840 F.3d 1183 (10th Cir. 2016), 14-4085, Dutcher v. Matheson

Docket Nº:14-4085
Citation:840 F.3d 1183
Opinion Judge:HOLMES, Circuit Judge.
Party Name:RICHARD DUTCHER; GWEN DUTCHER; RICHARD FERGUSON; MICHELLE FERGUSON; CATHERINE RICHARDS AHLERS, on their own behalf and on behalf of a class of similarly situated persons, Plaintiffs-Appellants, v. STUART T. MATHESON; MATHESON, MORTENSEN, OLSEN & JEPPSON, P.C.; RECONTRUST COMPANY, N.A.; B.A.C. HOME LOANS SERVICING, LP; BANK OF AMERICA, N.A., ...
Attorney:Marcus R. Mumford, Mumford PC, Salt Lake City, Utah, for Plaintiffs-Appellants. Amy Miller, McGuireWoods LLP, Washington, D.C., (Brian Emory Pumphrey, McGuire Woods LLP, Richmond, Virginia, and Craig Robert Mariger, Jones Waldo Holbrook & McDonough, PC, Salt Lake City, Utah, with her on the brief...
Judge Panel:Before LUCERO, HARTZ, and HOLMES, Circuit Judges. CONCUR BY: LUCERO, J., and HOLMES, Circuit Judge, concurring LUCERO, J., concurring. HOLMES, Circuit Judge, concurring.
Case Date:November 02, 2016
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
SUMMARY

Richard and Gwen Dutcher and their co-plaintiffs (collectively, “plaintiffs”) brought suit in Utah state court on behalf of a putative plaintiff class against ReconTrust, a national bank that served as the substitute trustee for class members’ deeds of trust over properties located in Utah. The suit alleged that ReconTrust illegally non-judicially foreclosed on the plaintiffs’ properties because... (see full summary)

 
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840 F.3d 1183 (10th Cir. 2016)

RICHARD DUTCHER; GWEN DUTCHER; RICHARD FERGUSON; MICHELLE FERGUSON; CATHERINE RICHARDS AHLERS, on their own behalf and on behalf of a class of similarly situated persons, Plaintiffs-Appellants,

v.

STUART T. MATHESON; MATHESON, MORTENSEN, OLSEN & JEPPSON, P.C.; RECONTRUST COMPANY, N.A.; B.A.C. HOME LOANS SERVICING, LP; BANK OF AMERICA, N.A., Defendants-Appellees. STATE OF UTAH, Amicus Curiae

No. 14-4085

United States Court of Appeals, Tenth Circuit

November 2, 2016

Page 1184

[Copyrighted Material Omitted]

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Appeal from the United States District Court for the District of Utah. (D.C. No. 2:11-CV-00666-TS).

Marcus R. Mumford, Mumford PC, Salt Lake City, Utah, for Plaintiffs-Appellants.

Amy Miller, McGuireWoods LLP, Washington, D.C., (Brian Emory Pumphrey, McGuire Woods LLP, Richmond, Virginia, and Craig Robert Mariger, Jones Waldo Holbrook & McDonough, PC, Salt Lake City, Utah, with her on the brief) for Defendants-Appellees.

Thom D. Roberts, Assistant Utah Attorney General (Sean D. Reyes, Attorney General, with him on the brief), Salt Lake City, Utah, for Amicus Curiae.

Before LUCERO, HARTZ, and HOLMES, Circuit Judges.

OPINION

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HOLMES, Circuit Judge.

Richard and Gwen Dutcher and their co-plaintiffs (collectively, " the plaintiffs" ) brought suit in Utah state court on behalf of a putative plaintiff class against ReconTrust, a national bank that serves as the substitute trustee for class members' deeds of trust over properties located in Utah. The suit alleges that ReconTrust illegally non-judicially foreclosed on the plaintiffs' properties because depository institutions like ReconTrust do not have the power of sale over properties secured by trust deed. The plaintiffs also sued B.A.C. Home Loans Servicing (" BAC" ) and Bank of America, N.A. (" BOA" ), as the former trustees who transferred trusteeship to ReconTrust, as well as Stuart Matheson and his law firm, as the agents who conducted the foreclosure sale on behalf of ReconTrust. ReconTrust and the other defendants (collectively, " the defendants" ) removed the case to federal court. They maintained that ReconTrust's acts were lawful. The district court denied a motion by the plaintiffs to remand the case to state court and agreed with ReconTrust on the merits, which led the court to grant the defendants' pending motion to dismiss.

The plaintiffs ask us to reverse the court's order denying remand and to reverse the order granting dismissal of the case. We conclude, however, that the district court properly decided that it had jurisdiction under the Class Action Fairness Act (" CAFA" ); accordingly, it correctly denied the plaintiffs' motion for remand. On the merits, we conclude that ReconTrust was authorized to conduct the challenged foreclosures under federal law, and the plaintiffs have relatedly failed to state a claim on which relief could be granted. We therefore affirm the district court's judgment as to both issues.

