# United States Court of Appeals **For the Eighth Circuit**

___________________________ No. 12-2370

___________________________ JPMorgan Chase Bank, N.A.

lllllllllllllllllllll Appellee

v. Daniel L. Johnson; Susan D. Johnson

lllllllllllllllllllll Appellant s

------------------------------ JPMorgan Chase Bank, N.A.

lllllllllllllllllllll Appellee

v. Tracy Lea Estes

lllllllllllllllllllll Appellant

------------------------------ JPMorgan Chase Bank, N.A.

lllllllllllllllllllll Appellee

v.Tammy Renae Peeks

lllllllllllllllllllll Appellant

___________________________ No. 12-2686

___________________________ Jere T. Jones; Teri Jones

lllllllllllllllllllll Plaintiffs - Appellants

v. JPMorgan Chase Bank, N.A.

lllllllllllllllllllll Defendant - Appellee

___________________________ No. 12-3049

___________________________ Karen Rivera

lllllllllllllllllllll Plaintiff - Appellant

v. JPMorgan Chase Bank, N.A.

lllllllllllllllllllll Defendant - Appellee

____________ Appeal from United States District Court for the Eastern District of Arkansas - Jonesboro

-2-____________ Submitted: January 15, 2013 Filed: July 9, 2013

____________ Before BYE, MELLOY, and SMITH, Circuit Judges.

____________ BYE, Circuit Judge.

In these consolidated cases, we consid er whether a national banking association chartered by the Office of the Comptroller of the Currency but not registered to do business with the Arkansas Secretary of St ate or the Arkansas Bank Department may use the non-judicial foreclosure procedure provided by the Arkansas Statutory Foreclosure Act. Ark. Code Ann. §§ 18-50-101–18-50-117. We conclude it may and affirm the dismissal 1 of the five cases before us.

I
In Arkansas, a mortgagee ("bank") may foreclose on real property by using one of two methods. First, it may file a co mplaint in Arkansas court alleging the mortgagor ("borrower") is in default on a pr omissory note. If it is successful, the bank may obtain a judgment allowing the borrower's property interest to be foreclosed and the property sold to satisfy the borrower's debt. See Ark. Code Ann. § 18-49-103(b). Second, the bank may use the Arkansas St atutory Foreclosure Act ("SFA"). Id. §§ 18- 50-101–18-50-117. The SFA authorizes foreclosure proceedings without judicial supervision if, among other things, the bank properly notifies the borrower that he or she is in default and the ba nk intends to foreclose on a nd sell the property. Id. §§ 18-

1 The Honorable J. Leon Holmes, United St ates District Judge for the Eastern District of Arkansas.
-3-50-103, 104; see Union Nat'l Bank of Ark. v. Nichols , 807 S.W.2d 36, 38 (Ark. 1991) ("The [SFA] procedure is designed to be e ffectuated without resorting to the state's court system . . . .").
The Arkansas General Assembly ame nded the SFA in 2003. Responding to an "emergency," it found
foreign entities not authorized to do business in the State of Arkansas are availing themselves to [sic] the provi sions of the Statutory Foreclosure Act of 1987; that often times it is to the detriment of Arkansas citizens; and that this act is immediately necessary because these entities should be authorized to do business in the State of Arkansas before being able to use the Statutory Foreclosure Act of 1987.
2003 Ark. Acts 1303 (S.B. 879). The bill added to Arkansas law the provision at issue in this case:
No person, firm, company, associati on, fiduciary, or partnership, either domestic or foreign shall avail them selves of the procedures under this chapter unless authorized to do business in this state. Ark. Code Ann. § 18-50-117. The provisi on applies if the mortgagee is a bank, savings and loan, or mortgage company. Id. §§ 18-50-116(c), 101(5) (defining "mortgage company").

