COURTNEY HUDSON GOODSON, Associate Justice
This case presents the following certified question from the United States District Court for the Eastern District of Arkansas, Judge Brian Miller:
Petitioners, Robert and Pamela Dickinson, ("the Dickinsons") contend that respondent, the Federal National Mortgage Association ("Fannie Mae"), may not institute foreclosure proceedings under the Statutory Foreclosure Act, codified at Ark. Code Ann. §§ 18-50-101 et seq., unless it is "authorized to do business in this state," which the Dickinsons claim requires Fannie Mae to obtain a certificate of authority from the Arkansas Secretary of State. Respondents argue that the statute allows any authorization, including authorization under federal law. We hold that the statute does contemplate authorization under federal law and that Fannie Mae's federal charter is sufficient to allow it to proceed under the Statutory Foreclosure Act.
This case stems from a statutory foreclosure proceeding instituted against the Dickinsons by respondent, SunTrust National Mortgage Inc. ("SunTrust"). According to the Dickinsons' complaint in this case, they have a note and a mortgage owned by Fannie Mae that is serviced by SunTrust. In early 2010, the Dickinsons fell behind on their payments, and in November 2010, SunTrust initiated a foreclosure action pursuant to the Statutory Foreclosure Act. In January 2011, shortly before the scheduled auction of their home, the Dickinsons filed suit against Fannie Mae and SunTrust in the circuit court of Green County, asserting causes of action for breach of contract, breach of the duty of good faith and fair dealing, promissory estoppel, and violations of the Arkansas Deceptive Trade Practices Act, codified at Ark. Code Ann. §§ 4-88-101 et seq. The circuit court granted the Dickinsons a temporary restraining order halting the statutory foreclosure sale of their home.
Thereafter, the Dickinsons filed an amended class-action complaint against Fannie Mae and SunTrust. Specifically, the complaint claimed that Fannie Mae, as the owner of the mortgage and the note, was not "authorized to do business" in Arkansas, as required by the Statutory Foreclosure Act, because it had failed to register to do business in Arkansas. The amended class-action complaint also pled
The respondents removed the case to federal court. Following a decision by the Eighth Circuit Court of Appeals in JPMorgan Chase Bank N.A. v. Johnson, 719 F.3d 1010 (8th Cir.2013), in which the Eighth Circuit held that the "authorized to do business" clause was satisfied by a federal law authorizing banks to do business in Arkansas, the respondents filed a motion to dismiss for failure to state a claim. The Dickinsons opposed the motion to dismiss and filed a cross-motion to certify the issues to this court. The district court granted the Dickinsons' motion and certified the above issue. We accepted certification.
The Statutory Foreclosure Act establishes a system of nonjudicial foreclosure proceedings as an alternative to judicial foreclosures. Because the Act is in derogation of the common law, its provisions must be strictly construed and complied with. Henson v. Fleet Mortg. Co., 319 Ark. 491, 892 S.W.2d 250 (1995). The district court has asked for our interpretation of Arkansas Code Annotated section 18-50-117 (Repl. 2003), which provides,
(Emphasis added.) The issue on certification is the meaning of the phrase "authorized to do business in this state." The Dickinsons argue that this phrase requires entities wishing to use the nonjudicial foreclosure procedures to register with and receive a certificate from the Arkansas Secretary of State. Respondents argue that authorization under federal law is sufficient.
The first issue is whether Ark. Code Ann. § 18-50-117 is ambiguous. A statute is ambiguous if it is open to two or more constructions, or if it is of such obscure or doubtful meaning that reasonable minds might disagree or be uncertain as to its meaning. Voltage Vehicles v. Ark. Motor Vehicle Comm'n, 2012 Ark. 386, 424 S.W.3d 281; Yamaha Motor Corp, U.S.A. v. Richard's Honda Yamaha, 344 Ark. 44, 38 S.W.3d 356 (2001). In this case, section 18-50-117 clearly contemplates that an entity must be "authorized to do business" in Arkansas to employ statutory foreclosure proceedings under the Statutory Foreclosure Act. However, the statutory language fails to provide direction as to what an entity must do to become "authorized to do business" in the state. As a result, we consider the statute to be ambiguous. When a statute is ambiguous, this court must interpret it according to legislative intent, and our review becomes an examination of the whole act. Simpson v. Cavalry SPV I, LLC, 2014 Ark. 363, 440 S.W.3d 335. In reviewing the Act in its entirety, this court will reconcile provisions to make them consistent, harmonious, and sensible in an effort to give effect to every part. Id.
In examining other sections of the Statutory Foreclosure Act to determine legislative intent for section 18-50-117, we note that section 18-50-102 also employs the phrase "authorized to do business." As initially enacted,
Ark. Code Ann. § 18-50-102(a)(2)(emphasis added). Section 18-50-102(a)(2) allows an entity to be a trustee under the Statutory Foreclosure Act if the trustee is authorized to do business under the laws of the United States. The Dickinsons, however, argue that authorization to do business under the laws of the United States is insufficient for purposes of section 18-50-117. Thus, if we were to adopt the Dickinsons' argument, an entity authorized to do business under the laws of the United States but not registered in Arkansas could be a trustee in a nonjudicial foreclosure under section 18-50-102 but simultaneously could not avail itself of the procedures of the Statutory Foreclosure Act according to section 18-50-117. However, the remaining sections of the Statutory Foreclosure Act contain provisions expressly directed at the trustee regarding, for example, publication of notice (Ark. Code Ann. § 18-50-105) and application of the proceeds of sale (Ark. Code Ann. § 18-50-109). To hold that an entity could be appointed trustee under section 18-50-102 but then prohibited from utilizing other sections of the statute governing actions of the trustee is an inconsistent and inharmonious reading of the provisions. Respondents' position, that section 18-50-117 allows authorization under the laws of the. United States, is the most cogent interpretation because it affords a consistent meaning to the phrase "authorized to do business" in both sections of the statute.
