Copeland v. MBNA America Bank, N.A.

• Decision Date: 20 November 1995
• Docket Number: No. 94SC409,94SC409
• Citation: 907 P.2d 87
• Parties: Brian K. COPELAND, on behalf of himself and all others similarly situated, Petitioner, v. MBNA AMERICA BANK, N.A., Respondent.
• Court: Colorado Supreme Court

Page 87

907 P.2d 87

64 USLW 2353

Brian K. COPELAND, on behalf of himself and all others similarly situated, Petitioner, v. MBNA AMERICA BANK, N.A., Respondent.

No. 94SC409.

Supreme Court of Colorado En Banc.

Nov. 20, 1995.

Bader & Villanueva, P.C., Gerald L. Bader, Jr., Jeffrey M. Villanueva, Renee B. Taylor, Denver, Chimicles, Jacobsen & Tikellis, Michael D. Donovan, Haverford, Pennsylvania, for Petitioner.

Ireland, Stapleton, Pryor & Pascoe, P.C., D. Monte Pascoe, Scot M. Peterson, Denver, Sullivan & Cromwell, John L. Warden, Richard J. Urowsky, Lori S. Sherman, New York City, for Respondent.

James K. Kreutz & Associates, P.C., James K. Kreutz, Englewood, for Amici Curiae Consumer Action, States of Hawaii, Iowa, Maryland, Massachusetts, Pennsylvania, Vermont and Wisconsin; Trial Lawyers for Public Justice, P.C.; and Bankcard Holders of America, Inc.

Gale A. Norton, Attorney General, Stephen K. ErkenBrack, Chief Deputy Attorney General, Timothy M. Tymkovich, Solicitor General, Denver, for Amicus Curiae State of Colorado.

McKenna & Cuneo, Daniel S. Hoffman, I. Thomas Bieging, Denver, for Amici Curiae States of Arizona, Delaware, Louisiana, Nevada, Ohio, South Dakota and Utah.

Davis, Graham & Stubbs, William A. Bianco, Denver, Wilmer, Cutler & Pickering, Ronald J. Greene, Christopher R. Lipsett, Charles A. Mendels, Craig M. Blackwell, Washington, DC, for Amicus Curiae Citibank (SD), N.A.

Dean S. Neuwirth, Denver, for Amici Curiae MasterCard Int'l, Inc. and VISA U.S.A., Inc.

Fairfield & Woods, P.C., Jac K. Sperling, Craig A. Umbaugh, Denver, for Amici Curiae Colorado Bankers Ass'n., American Bankers Ass'n., American Financial Servs. Ass'n. and Consumer Bankers Ass'n.

United States Attorney's Office, Linda A. Surbaugh, Denver, Office of the Comptroller of the Currency, L. Robert Griffin, Horace G. Sneed, Washington, DC, for Amicus Curiae Office of the Comptroller of the Currency.

Justice MULLARKEY delivered the Opinion of the Court.

We granted certiorari to review the court of appeals' decision in Copeland v. MBNA Am., N.A., 883 P.2d 564 (Colo.App.1994). ¹ The court of appeals held that section 85 of the National Bank Act, 12 U.S.C. § 85 (1982), preempted a Colorado consumer protection law, thereby, allowing a national banking association, located in Delaware, to charge a Colorado credit cardmember "interest" in the form of a "late payment fee." We affirm the judgment of the court of appeals, but we base our decision on different grounds.

I.

Respondent, MBNA America Bank, N.A. (MBNA), is a national banking association chartered by the United States Office of the Comptroller of the Currency (OCC) and governed by the National Bank Act (NBA), 12 U.S.C. § 85 (1982). The NBA requires MBNA to file an organization certificate. MBNA's organization certificate lists Delaware as "[t]he place where its operations of discount and deposit are to be carried on....," 12 U.S.C. § 22 (1989), and its state of incorporation.

MBNA issues credit cards under the VISA and MasterCard service marks. The credit cards permit MBNA to lend money on an open-end credit basis to borrowers throughout the United States. The terms and conditions governing the use of its credit cards are set forth in a cardmember agreement (Agreement). The Agreement provides that a cardmember must make a specified minimum monthly payment on the account's outstanding balance, and failure to do so by the due date constitutes default. The Agreement further provides for the imposition of a fifteen dollar late payment fee ² if the specified minimum payment is not paid within twenty-five days of the due date. MBNA does not include late payment fees in the computation of its annual percentage rate, and separately identifies finance charges and late payment fees on the monthly billing statement.

Petitioner, Brian K. Copeland (Copeland), a Colorado resident, became a MBNA VISA cardmember in 1988. Copeland used his VISA credit card to purchase goods and services in Colorado. In March 1992, Copeland failed to pay his VISA minimum monthly payment, and MBNA assessed a fifteen dollar late payment fee to his VISA credit card account.

