IN THE SUPREME COURT OF FLORIDA CASE NO. SC10-974

Transcription

1 IN THE SUPREME COURT OF FLORIDA CASE NO. SC ASSOCIATES, LTD., a Florida Limited Partnership, and GREGORY K. TALBOTT, Appellants, vs. SEACOAST NATIONAL BANK, a National Banking Association, Appellee. ANSWER BRIEF OF APPELLEE (140 ASSOCIATES, LTD.) On Appeal from the Florida Fourth District Court of Appeal Appeal Nos. 4D and 4D Morris G. (Skip) Miller, Esq. 222 Lakeview Avenue, Suite 800 West Palm Beach, Florida (Ph) / (Fax) Skip.miller@ruden.com ( ) John H. Pelzer, Esq. 200 East Broward Boulevard Fort Lauderdale, Florida john.pelzer@ruden.com

2 TABLE OF CONTENTS Page TABLE OF CONTENTS... ii TABLE OF AUTHORITIES... iv INTRODUCTION... vii STATEMENT OF THE CASE AND THE FACTS... 1 SUMMARY OF ARGUMENT... 3 ARGUMENT... 4 I. STANDARD OF REVIEW II. JURISDICTION III. AS A NATIONAL BANK, SEACOAST CANNOT BE REQUIRED TO OBTAIN A CERTIFICATE OF AUTHORITY FROM THE FLORIDA DEPARTMENT OF STATE IN ORDER TO MAINTAIN A LEGAL ACTION IN THE FLORIDA COURTS A. The National Bank Act 12 U.S.C. 21 et seq B. Relevant State and Federal Case Law C. Rebuttal of Appellants Arguments D. Remedy CONCLUSION CERTIFICATE OF SERVICE CERTIFICATE OF COMPLIANCE ii

3 TABLE OF AUTHORITIES Page Anderson Nat. Bank v. Luckett, 321 U.S. 233, 64 S. Ct. 599 (1944) Assoc. of Banks in Ins., Inc. v. Duryee, 270 F. 3d 397 (6th Cir. 2001) Bank of America v. City & County of San Francisco, 309 F. 3d 551 (9 th Cir. 2002)... 14, 16, 17 Bank of America, Nat l Trust & Savings Ass n v. Lima, 103 F. Supp. 916 (D. Mass. 1952)... 11, 15 Barnett Bank v. Nelson, 517 U.S. 25, 116 S. Ct (1996) Blackfeet Nat l Bank v. Nelson, 171 F. 3d 1237 (11th Cir.), pet. for cert. denied, 528 U.S. 1004, 120 S. Ct. 497 (1999) Cox v. Recontrust Co, N.A., 2010 WL (D. Utah, 2010)... 9 Cuomo v. Clearing House Ass n., L.L.C., 129 S. Ct. 2710, 2720 (2009) First Nat l Bank v. Dickinson, 396 U.S. 122, 90 S. Ct. 337 (1969) First Nat l Bank v. Slagle, 5 P. 2d 1013 (Wash. 1931) Indiana Nat l Bank v. Roberts, 326 So. 2d 802 (Miss. 1976) In re Hibernia Nat l Bank, 21 SW 3d 908 (Tex. App. Corpus Christi 2000) iii

4 L.M. Duncan & Sons, Inc. v. City of Clearwater, 478 So. 2d 816 (Fla. 1985)... 5 Manufacturers Nat l. Bank v. Baack, 2 Abb. U.S. 232, 16 F. Cas. 671 (D.C. NY 1871) McCullough v. Maryland, 17 U.S. 316 (1819)... 7 Nat l Park Bank v. Gunst, 1 Abb. N. Cas. 292 (Sup. Ct., N.Y. Co. 1876) PPR LLC v. TJCV Land Trust, 30 So. 3d 613 (Fla. 4 th DCA 2010)... vii South Carolina Equipment Co. v. Sheedy, 353 N.W. 2d 63 (Wisc. App. 1984) State v, Rubio, 967 So. 2d 768 (Fla. 2007)... 5 State Nat l Bank v. Laura, 256 N.Y.S. 2d 1004 (Cty. Ct. 1965) Steward v. Atlantic Nat. Bank, 27 F. 2d 224 (9th Cir. 1928) United States v. Locke, 529 U.S. 89 (2000)... 9, 16 Video Trax, Inc. v. Nationsbank, N.A., 33 F. Supp. 2d 1041 (S.D. Fla. 1998); aff d. 205 F. 3d 1358 (11 th Cir. 2000) Watters v. Wachovia Bank, 550 U.S. 1, 127 S. Ct (2007)... 10, 17, 18 iv

