Charter One Mortg. Corp. v. Condra
| Decision Date | 12 May 2006 |
| Docket Number | No. 49A05-0501-CV-30.,49A05-0501-CV-30. |
| Citation | 847 N.E.2d 207 |
| Parties | CHARTER ONE MORTGAGE CORPORATION, Appellant-Defendant, v. Kyle CONDRA, on behalf of himself and others similarly situated, Appellee-Plaintiff. |
| Court | Indiana Appellate Court |
David C. Campbell, Karl L. Mulvaney, Bingham McHale LLP, Indianapolis, IN, David P. Sanders, Michael T. Brody, Pro Hac Vice, Jenner & Block LLP, Chicago, IL, Elizabeth G. Porter, Pro Hac Vice, Jenner & Block LLP, Washington, D.C., Attorneys for Appellant.
Irwin B. Levin, Richard E. Shevitz, Scott D. Gilchrist, Eric S. Pavlack, Cohen & Malad, LLP, Indianapolis, IN, Attorneys for Appellee.
Susan W. Brooks, United States Attorney, Shelese Woods, Assistant United States Attorney, Office of the United States Attorney, Southern District of Indiana, Indianapolis, IN, Yvette Rivera, Ernest C. Barrett, III, Pro Hac Vice, Office of the Comptroller of the Currency, Washington, D.C., Attorneys for Amicus Curiae Office of the Comptroller of the Currency.
Appellant-Defendant Charter One Mortgage Corporation ("Charter One") appeals the trial court's denial of its motion to dismiss the class action complaint filed by Appellees-Plaintiffs Kyle Condra and "others similarly situated" (collectively referred to as "Condra").1 We affirm.2
Charter One raises one issue that we restate as whether the Indiana Supreme Court's original jurisdiction over the unauthorized practice of law, which derives from Article 7, Section 4 of the Indiana Constitution, is preempted by a regulation promulgated under the National Bank Act that permits national banks to charge incidental fees for legal services provided by non-lawyers in the preparation of real estate loan documents.
The relevant facts are undisputed. On October 24, 2002, Condra borrowed $89,600.00 from Charter One for the purchase of certain real estate located at 12160 Pebblebrook Court. This loan was secured by a mortgage on the property. In connection with the loan, Charter One charged Condra a document preparation fee in the amount of $175.00, for preparation of the deed and mortgage. Charter One's agents or employees, none of whom is licensed to practice law, prepared these legal documents.
On November 21, 2003, Condra filed a class action complaint against Charter One, alleging that the document preparation fee violated Indiana law and constituted unjust enrichment. On February 20, 2004, Charter One filed a motion to dismiss the complaint for failing to state a claim upon which relief can be granted, pursuant to Indiana Trial Rule 12(B)(6). In particular, Charter One contended that, because it is an operating subsidiary of a national bank, i.e., Charter One Bank, N.A., it is subject to the federal regulations promulgated by the Office of the Comptroller of the Currency ("OCC").3 Those regulations, according to Charter One, not only allow national banks and their operating subsidiaries to charge certain non-interest related fees — such as the document preparation fee in question — but also expressly preempt Indiana state law to the contrary. On October 16, 2004, after conducting a hearing on Charter One's motion to dismiss with respect to the issue of preemption, the trial court denied the motion in favor of Condra. Id. at 7. Thereafter, and upon petition by Charter One, the trial court certified its judgment for interlocutory appeal and we accepted jurisdiction on March 12, 2005.
On appeal, Charter One argues that the trial court erroneously denied its motion to dismiss the Complaint under Indiana Trial Rule 12(B)(6).4 The standard of review of a trial court's grant or denial of a motion to dismiss for failure to state a claim is de novo. Sims v. Beamer, 757 N.E.2d 1021, 1024 (Ind.Ct.App.2001). We do not defer at all to the trial court's decision because deciding a motion to dismiss based upon failure to state a claim involves a pure question of law. Id. That is, it does not require reference to extrinsic evidence, the drawing of inferences therefrom, nor the weighing of credibility for its disposition. Bader v. Johnson, 732 N.E.2d 1212, 1216 (Ind.2000). The grant or denial of a motion to dismiss turns solely on the legal sufficiency of the claim and does not require determinations of fact. Sims, 757 N.E.2d at 1024.
