In re Opal v. Bate

• Decision Date: 22 June 2011
• Docket Number: Adversary No. 8:10–ap–01289–MGW.,Bankruptcy No. 8:10–18159–MGW.
• Citation: 454 B.R. 869,23 Fla. L. Weekly Fed. B 49
• Parties: In re Opal V. BATE, Debtor.Opal V. Bate, Plaintiff,v.Wells Fargo Bank, N.A.
• Court: U.S. Bankruptcy Court — Middle District of Florida

454 B.R. 869

23 Fla. L. Weekly Fed. B 49

In re Opal

v. BATE, Debtor.Opal

v. Bate, Plaintiff,

v.Wells Fargo Bank, N.A.

Bankruptcy No. 8:10–18159–MGW.

Adversary No. 8:10–ap–01289–MGW.

United States Bankruptcy Court, M.D. Florida,Tampa Division.

June 22, 2011.

Frank T. Papa, Esq., Law Offices of Robert M. Geller, P.A., Tampa, FL, for Debtor.Fentrice D. Driskell, Esq., Carlton Fields, P.A., Tampa, FL, for Wells Fargo.

MEMORANDUM OPINION ON PREEMPTION BY NATIONAL BANK ACT OF FLORIDA CONSUMER COLLECTION PRACTICES ACT

MICHAEL G. WILLIAMSON, Bankruptcy Judge.

The National Bank Act ¹ preempts state laws that prevent or significantly interfere with the exercise by national banks of their powers. The Florida Consumer Collection Practices Act ² applies generally to all creditors and prohibits inappropriate debt collection practices. It does not prevent or significantly interfere with the business of banking. Accordingly, for the reasons set forth below, the Court concludes that the NBA does not preempt the FCCPA.

Procedural Background

This adversary proceeding was brought by the debtor, Opal Bate (“Debtor”), against Wells Fargo Bank, N.A. (“Wells Fargo”) seeking damages for violation of the automatic stay under Bankruptcy Code Section 362 and for violations of the FCCPA. Specifically, Count I of Debtor's Complaint alleges that Wells Fargo's loan collection activities violated the automatic stay pursuant to 11 U.S.C. § 362(a)(6). The remaining thirty-five counts of the Complaint are based on alleged violations of the FCCPA. Thirty-three of these counts allege that Wells Fargo violated Section 559.72(18), Florida Statutes, by contacting the Debtor after it had knowledge that she was represented by an attorney. In this regard, each of these counts contains the following identical paragraphs:

That Defendant, Wells Fargo, had knowledge that Plaintiff, Opal Bate, was represented by counsel with respect to the debt and had knowledge of Plaintiff's attorney's name and contact information.³

That the continued communication with Plaintiff, Opal Bate, in an attempt to collect a debt, constitutes a direct violation of Florida Statute § 559.72(18).⁴

In two additional counts, the Debtor alleges that Wells Fargo violated section 559.72(17) by impermissibly contacting the Debtor after 9:00 p.m. and before 8:00 a.m. in attempts to collect the past-due balance on her mortgage loan and that Wells Fargo violated Section 559.72(7) by repeatedly contacting the Debtor in a harassing manner.

Wells Fargo moved to dismiss the Complaint. It argued that the Debtor's allegations in Count I of the Complaint, that Wells Fargo violated the automatic stay, are insufficient to state a claim for relief. It also claimed that the other thirty-five counts of the Complaint that are based on the FCCPA should be dismissed on the basis that the NBA preempts state laws such as the FCCPA that would otherwise limit the manner and scope by which national banks may service and conduct collection activity with respect to loans made in the course of their banking business. A pre-trial conference was held on January 18, 2011, where the Court considered the Motion to Dismiss and denied the Motion as to Count I.⁵ Therefore, the sole issue before this Court is whether the NBA preempts the FCCPA.

Conclusions of Law

The Court has jurisdiction over this adversary proceeding pursuant to 28 U.SC. § 1334(b). This is a core proceeding pursuant to 28 U.S.C. § 157(O).

