July 18, 2019

Archives for February 27, 2013

Tenth Circuit: District Court’s Dismissal of Plaintiff’s Claims Against Loan Servicer for Overcharges and Fees Was Proper

The Tenth Circuit published its opinion in Berneike v. Citimortgage on Monday, February 25, 2013.

Over a six-month period in 2010, Adriana Berneike (“Berneike”) faxed more than one hundred letters to Citimortage (“Citi”), claiming that, despite paying in full every bill she received, she continued to be overcharged by Citi and was facing foreclosure and bankruptcy. Citi acknowledged Berneike’s inquiries and responded that it believed her account was correctly serviced.

Berneike filed suit in Utah state court alleging in part that Citi’s conduct violated the Real Estate Settlement Procedures Act (“RESPA”) and the Utah Consumer Sales Practices Act (“UCSPA”). Citi 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. Berneike appealed the district court’s dismissal.


Berneike raised two arguments: first, she argued the district court erroneously considered documents outside of the pleadings to find that Citi had provided notice of its qualified written request (“QWR”) address for these types of complaints; and, second, that Citi waived its right to receive QWRs at the designated address by responding to her first round of faxed letters. It was undisputed that Berneike failed to send her correspondence to the correct QWR address.

Documents Outside the Pleadings.  Berneike claimed the district court erred when it considered Citi’s Welcome Letter, which included notice to Berneike 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). Although the Tenth Circuit concluded that the district improperly considered the Welcome Letter, it was not reversible error for the district court to do so because the same notice containing the correct QWR address was also set forth in the monthly billing statements, which were properly before the court.

Waiver.  Berneike next argued that Citi waived its right to receive QWRs at the designated address by corresponding with her. The Tenth Circuit concluded this was the incorrect inquiry. Rather, the correct inquiry was whether the correspondence satisfied the requirements of RESPA such that Citi’s duties thereunder were triggered. Because Congress has not directly addressed the precise question at issue, the Tenth Circuit proceeded to ask whether the agency’s interpretation was a permissible construction of the statute. HUD, the relevant agency, promulgated 24 C.F.R. § 3500.21, which granted servicers like Citi the authority to designate an exclusive address for receipt of QWRs.

The Tenth Circuit held that this grant of authority to servicers to designate an exclusive address was a permissible construction of the statute, since RESPA recognizes that servicers will not have a statutory duty to respond to all inquiries or complaints from borrowers, and that failure to send the QWR to the designated address does not trigger a servicer’s duties. Since receipt at the designated address is necessary to trigger RESPA duties, and it was undisputed that Citi did not receive Berneike’s letters at the designated address, the district court did not err in dismissing Berneike’s RESPA claim.


Berneike next contended that the district court erred by dismissing her state consumer protection claim. Specifically, she disagreed with the district court’s conclusion that 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. Since the Utah Supreme Court had not ruled on whether the UCSPA applies to loan servicing, the Tenth Circuit interpreted and applied the law of Utah as the Court believed the Utah Supreme Court would. While the Utah Supreme Court had not explicitly decided whether a borrower can assert a USCPA claim under these circumstances, it has ruled that a USCPA claim is barred when the complained-of conduct is governed by other, more specific law. Because the alleged wrongful conduct is governed by more specific statutes than the UCSPA, Berneike was barred from asserting a USCPA claim.

Dismissal AFFIRMED.

HB 13-1109: Correcting Language of Mandatory Protection Orders Against Criminals to Encompass Parole Period

On January 18, 2013, Rep. Perry Buck and Sen. Scott Renfroe introduced HB 13-1109 – Concerning the Application of Mandatory Protection Orders to ParoleesThis summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

Under current law, a mandatory protection order is created against any person charged with a criminal offense. The order restrains the person charged from harassing, molesting, intimidating, retaliating against, or tampering with any witness to or victim of the acts charged. The protection order remains in effect until final disposition of the action.

For the purposes of these provisions, the bill amends the definition of “until final disposition of the action” to clarify that a defendant shall not be deemed to have been released from incarceration until the defendant has also been discharged from any period of parole supervision that follows such incarceration. On Feb. 12, the House gave final approval of the bill; the bill is assigned to the Judiciary Committee in the Senate.

HB 13-1097: Changing Autopsy Requirements for Coroners Examining Bodies of People who Died Under Certain Circumstances

On January 17, 2013, Rep. Bob Gardner and Sen. Jeanne Nicholson introduced HB 13-1097 – Concerning the Duties of Coroners. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

In 2011, the general assembly enacted a law that requires coroners to perform a forensic autopsy or have a forensic autopsy performed under certain circumstances. As a result of that change, this bill repeals a provision that allows a coroner to ask a physician to make a scientific examination of the body of the deceased.

Current law allows a physician who is conducting a postmortem examination to remove the pituitary gland from the body of the deceased for medical research. The bill repeals this provision.

