March 2025

• Extension of the McGirt decision to civil lawsuits
• Beneficial Ownership Information Update
• Banker Q&A
  • Series LLC
  • Updating account from ITIN to SSN
  • Providing debit cards to fiduciaries

Extension of the McGirt Decision to Civil Lawsuits

By Scott Thompson

A case pending in the Oklahoma Supreme Court, Paul-Lucas v. Paul, No. DF-122477, could have far reaching ramifications for businesses in Oklahoma, including banks. At the heart of the case is whether Oklahoma courts have jurisdiction over civil disputes involving Native Americans in Indian Country, which now includes most of Eastern Oklahoma. The decision in this case could affect the ability of banks to enforce contracts, sue for default and foreclose mortgages. It could also affect the type of loans lenders may be willing to make. If you just want to know what problems this case could potentially cause, you can skip to the end. If you want to better understand how we got where we are, read on.

McGirt v. Oklahoma, 591 U.S. __ (2020) is a landmark case decided by the U.S. Supreme Court on July 9, 2020. The case centered around Jimcy McGirt, a member of the Seminole Nation of Oklahoma, who was convicted of serious crimes in an Oklahoma state court. McGirt argued that the state lacked jurisdiction to prosecute him because his crimes occurred on land that should be considered “Indian country” under the federal Major Crimes Act. The Major Crimes Act provides that only tribal courts and federal courts have jurisdiction over crimes by Native Americans committed in Indian Country.

The Supreme Court ruled in a 5-4 decision that much of eastern Oklahoma, including the land where McGirt’s crimes took place, remains Indian Country. This decision was based on treaties from the 19th century, which established a reservation for the Muscogee (Creek) Nation. The crimes at issue had occurred within the historical boundaries of this reservation. The Court found that the Muscogee (Creek) Nation reservation had never been disestablished by Congress and, therefore, the area historically reserved for the Muscogee (Creek) Nation was still Indian Country under the Major Crimes Act. Thus, the state lacked jurisdiction over McGirt. The Oklahoma Court of Criminal Appeals subsequently extended this rationale to nine other tribes which means that nearly all of the eastern half of the State of Oklahoma is defined as Indian Country. Crimes committed by Native Americans on this land must be prosecuted by either tribal authorities or the federal government rather than the state.

The decision has significant implications for jurisdiction and sovereignty. While McGirt dealt explicitly with criminal jurisdiction under the Major Crimes Act, the finding that these tribal reservations were never disestablished, is being asserted as a defense in other cases. For example, a Tulsa man received a speeding ticket in Tulsa and paid the fine. After the McGirt decision, the driver, Justin Hooper, sued the City of Tulsa claiming it had no jurisdiction over him since he was a member of the Choctaw Nation and the ticket was written within the confines of the Muscogee (Creek) Nation.

The City of Tulsa disputed Hooper’s claim, arguing that Section 14 of Curtis Act, 30 Stat. 495 (1898), which allowed cities and towns to be incorporated in Indian Territory and apply their laws to all inhabitants without regard to race, granted Tulsa jurisdiction over municipal violations committed by all Tulsa’s inhabitants, including Native Americans. The municipal court agreed with Tulsa and denied Hooper’s application. Hooper then sought relief in federal court. He appealed the denial of his application for post-conviction relief and sought a declaratory judgment that the City of Tulsa did not have jurisdiction over him under Section 14 the Curtis Act. Tulsa moved to dismiss. The district court granted the motion to dismiss Hooper’s declaratory judgment claim, agreeing with Tulsa that Congress granted the city jurisdiction over municipal violations by all its inhabitants, including Native Americans, through Section 14. Hooper appealed to the United States Court of Appeals for the Tenth Circuit.

In Hooper v. City of Tulsa, No. 22-5034 (10th Cir. 2023), the Tenth Circuit reversed the district court, finding that the federal district court erred in dismissing Hooper’s declaratory judgment claim. The Court found that although the City of Tulsa had been established pursuant to Section 14 of the Curtis Act, that it had been reorganized after statehood and established as a political subdivision of the State of Oklahoma. Because Tulsa could not assert jurisdiction over Hooper under the Curtis Act, the question of jurisdiction fell back on McGirt. With a Native American committing an infraction in Indian Country, the court found the City of Tulsa lacked jurisdiction. The U.S. Supreme Court declined to hear the City of Tulsa’s appeal.

While certainly not a “major crime,” Hooper at least involved a criminal or quasi-criminal act. The case pending before the Oklahoma Supreme Court seeks to apply McGirt to wholly civil matters. It is important to understand what McGirt did and did not do. McGirt did not change the law as it relates to Native Americans and tribal lands. There is jurisprudence on those issues going back hundreds of years. What McGirt did was bring that law back into play for most of Eastern Oklahoma, where it had been assumed to be inapplicable for more than a hundred years.

In 2024, a forcible entry and detainer action was filed in the Tulsa County District Court to evict a renter from a single-family residence for non-payment of rent. The renter was a member of the Cherokee Nation and the house was located within the boundaries of the Cherokee Nation reservation. In defense of the eviction, the renter argued that the Tulsa County District Court lacked jurisdiction over the dispute because of McGirt. Since McGirt had clarified that the Cherokee Nation reservation remained established, the law governing jurisdiction over disputes involving Native Americans on reservation land should apply.

The renter relied primarily on two cases from the U.S. Supreme Court to move to dismiss the eviction claim. First, the renter relied on Williams v. Lee, 358 U.S. 217 (1959). In Williams, a non-tribal member operated a general store in Arizona on the Navajo reservation where he sold goods on credit to a member of the Navajo tribe. When the tribal member defaulted, Williams sued in state court. After success in state court, the United States Supreme Court reversed the state court. In doing so, the Court found that the transaction occurred on the reservation with a Native American and that allowing state court jurisdiction over the transaction would interfere with tribal self-government.

The renter also relied on Kennerly v. Dist. Court of the Ninth Judicial Dist. Of Montana, 400 U.S. 423 (1971). The case had similar facts, but occurred on the Blackfoot reservation. Notably, the Court reached the same conclusion despite the fact that the tribal code had a provision that purported to allow such jurisdiction.

The renter also relied on two Oklahoma Supreme Court cases which involved forcible entry and detainer actions such as the one at issue here. In both Ahboah v. Hous. Auth. Of Kiowa Tribe of Indians, 1983 OK 20, 660 P.2d 625 and Hous. Auth. Of the Seminole Nation v. Harjo, 1990 OK 35, 790 P.2d 1098, the court found the state had no jurisdiction over the actions because the subject properties were located in Indian Country. Both these cases are distinguishable from the present case. In Ahboah, the property was on an Indian allotment and in Harjo, the property was a dependent Indian community. While both meet a definition of Indian Country under federal law, they are not the same as reservation land. Moreover, in neither of these cases does it appear the property was owned in fee-simple by a non-Native American, as is true of the present case. It remains to be seen whether these are distinctions without a difference.

Ultimately, the Tulsa County District Court denied the renter’s motion to dismiss and asserted its jurisdiction over the forcible entry and detainer action. It ruled that the district court had concurrent jurisdiction over forcible entry and detainer cases that involve a non-tribal member property owner and a tribal member tenant on reservation land that is within the boundaries of Tulsa County. It found that state court evictions have the same tribal interests and do not deal with the political integrity, economic security, or health and welfare of the tribe. The court determined that it had jurisdiction, because the state court’s concurrent jurisdiction did not impermissibly infringe on the Cherokee Nation’s right to self-govern.

The district court stayed its ruling pending an appeal. The renter appealed and the Oklahoma Supreme Court, on its own motion, retained the appeal for disposition, bypassing the court of appeals which would normally resolve an appeal in the first instance. The briefing cycle has just begun, and it could be a year or more before we see a decision, but we can already theorize about the possible ramifications of a decision in favor of the renter.