Copeland initiated this class action, on behalf of himself and all others similarly situated, seeking injunctive relief and damages under Colorado statutory and common law. Specifically, Copeland alleges that MBNA violated section 5-3-203 of the Colorado Uniform Consumer Credit Code (UCCC), § 5-3-203, 2 C.R.S. (1992), by imposing a late payment fee in addition to a finance charge on his VISA credit card account. Copeland contends that the UCCC prohibits banking associations, both state and national, from charging a late payment fee to the credit card account of a Colorado resident.

In response, MBNA asserts that section 85 of the NBA, 12 U.S.C. § 85 (1982), preempts section 5-3-203 of the UCCC, § 5-3-203, 2 C.R.S. (1992). ³ MBNA maintains that the NBA allows national banks to assess "interest" in the form of a late payment fee if allowed by the state listed in the national bank's organization certificate. Because the Delaware Banking Statute (Delaware Statute), Del.Cod.Ann. tit. 5, § 950 (1993), has defined a late payment fee as a form of "interest," MBNA asserts that, as a national bank located in Delaware, it can charge "interest" in the form of a late payment fee to a Colorado resident. ⁴

The district court granted MBNA's motion for judgment on the pleadings and dismissed the complaint. The court of appeals affirmed the dismissal, and we granted certiorari. We conclude that, as a matter of federal law, the fifteen dollar late payment fee imposed on Copeland's VISA credit card account is a form of "interest" under section 85 of the NBA. Because MBNA is a national bank located in Delaware, and Delaware law permits the imposition of a late payment fee, MBNA can charge Copeland a late payment fee despite the fact that Colorado prohibited such fees.

II.

In April 1992, the month MBNA charged a late payment fee to Copeland's VISA credit card account, section 5-3-203 of the UCCC prohibited banks from assessing late payment fees on revolving credit accounts, such as VISA credit cards. The UCCC provided, in relevant part:

(5)(a) Except as provided in paragraph (b) of this section (5), with respect to a consumer loan, refinancing, or consolidation which is not pre-computed, including a revolving loan account, the parties may contract for a delinquency charge on any installment not paid in full within ten days after its scheduled due date in an amount not exceeding the lesser of five percent of the unpaid amount of the installment or ten dollars; except that the provisions of this paragraph (a) shall not apply to a revolving loan account for which a lender credit card is issued by the lender to the debtor.

§ 5-3-203, 2 C.R.S. (1992) (emphasis added). ⁵

Unlike Colorado, at the time this case arose, Delaware statutorily allowed its banks to charge late payment fees at the rate of fifteen dollars per billing cycle. Section 950 of the Delaware Statute provides:

If the agreement governing a revolving credit plan so provides, a bank may impose, as interest, a late or delinquency charge upon any outstanding unpaid installment payments or portions thereof under the plan which are in default.... No delinquency charge shall exceed fifteen dollars.

Del.Cod.Ann. tit. 5, § 950 (1993) (emphasis added).

However, MBNA's banking activities are governed by the NBA, which provides in section 85:

Any association [national bank] may take, receive, reserve, and charge on any loan or discount made, or upon any notes, bills of exchange, or other evidence of debt, interest at the rate allowed by the laws of the State ... where the bank is located.

12 U.S.C. § 85 (1982) (emphasis added).

III.

We must decide if late payment fees are a form of "interest" under section 85 of the NBA. To answer that question, we turn to the well-established rules of federal statutory interpretation. First, we look at the statutory language itself. United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524, 2527, 69 L.Ed.2d 246 (1981). Where the statutory language is clear and certain, the statute should be construed as written, because the function of the court, in such a case, is to enforce the statute according to its terms. Touche Ross & Co. v. Redington, 442 U.S. 560, 568, 99 S.Ct. 2479, 2485, 61 L.Ed.2d 82 (1979). Where, however, the statutory language is ambiguous or unclear, resort to legislative history is appropriate in order to arrive at an interpretation that effectuates legislative intent. Blum v. Stenson, 465 U.S. 886, 896, 104 S.Ct. 1541, 1547-48, 79 L.Ed.2d 891 (1984). Moreover, wherever practicable a statute should be interpreted in a manner that gives effect to all its provisions and policy objectives, and not in a way that renders one or more of its parts or goals inoperative. Mountain States Tel. and Tel. Co. v. Pueblo of Santa Ana, 472 U.S. 237, 249, 105 S.Ct. 2587, 2594, 86 L.Ed.2d 168 (1985).

Section 85 of the NBA does not provide a definition for the term "interest" or "interest at the rate." 12 U.S.C. § 85 (1982). Copeland suggests that the term "interest" should be defined narrowly only to include numerical periodic percentage interest rates. Copeland argues that at common law the term "interest" did not include penalty fees and that a late payment fee is a penalty fee. In support, Copeland refers to Webster's International Dictionary, which defines "interest" as "the price paid for borrowing money generally expressed as a percentage of the amount borrowed in one year." Webster's Third New International Dictionary, 1104 (3rd ed. 1986).

On the other hand, MBNA suggests that we define the term "interest" broadly to include a wide variety of banking fees, including late payment fees. MBNA argues that historically the term "interest" included penalty fees. In support, MBNA refers to the Oxford English Dictionary, which defines "interest" as the ...