Berneike v. CitiMortgage, Inc. , 708 F.3d 1141 ( 2013 )


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  •                                                                      FILED
    United States Court of Appeals
    Tenth Circuit
    PUBLISH                    February 25, 2013
    Elisabeth A. Shumaker
    UNITED STATES COURT OF APPEALS                Clerk of Court
    TENTH CIRCUIT
    ADRIANA BERNEIKE,
    Plaintiff-Appellant,
    v.                                                    No. 11-4210
    CITIMORTGAGE, INC.,
    Defendant-Appellee.
    APPEAL FROM THE UNITED STATES DISTRICT COURT
    FOR THE DISTRICT OF UTAH
    (D.C. No. 2:11-CV-00614-BCW)
    Brian W. Steffensen of Steffensen Law Office, Salt Lake City, Utah, 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, Utah, 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. 1 See, 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
    1
    Facts are primarily taken from Berneike’s complaint. See McDonald v.
    Kinder-Morgan, Inc., 
    287 F.3d 992
    , 997 (10th Cir. 2002) (accepting all
    well-pleaded factual allegations in the complaint as true when reviewing a district
    court’s grant of a motion to dismiss).
    2
    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
    3
    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 (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 (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
    2
    The motion to dismiss was referred to a magistrate judge pursuant to
    Rule 73 and 
    28 U.S.C. § 636
    (c). Parties Consent, Berneike v. CitiMortgage, No.
    2:11-cv-00614-BCW (D. Utah July 1, 2011), ECF 10. For simplicity’s sake, the
    order appealed will be referred to as the district court’s order.
    4
    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).
    III
    RESPA 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
    5
    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
    3
    In implementing RESPA pursuant to § 2617, the Secretary of the
    Department of Housing and Urban Development (HUD) promulgated 
    24 C.F.R. § 3500.21
    . On July 21, 2011, the Bureau of Consumer Financial Protection
    (Bureau) assumed HUD’s consumer-protection function under RESPA pursuant to
    the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No.
    111-203, 
    124 Stat. 1376
    . Thereafter, the Bureau adopted HUD’s previous
    regulation, including Regulation X. See 12 C.F.R. 1024.21. The Dodd-Frank
    Act, among other changes, decreased the response time in § 2605(e) from twenty
    days to five and from sixty days to thirty days, but has not yet taken effect. See
    Pub. L. 111-203 §§ 1400(c), 1463, 
    124 Stat. 1376
    , 2183-84 (stating that “a
    section, or provision thereof, of this title shall take effect on the date on which the
    final regulations implementing such section, or provision, take effect” or, if no
    regulations have been issued, “on the date that is 18 months after the designated
    transfer date,” July 21, 2011, which would be January 21, 2013). On January 17,
    2013, the Bureau issued a final rule implementing the Dodd-Frank amendments to
    RESPA and amending Regulation X, with an effective date of January 10, 2014.
    6
    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 (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
    7
    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 reversible error for the district court to consider
    the RESPA notice and address that were contained in the Welcome Letter because
    the same notice containing the correct QWR address was also set forth in the
    monthly billing statements, which were properly before the court. 4 Berneike does
    4
    Berneike does not dispute that Citi gave sufficient notice of the required
    address, and we assume for present purposes that the notice was sufficient.
    8
    not dispute that this notice was contained in each of her monthly billing
    statements, and she explicitly referenced the monthly statements in her complaint.
    It was proper for the district court to consider the referenced monthly statements
    that included the RESPA notice and required QWR address.
    2. Waiver
    Berneike next argues that Citi waived its right to receive QWRs at the
    designated address by corresponding with her. Berneike cites no supporting
    authority for this argument, and does not dispute the validity or application of
    RESPA’s implementing regulation, which authorizes a mortgage servicer to
    designate an exclusive address for receipt of QWRs. Aplt. Br. at 22-23; see Fed.
    R. App. P. 28(a)(9) (requiring appellant’s brief identify “appellant’s contentions
    and the reasons for them, with citations to the authorities and parts of the record
    on which the appellant relies”). Citi counters that no waiver occurred because
    “waiver must be distinctly made.” Aplee. Br. at 29 (citing Meadow Valley
    Contractors., Inc. v. Utah Dep’t of Transp., 
    266 P.3d 671
     (Utah 2011)).
    While a party may voluntarily relinquish or surrender a known right, the
    relevant inquiry is not whether Citi waived its right to receive QWRs at its
    designated address simply by responding to Berneike’s correspondence. See
    Yates v. Am. Republics Corp., 
    163 F.2d 178
    , 180 (10th Cir. 1947). Rather, the
    inquiry is whether the correspondence satisfies the RESPA requirements such that
    Citi’s duties under § 2605 were triggered.
    9
    Citi relies on two unpublished district court cases concluding that RESPA
    duties are not triggered when the correspondence is not sent to the designated
    address. Steele v. Green Tree Serv., LLC, No. 3:09-CV-0603-D, 
    2010 WL 3565415
    , at *3 (N.D. Tex. Sept. 7, 2010), aff’d, 453 F. App’x 473 (5th Cir.
    2011), cert. denied, 
    133 S. Ct. 111
     (2012); Bally v. Homeside Lending, Inc., No.
    02 C 5799, 
    2005 WL 2250856
     (N.D. Ill. Sept. 8, 2005). In Bally, the plaintiff,
    like Berneike, faxed her letters to the servicer, which the district court concluded
    failed to trigger the defendant’s RESPA duties, even if the servicer actually
    received the fax. 
    2010 WL 2250856
    , at *2-3. Similarly, the district court in
    Steele also concluded that letters sent to a nondesignated address failed to trigger
    RESPA duties and amounted to “informal avenues to obtain other information.”
    
