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Case No. 10-4117
IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT__________________________________________________________________
PENI COX,
Plaintiff-Appellant
vs.
RECONTRUST COMPANY, N.A.; BANK OF AMERICA HOME LOANSSERVICING, LP; BANK OF AMERICA, FSB; NEW LINE MORTGAGE,
DIVISION OF REPULIC MORTGAGE HOME LOANS, LLC; MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS, INC., AND DOES 1-5,
Defendants-Appellee__________________________________________________________________
Interlocutory Appeal from an Order of the United States District Court For TheDistrict of Utah, Central Division No. 2:10-CV-00492-SA Hon. Clark Waddoups
_____________________
REPLY BRIEF OF APPELLANT_____________________
JOHN CHRISTIAN BARLOWCAMERON SORAN (Law Student)Attorney for Plaintiff/Appellant40 North 300 East, Suite 101St. George, UT 84770Telephone: (435)634-1200
E.CRAIG SMAYAttorney for Plaintiff/Appellant174 E. South TempleSalt Lake City, UT 84111-1102Telephone: 801-539-8515
ORAL ARGUMENT REQUESTED
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TABLE OF CONTENTS
TABLE OF CONTENTS ........................................................................................ i
TABLE OF AUTHORITIES ................................................................................... iii
INTRODUCTION ..................................................................................................... 1
RESPONSE TO COUNTERSTATEMENT OF THE ISSUES PRESENTED ON
APPEAL ..................................................................................................................... 3
RESPONSE TO STANDARD OF REVIEW ............................................................ 6
SUMMARY OF ARGUMENT ................................................................................. 6
ARGUMENT ............................................................................................................. 9
I. THE DISTRICT COURT SHOULD ONLY HAVE EXERCISED
JURISDICTION IN THIS CASE IF THE NATIONAL BANK ACT
COMPLETELY PREEMPTED THE RELEVANT UTAH STATUTES ...........10
II. THE NATIONAL BANK ACT DOES NOT PREEMPT EITHER UTAH
STATUTE .............................................................................................................12
A. The Presumption Against Preemption Applies in this Case .......................12
B. As Stated Previously, the NBA does not Preempt either Utah Statute .......14
C. Defendants Analysis of 12 U.S.C. 92a and Associated Regulations isIncorrect .............................................................................................................14
D. Defendants Reliance on the OCC Interpretive Letters is Unavailing .........17
E. Defendants Other Arguments are Unavailing............................................19
F. The National Bank Act does not Completely Preempt both Utah Statutes
20
III. THE PREMISE OF RECONTRUSTS ARGUMENT IS THAT STATE
LAWS DO NOT APPLY TO NATIONAL BANKS ...........................................21
A. The Historical Overview of the Subjection of National Banks to State
Laws According to the Supreme Court .............................................................21
B. The Correct Interpretation of How Utah State Laws Apply to National
Banks .................................................................................................................23
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CONCLUSION ........................................................................................................26
STATEMENT REGARDING ORAL ARGUMENT .............................................26
ATTACHMENTS
1. Defendants Memorandum in Opposition to Plaintiff Peni Coxs Motion forPartial Summary Judgment
2. Declaration of Richard F. Ensor Requesting Judicial Notice in Connectionwith Reply Brief in Support of Motion to Dismiss
3. Peni Cox Deed of Trust
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TABLE OF AUTHORITIES
Cases
770 PPR, LLC v. TJCV Land Trust, 30 So.3d 613 (Fla. App. 2010) ......................19
American Bush v. City of South Salt Lake, 42 Fed.Appx. 308 (2002) ....................11
Anderson Nat. Bank v. Luckett, 321 U.S. 233 (1944) ..............................................22
Attorney General of Oklahoma v. Tyson Foods, Inc., 565 F.3d 769 (2009) ............. 6
Bank of Am. v. City & County of San Francisco, 309 F.3d 551 (9th Cir. 2002) .....24
Barnett Bank of Marion County v. Nelson, 517 U.S. 25(1996) ........................ 12, 22
Bauchman ex rel. Bauchman v. West High Sch., 132 F.3d 542 (10th Cir.1997) ....10
Beneficial Natl Bank v. Anderson, 539 U.S. 1 (2003) ..................... 9, 10, 11, 20, 21
Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343 (1988) ......................................7, 10
Caterpillar Inc. v. Williams, 482 U.S. 386, (1999) ..................................................21
Christensen v. Harris County, 529 U.S. 576 (2000) ...............................................18
City of Burbankv.Lockheed Air Terminal, Inc., 411 U.S. 624 (1973) ...................13
Cuomo v. Clearing House Ass'n, L.L.C., 129 S. Ct. 2710, 2720-21 (2009).... passim
Enterprise Intern., Inc. v. Corporation Estatal Petrolera Ecuatoriana, 762 F.2d
464 (5th Cir. 1985) .................................................................................................. 4
First Nat'l Bank v. Dickinson, 396 U.S. 122 (1969) ................................................23
First National Bank in St. Louis v. Missouri, 263 U.S. 640, (1924) .......................23
Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963) ..................13
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Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern
Cal.,463 U.S. 1 (1983) ..........................................................................................21
Indiana National Bank v. Roberts, 326 So.2d 802 (Miss. 1976) .............................19
Jones v.Rath Packing Co., 430 U.S. 519 (1977) ............................................. 12, 13
National Bank v. Commonwealth, 9 Wall. 353 (1870) ............................... 13, 22, 23
Nat'l State Bank v. Long, 630 F.2d 981 (3d Cir.1980) ............................................24
Perdue v. Crocker Nat'l Bank, 38 Cal.3d 913 (1985) ..............................................24
Pullman Co. v. Jenkins, 305 U.S. 534 (1939) ..........................................................10
Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947) .................................... 12, 13
United States v.Bass, 404 U.S. 336 (1971) .............................................................12
United States v. Mead Corp., 533 U.S. 218 (2001) .................................................18
Waite v. Dowley, 94 U.S. 527, (1876)......................................................................22
Watters v. Wachovia Bank, N.A., 550 U.S. 1 (2007) .................................. 12, 14, 23
Wells Fargo Bank N.A. v. Boutris, 419 F.3d 949 (9th Cir. 2005) ...........................19
Statutes
12 U.S.C. 43 ..........................................................................................................18
12 U.S.C. 92a ................................................................................................... passim
28 U.S.C. 1292...4
28 U.S.C. 1367......................................................................................................11
28 U.S.C. 1441 ........................................................................................... 2, 10, 11
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Utah Code 7-1-704 ................................................................................................25
Utah Code 16-10a-1501........................................................................... 14, 19, 25
Utah Code 16-10a-1502.......................................................................................... 4
Utah Code 16-10a-1505....................................................................................5, 14
Utah Code 57-1-21......................................................................................... 14, 25
Rules
Fed. R. App. P. Rule 28(c) ......................................................................................... 1
Regulations
12 C.F.R. 9.7......15, 16, 23, 24
12 C.F.R. 5.34...19
12 C.F.R. 55715
Other AuthoritiesActivities Permissible for a National Bank ..............................................................16
Comptrollers Licensing Manual, Fiduciary Powers ...............................................16
OCC Interp. Letter No. 1103 ...................................................................................18
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This is an appeal of an Interlocutory Decision by the District Court that
lifted an injunction issued by the State Court.
This Court has jurisdiction under 28 U.S.C. 1441(b).
