May 21, 2013

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Tenth Circuit: Dismissal of Plaintiffs’ Claims in Foreclosure Action Affirmed

March 12, 2013 by Leave a Comment

The Tenth Circuit issued its opinion in Toone v. Wells Fargo Bank on Friday, March 8, 2013.

Bryan and JoLynne Toone executed a promissory note (the Note) secured by a deed of trust on their home (the Trust Deed). The Note was assigned several times. After the Toones defaulted on the Note, their home was scheduled to be sold at a trustee’s foreclosure sale. They filed suit to halt the foreclosure and to obtain damages and declaratory relief based on alleged violations of statutory and common law duties by numerous parties who had current or prior interests in the Note and Trust Deed or were involved in the foreclosure efforts. Defendants filed separate motions to dismiss under Fed. R. Civ. P. 12(b)(6), which the district court granted. The Toones appealed.

“A pleading that states a claim for relief 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 for relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

The heart of the Toones’ claims was the challenge to the various assignments of the Note. The gravamen of their complaint was the allegation that the purported endorsements on the Note were defective for many reasons, such that subsequent banks never legally became the owner/endorsee of the Note. The problem for the Toones is that their complaint did not adequately allege that the endorsements were improper. It asserted that the endorsements were invalid because the first was signed by an underwriting assistant for the assignee instead of the assignor, and the remaining ones were “robosigned.” However, the face of the Note contradicted the Toones’ allegations. Accordingly, the factual predicate of most of the Toones’ arguments on appeal is undermined.

Toones’ opening brief on appeal also asserted that the defendants committed multiple acts that constituted violations of the Fair Debt Collection Practices Act (FDCPA). The brief failed, however, to specify what those acts were. The issue was so inadequately treated in the argument sections of opening briefs, the Tenth Circuit concluded it did not deserve its attention.

The Toones next claimed that Wells Fargo violated the Real Estate Settlement Procedures Act  (RESPA) by not responding to their written requests for information. To survive a Rule 12(b)(6) motion to dismiss a claim under § 2605(e) of RESPA, plaintiffs must plead actual damages stemming from the failure to respond to requests or a pattern or practice of misconduct. See Hintz v. JPMorgan Chase Bank, N.A., 686 F.3d 505, 510–11 (8th Cir. 2012).  The Tenth Circuit held this claim must fail due to the conclusory nature of the complaint.

AFFIRMED.

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Initial Discovery Protocols for Federal Employment Cases Being Tested in United States District Courts

February 19, 2013 by Leave a Comment

Diane_S_King_cutout

By Diane King

As of December 1, 2012, United States District Court Judge William Martinez has implemented the Initial Discovery Protocols for Employment Cases Alleging Adverse Action (“Protocols”). The Protocols are the product of a national committee of defense and plaintiff attorneys with the goal of creating pattern discovery for employment cases that would limit unnecessary cost and delay in the litigation process.

The Protocols would replace initial disclosures with initial discovery specific to employment cases alleging adverse action and provided automatically by both sides within 30 days of the defendant’s responsive pleading or motion. Although the Protocols would not affect parties’ subsequent right to discovery under F.R.C.P., they are meant to supersede the initial disclosures pursuant to F.R.C.P. 26(a)(1).

Instead of standard initial disclosures, the Protocols would require both plaintiff and defendant to provide discovery specific to employment cases. For example, the plaintiff will be required to produce any claims, lawsuits, administrative charges and complaints related to the factual allegations at issue in the lawsuit, as well as diaries, journals and calendar entries maintained by the plaintiff concerning the factual allegations of the suit. Conversely, the defendant will be required to produce all communications concerning the factual allegations of the claim, including those between the plaintiff and defendant, as well as between members of management and human resources. The defendant will also be required to produce the plaintiff’s personnel file, and any documentation of discipline.

The effectiveness of the Protocols are currently being tested by individual judges throughout the United States District Courts in a pilot project overseen by the Federal Judicial Center. For a PDF of Judge Martinez’s practice standards for civil and criminal matters, including the Protocols, click here.

Diane S. King is a trial attorney who practices exclusively in the area of plaintiff’s employment/civil rights law. She has represented plaintiffs in all areas of employment law, including federal court, state court, appellate court, arbitration and administrative proceedings. She has written and lectured frequently on employment law issues. She is a member of the National Employment Lawyers Association Executive Board, the Colorado Plaintiff Employment Lawyers Association Board, and numerous other professional boards. Ms. King is also a Fellow in the College of Labor and Employment Lawyers. Ms. King is a partner in the firm of King & Greisen, LLP. She received her Juris Doctorate from the University of California at Berkeley.

