IN THE SUPREME COURT OF FLORIDA
CASE NO. SC10-974
140 ASSOCIATES, LTD., a
Florida Limited Partnership, and
GREGORY K. TALBOTT,
Appellants,
vs.
SEACOAST NATIONAL BANK,
a National Banking Association,
Appellee.
__________________________________________________________________
ANSWER BRIEF OF APPELLEE
(140 ASSOCIATES, LTD.)
__________________________________________________________________
On Appeal from the Florida Fourth District Court of Appeal
Appeal Nos. 4D08-4796 and 4D08-4797
__________________________________________________________________
Morris G. (Skip) Miller, Esq.
RUDEN McCLOSKY P.A.
222 Lakeview Avenue, Suite 800
West Palm Beach, Florida 33401
561-838-4556 (Ph) /561-514-3456(Fax)
[email protected] (e-mail)
John H. Pelzer, Esq.
RUDEN McCLOSKY P.A.
200 East Broward Boulevard
Fort Lauderdale, Florida 33301
[email protected]
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TABLE OF CONTENTS
Page
TABLE OF CONTENTS .......................................................................................... ii
TABLE OF AUTHORITIES ....................................................................................iv
INTRODUCTION .................................................................................................. vii
STATEMENT OF THE CASE AND THE FACTS.................................................. 1
SUMMARY OF ARGUMENT .................................................................................3
ARGUMENT .............................................................................................................4
I.
STANDARD OF REVIEW. ................................................................. 4
II.
JURISDICTION. ...................................................................................4
III.
AS A NATIONAL BANK, SEACOAST CANNOT BE
REQUIRED TO OBTAIN A CERTIFICATE OF
AUTHORITY FROM THE FLORIDA DEPARTMENT
OF STATE IN ORDER TO MAINTAIN A LEGAL
ACTION IN THE FLORIDA COURTS. ............................................. 6
A.
B.
C.
D.
The National Bank Act 12 U.S.C. § 21 et seq. ........................... 6
Relevant State and Federal Case Law......................................... 9
Rebuttal of Appellants’ Arguments. .........................................16
Remedy .....................................................................................21
CONCLUSION ........................................................................................................23
CERTIFICATE OF SERVICE ................................................................................24
CERTIFICATE OF COMPLIANCE .......................................................................24
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TABLE OF AUTHORITIES
Page
Anderson Nat. Bank v. Luckett,
321 U.S. 233, 64 S. Ct. 599 (1944) ..........................................................................13
Assoc. of Banks in Ins., Inc. v. Duryee,
270 F. 3d 397 (6th Cir. 2001) ..................................................................................12
Bank of America v. City & County of San Francisco,
309 F. 3d 551 (9th Cir. 2002)........................................................................14, 16, 17
Bank of America, Nat’l Trust & Savings Ass’n v. Lima,
103 F. Supp. 916 (D. Mass. 1952) .....................................................................11, 15
Barnett Bank v. Nelson,
517 U.S. 25, 116 S. Ct. 1103 (1996) ........................................................................17
Blackfeet Nat’l Bank v. Nelson,
171 F. 3d 1237 (11th Cir.),
pet. for cert. denied, 528 U.S. 1004, 120 S. Ct. 497 (1999) ....................................19
Cox v. Recontrust Co, N.A.,
2010 WL 2519716 (D. Utah, 2010) ........................................................................... 9
Cuomo v. Clearing House Ass’n., L.L.C.,
129 S. Ct. 2710, 2720 (2009) ...................................................................................10
First Nat’l Bank v. Dickinson,
396 U.S. 122, 90 S. Ct. 337 (1969) ..........................................................................18
First Nat’l Bank v. Slagle,
5 P. 2d 1013 (Wash. 1931).......................................................................................14
Indiana Nat’l Bank v. Roberts,
326 So. 2d 802 (Miss. 1976) ....................................................................................13
In re Hibernia Nat’l Bank,
21 SW 3d 908 (Tex. App. – Corpus Christi 2000) ..................................................13
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L.M. Duncan & Sons, Inc. v. City of Clearwater,
478 So. 2d 816 (Fla. 1985).........................................................................................5
Manufacturers’ Nat’l. Bank v. Baack, 2 Abb. U.S. 232,
16 F. Cas. 671 (D.C. NY 1871) ...............................................................................20
McCullough v. Maryland,
17 U.S. 316 (1819) .....................................................................................................7
Nat’l Park Bank v. Gunst,
1 Abb. N. Cas. 292 (Sup. Ct., N.Y. Co. 1876) ........................................................20
770 PPR LLC v. TJCV Land Trust,
30 So. 3d 613 (Fla. 4th DCA 2010) ......................................................................... vii
South Carolina Equipment Co. v. Sheedy,
353 N.W. 2d 63 (Wisc. App. 1984) .........................................................................22
State v, Rubio,
967 So. 2d 768 (Fla. 2007).........................................................................................5
State Nat’l Bank v. Laura,
256 N.Y.S. 2d 1004 (Cty. Ct. 1965) ........................................................................13
Steward v. Atlantic Nat. Bank,
27 F. 2d 224 (9th Cir. 1928) ....................................................................................15
United States v. Locke,
529 U.S. 89 (2000) ...............................................................................................9, 16
Video Trax, Inc. v. Nationsbank, N.A.,
33 F. Supp. 2d 1041 (S.D. Fla. 1998);