    2010 WL 3565415
    , at *3. While these courts have held that failing to address a
    QWR to the designated address bars a § 2605 claim under RESPA, regardless of
    actual receipt, at least one district court has excused failure to use the designated
    address when the servicer actually received the QWR. 5 Because we afford
    Regulation X controlling weight, we find persuasive those cases that conclude
    that a servicer’s receipt of a QWR at the designated address is required to trigger
    5
    Compare Vought v. Bank of Am., NA, No. 10-2052, 
    2010 WL 4683599
    ,
    at *5 (C.D. Ill. Sept. 24, 2010) (concluding RESPA’s use of “receive”
    unambiguous and the plaintiff’s failure to use the designated address not fatal to
    her claim), with Steele v. Green Tree Serv., LLC, No. 3:09-CV-0603-D, 
    2010 WL 3565415
    , at *3 (N.D. Tex. Sept. 7, 2010) (concluding that “[t]he meaning of
    ‘receive’ in RESPA is ambiguous, and the regulation provides an interpretation
    that is neither arbitrary nor capricious”).
    10
    RESPA duties and liability under § 2605.
    When reviewing an agency’s construction of a statute it administers, we
    apply the well-known, two-step analysis articulated in Chevron, U.S.A., Inc. v.
    Natural Res. Def. Council, Inc., 
    467 U.S. 837
     (1984). First, “[i]f the intent of
    Congress is clear, that is the end of the matter; for the court, as well as the
    agency, must give effect to the unambiguously expressed intent of Congress.” 
    Id. at 842-43
    . If the statute is silent or ambiguous on the issue, we proceed to step
    two and ask “whether the agency’s answer is based on a permissible construction
    of the statute.” 
    Id. at 843
    . So long as the agency’s construction is not “arbitrary,
    capricious, or manifestly contrary to the statute,” that construction will stand. 
    Id. at 843-44
    .
    When determining whether Congress has expressly spoken to the issue,
    under the first prong of Chevron, we “look[] to, among other things, the statutory
    text, history, and purpose.” United Keetooway Band of Cherokee Indians of
    Okla. v. U.S. Dep’t of Hous. & Urban Dev., 
    567 F.3d 1235
    , 1239-40 (10th Cir.
    2009). Beginning, as we must, with the plain language of the statute, § 2605(e)
    states that liability is triggered by receipt of the QWR. RESPA does not define
    “receipt,” or discuss the use of a designated address for QWRs. See §§ 2602,
    2605(e), (i). Accordingly, a servicer’s authority to designate an address for
    receipt of QWRs is not directly addressed by RESPA. Nor does the structure of §
    2605 or its legislative history provide any clarity on this issue.
    11
    Congress enacted RESPA to effectuate “significant reforms in the real
    estate settlement process . . . to insure that consumers throughout the Nation are
    provided with greater and more timely information on the nature and costs of the
    settlement process and are protected from unnecessarily high settlement charges
    caused by certain abusive practices.” § 2601(a). Originally, “settlement process”
    in RESPA included negotiation and execution of mortgage contracts, but in 1990,
    RESPA was amended to include loan servicing. Section 2605 was enacted as an
    amendment to RESPA in 1990, by the Cranston-Gonzalez National Affordable
    Housing Act and amended one year later. Pub. L. No. 101-625, § 941, 
    104 Stat. 4079
    ; S. Rep. No. 101-17125 (1990) (Conf. Rep.), 136 Con. Rec. S17125-01
    (discussing the possible addition of “or” at the end of § 6(e)(2)(A)). This
    legislative history does little to inform the issue. Because Congress has not
    “directly addressed the precise question at issue,” we proceed to ask whether the
    agency’s interpretation is a permissible construction of the statute. Chevron, 
    467 U.S. at 842-43
    .
    Congress empowered HUD (and subsequently the Bureau) to “prescribe
    such rules and regulations, to make such interpretations . . . as may be necessary
    to achieve the purposes of this chapter.” 
    12 U.S.C. § 2617
    . And HUD exercised
    that authority by promulgating 
    24 C.F.R. § 3500.21