Except as provided in subsections (c) and (d) of this section, thecourts of appeals shall have jurisdiction of appeals from: (1)Interlocutory orders of the district courts of the United States, ofthe judges thereof, granting, continuing, modifying, refusing ordissolving injunctions, or refusing to dissolve or modify injunctions,except where a direct review may be had in the Supreme Court[.]
This section, under which Cox appeals, allows this court to review an interlocutory
order of a district court that dissolved an injunction. The District Court entered an
Interlocutory order in which it ruled it had jurisdiction to lift the State Court
injunction based upon the fact the preemption exists which allows ReconTrust to
operate in the State of Utah without being subject to state laws because ReconTrust
is a National Bank. This court need not review the merits of the injunction itself
because that is not the basis of this appeal, but this court must review the District
Courts decision upon which the District Court determined the State Court
Injunction invalid.
Cox submits to this Court that there are three possible scenarios presented by
this appeal:
(1) The District Court lacks jurisdiction. This being so, the case should
be remanded to the State Court, Injunction intact.
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(2) The District Court has jurisdiction but made an error in its interpretation
of the National Bank Act and the ability of a National Bank to preempt State
statutes. The result would be that the District court retains jurisdiction, but, based
on Utah law, the injunction must be reinstated or a new injunction issued.
(3) The District Court has jurisdiction and did not error in its interpretation
of the National Bank Act. This is the position of ReconTrust which Cox wholly
disputes.
Cox declines to argue the merits of the injunction because the injunction
itself is not the basis of the appeal, but a more substantial issue of preemption1 that
was addressed in the Interlocutory order is what Cox submits to this court as the
basis of appeal.
RESPONSE TO COUNTERSTATEMENT OF THE ISSUES PRESENTED ON
APPEAL
The Defendants suggest that Plaintiff Cox filed the appeal to decide whether
the district court abused its discretion when it dissolved the state court injunction.
See Respondents Brief p. 3. This is incorrect. The threshold question here is
whether the [district] court has subject matter jurisdiction over this action. District
Court Memo. Dec. at 2. Plaintiff filed an interlocutory appeal pursuant to 28
1The question becomes whether the National Banking Act completely preempts these Utahcauses of action allowing for removal in this case. Appellant Brief Attachment 1, Memo. Dec.p. 8.
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U.S.C. 1292(a) for this court to review an interlocutory order of a district court that
dissolved an injunction.
The threshold question for modification of an injunction is whether the
district court has jurisdiction, not whether the district court abused its discretion in
dissolving the injunction. See Enterprise Intern., Inc. v. Corporation Estatal
Petrolera Ecuatoriana, 762 F.2d 464, 470-71 (5th Cir. 1985) (a district court must
have valid jurisdiction before entering an order respecting interlocutory injunctive
relief); Respondents Brief p. 13 (agreeing with this point). The district court ruled
that it held jurisdiction on the sole grounds of complete preemption of both Utah
statutes. District Court Memorandum Opinion p. 2
Defendants contend that the injunction as a result of their failure to register
as a foreign corporation is procedurally invalid. The State Court correctly issued
the injunction. The Defendants reach their conclusion as a result of their flawed
reading of the statute.
The Utah registration statute is stated thusly:
16-10a-1502. Consequences of transacting business withoutauthority.(5) Upon a finding by the court that a foreign corporation or any of its
officers or agents have transacted business in this state in violation ofthis part, the court shall issue, in addition to or instead of a civilpenalty, an injunction restraining the further transaction of thebusiness of the foreign corporation and the further exercise of anycorporate rights and privileges in this state. Upon issuance of theinjunction, the foreign corporation shall be enjoined from transactingbusiness in this state until all civil penalties have been paid, plus any
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interest and court costs assessed by the court, and until the foreigncorporation has otherwise complied with the provisions of this part.
The State Court received evidence that ReconTrust, Bank of America, and
MERS are not registered to do business in the State of Utah. The State Court then
issued an injunction as it is directed to do so under the statute.
ReconTrust reads the statute thusly:
If a foreign corporation is found to be in violation of these provisions,section 1502(5) permits a court issue an injunction restraining thefurther transaction of the business of the foreign corporation and the
further transaction of the business of the foreign corporation and thefurther exercise of any corporate rights and privileges in this state.Respondents Brief Foot note 6 page 32.
ReconTrust believes that the injunction was permissive, and ReconTrust
wants this court to think that the State Court was outside its boundaries when it
issued the injunction. According to the plain language of the statute, an injunction
was mandatory. If ReconTrust has issue with the fact that the statute requires an
injunction they need to challenge the statute in court, not simply try to convince
this Court that the statute says something other than what it actually does.
Thus, the question of whether the District Court properly exercised
jurisdiction is the only question on appeal which this Court must answer. This
Court need not determine the validity of the injunction issued by the State Court.
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RESPONSE TO STANDARD OF REVIEW
Defendants argue that the standard of review in this case is abuse of
discretion. See Respondents Brief p. 13. Defendants are incorrect. The standard
of review for this case is de novo. See Appellants Brief p. 2. Even assuming
Defendants view ofthe issues on appeal is correct, the standard of review is still
de novo.Attorney General of Oklahoma v. Tyson Foods, Inc., 565 F.3d 769, 776
(10 Cir. 2009).
SUMMARY OF ARGUMENT
The District Court did not have the power to dissolve the Injunction issued
by the State Court. The District Court claimed that complete preemption existed
making Plaintiffs claims federal, and that it had jurisdiction over the issues
enabling it to enter a ruling dissolving the injunction. District Court Memo. Dec.
at 17. The District Court held that there are only two possible grounds for
concluding that the court could retain jurisdiction and dissolve the injunction.
District Court Memo. Dec. at 3. First, if supplemental jurisdiction existed, then the
District Court could have exercised jurisdiction.Id. Second, if the National Bank
Act (NBA) completely preempted both Utah statutes, then the District Court could
have exercised jurisdiction.Id. Neither supplemental jurisdiction nor complete
preemption however, is present in this case.
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First, there was no supplemental jurisdiction at the time of removal, since
Plaintiffs state law claims were not so related to her RESPA claim that they
formed part of the same case or controversy. District Court Memo. Dec. at 3.
Even if they did, a District Court should not exercise supplemental jurisdiction
when the federal law claims are no longer present. Carnegie-Mellon Univ. v.
Cohill, 484 U.S. 343, 350 (1988).
Second, the NBA does not completely preempt both Utah statutes.
Plaintiff has already thoroughly demonstrated this point in the original brief, and
all of Defendants arguments in their response are unavailing.
(1)Despite the Defendants assertions to the contrary, the presumptionagainst preemption does apply here. Cuomo v. Clearing House Assn,
L.L.C., 129 S. Ct. 2710, 2720-21 (2009).
(2)Moreover, 12 U.S.C. 92a and associated regulations do not preempt bothUtah statutes, since neither statue is an exercise of visitorial powers nor
specifically preempted by 12 U.S.C. 92a and associated regulations.
Indeed, the only interpretation that would allow for 12 U.S.C. 92a and
associated regulations to preempt both Utah statutes would make national
banks completely immune to all State laws, a clearly absurd result.
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(3)Nor is the Defendants reliance on the OCC interpretation lettersparticularly persuasive, since they are neither binding, nor do they
specifically address the question at issue.
(4)Defendants other arguments are neither persuasive nor on point.(5)Defendant now serially shifts positions to disguise the fact that no similar
institution, state or federally chartered, is given power of sale as trustee
of a trust deed by Utah law. First defendant claimed to be a depository
institution2
in obtaining reversal of the state court injunction. Next,
Defendants claimed to be a Trust (Non-Deposit) and a non-depository
institution.3 It appearing that trust companies also lack power of sale
under Utah law, defendant now claims that federally chartered trust
companies have power of sale by implication from their trust powers,
though state trust companies do not.