aff’d. 205 F. 3d 1358 (11th Cir. 2000) ......................................................................19
Watters v. Wachovia Bank,
550 U.S. 1, 127 S. Ct. 1559 (2007) ..............................................................10, 17, 18
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Other Authorities
Fla. Stat. § 607.0101 ..................................................................................................6
Fla. Stat. § 607.01401(12)........................................................................................15
Flat. Stat. § 607.1501(1). .........................................................................................17
Flat. Stat. § 607.1502. ..............................................................................3, 12, 21, 22
12 C.F.R. § 34.4 .........................................................................................................8
12 U.S.C. § 21 ........................................................................................................6, 7
12 U.S.C. § 24 ..............................................................................3, 4, 6, 7, 11, 12, 13
12 U.S.C. § 26 ..........................................................................................................11
12 U.S.C. § 27 ....................................................................................................10, 11
12 U.S.C. § 34.3 .........................................................................................................9
12 U.S.C. § 36 ..........................................................................................................18
12 U.S.C. § 42 ..........................................................................................................11
12 U.S.C. § 371 ..........................................................................................................9
12 U.S.C. § 371(a) .....................................................................................................8
12 U.S.C. § 1828(o) ...................................................................................................8
Fla. Const. Art. 5, § 3 .................................................................................................5
U. S. Const., Art. VI, Clause 2...................................................................................7
Fla. R. App. P. 9.030(a)(1).........................................................................................5
Commentary to the 1980 Amendments to the Florida Constitution ......................... 5
Corporate Decision 96-17, 1996 WL 226070 (O.C.C. 1996)..................................14
Corporate Decision 95-34. 1995 WL 553188 (O.C.C. 1995)..................................14
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INTRODUCTION
This is an appeal from the opinion of the Florida Fourth District Court of
Appeal in 770 PPR LLC v. TJCV Land Trust, 30 So. 3d 613 (Fla. 4th DCA 2010)
(the “Order on Appeal”).
The only issue on appeal is whether the Plaintiff/
Appellee Seacoast National Bank, a national banking association chartered by and
subject to the regulation of the U.S. Comptroller of the Currency, can be required
under Fla. Stat. § 607.1502 to obtain a certificate of authority from the Florida
Department of State in order to file a lawsuit in the Florida courts.
The Order on Appeal affirmed final judgments entered by the Circuit Court
in and for the 15th Judicial Circuit of Florida in favor of plaintiffs and against
defendants in two separate cases – 770 PPR LLC et at v. TJCV Land Trust, Case
No. 50-2008-CA-4419 (the “770 PPR Appeal”), and 140 Associates, Ltd. v.
Seacoast National Bank, Case No. 50-2008-CA-4416 (the “140 Appeal”). Each of
these cases involved a foreclosure action for non-payment of a loan, brought by
Seacoast National Bank against the limited liability company owning the real
estate in question and the guarantor of that loan. As correctly stated in the Initial
Brief, the issues before the Court in this appeal are identical. Therefore, and in
order to be consistent with the Initial Brief, this Answer Brief will only refer to the
facts in the 140 Appeal.
The undersigned is counsel for Plaintiff/Appellee Seacoast National Bank,
which will be referred to herein as “Seacoast.”
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Defendant/Appellant 140 Associates, Ltd. will be referred to herein as
“140,” Defendant/Appellant Gregory K. Talbott will be referred to herein as
“Talbott,” and 140 and Talbott will jointly be referred to herein as “Appellants.”
The Appendix filed with the Initial Brief will be referred to as “A-__.”
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STATEMENT OF THE CASE AND THE FACTS
The Statement of the Case and the Facts submitted by the Appellants does
not accurately set forth the relevant facts of this case and what occurred in the trial
court, and includes much discussion that is extraneous to the issue in this Appeal.
Accordingly, Seacoast presents its Statement of the Case and the Facts as follows:
Seacoast is a national banking association chartered by and subject to the
regulation of the United States of America Comptroller of the Currency. Seacoast
is not registered with the State of Florida Division of Corporations as a foreign
corporation transacting business in Florida.
Seacoast filed a First Amended Verified Complaint against 140 and Talbott
on March 24, 2008 (the “Complaint”). A-1. The Complaint sought, inter alia,
foreclosure of a mortgage in favor of Seacoast on real property owned by 140, and
breach of a guaranty from Talbott to Seacoast, on account of the failure of 140 to
make the payments required by the “Loan Documents” described in the Complaint.
On May 15, 2008, Seacoast filed its Motion and Memorandum of Law in
Support of its Motion for Summary Judgment (the “Motion for Summary
Judgment”).
A-2.
On October 27, 2009, Seacoast filed a Supplemental
Memorandum of Law in Support of Motion for Summary Judgment (the “Motion
for Summary Judgment”). A-4.