Let us assume that the renter is successful and the court rules that state civil courts have no jurisdiction over transactions involving Native Americans within the bounds of a reservation. As previously noted, this would include most of eastern Oklahoma, including the Tulsa metropolitan area. That would leave jurisdiction over all such transactions exclusively with tribal courts, except a small number that might meet federal court jurisdictional requirements.

This outcome raises numerous questions. Remember, both Williams and Kennerly involved non-Native American creditors who were prohibited from pursuing a Native American debtor in state court because the transactions occurred on reservation land. Will lenders want to make loans they clearly know would subject them exclusively to a tribal court? Will they be subject to discrimination claims if decisions are based on avoiding such jurisdictions? Certainly, a lender can refuse to enter into a loan that would require consenting to the jurisdiction of the Texas state courts. Would the same right exist if the jurisdictional issue is created by the race of the borrower, as is the case here?

If a Native American renter cannot be evicted for non-payment of rent, can a Native American borrower be subjected to the foreclosure of a mortgage and the sale of the property? Will lenders want to make loans for multi-family or non-owner occupied housing which is located on these tribal lands? Often the cash flow from renters is part of the borrower’s ability to repay the loan. Will lenders be willing to rely on tribal courts to evict non-paying renters? These questions portend the chaos that could occur.

It might be easy to think banks will avoid these issues because most of our loan documents will have choice of law, venue and jurisdiction clauses. However, it’s not at all clear these will be effective. In Kennerly, the court found no state court jurisdiction despite a tribal code provision expressly allowing it. The court relied on federal statutes which stated concurrent civil jurisdiction by a state was only applicable where “the enrolled Indians within the affected area of such Indian country accept such jurisdiction by a majority vote of the adult Indians voting at a special election held for that purpose.” 25 U.S.C. §§ 1322 and 1326. Thus, clauses in contracts purporting to confer jurisdiction on the state courts may be wholly ineffective in the absence of such votes from the tribes.

At this juncture, we do not know the outcome of the case or whether these concerns will come to pass. Oklahomans have certainly seen the disruption to the criminal court system in the aftermath of McGirt, so a similar disruption in the civil context is not unrealistic. However, even if the court finds in favor of the renter and declares that Oklahoma state courts lack jurisdiction over transactions involving tribal members within the boundaries of these reservations, the tribes and state may work together to establish effective concurrent jurisdiction. That would benefit not only the state and non-tribal businesses, but likely the tribes as well since making it more difficult for tribal members to enter into commercial relationships due to these jurisdictional concerns benefits no one. We will certainly keep you updated when we know more.

Beneficial Ownership Information Update

By Pauli Loeffler

On February 18, 2025, FinCEN provided FIN-2025-CTA1 decision by the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336(E.D. Tex.), means beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) is again back in effect. However, the Department of the Treasury recognized that reporting companies may need additional time to comply with their BOI reporting obligations, and FinCEN is generally extending the deadline 30 calendar days from February 19, 2025, for most companies.

Reporting companies that were given a reporting deadline later than the March 21, 2025 deadline must file their initial BOI report by that later deadline. For example, if a company’s reporting deadline is in April 2025 because it qualifies for certain disaster relief extensions, it should follow the April deadline, not the March deadline.

Banker Q&As

Series LLC

Q. I’m working on a loan for an LLC that has multiple series attached – do these usually have their own EIN or do they use the parent LLC’s info? Thankfully there is only one member/manager for both, but I was curious if there is any other required information to gather.

A. Certainly a series which I refer to as a “cell” or “child” can use the parent’s EIN. It is possible to simply list the name of each child on the parent account if that is what the customer wants. However, one reason to form as a series LLC is prevent a creditor of one series LLC from attaching assets of another series LLC as well as the assets of the parent. While using one master account under the name of the parent is permitted, it does cause an accounting problem for the parent when the account is set up that way. However, that’s the customer or its accountant’s problem rather than the bank’s. You will need to ask whether the cell or child LLC has its own EIN or uses the EIN of the parent. If each has its own EIN, you will set up individual accounts for each series. If cells don’t have individual EINs and use that of the parent, you may set up one account with all cells under the name and EIN of the parent or separate accounts for each cell/child under the name and EIN of the parent.