5 Other Authorities Fla. Stat Fla. Stat (12) Flat. Stat (1) Flat. Stat , 12, 21, C.F.R U.S.C , 7 12 U.S.C , 4, 6, 7, 11, 12, U.S.C U.S.C , U.S.C U.S.C U.S.C U.S.C U.S.C. 371(a) U.S.C. 1828(o)... 8 Fla. Const. Art. 5, U. S. Const., Art. VI, Clause Fla. R. App. P (a)(1)... 5 Commentary to the 1980 Amendments to the Florida Constitution... 5 Corporate Decision 96-17, 1996 WL (O.C.C. 1996) Corporate Decision WL (O.C.C. 1995) v

6 INTRODUCTION This is an appeal from the opinion of the Florida Fourth District Court of Appeal in 770 PPR LLC v. TJCV Land Trust, 30 So. 3d 613 (Fla. 4 th DCA 2010) (the Order on Appeal ). The only issue on appeal is whether the Plaintiff/ Appellee Seacoast National Bank, a national banking association chartered by and subject to the regulation of the U.S. Comptroller of the Currency, can be required under Fla. Stat to obtain a certificate of authority from the Florida Department of State in order to file a lawsuit in the Florida courts. The Order on Appeal affirmed final judgments entered by the Circuit Court in and for the 15 th Judicial Circuit of Florida in favor of plaintiffs and against defendants in two separate cases 770 PPR LLC et at v. TJCV Land Trust, Case No CA-4419 (the 770 PPR Appeal ), and 140 Associates, Ltd. v. Seacoast National Bank, Case No CA-4416 (the 140 Appeal ). Each of these cases involved a foreclosure action for non-payment of a loan, brought by Seacoast National Bank against the limited liability company owning the real estate in question and the guarantor of that loan. As correctly stated in the Initial Brief, the issues before the Court in this appeal are identical. Therefore, and in order to be consistent with the Initial Brief, this Answer Brief will only refer to the facts in the 140 Appeal. The undersigned is counsel for Plaintiff/Appellee Seacoast National Bank, which will be referred to herein as Seacoast. vi

7 Defendant/Appellant 140 Associates, Ltd. will be referred to herein as 140, Defendant/Appellant Gregory K. Talbott will be referred to herein as Talbott, and 140 and Talbott will jointly be referred to herein as Appellants. The Appendix filed with the Initial Brief will be referred to as A-. vii

8 STATEMENT OF THE CASE AND THE FACTS The Statement of the Case and the Facts submitted by the Appellants does not accurately set forth the relevant facts of this case and what occurred in the trial court, and includes much discussion that is extraneous to the issue in this Appeal. Accordingly, Seacoast presents its Statement of the Case and the Facts as follows: Seacoast is a national banking association chartered by and subject to the regulation of the United States of America Comptroller of the Currency. Seacoast is not registered with the State of Florida Division of Corporations as a foreign corporation transacting business in Florida. Seacoast filed a First Amended Verified Complaint against 140 and Talbott on March 24, 2008 (the Complaint ). A-1. The Complaint sought, inter alia, foreclosure of a mortgage in favor of Seacoast on real property owned by 140, and breach of a guaranty from Talbott to Seacoast, on account of the failure of 140 to make the payments required by the Loan Documents described in the Complaint. On May 15, 2008, Seacoast filed its Motion and Memorandum of Law in Support of its Motion for Summary Judgment (the Motion for Summary Judgment ). A-2. On October 27, 2009, Seacoast filed a Supplemental Memorandum of Law in Support of Motion for Summary Judgment (the Motion for Summary Judgment ). A-4. 1

9 On October 29, 2008, the trial court entered two orders (the Final Judgments ). First, the trial court entered a Final Summary Judgment of Foreclosure in favor of Seacoast and against 140, finding that 140 owed Seacoast a total of $4,027,595.52, and, if said amounts were not paid, directing the clerk to sell the property at public sale to the highest bidder. A-5. Second, the trial court entered a Final Judgment as to Gregory K. Talbott in favor of Seacoast and against Talbott, also in the amount of $4,027, A-6. Appellants appealed the final judgments to the Fourth District Court of Appeal. A-7. The Fourth District Court of Appeal affirmed those final judgments by entering the Order on Appeal on March 10, Appellants filed a Notice of Appeal to this Court on May 14, A-8. 2

