the General Assembly has in mind previous statutes
relating to the same subject matter when it enacts a new statute. Sеe Cousins v.
Dennis,
*11 We conclude that, if it were to rule on the matter, the Arkansas Supreme Court would hold registration with a state entity is not the exclusive means by which an entity may be authorized to do business in Arkansas. We now consider whether federal law authorizes JPMorgan to do business in Arkansas.
III
The district court concluded the National Bank Act ("NBA"), 12 U.S.C. § 21 et seq. , authorizes JPMorgan to conduct the business of banking in Arkansas. It further determined foreclosure constitutes a banking activity. The homeowners disagree. The NBA may allow JPMorgan to judicially foreclose in Arkansas, they argue, but it does not permit JPMorgan to statutorily foreclose.
The NBA regulates the activities of national banks. Congress has given the
Office of the Comptroller of the Currency ("OCC") the responsibility of enforcing the
NBA and overseeing national banks' operations. Id. §§ 24, 93(a). The parties agree
JPMorgan is a national bank subject to the OCC's regulations. The NBA vests in
nationally chartered banks enumerated powers and "all such incidental powers as shall
be necessary to carry on the business of banking." Id. § 24 Seventh. The Supreme
Court has repeatedly held "federal control shields national banking from unduly
burdensome and duplicative state regulation." Watters v. Wachovia Bank, N.A., 550
U.S. 1, 11 (2007) (citing Beneficial Nat'l Bank v. Anderson,
One of the enumerated powers the NBA authorizes banks to engage in, subject to OCC regulation, is mortgage lending. 12 U.S.C. § 371(a); see Watters, 550 U.S. at 12. This provision, as part of an act of Congress related to the national banks, *12 applies to the states. 12 U.S.C. § 42. Accordingly, the NBA authorizes JPMorgan to cоnduct the business of banking, including mortgage lending, in Arkansas, notwithstanding any contrary Arkansas law.
It is also clear that the power to foreclose is incidental to the express power to
make mortgage loans. An "incidental power" is one that is "closely related to an
express power and is useful in carrying out the business of banking." First Nat'l Bank
of E. Ark. v. Taylor,
The homeowners acknowledge this fact, but nevertheless argue the power to statutorily foreclose is not incidental to the enumerated power to make mortgage loans. This is so, they claim, because "[t]he Comptroller has never promulgated a regulation that specifically includes the authority to use a state's statutory foreclosure statute as an incidental power to banking business." Appellants' Br. at 25 (emphasis removed). We cannot agree with this reasoning, for treating promulgation as a prerequisite converts incidental powers into enumerated ones and, as such, flatly contradicts the terms of the NBA. See 12 U.S.C. § 24 Seventh.
Finally, an OCC regulation identifies certain substantive bodies of law as "not
inconsistent with the real estate lending powers of national banks." 12 C.F.R.
§§ 34.4(b)(1) (contracts), (b)(5) (right to collect debts), (b)(6) (acquisition and transfer
of property). The homeowners contend this regulation "exclud[es] these activities as
incidental powers." Appellants' Br. at 26. Because the excluded powers of contracts,
debt collection, and property transfer are at the core of the SFA, they argue, federal
law does not allow national banks to statutorily foreclose. Again, we disagree because
*13
the homeowners read the regulation incorrectly. Section 34.4(b) lists bodies of state
law that are not preempted by federal law, to the extent they are not inconsistent with
federal law as interpreted by the Supreme Court. The regulation does not say these
bodies of law represent powers which are not incidental to the enumerated powers
given to national banks. The homeowners confuse the two. To accept their position
would mean national banks have the express power to make mortgage loans, but in
doing so, may not enter into contracts, collect debts, or acquire and transfer property.
These severe limitations would substantially interfere with a national bank's ability to
execute an express power. Congress could hardly hаve intended such a result. See
Barnett Bank of Marion Cnty.,
IV
An entity may be authorized to do business in Arkansas for SFA purposes pursuant to either state or federal law. In JPMorgan's case, federal law provides such authorization. The district court correctly concluded JPMorgan is authorized to do business in Arkansas and may avail itself of the benefit of the SFA. The judgment of the district court is affirmed. [5]
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Notes
[1] The Honorable J. Leon Holmes, United States District Judge for the Eastern District of Arkansas.
[2] Each party states the district court's opinion may provide "some persuasive weight" regarding the proper outcome. See United States v. Foust (In re Foust), 52 F.3d 766, 768 (8th Cir. 1995). This may be true when a district court reviews a bankruptcy court's interprеtation of the bankruptcy code, a federal law. Here, though, the district court interpreted a disputed provision of state law. The Supreme Court has made clear appellate courts must review district court interpretations of state law de novo. Salve Regina Coll. v. Russell,499 U.S. 225 , 239 (1991).
[3] The General Assembly amended § 18-50-102 effective July 27, 2011, but the amendment does not affect the outcome here.
[4] The hоmeowners claim, "[w]hen it passed the 2003 amendment [to the SFA],
the legislature knew what a certificate of authority meant." Appellants' Br. at 15.
Assuming this statement is true, it is of little moment. Awareness of a statutory
provision in a past statute does not suffice to require it in a present one. We also reject
the homeowners' argument the district court improperly used a more general statute,
the Wingo Act, to intеrpret a more specific statute, the SFA. See Ozark Gas Pipeline
Corp. v. Ark. Pub. Serv. Comm'n,
[5] JPMorgan also argues that § 18-50-117 violates the Dormant Commerce Clause and is preempted by the NBA. Because we resolve the case in JPMorgan's favor based on the statutory language itself, we do not consider these arguments.