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On October 29, 2008, the trial court entered two orders (the “Final
Judgments”).
First, the trial court entered a Final Summary Judgment of
Foreclosure in favor of Seacoast and against 140, finding that 140 owed Seacoast a
total of $4,027,595.52, and, if said amounts were not paid, directing the clerk to
sell the property at public sale to the highest bidder. A-5. Second, the trial court
entered a Final Judgment as to Gregory K. Talbott in favor of Seacoast and against
Talbott, also in the amount of $4,027,595.52. A-6.
Appellants appealed the final judgments to the Fourth District Court of
Appeal. A-7. The Fourth District Court of Appeal affirmed those final judgments
by entering the Order on Appeal on March 10, 2010.
Appellants filed a Notice of Appeal to this Court on May 14, 2010. A-8.
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SUMMARY OF ARGUMENT
The only issue in this appeal is whether a national bank is required under
Fla. Stat. § 607.1502 to obtain a certificate of authority from the Florida
Department of State in order to file a lawsuit in the Florida courts. The trial court,
by entering the Final Judgments (A-5, A-6), ruled against Appellants, which Final
Judgments were correctly affirmed by the Fourth District Court of Appeal in the
Order on Appeal.
The law is well established and long-standing that a state cannot require a
national bank to register or file as a “foreign corporation” in order to file a lawsuit.
This is because the federal legislation creating the system of national banks, the
National Bank Act, preempts state laws that conflict or are inconsistent with it.
The National Bank Act expressly provides, among other things, that national banks
shall have the power “to sue and be sued, complain and defend, in any court of law
and equity, as fully as natural persons.” 12 U.S.C. § 24.
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ARGUMENT
I.
STANDARD OF REVIEW.
Seacoast concurs with the standard of review as presented in the Initial
Brief.
II.
JURISDICTION.
Seacoast does not agree that the Order on Appeal declares a state statute
invalid.
Appellants asserted in their Notice of Appeal that this Court has
mandatory jurisdiction on the basis that the Order on Appeal held that Fla. Stat. §
607.1502 was preempted as to national banks doing business in Florida, and
therefore declared said state statute invalid.
The Supremacy Clause is neither a mandate nor a prohibition. Rather, it is a
rule of construction that provides which of two conpeting laws should be applied
under particular circumstances.
Unless a state statute on its face purports to
supplant or nullify a federal law, a legislative strategy that has not been in vogue
for 150 years, a state statute cannot be said to violate the Supremacy Clause. By
applying the Supremacy Clause, therefore, a court does not declare the state statute
to be unconstitutional in any way. Rather, the court merely selects which body of
law to apply.
The Order on Appeal did not hold that Fla. Stat. § 607.1502 was invalid. It
merely held that the statute is “preempted as applied to all national banking
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associations.” This is the interpretation of the application of the statute to a
specific set of facts, not a declaration of invalidity. The cases cited by Appellants
in the Notice of Appeal, State v. Rubio, 967 So. 2d 768 (Fla. 2007) and L.M.
Duncan & Sons, Inc. v. City of Clearwater, 478 So. 2d 816 (Fla. 1985), are both
cases where the district court of appeals specifically found the statute in question to
be unconstitutional. Appellants cite to no cases where the court has accepted
mandatory jurisdiction where the opinion appealed from does not contain the
requisite declaration of invalidity. In the absence of such a declaration, this Court
does not have mandatory jurisdiction.
Fla. R. App. P. 9.030(a)(1) was amended in 1980 to reflect amendments to
Article 5, § 3 of the Florida Constitution. As noted by the Commentary to the
1980 Amendments to the Florida Constitution, “this amendment represents a
departure from the existing jurisdiction of the supreme court which was essentially
an appellate court of last resort.” The result of those amendments was to narrow
the mandatory jurisdiction of the Florida Supreme Court in this area to district
court decisions actually “declaring invalid” a state statute or provision of the state
constitution.
Neither does this Court have discretionary jurisdiction to consider this
appeal, as the Order on Appeal does not “expressly declare valid a state statute,”
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“expressly construe a provision of the state or federal constitution” or meet any of
the other constitutional criteria for the Court’s discretionary review.
III.
AS A NATIONAL BANK, SEACOAST CANNOT BE
REQUIRED TO OBTAIN A CERTIFICATE OF
AUTHORITY FROM THE FLORIDA DEPARTMENT OF
STATE IN ORDER TO MAINTAIN A LEGAL ACTION
IN THE FLORIDA COURTS.
A.
The National Bank Act 12 U.S.C. § 21 et seq.
Seacoast is a national bank, chartered by and subject to the regulation of the
United States Office of the Comptroller of the Currency (the “OCC”). The federal
legislation creating the system of national banks, the National Bank Act, expressly
provides, among other things, that national banks shall have the power “[to] sue
and be sued, complain and defend, in any court of law and equity, as fully as
natural persons.” 12 U.S.C. § 24.
Appellants’ position is that, notwithstanding the above, Seacoast was
required to obtain a certificate of authority from the Florida Department of State in
order to sue them.