10 SUMMARY OF ARGUMENT The only issue in this appeal is whether a national bank is required under Fla. Stat to obtain a certificate of authority from the Florida Department of State in order to file a lawsuit in the Florida courts. The trial court, by entering the Final Judgments (A-5, A-6), ruled against Appellants, which Final Judgments were correctly affirmed by the Fourth District Court of Appeal in the Order on Appeal. The law is well established and long-standing that a state cannot require a national bank to register or file as a foreign corporation in order to file a lawsuit. This is because the federal legislation creating the system of national banks, the National Bank Act, preempts state laws that conflict or are inconsistent with it. The National Bank Act expressly provides, among other things, that national banks shall have the power to sue and be sued, complain and defend, in any court of law and equity, as fully as natural persons. 12 U.S.C

11 ARGUMENT I. STANDARD OF REVIEW. Seacoast concurs with the standard of review as presented in the Initial Brief. II. JURISDICTION. Seacoast does not agree that the Order on Appeal declares a state statute invalid. Appellants asserted in their Notice of Appeal that this Court has mandatory jurisdiction on the basis that the Order on Appeal held that Fla. Stat was preempted as to national banks doing business in Florida, and therefore declared said state statute invalid. The Supremacy Clause is neither a mandate nor a prohibition. Rather, it is a rule of construction that provides which of two conpeting laws should be applied under particular circumstances. Unless a state statute on its face purports to supplant or nullify a federal law, a legislative strategy that has not been in vogue for 150 years, a state statute cannot be said to violate the Supremacy Clause. By applying the Supremacy Clause, therefore, a court does not declare the state statute to be unconstitutional in any way. Rather, the court merely selects which body of law to apply. The Order on Appeal did not hold that Fla. Stat was invalid. It merely held that the statute is preempted as applied to all national banking 4

12 associations. This is the interpretation of the application of the statute to a specific set of facts, not a declaration of invalidity. The cases cited by Appellants in the Notice of Appeal, State v. Rubio, 967 So. 2d 768 (Fla. 2007) and L.M. Duncan & Sons, Inc. v. City of Clearwater, 478 So. 2d 816 (Fla. 1985), are both cases where the district court of appeals specifically found the statute in question to be unconstitutional. Appellants cite to no cases where the court has accepted mandatory jurisdiction where the opinion appealed from does not contain the requisite declaration of invalidity. In the absence of such a declaration, this Court does not have mandatory jurisdiction. Fla. R. App. P (a)(1) was amended in 1980 to reflect amendments to Article 5, 3 of the Florida Constitution. As noted by the Commentary to the 1980 Amendments to the Florida Constitution, this amendment represents a departure from the existing jurisdiction of the supreme court which was essentially an appellate court of last resort. The result of those amendments was to narrow the mandatory jurisdiction of the Florida Supreme Court in this area to district court decisions actually declaring invalid a state statute or provision of the state constitution. Neither does this Court have discretionary jurisdiction to consider this appeal, as the Order on Appeal does not expressly declare valid a state statute, 5

13 expressly construe a provision of the state or federal constitution or meet any of the other constitutional criteria for the Court s discretionary review. III. AS A NATIONAL BANK, SEACOAST CANNOT BE REQUIRED TO OBTAIN A CERTIFICATE OF AUTHORITY FROM THE FLORIDA DEPARTMENT OF STATE IN ORDER TO MAINTAIN A LEGAL ACTION IN THE FLORIDA COURTS. A. The National Bank Act 12 U.S.C. 21 et seq. Seacoast is a national bank, chartered by and subject to the regulation of the United States Office of the Comptroller of the Currency (the OCC ). The federal legislation creating the system of national banks, the National Bank Act, expressly provides, among other things, that national banks shall have the power [to] sue and be sued, complain and defend, in any court of law and equity, as fully as natural persons. 12 U.S.C. 24. Appellants position is that, notwithstanding the above, Seacoast was required to obtain a certificate of authority from the Florida Department of State in order to sue them. Appellants novel theory is that Seacoast is a foreign corporation under the Florida Business Corporation Act (Fla. Stat et seq.) and therefore must apply for and receive a certificate of authority from the Florida Department of State pursuant to Fla. Stat in order to transact business in Florida and maintain a legal action in a court of the State. This 6

