Bracewell Represents JPMorgan Chase Bank, N.A. in Matter of JPMorgan Chase Bank, N.A. v. Johnson, et al.

Bracewell & Giuliani LLP represented JPMorgan Chase Bank, N.A. in the matter of JPMorgan Chase Bank, N.A. v. Johnson, et al.

In 2011, the United States Bankruptcy Court for the Eastern District of Arkansas ruled that JPMorgan Chase Bank, N.A. (JPMorgan) was not authorized to do business in the state of Arkansas and therefore was not permitted to use the State’s statutory nonjudicial foreclosure procedures. As a result of the ruling, the bankruptcy court disallowed foreclosure fees and costs included in proofs of claim filed by JPMorgan in three consolidated bankruptcy cases and created a ripple effect that brought mortgage lending in Arkansas to a near standstill.

In the wake of this bankruptcy decision, dozens of actions, including several class actions, were commenced in state and federal court in Arkansas. These actions sought to nullify foreclosures that had been carried out pursuant to Arkansas’ nonjudicial foreclosure statute by numerous national banks and recover millions in alleged damages caused by the purportedly wrongly foreclosures.

In a consolidated appeal to the Eastern District of Arkansas that included two related district court actions, and then to the Eighth Circuit Court of Appeals, Bracewell succeeded in obtaining a reversal of the Bankruptcy Court’s decision. Specifically, in affirming the decision of the district court, the Eighth Circuit held that either state or federal law could authorize banks to do business in the state of Arkansas and that national banks were so authorized by the National Bank Act.

As a result of the ruling, nonjudicial foreclosures in Arkansas restarted and numerous pending cases will be resolved in favor of JPMorgan and other national banks. Not only have JPMorgan and other national banks been able to confirm the validity of their prior foreclosures, but they also are now able to continue using the less expensive and more efficient nonjudicial foreclosure mechanism in the state of Arkansas without risk of adverse consequences.

Bracewell attorneys involved in this representation were Partners Daniel S. Connolly and Rachel B. Goldman; and Associates David J. Ball, David A. Shargel and Christina A. Jardine.