Appellants’ novel theory is that Seacoast is a “foreign
corporation” under the Florida Business Corporation Act (Fla. Stat. § 607.0101 et
seq.) and therefore must apply for and receive a “certificate of authority” from the
Florida Department of State pursuant to Fla. Stat. § 607.0101 in order to transact
business in Florida and maintain a legal action in a court of the State. This
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argument has no merit whatsoever, and is contrary to a well-established, long line
of state and federal cases.
National banks such as Seacoast are organized, exist and are governed by
federal, not state law. It has been an established principle of federal law since
Chief Justice John Marshall’s decision in McCullough v. Maryland, 17 U.S. 316
(1819), that state laws cannot govern the authorization and powers of entities
chartered by the federal government. This is set forth in the Supremacy Clause,
United States Constitution, Article VI, Clause 2, as follows:
. . . [T]his Constitution and the laws of the United States,
which shall be made in pursuance thereof . . . shall be the
supreme Law of the Land . . . any Thing in the
Constitution or laws of any state to contrary
notwithstanding.
If Congress intended to permit a state corporate or banking law to require
filing or qualification by a national bank, it would have to do so expressly. In the
absence of such a provision, any state law which requires registration or
qualification of a national bank before it can do business as set forth above is
preempted by the Supremacy Clause. To the contrary, by enacting the National
Bank Act, 12 U.S.C. § 21 et seq., and other federal laws, Congress has made it
clear that a national bank is organized solely by the OCC and its powers and its
other operations and characteristics preempt state law.
12 U.S.C. § 24 provides that:
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Upon duly making and filing articles of association and
an organization certificate a national banking association
shall become, as from the date of the execution of its
organization certificate, a body corporate, and as such,
and in the name designated in the organization certificate,
it shall have power . . .
Third. To make contracts.
Fourth. To sue and be sued, complain and defend, in any
court of law and equity, as fully as natural persons. . . .
Seventh. To exercise by its board of directors or duly
authorized officers or agents, subject to law, all such
incidental powers as shall be necessary to carry on the
business of banking; . . .
Among other powers that a national bank has are the powers under 12
U.S.C. § 371(a) to:
. . . make, arrange, purchase or sell loans or extensions of
credit secured by liens on interests in real estate, subject
to section 1828(o) of this title and such restrictions and
requirements as the Comptroller of the Currency may
prescribe by regulation or order.
12 U.S.C. § 1828(o) requires that each federal bank regulatory agency adopt
uniform regulations prescribing standards for extensions of credit secured by
interests in real estate, but does not authorize or permit any state laws limiting
corporate powers of national banks. OCC Regulations at 12 C.F.R. § 34.4 further
expressly preempt any state laws that “obstruct, impair, or condition” a national
bank’s ability to fully exercise its federally-authorized real estate lending powers.
It states that such state laws generally “do not apply to national banks.
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Specifically, a national bank may make real estate loans under 12 U.S.C. 371 and
§ 34.3, without regard to state law limitations concerning: (1) Licensing,
registration (except for purposes of service of process), filings, or reports by
creditors;” (emphasis supplied).
B.
Relevant State and Federal Case Law.
It is long held and well established by over eighty (80) years of federal and
state case law that state laws purporting to require national banks to comply with
state laws requiring qualification or registration to do business as a precondition to
maintaining a legal action are invalid. The most recent federal case to address the
issue is Cox v. Recontrust Co, N.A., 2010 WL 2519716 (D. Utah, 2010). The
court’s Memorandum Decision in Cox held that the National Bank Act preempted
a Utah statute that precluded a foreign corporation from filing an action in state
court unless it had applied to transact business in the state and its application had
been approved by the state. The court’s discussion of the preemption issue is
instructive, and completely rebuts both the argument on pages 19 to 25 of the
Initial Brief that such statutes are not preempted and the argument on page 32 and
33 of the Initial Brief that there is a presumption against preemption.
Initially, in the area of national banking, the Supreme Court has
repeatedly held that the nature of a presumption analysis is different
than in other areas of the law. While there is a general presumption
that state laws are not preempted by federal law, this presumption
does not apply in the context of national banking. See United States v.
Locke, 529 U.S. 89 (2000) (“[A]n ‘assumption’ of nonpre-emption is
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not triggered when the State regulates in an area where there has been
a history of significant federal presence,” such as national banking.)
To the contrary, when reviewing a state law that regulates the
activities of a national bank, a court must determine whether that
regulation “prevent[s] or significantly interfere[s] with the national
bank’s or the national bank regulator’s exercise of powers.” Watters v.
Wachovia Bank, N.A., 550 U.S. 1, 12 (2007). If the state regulation
“significantly impair[s] the exercise of authority, enumerated or
incidental under the NBA, the State’s regulations must give way.” Id.
(emphasis added). In other words, Congress’ grant of either
enumerated or incidental powers to a national bank will “ordinarily”
preempt “contrary state law.” Id. at 11 (citation omitted).