    , pursuant to notice and
    comment rulemaking, which granted servicers the authority to designate an
    exclusive address for receipt of QWRs under (e)(1) of the implementing
    12
    regulations of RESPA. See Real Estate Settlement Procedures Act, Section 6, 
    59 Fed. Reg. 65442
    -01, 65445-46 (Dec. 19, 1994) (responding to comments
    regarding the designated address by stating that “[t]his rule does not require that a
    servicer establish an office to handle borrowers’ complaints. It does, however,
    allow the servicer to do so. In the event the servicer establishes such an office
    and complies with all the necessary notice provisions of this rule, then the
    borrower must deliver its request to that office in order for the inquiry to be a
    ‘qualified written request.’”).
    Regulation X’s grant of authority to servicers to designate an exclusive
    address is a permissible construction of RESPA. Section 2605(e)(2) delineates
    what correspondence qualifies as a QWR, which recognizes that servicers will not
    have a statutory duty to respond to all inquiries or complaints from borrowers.
    Failure to send the QWR to the designated address “for receipt and handling of
    [QWRs]” does not trigger the servicer’s duties under RESPA. See Regions Hosp.
    v. Shalala, 
    522 U.S. 448
    , 457 (1998) (concluding that so long as “the agency’s
    reading fills a gap or defines a term in a reasonable way in light of the
    Legislature’s design, we give that reading controlling weight, even if it is not the
    answer the court would have reached if the question initially had arisen in a
    judicial proceeding” (quotation omitted)). RESPA was intended to reform the
    real estate settlement process to give consumers “greater and more timely
    information,” and allowing a servicer to designate an exclusive address where
    13
    such requests can be handled does not undermine this goal. See Watt v. GMAC
    Mortg. Corp., 
    457 F.3d 781
    , 783 (11th Cir. 2006). Therefore, we accord
    Regulation X controlling weight.
    Berneike admits that she did not mail her correspondence to the designated
    address, arguing instead that Citi waived its statutory right to receive all future
    QWRs at its specified address because it responded without asserting Berneike’s
    correspondence was sent to the wrong address. This argument is not persuasive.
    RESPA and its implementing regulation envisioned that only certain
    communications would trigger liability for damages under § 2605, and delineated
    certain requirements for communications before imposing that liability. See, e.g.,
    Medrano v. Flagstar Bank, FSB, ___ F.3d ___, No. 11-55412, 
    2012 WL 6183549
    ,
    at *4 (9th Cir. Dec. 11, 2012). Communication failing to meet the requirements
    of RESPA and its implementing regulation amounts to nothing more than general
    correspondence between a borrower and servicer. Receipt at the designated
    address is necessary to trigger RESPA duties, and Citi did not receive Berneike’s
    letters at the designated address. Accordingly, the district court did not err in
    dismissing Berneike’s RESPA claim.
    Utah Consumer Sales Practices Act
    Berneike next contends that the district court erred by dismissing her state
    14
    consumer protection claim. 6 Specifically, she disagrees with the district court’s
    conclusion that the Utah Consumer Sales Practices Act (UCSPA) did not apply to
    mortgage loan transactions and that she was barred from asserting a UCSPA claim
    because the conduct she complained of is governed by other, more specific law.
    The Utah Supreme Court has not ruled on whether the UCSPA applies to loan
    servicing; therefore, “our task here is to interpret and apply the law of [Utah] as
    we believe the [Utah] Supreme Court would.” High Plains Natural Gas Co. v.
    Warren Petroleum Co., 
    875 F.2d 284
    , 288 (10th Cir. 1989); see United States v.
    DeGasso, 
    369 F.3d 1139
    , 1145 (10th Cir. 2004) (“It is axiomatic that state courts
    are the final arbiters of state law.”). Because we agree with the district court that
    the Utah Supreme Court case Carlie v. Morgan, 