(6)Lastly Defendants position is undermined by the very instrument theywish to enforce, the Deed of Trust. Under paragraph 16 of the Deed of
2Utah Code 57-1-21 provides a list of persons eligible to act as trustees in Utah. Theseinclude members of the Utah state bar, depository institutions, and title insurance companies.Utah Code 57-1-21. ReconTrust is not permitted to serve as a trustee under this Utahregulation. This restriction on ReconTrusts ability to act as a trustee clearly conflicts with 12
U.S.C. 92a(b) because Utah Code 57-1-21 allows a depository institution, which isunquestionably a competitor of a national bank, to act as a trustee. (Memo. Dec. [Doc. # 45] at
14.) Preemption principles thus bar the application of 57-1-21 to ReconTrust, and Plaintiffsrequest for summary judgment on her claim based on that statute must be denied. DefendantsMemo. in Opp., [Doc. #58] at 6, Attach. 1.3The Court can take judicial notice of the fact that ReconTrust Company, N.A. is a non-depository institution as that fact is set forth in the public records. Dec. Richard Ensor [Doc. #66] at 2, par. 2, Attach. 2.
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Trust states This Security Instrument shall be governed by federal law
and the law of the jurisdiction in which the property is located. Attach.3.
Even if the NBA did preempt either Utah statute, the NBA does not
completely preempt them. Federal preemption requires that the State statute
conflicts with the federal statute, but complete preemption requires that the NBA
provide the exclusive cause of action for the claim asserted and also set forth
procedures and remedies governing that cause of action.Beneficial Natl Bank v.
Anderson, 539 U.S. 1, 8 (2003) (emphasis added). This standard, as articulated by
the Supreme Court, is simply not present in this case.
Thus, the District Court incorrectly exercised jurisdiction in this case, and
this Court should remand this case to the State trial court, or in the alternative issue
an order to the District Court to correct its ruling.
ARGUMENT
Plaintiff will not restate all of the same arguments already presented within
Plaintiffs opening brief. Rather, Plaintiff will only focus on responding to
arguments that Respondent raises that the Plaintiff has not already covered in the
opening brief.
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I. THE DISTRICT COURT SHOULD ONLY HAVE EXERCISED
JURISDICTION IN THIS CASE IF THE NATIONAL BANK ACT
COMPLETELY PREEMPTED THE RELEVANT UTAH STATUTES
A defendant may remove a civil action filed in state court to federal court if
a claim arises under federal law. 28 U.S.C. 1441(b) (2010). In determining if a
claim arises under federal law, courts examine the well pleaded allegations of the
complaint and ignore potential defenses.Beneficial Natl Bankv. Anderson, 539
U.S. 1, 6 (2003) and 28 U.S.C. 1441 (2010). The action here was removed solely
on the basis of an original claim under RESPA. Since Cox amended her complaint
to voluntarily dismiss the RESPA claim and include only state claims, there are
only two possible grounds for the District Court to retain jurisdiction. Removal is
not available to re-institute the RESPA claim for decision.
(1)The court may exercise supplemental jurisdiction if it concludes that the
state law claims are so related to her RESPA claim that they form part of the
same case or controversy.28 U.S.C. 1367(a) (2010). It is not necessary that the
plaintiff alleges no federal claim now, since the court must determine the right to
remove at the time of the petition for removal. Pullman Co. v. Jenkins, 305 U.S.
534, 537 (1939). However, the District Court should refuse supplemental
jurisdiction if the federal claims are no longer present. Carnegie-Mellon Univ. v.
Cohill, 484 U.S. 343, 350 (1988);Bauchman ex rel. Bauchman v. West High
Sch., 132 F.3d 542, 549 (10th Cir.1997);American Bush v. City of South Salt Lake,
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42 Fed.Appx. 308, 310 (2002). The cases cited by defendant (e.g.Boelens, 759
F.2d 504 (5 Cir. 1985); Westmoreland, 605 F.2d 119 (3 Cir. 1979)) nowhere
suggest that voluntary dismissal of a federal claim after removal leaves the federal
court with jurisdiction to review and reverse prior state law decisions of the state
court. Such decisions would be protected by at least comity and the law of the
case.
Bank of Americas alleged RESPA and TILA violations, that were dropped
from Coxs amended complaint, are not related to ReconTrusts power to sell Ms.
Coxs home, let alone so related that they form part of the same case or
controversy. 28 U.S.C. 1367(a) (2010). Indeed, the District Court concluded
that it would be incorrect to exercise supplemental jurisdiction in this case. District
Court Memorandum opinion at 3.
(2) The defendant may remove to federal court when a federal statute wholly
displaces a State law cause of action through complete preemption.4Beneficial
Natl Bankv. Anderson, 539 U.S. 1, 8 (2003) and 28 U.S.C. 1441 (2010).
Complete preemption only occurs when the federal statutes at issue provide the
exclusive cause of action for the claim asserted and also set forth procedures and
remedies governing that cause of action.Beneficial Natl Bank v. Anderson, 539
4 Diversity of citizenship was not asserted as a ground for removal. Further, diversity may not beresorted to for removal of a matter in which the state court has ruled on a state law issue, toobtain review of that decision by the federal court.
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U.S. 1, 8 (2003) (emphasis added). In other words, the cause of action, even if
pleaded in terms of state law, is in reality based on federal law.Id.
Thus, in order for complete preemption to occur here, the NBA must not
simply interfere with the state law claims, but the NBA must completely control
this specific cause of action by the Plaintiff. In this case it does not. See for
example Cuomo at 2720-21, Stateshave always enforced their general laws
against national banks--and have enforced their banking-related laws against
national banks;Watters, at 12; andBarnett Bank of Marion County v. Nelson, 517
U.S. 25, 31 stating the NBA preempts state law whenever a state law directly
conflicts with a specific federal statute, or the state law would significantly
impair a specific federal statute.
II. THE NATIONAL BANK ACT DOES NOT PREEMPT EITHER
UTAH STATUTE
A. The Presumption Against Preemption Applies in this Case
The presumption against preemption applies when the area of law is
historically under the States police powers.Rice v. Santa Fe Elevator Corp., 331
U.S. 218, 230 (1947). This assumption provides assurance that "the federal-state
balance," United States v.Bass, 404 U.S. 336, 349 (1971), will not be disturbed
unintentionally by Congress or unnecessarily by the courts.Jones v.Rath Packing
Co., 430 U.S. 519, 525 (1977).
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This presumption against preemption however, does not apply when
Congress has unmistakably ordained,Florida Lime & Avocado Growers,
Inc. v. Paul, 373 U.S. 132, 142 (1963), that its enactments alone are to regulate a
part of commerce, state laws regulating that aspect of commerce must fall. This
result is compelled whether Congress' command is explicitly stated in the statute's
language or implicitly contained in its structure and purpose. City of
Burbankv.Lockheed Air Terminal, Inc., 411 U.S. 624, 633 (1973);Rice at 230;
Jones at 525. However, States, on the other hand, have always enforced their
general laws against national banks--and have enforced their banking-related laws
against national banks. Cuomo at 2720-21. As both Utah statutes are general laws,
applying to national banks and non-national banks alike, they merit presumption
against preemption under the Courts analysis.