14 argument has no merit whatsoever, and is contrary to a well-established, long line of state and federal cases. National banks such as Seacoast are organized, exist and are governed by federal, not state law. It has been an established principle of federal law since Chief Justice John Marshall s decision in McCullough v. Maryland, 17 U.S. 316 (1819), that state laws cannot govern the authorization and powers of entities chartered by the federal government. This is set forth in the Supremacy Clause, United States Constitution, Article VI, Clause 2, as follows:... [T]his Constitution and the laws of the United States, which shall be made in pursuance thereof... shall be the supreme Law of the Land... any Thing in the Constitution or laws of any state to contrary notwithstanding. If Congress intended to permit a state corporate or banking law to require filing or qualification by a national bank, it would have to do so expressly. In the absence of such a provision, any state law which requires registration or qualification of a national bank before it can do business as set forth above is preempted by the Supremacy Clause. To the contrary, by enacting the National Bank Act, 12 U.S.C. 21 et seq., and other federal laws, Congress has made it clear that a national bank is organized solely by the OCC and its powers and its other operations and characteristics preempt state law. 12 U.S.C. 24 provides that: 7

15 Upon duly making and filing articles of association and an organization certificate a national banking association shall become, as from the date of the execution of its organization certificate, a body corporate, and as such, and in the name designated in the organization certificate, it shall have power... Third. To make contracts. Fourth. To sue and be sued, complain and defend, in any court of law and equity, as fully as natural persons.... Seventh. To exercise by its board of directors or duly authorized officers or agents, subject to law, all such incidental powers as shall be necessary to carry on the business of banking;... Among other powers that a national bank has are the powers under 12 U.S.C. 371(a) to:... make, arrange, purchase or sell loans or extensions of credit secured by liens on interests in real estate, subject to section 1828(o) of this title and such restrictions and requirements as the Comptroller of the Currency may prescribe by regulation or order. 12 U.S.C. 1828(o) requires that each federal bank regulatory agency adopt uniform regulations prescribing standards for extensions of credit secured by interests in real estate, but does not authorize or permit any state laws limiting corporate powers of national banks. OCC Regulations at 12 C.F.R further expressly preempt any state laws that obstruct, impair, or condition a national bank s ability to fully exercise its federally-authorized real estate lending powers. It states that such state laws generally do not apply to national banks. 8

16 Specifically, a national bank may make real estate loans under 12 U.S.C. 371 and 34.3, without regard to state law limitations concerning: (1) Licensing, registration (except for purposes of service of process), filings, or reports by creditors; (emphasis supplied). B. Relevant State and Federal Case Law. It is long held and well established by over eighty (80) years of federal and state case law that state laws purporting to require national banks to comply with state laws requiring qualification or registration to do business as a precondition to maintaining a legal action are invalid. The most recent federal case to address the issue is Cox v. Recontrust Co, N.A., 2010 WL (D. Utah, 2010). The court s Memorandum Decision in Cox held that the National Bank Act preempted a Utah statute that precluded a foreign corporation from filing an action in state court unless it had applied to transact business in the state and its application had been approved by the state. The court s discussion of the preemption issue is instructive, and completely rebuts both the argument on pages 19 to 25 of the Initial Brief that such statutes are not preempted and the argument on page 32 and 33 of the Initial Brief that there is a presumption against preemption. Initially, in the area of national banking, the Supreme Court has repeatedly held that the nature of a presumption analysis is different than in other areas of the law. While there is a general presumption that state laws are not preempted by federal law, this presumption does not apply in the context of national banking. See United States v. Locke, 529 U.S. 89 (2000) ( [A]n assumption of nonpre-emption is 9

17 not triggered when the State regulates in an area where there has been a history of significant federal presence, such as national banking.) To the contrary, when reviewing a state law that regulates the activities of a national bank, a court must determine whether that regulation prevent[s] or significantly interfere[s] with the national bank s or the national bank regulator s exercise of powers. Watters v. Wachovia Bank, N.A., 550 U.S. 1, 12 (2007). If the state regulation significantly impair[s] the exercise of authority, enumerated or incidental under the NBA, the State s regulations must give way. Id. (emphasis added). In other words, Congress grant of either enumerated or incidental powers to a national bank will ordinarily preempt contrary state law. Id. at 11 (citation omitted). On the other hand, it is clear that states have always enforced their general laws against national banks. Cuomo v. Clearing House Ass n., L.L.C., 129 S. Ct. 2710, 2720 (2009). Such general laws include universally applicable state fair lending laws. See id. at Accordingly, there is a clear dichotomy between state laws that directly interfere with a national bank s efficient exercise of enumerated and incidental powers bestowed upon it by the National Banking Act and those state laws that do not. Watters, 550 U.S. at 13. The former are preempted, while the latter are not.... A review of the National Banking Act, however, makes clear that Congress intended that federal statute exclusively control the area of allowing a national bank to transact business nationwide. First, 12 U.S.C. 26 gives the Comptroller of Currency the power to determine whether the [national banking] association is lawfully entitled to commence the business of banking. That statute also refers to various requirements that the Comptroller must find that a national bank has met before it may begin conducting business. See id. Once the Comptroller has determined that a national bank may commence the business of banking, the Comptroller shall give to such association a certificate, under his hand and official seal, that such association has complied with all the provisions required to be complied with before commencing the business of banking, and that such association is authorized to commence such business. 12 U.S.C. 27(a).... Finally, 12 U.S.C. 42 provides that the provision of all Acts of Congress relating to national banks shall apply in the several 10