The issue before this Court is whether the NBA preempts the FCCPA. In its Motion to Dismiss, Wells Fargo relies on regulations promulgated by the Office of the Comptroller of the Currency (the “OCC”) that clarify the applicability of state law to national banks.⁶ Under the relevant federal regulations, state laws that “obstruct, impair, or condition a national bank's ability to fully exercise its Federally authorized ... lending powers do not apply to national banks.” ⁷ These regulations also specify certain state laws dealing with subjects that are not viewed as being inconsistent with the real estate lending powers of national banks and apply to national banks to the extent that they only incidentally affect the exercise of national banks' real estate lending powers.⁸

The specific areas that are not generally preempted are: contracts, torts, criminal law, rights to collect debts, acquisition and transfer of real property, taxation, zoning, and any other law the effect of which the OCC determines to be incidental to the lending functions of the national bank. ⁹ While the inclusion within these non-preempted areas of the “rights to collect debts” ¹⁰ could be interpreted to support the view that debt collection activities of a national bank do not fall within the scope of the federal preemption, the OCC's interpretive history of the applicable regulations dealing with this issue indicates otherwise.¹¹ That is, it is clear from this history that the reference in these regulations to the “rights to collect debts” pertains to the “existence of a bank's right to recover a debt, not to the means the bank uses to pursue that right.” ¹² Because the “means” employed by a bank to collect a debt would necessarily bring into play laws limiting the manner in which creditors can collect debts, such as the FCCPA, the OCC's interpretation of its own regulation would support a finding that the NBA preempts the FCCPA and its provisions would not apply to national banks.

Accordingly, it appears then that if the sole guidance for this Court were the preemption regulation and the OCC's interpretive letter, then it would be appropriate to find preemption. But this is not the case when the Court looks to the general principles governing federal preemption and the deference that should be afforded to an agency's proclamation that state debt collection laws are preempted.

A. Federal Preemption

The Supremacy Clause of Article VI of the Constitution provides that the laws of the United States “shall be the supreme Law of the Land; ... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” ¹³ In considering preemption issues under the Supremacy Clause, we start with the assumption that “the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” The presumption against preemption applies even in those areas long occupied by federal regulation, and the purpose of Congress is the ultimate touchstone in every preemption case. ¹⁵

Congress's intent to preempt state law may be explicitly stated in the language of a federal statute or it may be implicitly contained in the structure and purpose of the statute.¹⁶ The Supreme Court has identified three types of preemption: express preemption, field preemption, and conflict preemption.¹⁷ Express preemption occurs when Congress has clearly expressed an intention to preempt state law.¹⁸ Field preemption occurs when federal regulation in a legislative field is so pervasive that it can reasonably be inferred that Congress left no room for states to supplement it.¹⁹ Conflict preemption arises under two circumstances. The first circumstance is when it is physically impossible to comply with both federal and state law.²⁰ This has been referred to as “physical impossibility preemption.” ²¹ The second circumstance is when state law stands as an obstacle to achieving the objectives of the federal law.²² This type has been referred to as “obstacle preemption.” ²³

1. Express Preemption

In 1819, in the case of McCulloch v. Maryland,²⁴ the Supreme Court held that federal law is supreme over state law with respect to national banking. In 1864, Congress enacted the National Bank Act establishing the system of national banking still in place today.²⁵ The Act vested in nationally chartered banks enumerated powers and “all such incidental powers as shall be necessary to carry on the business of banking.” ²⁶ It also vested the OCC with broad rulemaking authority under 12 U.S.C. §§ 93(a) and 371(a).²⁷ The NBA however, does not contain a provision preempting state consumer protection laws. It only contains a provision that requires notice and an opportunity for comment before the OCC issues an opinion letter or interpretive rule concluding that federal law preempts state laws concerning, among other things, consumer protection.²⁸ Therefore, express preemption is not applicable to this case because Congress, through the NBA, has not clearly expressed its intent to preempt state consumer protection laws.

2. Field Preemption

Field preemption is also inapplicable to this case. While Congress did not expressly address the NBA's preemption of state laws, it has been an issue since its enactment, and the Supreme Court has repeatedly made clear that federal law shields national banks from unduly burdensome and duplicative state regulation.²⁹ However, the Supreme Court has also made clear that national banks are subject to state laws of general application in their daily business, to the extent such laws do not conflict with the letter or the general purposes of the NBA.³⁰ States are permitted to regulate the activity of national banks where doing so does not prevent or significantly interfere with national banks' efficient exercise of any power enumerated under the NBA.³¹ Based on the foregoing, this Court is persuaded that Congress did not intend for the NBA or the OCC regulations to occupy the field of national banking to the exclusion of state laws of general application and, therefore, field preemption does not apply.

3. Conflict Preemption

Having concluded that the NBA does not expressly preempt the FCCPA and that the NBA does not occupy the entire field of laws governing the lending activities of national banks, we now turn our attention to conflict preemption. This part of the preemption analysis presents a more challenging task because the conflict in this case is not between a federal statute...