Furthermore, [N]ational Banks acquisition and transfer of property [are]
based on state law. Watters at 6, quotingNational Bank v. Commonwealth, 9
Wall. 353, 362 (1870). Therefore, since both Utah statutes concern the acquisition
and transfer of property within their borders, they fall within the traditional police
powers of the States. Thus, these statutes merit presumption against preemption
under the Courts analysis.
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B. As Stated Previously, the NBA does not Preempt either Utah Statute
As originally stated in the Appellants Brief, the NBA only preempts a State
statute in two instances. First, when the state exercises visitorial powers. Cuomo at
2721, and Watters at 6. The Supreme Court has defined visitorial powers as a
sovereigns supervisory powers over corporations, including any form of
administrative oversight that allows a sovereign to inspect books and records on
demand. Cuomo, at 2721. But since neither Utah Code 16-10a-15015 nor 57-1-
21(3) are an exercise of visitorial powers, the NBA cannot preempt them.
Second, the NBA preempts state law whenever a state law directly conflicts
with a specific federal statute, or the state law would significantly impair a
specific federal statute. Watters, at 12 andBarnettat 31. However, there is no
specific federal statute that would preempt either State statute.
Consequently, the NBA does not preempt either Utah statute.
C. Defendants Analysis of 12 U.S.C. 92a and Associated Regulationsis Incorrect
Section 92a addresses the applicability of state laws to a national bank's trust
powers:
(a) Authority of Comptroller of the Currency. The Comptroller of theCurrency shall be authorized and empowered to grant by specialpermit to national banks applying therefor, when not in contravention
5 16-10a-1505(3) This chapter does not authorize this state to regulate the organization orinternal affairs of a foreign corporation authorized to transact business in this state.
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of State or local law, the right to act astrustee, executor,administrator, registrar of stocks and bonds, guardian of estates,assignee, receiver, committee of estates of lunatics, or in any otherfiduciary capacity in which State banks, trust companies, or othercorporations which come into competition with national banks arepermitted to act under the laws of the State in which the national
bank is located. (emphasis added). 12 U.S.C. 92a(a).
Therefore, a national bank may receive the legal status as a trustee from the
Comptroller when not in contravention of State or local law within the State in
which it is located.
The Definition ofLocated.
Looking at the plain language of the statute we can determine the definition
of the word located.
(a) Authority of Comptroller of the Currency. The Comptroller of theCurrency shall be authorized and empowered to grant by specialpermit to national banks applying therefor, when not in contraventionof State or local law, the right to act astrustee,or in any otherfiduciary capacity in which State banks, trust companies, or othercorporations which come into competition with national banks are
permitted to act under the laws of the State in which the nationalbank is located. (emphasis added). 12 U.S.C. 92a(a).
Located refers to any State where the national bank is in competition with State
banks.
The OCC interprets locate not as defining situs in one state, but in any
State in which the national bank is in competition with State banks. To clarify
locate the Comptroller promulgated 12 C.F.R. 9.7. The state laws that apply
to a national bank's fiduciary activities by virtue of 12 U.S.C. 92a are the laws of
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the State in which the bank acts in a fiduciary capacity. 12 C.F.R. 9.7 (e). A
national bank acts in fiduciary capacity in the State in which it accepts the
fiduciary appointment, executes the documents that create the fiduciary
relationship, and makes discretionary decisions regarding the investment or
distribution of fiduciary assets. 12 C.F.R. 9.7 (d).
Under the title Fiduciary Activities in Activities Permissible for a National
Bank, published in April of 2010, the OCC says:
Fiduciary Activities, In Gerneral. National banks with fiduciarypowers (which may be granted at the time of the chartering orsubsequently on application to the OCC) are subject to federal rulesthat define fiduciary standards and authorize national banks to operatein the same capacities as fiduciaries are permitted to operate6in theStates
7where the bank conducts its trust activities(emphasis
added). 12 USC 92a and 12 CFR 9. (P.42)
In the Comptrollers Licensing Manual, Fiduciary Powers, published in June 2002,
the OCC says:
Fiduciary powers mean the authority the OCC permits a bank toexercise pursuant to 12 USC 92a. The extent of fiduciary powers isthe same for out-of-state national banks as for instate national banksand that extent depends upon what powers the state grants to thefiduciaries in the state with which the national banks compete. (p.2).
A bank with existing fiduciary powers may offer services inmultiple states through branches, trust offices, or trust representative
offices in such states. Such a bank may exercise any of the fiduciarypowers granted in 12 USC 92a(a) in any state, unless that state
6In Watters the Supreme Court used the word operate interchangeably with locate when
discussing an analogous situation involving the location of a subsidiary bank.7Note that States is plural, meaning that the bank can operate and conduct its activities in morethan one State.
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prohibits both national banks and competing institutions in its ownstate from exercising that fiduciary power. (p.3).
Where is ReconTrust Located?
ReconTrust, as a national bank comes into competition with which State
banks? Utah State banks. ReconTrust is not competing with California State
banks in Utah. ReconTrust is not competing with Texas State banks in Utah.
ReconTrust is not competing with Utah State banks in Texas or California.
ReconTrust is competing with Utah State banks and/or trust companies.
ReconTrust is located in Utah.
ReconTrust is Located in Utah, California, Texas, Arizona, Alaska, Arkansas,
Idaho, Mississippi, Montana, Nebraska, Nevada, Oregon, Tennessee, Virginia,
and Washington.
According to the ReconTrust website, ReconTrust is located in 15 States.
ReconTrust claims it is headquartered in California and its trust operations for
Utah foreclosures take place in Texas. Appellee Brief pg. 41. ReconTrust at least
admitsto being located in at least two places, California and Texas.
D. Defendants Reliance on the OCC Interpretive Letters is Unavailing
Defendants incorrectly rely on the OCC interpretive letters. See
Respondents Brief at p. 34-35.
First, the OCC Interpretive Letters are not binding. The 1994 amendments
on the NBA recognized that the OCC had been issuing interpretive letters on
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federal preemption. See 12 U.S.C. 43. However, by its own language, 43 does
not confer any authority on the OCC to make binding determinations concerning
statutory preemption.Id. Rather, 43(a) requires the OCC to follow notice-and-
comment procedures before issuing any opinion letter or interpretive rule that
concludes that Federal law preempts the application to a national bank of any State
law regarding community reinvestment, consumer protection, fair lending, or the
establishment of intrastate branches. The crucial phrase here, opinion letter or
interpretive rule, makes it clear that these types of administrative actions do not
have any force of law and generally are not eligible for Chevron deference.
See United States v. Mead Corp., 533 U.S. 218 (2001); Christensen v. Harris
County, 529 U.S. 576 (2000).
Second, Defendants appear to over-read these OCC interpretive letters. In
each instance, the OCC appears to adhere to the analysis that the Plaintiff set out in
the original brief. See Petitioners Brief at p. 14-15. The NBA preempts State law
when it attempts to exercise visitorial powers, or when there is a specific federal
law on point. See OCC Interp. Letter No. 1103 (North Carolina law specifically
conflicting with 12 U.S.C. 92a). As stated previously, neither situation is present
here. See Petitioners Brief.
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E. Defendants Other Arguments are Unavailing
First, Defendants argue that Utah Code 16-10a-1501 is an exercise of
visitorial powers. However, for the reasons stated in the Petitioners original brief,
this argument is unpersuasive.
Second, Defendants urge reliance on three more non-binding cases that they
believe to be persuasive in this case: Wells Fargo Bank N.A. v. Boutris, 419 F.3d
949 (9th Cir. 2005); 770 PPR, LLC v. TJCV Land Trust, 30 So.3d 613 (Fla. App.
