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VALLEY NATIONAL BANK v. LAVECCHIA

August 13, 1999

VALLEY NATIONAL BANK, AND WAYNE TITLE, INC., PLAINTIFFS,
v.
JAYNEE LAVECCHIA, IN HER OFFICIAL CAPACITY AS COMMISSIONER OF THE NEW JERSEY DEPARTMENT OF BANKING AND INSURANCE, DEFENDANT.



The opinion of the court was delivered by: Walls, District Judge.

OPINION

Factual Background

Plaintiff Valley National Bank ("Valley") owns all of the shares of plaintiff Wayne Title, Inc. ("Wayne"). Valley acquired Wayne to allow it to sell insurance products. Defendant Jaynee LaVecchia ("the Commissioner") is the Commissioner of the New Jersey Department of banking and Insurance ("the Department").

Valley has opened a branch in Riverdale, New Jersey, a town with a population of 2,370 people, and Wayne Title will also be located in Riverdale. Wayne Title has entered into an employment agreement with a licensed insurance producer to sell title insurance. On November 5, 1998, Valley applied to the Office of the Comptroller of the Currency ("OCC") to establish Wayne Title as an operating subsidiary to sell title insurance and other insurance from Valley's branch in Riverdale. The OCC advised Valley that it would await the grant of an insurance license from the Department before acting on Valley's application.

On November 10, 1998, Valley applied to the Department for Wayne Title to be licensed as an insurance provider for the purposes of selling title insurance. The application was returned to Valley, rejected for technical reasons. On December 16, 1998, Valley resubmitted its application to the Department. During its communications with Valley, the Department informed Valley that it would reject the application because it regards Wayne as a "bank, trust company, bank and trust company or other lending institution, mortgage service, mortgage brokerage or mortgage guaranty company" for purposes of N.J.S.A. 17:46B-30.1 (a statute applicable to national banks doing business in a place with fewer than 5,000 inhabitants), and that it would enforce this statute against Valley and Wayne.

The plaintiffs filed a complaint in this Court on March 19, 1999, for a declaration that N.J.S.A. 17:46B-30.1 is preempted by Article VI, Clause 2, of the United States Constitution ("the Supremacy Clause") and by 12 U.S.C. § 92 ("Section 92"). The complaint also seeks to permanently enjoin the Commissioner from enforcing N.J.S.A. 17:46B-30.1 to the extent it is preempted by Section 92, and to permanently enjoin the Commissioner from otherwise restricting or interfering with the rights granted to Valley under Section 92. On April 22, 1999, the Commissioner, by letter, denied to Valley a license based on N.J.S.A. 17:46B-30.1. On April 30, 1999 Valley opened a branch in Riverdale, New Jersey. On May 4, 1999, Valley filed a motion for summary judgment on its request for declaratory and injunctive relief.

Legal Standard for Summary Judgment

Summary judgment is appropriate where the moving party establishes that "there is no genuine issue of fact and that [it] is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A factual dispute between the parties will not defeat a motion for summary judgment unless it is both genuine and material. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is genuine if a reasonable jury could return a verdict for the nonmovant and it is material if, under the substantive law, it would affect the outcome of the suit. See id. at 248, 106 S.Ct. 2505. The moving party must show that if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the nonmoving party to carry its burden of proof. See Celotex v. Catrett, 477 U.S. 317, 318, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The party opposing a motion for summary judgement must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations or denials of its pleadings. See Sound Ship Building Corp. v. Bethlehem Steel Co., 533 F.2d 96, 99 (3d Cir. 1976), cert. denied, 429 U.S. 860, 97 S.Ct. 161, 50 L.Ed.2d 137 (1976). At the summary judgment stage the court's function is not to weigh the evidence and determine the truth of the matter, but rather to determine whether there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In doing so, the court must construe the facts and inferences in the light most favorable to the non-moving party. See Wahl v. Rexnord, Inc. 624 F.2d 1169, 1181 (3d Cir. 1980).

Analysis

Section 92 provides that:

  In addition to the powers now vested by law in
  national banking associations organized under the
  laws of the United States and any such association
  located and doing business in any place the
  population of which does not exceed five thousand
  inhabitants . . . may, under such rules and
  regulations as may be prescribed by the Comptroller
  of the Currency, act as the agent for any fire, life
  or other insurance company authorized by the
  authorities of the State in which said bank is
  located to do business in said State, by soliciting
  and selling insurance. . . .

12 U.S.C. § 92. Acting pursuant to this Congressional authorization, the OCC has promulgated 12 C.F.R. § 7.1001, which instructs that:

  Pursuant to 12 U.S.C. ยง 92, a national bank may act
  as an agent for any fire, life or other insurance
  company in any place the population of which does not
  exceed 5,000 inhabitants. This provision is
  applicable to any office of a national bank when the
  office is located in a community having a population
  of less than 5,000, even though the ...

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