Case No. 10-4117 IN THE UNITED STATES COURT OF APPEALS...

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Case No. 10-4117 IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT __________________________________________________________________ PENI COX, Plaintiff-Appellant vs. RECONTRUST COMPANY, N.A.; BANK OF AMERICA HOME LOANS SERVICING, LP; BANK OF AMERICA, FSB; NEW LINE MORTGAGE, DIVISION OF REPULIC MORTGAGE HOME LOANS, LLC; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., AND DOES 1-5, Defendants-Appellee __________________________________________________________________ Interlocutory Appeal from an Order of the United States District Court For The District of Utah, Central Division No. 2:10-CV-00492-SA Hon. Clark Waddoups _____________________ REPLY BRIEF OF APPELLANT _____________________ JOHN CHRISTIAN BARLOW CAMERON SORAN (Law Student) Attorney for Plaintiff/Appellant 40 North 300 East, Suite 101 St. George, UT 84770 Telephone: (435)634-1200 E.CRAIG SMAY Attorney for Plaintiff/Appellant 174 E. South Temple Salt Lake City, UT 84111-1102 Telephone: 801-539-8515 ORAL ARGUMENT REQUESTED Appellate Case: 10-4117 Document: 01018526530 Date Filed: 11/03/2010 Page: 1 Courtesy of www.4closureFraud.org

Transcript of Case No. 10-4117 IN THE UNITED STATES COURT OF APPEALS...

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Case No. 10-4117

IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

__________________________________________________________________

PENI COX,

Plaintiff-Appellant

vs.

RECONTRUST COMPANY, N.A.; BANK OF AMERICA HOME LOANS

SERVICING, LP; BANK OF AMERICA, FSB; NEW LINE MORTGAGE,

DIVISION OF REPULIC MORTGAGE HOME LOANS, LLC; MORTGAGE

ELECTRONIC REGISTRATION SYSTEMS, INC., AND DOES 1-5,

Defendants-Appellee __________________________________________________________________

Interlocutory Appeal from an Order of the United States District Court For The

District of Utah, Central Division No. 2:10-CV-00492-SA Hon. Clark Waddoups

_____________________

REPLY BRIEF OF APPELLANT

_____________________

JOHN CHRISTIAN BARLOW

CAMERON SORAN (Law Student)

Attorney for Plaintiff/Appellant

40 North 300 East, Suite 101

St. George, UT 84770

Telephone: (435)634-1200

E.CRAIG SMAY

Attorney for Plaintiff/Appellant

174 E. South Temple

Salt Lake City, UT 84111-1102

Telephone: 801-539-8515

ORAL ARGUMENT REQUESTED

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TABLE OF CONTENTS

TABLE OF CONTENTS ........................................................................................ i

TABLE OF AUTHORITIES ................................................................................... iii

INTRODUCTION ..................................................................................................... 1

RESPONSE TO COUNTERSTATEMENT OF THE ISSUES PRESENTED ON

APPEAL ..................................................................................................................... 3

RESPONSE TO STANDARD OF REVIEW ............................................................ 6

SUMMARY OF ARGUMENT ................................................................................. 6

ARGUMENT ............................................................................................................. 9

I. THE DISTRICT COURT SHOULD ONLY HAVE EXERCISED

JURISDICTION IN THIS CASE IF THE NATIONAL BANK ACT

COMPLETELY PREEMPTED THE RELEVANT UTAH STATUTES ...........10

II. THE NATIONAL BANK ACT DOES NOT PREEMPT EITHER UTAH

STATUTE .............................................................................................................12

A. The Presumption Against Preemption Applies in this Case .......................12

B. As Stated Previously, the NBA does not Preempt either Utah Statute .......14

C. Defendants‟ Analysis of 12 U.S.C. § 92a and Associated Regulations is

Incorrect .............................................................................................................14

D. Defendants Reliance on the OCC Interpretive Letters is Unavailing .........17

E. Defendants‟ Other Arguments are Unavailing ............................................19

F. The National Bank Act does not Completely Preempt both Utah Statutes

20

III. THE PREMISE OF RECONTRUST‟S ARGUMENT IS THAT STATE

LAWS DO NOT APPLY TO NATIONAL BANKS ...........................................21

A. The Historical Overview of the Subjection of National Banks to State

Laws According to the Supreme Court .............................................................21

B. The Correct Interpretation of How Utah State Laws Apply to National

Banks .................................................................................................................23

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CONCLUSION ........................................................................................................26

STATEMENT REGARDING ORAL ARGUMENT .............................................26

ATTACHMENTS

1. Defendant‟s Memorandum in Opposition to Plaintiff Peni Cox‟s Motion for

Partial Summary Judgment

2. Declaration of Richard F. Ensor Requesting Judicial Notice in Connection

with Reply Brief in Support of Motion to Dismiss

3. Peni Cox Deed of Trust

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TABLE OF AUTHORITIES

Cases

770 PPR, LLC v. TJCV Land Trust, 30 So.3d 613 (Fla. App. 2010) ......................19

American Bush v. City of South Salt Lake, 42 Fed.Appx. 308 (2002) ....................11

Anderson Nat. Bank v. Luckett, 321 U.S. 233 (1944) ..............................................22

Attorney General of Oklahoma v. Tyson Foods, Inc., 565 F.3d 769 (2009) ............. 6

Bank of Am. v. City & County of San Francisco, 309 F.3d 551 (9th Cir. 2002) .....24

Barnett Bank of Marion County v. Nelson, 517 U.S. 25(1996) ........................ 12, 22

Bauchman ex rel. Bauchman v. West High Sch., 132 F.3d 542 (10th Cir.1997) ....10

Beneficial Nat’l Bank v. Anderson, 539 U.S. 1 (2003) ..................... 9, 10, 11, 20, 21

Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343 (1988) ......................................7, 10

Caterpillar Inc. v. Williams, 482 U.S. 386, (1999) ..................................................21

Christensen v. Harris County, 529 U.S. 576 (2000) ...............................................18

City of Burbank v. Lockheed Air Terminal, Inc., 411 U.S. 624 (1973) ...................13

Cuomo v. Clearing House Ass'n, L.L.C., 129 S. Ct. 2710, 2720-21 (2009) .... passim

Enterprise Intern., Inc. v. Corporation Estatal Petrolera Ecuatoriana, 762 F.2d

464 (5th

Cir. 1985) .................................................................................................. 4

First Nat'l Bank v. Dickinson, 396 U.S. 122 (1969) ................................................23

First National Bank in St. Louis v. Missouri, 263 U.S. 640, (1924) .......................23

Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963) ..................13

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Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern

Cal.,463 U.S. 1 (1983) ..........................................................................................21

Indiana National Bank v. Roberts, 326 So.2d 802 (Miss. 1976) .............................19

Jones v. Rath Packing Co., 430 U.S. 519 (1977) ............................................. 12, 13

National Bank v. Commonwealth, 9 Wall. 353 (1870) ............................... 13, 22, 23

Nat'l State Bank v. Long, 630 F.2d 981 (3d Cir.1980) ............................................24

Perdue v. Crocker Nat'l Bank, 38 Cal.3d 913 (1985) ..............................................24

Pullman Co. v. Jenkins, 305 U.S. 534 (1939) ..........................................................10

Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947) .................................... 12, 13

United States v. Bass, 404 U.S. 336 (1971) .............................................................12

United States v. Mead Corp., 533 U.S. 218 (2001) .................................................18

Waite v. Dowley, 94 U.S. 527, (1876). .....................................................................22

Watters v. Wachovia Bank, N.A., 550 U.S. 1 (2007) .................................. 12, 14, 23

Wells Fargo Bank N.A. v. Boutris, 419 F.3d 949 (9th Cir. 2005) ...........................19

Statutes

12 U.S.C. § 43 ..........................................................................................................18

12 U.S.C. 92a ................................................................................................... passim

28 U.S.C. § 1292…………………………………………………………………...4

28 U.S.C. § 1367 ......................................................................................................11

28 U.S.C. § 1441 ........................................................................................... 2, 10, 11

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Utah Code § 7-1-704 ................................................................................................25

Utah Code § 16-10a-1501 ........................................................................... 14, 19, 25

Utah Code § 16-10a-1502 .......................................................................................... 4

Utah Code § 16-10a-1505 ....................................................................................5, 14

Utah Code § 57-1-21 ......................................................................................... 14, 25

Rules

Fed. R. App. P. Rule 28(c) ......................................................................................... 1

Regulations

12 C.F.R. § 9.7……………………………………………………......15, 16, 23, 24

12 C.F.R. § 5.34...…………………………………………………………………19

12 C.F.R. § 557……………………………………………………………………15

Other Authorities

Activities Permissible for a National Bank ..............................................................16

Comptroller‟s Licensing Manual, Fiduciary Powers ...............................................16

OCC Interp. Letter No. 1103 ...................................................................................18

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Case No. 10-4117

IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

__________________________________________________________________

PENI COX,

Plaintiff-Appellant

vs.