On the other hand, it is clear that states “have always enforced
their general laws against national banks.” Cuomo v. Clearing House
Ass’n., L.L.C., 129 S. Ct. 2710, 2720 (2009). Such general laws
include universally applicable state fair lending laws. See id. at 27212722. Accordingly, there is a clear dichotomy between state laws that
directly interfere with a national bank’s “efficient exercise” of
enumerated and incidental powers bestowed upon it by the National
Banking Act and those state laws that do not. Watters, 550 U.S. at 13.
The former are preempted, while the latter are not. . . .
A review of the National Banking Act, however, makes clear
that Congress intended that federal statute exclusively control the area
of allowing a national bank to transact business nationwide. First, 12
U.S.C. § 26 gives the Comptroller of Currency the power to
“determine whether the [national banking] association is lawfully
entitled to commence the business of banking.” That statute also
refers to various requirements that the Comptroller must find that a
national bank has met before it may begin conducting business. See
id. Once the Comptroller has determined that a national bank may
commence the business of banking, “the Comptroller shall give to
such association a certificate, under his hand and official seal, that
such association has complied with all the provisions required to be
complied with before commencing the business of banking, and that
such association is authorized to commence such business.” 12 U.S.C.
§ 27(a). . . . Finally, 12 U.S.C. § 42 provides that the “provision of all
Acts of Congress relating to national banks shall apply in the several
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States.” This provision clearly signals that §§ 26 and 27 are meant to
be nationwide in scope. . . .
Based on the above, it is clear that given their exhaustive reach
and protective function, §§ 26, 27 and 42 are intended to be the
exclusive authority on what a national bank must do to transact
business in any state. Cox, 2010 WL2519716 at pgs. 4-6.
Other federal cases reach the same conclusion. In Bank of America, Nat’l
Trust & Savings Ass’n. v. Lima, 103 F. Supp. 916 (D. Mass. 1952), the issue was
whether a national bank could be precluded from bringing suit in state court
because it had not registered as a “foreign corporation” under the applicable
Massachusetts statute. The court held that the statute was not applicable to the
national bank for three separate reasons – first, because the bank was not doing
business in Massachusetts such that it was subject to the statute in question;
second, that the term “foreign corporation” as used in the statute was not intended
to cover national banks; and third, that if the statute was intended to apply to a
national bank, it “would be repugnant to the banking laws of the United States and
unconstitutional.” 103 F. Supp. at 919. This latter holding was not dicta, as
contended on page 31-32 of the Initial Brief. With respect to the latter holding, the
court stated as follows:
Section 5 of the General Laws is very plainly in conflict
with 12 U.S.C.A. The last sentence reads in part, “* * *
no action shall be maintained or recovery had in any of
the courts of this commonwealth by any * * * foreign
corporation so long as it fails to comply with said
sections.” Section 24 of 12 U.S.C.A. includes among the
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powers of national banks the power “to sue and be sued,
complain and defend, in any court of law and equity, as
fully as natural persons.” The effect of this provision is
to place national banks in the same category as
individuals in suits by and against them.
From the foregoing it would appear that if the provisions
of Chapter 181 are held to include national banks within
the scope of their coverage, then the effect of that statute
is to place national banks on the same level as foreign
corporations as regards capacity to sue. Such a result is
plainly unconstitutional since it conflicts with the federal
statute empowering national banks to sue as fully as
natural persons. 103 F. Supp. at 918.
Much more recently, the court in Assoc. of Banks in Ins., Inc. v. Duryee, 270
F. 3d 397 (6th Cir. 2001), addressed the issue of whether a national bank desiring
to engage in the business of life insurance (pursuant to a federal statute granting it
that authority) had to be qualified to do business under Ohio law. The court
concluded that under the Supremacy Clause, national banks would not be bound by
the licensing requirements for foreign corporations, as those requirements, “insofar
as they would be applied to national banks, are pre-empted by federal law.” 270
F. 3d at 413.
State courts in at least five (5) states (including Florida in the Order on
Appeal) have considered the issue under almost identical facts and come to the
same conclusion. In the Order on Appeal, the Fourth District Court of Appeal
correctly held that Fla. Stat. § 607.1502(1) is preempted by 12 U.S.C. § 24, and
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that therefore “a state cannot require a national bank to register or file as a ‘foreign
corporation’ in order to maintain a lawsuit in state court.” 30 So. 3d at 618.
This ruling is totally consistent with those of other state courts that have
considered the question. In re Hibernia Nat’l Bank, 21 SW 3d 908 (Tex. App. –
Corpus Christi 2000), the court held as follows in ruling that a national bank could
not be required to obtain a certificate of authority under Texas law as a
precondition to filing suit:
In the instant case it is undisputed that Hibernia is a national bank
organized under U.S. law. Thus Hibernia is subject to state laws,
unless those laws infringe the national banking laws. Anderson Nat.
Bank v. Luckett, 321 U.S. at 248, 64 S. Ct. 599. Because 12 U.S.C. §
24 gives national banks the power to sue in any court of law and
equity, as fully as natural persons, article 8.18A [of Texas Rev. Civ.
