Mamot Feed Lot and Trucking v. Hobson

• Decision Date: 26 August 2008
• Docket Number: No. 07-3129.,07-3129.
• Citation: 539 F.3d 898
• Parties: MAMOT FEED LOT AND TRUCKING, A Nebraska Partnership; Eugene P. Sonnenfeld, An Individual and On Behalf of a Class Similarly Situated; John Richter, Husband and On Behalf of a Class Similarly Situated; Rosemary Richter, Wife and on Behalf of a Class Similarly Situated; Dennis Land, Husband and on Behalf of a Class Similarly Situated; Rita Land, Wife and on Behalf of a Class Similarly Situated; Dave Vest, Husband and on Behalf of a Class Similarly Situated; Mary Vest, Wife and on Behalf of a Class Similarly Situated; Robert E. Smith, Husband and on Behalf of a Class Similarly Situated; Teresa R. Smith, Wife and on Behalf of a Class Similarly Situated; Ed Boltz, An Individual and on Behalf of a Class Similarly Situated; Ray Doggett, An Individual and on Behalf of a Class Similarly Situated, doing business as Doggett Hay Coach; Eldon Dubas, An Individual and on Behalf of a Class Similarly Situated; Dale Brabander, Husband and on Behalf of a Class Similarly Situated; Delores Brabander, Wife and on Behalf of a Class Similarly Situated; Jerry Rowse, An Individual and on Behalf of a Class Similarly Situated, Appellants, v. Scott HOBSON, Individually and in His Official Capacity, as Former President of Exchange Bank; Exchange Bank, A Federally Insured State-Charter Bank, also known as Exchange Bank of Gibbon Collectively; Exchange Company, A Nebraska Bank Holding Company; Dennis Schardt, Individually and in His Official Capacity; Susan Schardt, Individually and in Her Official Capacity; Brian Schardt, Individually and in His Official Capacity; Tom Baxter, Individually and in His Official Capacity; Sue Bolin, Individually and in Her Official Capacity; Allissa Kroll Bombeck, Individually and in Her Official Capacity; Janet Carr, Individually and in Her Official Capacity; Linda Clevenger, Individually and in Her Official Capacity; Craig Dewalt, Individually and in His Official Capacity; Vaughn Duncan, Individually and in His Official Capacity; Stephen England, Individually and in His Official Capacity; Kim Hannon, Individually and in Her Official Capacity; Roger Heffelfinger, Individually and in His Official Capacity; Michelle High, Individually and in Her Official Capacity; Tim Horacek, Individually and in His Official Capacity; Kevin Hynes, Individually and in His Official Capacity; Heather Jurgens, Individually and in Her Official Capacity; Jeff Konen, Individually and in His Official Capacity; Dee Krolikowski, Individually and in Her Official Capacity; Sheri Lyons, Individually and in Her Official Capacity; Pat Manfull, Individually and in Her Official Capacity; Patrick McGuire, Individually and in His Official Capacity; Pat Meyer, Individually and in Her Official Capacity; Rebecca Rathjen, Individually and in Her Official Capacity; Deb Slack, Individually and in Her Official Capacity, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

539 F.3d 898

MAMOT FEED LOT AND TRUCKING, A Nebraska Partnership; Eugene P. Sonnenfeld, An Individual and On Behalf of a Class Similarly Situated; John Richter, Husband and On Behalf of a Class Similarly Situated; Rosemary Richter, Wife and on Behalf of a Class Similarly Situated; Dennis Land, Husband and on Behalf of a Class Similarly Situated; Rita Land, Wife and on Behalf of a Class Similarly Situated; Dave Vest, Husband and on Behalf of a Class Similarly Situated; Mary Vest, Wife and on Behalf of a Class Similarly Situated; Robert E. Smith, Husband and on Behalf of a Class Similarly Situated; Teresa R. Smith, Wife and on Behalf of a Class Similarly Situated; Ed Boltz, An Individual and on Behalf of a Class Similarly Situated; Ray Doggett, An Individual and on Behalf of a Class Similarly Situated, doing business as Doggett Hay Coach; Eldon Dubas, An Individual and on Behalf of a Class Similarly Situated; Dale Brabander, Husband and on Behalf of a Class Similarly Situated; Delores Brabander, Wife and on Behalf of a Class Similarly Situated; Jerry Rowse, An Individual and on Behalf of a Class Similarly Situated, Appellants, v. Scott HOBSON, Individually and in His Official Capacity, as Former President of Exchange Bank; Exchange Bank, A Federally Insured State-Charter Bank, also known as Exchange Bank of Gibbon Collectively; Exchange Company, A Nebraska Bank Holding Company; Dennis Schardt, Individually and in His Official