The Eighth Circuit Court of Appeals has recently examined this issue and agreed that authorization under federal law is sufficient to comply with section 18-50-117. The Eighth Circuit compared the language of section 18-50-117 to section 18-50-102:
JPMorgan Chase Bank, N.A. v. Johnson, 719 F.3d 1010, 1016 (8th Cir.2013). The Eighth Circuit also looked to other related statutes to discern the legislative intent for section 18-50-117:
Id. at 1016-17. Decisions of the federal circuit courts are not binding on this court, but we may choose to follow their rationale if we find it persuasive. Larry Hobbs Farm Equip., Inc. v. CNH Am., LLC, 375 Ark. 379, 291 S.W.3d 190 (2009). In this case, we find the Eighth Circuit's reasoning to be the correct interpretation of the statutory language.
Having established that section 18-50-117 does not require an entity to be licensed under Arkansas law, the only remaining issue in the certified question is whether Fannie Mae is authorized to do business in this state. The Dickinsons argue that the Federal National Mortgage Association Charter Act, 12 U.S.C. §§ 1716 et seq., does not provide Fannie Mae with enumerated or implied powers to conduct statutory foreclosures. The Dickinsons' reading is too narrow. The issue is not whether the charter grants Fannie Mae explicit powers to foreclose but whether it authorizes Fannie Mae to do business in this state, which it unquestionably does. According to the charter, Fannie Mae has the power to "purchase, service, sell, or otherwise deal in any mortgages" 12 U.S.C. § 1717. Additionally, the charter states that Fannie Mae is authorized to "conduct its business without regard to any qualification or similar statute in any State." 12 U.S.C. § 1723(a). The charter clearly contemplates that Fannie Mae will engage in the business of dealing in mortgages in any state. Such authorization is sufficient to satisfy the requirements of section 18-50-117. Thus,
Certified question answered.
HART, J., dissents.
Josephine Linker Hart, Justice, dissenting.
Holding that 12 U.S.C. § 1716 et seq., the federal legislation that created the Federal National Mortgage Association, satisfies the authorized-to-do-business requirement embodied in Arkansas Code Annotated section 18-50-117, requires a fundamental misunderstanding of our system of federalism and does not comport with the rules of statutory construction.
As the Supreme Court noted, dual sovereignty is a defining feature of our nation's constitutional blueprint, and upon ratification of the Constitution, the States entered the Union "with their sovereignty intact." Sossamon v. Texas, ___ U.S. ___, 131 S.Ct. 1651, 1657, 179 L.Ed.2d 700 (2011) (quoting Federal Maritime Comm'n v. S. Carolina State Ports Authority, 535 U.S. 743, 751, 122 S.Ct. 1864, 152 L.Ed.2d 962 (2002)). Absent federal preemption, as provided for by the Supremacy Clause of Article 6 of the United States Constitution, the sovereign state of Arkansas has the authority to regulate business within its borders. I am mindful that federal preemption can occur in three ways: "(1) express preemption, where Congress defines explicitly the extent to which its enactments preempt state law; (2) field preemption, where Congress's regulation of a field is so pervasive or the federal interest is so dominant that an intent to occupy the entire field can be inferred; and (3) conflict preemption, where state law stands as an obstacle to the accomplishment of the full purposes and objectives of a federal statute." GSS, LLC v. CenterPoint Energy Gas Transmission Co., 2014 Ark. 144, at 11, 432 S.W.3d 583, 590. Despite the majority's citation to convenient language from a section of the U.S. Code
In my view, the lack of federal preemption does not mean that the Federal National Mortgage Association cannot do business in Arkansas. It merely means that it is subject to some state regulation — the requirement that it obtain a certificate of authorization from the secretary of state.
I am likewise mindful of the federal court decision in JPMorgan Chase Bank, N.A. v. Johnson, 719 F.3d 1010 (8th Cir. 2013), which found that being "authorized by Congress to carry on business of banking throughout the United States" allowed the bank to utilize Arkansas's statutory foreclosure procedure. However, I do not find it persuasive. JPMorgan stipulated that it was not authorized to do business in accordance with section 18-50-117, but the federal court found that the National Bank Act satisfied the authorized-to-do-business requirement. I contend that a fairer interpretation of a national bank's authority to do business throughout the United States means only that such an institution does not need an Arkansas charter to conduct banking business. That interpretation is consistent with Arkansas banking law.
Given that Arkansas has retained its sovereignty in this area, the only entity that can "authorize" an entity to do business in this state, is the State of Arkansas itself. Accordingly, the phrase is not ambiguous in that the alternative interpretation exists not because the words of the statute are unclear.
The purpose of the rules of statutory construction is to give effect to the intent of the legislature. State v. Colvin, 2013 Ark. 203, 427 S.W.3d 635. While the so-called "first rule of statutory construction" is to construe a statute just as it reads, giving the words their ordinary and usually accepted meaning, Smith v. Simes,
I respectfully dissent.
Arkansas Code Annotated section 23-48-1001 states: