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California
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Bank Examination -Visitorial Powers (12 C.F.R. § 7.4000(a)(2).)
(Morris v. Redwood Empire Bancorp)

C. The Visitorial Powers Statute Does Not Bar Morris’s Claims Under The UCL

Defendants contend the visitorial powers statute, section 484(a) of title 12 of the United States Code, provides an alternative basis for upholding the judgment. We disagree.

The visitorial powers statute provides: “(a) No national bank shall be subject to any visitorial powers except as authorized by Federal law, vested in the courts of justice or such as shall be, or have been exercised or directed by Congress or by either House thereof or by any committee of Congress or of either House duly authorized.” (12 U.S.C. § 484(a).) Federal law defines “visitorial powers” with respect to national banks to include: “(i) Examination of a bank; (ii) Inspection of a bank’s books and records; (iii) Regulation and supervision of activities authorized or permitted pursuant to federal banking law; and (iv) Enforcing compliance with any applicable federal or state laws concerning those activities.” (12 C.F.R. § 7.4000(a)(2).) “State officials may not exercise visitorial powers with respect to national banks, such as . . . prosecuting enforcement actions, except in limited circumstances authorized by federal law . . . .” (12 C.F.R. § 7.4000(a)(1).)

Defendants contend pursuing an action under the UCL is prosecuting an enforcement action, and by acting as a private attorney general under the UCL, Morris stands in the shoes of the Attorney General. The issue whether an individual may pursue a UCL action against a bank as a private attorney general appears novel, as neither the parties, nor the Attorney General as amicus, have located a single published case addressing this issue. This issue is intriguing, but its resolution here is unnecessary and must await another day.

A demurrer may not be sustained as to a part of a cause of action, even if portions may be subject to a motion to strike. (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680.) Morris brought his cause of action under the UCL not only as a private attorney general, but also in his personal capacity. The Supreme Court in Perdue considered whether a state law claim of unconscionability challenging a bank’s assessment of noninterest fees would violate the visitorial powers statute, concluding a “plaintiff can state a cause of action for violation of [California law] without violating section 484 . . . .” (Perdue, supra, 38 Cal.3d at p. 934, fn. 21.)[11] Because Morris has alleged personal harm, he has standing to bring the action independent of his status as a private attorney general.

Thus, the visitorial powers statute does not provide an alternative basis for sustaining the demurrers without leave to amend.

Morris v. Redwood Empire BancorpG0336494/29/05 CA4/3
Morris v. Redwood Empire BancorpG0336494/29/05 CA4/3-pdf

Apr 29 2005

G033649
[PDF] [DOC]

Morris v. Redwood Empire Bancorp 4/29/05 CA4/3

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Bruton v. United States, supra, 391 U.S. 123 [20 L.Ed.2d 476] hhh
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