Capacity; Susan Schardt, Individually and in Her Official Capacity; Brian Schardt, Individually and in His Official Capacity; Tom Baxter, Individually and in His Official Capacity; Sue Bolin, Individually and in Her Official Capacity; Allissa Kroll Bombeck, Individually and in Her Official Capacity; Janet Carr, Individually and in Her Official Capacity; Linda Clevenger, Individually and in Her Official Capacity; Craig Dewalt, Individually and in His Official Capacity; Vaughn Duncan, Individually and in His Official Capacity; Stephen England, Individually and in His Official Capacity; Kim Hannon, Individually and in Her Official Capacity; Roger Heffelfinger, Individually and in His Official Capacity; Michelle High, Individually and in Her Official Capacity; Tim Horacek, Individually and in His Official Capacity; Kevin Hynes, Individually and in His Official Capacity; Heather Jurgens, Individually and in Her Official Capacity; Jeff Konen, Individually and in His Official Capacity; Dee Krolikowski, Individually and in Her Official Capacity; Sheri Lyons, Individually and in Her Official Capacity; Pat Manfull, Individually and in Her Official Capacity; Patrick McGuire, Individually and in His Official Capacity; Pat Meyer, Individually and in Her Official Capacity; Rebecca Rathjen, Individually and in Her Official Capacity; Deb Slack, Individually and in Her Official Capacity, Appellees.

No. 07-3129.

United States Court of Appeals, Eighth Circuit.

Submitted: May 16, 2008.

Filed: August 26, 2008.

Robert M. Cook, argued, Phoenix, AZ, for appellants.

Rebecca S. Yocum, argued, Kansas City, MO (Robin K. Carlson, Kansas City, MO, Victor C. Padios, Omaha, NE, Terry R. Wittler, Lincoln, NE, on the brief), for appellees.

Before RILEY, HANSEN, and ARNOLD, Circuit Judges.

HANSEN, Circuit Judge.

Appellants were each either customers of the Exchange Bank of Gibbon (Bank) or have been sued by the Bank. The appellants brought this action as a class action against the Bank, its holding company, and various shareholders, officers, and employees of the Bank, following the criminal indictment of Scott Hobson, the Bank's president, for defrauding the bank of nearly one million dollars. The appellants brought federal usury and antitying claims against the Bank based on Hobson's actions, relying on 12 U.S.C. §§ 85, 86 (the National Bank Act); 12 U.S.C. §§ 1972, 1975; and 12 U.S.C. § 1831d (the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDA)). All of the appellees except Hobson (collectively the "Bank Defendants") filed a joint motion to dismiss for want of jurisdiction as to the National Bank Act claim and for failure to state a claim on the remaining claims, which the district court¹ granted. The Appellants appeal, and we affirm.

I.

Exchange Bank is a federally-insured, state-chartered bank located in Nebraska. Although it is less than clear from the parties' district court filings or the briefs on appeal, apparently (and allegedly) Scott Hobson, as the President of the Bank, misappropriated assets of the Bank, misstated the value of collateral on loans, misstated the Bank's assets on its balance sheet, and diverted loan payments made by customers to other accounts. Appellants Dennis and Rita Land, Eugene Sonnenfeld, Dave and Mary Vest, Robert and Teresa Smith, Eldon Dubas, Jerry Rowse, Dale and Delores Brabander, Ed Boltz, and Ray Doggett were all customers of the Bank.² Appellant Mamot Feed Lot and Trucking is not a customer of the Bank but purchased hay from Appellant Sonnenfeld. Apparently, the hay served as collateral for Sonnenfeld's loan with the Bank, and the Bank has brought an action in state court against Mamot Feed Lot and Trucking based on its security interest in Sonnenfeld's crop.