RECONTRUST COMPANY, N.A.; BANK OF AMERICA HOME LOANS

SERVICING, LP; BANK OF AMERICA, FSB; NEW LINE MORTGAGE,

DIVISION OF REPULIC MORTGAGE HOME LOANS, LLC; MORTGAGE

ELECTRONIC REGISTRATION SYSTEMS, INC., AND DOES 1-5,

Defendants-Appellee

__________________________________________________________________

Interlocutory Appeal from an Order of the United States District Court

for the District of Utah, Central Division

Hon. Clark Waddoups

_____________________

REPLY BRIEF OF APPELLANT

_____________________

INTRODUCTION

Plaintiff-Appellant Peni Cox (“Cox”) submits this Reply Brief pursuant to

Fed. R. App. P. Rule 28(c).Cox clarifies the issue presented by the Defendant-

Appellees, ReconTrust, Bank of America, and Mortgage Electronic Registration

Systems. For the purpose of this reply brief, Defendant-Appellees shall be known

as ReconTrust, although they are separate entities.

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This is an appeal of an Interlocutory Decision by the District Court that

lifted an injunction issued by the State Court.

This Court has jurisdiction under 28 U.S.C. § 1441(b).

Except as provided in subsections (c) and (d) of this section, the

courts of appeals shall have jurisdiction of appeals from: (1)

Interlocutory orders of the district courts of the United States, … of

the judges thereof, granting, continuing, modifying, refusing or

dissolving injunctions, or refusing to dissolve or modify injunctions,

except where a direct review may be had in the Supreme Court[.]

This section, under which Cox appeals, allows this court to review an interlocutory

order of a district court that dissolved an injunction. The District Court entered an

Interlocutory order in which it ruled it had jurisdiction to lift the State Court

injunction based upon the fact the preemption exists which allows ReconTrust to

operate in the State of Utah without being subject to state laws because ReconTrust

is a National Bank. This court need not review the merits of the injunction itself

because that is not the basis of this appeal, but this court must review the District

Court‟s decision upon which the District Court determined the State Court

Injunction invalid.

Cox submits to this Court that there are three possible scenarios presented by

this appeal:

(1) The District Court lacks jurisdiction. This being so, the case should

be remanded to the State Court, Injunction intact.

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(2) The District Court has jurisdiction but made an error in its interpretation

of the National Bank Act and the ability of a National Bank to preempt State

statutes. The result would be that the District court retains jurisdiction, but, based

on Utah law, the injunction must be reinstated or a new injunction issued.

(3) The District Court has jurisdiction and did not error in its interpretation

of the National Bank Act. This is the position of ReconTrust which Cox wholly

disputes.

Cox declines to argue the merits of the injunction because the injunction

itself is not the basis of the appeal, but a more substantial issue of preemption1 that

was addressed in the Interlocutory order is what Cox submits to this court as the

basis of appeal.

RESPONSE TO COUNTERSTATEMENT OF THE ISSUES PRESENTED ON

APPEAL

The Defendants suggest that Plaintiff Cox filed the appeal to decide whether

the district court abused its discretion when it dissolved the state court injunction.

See Respondent‟s Brief p. 3. This is incorrect. “The threshold question here is

whether the [district] court has subject matter jurisdiction over this action.” District

Court Memo. Dec. at 2. Plaintiff filed an interlocutory appeal pursuant to 28

1 “The question becomes whether the National Banking Act completely preempts these Utah

causes of action allowing for removal in this case.” Appellant Brief Attachment 1, Memo. Dec.

p. 8.

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U.S.C. 1292(a) for this court to review an interlocutory order of a district court that

dissolved an injunction.

The threshold question for modification of an injunction is whether the

district court has jurisdiction, not whether the district court abused its discretion in

dissolving the injunction. See Enterprise Intern., Inc. v. Corporation Estatal

Petrolera Ecuatoriana, 762 F.2d 464, 470-71 (5th Cir. 1985) (a district court must

have valid jurisdiction before entering an order respecting interlocutory injunctive

relief); Respondent‟s Brief p. 13 (agreeing with this point). The district court ruled

that it held jurisdiction on the sole grounds of complete preemption of both Utah

statutes. District Court Memorandum Opinion p. 2

Defendants contend that the injunction as a result of their failure to register

as a foreign corporation is procedurally invalid. The State Court correctly issued

the injunction. The Defendants reach their conclusion as a result of their flawed

reading of the statute.

The Utah registration statute is stated thusly:

16-10a-1502. Consequences of transacting business without

authority. (5) Upon a finding by the court that a foreign corporation or any of its

officers or agents have transacted business in this state in violation of

this part, the court shall issue, in addition to or instead of a civil

penalty, an injunction restraining the further transaction of the

business of the foreign corporation and the further exercise of any

corporate rights and privileges in this state. Upon issuance of the

injunction, the foreign corporation shall be enjoined from transacting

business in this state until all civil penalties have been paid, plus any

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interest and court costs assessed by the court, and until the foreign

corporation has otherwise complied with the provisions of this part.

The State Court received evidence that ReconTrust, Bank of America, and

MERS are not registered to do business in the State of Utah. The State Court then

issued an injunction as it is directed to do so under the statute.

ReconTrust reads the statute thusly:

If a foreign corporation is found to be in violation of these provisions,

section 1502(5) permits a court issue “an injunction restraining the

further transaction of the business of the foreign corporation and the

further transaction of the business of the foreign corporation and the

further exercise of any corporate rights and privileges in this state.”

Respondents Brief Foot note 6 page 32.

ReconTrust believes that the injunction was permissive, and ReconTrust

wants this court to think that the State Court was outside its boundaries when it

issued the injunction. According to the plain language of the statute, an injunction

was mandatory. If ReconTrust has issue with the fact that the statute requires an

injunction they need to challenge the statute in court, not simply try to convince

this Court that the statute says something other than what it actually does.

Thus, the question of whether the District Court properly exercised

jurisdiction is the only question on appeal which this Court must answer. This

Court need not determine the validity of the injunction issued by the State Court.

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RESPONSE TO STANDARD OF REVIEW

Defendants argue that the standard of review in this case is “abuse of

discretion.” See Respondent‟s Brief p. 13. Defendants are incorrect. The standard

of review for this case is de novo. See Appellants Brief p. 2. Even assuming

Defendants‟ view of the issues on appeal is correct, the standard of review is still

de novo. Attorney General of Oklahoma v. Tyson Foods, Inc., 565 F.3d 769, 776

(10 Cir. 2009).

SUMMARY OF ARGUMENT

The District Court did not have the power to dissolve the Injunction issued

by the State Court. The District Court claimed that complete preemption existed

making Plaintiff‟s claims federal, and that it had jurisdiction over the issues

enabling it to enter a ruling dissolving the injunction. District Court Memo. Dec.

at 17. The District Court held that there are only two possible grounds for

concluding that the court could retain jurisdiction and dissolve the injunction.

District Court Memo. Dec. at 3. First, if supplemental jurisdiction existed, then the

District Court could have exercised jurisdiction. Id. Second, if the National Bank

Act (NBA) completely preempted both Utah statutes, then the District Court could

have exercised jurisdiction. Id. Neither supplemental jurisdiction nor complete

preemption however, is present in this case.