A coroner has additional legal duties when a person dies under certain circumstances that may require an investigation. The bill adds several additional duties and responsibilities for coroners when a person dies under those circumstances. On Feb. 20 the House gave final approval of the bill; the bill is assigned to the Senate Local Government Committee.

HB 13-1090: Setting Payment Requirements for Private and Public Construction Projects

On January 17, 2013, Rep. Randy Fischer and Sen. Lois Tochtrop introduced HB 13-1090 – Concerning Payment of Amounts Due Under a Construction AgreementThis summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill sets the following requirements for both private and public construction contracts:

  • The owner and contractor must make regular progress payments approximately every 30 days to contractors and subcontractors for work actually performed.
  • To receive the progress payments, the contractor and subcontractor must submit a progress payment invoice plus any required documents.
  • A contractor must pass on the progress payment to the subcontractor within five days or by the end of the billing cycle.
  • Interest accrues on unpaid progress payments.
  • A contract may extend a billing cycle to 60 days, but the contract must duly warn of this.
  • An owner or contractor may only retain five percent of each progress payment to ensure work is done properly.
  • If a subcontractor’s work is done before the whole project is done, the subcontractor may apply to be paid the retained five percent. The owner and contractor must pay the retainage if the work is done correctly and the subcontractor gives waivers and the proper documents.
  • A person who retains from a payment must give the contractor or subcontractor a chance to cure the default.
  • The owner and contractor must pay for changes made to the contract. If they cannot agree on the price, the person doing the work may bill monthly at cost plus 15 percent or terminate performance.
  • A contractor or subcontractor is authorized to suspend performance after 15 days notice if the owner or contractor fails to make progress payments.
  • After suspending performance, the contractor or subcontractor is obliged to resume work after being paid for the work and reasonable costs and interest.
  • A contractor or subcontractor may not suspend performance if the failure to make a payment is due to a failure of the contractor or subcontractor or a dispute about the construction.

The bill voids any provision in a construction contract that does not comply with these requirements. The bill is assigned to the Business, Labor, Economic, & Workforce Development Committee.

HB 13-1086: Changing Requirement for Record Preparation in Appeals to District Court

On January 16, 2013, Rep. Roger Wilson and Sen. Kevin Grantham introduced HB 13-1086 –  Concerning the Preparation of the Record in Appeals from County Court JudgmentsThis summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

Under current law, in county court civil or criminal actions that are appealed to the district court, the record on appeal must be completed within 42 days after judgment. The bill revises the process to require the record to be completed within 42 days after the filing of notice of appeal rather than of the judgment. The completed record shall be certified by the clerk of the court, not by a county court judge. The bill applies to appeals from judgments entered on or after July 1, 2013.The CBA LPC voted to support this legislation. On Feb. 7, the House gave final approval of the bill; the bill is assigned to the Judiciary Committee in the Senate.

Since this summary, the Senate Judiciary Committee referred the bill unamended to the consent calendar for the Senate Committee of the Whole.

HB 13-1085: Changing Restrictions on Possession of Weapons by Previous Felony Offenders to Only Restrict Certain Felony Offenders’ Possession of Weapons

On January 16, 2013, Rep. Perry Buck and Sen. Scott Renfroe introduced HB 13-1085 – Concerning Changes to the Crimes Eligible for Possession of Weapons by Previous OffendersThis summary is published here courtesy of the Colorado Bar Association’se-Legislative Report.

Under current law the crime of possession of weapons by previous offenders applies to all felony convictions. The bill limits the felony application to felonies under the victim’s rights act, burglary, arson, or any felony involving the use of force or the use of a deadly weapon. On Feb. 5, the Judiciary Committee took testimony and held the bill over for action only to a dater in the future.

HB 13-1084: Requiring State to Treat Previously-Licensed Child Care Facilities as Renewals When Issued New FEIN

On January 16, 2013, Rep. Brian DelGrosso and Sen. Linda Newell introduced HB 13-1084 – Concerning the Licensing Status of Entities Under the “Child Care Licensing Act” when a New Federal Employee Identification Number is IssuedThis summary is published here courtesy of the Colorado Bar Association’se-Legislative Report.

Under current law, when an entity licensed under the “Child Care Licensing Act” (a child care center, children’s resident camp, secure residential treatment center, residential child care facility, homeless youth shelter, day treatment center, specialized group facility, or child placement agency) is issued a new federal employee identification number (FEIN), the entity is required to fill out an original application for a license from the state department of human services (state department), thus triggering new inspections of the facility and criminal background checks of employees.

This bill requires the state department to treat a previously licensed entity that is issued a new FEIN as a renewal instead of requiring submission of an original application when the following occur:

  • The reason for the new FEIN is solely due to a change in the corporate structure;
  • The management or governing body of the entity remains the same as originally licensed; and
  • The facility or facilities are the same as those originally licensed.

The bill requires that only newly hired employees undergo criminal background checks. On Feb. 4, the Senate gave final approval of the bill; the bill is assigned to the House Health & Human Services Committee.