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

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Tenth Circuit: Summary Judgment Upheld Under Foreign Sovereign Immunities Act

February 7, 2013 by Leave a Comment

The Tenth Circuit published its opinion in Hansen v. PT Bank Negara Indonesia (Persero) Tbk.   on Tuesday, February 5, 2013.

The plaintiff-appellant, Theodore Hansen, owned gas stations, convenience stores, and other businesses. He decided to sell these assets and related liabilities to defendant Native American Refinery Company (“NARCO”) for $50 million. To secure its obligations, NARCO provided various financial instruments from PT Bank Negara Indonesia (BNI), some of which were bank guaranties, others were letters of credit. When NARCO failed to meet its obligations, Hansen contacted BNI, which refused to make payment and denied issuing or authenticating any of the instruments.

The district court granted BNI’s motion for summary judgment for lack of jurisdiction under the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. § 1604 (“FSIA”). BNI was majority-owned by the government of Indonesia so it was immune from suit in the United States under the FSIA unless plaintiffs met their burden of showing a FSIA exception applied. BNI argued the commercial activity exception did not apply. It had not engaged in commercial activity with the plaintiffs because all the instruments at issue were fraudulent.

Hansen had gotten a phone number from BNI from a BNI website and spoke to two individuals he believed to be BNI employees who confirmed the bank’s relationship with NARCO and the guaranties. Hansen argued the phone conversations were admissions of party-opponents under FRE 801 so the district court erred in finding they were inadmissible hearsay. The Tenth Circuit disagreed. It found the calls could not be authenticated under FRE 901 because there was no evidence the phone number was assigned to BNI by the telephone company. The court also found the website where Hansen got the phone number could did not have sufficient indicia of reliability to be self-authenticating under FRE 902.

The court also found no abuse of discretion in the district court’s exclusion of an affidavit from a man who claimed to have met with BNI officials in Indonesia on behalf of NARCO. The affidavit failed to meet the personal knowledge standard required by F.R.C.P. 56. The court affirmed the grant of summary judgment to BNI.

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Tenth Circuit: Dismissal of Declaratory Judgment Action Affirmed Due to Lack of Federal-Question Jurisdiction

August 24, 2012 by Leave a Comment

The Tenth Circuit Court of Appeals published its opinion in Devon Energy Production Co. v. Mosiac Potash Carlsbad, Inc. on Wednesday, August 22, 2012.

Plaintiff-Appellant Devon Energy Production Company, (“Devon”), an oil and gas production company, appealed the judgment of the United States District Court for the District of New Mexico, which dismissed Devon’s declaratory-judgment action against Defendant-Appellee Mosaic Potash Carlsbad, Inc. (“Mosaic”), a potash mining company, for lack of subject matter jurisdiction. Devon sought a declaratory judgment that federal law preempted Mosaic’s anticipated state-law claims emanating from Devon’s unauthorized drilling in a federally managed area of New Mexico, and that the only remedies available to Mosaic were derived from the federal administrative and judicial remedies of the Administrative Procedure Act (“APA”) and certain regulatory provisions of the U.S. Department of the Interior. The district court concluded there was no federal-question jurisdiction to support Devon’s action and dismissed its complaint, and subsequently denied Devon’s motion to alter or amend the judgment under Federal Rule of Civil Procedure 59(e). The Tenth Circuit affirmed.

To invoke federal-question jurisdiction, Devon had to show that at least one of two exceptions to the well-pleaded complaint rule was applicable—either (1) that Mosaic’s state-law claims were completely preempted, or (2) there was a substantial federal-law question embedded in Mosaic’s state-law claims.

Devon argued that federal jurisdiction was appropriate because Mosaic’s claims were completely preempted by the interplay betweeen the Mineral Leasing Act and the APA. Mosaic argued that there could not be complete preemption because no federal statute provided the foundation for preemption.

Complete preemption demands a two-part analysis: first, the Court asks whether the federal regulation at issue preempts the state law relied on by the plaintiff; and second, whether Congress intended to allow removal in such a case, as manifested by the provision of a federal cause of action to enforce the federal regulation. Courts should begin their inquiry with the second prong. The 10th Circuit held that the district court properly applied the second prong of complete-preemption test when it dismissed Devon’s complaint on the ground that the lack of a substitute federal remedy precluded a finding of complete preemption.