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First, there was no supplemental jurisdiction at the time of removal, since

Plaintiff‟s state law claims were not so related to her RESPA claim that they

formed part of the same case or controversy. District Court Memo. Dec. at 3.

Even if they did, a District Court should not exercise supplemental jurisdiction

when the federal law claims are no longer present. Carnegie-Mellon Univ. v.

Cohill, 484 U.S. 343, 350 (1988).

Second, the NBA does not “completely preempt” both Utah statutes.

Plaintiff has already thoroughly demonstrated this point in the original brief, and

all of Defendants‟ arguments in their response are unavailing.

(1) Despite the Defendant‟s assertions to the contrary, the presumption

against preemption does apply here. Cuomo v. Clearing House Ass’n,

L.L.C., 129 S. Ct. 2710, 2720-21 (2009).

(2) Moreover, 12 U.S.C. 92a and associated regulations do not preempt both

Utah statutes, since neither statue is an exercise of visitorial powers nor

specifically preempted by 12 U.S.C. 92a and associated regulations.

Indeed, the only interpretation that would allow for 12 U.S.C. 92a and

associated regulations to preempt both Utah statutes would make national

banks completely immune to all State laws, a clearly absurd result.

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(3) Nor is the Defendants‟ reliance on the OCC interpretation letters

particularly persuasive, since they are neither binding, nor do they

specifically address the question at issue.

(4) Defendants‟ other arguments are neither persuasive nor on point.

(5) Defendant now serially shifts positions to disguise the fact that no similar

institution, state or federally chartered, is given power of sale as trustee

of a trust deed by Utah law. First defendant claimed to be a “depository

institution”2 in obtaining reversal of the state court injunction. Next,

Defendants claimed to be a “Trust (Non-Deposit)” and a “non-depository

institution.”3 It appearing that trust companies also lack power of sale

under Utah law, defendant now claims that federally chartered trust

companies have power of sale by implication from their trust powers,

though state trust companies do not.

(6) Lastly Defendants position is undermined by the very instrument they

wish to enforce, the Deed of Trust. Under paragraph 16 of the Deed of

2 “Utah Code § 57-1-21 provides a list of persons eligible to act as trustees in Utah. These

include members of the Utah state bar, depository institutions, and title insurance companies.

Utah Code § 57-1-21. ReconTrust is not permitted to serve as a trustee under this Utah

regulation. This restriction on ReconTrust‟s ability to act as a trustee clearly conflicts with 12

U.S.C. § 92a(b) because Utah Code § 57-1-21 “allows a „depository institution,‟ which is

unquestionably a competitor of a national bank, to act as a trustee.” (Memo. Dec. [Doc. # 45] at

14.) Preemption principles thus bar the application of § 57-1-21 to ReconTrust, and Plaintiff‟s

request for summary judgment on her claim based on that statute must be denied.” Defendants‟

Memo. in Opp., [Doc. #58] at 6, Attach. 1. 3 “The Court can take judicial notice of the fact that ReconTrust Company, N.A. is a non-

depository institution as that fact is set forth in the public records.” Dec. Richard Ensor [Doc. #

66] at 2, par. 2, Attach. 2.

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Trust states “This Security Instrument shall be governed by federal law

and the law of the jurisdiction in which the property is located.” Attach.3.

Even if the NBA did preempt either Utah statute, the NBA does not

“completely preempt” them. Federal preemption requires that the State statute

conflicts with the federal statute, but “complete preemption” requires that the NBA

provide “the exclusive cause of action for the claim asserted and also set forth

procedures and remedies governing that cause of action.” Beneficial Nat’l Bank v.

Anderson, 539 U.S. 1, 8 (2003) (emphasis added). This standard, as articulated by

the Supreme Court, is simply not present in this case.

Thus, the District Court incorrectly exercised jurisdiction in this case, and

this Court should remand this case to the State trial court, or in the alternative issue

an order to the District Court to correct its ruling.

ARGUMENT

Plaintiff will not restate all of the same arguments already presented within

Plaintiff‟s opening brief. Rather, Plaintiff will only focus on responding to

arguments that Respondent raises that the Plaintiff has not already covered in the

opening brief.

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I. THE DISTRICT COURT SHOULD ONLY HAVE EXERCISED

JURISDICTION IN THIS CASE IF THE NATIONAL BANK ACT

COMPLETELY PREEMPTED THE RELEVANT UTAH STATUTES

A defendant may remove a civil action filed in state court to federal court if

a claim arises under federal law. 28 U.S.C. § 1441(b) (2010). In determining “if a

claim arises under federal law, courts examine the „well pleaded‟ allegations of the

complaint and ignore potential defenses.” Beneficial Nat’l Bank v. Anderson, 539

U.S. 1, 6 (2003) and 28 U.S.C. § 1441 (2010). The action here was removed solely

on the basis of an original claim under RESPA. Since Cox amended her complaint

to voluntarily dismiss the RESPA claim and include only state claims, there are

only two possible grounds for the District Court to retain jurisdiction. Removal is

not available to re-institute the RESPA claim for decision.

(1)The court may exercise supplemental jurisdiction if it concludes that the

state law claims “are so related to” her RESPA claim “that they form part of the

same case or controversy.” 28 U.S.C. § 1367(a) (2010). It is not necessary that the

plaintiff alleges no federal claim now, since the court must determine the right to

remove at the time of the petition for removal. Pullman Co. v. Jenkins, 305 U.S.

534, 537 (1939). However, the District Court should refuse supplemental

jurisdiction if the federal claims are no longer present. Carnegie-Mellon Univ. v.

Cohill, 484 U.S. 343, 350 (1988); Bauchman ex rel. Bauchman v. West High

Sch., 132 F.3d 542, 549 (10th Cir.1997); American Bush v. City of South Salt Lake,

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42 Fed.Appx. 308, 310 (2002). The cases cited by defendant (e.g. Boelens, 759

F.2d 504 (5 Cir. 1985); Westmoreland, 605 F.2d 119 (3 Cir. 1979)) nowhere

suggest that voluntary dismissal of a federal claim after removal leaves the federal

court with jurisdiction to review and reverse prior state law decisions of the state

court. Such decisions would be protected by at least comity and the law of the

case.

Bank of America‟s alleged RESPA and TILA violations, that were dropped

from Cox‟s amended complaint, are not related to ReconTrust‟s power to sell Ms.

Cox‟s home, let alone so related “that they form part of the same case or

controversy.” 28 U.S.C. § 1367(a) (2010). Indeed, the District Court concluded

that it would be incorrect to exercise supplemental jurisdiction in this case. District

Court Memorandum opinion at 3.

(2) The defendant may remove to federal court when a federal statute wholly

displaces a State law cause of action through complete preemption.4 Beneficial

Nat’l Bankv. Anderson, 539 U.S. 1, 8 (2003) and 28 U.S.C. § 1441 (2010).

Complete preemption only occurs when the federal statutes at issue provide “the

exclusive cause of action for the claim asserted and also set forth procedures and

remedies governing that cause of action.” Beneficial Nat’l Bank v. Anderson, 539

4 Diversity of citizenship was not asserted as a ground for removal. Further, diversity may not be

resorted to for removal of a matter in which the state court has ruled on a state law issue, to

obtain review of that decision by the federal court.

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U.S. 1, 8 (2003) (emphasis added). In other words, the cause of action, “even if

pleaded in terms of state law, is in reality based on federal law.” Id.

Thus, in order for complete preemption to occur here, the NBA must not

simply interfere with the state law claims, but the NBA must completely control

this specific cause of action by the Plaintiff. In this case it does not. See for

example Cuomo at 2720-21, “States…have always enforced their general laws

against national banks--and have enforced their banking-related laws against

national banks”; Watters, at 12; and Barnett Bank of Marion County v. Nelson, 517

U.S. 25, 31 stating the NBA preempts state law whenever a state law directly

conflicts with a specific federal statute, or the state law would “significantly

impair” a specific federal statute.