18 States. This provision clearly signals that 26 and 27 are meant to be nationwide in scope.... Based on the above, it is clear that given their exhaustive reach and protective function, 26, 27 and 42 are intended to be the exclusive authority on what a national bank must do to transact business in any state. Cox, 2010 WL at pgs Other federal cases reach the same conclusion. In Bank of America, Nat l Trust & Savings Ass n. v. Lima, 103 F. Supp. 916 (D. Mass. 1952), the issue was whether a national bank could be precluded from bringing suit in state court because it had not registered as a foreign corporation under the applicable Massachusetts statute. The court held that the statute was not applicable to the national bank for three separate reasons first, because the bank was not doing business in Massachusetts such that it was subject to the statute in question; second, that the term foreign corporation as used in the statute was not intended to cover national banks; and third, that if the statute was intended to apply to a national bank, it would be repugnant to the banking laws of the United States and unconstitutional. 103 F. Supp. at 919. This latter holding was not dicta, as contended on page of the Initial Brief. With respect to the latter holding, the court stated as follows: Section 5 of the General Laws is very plainly in conflict with 12 U.S.C.A. The last sentence reads in part, * * * no action shall be maintained or recovery had in any of the courts of this commonwealth by any * * * foreign corporation so long as it fails to comply with said sections. Section 24 of 12 U.S.C.A. includes among the 11

19 powers of national banks the power to sue and be sued, complain and defend, in any court of law and equity, as fully as natural persons. The effect of this provision is to place national banks in the same category as individuals in suits by and against them. From the foregoing it would appear that if the provisions of Chapter 181 are held to include national banks within the scope of their coverage, then the effect of that statute is to place national banks on the same level as foreign corporations as regards capacity to sue. Such a result is plainly unconstitutional since it conflicts with the federal statute empowering national banks to sue as fully as natural persons. 103 F. Supp. at 918. Much more recently, the court in Assoc. of Banks in Ins., Inc. v. Duryee, 270 F. 3d 397 (6th Cir. 2001), addressed the issue of whether a national bank desiring to engage in the business of life insurance (pursuant to a federal statute granting it that authority) had to be qualified to do business under Ohio law. The court concluded that under the Supremacy Clause, national banks would not be bound by the licensing requirements for foreign corporations, as those requirements, insofar as they would be applied to national banks, are pre-empted by federal law. 270 F. 3d at 413. State courts in at least five (5) states (including Florida in the Order on Appeal) have considered the issue under almost identical facts and come to the same conclusion. In the Order on Appeal, the Fourth District Court of Appeal correctly held that Fla. Stat (1) is preempted by 12 U.S.C. 24, and 12

20 that therefore a state cannot require a national bank to register or file as a foreign corporation in order to maintain a lawsuit in state court. 30 So. 3d at 618. This ruling is totally consistent with those of other state courts that have considered the question. In re Hibernia Nat l Bank, 21 SW 3d 908 (Tex. App. Corpus Christi 2000), the court held as follows in ruling that a national bank could not be required to obtain a certificate of authority under Texas law as a precondition to filing suit: In the instant case it is undisputed that Hibernia is a national bank organized under U.S. law. Thus Hibernia is subject to state laws, unless those laws infringe the national banking laws. Anderson Nat. Bank v. Luckett, 321 U.S. at 248, 64 S. Ct Because 12 U.S.C. 24 gives national banks the power to sue in any court of law and equity, as fully as natural persons, article 8.18A [of Texas Rev. Civ. Stat.] would infringe upon that power because it would require a foreign bank to obtain a certificate of authority before it could maintain a suit in this state. thus, 12 U.S.C. 24 will preempt the application of article 8.18A. Anderson Nat. Bank, 321 U.S. at 248, 64 S. Ct. 599; Roberts, 326 So. 2d at SW 3d at 909. (language in brackets added), In Indiana Nat l Bank v. Roberts, 326 So. 2d 802 (Miss. 1976), the court found that Mississippi s statute prohibiting a foreign corporation not qualified to do business in the state from maintaining an action in state courts did not apply to national banks, expressly referencing the powers of national banks to sue and be sued as fully as natural persons set forth in 12 U.S.C. 24. In State Nat l Bank v. Laura, 256 N.Y.S. 2d 1004 (Cty. Ct. 1965), the court held that since a national bank is brought into existence under federal legislation, it is not subject to New 13