In each of these consolidated cases , JPMorgan Chase Bank ("JPMorgan") attempted to use the SFA to foreclose on the borrower's home. Daniel and Susan Johnson, Tracy Estes, and Tammy Renae P eeks each filed a petition for relief under Chapter 13 of the Bankruptcy Code to halt the statutory foreclosure. See11 U.S.C. § 362. Each debtor's repayment plan liste d JPMorgan as a long-term secured creditor which was owed an arrearage of a stated figure. A debtor in a Chapter 13 case may cure a default on a debt for the debtor 's home mortgage through the plan. Id. § 1322(b)(3). To confirm the plan and cure the default, the debtor must repay the

-4-arrearage, the amount of which is "d etermined in accordance with the underlying agreement and applicable nonbankruptcy law." Id. § 1322(e). JPMorgan filed a plan confirmation objection in each case, arguing the debtors failed to include in their plans the fees and costs JPMorgan had incurred in pursuing the foreclosures, and as a result, the arrearage figure listed in the debtors' respective c onfirmation plans was too low. Thus, to calculate the proper arrearage am ount, the bankruptcy court had to determine whether JPMorgan was entitled to use the SFA and claim the foreclosure fees from its use.
The bankruptcy court held a consolid ated hearing regarding JPMorgan's objections. The parties stipulated that JPMo rgan was not registered with the Arkansas Secretary of State as an entity authori zed to conduct business in Arkansas, see Ark. Code Ann. § 4-27-1501, and wa s not registered with the Arkansas Bank Department as an out-of-state bank doing business in Arkansas. See id. § 23-48-1001. The bankruptcy court concluded this stipulati on established JPMorgan was not "authorized to do business" in Arkansas. In re Johnson , 460 B.R. 234, 238-39 (Bankr. E.D. Ark. 2011). It found JPMorgan was not in comp liance with the SFA, the debtors did not owe JPMorgan foreclosure fees and costs, and those fees and costs need not be included in the debtors' repayment plans fo r their plans to be confirmed. JPMorgan appealed.

In the fourth consolidated case, Jere T. Jones and Teri Jones filed a civil action against JPMorgan in Arkansas court. They requested a declaratory judgment JPMorgan was not in compliance with the SFA, as well as a temporary restraining order (TRO) enjoining the foreclosure of th eir property. The Arkansas court issued the TRO. JPMorgan then re moved the case to federal c ourt and moved for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c).
In the final case, Karen Rivera sought to recover damages and restitution on behalf of a class of persons subject to non-judicial foreclosure by JPMorgan. Her

-5-complaint alleged, among other things, thatJPMorgan's unauthorized use of the SFA violated the Arkansas Decep tive Trade Practices Act. Ark. Code Ann. § 4-88-101 et seq . JPMorgan moved to dismiss pursuan t to Federal Rule of Civil Procedure 12(b)(6).

Because the five cases turned on the sa me legal issue, the district court consolidated the three bankruptcy cases, Jones , and Rivera . After holding a hearing, the district court issued a memorandum opinion, accompanied by separate judgments, which reversed the bankruptcy court's d ecision, granted JPMorgan's motion for judgment on the pleadings in Jones , and granted JPMorgan's motion to dismiss in Rivera . First, the district court noted JPMorgan's stipulation was more limited than the bankruptcy court recognized. JPMorgan stipulated only that it was not registered to do business in Arkansas with the Secretary of State or the Bank Department. It did not stipulate it was not authorized to do bus iness in Arkansas as § 18-50-117 required. Second, it reasoned a plain reading of § 18-50-117 allowed JPMorgan to acquire authorization to do business in Arkansas pur suant to state or federal law, rather than exclusively by state law. Third, and fina lly, it determined federal law authorized JPMorgan to do business in Arkansas. Th erefore, the district court concluded JPMorgan met § 18-50-117's authorized-t o-do-business requirement and could lawfully use the non-judicial foreclos ure procedure the SFA provided. The homeowners appealed.

II
Our analysis proceeds in two parts: (1) whether an entity seeking to use the SFA may be "authorized to do business" in Arkansas only by virtue of state registration, or whether federal law may provide such authorization; and (2) if federal law may provide such authorization, wh ether the National Ba nk Act ("NBA") does, in fact, authorize JPMorgan to do business in Arkansas.