II. THE NATIONAL BANK ACT DOES NOT PREEMPT EITHER

UTAH STATUTE

A. The Presumption Against Preemption Applies in this Case

The presumption against preemption applies when the area of law is

historically under the States‟ police powers. Rice v. Santa Fe Elevator Corp., 331

U.S. 218, 230 (1947). “This assumption provides assurance that "the federal-state

balance," United States v. Bass, 404 U.S. 336, 349 (1971), will not be disturbed

unintentionally by Congress or unnecessarily by the courts.” Jones v. Rath Packing

Co., 430 U.S. 519, 525 (1977).

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This presumption against preemption however, does not apply “when

Congress has „unmistakably… ordained,‟ Florida Lime & Avocado Growers,

Inc. v. Paul, 373 U.S. 132, 142 (1963), that its enactments alone are to regulate a

part of commerce, state laws regulating that aspect of commerce must fall. This

result is compelled whether Congress' command is explicitly stated in the statute's

language or implicitly contained in its structure and purpose. City of

Burbank v. Lockheed Air Terminal, Inc., 411 U.S. 624, 633 (1973); Rice at 230;

Jones at 525. However, “States, on the other hand, have always enforced their

general laws against national banks--and have enforced their banking-related laws

against national banks.” Cuomo at 2720-21. As both Utah statutes are general laws,

applying to national banks and non-national banks alike, they merit presumption

against preemption under the Court‟s analysis.

Furthermore, “[N]ational Banks „acquisition and transfer of property [are]

based on state law.‟” Watters at 6, quoting National Bank v. Commonwealth, 9

Wall. 353, 362 (1870). Therefore, since both Utah statutes concern the acquisition

and transfer of property within their borders, they fall within the traditional police

powers of the States. Thus, these statutes merit presumption against preemption

under the Court‟s analysis.

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B. As Stated Previously, the NBA does not Preempt either Utah Statute

As originally stated in the Appellant‟s Brief, the NBA only preempts a State

statute in two instances. First, when the state exercises visitorial powers. Cuomo at

2721, and Watters at 6. The Supreme Court has defined visitorial powers as a

sovereign‟s supervisory powers over corporations, including any form of

administrative oversight that allows a sovereign to inspect books and records on

demand. Cuomo, at 2721. But since neither Utah Code § 16-10a-15015 nor § 57-1-

21(3) are an exercise of visitorial powers, the NBA cannot preempt them.

Second, the NBA preempts state law whenever a state law directly conflicts

with a specific federal statute, or the state law would “significantly impair” a

specific federal statute. Watters, at 12 and Barnett at 31. However, there is no

specific federal statute that would preempt either State statute.

Consequently, the NBA does not preempt either Utah statute.

C. Defendants‟ Analysis of 12 U.S.C. § 92a and Associated Regulations

is Incorrect

Section 92a addresses the applicability of state laws to a national bank's trust

powers:

(a) Authority of Comptroller of the Currency. The Comptroller of the

Currency shall be authorized and empowered to grant by special

permit to national banks applying therefor, when not in contravention

5 16-10a-1505(3) This chapter does not authorize this state to regulate the organization or

internal affairs of a foreign corporation authorized to transact business in this state.

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of State or local law, the right to act as trustee, executor,

administrator, registrar of stocks and bonds, guardian of estates,

assignee, receiver, committee of estates of lunatics, or in any other

fiduciary capacity in which State banks, trust companies, or other

corporations which come into competition with national banks are

permitted to act under the laws of the State in which the national

bank is located. (emphasis added). 12 U.S.C. § 92a(a).

Therefore, a national bank may receive the legal status as a trustee from the

Comptroller “when not in contravention of State or local law” within the State in

which it is “located.”

The Definition of “Located.”

Looking at the plain language of the statute we can determine the definition

of the word “located”.

(a) Authority of Comptroller of the Currency. The Comptroller of the

Currency shall be authorized and empowered to grant by special

permit to national banks applying therefor, when not in contravention

of State or local law, the right to act as trustee,…or in any other

fiduciary capacity in which State banks, trust companies, or other

corporations which come into competition with national banks are

permitted to act under the laws of the State in which the national

bank is located. (emphasis added). 12 U.S.C. § 92a(a).

“Located” refers to any State where the national bank is in competition with State

banks.

The OCC interprets “locate” not as defining situs in one state, but in any

State in which the national bank is in competition with State banks. To clarify

“locate” the Comptroller promulgated 12 C.F.R. § 9.7. “The state laws that apply

to a national bank's fiduciary activities by virtue of 12 U.S.C. 92a are the laws of

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the State in which the bank acts in a fiduciary capacity.” 12 C.F.R. 9.7 (e). A

national bank acts in fiduciary capacity “in the State in which it accepts the

fiduciary appointment, executes the documents that create the fiduciary

relationship, and makes discretionary decisions regarding the investment or

distribution of fiduciary assets.” 12 C.F.R. 9.7 (d).

Under the title Fiduciary Activities in Activities Permissible for a National

Bank, published in April of 2010, the OCC says:

Fiduciary Activities, In Gerneral. National banks with fiduciary

powers (which may be granted at the time of the chartering or

subsequently on application to the OCC) are subject to federal rules

that define fiduciary standards and authorize national banks to operate

in the same capacities as fiduciaries are permitted to operate6in the

States7 where the bank conducts its trust activities(emphasis

added). 12 USC 92a and 12 CFR 9. (P.42)

In the Comptroller’s Licensing Manual, Fiduciary Powers, published in June 2002,

the OCC says:

Fiduciary powers mean the authority the OCC permits a bank to

exercise pursuant to 12 USC 92a. The extent of fiduciary powers is

the same for out-of-state national banks as for instate national banks

and that extent depends upon what powers the state grants to the

fiduciaries in the state with which the national banks compete. (p.2).

A bank with existing fiduciary powers may offer services in

multiple states through branches, trust offices, or trust representative

offices in such states. Such a bank may exercise any of the fiduciary

powers granted in 12 USC 92a(a) in any state, unless that state

6 In Watters the Supreme Court used the word “operate” interchangeably with locate when

discussing an analogous situation involving the location of a subsidiary bank. 7 Note that “States” is plural, meaning that the bank can operate and conduct its activities in more

than one State.

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prohibits both national banks and competing institutions in its own

state from exercising that fiduciary power. (p.3).

Where is ReconTrust “Located”?

ReconTrust, as a national bank comes into competition with which State

banks? Utah State banks. ReconTrust is not competing with California State

banks in Utah. ReconTrust is not competing with Texas State banks in Utah.

ReconTrust is not competing with Utah State banks in Texas or California.

ReconTrust is competing with Utah State banks and/or trust companies.

ReconTrust is located in Utah.

ReconTrust is Located in Utah, California, Texas, Arizona, Alaska, Arkansas,

Idaho, Mississippi, Montana, Nebraska, Nevada, Oregon, Tennessee, Virginia,

and Washington.

According to the ReconTrust website, ReconTrust is located in 15 States.

ReconTrust claims it is “headquartered in California and its trust operations for

Utah foreclosures take place in Texas.” Appellee Brief pg. 41. ReconTrust at least

admits to being located in at least two places, California and Texas.

D. Defendants Reliance on the OCC Interpretive Letters is Unavailing

Defendants incorrectly rely on the OCC interpretive letters. See

Respondent‟s Brief at p. 34-35.

First, the OCC Interpretive Letters are not binding. The 1994 amendments

on the NBA recognized that the OCC had been issuing interpretive letters on

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federal preemption. See 12 U.S.C. § 43. However, by its own language, § 43 does

not confer any authority on the OCC to make binding determinations concerning

statutory preemption. Id. Rather, § 43(a) requires the OCC to follow notice-and-

comment procedures before issuing “any opinion letter or interpretive rule that

concludes that Federal law preempts the application to a national bank of any State

law regarding community reinvestment, consumer protection, fair lending, or the

establishment of intrastate branches.” The crucial phrase here, “opinion letter or

interpretive rule,” makes it clear that these types of administrative actions do not

have any force of law and generally are not eligible for Chevron deference.

See United States v. Mead Corp., 533 U.S. 218 (2001); Christensen v. Harris

County, 529 U.S. 576 (2000).

Second, Defendants appear to over-read these OCC interpretive letters. In

each instance, the OCC appears to adhere to the analysis that the Plaintiff set out in

the original brief. See Petitioner‟s Brief at p. 14-15. The NBA preempts State law

when it attempts to exercise visitorial powers, or when there is a specific federal

law on point. See OCC Interp. Letter No. 1103 (North Carolina law specifically

conflicting with 12 U.S.C. 92a). As stated previously, neither situation is present

here. See Petitioner‟s Brief.

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E. Defendants‟ Other Arguments are Unavailing

First, Defendants‟ argue that Utah Code § 16-10a-1501 is an exercise of

visitorial powers. However, for the reasons stated in the Petitioner‟s original brief,

this argument is unpersuasive.

Second, Defendants‟ urge reliance on three more non-binding cases that they

believe to be persuasive in this case: Wells Fargo Bank N.A. v. Boutris, 419 F.3d

949 (9th

Cir. 2005); 770 PPR, LLC v. TJCV Land Trust, 30 So.3d 613 (Fla. App.

2010); Indiana National Bank v. Roberts, 326 So.2d 802 (Miss. 1976). Not only

are these cases non-binding, they are not particularly persuasive.

Boutris held that the OCC‟s extensive regulation concerning operating

subsidiaries of a national bank (12 C.F.R. § 5.34) preempted a blatant exercise of

visitorial powers over a subsidiary of a national bank. Boutris, 419 F.3d at 949-70.

Both TJCV and Roberts held that a State cannot prohibit a national bank from

filing suit or being sued due to a specific federal law stating to the contrary. It is

not clear how these cases are particularly analogous, let alone persuasive, to the

current dispute.

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Third, Defendant argues that Plaintiff Cox uses this appeal as a challenge to

remand ruling. This is incorrect. Plaintiff filed this appeal to challenge the district

court‟s ruling that the NBA completely preempted both Utah statutes. Such a

decision implies that State regulations concerning commercial and real property

law cannot apply to national banks, a completely absurd result and one that

conflicts with the long history of federal law concerning State regulation of

national banks.

F. The National Bank Act does not Completely Preempt both Utah

Statutes

As stated above, the NBA does not preempt either Utah statute. However,

the standard here is not that the National Bank Act must preempt these statutes, but

that they must “completely preempt” them. Complete preemption only occurs

when the federal statutes at issue provide “the exclusive cause of action for the

claim asserted and also set forth procedures and remedies governing that cause of

action.” Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 8 (2003) (emphasis added).

In other words, the cause of action, “even if pleaded in terms of State law, is in

reality based on federal law.” Id.

Under the well-pleaded-complaint rule, “a federal court does not have

original jurisdiction over a case in which the complaint presents a State-law cause

of action, but also asserts that federal law deprives the defendant of a defense he

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may raise, ... or that a federal defense the defendant may raise is not sufficient to

defeat the claim.” Franchise Tax Bd. of Cal. v. Construction Laborers Vacation

Trust for Southern Cal., 463 U.S. 1, 10 (1983). “[A] case may not be removed to

federal court on the basis of ... the defense of pre-emption ....” Caterpillar Inc. v.

Williams, 482 U.S. 386, 393, 107 S.Ct. 2425 (1999). To be sure, preemption

requires a State court to dismiss a particular claim filed under State law, but it does

not, as a general matter, provide grounds for removal.

Even assuming arguendo that Defendant ReconTrust is correct in asserting

that the National Bank Act preempts both Utah statutes, the National Bank Act

does not provide for “the exclusive cause of action for the claim asserted and also

set forth procedures and remedies governing that cause of action” in all State

agency registration and trustee power of sale cases based on State law. (Emphasis

added). Beneficial at 8.

Therefore, the District Court incorrectly ruled that the National Bank Act

“completely preempts” both Utah statutes.

III. THE PREMISE OF RECONTRUST’S ARGUMENT IS THAT STATE

LAWS DO NOT APPLY TO NATIONAL BANKS

A. The Historical Overview of the Subjection of National Banks to State

Laws According to the Supreme Court

“So of the banks. They are subject to the laws of the State, and are

governed in their daily course of business far more by the laws of the

State than of the Nation. *** It is only when the State law

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incapacitates the banks from discharging their duties to the

government that it becomes unconstitutional.” National Bank v.

Commonwealth, 76 U.S. 353, 362 (1869).

“We have more than once held in this court that the national banks

organized under the acts of Congress are subject to State Legislation,

except were such legislation is in conflict with some act of Congress,

or where it tends to impair or destroy the utility of such banks, as

agents or instrumentalities of the United States, or interferes with the

purposes of their creation.” Waite v. Dowley, 94 U.S. 527, 533

(1876).

“National banks are brought into existence under the federal

legislation, are instrumentalities of the federal government and are

necessarily subject to the paramount authority of the United States.

Nevertheless, national banks are subject to the laws of a state in

respect of their affairs, unless such laws interfere with the purposes of

their creation, tend to impair or destroy their efficiency as federal

agencies, or conflict with the paramount law of the United States.”

First National Bank in St. Louis v. Missouri, 263 U.S. 640, 656

(1924).

“This Court has often pointed out that national banks are subject to

state laws, unless those laws infringe the national banking laws or

impose an undue burden on the performance of the banks' functions.”

Anderson Nat. Bank v. Luckett, 321 U.S. 233, 248 (1944).

“In defining the pre-emptive scope of statutes and regulations granting

a power to national banks, these cases take the view that normally

Congress would not want States to forbid, or to impair significantly,

the exercise of a power that Congress explicitly granted. To say this is

not to deprive States of the power to regulate national banks, where

(unlike here) doing so does not prevent or significantly interfere with

the national bank's exercise of its powers.” Barnett Bank of Marion

County v. Nelson, 517 U.S. 25, 33 (1996).

“Federally chartered banks are subject to state laws of general

application in their daily business to the extent such laws do not

conflict with the letter or the general purposes of the NBA. States are

permitted to regulate the activities of national banks where doing so

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does not prevent or significantly interfere with the national bank's or

the national bank regulator's exercise of its powers.”Watters v.

Wachovia Bank, 550 U.S. 1, 11, 12 (2007).

“No one denies that the National Bank Act leaves in place some state

substantive laws affecting banks. This [national banking] system

echoes many other mixed state/federal regimes in which the Federal

Government exercises general oversight while leaving state

substantive law in place.”Cuomo v. The Clearing House Association,

L.L. C. and Office of the Comptroller of the Currency, 129 S. Ct.

2710, 2717-18 (2009).

B. The Correct Interpretation of How Utah State Laws Apply to National Banks

Trustee Status in Utah

Defendants suggest that State laws concerning the acquisition and transfer of

property do not apply to national banks. That would mean that Utah could regulate

how individuals and State banks acquire and transfer property, but that these laws

could not apply to national banks. Not only does this run afoul of Supreme Court

case law (“[N]ational Banks acquisition and transfer of property [are] based on

State law.” Watters at 6, quoting National Bank v. Commonwealth, 9 Wall. 353,

362 (1870)), but it also violates States police powers8 and allows national banks to

completely ignore State law. See 12 C.F.R. 9.7 (d).

8 “See, e.g., 12 C.F.R. §§ 557.13(a) & 560.2(c) (state laws pertaining to contract and commercial

law, tort law, criminal law, real property law, and homestead law are not preempted by OTS

regulations); de la Cuesta, 458 U.S. at 172, 102 S.Ct. 3014 (“Nothing in the language of ...

HOLA ... suggests that Congress intended to permit the [OTS] to displace local laws, such as tax

statutes and zoning ordinances, not directly related to savings and loan practices.”) (O'Connor, J.,

concurring); First Nat'l Bank v. Dickinson, 396 U.S. 122, 90 S.Ct. 337, 24 L.Ed.2d 312 (1969)

(allowing application of a Florida branch bank statute to national banks in the state); Franklin

Nat. Bank v. New York, 347 U.S. 373, 378 n. 7, 74 S.Ct. 550, 98 L.Ed. 767 (1954) ( “[N]ational

banks may be subject to some state laws in the normal course of business if there is no conflict

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The Defendants also contend that 12 CFR 9.7(e) grants them the power of

sale. Both the plain and correct reading of this statute is that federal law limits the

assignment to national banks of authority to act only “when not in contravention of

State or local law.” A federally chartered trust company can have no power

conferred upon it by the comptroller which is not conferred by State law, such as §

57-1-21, UCA (1953), upon similar State chartered institutions.