Following Hobson's indictment on fraud charges, the Appellants filed this action in federal court claiming that the Bank Defendants had charged them usurious interest. The basis for the usurious interest claim was that "Hobson, without permission, contrary to the documents, but with the full approval of Defendant Exchange Bank of Gibbon, et. al. deliberately and intentionally misstated or took collateral of Plaintiffs, for his or others [sic] benefits, misstated the value of the collateral on the books and records of Defendant Exchange Bank, and that all amounts misappropriated, stolen, misstated, diverted, by Defendant Scott Hobson shall be deemed excessive interest paid by plaintiff/borrower ...." (Appellants' App. at 210.) The complaint also alleged that Hobson "routinely, systematically and deliberately overstated the statements of financial condition of said borrower so that the loan could be `booked' as a legitimate asset on the books and records of defendant Exchange Bank," and that Hobson "deliberately converted collateral of said Plaintiffs and deliberately diverted payments on loans to his own account thereby again misstating the books and records of the bank, thereby triggering a default and thereby triggering phoney acceleration clauses and attorney's fees clauses, all of which constitute interest which is excessive." (Appellants' App. at 211.)

The complaint relied solely on federal question jurisdiction under 28 U.S.C. § 1331, citing 12 U.S.C. §§ 85, 86; 12 U.S.C. §§ 1972, 1975; and 12 U.S.C. § 1831d. The plaintiffs sought a declaratory judgment that the Bank Defendants charged and received usurious interest, entitling the plaintiffs to damages in the amount of $50 million, allegedly representing twice the amount of usurious interest paid by the plaintiffs. The Bank Defendants filed a Motion to Dismiss on March 19, 2007. The district court subsequently granted the motion to dismiss as to all plaintiffs except defendant Scott Hobson, who did not join in the motion, and the court certified the order as immediately appealable under Rule 54(b) of the Federal Rules of Civil Procedure.

II.

We review the district court's dismissal of the National Bank Act claim for want of federal jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure de novo, accepting all factual allegations in the complaint as true and viewing them in the light most favorable to the nonmoving party. See Hastings v. Wilson, 516 F.3d 1055, 1058 (8th Cir.2008). Federal courts are courts of limited jurisdiction, and a district court's federal question jurisdiction extends only to "civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331.

Appellants claim that the Bank Defendants' actions amounted to the illegal charging of usurious interest in violation of § § 85 and 86 of the National Bank Act.³ Section 85 "sets forth the substantive limits on the rates of interest that national banks may charge," Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 9, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003), while section 86 "sets forth the elements of a usury claim against a national bank ... and prescribes the remedies available to borrowers who are charged higher rates," id. Exchange Bank is a state-chartered bank, not a national bank. Sections 85 and 86 of the National Bank Act apply only to "associations," see § 85 ("Any association may take ..."); § 86 (allowing recovery "from the association"), referring to national banking associations, see 12 U.S.C. § 37 (defining "associations" as used in the National Banking Act as "all associations organized to carry on the business of banking under any Act of Congress"). Thus, the National Bank Act does not apply to state-chartered banks. See First and Beck, a Nevada LLC v. Bank of Southwest, 267 Fed.Appx. 499, 501 (9th Cir.2007) (unpublished) (dismissing National Bank Act claim against state-chartered bank for lack of jurisdiction because "12 U.S.C. § 85 provides for a cause of action only against nationally-chartered banks"); Krispin v. May Dep't Stores Co., 218 F.3d 919, 923 (8th Cir.2000) (noting that the National Bank Act applies to national banking associations as defined by 12 U.S.C. §§ 21, 37); Greenwood Trust Co. v. Massachusetts, 971 F.2d 818, 826 (1st Cir.1992) (explaining the history behind the DIDA and noting Congress's intent to level the playing field between national banks, whose interest rates were tied to federal discount rates under § 85, and state banks, whose interest rates prior to enactment of § 1831d were limited by state usury laws), cert. denied, 506 U.S. 1052, 113 S.Ct. 974, 122 L.Ed.2d 129 (1993). Because §§ 85 and 86 do not apply to state-chartered banks, the district court properly dismissed...