2010);Indiana National Bank v. Roberts, 326 So.2d 802 (Miss. 1976). Not only
are these cases non-binding, they are not particularly persuasive.
Boutris held that the OCCs extensive regulation concerning operating
subsidiaries of a national bank (12 C.F.R. 5.34) preempted a blatant exercise of
visitorial powers over a subsidiary of a national bank.Boutris, 419 F.3d at 949-70.
Both TJCVandRoberts held that a State cannot prohibit a national bank from
filing suit or being sued due to a specific federal law stating to the contrary. It is
not clear how these cases are particularly analogous, let alone persuasive, to the
current dispute.
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Third, Defendant argues that Plaintiff Cox uses this appeal as a challenge to
remand ruling. This is incorrect. Plaintiff filed this appeal to challenge the district
courts ruling that the NBA completely preempted both Utah statutes. Such a
decision implies that State regulations concerning commercial and real property
law cannot apply to national banks, a completely absurd result and one that
conflicts with the long history of federal law concerning State regulation of
national banks.
F. The National Bank Act does not Completely Preempt both UtahStatutes
As stated above, the NBA does not preempt either Utah statute. However,
the standard here is not that the National Bank Act must preempt these statutes, but
that they must completely preempt them. Complete preemption only occurs
when the federal statutes at issue provide the exclusive cause of action for the
claim asserted and also set forth procedures and remedies governing that cause of
action.Beneficial Natl Bank v. Anderson, 539 U.S. 1, 8 (2003) (emphasis added).
In other words, the cause of action, even if pleaded in terms ofState law, is in
reality based on federal law.Id.
Under the well-pleaded-complaint rule, a federal court does not have
original jurisdiction over a case in which the complaint presents a State-law cause
of action, but also asserts that federal law deprives the defendant of a defense he
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may raise, ... or that a federal defense the defendant may raise is not sufficient to
defeat the claim.Franchise Tax Bd. of Cal. v. Construction Laborers Vacation
Trust for Southern Cal., 463 U.S. 1, 10 (1983). [A] case maynotbe removed to
federal court on the basis of ... the defense of pre-emption ....Caterpillar Inc. v.
Williams, 482 U.S. 386, 393, 107 S.Ct. 2425 (1999). To be sure, preemption
requires a State court to dismiss a particular claim filed under State law, but it does
not, as a general matter, provide grounds for removal.
Even assuming arguendo that Defendant ReconTrust is correct in asserting
that the National Bank Act preempts both Utah statutes, the National Bank Act
does not provide for the exclusive cause of action for the claim asserted and also
set forth procedures and remedies governing that cause of action in all State
agency registration andtrustee power of sale cases based on State law. (Emphasis
added).Beneficial at 8.
Therefore, the District Court incorrectly ruled that the National Bank Act
completely preempts both Utah statutes.
III. THE PREMISE OF RECONTRUSTS ARGUMENT IS THAT STATE
LAWS DO NOT APPLY TO NATIONAL BANKS
A. The Historical Overview of the Subjection of National Banks to StateLaws According to the Supreme Court
So of the banks. They are subject to the laws of the State, and are
governed in their daily course of business far more by the laws of theState than of the Nation. *** It is only when the State law
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incapacitates the banks from discharging their duties to thegovernment that it becomes unconstitutional. National Bank v.
Commonwealth, 76 U.S. 353, 362 (1869).
We have more than once held in this court that the national banksorganized under the acts of Congress are subject to State Legislation,except were such legislation is in conflict with some act of Congress,or where it tends to impair or destroy the utility of such banks, asagents or instrumentalities of the United States, or interferes with thepurposes of their creation. Waite v. Dowley, 94 U.S. 527, 533(1876).
National banks are brought into existence under the federallegislation, are instrumentalities of the federal government and are
necessarily subject to the paramount authority of the United States.Nevertheless, national banks are subject to the laws of a state inrespect of their affairs, unless such laws interfere with the purposes oftheir creation, tend to impair or destroy their efficiency as federalagencies, or conflict with the paramount law of the United States.First National Bank in St. Louis v. Missouri, 263 U.S. 640, 656(1924).
This Court has often pointed out that national banks are subject tostate laws, unless those laws infringe the national banking laws orimpose an undue burden on the performance of the banks' functions.
Anderson Nat. Bank v. Luckett, 321 U.S. 233, 248 (1944).
In defining the pre-emptive scope of statutes and regulations grantinga power to national banks, these cases take the view that normallyCongress would not want States to forbid, or to impair significantly,the exercise of a power that Congress explicitly granted. To say this isnot to deprive States of the power to regulate national banks, where(unlike here) doing so does not prevent or significantly interfere with
the national bank's exercise of its powers.Barnett Bank of MarionCounty v. Nelson, 517 U.S. 25, 33 (1996).
Federally chartered banks are subject to state laws of generalapplication in their daily business to the extent such laws do notconflict with the letter or the general purposes of the NBA. States arepermitted to regulate the activities of national banks where doing so
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does not prevent or significantly interfere with the national bank's orthe national bank regulator's exercise of its powers.Watters v.Wachovia Bank, 550 U.S. 1, 11, 12 (2007).
No one denies that the National Bank Act leaves in place some statesubstantive laws affecting banks. This [national banking] systemechoes many other mixed state/federal regimes in which the FederalGovernment exercises general oversight while leaving statesubstantive law in place.Cuomo v. The Clearing House Association,
L.L. C. and Office of the Comptroller of the Currency, 129 S. Ct.2710, 2717-18 (2009).
B. The Correct Interpretation of How Utah State Laws Apply to National Banks
Trustee Status in Utah
Defendants suggest that State laws concerning the acquisition and transfer of
property do not apply to national banks. That would mean that Utah could regulate
how individuals and State banks acquire and transfer property, but that these laws
could not apply to national banks. Not only does this run afoul ofSupreme Court
case law ([N]ational Banks acquisition and transfer of property [are] based on
State law. Watters at 6, quotingNational Bank v. Commonwealth, 9 Wall. 353,
362 (1870)), but it also violates States police powers8 and allows national banks to
completely ignore State law. See 12 C.F.R. 9.7 (d).
8See, e.g., 12 C.F.R. 557.13(a) & 560.2(c) (state laws pertaining to contract and commerciallaw, tort law, criminal law, real property law, and homestead law are not preempted by OTSregulations); de la Cuesta, 458 U.S. at 172, 102 S.Ct. 3014 (Nothing in the language of ...HOLA ... suggests that Congress intended to permit the [OTS] to displace local laws, such as taxstatutes and zoning ordinances, not directly related to savings and loan practices.) (O'Connor, J.,
concurring); First Nat'l Bank v. Dickinson, 396 U.S. 122, 90 S.Ct. 337, 24 L.Ed.2d 312 (1969)(allowing application of a Florida branch bank statute to national banks in the state); FranklinNat. Bank v. New York, 347 U.S. 373, 378 n. 7, 74 S.Ct. 550, 98 L.Ed. 767 (1954) ( [N]ationalbanks may be subject to some state laws in the normal course of business if there is no conflict
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The Defendants also contend that 12 CFR 9.7(e) grants them the power of
sale. Both the plain and correct reading of this statute is thatfederal law limits the
assignment to national banks of authority to act only when not in contravention of
State or local law. A federally chartered trust company can have no power
conferred upon it by the comptroller which is not conferred by State law, such as
57-1-21, UCA (1953), upon similar State chartered institutions.
