Kleinsmith v. Shurtleff
| Decision Date | 06 July 2009 |
| Docket Number | No. 07-4187.,07-4187. |
| Citation | 571 F.3d 1033 |
| Parties | Phillip M. KLEINSMITH, Plaintiff-Appellant, v. Mark L. SHURTLEFF, Attorney General, State of Utah, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Philip M. Kleinsmith, pro se.
Nancy L. Kemp, Jerrold S. Jensen, Assistant Utah Attorneys General, Mark L. Shurtleff, Utah Attorney General, Salt Lake City, UT, for Defendant-Appellee.
Before TACHA, EBEL, and HARTZ, Circuit Judges.
Philip M. Kleinsmith resides in Colorado but is licensed to practice law in Utah. A specialist in nonjudicial foreclosures, he challenges the constitutionality of a Utah statute that requires all attorneys who act as trustees of real-property trust deeds in Utah to "maintain[] a place within the state" to meet with trustors for certain enumerated purposes related to foreclosures. Utah Code Ann. § 57-1-21(1)(a)(i) (2009). Mr. Kleinsmith, who has no Utah office, challenges the law on the grounds that the maintain-a-place requirement (1) is so vague that the statute violates the federal Constitution's Due Process Clause; (2) discriminates against and burdens nonresident attorneys, thereby injuring interstate commerce in violation of the Constitution's dormant Commerce Clause; (3) violates the Constitution's Article IV Privileges and Immunities Clause (and perhaps the Fourteenth Amendment's Privileges or Immunities Clause) by depriving nonresident attorneys of privileges enjoyed by residents of Utah; and (4) violates the Constitution's Equal Protection Clause by irrationally discriminating against nonresident attorney-trustees. He appeals from the ruling of the United States District Court for the District of Utah granting summary judgment to the defendant, Utah Attorney General Mark Shurtleff. We have jurisdiction under 28 U.S.C. § 1291 and affirm.
Trust-deed foreclosures are a significant part of Mr. Kleinsmith's law practice. A trust deed conveys real property in trust to secure a debt; the debtor, who typically has used the loan proceeds to purchase a home, is also the trustor. See id. § 57-1-19. In the event of default, the trustee may conduct a nonjudicial sale of the property or institute foreclosure proceedings. See id. § 57-1-23. According to Mr. Kleinsmith's complaint, as a trustee he could "prepare trustee foreclosure sale documents, supervise their recording, service, mailing and posting and supervise a crier to conduct foreclosure sales, all without ... personally being present in the state of Utah." Aplt.App. at 126. Although Mr. Kleinsmith's only office is in Colorado Springs, Colorado, he has gained admission to practice law in 26 states, with the aim of building a national practice as a foreclosure trustee. One state where he is admitted is Utah, whose bar he joined in 1989. From 1998 to 2001 he earned more than $50,000 annually from Utah work relating to trust-deed foreclosures, but his income from this source "has declined to virtually nothing." Reply Br. at 3. He attributes the decline to amendments to the Utah statute governing the qualifications for trustees of trust deeds.
The initial amendment that harmed his business became effective in April 2001. It required licensed Utah attorneys to reside in the state in order to qualify as trustees. See 2001 Utah Laws ch. 236 § 2. Mr. Kleinsmith successfully challenged the constitutionality of the residency requirement under the Privileges and Immunities Clause of Article IV of the Constitution. See Kleinsmith v. Shurtleff, No. 2:01cv0310 ST, slip op. at 15 (D.Utah Aug. 13, 2001) (Aplt.App. at 47).
The legislature then amended the statute effective May 6, 2002, to require that attorney trustees either reside in Utah or "maintain[] a bona fide office in the state." 2002 Utah Laws ch. 209 § 1. The amendment defined a bona fide office as a physical office open to the public and staffed during regular business hours, at which a trustor could request information and deliver funds in person. Mr. Kleinsmith again challenged the statute's constitutionality and again prevailed, this time on the ground that it violated the federal Constitution's dormant Commerce Clause by discriminating against out-of-state economic interests. See Kleinsmith v. Shurtleff, No. 2:03-CV-63TC, slip op. at 1-2 (D.Utah July 3, 2003).
In response, the Utah legislature amended the statute a third time. See 2004 Utah Laws ch. 177 § 1. Since May 2004 the law has required Utah-licensed attorneys who wish to act as trustees of trust deeds to
maintain[] a place within the state where the trustor or other interested parties may meet with the trustee to:
(A) request information about what is required to reinstate or payoff the obligation secured by the trust deed;
(B) deliver written communications to the lender as required by both the trust deed and by law;
(C) deliver funds to reinstate or payoff the loan secured by the trust deed; or
(D) deliver funds by a bidder at a foreclosure sale to pay for the purchase of the property secured by the trust deed.
