Berneike v. CitiMortgage, Inc.

• Decision Date: 25 February 2013
• Docket Number: No. 11–4210.,11–4210.
• Citation: 708 F.3d 1141
• Parties: Adriana BERNEIKE, Plaintiff–Appellant, v. CITIMORTGAGE, INC., Defendant–Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

708 F.3d 1141

Adriana BERNEIKE, Plaintiff–Appellant,

v.CITIMORTGAGE, INC., Defendant–Appellee.

No. 11–4210.

United States Court of Appeals,Tenth Circuit.

Feb. 25, 2013.

Brian W. Steffensen of Steffensen Law Office, Salt Lake City, UT, for Defendant–Appellant.

Anthony C. Kaye, (Angela W. Adams and Steven D. Burt with him on the brief), of Ballard Spahr LLP, Salt Lake City, UT, for Plaintiff–Appellee.

Before BRISCOE, Chief Judge, GORSUCH and MATHESON, Circuit Judges.

BRISCOE, Chief Judge.

Adriana Berneike (Berneike) appeals the district court's dismissal pursuant to Rule 12(b)(6) of her Real Estate Settlement Procedures Act (RESPA), Utah Consumer Sales Protection Act (UCSPA), and breach of contract claims asserted against CitiMortgage, Inc. (Citi). Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm.

I

On January 13, 2010, Berneike faxed twenty-eight different letters to Citi, her mortgage loan servicer, asserting that Citi was incorrectly billing her for overcharges and improper fees.¹See, e.g., Aplt.App. at 21. Twenty-two of the January 13 letters were addressed to a Citi address in Illinois,and six letters were addressed to a Citi address in Nevada. Id. at 15–42. On January 29, 2010, Berneike faxed a second round of at least fifty-eight different letters. Id. at 6. Like the January 13 letters, these letters asserted that Citi was improperly billing Berneike for overcharges, and sought information regarding specific fees that were set forth on her monthly bills, such as “late payment,” “other charge,” and “[r]eturned payment fee.” Id. at 58, 60, 91. The January 29 letters were addressed to a Citi address in Nevada. Id. at 44–102. All the letters included “Qualified Written Request (RESPA)” in the subject line. These letters were later attached as exhibits to Berneike's complaint in the present action. Id. at 6, 21.

On February 3, 2010, Berneike received two response letters from Citi regarding her billing concerns, but she attached only one of these letters to her complaint. In the letter she attached to her complaint, Citi acknowledged Berneike's inquiry and responded that it believed her account was correctly serviced. Citi provided the specific amounts of Berneike's payments for 2008, explaining that “[d]ue to an increase in your escrow disbursements since your previous analysis, a shortage developed.” Id. at 104. Generally, Citi stated that Berneike's account was correct and that taxes and an escrow shortage caused billing fluctuation. Finally, Citi provided a telephone number where Berneike could reach an employee for future assistance.

Steadfast in her belief that Citi was overcharging her, Berneike sent another letter in June 2010 seeking further explanation and correction. This letter was not attached to her complaint. On July 28, 2010, Berneike faxed a third round of forty-seven different letters to Citi again requesting information about overcharges and improper fees. Citi did not respond to Berneike's June or July letters, but it did send a third letter “demanding a late fee of $73.31 for a return[ed] check fee for Plaintiff's previous payment,” on September 23, 2010. Id. at 9. Altogether, Berneike faxed more than one-hundred letters to Citi. Berneike claims that despite paying in full every bill she received, she continues to be overcharged by Citi and is facing foreclosure and bankruptcy.

Berneike filed suit in Utah state court alleging Citi's conduct violated UCSPA, breached their contract and covenant of good faith and fair dealing, and violated RESPA. Among other damages, Berneike sought “$1,000 per violation of RESPA.” Id. at 12. Thereafter, Citi timely removed the case to federal court, and the court then granted Citi's motion to dismiss Berneike's claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.²

II

This court reviews de novo a district court's Rule 12(b)(6) dismissal for failure to state a claim. Khalik v. United Air Lines, 671 F.3d 1188, 1190 (10th Cir.2012). Accordingly, all well-pleaded allegations of the complaint are accepted as true and viewed in a light most favorable to the nonmoving party. While factual assertions are taken as true, legal conclusions are not. To survive dismissal under Rule 12(b)(6) for failure to state a claim, plaintiffs must “nudge[ ] their claims across the line from conceivable to plausible.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the [pleaded] factual content ... allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

Berneike also appeals the district court's denial of her request for leave to amend based on the district court's determination that amendment would be futile. “[W]e generally review for abuse of discretion a district court's denial of leave to amend a complaint,” but we review de novo “the legal basis for the finding of futility.” Cohen v. Longshore, 621 F.3d 1311, 1314 (10th Cir.2010).