    922 P.2d 1
     (Utah 1996), controls
    here, we need not decide whether the UCSPA applies to mortgage loan servicing.
    The UCSPA “protect[s] consumers from suppliers who commit deceptive
    and unconscionable sales practices.” 
    Utah Code Ann. § 13-11-2
    (2). This act is
    “construed liberally,” “to make state regulation of consumer sales practices not
    6
    Citing no authority, Berneike asserts the district court lost subject matter
    jurisdiction over the state law claims once it dismissed her RESPA claim. Aplt.
    Br. at 23-24. We disagree. Pursuant to 
    28 U.S.C. § 1367
    , “district courts may
    decline to exercise supplemental jurisdiction over a claim . . . if . . . the district
    court has dismissed all claims over which it has original jurisdiction.” § 1367(c).
    See also Carlsbad Tech., Inc. v. HIF Bio, Inc., 
    556 U.S. 635
    , 640 (2009) (“[T]he
    district court’s exercise of its discretion under § 1367(c) is not a jurisdictional
    matter. Thus, the court’s determination may be reviewed for abuse of discretion,
    but may not be raised at any time as a jurisdictional defect.” (alteration and
    quotation omitted)).
    15
    inconsistent with the policies of the Federal Trade Commission Act relating to
    consumer protection.” § 13-11-2(4) (footnote omitted). Violative conduct can
    occur “before, during, or after the transaction,” but the supplier must have
    knowingly or intentionally committed the deceptive act or practice or the
    supplier’s conduct must be unconscionable. §§ 13-11-4 to -5.
    While the Utah Supreme Court has not explicitly decided whether a
    borrower can assert a USCPA claim when the Utah statutes governing mortgage
    loan servicing and trust deeds govern the complained-of conduct, it has ruled that
    a USCPA claim is barred when the complained-of conduct was governed by other,
    more specific law. In Carlie, the Utah Supreme Court determined that a more
    specific statute, the Utah Fit Premises Act, provided a remedy for the
    complained-of conduct and held that, pursuant to its “long-standing rule of
    statutory construction that ‘[s]pecific statutes control over more general
    ones,’ . . . [the] plaintiffs may not resort to the UCSPA under the facts alleged.”
    922 P.2d at 6 (first alteration in original) (citation omitted) (quoting State v.
    Lowder, 
    889 P.2d 412
    , 414 (Utah 1994)).
    Similar to the facts in Carlie, “the UCSPA does not explicitly include or
    exclude” mortgage loan transactions and the alleged wrongful conduct is
    governed by more specific statutes than the UCSPA. 7 
    Id.
     Cf. Woodhaven
    7
    See McGinnis v. GMAC Mortg. Corp., No. 2:10-cv-00301-TC, 
    2010 WL 3418204
    , at *6 (D. Utah Aug. 27, 2010) (concluding that the defendants’ conduct
    (continued...)
    16
    Apartments v. Washington, 
    942 P.2d 918
    , 923-24 (Utah 1997) (finding Carlie’s
    holding distinguishable because no “other specific laws . . . appl[ied] to
    landlord/tenant transactions”), abrogated on other grounds by Commercial Real
    Estate Inv., L.C. v. Comcast of Utah II, Inc., 
    285 P.3d 1193
    , 1202 (Utah 2012).
    Mortgage loan servicing is highly regulated under Utah statutory law. See, e.g.,
    Mortgage Lending and Servicing Act, Utah Code Ann. §§ 70D-2-304, -501
    (specifying rules for mortgage servicing, such as providing the mortgagor a
    statement detailing the account and imposing civil and criminal liability for
    violation); id. § 70D-1-102 (defining “Mortgage” as a “mortgage or deed of trust
    affecting real property located in this state.”). Likewise, deeds in trust are also
    highly regulated under Utah statutory law. See, e.g., 
    Utah Code Ann. § 57-1-1
    ,
    -19 to -36. We conclude that Berneike is barred from asserting a USCPA claim
    pursuant to the principles articulated by the Utah Supreme Court in Carlie.
    Wankier v. Crown Equip. Corp., 
    353 F.3d 862
    , 867 (10th Cir. 2003) (“The federal
    court must defer to the most recent decisions of the state’s highest court.”).
    Because Berneike is barred from asserting a UCSPA claim based on Utah