Utah Code Ann. § 57-1-21(1)(a)(i).1 The statute does not further define maintain or place. Although the term is no longer relevant to attorney trustees, the statute retains its definition of bona fide office, see id. at § 57-1-21(1)(b), because a title-insurance company is required to have one to qualify as a trustee of trust deeds, see id. at § 57-1-21(1)(a)(iv)(C).
Mr. Kleinsmith filed this suit in May 2006. Two weeks later he moved for summary judgment. He asserted that certain facts were undisputed but did not submit affidavits or other evidence in support of his motion. The Attorney General filed his own motion for summary judgment. After a hearing the district court denied Mr. Kleinsmith's motion and granted the Attorney General's. Mr. Kleinsmith filed a motion to reconsider in which he raised for the first time an argument that the statute is unconstitutionally vague. The court denied the motion.
We review de novo a district court's decision to grant summary judgment, viewing all facts in the light most favorable to the party opposing summary judgment. See Jacklovich v. Simmons, 392 F.3d 420, 425 (10th Cir.2004). We will affirm a grant of summary judgment if there is no genuine issue of material fact and the prevailing party is entitled to judgment under the law. See id. at 426; Fed.R.Civ.P. 56(c).
Section 57-1-21(1)(a)(i) requires an attorney trustee to "maintain[] a place within the state where the trustor or other interested parties may meet with the trustee to" request information or deliver funds or written communications. The term maintain a place is not defined in the statute. About all that we can readily infer is that maintaining a place is less onerous than maintaining a bona fide office, as required by the previous version of the statute, which was amended in response to Mr. Kleinsmith's successful challenge to its bona-fide-office requirement. The statute, both before and after the most recent amendment, defines a bona fide office as
a physical office in the state ... that is open to the public; ... staffed during regular business hours on regular business days; and ... at which a trustor of a trust deed may in person: ... request information regarding a trust deed; or ... deliver funds, including reinstatement or payoff funds.
Utah Stat. Ann. § 57-1-21(1)(b). The district court's opinion granting summary judgment did not attempt to provide a complete definition of maintain a place, but it offered the following observations when addressing Mr. Kleinsmith's Commerce Clause argument:
[The statute] does not prohibit attorney-trustees from sharing office space or other resources, such as support staff, with other parties. Moreover, [the provision regulating attorney trustees] and the Statute as a whole do not require that the place maintained by attorney-trustees be open to the public during all regular business hours on all regular business days, as required of title-company-trustees, and do not unreasonably restrict out-of-state attorney-trustees from also maintaining a practice or working in other states.
Aplt.App. at 269. (The court also noted that resident attorney-trustees could use their homes as their "places" under the statute; but it is not clear to us that many attorneys would wish to disclose their home addresses to people threatened with foreclosure, much less meet them for business at their homes.)
A statute violates the due-process guarantee of the Fourteenth Amendment if it "forbid[s] or requir[es] conduct in terms so vague that [persons] of common intelligence must necessarily guess at its meaning and differ as to its application." Baggett v. Bullitt, 377 U.S. 360, 367, 84 S.Ct. 1316, 12 L.Ed.2d 377 (1964). On appeal Mr. Kleinsmith contends that § 57-1-21(1)(a)(i) is void because the word place in the statutory text "and as interpreted by [the district court]" is unconstitutionally vague. Aplt. Br. 18. But he did not raise a vagueness challenge in his motion for summary judgment or in his response to Mr. Shurtleff's cross-motion. He first mentioned vagueness in his motion to reconsider the summary judgment against him, and even then it was only a passing reference in his challenge to the district court's rejection of his earlier arguments. The court did not address the issue in its one-page ruling on that motion.
We decline to reach the merits of Mr. Kleinsmith's vagueness claim. His failure to raise a vagueness challenge to the statute before the district court entered summary judgment bars such a challenge on appeal. See FDIC v. Noel, 177 F.3d 911, 915 (10th Cir.1999). Of course, if the district court had exercised its discretion to address that challenge in Mr Kleinsmith's motion for reconsideration, the matter would be preserved for appeal. See Holland v. Big River Minerals Corp., 181 F.3d 597, 605 (4th Cir.1999); Quest Med., Inc. v....
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