IIIRESPA Claim

The Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. §§ 2601–2617, is a consumer protection statute enacted to regulate real estate settlement processes. § 2601. Under RESPA, a servicer of a “federally related mortgage loan” may be liable for damages to a borrower if it fails to adequately respond to a qualified written request (QWR). § 2605(e)–(f). Upon receipt of a QWR, the loan servicer must provide a written response within twenty days of the borrower's inquiry acknowledging the QWR. § 2605(e)(1)(A). Within sixty days of receipt of a QWR, the loan servicer generally must investigate and make appropriate corrections to the borrower's account, provide a written notification of any correction or an explanation why no correction was necessary, and provide a contact number for a representative. § 2605(e)(2). If the servicer fails to appropriately respond, the borrower may recover actual damages resulting from the servicer's failure and “any additional damages ... in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $1,000.” § 2605(f). The servicer's duty to respond is triggered by receipt of a QWR, which is defined as “written correspondence, other than notice on a payment coupon” that states the name and account number of the borrower as well as a statement of the reasons that the borrower believes the account is in error. § 2605(e)(1)(B).

Pursuant to RESPA's implementing regulation (“Regulation X”),³ “a servicer may establish a separate and exclusive office and address for the receipt and handling of qualified written requests” by “notice either included in the Notice of Transfer or separately delivered by first-class mail, postage prepaid.” 24 C.F.R. § 3500.21(e)(1). This authority arises under the heading “Duty of loan servicer to respond to borrower inquires.” § 3500.21(e)(1).

The parties do not dispute that Berneike failed to send her letters to Citi's designated QWR address, which Citi contends mandates dismissal of Berneike's RESPA claims. Berneike counters with two arguments: first, the district court erroneously considered documents outside of the pleadings to find that Citi had provided notice of its designated QWR address; and, second, that Citi waived its right to receive QWRs at the designated address by responding to her first round of faxed letters.

1. Documents Outside of the Pleadings

Initially, Berneike claims the district court erred when it considered Citi's Welcome Letter, which included notice of a designated address for receipt of QWRs. Generally, a court considers only the contents of the complaint when ruling on a 12(b)(6) motion. Gee v. Pacheco, 627 F.3d 1178, 1186 (10th Cir.2010). Exceptions to this general rule include the following: documents incorporated by reference in the complaint; documents referred to in and central to the complaint, when no party disputes its authenticity; and “ ‘matters of which a court may take judicial notice.’ ” Id. (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007)). This court has explained that

if a plaintiff does not incorporate by reference or attach a document to its complaint, but the document is referred to in the complaint and is central to the plaintiff's claim, a defendant may submit an indisputably authentic copy to the court to be considered on a motion to dismiss.

GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir.1997).

Here, Berneike claims that the district court improperly considered the Welcome Letter and a monthly mortgage loan statement sent by Citi to Berneike. Berneike argues the district court's consideration of the Welcome Letter was improper because she did not reference the letter in or attach the letter to her complaint. Additionally, Berneike argues the district court improperly concluded that the Welcome Letter was central to her claim.

In its Welcome Letter, Citi stated that borrowers “must” send all QWRs to a designated address in Maryland. Aplt.App. at 117. We conclude that the Welcome Letter is central to Berneike's RESPA claim because it notified Berneike of the correct address to use when sending a QWR. Whether Berneike sent the letters to the designated address affects whether she sent a QWR, which would trigger Citi's RESPA obligations. Berneike did not, however, incorporate the Welcome Letter by reference or mention it in her complaint, and the district court provided no citation to the complaint where it found such a reference. See Aplt.App. at 5–12, 223. Accordingly, the district court improperly considered the Welcome Letter. Cf. GFF Corp., 130 F.3d at 1385 (concluding that district court properly considered letter that was “frequently referred to and quoted from” in the amended complaint).

Nevertheless, it was not...