    Supreme Court precedent rather than federal preemption, Berneike’s federal
    preemption argument is not persuasive. Accordingly, dismissal of Berneike’s
    7
    (...continued)
    was “governed by the more specific Utah High Cost Home Loan Act, and
    Mortgage Lending and Servicing Act,” which precluded application of UCSPA);
    Burnett v. Mortg. Elec. Registration Sys., No. 1:09-cv-00069DAK, 
    2009 WL 3582294
    , at *4-5 (D. Utah Oct. 27, 2009).
    17
    UCSPA claim, as pled, was warranted. 8
    Remaining Claims
    Berneike asserts the district court erred in dismissing her contract claim.
    Under Utah law, to establish a breach of contract, a plaintiff must show: (1) the
    existence of a contract, (2) her performance of that contract, (3) breach of the
    contract by the other party, and (4) damages. Bair v. Axiom Design, L.L.C., 
    20 P.3d 388
    , 392 (Utah 2001). Berneike contends that she sufficiently pled her
    fulfillment of the contract and Citi’s breach. The district court concluded that her
    allegations did not satisfy the pleading requirements in light of her failure to
    include how Citi breached the contract, which contractual provisions were
    violated, and how Berneike upheld her end of the agreement.
    We agree that, as pled, Berneike’s claims are based on legal conclusions
    without sufficiently alleged supporting facts. See Aplt. App. at 10-11. She
    provides scant factual basis for the performance or breach of any contract
    8
    Berneike argues that two Utah Court of Appeals cases have held that
    mortgage transactions fall within the UCSPA’s scope, despite Carlie’s holding.
    Aplt. Br. at 25. But the trial court in Estrada v. Mendoza, 
    275 P.3d 1024
     (Utah
    Ct. App. 2012), concluded that the plaintiffs waived their claims by failing to
    appeal the issuance of the writ of garnishment via the state procedure, and the
    Utah Court of Appeals discussed whether the plaintiffs could assert a UCSPA
    claim procedurally, not the merits of their UCSPA claim. 
    Id.
     at 1028 & n.6.
    Likewise, the court in Martinez v. Best Buy Co., 
    283 P.3d 521
     (Utah Ct. App.
    2012), found that the plaintiffs had not sufficiently shown that the defendants’
    acted with knowledge or intent to deceive. 283 P.3d at 524-25. While the
    plaintiffs in Martinez were credit-card applicants and the defendants were Best
    Buy employees initiating a credit-card account, Martinez does not hold that the
    UCSPA applies to mortgage loan servicing. See id. at 524, 526.
    18
    between herself and Citi. Khalik, 671 F.3d at 1193 (“While ‘specific facts are not
    necessary,’ some facts are.” (quoting Erickson v. Pardus, 
    551 U.S. 89
    , 93 (2007)
    (alteration and citation omitted))). Accordingly, the district court did not err by
    dismissing Berneike’s breach of contract claim.
    Leave to Amend
    Finally, Berneike asserts the district court erred by dismissing her claims
    with prejudice and denying her leave to amend. Rule 15(a) states that leave to
    amend should be “freely give[n] . . . when justice so requires,” but a “district
    court may dismiss without granting leave to amend when it would be futile to
    allow the plaintiff an opportunity to amend [her] complaint.” Brereton v.
    Bountiful City Corp., 
    434 F.3d 1213
    , 1219 (10th Cir. 2006). For reasons
    previously discussed, Berneike’s RESPA and UCSPA claims would still be
    subject to dismissal even if amended, rendering leave to amend futile. Anderson
    v. Suiters, 
    499 F.3d 1228
    , 1238 (10th Cir. 2007). The district court did not abuse
    its discretion by denying Berneike leave to amend her contract claim since she
    failed to give “adequate notice to the district court and to the opposing party of
    the basis of the proposed amendment.” Calderon v. Kan. Dep’t of Social &
    Rehab. Servs., 
    181 F.3d 1180
    , 1186-87 (10th Cir. 1999); Aplt. App. at 183.
    Accordingly, the district court did not err by dismissing Berneike’s claims
    without leave to amend.
    19
    IV
    For the foregoing reasons, the judgment of the district court is AFFIRMED.
    20
    

