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Bank of America, N.A. v. Sundquist

Supreme Court of Utah

October 5, 2018

Bank of America, N.A., Appellant,
Loraine Sundquist and John Doe/Jane Doe/ Occupant Doug Kahler, an individual, Appellees.

         This opinion is subject to revision before final publication in the Pacific Reporter

          On Direct Appeal Third District, Salt Lake The Honorable Judge Bruce C. Lubeck No. 110408730 EV

          Daniel S. Volchok, Washington, D.C., Brian E. Pumphrey, Richmond, VA, Robert H. Scott, Salt Lake City, for appellant.

          Tyler Ayers, Draper, J. Kent Holland, Sandy, Scott C. Borison, Frederick, MD, for appellees.

          Justice Pearce authored the opinion of the Court, in which Chief Justice Durrant, Associate Chief Justice Lee, Justice Himonas, and Justice Petersen joined.




         ¶ 1 Location, location, location are, at least according to Lord Harold Samuel, the three things that matter most in real estate. Location is also the thing that matters the most in this case. The National Bank Act authorizes a national bank to perform certain fiduciary functions if the law of the state where the national bank is located permits competing entities to engage in those activities. In 2013, a majority of this Court opined that the word "located" was unambiguous. With the benefit of more focused briefing we conclude that, as used in the Act, located lends itself to at least two plausible meanings. Because we find Congress's use of the word ambiguous, we must defer to the "not unreasonable" interpretation the Comptroller of the Currency has assigned to the word located. Applying that definition, we overturn the decision we reached when this case was before us on interlocutory review. We reverse and remand for further proceedings.


         ¶ 2 Loraine Sundquist purchased a home in Utah. At the time of the purchase, she executed a deed of trust, in Utah, naming Mortgage Electronic Registration Systems, Inc. (MERS) as beneficiary. The deed of trust named an attorney as trustee. ReconTrust Company, N.A. (ReconTrust) later replaced the attorney as trustee.

         ¶ 3 Sundquist fell behind on her payments. ReconTrust elected to sell the property. The beneficial interests were then assigned to the Federal National Mortgage Association (FNMA). ReconTrust, acting as the trustee on the deed, auctioned the property. Bank of America, which later acquired FNMA's interest in the property, asserts that ReconTrust was located in Texas while it acted as the trustee.[1] FNMA won the auction and ReconTrust conveyed the property to FNMA.

         ¶ 4 After the sale, Sundquist refused to leave. FNMA brought this action, seeking an order forcing Sundquist from her home. FNMA also asked for damages allegedly arising out of her decision to stay in the property after it had been sold. The district court entered an eviction order.

         ¶ 5 Sundquist petitioned for interlocutory review. We granted the petition, which we resolved in Federal National Mortgage Ass'n v. Sundquist (Sundquist I), 2013 UT 45, 311 P.3d 1004. In that case, Sundquist asserted that the sale was invalid because Utah law does not permit a bank to act as a trustee on a trust deed. Id. ¶ 8. FNMA countered that Texas law permitted ReconTrust to serve as the trustee and that under the National Bank Act, Texas law applied. Id. ¶ 9.

         ¶ 6 The outcome of the case rose and fell on the question of whether Utah law applied. Under Utah law, only certain people and entities can serve as a trustee of a trust deed-for example, active attorneys and title insurance companies. See Utah Code §§ 57-1-21, - 23.[2] A bank, like ReconTrust, may not. In contrast, ReconTrust argued that Texas law would have permitted ReconTrust to be the trustee and oversee the property's sale. Sundquist I, 2013 UT 45, ¶ 9.

         ¶ 7 The relevant portion of the National Bank Act reads:

(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, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, 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.
(b) Grant and exercise of powers deemed not in contravention of State or local law
Whenever the laws of such State authorize or permit the exercise of any or all of the foregoing powers by State banks, trust companies, or other corporations which compete with national banks, the granting to and the exercise of such powers by national banks shall not be deemed to be in contravention of State or local law within the meaning of this section.

12 U.S.C. § 92a(a)-(b) (emphasis added).

         ¶ 8 The central inquiry became, therefore, whether corporations were permitted to serve as trustees of trust deeds "under the laws of the State in which [ReconTrust] [was] located." Id. § 92a(a). And this required us to determine where ReconTrust was located. To suss out the meaning of located, we consulted the Merriam-Webster online dictionary. Sundquist I, 2013 UT 45, ¶ 23. We relied on its definition of locate to conclude that the statutory language was unambiguous and that "a national bank is located in the place or places where it acts or conducts business." Id.