But the Defendants then take this regulation to justify that they may ignore
any State law that they believe limitsor establishes preconditions on their
ability to act as a trustee. The Defendants completely misunderstand 9.7(e). This
regulation was meant to ensure that national banks may have the legal authority to
act as a trustee (among the other fiduciary capacities) - not to ignore the laws of the
States in which they do business. IfReconTrusts reading was correct, then a
national bank could ignore all State laws since they would potentially limit or
establish preconditions on their ability to act in fiduciary capacity. Indeed, it is
difficult to imagine a single economic or property regulation that a State could
promulgate that would not in some way limit a national banks ability to act in
one of its eight fiduciary capacities.
with federal law.); see alsoNat'l State Bank v. Long, 630 F.2d 981, 985 (3d Cir.1980)([R]egulation of banking has been one of dual [federal-state] control since the passage of thefirst National Bank Act in 1863.); Perdue v. Crocker Nat'l Bank, 38 Cal.3d 913, 937, 216Cal.Rptr. 345, 702 P.2d 503 (1985) (Congress has declined to provide an entire system offederal law to govern every aspect of national bank operations.), appeal dismissed, 475 U.S.1001, 106 S.Ct. 1170, 89 L.Ed.2d 290 (1986) (noting lack of jurisdiction).Bank of Am. v. City & County of San Francisco, 309 F.3d 551, 566 (9th Cir. 2002)
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The correct reading is that a national bank may receive the legal status as a
trustee from the Comptroller when not in contravention of State or local law of
the State in which it acts with fiduciary capacity. However, a national bank must
still respect the method in which a State regulates the acquisition and transfer of
property.
Registration of Foreign Corporations in Utah
ReconTrust claims that the Utah registration statute inhibits the OCCs
ability to authorize a national bank to conduct the business of banking. Appellees
Brief p. 32-3. Once again, this is an overgeneralization.
Utah Code Section 16-10a-1501(1) requires foreign corporations to register
with the division [of corporations]. Utah Code Section 7-1-704 requires financial
institutions to register with the State Department of Financial Institutions. The
irony here is that Countrywide Home Loans, of which ReconTrust is a subsidiary,
or which is also a subsidiary of BAC, and doing business in the State of Utah, is
registered with both State agencies.
Registration with the State is not a licensing activity. No requirements are
made. Everyone can register any business entity they want. The cost is $70.00.
Articles of Incorporation must be filed and the Registered Agent must be
identified.
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The public policy under this statute is that registration makes it easier for
citizens to obtain service of process on out-of-state corporations doing business in
the State.
The OCC may give ReconTrust the necessary authority to carry on business
as a National Bank. However, the status of national bank is not license for
ReconTrust to operate in any fashion it wants. Necessary does not equate to
sufficient. As Plaintiff stated previously in Coxs opening brief, the Utah statute
requiring registration of a Foreign Corporation does not require any visitation, and
the policy behind the statute is that it makes it easier for citizens to obtain service
of process on out-of-state corporations doing business in Utah.
CONCLUSION
For the foregoing reasons, this Court must reverse the order of the District
Court in which it retains jurisdiction, and remand to the State trial Court. Or,
alternatively issue an order to the District Court to correct its ruling.
STATEMENT REGARDING ORAL ARGUMENT
Since this case presents certain key issues concerning the National Bank Act
and its relationship to State law within the Tenth Circuit, we believe that Oral
Argument is necessary.
DATED this _3___ day of November, 2010./s/ John Christian Barlow
John Christian BarlowAttorney for Plaintiff/Appellant
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CERTIFICATE OF COMPLIANCE WITH RULE 32(a)
1. This brief complies with the type-volume limitations of Fed. R. App. P.32(a)(7)(B) because it contains 6312 words, excluding the parts of the briefexempted by Fed R. App. P. 32(a)(7)(B)(iii), as counted by Microsoft Word 2007the word processing software used to prepare this brief.
2. This brief complies with the typeface requirements of the Fed. R. App. P.32(a)(5) & (6) because it has been prepared in 14 point Times New Romanaplain, Roman, proportionally spaced typefaceusing Microsoft Word 2007, theword processing software used to create prepare this brief.
DATED this __3__ day of November, 2010./s/ John Christian Barlow
John Christian BarlowAttorney for Plaintiff/Appellant
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CERTIFICATE OF COMPLIANCE WITH THE GENERAL ORDER ON
ELECTRONIC FILING
This brief complies with this Courts March 18, 2009 general order
regarding electronic filing because:
(1) all required privacy redactions have been made;
(2) the ECF submission is an exact copy of the 7 hard copies of this briefand documents, which will be submitted within 2 business days of the ECFfiling;
(3) the ECF submission was scanned for viruses with the most recent versionof AVG, and according to the program is free of viruses.
DATED this __3__ day of November, 2010./s/ John Christian Barlow
John Christian BarlowAttorney for Plaintiff/Appellant
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CERTIFICATE OF SERVICE
I do hereby certify that on this _3___ day of November, 2010, I caused to beelectronically served a true and correct copy of the foregoing REPLY BRIEF OFAPPELLANT to the following:
E. Craig Smay174 E. South TempleSalt Lake City, UT 84111(801) 539-8515Fax: (801) 539-8544
Cameron Soran (Law Student)40 N. 300 E. # 101
Saint George, Utah 84771Telephone: (253) 250-9449
Michael Huber8170 S. Highland Drive, Suite E5Sandy, Utah 84093
Richard F. Ensor (10877)VANTUS LAW GROUP, P.C.3165 East Millrock Drive, Suite 160Salt Lake City, Utah 84121Telephone: (801) 833-0500Facsimile: (801) 931-2500
Roy W. Arnold (Admitted pro hacvice)REED SMITH LLPReed Smith Centre225 Fifth Avenue
Pittsburgh, PA 15222Telephone: (412) 288-3916Facsimile: (412) 288-3063
Amir Shlesinger (Admitted pro hacvice)REED SMITH LLP355 South Grand Avenue, Suite 2900Los Angeles, CA 90071-1514Telephone: (213) 457-8000
Facsimile: (213) 457-8080
James MartinReed Smith LLP225 Fifth AvenuePittsburgh, [email protected]: (412) 288-3131
David BirdReed Smith LLP225 Fifth AvenuePittsburgh, [email protected]: (412) 288-3131
/s/ John Christian Barlow
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ATTACHMENT 1
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Richard F. Ensor (10877)
VANTUS LAW GROUP, P.C.
3165 East Millrock Drive, Suite 160
Salt Lake City, Utah 84121Telephone: (801) 833-0500
Facsimile: (801) 931-2500
Roy W. Arnold (Admittedpro hac vice)
REEDSMITHLLP
Reed Smith Centre225 Fifth Avenue
Pittsburgh, PA 15222
Telephone: (412) 288-3916Facsimile: (412) 288-3063
Amir Shlesinger (Admittedpro hac vice)REED SMITH LLP355 South Grand Avenue, Suite 2900Los Angeles, CA 90071-1514Telephone: (213) 457-8000Facsimile: (213) 457-8080
Attorneys for Defendants ReconTrust Company, N.A., BAC Home Loans Servicing, LP(erroneously sued as Bank of America Home Loans Servicing, LP), Bank of America, N.A.
(erroneously sued as Bank of America, FSB), and Mortgage Electronic Registration Systems,
Inc.
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH -
CENTRAL DIVISION
PENI COX, an individual,
Plaintiff,
v.
RECONTRUST COMPANY, N.A., BANK
OF AMERICA HOME LOANS SERVICING,LP; BANK OF AMERICA, FSB, NEW LINEMORTGAGE, DIVISION OF REPUBLIC,
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.; ANDDOES 1-5,
Defendants.