Document Info

Docket Number: 11-4210

Citation Numbers: 708 F.3d 1141

Judges: Briscoe, Gorsuch, Matheson

Filed Date: 2/25/2013

Precedential Status: Precedential

Modified Date: 8/6/2023

Authorities (20)

Yates v. American Republics Corporation , 163 F.2d 178 ( 1947 )

Calderon v. Kansas Department of Social & Rehabilitation ... , 181 F.3d 1180 ( 1999 )

Anderson v. Suiters , 499 F.3d 1228 ( 2007 )

United Keetoowah Band of Cherokee Indians of Oklahoma v. ... , 567 F.3d 1235 ( 2009 )

Wankier v. Crown Equipment Corp. , 353 F.3d 862 ( 2003 )

Gee v. Pacheco , 627 F.3d 1178 ( 2010 )

High Plains Natural Gas Company v. Warren Petroleum Company,... , 875 F.2d 284 ( 1989 )

Patrick R. McDonald and James P. Rode v. Kinder-Morgan, Inc.... , 287 F.3d 992 ( 2002 )

Brereton v. Bountiful City Corp. , 434 F.3d 1213 ( 2006 )

Cohen v. Longshore , 621 F.3d 1311 ( 2010 )

United States v. Schmitt Degasso , 369 F.3d 1139 ( 2004 )

Gff Corporation, an Oklahoma Corporation v. Associated ... , 130 F.3d 1381 ( 1997 )

Regions Hospital v. Shalala , 118 S. Ct. 909 ( 1998 )

Bell Atlantic Corp. v. Twombly , 127 S. Ct. 1955 ( 2007 )

Estrada v. Mendoza , 275 P.3d 1024 ( 2012 )

Erickson v. Pardus , 127 S. Ct. 2197 ( 2007 )

Tellabs, Inc. v. Makor Issues & Rights, Ltd. , 127 S. Ct. 2499 ( 2007 )

Ashcroft v. Iqbal , 129 S. Ct. 1937 ( 2009 )

Carlsbad Technology, Inc. v. HIF Bio, Inc. , 129 S. Ct. 1862 ( 2009 )

Chevron U. S. A. Inc. v. Natural Resources Defense Council, ... , 104 S. Ct. 2778 ( 1984 )

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