Updating account from ITIN to SSN

Q. We have had a few customers that currently have ITIN numbers, but they have applied for and received a social security number. What documents do we need in order to get this changed for those customers in our system?

A. The bank needs to update the current accounts to report under the Social Security Number of the customer rather than the ITIN for the existing account. I would suggest the see the actual social security card. In order to avoid a name mismatch now that s/he has an SSN, the customer will need to fill out IRS Form W-9 to have the Tax Identification Number match. If the customer’s address has changed or the photo ID you used has expired, the bank should take this opportunity to update such information.
I will point out that when W-8 BEN uses an ITIN, you need to be aware that ITINs expire. The instructions for that form specifically states:

Expiration of Form W-8BEN. Generally, a Form W-8BEN will remain in effect for purposes of establishing foreign status for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect. For example, a Form W-8BEN signed on September 30, 2015, remains valid through December 31, 2018.

Reporting collection, Reg V

Q. I have a question for you about disclosures. Our owner asked me this in the oversight meeting yesterday.

In our disclosures, is it necessary to disclose that while we do not report to the credit bureaus, in the event that the customer defaults, or overdrafts their account into a collection status and it is sent to a collection agency, that the collection agency may or may not report them to the credit bureaus?

We had a customer that was upset that when they were sent to collections, while we told them we do not report to the bureaus, they were reported by the collection agency and called the bank to complain.

A. I have never heard of a bank disclosing that it does not report to credit bureaus. Every bank I know of uses one of the following Reg V forms found in Appendix B of Reg V:

A financial institution may use Model Notice B–1 if the institution provides the notice prior to furnishing negative information to a nationwide consumer reporting agency.

A financial institution may use Model Notice B–2 if the institution provides the notice after furnishing negative information to a nationwide consumer reporting agency.

Model Notice B–1

We may report information about your account to credit bureaus. Late payments, missed payments, or other defaults on your account may be reflected in your credit report.

Model Notice B–2

We have told a credit bureau about a late payment, missed payment or other default on your account. This information may be reflected in your credit report.

The vast majority of banks use the B-1 which is provided at account opening the account as a part of account disclosures. If your bank does NOT use the B-1, you certainly will need to provide the B-2 when you refer overdrawn deposit accounts or loans in default having missed payments.

If your bank provides neither the B-1 at account opening nor the B-2 when reporting, you are in violation of Reg V and cited for violating the Reg.

Follow up Q. Do the disclosures for the savings accounts need to state the B-1 Notice as well? Our “Terms and Conditions of Your Account” is from X software provider, and it doesn’t have the B-1 notice specially, but it does reference the TISA disclosure that does have the B-1 notice. Do we need to add it to the Terms and Conditions or are we good to go with what we have been using?

Response: As long as the bank provided the B-1 Notice at account opening everything is fine. Having done that, there is no requirement you give the consumer any additional notice before reporting to the credit bureau or handing the debt over for collection.
Providing debit cards to fiduciaries

Q. We currently issue debit cards to our customers on trust, estate, and fiduciary accounts. Are there any risks (federal/state law, etc.) associated with that practice that we need to be aware of?

A. I am not sure why the personal representative/executor/administrator would need a debit card. Neither an estate account nor a trust account is covered by Reg E since these are NOT owned by a natural person. Do not provide Reg E disclosures for such accounts. Please read the Bankers Threads at the links below.

On the other hand, a Rep Payee, Federal Fiduciary, or UTMA accounts are owned by a natural person and would be subject to Reg E.

https://www.bankersonline.com/forum/ubbthreads.php/topics/2213653/fiduciary-accounts-reg-e
https://www.bankersonline.com/qa/reg-e-debit-card-trustees-living-trust