Stat.] would infringe upon that power because it would require a
foreign bank to obtain a certificate of authority before it could
maintain a suit in this state. thus, 12 U.S.C. § 24 will preempt the
application of article 8.18A. Anderson Nat. Bank, 321 U.S. at 248, 64
S. Ct. 599; Roberts, 326 So. 2d at 803. 21 SW 3d at 909. (language in
brackets added),
In Indiana Nat’l Bank v. Roberts, 326 So. 2d 802 (Miss. 1976), the court
found that Mississippi’s statute prohibiting a foreign corporation not qualified to
do business in the state from maintaining an action in state courts did not apply to
national banks, expressly referencing the powers of national banks to sue and be
sued as fully as natural persons set forth in 12 U.S.C. § 24. In State Nat’l Bank v.
Laura, 256 N.Y.S. 2d 1004 (Cty. Ct. 1965), the court held that since a national
bank is brought into existence under federal legislation, it is not subject to New
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York’s statutory requirements limiting the rights of foreign corporations to sue.
And in First Nat’l Bank v. Slagle, 5 P. 2d 1013 (Wash. 1931), the court held that
failure to pay a corporate license fee did not preclude a national bank from
maintaining an action in the state because the Washington legislature did not have
the power to limit the powers of national banks.
This is also consistent with rulings of the U.S. Comptroller of the Currency.
Such rulings, as constructions of a federal regulatory statute by the federal agency
charged with its enforcement, are entitled to “great weight” by the courts. Bank of
America v. City & County of San Francisco, 309 F. 3d 551 at 563 (9th Cir. 2002).
For example, in Corporate Decision 96-17, 1996 WL 226070 (O.C.C. 1996), the
Comptroller ruled that Connecticut laws relating to “foreign corporations,”
including those prohibiting foreign corporations from “maintaining any action in
any court of the state unless it has obtained a certificate of authority” from the
secretary of state, were preempted and ruled not applicable to “prohibit, restrict,
limit or condition” the operation of branches of the national bank in question in
Connecticut. 1996 WL 226070 at pgs. 19, 21. Accord, Corporate Decision 95-34.
1995 WL 553188 (O.C.C. 1995).
In addition, it is clear that under rules of statutory interpretation the National
Florida Business Corporation Act does not impose any requirement on a national
bank headquartered in the State of Florida to register with the Florida Department
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of State in order to conduct business as a national bank, or to bring or defend
lawsuits within the State of Florida. Fla. Stat. § 607.01401(12) defines a foreign
corporation to mean “a corporation for profit incorporated under laws other than
the laws of this state.” Nowhere in the statute is the intent expressed that this
definition includes national banks. As the court held in Bank of America, Nat’l
Trust & Savings Ass’n v. Lima, supra,
it is commonly accepted that in the absence of clear and
unequivocal language to the effect, national banks are
generally not held to come within state statutory
requirements relating to foreign corporations unless the
legislative intent to treat such institutions as foreign
corporations is clearly manifested in unmistakable
language.
103 F. Supp. at 918.
The Massachusetts statute in question in Bank of America defined a foreign
corporation as “a corporation, association or organization . . . which has been
established, organized or chartered under laws other than those of the
commonwealth,” language that is almost identical to the Florida Statute.
Id.
Similarly, in Steward v. Atlantic Nat. Bank, 27 F. 2d 224 (9th Cir. 1928), the court
found that a national bank was not a “foreign corporation” within the meaning of
an Arizona statute that prohibited a foreign corporation that did not have a permit
to do business in Arizona from maintaining a legal action. The court went on to
hold that “in the absence of unmistakenly clear language, it will not be found that
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the state has attempted to exercise a regulatory power over national agencies
established in aid of governmental purposes.” 27 F. 2d at 228. Again, the statute’s
definition of “foreign corporation” was similar to that found in the Florida statute.
C.
Rebuttal of Appellants’ Arguments.
Contrary to the assertions on pages 30-32 of the Initial Brief, each of the
above cases is almost directly on “all fours” with the facts and legal issues
presented in this case, and any ruling in Appellants’ favor would be in direct
conflict with those rulings. On the other hand, the case law cited in the Initial
Brief is not on point. None of the cases Appellants rely on deal with the issue of
preemption in the context of state restrictions on the right of access of a national
bank to the state courts. The discussion on pages 16 to 19 of the Initial Brief on
federal preemption in situations not involving the National Bank Act is of no
relevance because of the uniqueness of preemption under the National Bank Act
and the large number of cases interpreting it. The argument on pages 32-33 of the
Initial Brief that there is a presumption against preemption is clearly incorrect,
because the case law is clear that because of the “history of significant federal
presence” in national banking, the presumption against preemption of state law is
inapplicable. United States v. Locke, 529 U.S. 89 at 108, 120 S. Ct. 1135; Bank of
America v. City & County of San Francisco, supra, 309 F. 3d 551 at 559 (9th Cir.
2002).
