Texas Supreme Court: Out-of-State banks May Only Be Served through Their Registered Agent
September 1, 2022
Texas Supreme Court: Out-of-State Financial Institutions May Only Be Served through Their Registered Agent (2021) |
𝙽𝚘. 𝟸𝟶-𝟶𝟻𝟷𝟽
𝘛𝘩𝘦 𝘛𝘦𝘹𝘢𝘴 𝘌𝘴𝘵𝘢𝘵𝘦𝘴 𝘊𝘰𝘥𝘦 𝘳𝘦𝘲𝘶𝘪𝘳𝘦𝘴 𝘢𝘯 𝘰𝘶𝘵-𝘰𝘧-𝘴𝘵𝘢𝘵𝘦 𝘧𝘪𝘥𝘶𝘤𝘪𝘢𝘳𝘺 𝘵𝘰 𝘢𝘱𝘱𝘰𝘪𝘯𝘵 𝘵𝘩𝘦 𝘚𝘦𝘤𝘳𝘦𝘵𝘢𝘳𝘺 𝘰𝘧 𝘚𝘵𝘢𝘵𝘦 𝘢𝘴 𝘵𝘩𝘦 𝘧𝘪𝘥𝘶𝘤𝘪𝘢𝘳𝘺’𝘴 𝘢𝘨𝘦𝘯𝘵 𝘧𝘰𝘳 𝘴𝘦𝘳𝘷𝘪𝘤𝘦 𝘰𝘧 𝘱𝘳𝘰𝘤𝘦𝘴𝘴. 𝘛𝘩𝘦 𝘛𝘦𝘹𝘢𝘴 𝘊𝘪𝘷𝘪𝘭 𝘗𝘳𝘢𝘤𝘵𝘪𝘤𝘦 𝘢𝘯𝘥 𝘙𝘦𝘮𝘦𝘥𝘪𝘦𝘴 𝘊𝘰𝘥𝘦, 𝘩𝘰𝘸𝘦𝘷𝘦𝘳, 𝘴𝘵𝘢𝘵𝘦𝘴 𝘵𝘩𝘢𝘵 𝘢𝘯 𝘰𝘶𝘵-𝘰𝘧-𝘴𝘵𝘢𝘵𝘦 𝘧𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘪𝘯𝘴𝘵𝘪𝘵𝘶𝘵𝘪𝘰𝘯 𝘮𝘶𝘴𝘵 𝘣𝘦 𝘴𝘦𝘳𝘷𝘦𝘥 𝘵𝘩𝘳𝘰𝘶𝘨𝘩 𝘪𝘵𝘴 𝘳𝘦𝘨𝘪𝘴𝘵𝘦𝘳𝘦𝘥 𝘢𝘨𝘦𝘯𝘵.
U.S. Bank National Association, as Trustee for Residential Asset Mortgage Products, Inc., Mortgage Asset-Backed Pass-Through Certificates Series 2005-EFC2, Petitioner, v. Dennis Moss, Respondent.
The Texas Supreme Court reversed the lower courts, siding with the Bank. Moss argued that the Legislature’s choice of the word “may” in § 17.028—rather than “must” or “shall”— signaled its intent that service under section 17.028 is permissive, not mandatory. While the Court acknowledged that “may” does not mean “must,” it rejected Moss’s argument and held that the “may” in § 17.028 introduces two alternative methods of service, and which method applies depends on whether the institution has a registered agent.
In the next step of its analysis, the Court concluded that the Secretary of State was not the Bank’s registered agent under § 17.028. To reach this conclusion, the Court engaged in self-described “statutory hopscotch,” starting with an out-of-state financial institution’s obligation to apply to do business in Texas under §201.102 of the Finance Code. This section provides that “[a]n out-of-state financial institution must file an application for registration with the Secretary of State . . . by complying with [Texas law] relating to foreign corporations doing business in this state.”
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