Devon also contended that even if the Court had not found that Mosaic’s claims were completely preempted, federal-question jurisdiction should still attach because of substantial and disputed federal issues that were embedded in Mosaic’s state-law claims.

The appropriate jurisdictional test is set forth in Grable & Sons —namely, whether the state-law claims raise a stated federal issue, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities. Grable & Sons held that ordinarily, federal-question jurisdiction is invoked by plaintiffs pleading a cause of action created by federal law.

The Court concluded that there was no actual dispute over the meaning of the federal law such that Devon’s claims could be be said to arise under federal law, and that at most they provided a federal defense to Mosaic’s state-law causes of action. Accordingly, the Court held that Grable & Sons did not provide Devon the basis to proceed in federal court.

Devon’s final claim was that the district court erred in denying its Rule 59(e) motion because Devon presented new evidence to the district court.

Where a party seeks Rule 59(e) relief to submit additional evidence, the movant must show either that the evidence was newly discovered, or if the evidence was available at the time of the decision being challenged, that counsel made a diligent yet unsuccessful effort to discover the evidence. Although Devon pointed to a number of specific facts that it claimed could not have been anticipated by the district court, it did not adequately explain why this evidence should have undermined the 10th Circuit’s confidence in the district court’s determination. The district court’s dismissal of Devon’s complaint and its order denying Devon’s Rule 59(e) motion were therefore affirmed.

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Tenth Circuit: No Legitimate Claim of Entitlement to Pre-Termination Hearing Under State Law

June 12, 2012 by Leave a Comment

The Tenth Circuit Court of Appeals published its opinion in Ribeau, Jr. v. Katt on Monday, June 11, 2012.

The Tenth Circuit affirmed the district court’s decision. Petitioner was hired as a maintenance mechanic for a school district in 1984. “Over the years, he was promoted, assumed various job titles, and took on supervisory duties.” Respondents, his supervisors, decided to terminate Petitioner’s employment based on his alleged poor work performance, and twice told Petitioner that the Board of Education had approved his termination. “Due to the [Respondents]’ representations, [Petitioner] believed he could not file a grievance because the Board had already approved his termination. The Board, however, had not yet given its approval. . . . During [Petitioner]’s employment, he signed 23 separate employment agreements. Each agreement stated that [Petitioner] was an at-will employee.” Petitioner sued Respondents, alleging that they had deprived him of his property interest in continued employment without due process of law, in violation of his rights under the Fourteenth Amendment. The district court held that because Petitioner was an at-will employee, he did not have a protected property interest in his continued employment.

Petitioner “moved to alter or amend the district court’s judgment under Rule 59(e) of the Federal Rules of Civil Procedure. He requested that the court address an ‘alternative property interest . . . separate and distinct from his alleged property interest in his continued employment.’ This property interest was an implied ‘contract right to be heard by the Board of Education itself before the Board decided to terminate [Petitioner's] employment.’ The district court denied [Petitioner]’s Rule 59(e) motion, and explained that Petitioner “did not have an implied right to be heard by the [B]oard” because the Handbook “does not provide for the right to be heard by the [B]oard before termination.”

The Tenth Circuit concluded that Petitioner had an express employment contract, and therefore Kansas courts would not recognize his implied-contract theory. “[A]ny entitlement [Petitioner] had to a pre-termination Board hearing must derive from his express employment contract. The language of that contract is unambiguous and does not provide for a pre-termination hearing before the Board. [Petitioner] therefore had no legitimate claim of entitlement to a pre-termination hearing under state law, and the district court was correct to dismiss his § 1983 claim.”

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Tenth Circuit: Tribe Failed to State a Claim that Oklahoma Cigarette Sale and Tax Laws Violate Federal Law or Tribal Sovereignty

February 29, 2012 by Leave a Comment

The Tenth Circuit Court of Appeals published its opinion in Muscogee (Creek) Nation v. Henry on Tuesday, February 28, 2012.