-6-"As the second court of review in a bankruptcy appeal, we apply the same standard of review as the District Court, reviewing the Bankruptcy Court's legal conclusions de novo and its factual findi ngs for clear error." In re Usery , 123 F.3d 1089, 1093 (8th Cir. 1997). 2We review a district court's grant of a motion for judgment on the pleadings and grant of a motion to dismiss for failure to state a claim de novo as well. Faibisch v. Univ. of Minn. , 304 F.3d 797, 803 (8th Cir. 2002) (quotation and citation omitted) (judgment on the pleadings); Detroit Gen. Retirement Sys. v. Medtronic, Inc. , 621 F.3d 800, 804 (8th Cir. 2010) (failure to state a claim).
We look to Arkansas law to decide the merits of this diversity case. See Erie R.R. v. Tompkins , 304 U.S. 64, 78 (1938). Because the case presents a matter of first impression in Arkansas, we must predict, as best we can, how the Arkansas Supreme Court would decide it. SeeSloan v. Motorists Mut. Ins. Co. , 368 F.3d 853, 856 (8th Cir. 2004) (citation omitted). To do so, we consider "relevant state precedent, analogous decisions, considered dicta, and any other reliable data." HOK Sport, Inc. v. FC Des Moines, L.C. , 495 F.3d 927, 935 (8th Cir. 2007) (internal quotation and citation omitted). "[W]e are bound by [Arkansas' s] rules of statutory construction" in our analysis. Gershman v. Am. Cas. Co. of Reading, PA , 251 F.3d 1159, 1162 (8th Cir. 2001). In Arkansas,
[t]he basic rule of statutory constructi on is to give effect to the intent of the General Assembly. In determining the meaning of a statute, the first rule is to construe it just as it reads, giving the words their ordinary and usually accepted meaning in common language. This court construes the

2 Each party states the district court's opinion may provide "some persuasive weight" regarding the proper outcome. SeeUnited States v. Foust (In re Foust) , 52 F.3d 766, 768 (8th Cir. 1995). This may be true when a district court reviews a bankruptcy court's interpretation of the ba nkruptcy code, a fede ral law. Here, though, the district court interpreted a disputed pr ovision of state law. The Supreme Court has made clear appellate courts must review di strict court interpretations of state law de novo. Salve Regina Coll. v. Russell , 499 U.S. 225, 239 (1991).
-7-statute so that no word is left void, superfluous, or insignificant, and meaning and effect are given to every word in the statute if possible. When the language of a statute is plain and unambiguous and conveys a clear and definite meaning, there is no need to resort to rules of statutory construction. However, this court will not give statutes a literal interpretation if it leads to absurd consequences that are contrary to legislative intent. This court seeks to reconcile statutory provisions to make them consistent, harmonious, and sensible.
Mamo Transp., Inc. v. Williams , 289 S.W.3d 79, 83 (Ark. 2008) (citations omitted).

We first ask whether Ark. Code Ann. § 18-50-117 is ambiguous, for if it is not, our analysis need go no further. Burcham v. City of Van Buren , 954 S.W.2d 266, 269 (Ark. 1997). "A statute is ambiguous where it is open to two or more constructions, or where it is of such obscure or doubtful meaning that reasonable minds might disagree or be uncertain as to its meaning." Yamaha Mo tor Corp., U.S.A. v. Richard's Honda Yamaha , 38 S.W.3d 356, 360 (Ark. 2001). C onstruing Ark. Code Ann. § 18- 50-117 "just as it reads," Williams , 289 S.W.3d at 83, we initially observe the statute means exactly what it says—an entity must be"authorized to do business" in Arkansas to avail itself of the SFA. A requirement a ba nk register with a state official or state entity is not present in the statutory language. But neitheris an explicit acknowledgment that federal law may authorize national banks to use the SFA. In short, the statute simply does not explain what a person or organization must do to become "authorized to do business" in Arkansas. This absence leaves reasonable minds to speculate regarding the meaning of the statute. This uncertainty renders § 18-50-117 ambiguous.
When, as here, a statute is ambiguous , and again seeking to determine legislative intent, Arkansas courts examine th e whole act of which the statute is a part. Cent. & S. Cos. v. Weiss , 3 S.W.3d 294, 298 (Ark. 1999). They also consider "legislative history, the language, a nd the subject matter involved." Id. "[S]tatutes relating to the same subject are said to be in pari materia and should be read in a