Because an Indiana Trial Rule 12(B)(6) motion to dismiss tests the legal sufficiency of a claim, and not the facts supporting it, a complaint may not be dismissed on the basis that it fails to state a claim upon which relief may be granted unless it appears to a certainty, on the face of such complaint, that the complaining party is not entitled to any relief. McQueen v. Fayette County Sch. Corp., 711 N.E.2d 62, 65 (Ind.Ct.App.1999), trans. denied. In ruling upon a motion to dismiss for failure to state a claim, the trial court is required to view the complaint in a light most favorable to the nonmoving party, with every reasonable inference construed in the nonmovant's favor. Id. The trial court may only look to the complaint, and well-pleaded material must be taken as admitted. Id.; see also Crosson v. Berry, 829 N.E.2d 184, 189 (Ind.Ct.App.2005), trans. denied.
On appeal, Charter One argues that the trial court erroneously denied its motion to dismiss because Indiana law, which prohibits non-attorneys from engaging in the unauthorized practice of law by charging document preparation fees for legal instruments prepared by non-attorneys, has been preempted by the National Bank Act. In response, Condra contends that the trial court's judgment was proper inasmuch as there is no direct conflict between Indiana law and the federal regulation in question. Before we address the preemption issue, we first examine the allegedly competing state and federal laws or regulations.
Indiana, like most other states, requires minimum levels of education, training, and character before granting a license to practice law. See, e.g., Ind. Admission and Discipline Rules 12 (character and fitness), 13 (educational requirements), 17 (bar examinations), and 22 (attorney oath). The purpose of these minimum standards is to protect the public from potential injury resulting from laypersons performing acts that require the training, knowledge, and responsibility of a licensed attorney. See King v. First Capital Fin. Serv. Corp., 215 Ill.2d 1, 293 Ill.Dec. 657, 828 N.E.2d 1155, 1162 (2005). The power to regulate the conduct of licensed attorneys and to define the practice of law is a prerogative of the Indiana Supreme Court under the Indiana Constitution.5 See IND. CONST. art. 7, § 4; Ind.Code § 33-24-1-2(b)(2); see also In re Mittower, 693 N.E.2d 555, 558 (Ind.1998).
In Miller v. Vance, 463 N.E.2d 250, 251 (Ind.1984), the Indiana Supreme Court considered whether the preparation of a mortgage instrument by a bank employee who was not a licensed attorney constituted the unauthorized practice of law. There, the Court observed that the "core element of practicing law is the giving of legal advice to a client and the placing of oneself in the very sensitive relationship wherein the confidence of the client, and the management of his affairs, is left totally in the hands of the attorney." Id. The Court also recognized that the "undertaking to minister to the legal problems of another creates an attorney-client relationship without regard to whether the services are actually performed by the one so undertaking the responsibility or are delegated or subcontracted to another." Id.
That said, the Miller Court noted that the filling in of blanks in legal instruments, which requires only the use of common knowledge regarding the information to be inserted, is not generally considered to be the practice of law unless it involves "considerations of significant legal refinement, or the legal consequences of the act are of great significance to the parties involved." Id.; see also Lawson v. First Union Mortg. Co., 786 N.E.2d 279, 282 (Ind.Ct. App.2003). However, the Miller Court cautioned:
We emphasize that there are certain limitations which apply to bank employees similar to those placed upon real estate brokers. A lay bank employee may fill in the blanks on a standardized mortgage form which has been approved by an attorney in a transaction which involves the employer bank and the bank's client. The lay bank employee may not give advice or opinions as to the legal effects of the instruments he prepares or the legal rights of the parties. The bank may not make any separate charge for the preparation of the mortgage instrument.
Miller, 463 N.E.2d at 253 (emphasis added).
As a result of Miller, in Indiana, bank employees who are not licensed attorneys may prepare mortgage instruments without committing the unauthorized practice of law, provided that: (1) they do not give advice or opinions as to the legal effects of the instruments prepared or the legal rights of the parties; and (2) the bank does not make a separate charge for the preparation of the mortgage instrument. Id.; see also State v. Diaz, 838 N.E.2d 433, 435 (Ind.2005). It is this latter condition that is implicated here.
National banks are created and governed by the National Bank Act, 12 U.S.C. §§ 21 et seq., which was originally enacted in 1864. In brief, the National Bank Act authorizes national banks to engage in various banking activities and "to exercise ... all such incidental powers as shall be necessary to carry on the business of banking...." 12 U.S.C. § 24 (Seventh). In addition, Congress has expressly authorized national banks to engage in residential lending subject to restrictions and requirements prescribed by the OCC. See 12 U.S.C. § 371(a).6
National banks are instrumentalities of the federal government, created for a public purpose, and, as such, necessarily subject to the...
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Charter One Mortg. Corp. v. Condra
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