Jpmorgan Chase Bank, N.A. v. Johnson
| Decision Date | 13 August 2013 |
| Docket Number | 12–2686,Nos. 12–2370,12–3049.,s. 12–2370 |
| Citation | 719 F.3d 1010 |
| Parties | JPMORGAN CHASE BANK, N.A., Appellee v. Daniel L. JOHNSON; Susan D. Johnson, Appellants. JPMorgan Chase Bank, N.A., Appellee v. Tracy Lea Estes, Appellant. JPMorgan Chase Bank, N.A., Appellee v. Tammy Renae Peeks, Appellant. Jere T. Jones; Teri Jones, Plaintiffs–Appellants v. JPMorgan Chase Bank, N.A., Defendant–Appellee. Karen Rivera, Plaintiff–Appellant v. JPMorgan Chase Bank, N.A., Defendant–Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
OPINION TEXT STARTS HERE
Corey D. McGaha (argued), Little Rock, AR, Todd M. Turner, Arkadelphia, Kathy A. Cruz, Hot Springs, Scott E. Poynter, of Little Rock, and Joel G. Hargis, Jonesboro, AR, on the brief, for appellant.
Daniel S. Connolly (argued), New York, NY, David L. Williams, Katherine M. Hingtgen, Little Rock, AR, and Rachel B. Goldman, of New York, NY, on the brief, for appellee.
Before BYE, MELLOY, and SMITH, Circuit Judges.
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 the dismissal 1 of the five cases before us.
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'sproperty interest to be foreclosed and the property sold to satisfy the borrower's debt. SeeArk.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. §§ 18–50–103, 104; see Union Nat'l Bank of Ark. v. Nichols, 305 Ark. 274, 807 S.W.2d 36, 38 (1991) ().
The Arkansas General Assembly amended the 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. See11 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 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, seeArk.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, 460 B.R. 234, 238–39 (Bankr.E.D.Ark.2011). It found JPMorgan was not in compliance with the SFA, the debtors did not owe JPMorgan foreclosure fees and costs, and those fees and costs need not be included in the debtors' repayment plans for their plans to be confirmed. JPMorgan appealed.
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 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 on 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 JPMorgan 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.
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. Medtronic, Inc., 621 F.3d 800, 804 (8th Cir.2010) ().
We look to Arkansas law to decide the merits of this diversity case. See Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Because the case presents a matter of first impression in Arkansas, we must predict, as best we can, how the Arkansas Supreme Court would decide it. See Sloan v. Motorists Mut. Ins. Co., 368 F.3d 853, 856 (8th Cir.2004) (citation omitted). To do so, we consider “relevant state precedent, analogous decisions, considered dicta, and any other reliable data.” HOK Sport, Inc. v. FC Des Moines, L.C., 495 F.3d 927, 935 (8th Cir.2007) (internal quotation and citation omitted). “[W]e are bound by [Arkansas's] rules of statutory construction” in our analysis. Gershman v. Am. Cas. Co. of Reading, PA, 251 F.3d 1159, 1162 (8th Cir.2001). In Arkansas,
[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 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...
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