DEFENDANTS MEMORANDUM IN
OPPOSITION TO PLAINTIFF PENI
COXS MOTION FOR PARTIAL
SUMMARY JUDGMENT
Case No. 10-cv-00492
Honorable Clark Waddoups
Magistrate Judge Alba
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I. INTRODUCTIONOn June 7, 2010, only a month after serving her complaint on ReconTrust, N.A.
(ReconTrust), Plaintiff Peni Cox (Plaintiff) filed an emergency motion for partial
summary judgment seeking an adjudication of her first and second claims which allege that
ReconTrust violated registration and trustee qualification requirements set forth in Utah Code
57-1-21 and 16-10a-1501.
Plaintiffs motion raises the same issues previously addressed by this Court in connection
with the motion to dissolve the preliminary injunction filed by ReconTrust and other defendants.
After hearing oral argument, on June 11, 2010, the Court granted the motion to dissolve the
injunction finding that Utah Code 57-1-21 and 16-10a-1501 are preempted by federal law.
(6/11/10 Order [Doc. # 42]; Memo. Dec. [Doc. # 45].) The Courts order and its conclusion that
these statutory provisions are preempted by federal law are dispositive of Plaintiffs first and
second claims. Therefore, this Court should deny Plaintiffs motion for partial summary
judgment.1
II. RESPONSE TO PLAINTIFFS STATEMENT OF UNDISPUTED FACTSPlaintiffs motion is not supported by any competent affidavits, deposition testimony, or
any admissible evidence. Indeed, the motion fails to establish any material facts necessary to
state any claim against ReconTrust, let alone establish any entitlement to judgment against
ReconTrust. Plaintiff does not present evidence to establish even the basic elements of her
claim; namely, that ReconTrust foreclosed on her home in violation Utah Code 57-1-21 and
16-10a-1501. Plaintiffs alleged undisputed material facts are primarily comprised of
improper legal assumptions and conclusions. Paragraphs 4 through 11, for instance, include
1Subsequent to filing her motion for partial summary judgment, Plaintiff moved to dismiss her third, fourth and fifth
claims from the amended complaint, as well as New Line Mortgage as a defendant. (Motion to Amend [Doc. # 49].)
Accordingly, Plaintiffs first and second claims are the only remaining claims in this action, and ReconTrust and the
other remaining defendants filed a motion to dismiss those claims. (Motion to Dismiss [Doc. # 52]; Memo. In
Support [Doc # 53].)
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citations to Utah Code 57-1-21 and 16-10a-1501, as well as citation to inapposite case law
which does not support her motion. Because Plaintiffs motion is not supported by any
admissible evidence, it should be denied for this reason alone.2
In any event, for reasons set
forth below, Plaintiffs motion also should be denied because her claims are preempted by
federal law.
III. LEGAL ANALYSIS AND ARGUMENTA. Legal Standard Governing Rule 56 Motion For Summary Judgment.Federal Rules of Civil Procedure 56 provides that summary judgment can be granted only
if the pleadings, the discovery and disclosure materials on file, and any affidavits show that
there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a
matter of law. Fed. R. Civ. P. 56(c) (emphasis added). When applying this standard, a court
should review the factual record in the light most favorable to the party opposing summary
judgment. Wilkerson v. Shinseki, 606 F.3d 1256, 1262 (10th Cir. 2010). For purposes of
summary judgment, the court should deny a motion for summary judgment if a reasonable jury
could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
249 (1986). Summary judgment will not be granted, even if there is no genuine issue as to any
material fact, where a moving party is not entitled to judgment as a matter of law. See Applied
Genetics Intern., Inc. v. First Affiliated Securities, Inc., 912 F.2d 1238, 1242 (10th Cir. 1990)
2To the extent Plaintiffs statement of facts warrant a specific response under Local Rule 56(c), ReconTrust
responds as follows:
Plaintiff Fact No. 1: Disputed. ReconTrust is a national banking association and is a wholly ownedsubsidiary of Bank of America, N.A. (Aff. Of Jeffrey Aiken [Doc. # 20].) Furthermore, based on the Court's
previous ruling in this case and the arguments below, ReconTrust is authorized to conduct foreclosures in the state
of Utah. (6/11/10 Order [Doc. # 42]; Memo. Dec. [Doc. # 45].)
Plaintiff Fact No. 2-3: Undisputed. These facts are not material to Plaintiffs motion.
Plaintiff Fact Nos. 4-11: Disputed: Plaintiff's assertions are not facts, but rather legal conclusions which
are disputed as set forth below.
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(even if no genuine issue of material fact in dispute, district court must still correctly apply
substantive law);APC Operating Partnership v Mackey, 841 F.2d 1031, 1033 (10th Cir. 1988)
(same); see also Fed. R. Civ. P. 56(c). Where a plaintiff seeks summary judgment of state-law
claims which are preempted by federal law, summary judgment must be denied. See Dadoub v.
Gibbons, 42 F.3d 285, 290 (5th Cir. 1995) (affirming summary judgment for defendant where
plaintiff's state copyright claims preempted by Federal Copyright Act).
B. Plaintiffs First And Second Claims Against ReconTrust Are Preempted ByThe National Bank Act.
Despite this Courts preemption analysis, Plaintiff continues to argue that ReconTrusts
foreclosure of her home violates Utah Code 57-1-21 and 16-10a-1501. Plaintiffs motion as
to her first and second claims fails as a matter of law, however, because this Court already found
that her claims, based on Utah Code 57-1-21 and Utah Code 16-10a-1501, are preempted by
the National Bank Act. (Memo. Dec. [Doc. # 45] at 8-15.)
1. The National Bank Act Specifically Authorizes ReconTrust ToConduct Foreclosures In Utah.
This Court should deny Plaintiffs motion for summary judgment with respect to her first
claim under Utah Code 16-10a-1501 because this Court previously held that Congress intended
to completely preempt the area of requirements a national bank must meet before conducting
business nationwide. (Memo. Dec. [Doc. # 45] at 13.)
Utah Code 1501 and 1502 purport to regulate a national banks ability to transact
business in Utah. Specifically, section 1501 mandates that a foreign corporation may not
transact business in this state until its application for authority to transact business is filed by the
division. Utah Code 16-10a-1501. Where a foreign corporations application is not approved
and filed by the appropriate division, that corporation may not maintain a proceeding in any Utah
state court. Utah Code 16-10a-1502(1). Moreover, if a foreign corporation is found to be in
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violation of these provisions, section 1502(5) permits a court to issue an injunction restraining
the further transaction of the business of the foreign corporation and the further exercise of any
corporate rights and privileges in this state. Utah Code 16-10a-1502(5).
These statutes set out competing state requirements for a bank to transact business,
assign a competing authority to judge if the requirements are met, and provide for competing
remedies for a banks failure to meet the states requirements. (Memo. Dec. [Doc. # 45] at 10.)
However, sections 26, 27, and 42 of the National Bank Act leave no room for Utah Code Ann.
16-10a-1501 and 1502 to regulate national banks. Id. Thus, Plaintiffs claims based on Utah
Code 16-10a-1501 and 1502 are preempted because the Comptroller is intended to be the
exclusive authority on what a national bank must do to transact business in any state under 12
U.S.C. 26-27, 42. Id. at 11. Plaintiffs motion based on this statute accordingly should be
denied.