21 York s statutory requirements limiting the rights of foreign corporations to sue. And in First Nat l Bank v. Slagle, 5 P. 2d 1013 (Wash. 1931), the court held that failure to pay a corporate license fee did not preclude a national bank from maintaining an action in the state because the Washington legislature did not have the power to limit the powers of national banks. This is also consistent with rulings of the U.S. Comptroller of the Currency. Such rulings, as constructions of a federal regulatory statute by the federal agency charged with its enforcement, are entitled to great weight by the courts. Bank of America v. City & County of San Francisco, 309 F. 3d 551 at 563 (9 th Cir. 2002). For example, in Corporate Decision 96-17, 1996 WL (O.C.C. 1996), the Comptroller ruled that Connecticut laws relating to foreign corporations, including those prohibiting foreign corporations from maintaining any action in any court of the state unless it has obtained a certificate of authority from the secretary of state, were preempted and ruled not applicable to prohibit, restrict, limit or condition the operation of branches of the national bank in question in Connecticut WL at pgs. 19, 21. Accord, Corporate Decision WL (O.C.C. 1995). In addition, it is clear that under rules of statutory interpretation the National Florida Business Corporation Act does not impose any requirement on a national bank headquartered in the State of Florida to register with the Florida Department 14

22 of State in order to conduct business as a national bank, or to bring or defend lawsuits within the State of Florida. Fla. Stat (12) defines a foreign corporation to mean a corporation for profit incorporated under laws other than the laws of this state. Nowhere in the statute is the intent expressed that this definition includes national banks. As the court held in Bank of America, Nat l Trust & Savings Ass n v. Lima, supra, 103 F. Supp. at 918. it is commonly accepted that in the absence of clear and unequivocal language to the effect, national banks are generally not held to come within state statutory requirements relating to foreign corporations unless the legislative intent to treat such institutions as foreign corporations is clearly manifested in unmistakable language. The Massachusetts statute in question in Bank of America defined a foreign corporation as a corporation, association or organization... which has been established, organized or chartered under laws other than those of the commonwealth, language that is almost identical to the Florida Statute. Id. Similarly, in Steward v. Atlantic Nat. Bank, 27 F. 2d 224 (9th Cir. 1928), the court found that a national bank was not a foreign corporation within the meaning of an Arizona statute that prohibited a foreign corporation that did not have a permit to do business in Arizona from maintaining a legal action. The court went on to hold that in the absence of unmistakenly clear language, it will not be found that 15

23 the state has attempted to exercise a regulatory power over national agencies established in aid of governmental purposes. 27 F. 2d at 228. Again, the statute s definition of foreign corporation was similar to that found in the Florida statute. C. Rebuttal of Appellants Arguments. Contrary to the assertions on pages of the Initial Brief, each of the above cases is almost directly on all fours with the facts and legal issues presented in this case, and any ruling in Appellants favor would be in direct conflict with those rulings. On the other hand, the case law cited in the Initial Brief is not on point. None of the cases Appellants rely on deal with the issue of preemption in the context of state restrictions on the right of access of a national bank to the state courts. The discussion on pages 16 to 19 of the Initial Brief on federal preemption in situations not involving the National Bank Act is of no relevance because of the uniqueness of preemption under the National Bank Act and the large number of cases interpreting it. The argument on pages of the Initial Brief that there is a presumption against preemption is clearly incorrect, because the case law is clear that because of the history of significant federal presence in national banking, the presumption against preemption of state law is inapplicable. United States v. Locke, 529 U.S. 89 at 108, 120 S. Ct. 1135; Bank of America v. City & County of San Francisco, supra, 309 F. 3d 551 at 559 (9 th Cir. 2002). 16