-8-harmonious manner, if possible." Rose v. Ark. State Plant Bd. , 213 S.W.3d 607, 614 (Ark. 2005). Accordingly, we examine re lated provisions of the SFA and other Arkansas banking statutes to ascertain the General Assembly's intent.
Section 18-50-102(a) determines who may serve as a trustee in a non-judicial foreclosure proceeding. As initially enacted, 3 it allowed any "[b]ank or savings and loan authorized to do business under the la ws of Arkansas or those of the United States " to be a trustee. Ark. Code Ann. § 18-50-102(a)(2) (2003) (emphasis added). Construing § 18-50-117 to allow only state la w to authorize banks to do business in Arkansas would mean a national bank could bea trustee in a non-judicial foreclosure without prior registration, but simultaneously could not avail itself of the benefits of the SFA. The homeowners s ee no inconsistency here. We believe the homeowners misread the statute. Section 18-50-117 requires authorization for an entity to avail itself of "the procedures under this chapter," not just initiating a non-judicial foreclosure. Because the appointment of a trustee is part of the "procedures" contained in the SFA, the two provisions are inconsistent. Reading the statute in the manner JPMorgan suggests—in other word s, an entity may initiate a non-judicial foreclosure pursuant to Arkansas law or th e laws of the United States—produces this consistency because the phrase "authorized to do business" mean s the same thing in different parts of the statute. It is th erefore a preferable interpretation. See Williams , 289 S.W.3d at 83.
Other Arkansas banking statutes lead to a similar conclusion. The Wingo Act provides a foreign corporation may become authorized to transact business in Arkansas by obtaining a certificate of authority from the Secretary of State. Ark. Code Ann. § 4-27-1501(a). Elsewhere, th e Branching Act requires an out-of-state bank to file an application with the Arkansas Bank Commissioner before it may open

3 The General Assembly amended § 18-50- 102 effective July 27, 2011, but the amendment does not affect the outcome here.
-9-a branch in Arkansas. Id. § 23-48-1001(a). These statutes, which contain express state certification requirements, demonstr ate the General Assembly is capable of articulating a certification requirement wh en it desires one. Yet the SFA contains none. Arkansas courts presume the Genera l Assembly has in mind previous statutes relating to the same subject matter when it enacts a new statute. SeeCousins v. Dennis , 767 S.W.2d 296, 298 (Ark. 1989). And when the General Assembly has demonstrated the ability to include qualifying statutory language in a statute, but chooses not to do so in a particular statut e, Arkansas courts infer the omission was deliberate and evidences a different legislative intent. See Bush v. State , 2 S.W.3d 761, 764 (Ark. 1999) (holding the legislature' s approval of granting a defendant credit against his sentence in a statute governi ng post-sentence electronic monitoring by the Department of Corrections, but omission of th at approval in a separate statute relating to pre-trial electronic monitoring, "is evid ence that the legislature did not intend for credit to be given for electronic monitori ng while a defendant is awaiting trial"); Chatelain v. Kelley , 910 S.W.2d 215, 219 (Ark. 1995) ("[T]he General Assembly knows how to include proper terminology or exclude it in accordance with its intent . . . ."), overrule d on other grounds by Aka v. Jefferson Hosp. Ass'n , 42 S.W.3d 508 (Ark. 2001); Hales v. State , 771 S.W.2d 285, 286 (Ark. 1989). Applying these principles to the present matter, we must presume the General Assembly did not intend to include in § 18-50-117 the exclusive state registration it has insisted upon in other statutes. 4

4 The homeowners claim, "[w]hen it pa ssed the 2003 amendment [to the SFA], the legislature knew what a certificate of au thority meant." Appellants' Br. at 15. Assuming this statement is true, it is of little moment. Awareness of a statutory provision in a past statute does not suffice to require it in a present one. We also reject the homeowners' argument the district court improperly used a more general statute, the Wingo Act, to interpret a more specific statute, the SFA. See Ozark Gas Pipeline Corp. v. Ark. Pub. Serv. Comm'n , 29 S.W.3d 730, 736 (Ark. 2000) ("The rule is well settled that a general statute must yield whenthere is a more specific statute involving the particular matter."). The district cour t did no such thing. Rather, it used the Wingo Act simply as an example of the General Assembly's ability to communicate its intent.
-10-We conclude that, if it were to rule on the matter, the Arkansas Supreme Court would hold registration with a state entity is not the exclusive means by which an entity may be authorized to do business in Arkansas. We now consider whether federal law authorizes JPMorgan to do business in Arkansas.