But the Defendants then take this regulation to justify that they may ignore

any State law that they believe “limits” or establishes “preconditions” on their

ability to act as a trustee. The Defendants completely misunderstand 9.7(e). This

regulation was meant to ensure that national banks may have the legal authority to

act as a trustee (among the other fiduciary capacities) - not to ignore the laws of the

States in which they do business. If ReconTrust‟s reading was correct, then a

national bank could ignore all State laws since they would potentially “limit” or

establish “preconditions” on their ability to act in fiduciary capacity. Indeed, it is

difficult to imagine a single economic or property regulation that a State could

promulgate that would not in some way “limit” a national bank‟s ability to act in

one of its eight fiduciary capacities.

with federal law.”); see also Nat'l State Bank v. Long, 630 F.2d 981, 985 (3d Cir.1980)

(“[R]egulation of banking has been one of dual [federal-state] control since the passage of the

first National Bank Act in 1863.”); Perdue v. Crocker Nat'l Bank, 38 Cal.3d 913, 937, 216

Cal.Rptr. 345, 702 P.2d 503 (1985) (“Congress has declined to provide an entire system of

federal law to govern every aspect of national bank operations.”), appeal dismissed, 475 U.S.

1001, 106 S.Ct. 1170, 89 L.Ed.2d 290 (1986) (noting lack of jurisdiction).”

Bank of Am. v. City & County of San Francisco, 309 F.3d 551, 566 (9th Cir. 2002)

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The correct reading is that a national bank may receive the legal status as a

trustee from the Comptroller “when not in contravention of State or local law” of

the State in which it acts with fiduciary capacity. However, a national bank must

still respect the method in which a State regulates the acquisition and transfer of

property.

Registration of Foreign Corporations in Utah

ReconTrust claims that the Utah registration statute inhibits the OCC‟s

ability to authorize a national bank to conduct the business of banking. Appellee‟s

Brief p. 32-3. Once again, this is an overgeneralization.

Utah Code Section 16-10a-1501(1) requires foreign corporations to register

with the division [of corporations]. Utah Code Section 7-1-704 requires financial

institutions to register with the State Department of Financial Institutions. The

irony here is that Countrywide Home Loans, of which ReconTrust is a subsidiary,

or which is also a subsidiary of BAC, and doing business in the State of Utah, is

registered with both State agencies.

Registration with the State is not a licensing activity. No requirements are

made. Everyone can register any business entity they want. The cost is $70.00.

Articles of Incorporation must be filed and the Registered Agent must be

identified.

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The public policy under this statute is that registration makes it easier for

citizens to obtain service of process on out-of-state corporations doing business in

the State.

The OCC may give ReconTrust the necessary authority to carry on business

as a National Bank. However, the status of national bank is not license for

ReconTrust to operate in any fashion it wants. Necessary does not equate to

sufficient. As Plaintiff stated previously in Cox‟s opening brief, the Utah statute

requiring registration of a Foreign Corporation does not require any visitation, and

the policy behind the statute is that it makes it easier for citizens to obtain service

of process on out-of-state corporations doing business in Utah.

CONCLUSION

For the foregoing reasons, this Court must reverse the order of the District

Court in which it retains jurisdiction, and remand to the State trial Court. Or,

alternatively issue an order to the District Court to correct its ruling.

STATEMENT REGARDING ORAL ARGUMENT

Since this case presents certain key issues concerning the National Bank Act

and its relationship to State law within the Tenth Circuit, we believe that Oral

Argument is necessary.

DATED this _3___ day of November, 2010.

/s/ John Christian Barlow

John Christian Barlow

Attorney for Plaintiff/Appellant

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CERTIFICATE OF COMPLIANCE WITH RULE 32(a)

1. This brief complies with the type-volume limitations of Fed. R. App. P.

32(a)(7)(B) because it contains 6312 words, excluding the parts of the brief

exempted by Fed R. App. P. 32(a)(7)(B)(iii), as counted by Microsoft Word 2007

the word processing software used to prepare this brief.

2. This brief complies with the typeface requirements of the Fed. R. App. P.

32(a)(5) & (6) because it has been prepared in 14 point Times New Roman—a

plain, Roman, proportionally spaced typeface—using Microsoft Word 2007, the

word processing software used to create prepare this brief.

DATED this __3__ day of November, 2010.

/s/ John Christian Barlow

John Christian Barlow

Attorney for Plaintiff/Appellant

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28

CERTIFICATE OF COMPLIANCE WITH THE GENERAL ORDER ON

ELECTRONIC FILING

This brief complies with this Court‟s March 18, 2009 general order

regarding electronic filing because:

(1) all required privacy redactions have been made;

(2) the ECF submission is an exact copy of the 7 hard copies of this brief

and documents, which will be submitted within 2 business days of the ECF

filing;

(3) the ECF submission was scanned for viruses with the most recent version

of AVG, and according to the program is free of viruses.

DATED this __3__ day of November, 2010.

/s/ John Christian Barlow

John Christian Barlow

Attorney for Plaintiff/Appellant

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CERTIFICATE OF SERVICE

I do hereby certify that on this _3___ day of November, 2010, I caused to be

electronically served a true and correct copy of the foregoing REPLY BRIEF OF

APPELLANT to the following:

E. Craig Smay

174 E. South Temple

Salt Lake City, UT 84111

(801) 539-8515

Fax: (801) 539-8544

Cameron Soran (Law Student)

40 N. 300 E. # 101

Saint George, Utah 84771

Telephone: (253) 250-9449

Michael Huber

8170 S. Highland Drive, Suite E5

Sandy, Utah 84093

Richard F. Ensor (10877)

VANTUS LAW GROUP, P.C.

3165 East Millrock Drive, Suite 160

Salt Lake City, Utah 84121

Telephone: (801) 833-0500

Facsimile: (801) 931-2500

Roy W. Arnold (Admitted pro hac

vice)

REED SMITH LLP

Reed Smith Centre

225 Fifth Avenue

Pittsburgh, PA 15222

Telephone: (412) 288-3916

Facsimile: (412) 288-3063

Amir Shlesinger (Admitted pro hac

vice)

REED SMITH LLP

355 South Grand Avenue, Suite 2900

Los Angeles, CA 90071-1514

Telephone: (213) 457-8000

Facsimile: (213) 457-8080

James Martin

Reed Smith LLP

225 Fifth Avenue

Pittsburgh, Pennsylvania

[email protected]

Phone: (412) 288-3131

David Bird

Reed Smith LLP

225 Fifth Avenue

Pittsburgh, Pennsylvania

[email protected]

Phone: (412) 288-3131

/s/ John Christian Barlow

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Courtesy of www.4closureFraud.org

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ATTACHMENT 1

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Richard F. Ensor (10877)

VANTUS LAW GROUP, P.C.

3165 East Millrock Drive, Suite 160

Salt Lake City, Utah 84121

Telephone: (801) 833-0500

Facsimile: (801) 931-2500

Roy W. Arnold (Admitted pro hac vice)

REED SMITH LLP

Reed Smith Centre

225 Fifth Avenue

Pittsburgh, PA 15222

Telephone: (412) 288-3916

Facsimile: (412) 288-3063

Amir Shlesinger (Admitted pro hac vice) REED SMITH LLP 355 South Grand Avenue, Suite 2900 Los Angeles, CA 90071-1514 Telephone: (213) 457-8000 Facsimile: (213) 457-8080

Attorneys for Defendants ReconTrust Company, N.A., BAC Home Loans Servicing, LP

(erroneously sued as “Bank of America Home Loans Servicing, LP”), Bank of America, N.A.

(erroneously sued as “Bank of America, FSB”), and Mortgage Electronic Registration Systems,

Inc.

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH -

CENTRAL DIVISION

PENI COX, an individual,

Plaintiff,

v.