2. Section 92a Of The National Bank Act Authorizes ReconTrust ToConduct A Foreclosure In Utah As A Trustee.
This Court also should deny Plaintiffs motion for summary judgment with respect to her
second claim under Utah Code 57-1-21 because 12 U.S.C. 92a preempts section 57-1-21.
(Memo. Dec. [Doc. # 45] at 14.) Section 92a provides that a national banks position as a trustee
shall not be deemed to be in contravention of State or local law if a state allows a competitor
of a national bank to act as a trustee. Id.; 12 U.S.C. 92a(b). In other words, where a state law
regulation allows a national banks competitor to act as a trustee, a national bank may also act as
a trustee pursuant to section 92a. (Memo. Dec. [Doc. # 45] at 14.) Thus, where state regulation
allows a competitor to act as a trustee, but prohibits a national bank from doing so, section 92a
preempts the state law regulation and permits a national bank to act as a trustee. Id.; see also
Zabriskie v. ReconTrust, et al., Case No. 2:08-CV-00155-BSJ (Doc. No. 31, dated Nov. 12,
2008).
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Utah Code 57-1-21 provides a list of persons eligible to act as trustees in Utah. These
include members of the Utah state bar, depository institutions, and title insurance companies.
Utah Code 57-1-21. ReconTrust is notpermitted to serve as a trustee under this Utah
regulation. This restriction on ReconTrusts ability to act as a trustee clearly conflicts with 12
U.S.C. 92a(b) because Utah Code 57-1-21 allows a depository institution, which is
unquestionably a competitor of a national bank, to act as a trustee. (Memo. Dec. [Doc. # 45] at
14.) Preemption principles thus bar the application of 57-1-21 to ReconTrust, and Plaintiffs
request for summary judgment on her claim based on that statute must be denied.
IV. CONCLUSIONPlaintiffs motion for partial summary judgment fails. This Courts June 11, 2010
Memorandum Opinion clearly establishes that the National Bank Act preempts Plaintiffs claims
under Utah Code 57-1-21 and 16-10a-1501. Accordingly, Plaintiff fails to establish an
entitlement to judgment on those claims, and this Court should deny Plaintiffs Motion.
DATED: July 8, 2010 VANTUS LAW GROUP, P.C.
By /s/ Richard F. EnsorAttorneys for Defendants ReconTrust Company,N.A., BAC Home Loans Servicing, LP(erroneously sued as Bank of America HomeLoans Servicing, LP), Bank of America, N.A.(erroneously sued as Bank of America, FSB),and Mortgage Electronic Registration Systems,Inc.
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CERTIFICATE OF SERVICE
THE UNDERSIGNED CERTIFIES that on this 8
th
day of July 2010, a true and correct
copy of the foregoing was filed with the Clerk of Court via ECF and was therefore served by
electronic mail to the following:
John Christian Barlow
ENVISION LAW FIRM
40 North 300 East, Suite 101St. George, Utah 84770
Michael Huber
8170 S. Highland Drive, Suite E5Sandy, Utah 84093
/s/ Richard F. Ensor
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ATTACHMENT 2
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Richard F. Ensor (10877)
VANTUS LAW GROUP, P.C.
3165 East Millrock Drive, Suite 160
Salt Lake City, Utah 84121Telephone: (801) 833-0500
Facsimile: (801) 931-2500
Roy W. Arnold (Admittedpro hac vice)
REED SMITH LLPReed Smith Centre
225 Fifth Avenue
Pittsburgh, PA 15222Telephone: (412) 288-3916
Facsimile: (412) 288-3063
Amir Shlesinger (Admittedpro hac vice)REED SMITH LLP355 South Grand Avenue, Suite 2900Los Angeles, CA 90071-1514Telephone: (213) 457-8000Facsimile: (213) 457-8080
Attorneys for Defendants ReconTrust Company, N.A., BAC Home Loans Servicing, LP
(erroneously sued as Bank of America Home Loans Servicing, LP), Bank of America, N.A.(erroneously sued as Bank of America, FSB), and Mortgage Electronic Registration Systems,
Inc.
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH,
CENTRAL DIVISION
PENI COX, an individual,
Plaintiff,
v.
RECONTRUST COMPANY, N.A., BANK
OF AMERICA HOME LOANS SERVICING,LP; BANK OF AMERICA, FSB, NEW LINE
MORTGAGE, DIVISION OF REPUBLIC,
MORTGAGE ELECTRONICREGISTRATION SYSTEMS, INC.; AND
DOES 1-5,
Defendants.
DECLARATION OF RICHARD F. ENSOR
REQUESTING JUDICIAL NOTICE IN
CONNECTION WITH REPLY BRIEF IN
SUPPORT OF MOTION TO DISMISS
Case No. 10-cv-00492
Honorable Clark Waddoups
Magistrate Judge Alba
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I, Richard F. Ensor, declare as follows:
1. I am an attorney duly licensed to practice before this Court. I am the attorney forDefendants ReconTrust Company, N.A., BAC Home Loans Servicing, LP (erroneously sued as
Bank of America Home Loans Servicing, LP), Bank of America, N.A. (erroneously sued as
Bank of America FSB), and Mortgage Electronic Registration Systems, Inc. in this action, and
am competent to testify regarding the matters set forth herein.
2. The Court can take judicial notice of the fact that ReconTrust Company, N.A. is anon-depository institution as that fact is set forth in the public records.
3. The fact that ReconTrust is a non-depository institution is capable of accurate andready determination by resorting to sources whose accuracy cannot reasonably be questioned,
such as the Office of Comptrollers Quarterly Journal or on Westlaw.
4. Specifically, the following attached documents establish that this fact cannot bedisputed:
a. Attached hereto as Exhibit A is a true and accurate print out of the Officeof the Comptroller of the Currencys Application for New, Limited-
Purpose National Bank Charters, Approved and Denied, by State, July 1 to
December 31, 2004. Exhibit A states, under type of bank, that
ReconTrust is Trust (Non-Deposit).
b. Attached hereto as Exhibit B is a true and accurate copy of the Office ofComptroller Report on New, Limited-Purpose National Bank Charters
issued January 1, 2005 to June 30, 2005. Exhibit B states that
ReconTrusts charter has been issued as Trust (non-deposit).
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c. Attached hereto as Exhibit C is a true and accurate copy of the Office ofComptroller of the Currencys Conditional Approval letter to Bank of
America, dated April 23, 2009. Page 7 of Exhibit C states, in pertinent
part, that Following the conversion of Country wide into BANA-
Colorado, and BANA-Colorados merger into BANA, BANA will retain
ReconTrust Company, National Association, an uninsured, nondepository
national bank with trust powers headquartered in Thousand Oaks,
California (Recon NA).
5. The citations listed on the upper left corner of the exhibits identify the specificcitation where these documents can be located in the public record.
6. I declare under penalty of perjury and under the laws of the State of Utah that theforegoing is true and correct.
EXECUTED this 26th
day of July 2010 in Salt Lake City, Utah.
Respectfully submitted,
By: /s/ Richard F. EnsorCounsel for Defendants
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CERTIFICATE OF SERVICE
THE UNDERSIGNED CERTIFIES that on this 26th day of July 2010, a true and correct
copy of the foregoing was filed with the Clerk of Court via ECF and was therefore served by
electronic mail to the following:
John Christian Barlow
ENVISION LAW FIRM
40 North 300 East, Suite 101
St. George, Utah 84770
Craig Smay
174 East South TempleSalt Lake City, Utah 84111
Michael Huber8170 S. Highland Drive, Suite E5
Sandy, Utah 84093
/s/ Richard F. Ensor
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ATTACHMENT 3
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