24 To the contrary, as set forth by the court in Bank of America v. City & County of San Francisco, supra, The National Bank Act of 1864 was enacted to protect national banks against intrusive regulation by the States. See Cong. Globe, 38 th Cong., 1 st Sess (1864) (noting that the object of the National Bank Act was to establish a national banking system free from intrusive state regulation); Marquette Nat l Bank, 439 U.S. at , 99 S. Ct. 540 ( Close examination of the National Bank Act of 1864, its legislative history, and its historical context makes clear that... Congress intended to facilitate... a national banking system. ) (internal quotations and citations omitted). 309 F. 3d at 561 The history of national bank legislation is one of interpreting grants of both enumerated and incidental powers to national banks as grants of authority not normally limited by, but rather ordinarily preempting, contrary state law. Barnett Bank v. Nelson, 517 U.S. 25 at 32, 116 S. Ct (1996); Accord, Watters v. Wachovia Bank, 550 U.S. 1 at 12, 127 S. Ct at The Supreme Court further observed in Barnett Bank, supra, that in defining the pre-emptive scope of federal statutes and regulations granting a power to national banks... normally Congress would not want States to forbid, or to impair significantly, the exercise of a power that Congress explicitly granted. 527 U.S. at 33. Appellants argue, beginning on page 19 of the Initial Brief, that Fla. Stat (1) is not the type of law that is preempted by the National Banking Act. However, the federal banking cases they discuss do not support that conclusion. Watters, supra, discussed on page 22 of the Initial Brief, supports 17

25 Seacoast s position, not Appellants position. Watters addressed the issue of whether the subsidiary of a national bank engaged in the business of real estate lending could be required to submit to state supervision. The Court applied the general rules relating to preemption of state laws regulating the activities of national banks, and held that the State of Michigan could not exercise supervisory authority over the subsidiary of a national bank. Watters reaffirms that the intent of the National Bank Act is to protect from state hindrance a national bank s engagement in the business of banking U.S. at 21, 127 S. Ct. at Placing roadblocks in the way of a national bank s ability to access the state courts to enforce its rights under its lending activities, one of the core functions of a national bank, is clearly such a hindrance. Appellants reliance on the next case they cite on page 23 of the Initial Brief, First Nat l Bank v. Dickinson, 396 U.S. 122, 90 S. Ct. 337 (1969), is totally misplaced. Dickinson addressed the issue of whether use of an armored car service was a branch. The reason the state statute was not held to, as cited by Appellants, frustrate, interfere or infringe on national banking is because the section of the National Bank Act in question specifically provided that a national bank was only permitted to establish a branch when, where, and how state law would authorize a state bank to establish and operate such a branch. 12 U.S.C. 36. In fact, the Court noted that Congress had absolute authority over national 18

26 banks, and that it was Congress that imposed the limitations by incorporating the state law by reference. 396 U.S. at 131. Notwithstanding the foregoing, the Court held that it was Congress s definition of the term branch that controlled, not the state s. Appellants next cite to Blackfeet Nat l Bank v. Nelson, 171 F. 3d 1237 (11th Cir.), pet. for cert. denied 528 U.S. 1004, 120 S. Ct. 497 (1999). Blackfeet dealt with the McCarran-Ferguson Act, a federal statute expressly providing that a state law specifically regulating the business of insurance would preempt a conflicting federal law unless that federal law specifically relates to the business of insurance as well. The court held that a Florida law regulating insurance investments preempted the National Bank Act, because it found that the National Bank Act did not specifically relate to the business of insurance. The next case cited by Appellants is Video Trax, Inc. v. Nationsbank, N.A., 33 F. Supp. 2d 1041 (S.D. Fla. 1998), aff d. 205 F. 3d 1358 (11 th Cir. 2000). With respect to preemption, the issue in that case was whether the National Bank Act regulated overdraft fees as part of its regulation of usurious practices by national banks. The court ruled that the National Bank Act did not preempt state law on the subject, because it did not speak to charges for processing checks presented against overdrawn accounts, and that there was otherwise no intent to regulate the fees and charges of national banks other than with respect to interest. Again, that is in 19

