United States Court of Appeals

For the Eighth Circuit

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No. 12-2370

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JPMorgan Chase Bank, N.A.

lllllllllllllllllllllAppellee

v.

Daniel L. Johnson; Susan D. Johnson

lllllllllllllllllllllAppellants

------------------------------

JPMorgan Chase Bank, N.A.

lllllllllllllllllllllAppellee

v.

Tracy Lea Estes

lllllllllllllllllllllAppellant

------------------------------

JPMorgan Chase Bank, N.A.

lllllllllllllllllllllAppellee

v.
Tammy Renae Peeks

lllllllllllllllllllllAppellant

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No. 12-2686

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Jere T. Jones; Teri Jones

lllllllllllllllllllll Plaintiffs - Appellants

v.

JPMorgan Chase Bank, N.A.

lllllllllllllllllllll Defendant - Appellee

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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

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____________

 Submitted: January 15, 2013

 Filed: July 9, 2013

____________

Before BYE, MELLOY, and SMITH, Circuit Judges.

____________

BYE, Circuit Judge.

In these consolidated cases, we consider 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 State 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 dismissal1

 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 complaint in Arkansas court alleging the

mortgagor ("borrower") is in default on a promissory 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 Statutory 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 bank intends to foreclose on and sell the property. Id. §§ 18-

1

The Honorable J. Leon Holmes, United States District Judge for the Eastern

District of Arkansas. 

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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 effectuated without resorting to the state's

court system . . . .").

The Arkansas General Assembly amended 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 provisions 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, association, fiduciary, or partnership, either

domestic or foreign shall avail themselves of the procedures under this

chapter unless authorized to do business in this state.

Ark. Code Ann. § 18-50-117. The provision 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 Peeks each filed a petition for relief under

Chapter 13 of the Bankruptcy Code to halt the statutory foreclosure. See 11 U.S.C.

§ 362. Each debtor's repayment plan listed 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

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arrearage, the amount of which is "determined 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 confirmation plans was too low. 

Thus, to calculate the proper arrearage amount, 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 consolidated hearing regarding JPMorgan's

objections. The parties stipulated that JPMorgan was not registered with the Arkansas

Secretary of State as an entity authorized to conduct business in Arkansas, see Ark.

Code Ann. § 4-27-1501, and was 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 stipulation 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 compliance 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 for 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 their property. The Arkansas court issued

the TRO. JPMorgan then removed the case to federal court 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

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complaint alleged, among other things, that JPMorgan's unauthorized use of the SFA

violated the Arkansas Deceptive Trade Practices Act. Ark. Code Ann. § 4-88-101 et

seq. JPMorgan moved to dismiss pursuant to Federal Rule of Civil Procedure

12(b)(6).

Because the five cases turned on the same 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 decision, 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 business 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 pursuant to state or federal law, rather than

exclusively by state law. Third, and finally, it determined federal law authorized

JPMorgan to do business in Arkansas. Therefore, the district court concluded

JPMorgan met § 18-50-117's authorized-to-do-business requirement and could

lawfully use the non-judicial foreclosure 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, whether the National Bank Act ("NBA") does,

in fact, authorize JPMorgan to do business in Arkansas.

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"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 findings for clear error." In re Usery, 123 F.3d

1089, 1093 (8th Cir. 1997).2

 We 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. See Sloan 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 construction 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. See United 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 bankruptcy code, a federal law. Here, though,

the district court interpreted a disputed provision of state law. The Supreme Court has

made clear appellate courts must review district court interpretations of state law de

novo. Salve Regina Coll. v. Russell, 499 U.S. 225, 239 (1991).

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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 Motor Corp., U.S.A. v. Richard's

Honda Yamaha, 38 S.W.3d 356, 360 (Ark. 2001). Construing 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 bank register with a state official or state

entity is not present in the statutory language. But neither is 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 the 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, and 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

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harmonious manner, if possible." Rose v. Ark. State Plant Bd., 213 S.W.3d 607, 614

(Ark. 2005). Accordingly, we examine related 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 laws 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 law to authorize banks to do business in

Arkansas would mean a national bank could be a trustee in a non-judicial foreclosure

without prior registration, but simultaneously could not avail itself of the benefits of

the SFA. The homeowners see 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 words, an entity may initiate a non-judicial

foreclosure pursuant to Arkansas law or the laws of the United States—produces this

consistency because the phrase "authorized to do business" means the same thing in

different parts of the statute. It is therefore 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, the 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.

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a branch in Arkansas. Id. § 23-48-1001(a). These statutes, which contain express

state certification requirements, demonstrate the General Assembly is capable of

articulating a certification requirement when it desires one. Yet the SFA contains

none. Arkansas courts presume the General Assembly has in mind previous statutes

relating to the same subject matter when it enacts a new statute. See Cousins 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 statute, 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 governing post-sentence electronic monitoring by the

Department of Corrections, but omission of that approval in a separate statute relating

to pre-trial electronic monitoring, "is evidence that the legislature did not intend for

credit to be given for electronic monitoring 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

. . . ."), overruled 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 passed the 2003 amendment [to the SFA],

the legislature knew what a certificate of authority 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 when there is a more specific statute involving

the particular matter."). The district court did no such thing. Rather, it used the

Wingo Act simply as an example of the General Assembly's ability to communicate

its intent.

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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 National 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. Congress 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 regulation." Watters v. Wachovia Bank, N.A., 550

U.S. 1, 11 (2007) (citing Beneficial 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, Davis 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 authorizes 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 act of Congress related to the national banks,

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applies to the states. 12 U.S.C. § 42. Accordingly, the NBA authorizes JPMorgan to

conduct the business of banking, including mortgage lending, in Arkansas,

notwithstanding any contrary Arkansas law.

It is also clear that the power to foreclose 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 district 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 has 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 into 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 lending powers of national banks." 12 C.F.R.

§§ 34.4(b)(1) (contracts), (b)(5) (right to collect debts), (b)(6) (acquisition and transfer

of property). The homeowners contend this regulation "exclud[es] these activities as

incidental powers." Appellants' Br. at 26. Because the excluded powers of contracts,

debt collection, and property transfer are at the core of the SFA, they argue, federal

law does not allow national banks to statutorily foreclose. Again, we disagree because

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the homeowners read the regulation incorrectly. Section 34.4(b) lists bodies of state

law that are not preempted by 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. The homeowners confuse the two. To accept their position

would mean national banks have the express power to make mortgage loans, but in

doing so, may not enter into contracts, collect debts, or acquire and 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 exercise 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

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5

JPMorgan also argues that § 18-50-117 violates the Dormant Commerce

Clause and is preempted by the NBA. Because we resolve the case in JPMorgan's

favor based on the statutory language itself, we do not consider these arguments.

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