706 F.3d 1231 (10th Cir. 2013), 09-4216, Burnett v. Mortgage Electronic Registration Systems, Inc.

Docket Nº:09-4216.
Citation:706 F.3d 1231
Opinion Judge:SEYMOUR, Circuit Judge.
Party Name:Charlene BURNETT, Plaintiff-Appellant, v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; James H. Woodall, Defendants-Appellees.
Attorney:Brian W. Steffensen of Salt Lake City, Utah, for Plaintiff-Appellant. Peter J. Salmon of Pite Duncan LLP, San Diego, California, for Defendant-Appellee James H. Woodall.
Judge Panel:Before LUCERO, SEYMOUR, and TYMKOVICH, Circuit Judges.
Case Date:February 01, 2013
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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706 F.3d 1231 (10th Cir. 2013)

Charlene BURNETT, Plaintiff-Appellant,

v.

MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; James H. Woodall, Defendants-Appellees.

No. 09-4216.

United States Court of Appeals, Tenth Circuit.

February 1, 2013

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[Copyrighted Material Omitted]

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Brian W. Steffensen of Salt Lake City, Utah, for Plaintiff-Appellant.

Peter J. Salmon of Pite Duncan LLP, San Diego, California, for Defendant-Appellee James H. Woodall.

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Before LUCERO, SEYMOUR, and TYMKOVICH, Circuit Judges.

SEYMOUR, Circuit Judge.

Charlene Burnett filed this action against James H. Woodall, Mortgage Electronic Registration Systems, Inc., and fifty unnamed individuals. The complaint asserted violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., the Utah Consumer Sales Practices Act (USCPA), Utah Code Ann. § 13-11-1 et seq. , and related claims arising out of the foreclosure of her home. Ms. Burnett appeals the district court's dismissal of her complaint under Fed.R.Civ.P. 12(b)(6). Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

I.

In April 2007, Ms. Burnett purchased a home in Weber County, Utah. 1 To finance this purchase, she obtained a loan from Academy Mortgage Corp. She signed a promissory note for repayment of the loan and secured it with a trust deed to the property. The trust deed identified Ms. Burnett as " Borrower," Academy Mortgage Corp. as " Lender," Mortgage Electronic Registration Systems, Inc. (MERS) as " beneficiary ... (solely as nominee for Lender and Lender's successor and assigns)," and Mountain View Title & Escrow as " Trustee." Aplt.App., vol. I at 38, 39. The trust deed also provided that MERS could foreclose on and sell Ms. Burnett's property should she default on her payment obligations:

Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument.

Id. at 40 (emphasis added). Beginning in August 2008, Ms. Burnett defaulted on her obligations under the trust deed by failing to make the required minimum monthly payments. On November 21, 2008, MERS filed a Substitution of Trustee form in Weber County. The form provided notice that MERS appointed Mr. Woodall, a Utah attorney, as successor trustee under the trust deed. Mr. Woodall filed a Notice of Default that same day. Ms. Burnett subsequently demanded that Mr. Woodall release the Notice of Default but he refused, indicating he intended to proceed with a trustee's sale of her property. The sale occurred on May 19, 2009.

On the day of the sale, Ms. Burnett filed this action against MERS, Mr. Woodall,

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and fifty unidentified individuals who were unknown to Ms. Burnett. She sought damages and declaratory relief for alleged violations of the FDCPA and the UCSPA, a breach of duty by Mr. Woodall, a claim predicated on § 57-1-31 of the Utah Code, which governs trust deeds, and a slander of title claim. Ms. Burnett did not serve MERS nor any of the unidentified individuals named as defendants.

Mr. Woodall moved to dismiss the complaint for failing to state a claim upon which relief can be granted. See Fed.R.Civ.P. 12(b)(6). The district court granted the motion, dismissing all of Ms. Burnett's claims against Mr. Woodall and dismissing the case with prejudice.

II.

A. PLEADING STANDARDS

We review a district court's dismissal under Rule 12(b)(6) de novo. Teigen v. Renfrow, 511 F.3d 1072, 1078 (10th Cir.2007). We accept as true all well-pleaded factual allegations in the complaint and view them in the light most favorable to the plaintiff. Smith v. United States, 561 F.3d 1090, 1098 (10th Cir.2009). Under Rule 8(a)(2), a pleading must contain " a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). " To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘ state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).

Two working principles underlie this standard. " First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Id. " Thus, mere ‘ labels and conclusions,’ and ‘ a formulaic recitation of the elements of a cause of action’ will not suffice; a plaintiff must offer specific factual allegations to support each claim." Kan. Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir.2011) (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955); see also Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (" [T]he pleading standard Rule 8 announces ... demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." ). " Second, only a complaint that states a plausible claim for relief survives a motion to dismiss." Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. " A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678, 129 S.Ct. 1937. The complaint must offer sufficient factual allegations " to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. Although " [s]pecific facts are not necessary" to comply with Rule 8(a)(2), the complaint must " ‘ give the defendant fair notice of what the ... claim is and the grounds upon which it rests.’ " Erickson v. Pardus, 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955) (alteration in original).

In observing that " [t]here is disagreement as to whether this new [ Twombly / Iqbal ] standard requires minimal change or whether it in fact requires a significantly heightened fact-pleading standard," we concluded that

the Twombly / Iqbal standard is a middle ground between heightened fact pleading, which is expressly rejected, and allowing complaints that are no more than labels and conclusions or a formulaic recitation of the elements of a cause of action, which the Court stated will not do. In other words, Rule 8(a)(2) still lives. Under Rule 8, specific facts are not necessary; the statement need only give the defendant fair notice of what

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the claim is and the grounds upon which it rests.

Khalik v. United Air Lines, 671 F.3d 1188, 1191 (10th Cir.2012) (internal quotations, ellipsis, citations, and alterations omitted).

Determining whether a complaint states a plausible claim for relief is " a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. This contextual approach means comparing the pleading with the elements of the cause(s) of action. Khalik, 671 F.3d at 1193. " [W]hile Plaintiff is not required to set forth a prima facie case for each element, she is required to set forth plausible claims" animating the elements of her causes of action. Id. Pleadings that do not allow for at least a " reasonable inference" of the legally relevant facts are insufficient. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.

We apply these principles to the allegations Ms. Burnett makes in her complaint to determine whether the district court erred in dismissing the action.

B. FDCPA

The FDCPA was enacted, in part, to " eliminate abusive debt collection practices by debt collectors." 15 U.S.C. § 1692(e). Ms. Burnett alleges that defendants violated the FDCPA in three ways in connection with foreclosing on her property: (1) by initiating a nonjudicial foreclosure without having a right to possess the property in violation of § 1692f(6)(A), (2) by making false representations in an attempt to collect a debt in violation of § 1692e, and (3) by failing to give her required notices in connection with an attempt to collect a debt in violation of § 1692g(a).

1. Section 1692f(6)(A)

The FDCPA prohibits a " debt collector" from " [t]aking or threatening to take any nonjudicial action to effect dispossession or disablement of property if ... there is no present right to possession of the property claimed as collateral through an enforceable security interest." 15 U.S.C. § 1692f(6)(A). The Act defines a " debt collector" as:

any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.... For the purpose of section 1692f(6) of this title, such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests.

Id. § 1692a(6) (emphasis added).2 " By the plain language of the statute, therefore, a person whose business has the principal purpose of enforcing security...

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