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To the contrary, as set forth by the court in Bank of America v. City &
County of San Francisco, supra,
The National Bank Act of 1864 was enacted to protect national
banks against intrusive regulation by the States. See Cong. Globe, 38th
Cong., 1st Sess. 1451 (1864) (noting that the “object” of the National
Bank Act was to “establish a national banking system” free from
intrusive state regulation); Marquette Nat’l Bank, 439 U.S. at 314315, 99 S. Ct. 540 (“Close examination of the National Bank Act of
1864, its legislative history, and its historical context makes clear that
. . . Congress intended to facilitate . . . a national banking system.”)
(internal quotations and citations omitted). 309 F. 3d at 561
The history of national bank legislation is “one of interpreting grants of both
enumerated and incidental “powers” to national banks as grants of authority not
normally limited by, but rather ordinarily preempting, contrary state law.” Barnett
Bank v. Nelson, 517 U.S. 25 at 32, 116 S. Ct. 1103 (1996); Accord, Watters v.
Wachovia Bank, 550 U.S. 1 at 12, 127 S. Ct. 1559 at 1568. The Supreme Court
further observed in Barnett Bank, supra, that “in defining the pre-emptive scope of
federal statutes and regulations granting a power to national banks . . . normally
Congress would not want States to forbid, or to impair significantly, the exercise of
a power that Congress explicitly granted. 527 U.S. at 33.
Appellants argue, beginning on page 19 of the Initial Brief, that Fla. Stat.
§ 607.1501(1) is not the type of law that is preempted by the National Banking
Act.
However, the federal banking cases they discuss do not support that
conclusion. Watters, supra, discussed on page 22 of the Initial Brief, supports
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Seacoast’s position, not Appellants’ position.
Watters addressed the issue of
whether the subsidiary of a national bank engaged in the business of real estate
lending could be required to submit to state supervision. The Court applied the
general rules relating to preemption of state laws regulating the activities of
national banks, and held that the State of Michigan could not exercise supervisory
authority over the subsidiary of a national bank. Watters reaffirms that the intent
of the National Bank Act is to “protect from state hindrance a national bank’s
engagement in the ‘business of banking” . . . 550 U.S. at 21, 127 S. Ct. at 1572.
Placing roadblocks in the way of a national bank’s ability to access the state courts
to enforce its rights under its lending activities, one of the core functions of a
national bank, is clearly such a hindrance.
Appellants’ reliance on the next case they cite on page 23 of the Initial Brief,
First Nat’l Bank v. Dickinson, 396 U.S. 122, 90 S. Ct. 337 (1969), is totally
misplaced. Dickinson addressed the issue of whether use of an armored car service
was a “branch.”
The reason the state statute was not held to, as cited by
Appellants, “frustrate, interfere or infringe on national banking” is because the
section of the National Bank Act in question specifically provided that a national
bank was only permitted to establish a branch “when, where, and how state law
would authorize a state bank to establish and operate such a branch.” 12 U.S.C.
§ 36. In fact, the Court noted that Congress had “absolute authority” over national
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banks, and that it was Congress that imposed the limitations by incorporating the
state law by reference. 396 U.S. at 131. Notwithstanding the foregoing, the Court
held that it was Congress’s definition of the term “branch” that controlled, not the
state’s.
Appellants next cite to Blackfeet Nat’l Bank v. Nelson, 171 F. 3d 1237 (11th
Cir.), pet. for cert. denied 528 U.S. 1004, 120 S. Ct. 497 (1999). Blackfeet dealt
with the McCarran-Ferguson Act, a federal statute expressly providing that a state
law specifically regulating the business of insurance would preempt a conflicting
federal law unless that federal law specifically relates to the business of insurance
as well.
The court held that a Florida law regulating insurance investments
preempted the National Bank Act, because it found that the National Bank Act did
not specifically relate to the business of insurance.
The next case cited by Appellants is Video Trax, Inc. v. Nationsbank, N.A.,
33 F. Supp. 2d 1041 (S.D. Fla. 1998), aff’d. 205 F. 3d 1358 (11th Cir. 2000). With
respect to preemption, the issue in that case was whether the National Bank Act
regulated overdraft fees as part of its regulation of usurious practices by national
banks. The court ruled that the National Bank Act did not preempt state law on the
subject, because it did not speak to charges for processing checks presented against
overdrawn accounts, and that there was otherwise no intent to regulate the fees and
charges of national banks other than with respect to interest. Again, that is in
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contrast to this case, where the National Bank Act explicitly gives national banks
the right to sue and be sued in state court as fully as natural persons.
Appellants next argue, on pages 25 to 30 of the Initial Brief, that Congress
did not intend by the initial passage of the National Bank Act in 1864 to preempt a
state’s ability to limit a national bank’s access to its courts. In support of that
argument, Appellants offer two truly ancient lower court cases. In Nat’l Park Bank
v. Gunst, 1 Abb. N. Cas. 292 (Sup. Ct., N.Y. Co. 1876), it does not appear that the
issue of preemption was raised. The issue in Manufacturers’ Nat’l. Bank v. Baack,
2 Abb. U.S. 232, 16 F. Cas. 671 (D.C. NY 1871), was whether a national bank is
presumed to be a citizen for purposes of jurisdiction, and has nothing to do with
either preemption or the state laws relating to the authorization of foreign
corporations to do business. These cases do not come even close to negating the
overwhelming authority to the contrary.