RECONTRUST COMPANY, N.A., BANK

OF AMERICA HOME LOANS SERVICING,

LP; BANK OF AMERICA, FSB, NEW LINE

MORTGAGE, DIVISION OF REPUBLIC,

MORTGAGE ELECTRONIC

REGISTRATION SYSTEMS, INC.; AND

DOES 1-5,

Defendants.

DEFENDANTS’ MEMORANDUM IN

OPPOSITION TO PLAINTIFF PENI

COX’S MOTION FOR PARTIAL

SUMMARY JUDGMENT

Case No. 10-cv-00492

Honorable Clark Waddoups

Magistrate Judge Alba

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I. INTRODUCTION

On June 7, 2010, only a month after serving her complaint on ReconTrust, N.A.

(“ReconTrust”), Plaintiff Peni Cox (“Plaintiff”) filed an “emergency” motion for partial

summary judgment seeking an adjudication of her first and second claims which allege that

ReconTrust violated registration and trustee qualification requirements set forth in Utah Code §§

57-1-21 and 16-10a-1501.

Plaintiff’s motion raises the same issues previously addressed by this Court in connection

with the motion to dissolve the preliminary injunction filed by ReconTrust and other defendants.

After hearing oral argument, on June 11, 2010, the Court granted the motion to dissolve the

injunction finding that Utah Code §§ 57-1-21 and 16-10a-1501 are preempted by federal law.

(6/11/10 Order [Doc. # 42]; Memo. Dec. [Doc. # 45].) The Court’s order and its conclusion that

these statutory provisions are preempted by federal law are dispositive of Plaintiff’s first and

second claims. Therefore, this Court should deny Plaintiff’s motion for partial summary

judgment.1

II. RESPONSE TO PLAINTIFF’S STATEMENT OF UNDISPUTED FACTS

Plaintiff’s motion is not supported by any competent affidavits, deposition testimony, or

any admissible evidence. Indeed, the motion fails to establish any material facts necessary to

state any claim against ReconTrust, let alone establish any entitlement to judgment against

ReconTrust. Plaintiff does not present evidence to establish even the basic elements of her

claim; namely, that ReconTrust foreclosed on her home in violation Utah Code §§ 57-1-21 and

16-10a-1501. Plaintiff’s alleged undisputed material “facts” are primarily comprised of

improper legal assumptions and conclusions. Paragraphs 4 through 11, for instance, include

1 Subsequent to filing her motion for partial summary judgment, Plaintiff moved to dismiss her third, fourth and fifth

claims from the amended complaint, as well as New Line Mortgage as a defendant. (Motion to Amend [Doc. # 49].)

Accordingly, Plaintiff’s first and second claims are the only remaining claims in this action, and ReconTrust and the

other remaining defendants filed a motion to dismiss those claims. (Motion to Dismiss [Doc. # 52]; Memo. In

Support [Doc # 53].)

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citations to Utah Code §§ 57-1-21 and 16-10a-1501, as well as citation to inapposite case law

which does not support her motion. Because Plaintiff’s motion is not supported by any

admissible evidence, it should be denied for this reason alone. 2

In any event, for reasons set

forth below, Plaintiff’s motion also should be denied because her claims are preempted by

federal law.

III. LEGAL ANALYSIS AND ARGUMENT

A. Legal Standard Governing Rule 56 Motion For Summary Judgment.

Federal Rules of Civil Procedure 56 provides that summary judgment can be granted only

“if the pleadings, the discovery and disclosure materials on file, and any affidavits show that

there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a

matter of law.” Fed. R. Civ. P. 56(c) (emphasis added). When applying this standard, a court

should review the factual record in the light most favorable to the party opposing summary

judgment. Wilkerson v. Shinseki, 606 F.3d 1256, 1262 (10th Cir. 2010). For purposes of

summary judgment, the court should deny a motion for summary judgment if a reasonable jury

could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

249 (1986). Summary judgment will not be granted, even if there is no genuine issue as to any

material fact, where a moving party is not entitled to judgment as a matter of law. See Applied

Genetics Intern., Inc. v. First Affiliated Securities, Inc., 912 F.2d 1238, 1242 (10th Cir. 1990)

2 To the extent Plaintiff’s statement of facts warrant a specific response under Local Rule 56(c), ReconTrust

responds as follows:

Plaintiff Fact No. 1: Disputed. ReconTrust is a national banking association and is a wholly owned

subsidiary of Bank of America, N.A. (Aff. Of Jeffrey Aiken [Doc. # 20].) Furthermore, based on the Court's

previous ruling in this case and the arguments below, ReconTrust is authorized to conduct foreclosures in the state

of Utah. (6/11/10 Order [Doc. # 42]; Memo. Dec. [Doc. # 45].)

Plaintiff Fact No. 2-3: Undisputed. These facts are not material to Plaintiff’s motion.

Plaintiff Fact Nos. 4-11: Disputed: Plaintiff's assertions are not facts, but rather legal conclusions which

are disputed as set forth below.

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(even if no genuine issue of material fact in dispute, district court must still correctly apply

substantive law); APC Operating Partnership v Mackey, 841 F.2d 1031, 1033 (10th Cir. 1988)

(same); see also Fed. R. Civ. P. 56(c). Where a plaintiff seeks summary judgment of state-law

claims which are preempted by federal law, summary judgment must be denied. See Dadoub v.

Gibbons, 42 F.3d 285, 290 (5th Cir. 1995) (affirming summary judgment for defendant where

plaintiff's state copyright claims preempted by Federal Copyright Act).

B. Plaintiff’s First And Second Claims Against ReconTrust Are Preempted By

The National Bank Act.

Despite this Court’s preemption analysis, Plaintiff continues to argue that ReconTrust’s

foreclosure of her home violates Utah Code §§ 57-1-21 and 16-10a-1501. Plaintiff’s motion as

to her first and second claims fails as a matter of law, however, because this Court already found

that her claims, based on Utah Code § 57-1-21 and Utah Code § 16-10a-1501, are preempted by

the National Bank Act. (Memo. Dec. [Doc. # 45] at 8-15.)

1. The National Bank Act Specifically Authorizes ReconTrust To

Conduct Foreclosures In Utah.

This Court should deny Plaintiff’s motion for summary judgment with respect to her first

claim under Utah Code § 16-10a-1501 because this Court previously held that Congress intended

“to completely preempt the area of requirements a national bank must meet before conducting

business nationwide.” (Memo. Dec. [Doc. # 45] at 13.)

Utah Code §§ 1501 and 1502 purport to regulate a national bank’s ability to transact

business in Utah. Specifically, section 1501 mandates that a “foreign corporation may not

transact business in this state until its application for authority to transact business is filed by the

division.” Utah Code § 16-10a-1501. Where a foreign corporation’s application is not approved

and filed by the appropriate division, that corporation may not maintain a proceeding in any Utah

state court. Utah Code § 16-10a-1502(1). Moreover, if a foreign corporation is found to be in

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violation of these provisions, section 1502(5) permits a court to issue “an injunction restraining

the further transaction of the business of the foreign corporation and the further exercise of any

corporate rights and privileges in this state.” Utah Code § 16-10a-1502(5).

These statutes “set out competing state requirements for a bank to transact business,

assign a competing authority to judge if the requirements are met, and provide for competing

remedies for a banks’ failure to meet the state’s requirements.” (Memo. Dec. [Doc. # 45] at 10.)

However, sections “26, 27, and 42 of the National Bank Act leave no room for Utah Code Ann.

§§ 16-10a-1501 and 1502” to regulate national banks. Id. Thus, Plaintiff’s claims based on Utah

Code §§ 16-10a-1501 and 1502 are preempted because the Comptroller is “intended to be the

exclusive authority on what a national bank must do to transact business in any state” under 12

U.S.C. §§ 26-27, 42. Id. at 11. Plaintiff’s motion based on this statute accordingly should be

denied.

2. Section 92a Of The National Bank Act Authorizes ReconTrust To

Conduct A Foreclosure In Utah As A Trustee.

This Court also should deny Plaintiff’s motion for summary judgment with respect to her

second claim under Utah Code § 57-1-21 because 12 U.S.C. § 92a preempts section 57-1-21.