The Tenth Circuit affirmed the district court’s decision. Petitioner Tribe sued the Oklahoma Tax Commission seeking declaratory and injunctive relief based on numerous claims challenging three Oklahoma statutes that tax and regulate the sale of cigarettes and other tobacco products. “In Oklahoma, cigarette and other tobacco product sales to tribal members in Indian country are exempt from state taxes. To prevent non-tribal members from avoiding taxes on their purchases of such products in Indian country, Oklahoma adopted a tax-stamp scheme to ensure that taxes are collected for those sales. Oklahoma also requires tobacco product manufacturers either to enter into and make payments under a Master Settlement Agreement with the State or to pay a certain percentage of each sale into an escrow fund. Any brand of cigarette produced by a manufacturer that does not comply with these requirements is deemed contraband.” Petitioners object to these requirements as violative of federal law and tribal sovereignty, claiming that they are preempted by the Indian Trader Statutes and violate violate their right to tribal self-government. The district court dismissed the claims “based on the State’s Eleventh Amendment immunity or, alternatively, for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).”

The Court held that, based on Supreme Court precedent, the Tribe “has failed to state a plausible claim that the Excise Tax Statute is not valid and enforceable based either on preemption or on infringement of [their] right of tribal self-government.” The Tribe similarly failed to state a plausible claim that the Escrow Statute and the Complementary Act are invalid and unenforceable. While the district court erred in finding that immunity under the State’s Eleventh Amendment, it properly dismissed the claims for failure to state a claim.

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New Across-the-Board Procedure Rules for Calculating Trial and Appellate Deadlines Proposed by the Colorado Supreme Court

July 27, 2011 by Leave a Comment

The Colorado Supreme Court is requesting written public comments by any interested person on revisions to proposed new rules for calculating trial and appellate deadlines. Changes are being made to virtually every rule of procedure (civil, appellate, uniform water, probate, and criminal) – a daunting task undertaken by the Supreme Court to help simplify how one determines when pre- and post-trial actions must be taken. Most of the new rules will take effect at the start of 2012, with a few others kicking in July 2012  to allow for legislative review.

Public review and comment is seen as vital to these changes especially, as they are comprehensive; with such a vast number of rules to review, it is possible mistakes or inconsistencies escaped the notice of the Supreme Court’s rules committees. The Court asks that lawyers who appear in courts—civil, criminal, appellate, or other—review the applicable proposals and submit written comments to the Supreme Court by Friday, September 30, 2011 at 5:00 pm.

According to an advance article from The Colorado Lawyer, the changes again come as a response to revisions in the Federal Rules of Civil Procedure. The amended Colorado rules will adopt the federal rules’ multiples of 7 – or, multiples of a week. This change will virtually eliminate problems that arise when a deadline falls on a weekend; a response that is due in 21 days will always fall on the same weekday.

The revised Colorado rules, however, reject the federal standard of allowing an extra 3 days for mailing and e-service. The Colorado rules will adopt a 7-day standard for that as well.

As a result of these changes, most court deadlines were rounded up to closest 7-day period, with 10 days becoming 14 and 15 rounding up to 21. However, sometimes longer periods were shortened slightly when time frames were deemed important; 30 days before trial could now become 28 days before trial.

All trial and appellate lawyers are urged to review the new proposed rules to determine whether these new deadlines create unintended consequences that should be fixed before final action on the rules is taken.

An original plus eight copies of written comments concerning the proposed new rules should be submitted to the Clerk of the Colorado Supreme Court, Christopher T. Ryan, at 101 W. Colfax Avenue, Suite 800, Denver, Colorado 80202, no later than Friday, September 30, 2011 at 5:00 pm.

Click here to review The Colorado Lawyer article outlining the proposed changes to the rules. Click here to assist the Colorado Supreme Court and review the amended rules themselves.

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Tenth Circuit: Opinions, 2/24/11

February 24, 2011 by Leave a Comment

The Tenth Circuit on Thursday issued one published opinion and no unpublished opinions.

Published

In Scottsdale Ins. Co. v. Tolliver, the Court affirmed the district court’s decision. Petitioners’ dwelling, insured by Respondent, was destroyed by fire. Due to misrepresentations by Petitioners, Respondent did not cover the claim and, after extensive litigation, sought attorney fees, which the district court granted. Petitioners claim that the grant of attorneys fees was improper as the Oklahoma statute allowing such fees is in conflict with FCRP 68, and therefore in violation of Erie. However, the Court found that no such conflict exists here. Rule 68 was applicable to Respondent when it made its offer of judgment during trial, but became inapplicable when judgment was made in its favor. Oklahoma law then governed as the applicable substantive law entitling Respondent to attorney fees.

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2013-05-21 03:32:11