Appellants finally argue, on page 35 of the Initial Brief, that the only
consequence to Seacoast (or any national bank, for that matter) of transacting
business without a certificate of authority is that it cannot access the Florida courts.
This argument is without merit. First of all, if Appellants were to prevail, it would
mean that Seacoast and every other national bank doing business in Florida could
be subject to substantial civil fines and penalties for all of the years they have
“illegally” done business in Florida. Secondly, as Appellants point out, on page 12
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of the Initial Brief, the Florida statute in question is part of a Model Corporation
Act that has been adopted in all 50 states. Therefore, reversal of the Order on
Appeal would call into question the seemingly universal position that all of these
state statutes are preempted by the National Bank Act or otherwise not applicable
to national banks.
This would subject the truly “national” national banks to
registration, etc., in multiple states, and would clearly be a substantial obstacle to
the national banks’ fulfilling their mission and eroding the exclusive control and
supervision of the U.S. Comptroller of the Currency.
D.
Remedy.
Seacoast believes that it will prevail in this appeal. In the event Appellants
prevail, the remedy should be a remand to the trial court. In accordance with Fla.
Stat. § 607.1502(3), the trial court would then decide whether to stay the case until
Seacoast obtains a certificate of authority to do business in Florida, and under what
conditions.
Appellants suggest on pages 34-38 of the Initial Brief that the remedy should
be that the trial court be instructed to dismiss the case. This suggestion is totally
inconsistent with the aforementioned statute and is not supported by the case law
cited by Appellants. Appellants’ argument is based on the premise that if Seacoast
is not authorized to do business in Florida, the trial court had no jurisdiction to hear
the case. The Florida cases cited by Appellants do stand for the principle that
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dismissal is the proper remedy if the court had no jurisdiction. However, South
Carolina Equipment Co. v. Sheedy, 353 N.W. 2d 63 (Wisc. App. 1984), the case
relied upon by Appellants for the proposition that registration cannot be effected
once an appeal is filed, expressly states that the Wisconsin statute in question “had
no function with respect to the jurisdiction of Wisconsin courts over foreign
corporation.”
353 NW 2d at 65.
Therefore, the Florida cases cited are not
relevant. In addition, the facts in Sheedy are very different. There, the foreign
corporation’s case was dismissed by the trial court because it did not have a
certificate of authority. However, the plaintiff made the mistake of filing its notice
of appeal before becoming authorized to do business, so the authorization was
outside the trial court record and therefore could not be considered on appeal.
Of course, the situation in this case is totally different.
Seacoast was
successful in the trial court and the case was never dismissed. There is no reason
why Fla. Stat. § 607.1502(3) would not apply to further proceedings in the event
the case is remanded. In addition, it would make no sense for Seacoast to be in a
worse position because it prevailed on the issue before the trial court than had
Seacoast not prevailed.
If the trial court had ruled that Seacoast had to be
authorized to do business to maintain this proceeding, under Fla. Stat.
§ 607.1502(3) Seacoast would have been given the opportunity to obtain
authorization.
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CONCLUSION
For the foregoing reasons, it is clear that Seacoast cannot be required to
qualify or register to do business in Florida as a precondition to maintaining this
action. and it is respectfully submitted that this Court affirm the Order on Appeal.
Respectfully submitted,
RUDEN McCLOSKY P.A.
Morris G. (Skip) Miller, [email protected]
Florida Bar Number 279145
222 Lakeview Avenue, Suite 800
West Palm Beach, Florida 33401
561-838-4556(ph);561-514-3456(fax)
RUDEN McCLOSKY P.A.
200 East Broward Boulevard, 15th floor (33301)
Post Office Box 1900
Fort Lauderdale, Florida 33302
(954)764-6660, 527-2468; Fax: (954)333-4068
By:_________________________________
John H. Pelzer
john.pelzer @ruden.com
Florida Bar Number 376647
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RUDEN McCLOSKY P.A.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by U. S. Mail to Robert A. Sweetapple, Esq., Sweetapple, Broeker &
Varkas, P.L., 165 East Boca Raton Road, Boca Raton, FL 33432, Richard A.
Kupfer, Esq., 833 Eastview Avenue, Delray Beach, FL 33483-5968, and Harvey R.
Schneider, Esq., 33 S.E. 7th Street, Suite G, Boca Raton, FL 33432, this 18th day of
February 2011.
CERTIFICATE OF COMPLIANCE
Undersigned counsel certifies that TIMES NEW ROMAN, 14 pt., is used in
this brief.
RUDEN McCLOSKY P.A.
200 East Broward Boulevard, 15th floor (33301)
Post Office Box 1900
Fort Lauderdale, Florida 33302
(954)764-6660, 527-2468; Fax: (954)333-4068
By:_________________________________
John H. Pelzer
john.pelzer @ruden.com
Florida Bar Number 376647
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