27 contrast to this case, where the National Bank Act explicitly gives national banks the right to sue and be sued in state court as fully as natural persons. Appellants next argue, on pages 25 to 30 of the Initial Brief, that Congress did not intend by the initial passage of the National Bank Act in 1864 to preempt a state s ability to limit a national bank s access to its courts. In support of that argument, Appellants offer two truly ancient lower court cases. In Nat l Park Bank v. Gunst, 1 Abb. N. Cas. 292 (Sup. Ct., N.Y. Co. 1876), it does not appear that the issue of preemption was raised. The issue in Manufacturers Nat l. Bank v. Baack, 2 Abb. U.S. 232, 16 F. Cas. 671 (D.C. NY 1871), was whether a national bank is presumed to be a citizen for purposes of jurisdiction, and has nothing to do with either preemption or the state laws relating to the authorization of foreign corporations to do business. These cases do not come even close to negating the overwhelming authority to the contrary. Appellants finally argue, on page 35 of the Initial Brief, that the only consequence to Seacoast (or any national bank, for that matter) of transacting business without a certificate of authority is that it cannot access the Florida courts. This argument is without merit. First of all, if Appellants were to prevail, it would mean that Seacoast and every other national bank doing business in Florida could be subject to substantial civil fines and penalties for all of the years they have illegally done business in Florida. Secondly, as Appellants point out, on page 12 20

28 of the Initial Brief, the Florida statute in question is part of a Model Corporation Act that has been adopted in all 50 states. Therefore, reversal of the Order on Appeal would call into question the seemingly universal position that all of these state statutes are preempted by the National Bank Act or otherwise not applicable to national banks. This would subject the truly national national banks to registration, etc., in multiple states, and would clearly be a substantial obstacle to the national banks fulfilling their mission and eroding the exclusive control and supervision of the U.S. Comptroller of the Currency. D. Remedy. Seacoast believes that it will prevail in this appeal. In the event Appellants prevail, the remedy should be a remand to the trial court. In accordance with Fla. Stat (3), the trial court would then decide whether to stay the case until Seacoast obtains a certificate of authority to do business in Florida, and under what conditions. Appellants suggest on pages of the Initial Brief that the remedy should be that the trial court be instructed to dismiss the case. This suggestion is totally inconsistent with the aforementioned statute and is not supported by the case law cited by Appellants. Appellants argument is based on the premise that if Seacoast is not authorized to do business in Florida, the trial court had no jurisdiction to hear the case. The Florida cases cited by Appellants do stand for the principle that 21

29 dismissal is the proper remedy if the court had no jurisdiction. However, South Carolina Equipment Co. v. Sheedy, 353 N.W. 2d 63 (Wisc. App. 1984), the case relied upon by Appellants for the proposition that registration cannot be effected once an appeal is filed, expressly states that the Wisconsin statute in question had no function with respect to the jurisdiction of Wisconsin courts over foreign corporation. 353 NW 2d at 65. Therefore, the Florida cases cited are not relevant. In addition, the facts in Sheedy are very different. There, the foreign corporation s case was dismissed by the trial court because it did not have a certificate of authority. However, the plaintiff made the mistake of filing its notice of appeal before becoming authorized to do business, so the authorization was outside the trial court record and therefore could not be considered on appeal. Of course, the situation in this case is totally different. Seacoast was successful in the trial court and the case was never dismissed. There is no reason why Fla. Stat (3) would not apply to further proceedings in the event the case is remanded. In addition, it would make no sense for Seacoast to be in a worse position because it prevailed on the issue before the trial court than had Seacoast not prevailed. If the trial court had ruled that Seacoast had to be authorized to do business to maintain this proceeding, under Fla. Stat (3) Seacoast would have been given the opportunity to obtain authorization. 22

30 CONCLUSION For the foregoing reasons, it is clear that Seacoast cannot be required to qualify or register to do business in Florida as a precondition to maintaining this action. and it is respectfully submitted that this Court affirm the Order on Appeal. Respectfully submitted, Morris G. (Skip) Miller, skip.miller@ruden.com Florida Bar Number Lakeview Avenue, Suite 800 West Palm Beach, Florida (ph); (fax) 200 East Broward Boulevard, 15 th floor (33301) Post Office Box 1900 Fort Lauderdale, Florida (954) , ; Fax: (954) By: John H. Pelzer Florida Bar Number

31 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished by U. S. Mail to Robert A. Sweetapple, Esq., Sweetapple, Broeker & Varkas, P.L., 165 East Boca Raton Road, Boca Raton, FL 33432, Richard A. Kupfer, Esq., 833 Eastview Avenue, Delray Beach, FL , and Harvey R. Schneider, Esq., 33 S.E. 7 th Street, Suite G, Boca Raton, FL 33432, this 18th day of February this brief. CERTIFICATE OF COMPLIANCE Undersigned counsel certifies that TIMES NEW ROMAN, 14 pt., is used in 200 East Broward Boulevard, 15 th floor (33301) Post Office Box 1900 Fort Lauderdale, Florida (954) , ; Fax: (954) By: John H. Pelzer Florida Bar Number