         ¶ 9 We also decided that even if the statute's plain language was not clear, two different canons of statutory construction would dictate that Utah law applied. Id. ¶ 30. The first canon provides that when Congress delegates authority to agencies to make significant decisions, it does so clearly and explicitly. FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 159-61 (2000). The second canon provides that we will not find that Congress has intruded into traditional areas of state law unless Congress does so explicitly. Gregory v. Ashcroft, 501 U.S. 452, 460 (1991).

         ¶ 10 We opined that both of these canons suggested that Congress did not intend to dictate what law would apply to a foreclosure action. We concluded that real property is a matter of "intensely local concern." Sundquist I, 2013 UT 45, ¶ 37. And, because "a clear statement of an intent to permit the laws of a foreign state to regulate the manner and mode of a foreclosure sale in another state should be required," Utah law governed that matter. Id. We also concluded that the "matter of authorizing one state to regulate non-judicial sales for the foreclosure of real property in another state would be monumental-hardly the sort of interstitial administrative detail that Congress would likely leave for an agency." Id. ¶ 38.

         ¶ 11 Because we concluded the statute was unambiguous, we had no need to address whether under Chevron, U.S.A., Inc. v. National Resource Defense Council, Inc., 467 U.S. 837 (1984), we were required to defer to the agency's interpretation. Sundquist I, 2013 UT 45, ¶¶ 39-40. In relevant part, the regulation provides:

For each fiduciary relationship, the state referred to in section 92a is the state in which the bank acts in a fiduciary capacity for that relationship. A national bank acts in a 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.

         We nevertheless examined the Comptroller's interpretation of the statute and decided that the regulation was unreasonable. We reasoned that:

[T]here is nothing in the statute itself that ascribes any particular significance of these three particular acts, while rendering other acts undertaken by the bank irrelevant. Moreover, the three activities identified in the regulation could theoretically be performed in any location without regard to the location of the trust property, thereby allowing national banks to dictate the applicable law.

Id. ¶ 42.

         ¶ 12 Ultimately, we concluded that "[a] state bank which seeks to foreclose on real property in Utah must comply with Utah law. A federally chartered "bank" which seeks to foreclose on such property must comply with Utah law as well." Id. ¶ 51 (alteration in original) (citation omitted).

         ¶ 13 After our decision, FNMA petitioned for certiorari to the United States Supreme Court. The court called for briefing from the Solicitor General. Although sharply disagreeing with our opinion- and our conclusion that located was an unambiguous term-the Solicitor General suggested that the Court deny certiorari because, in part, our decision was not final. Brief for the United States as Amicus Curiae at 1, 7-11, 16, Federal Nat'l Mortg. Ass'n v. Sundquist (Sundquist II), 134 S.Ct. 475 (2014) (No. 13-852), 2014 WL 4979386, at *8-12, *16. The Court then denied certiorari. Sundquist II, 134 S.Ct. 475.

         ¶ 14 FNMA transferred its interest in the property to Bank of America through a quitclaim deed. The district court quieted title in favor of Sundquist. Bank of America appeals.


         ¶ 15 To decide this appeal, we must determine what the National Bank Act means by the term "located" in 12 U.S.C. section 92a(a). "We review questions of statutory interpretation for correctness, affording no deference to the district court's legal conclusions." Marion Energy, Inc. v. KFJ Ranch P'ship, 2011 UT 50, ¶ 12, 267 P.3d 863 (citation omitted).


         I. Exceptional Circumstances Permit Us to Revisit Sundquist I

         ¶ 16 Before we reach the merits of the underlying dispute, we must confront a threshold question: does our decision in Sundquist I bind our hands in this matter. Sundquist argues that under the law of the case doctrine, Sundquist I both begins and ends our analysis.

Under [the law of the case doctrine], a court is justified in refusing to reconsider matters it resolved in a prior ruling in the same case for reasons of efficiency and consistency. . . . The exceptional circumstances under which courts have reopened issues previously decided are narrowly defined: (1) when there has been an intervening change of controlling authority; (2) when new evidence has become available; or (3) ...

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