III

The district court concluded the Na tional Bank Act ("NBA"), 12 U.S.C. § 21 et seq. , authorizes JPMorgan to conduct the business of banking in Arkansas. It further determined foreclosure constitutes a banking activity. The homeowners disagree. The NBA may allow JPMorgan to judicially foreclose in Arkansas, they argue, but it does not permit JPMorgan to statutorily foreclose.
The NBA regulates the activities of national banks. Congr ess has given the Office of the Comptroller of the Currency ("OCC") the responsibility of enforcing the NBA and overseeing national banks' operations. Id. §§ 24, 93(a). The parties agree JPMorgan is a national bank subject to the OCC's regulations. The NBA vests in nationally chartered banks enumerated powers and "all such incidental powers as shall be necessary to carry on the business of banking." Id. § 24 Seventh. The Supreme Court has repeatedly held "federal control shields national banking from unduly burdensome and duplicative state regula tion." Watters v. Wachovia Bank, N.A. , 550 U.S. 1, 11 (2007) (citing Benefic ial Nat'l Bank v. Anderson , 539 U.S. 1, 10 (2003)). Although national banks are subject to state laws of general application that do not conflict with the NBA, Davi s v. Elmira Savings Bank , 161 U.S. 275, 290 (1896), the grants of enumerated and incidental powers are not limited by—and in fact preempt—contrary state law. Barnett Bank of Marion Cnty., N.A. v. Nelson , 517 U.S. 25, 32 (1996).
One of the enumerated powers the NBA au thorizes banks to engage in, subject to OCC regulation, is mortgage lending. 12 U.S.C. § 371(a); see Watters , 550 U.S. at 12. This provision, as part of an actof Congress re lated to the national banks,
-11-applies to the states. 12 U.S.C. § 42. A ccordingly, the NBA authorizes JPMorgan to conduct the business of banking, includi ng mortgage lending, in Arkansas, notwithstanding any contrary Arkansas law.
It is also clear that the power to forecl ose is incidental to the express power to make mortgage loans. An "incidental power " is one that is "closely related to an express power and is useful in carrying out the business of banking." First Nat'l Bank of E. Ark. v. Taylor , 907 F.2d 775, 777 (8th Cir. 1990). Incidental powers are not confined to activities deemed "essential" to the operations of national banks. Id. There is little doubt the power to foreclose is closely related to and useful in carrying out the business of banking. As the distri ct court recognized, "[t]he power to engage in real estate lending would be rendered a nullity if national banks could not also foreclose when the borrower defaulted." JPMorgan Chase Bank, N.A. v. Johnson , 470 B.R. 829, 835 n.4 (E.D. Ark. 2012).
The homeowners acknowledge this fact, but nevertheless argue the power to statutorily foreclose is not incidental to the enumerated power to make mortgage loans. This is so, they claim, because "[t]he Comptroller ha s never promulgated a regulation that specifically includes the authority to use a state's statutory foreclosure statute as an incidental power to banking business." Appellants' Br. at 25 (emphasis removed). We cannot agree with this reasoning, for treating promulgation as a prerequisite converts incidental powers in to enumerated ones and, as such, flatly contradicts the terms of the NBA. See 12 U.S.C. § 24 Seventh.
Finally, an OCC regulation identifies certain substantive bodies of law as "not inconsistent with the real estate le nding powers of national banks." 12 C.F.R. §§ 34.4(b)(1) (contracts), (b)(5) (right to coll ect debts), (b)(6) (acquisition and transfer of property). The homeowners contend this regulation "exclud[es] these activities as incidental powers." Appellant s' Br. at 26. Because the excluded powers of contracts, debt collection, and property transfer are atthe core of the SFA, they argue, federal law does not allow nati onal banks to statutorily foreclose. Again, we disagree because
-12-the homeowners read the regulation incorrectly. Section 34.4(b) lists bodies of state law that are not preemptedby federal law, to the extent they are not inconsistent with federal law as interpreted by the Supreme Court. The regulation does not say these bodies of law represent powers which are not incidental to the enumerated powers given to national banks. Th e homeowners confuse the tw o. To accept their position would mean national banks have the expre ss power to make mortgage loans, but in doing so, may not enter into contracts, collect debts, or acquire a nd transfer property. These severe limitations would substantially interfere with a national bank's ability to execute an express power. Congress could hardly have intended such a result. See Barnett Bank of Marion Cnty. , 517 U.S. at 33 ("Congress would not want States to forbid, or to impair significantly, the ex ercise of a power that Congress explicitly granted.").

IV
An entity may be authorized to do business in Arkansas for SFA purposes pursuant to either state or federal law. In JPMorgan's case, federal law provides such authorization. The district court correctly concluded JPMorgan is authorized to do business in Arkansas and may avail itself of the benefit of the SFA. The judgment of the district court is affirmed. 5

______________________________

5 JPMorgan also argues that § 18-50-117 violates the Dormant Commerce Clause and is preempted by the NBA. Becau se we resolve the case in JPMorgan's favor based on the statutory language itsel f, we do not consider these arguments.
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