(Memo. Dec. [Doc. # 45] at 14.) Section 92a provides that a national bank’s position as a trustee

“shall not be deemed to be in contravention of State or local law” if a “state allows a competitor

of a national bank to act as a trustee.” Id.; 12 U.S.C. § 92a(b). In other words, where a state law

regulation allows a national bank’s competitor to act as a trustee, a national bank may also act as

a trustee pursuant to section 92a. (Memo. Dec. [Doc. # 45] at 14.) Thus, where state regulation

allows a competitor to act as a trustee, but prohibits a national bank from doing so, section 92a

preempts the state law regulation and permits a national bank to act as a trustee. Id.; see also

Zabriskie v. ReconTrust, et al., Case No. 2:08-CV-00155-BSJ (Doc. No. 31, dated Nov. 12,

2008).

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Utah Code § 57-1-21 provides a list of persons eligible to act as trustees in Utah. These

include members of the Utah state bar, depository institutions, and title insurance companies.

Utah Code § 57-1-21. ReconTrust is not permitted to serve as a trustee under this Utah

regulation. This restriction on ReconTrust’s ability to act as a trustee clearly conflicts with 12

U.S.C. § 92a(b) because Utah Code § 57-1-21 “allows a ‘depository institution,’ which is

unquestionably a competitor of a national bank, to act as a trustee.” (Memo. Dec. [Doc. # 45] at

14.) Preemption principles thus bar the application of § 57-1-21 to ReconTrust, and Plaintiff’s

request for summary judgment on her claim based on that statute must be denied.

IV. CONCLUSION

Plaintiff’s motion for partial summary judgment fails. This Court’s June 11, 2010

Memorandum Opinion clearly establishes that the National Bank Act preempts Plaintiff’s claims

under Utah Code §§ 57-1-21 and 16-10a-1501. Accordingly, Plaintiff fails to establish an

entitlement to judgment on those claims, and this Court should deny Plaintiff’s Motion.

DATED: July 8, 2010 VANTUS LAW GROUP, P.C.

By /s/ Richard F. Ensor Attorneys for Defendants ReconTrust Company, N.A., BAC Home Loans Servicing, LP (erroneously sued as “Bank of America Home Loans Servicing, LP”), Bank of America, N.A. (erroneously sued as “Bank of America, FSB”), and Mortgage Electronic Registration Systems, Inc.

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CERTIFICATE OF SERVICE

THE UNDERSIGNED CERTIFIES that on this 8th

day of July 2010, a true and correct

copy of the foregoing was filed with the Clerk of Court via ECF and was therefore served by

electronic mail to the following:

John Christian Barlow

ENVISION LAW FIRM

40 North 300 East, Suite 101

St. George, Utah 84770

Michael Huber

8170 S. Highland Drive, Suite E5

Sandy, Utah 84093

/s/ Richard F. Ensor

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ATTACHMENT 2

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Richard F. Ensor (10877)

VANTUS LAW GROUP, P.C.

3165 East Millrock Drive, Suite 160

Salt Lake City, Utah 84121

Telephone: (801) 833-0500

Facsimile: (801) 931-2500

Roy W. Arnold (Admitted pro hac vice)

REED SMITH LLP

Reed Smith Centre

225 Fifth Avenue

Pittsburgh, PA 15222

Telephone: (412) 288-3916

Facsimile: (412) 288-3063

Amir Shlesinger (Admitted pro hac vice) REED SMITH LLP 355 South Grand Avenue, Suite 2900 Los Angeles, CA 90071-1514 Telephone: (213) 457-8000 Facsimile: (213) 457-8080

Attorneys for Defendants ReconTrust Company, N.A., BAC Home Loans Servicing, LP

(erroneously sued as “Bank of America Home Loans Servicing, LP”), Bank of America, N.A.

(erroneously sued as “Bank of America, FSB”), and Mortgage Electronic Registration Systems,

Inc.

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH,

CENTRAL DIVISION

PENI COX, an individual, Plaintiff,

v. RECONTRUST COMPANY, N.A., BANK

OF AMERICA HOME LOANS SERVICING,

LP; BANK OF AMERICA, FSB, NEW LINE

MORTGAGE, DIVISION OF REPUBLIC,

MORTGAGE ELECTRONIC

REGISTRATION SYSTEMS, INC.; AND

DOES 1-5, Defendants.

DECLARATION OF RICHARD F. ENSOR

REQUESTING JUDICIAL NOTICE IN

CONNECTION WITH REPLY BRIEF IN

SUPPORT OF MOTION TO DISMISS

Case No. 10-cv-00492

Honorable Clark Waddoups

Magistrate Judge Alba

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2

I, Richard F. Ensor, declare as follows:

1. I am an attorney duly licensed to practice before this Court. I am the attorney for

Defendants ReconTrust Company, N.A., BAC Home Loans Servicing, LP (erroneously sued as

“Bank of America Home Loans Servicing, LP”), Bank of America, N.A. (erroneously sued as

“Bank of America FSB”), and Mortgage Electronic Registration Systems, Inc. in this action, and

am competent to testify regarding the matters set forth herein.

2. The Court can take judicial notice of the fact that ReconTrust Company, N.A. is a

non-depository institution as that fact is set forth in the public records.

3. The fact that ReconTrust is a non-depository institution is capable of accurate and

ready determination by resorting to sources whose accuracy cannot reasonably be questioned,

such as the Office of Comptrollers’ Quarterly Journal or on Westlaw.

4. Specifically, the following attached documents establish that this fact cannot be

disputed:

a. Attached hereto as Exhibit A is a true and accurate print out of the Office

of the Comptroller of the Currency’s Application for New, Limited-

Purpose National Bank Charters, Approved and Denied, by State, July 1 to

December 31, 2004. Exhibit A states, under type of bank, that

ReconTrust is “Trust (Non-Deposit).”

b. Attached hereto as Exhibit B is a true and accurate copy of the Office of

Comptroller Report on New, Limited-Purpose National Bank Charters

issued January 1, 2005 to June 30, 2005. Exhibit B states that

ReconTrust’s charter has been issued as “Trust (non-deposit).”

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c. Attached hereto as Exhibit C is a true and accurate copy of the Office of

Comptroller of the Currency’s Conditional Approval letter to Bank of

America, dated April 23, 2009. Page 7 of Exhibit C states, in pertinent

part, that “Following the conversion of Country wide into BANA-

Colorado, and BANA-Colorado’s merger into BANA, BANA will retain

ReconTrust Company, National Association, an uninsured, nondepository

national bank with trust powers headquartered in Thousand Oaks,

California (“Recon NA”).”

5. The citations listed on the upper left corner of the exhibits identify the specific

citation where these documents can be located in the public record.

6. I declare under penalty of perjury and under the laws of the State of Utah that the

foregoing is true and correct.

EXECUTED this 26th

day of July 2010 in Salt Lake City, Utah.

Respectfully submitted,

By: /s/ Richard F. Ensor

Counsel for Defendants

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CERTIFICATE OF SERVICE

THE UNDERSIGNED CERTIFIES that on this 26th

day of July 2010, a true and correct

copy of the foregoing was filed with the Clerk of Court via ECF and was therefore served by

electronic mail to the following:

John Christian Barlow

ENVISION LAW FIRM

40 North 300 East, Suite 101

St. George, Utah 84770

Craig Smay

174 East South Temple

Salt Lake City, Utah 84111

Michael Huber

8170 S. Highland Drive, Suite E5

Sandy, Utah 84093

/s/ Richard F. Ensor

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ATTACHMENT 3

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Appellate Case: 10-4117 Document: 01018526530 Date Filed: 11/03/2010 Page: 53

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Appellate Case: 10-4117 Document: 01018526530 Date Filed: 11/03/2010 Page: 54

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Page 55: Case No. 10-4117 IN THE UNITED STATES COURT OF APPEALS …docshare04.docshare.tips/files/4910/49105670.pdf · 2017. 3. 7. · Petrolera Ecuatoriana, 762 F.2d 464, 470-71 (5th Cir.

Appellate Case: 10-4117 Document: 01018526530 Date Filed: 11/03/2010 Page: 55

Courtesy of www.4closureFraud.org