I

The plaintiffs are representatives of a putative class of former purchasers of Utah properties who financed their purchases by executing deeds of trust with various banks. In Utah, which permits the financing of the purchase of real estate through deeds of trust, the purchaser of the real estate becomes the trustor of a deed of trust under which the purchased property is the trust property and the financier is the beneficiary of the trust. If the purchaser defaults, the beneficiary may commence non-judicial foreclosure of the secured property. This is usually accomplished

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by selecting a substitute trustee to conduct the foreclosure.

In this case, the plaintiffs defaulted and were subject to non-judicial foreclosures instituted by BOA and its subsidiaries, including ReconTrust.1 ReconTrust--a wholly owned subsidiary of BOA that maintains offices in Richardson, Texas--is a national bank by right of its charter with the Office of the Comptroller of the Currency (" OCC" ). Pursuant to this charter, ReconTrust's functions are limited to foreclosing on deeds of trust. To that end, defendants BAC and BOA designated ReconTrust as the substitute trustee for the plaintiffs' properties, and ReconTrust proceeded to conduct the foreclosures that the plaintiffs now assert were unlawful. In doing so, ReconTrust notarized and executed--from Texas--three documents pertaining to each foreclosed property: a Substitution of Trustee, a Notice of Default and Election to Sell, and the Trustee's Deed. In each case, ReconTrust--acting through its agent Stuart Matheson, who is a member of the Utah Bar, and his law firm of Matheson, Mortensen, Olsen & Jeppson, P.C. (" MMOJ" )--commenced non-judicial foreclosure proceedings on the property on the same day that it became the designated substitute trustee.

The plaintiffs filed this putative class action in Utah state court against Mr. Matheson, MMOJ, BAC, ReconTrust, and BOA, claiming that the defendants had conducted illegal non-judicial foreclosures in violation of Utah Law. The complaint presented six claims for relief: (1) violations of Utah Code § 57-1-23.5 (providing damages for the unauthorized sale of property held in deed of trust); (2) violations of Utah Code § 57-1-21 (relating to the exercise of the power of sale on deeds of trust without authority); (3) conversion; (4) wrongful lien; (5) wrongful foreclosure; and (6) intentional infliction of emotional distress.

The plaintiffs defined the class to contain " [a]ll persons subjected to the actions of Matheson, MMOJ and other defendants in non-judicial foreclosure proceedings instituted by ReconTrust, BAC, or Bank of America, as the purported trustee" since

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January 1, 2001. Aplts.' App. at 25 (Compl., filed June 24, 2011). The defendants removed the action to federal court under the Class Action Fairness Act (" CAFA" ), 28 U.S.C. § 1332(d), and diversity jurisdiction. They then filed a motion to dismiss, arguing that ReconTrust, as a federally-chartered national bank, was permitted to conduct the challenged foreclosures under federal law--specifically, 12 U.S.C. § 92a(a), as interpreted by the OCC in 12 C.F.R. § 9.7. The plaintiffs argued that this federal statute did not in fact permit ReconTrust to conduct the challenged foreclosures; they also moved to remand the case to state court. The district court granted the defendants' motion and denied that of the plaintiffs, dismissing all of the plaintiffs' claims and closing the case.

Following these rulings, another judge in the District of Utah issued an order ruling on the same question at issue here--whether ReconTrust was permitted to conduct non-judicial foreclosures in Utah under 12 U.S.C. § 92a(a)--and found that the challenged foreclosures were not lawful. See

Bell v. Countrywide Bank, N.A., 860 F.Supp.2d 1290 (D. Utah 2012). Relying on this decision, and arguing for the first time that the OCC's regulatory interpretation of § 92a--embodied in 12 C.F.R. § 9.7--was " invalid under Chevron," the plaintiffs filed a Motion For Reconsideration, Or, In The Alternative, To Alter Or. Amend Judgment. Aplts.' App. at 245 (Mem. Decision & Order Den. All Pending Mots., filed July 23, 2012); see Chevron, U.S.A., Inc. v. Nat'l Res. Def. Council, Inc., 467 U.S. 837, 842, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The district court denied the motion. It declined to consider the plaintiffs' late-blooming Chevron argument and concluded that they had not shown that " the court ha[d] misapprehended the facts, a party's position, or the controlling law." Id. at 244.

The plaintiffs then appealed to our court. We asked for and received an amicus brief from the OCC, which administers 12 U.S.C. § 92a, on the applicability of 12 C.F.R. § 9.7 to this fact situation. See Dutcher v. Matheson (Dutcher I), 733 F.3d 980, 984 (10th Cir. 2013). We also requested and received supplemental briefing by the parties on the question of jurisdiction. Id. at 985. Following oral argument, we issued an opinion that concluded that " the district court erred in determining it had jurisdiction to hear this case" under federal question or diversity jurisdiction, but remanded the case " with instructions for the district court to determine whether it has jurisdiction to act and, relatedly, to rule in the first instance whether [CAFA] provides jurisdiction." Id. at 983, 990. Because we concluded that the district court had erred in finding that it had jurisdiction, we did not address the merits of the dispute. Id. at 983.

On remand, the district court denied the plaintiffs' requests for jurisdictional discovery, concluded based on additional briefing that it did have jurisdiction under CAFA, and again closed the case. The plaintiffs filed a new motion to alter or amend the judgment, claiming that the district court disobeyed our court's mandate by closing the case...

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