July 17, 2019

Archives for August 15, 2013

Tenth Circuit: Question of Jurisdiction Must First be Determined Before Issue of Interaction of Federal Banking and State Foreclosure Laws

The Tenth Circuit Court of Appeals published its opinion in Dutcher v. Matheson on Tuesday, August 13, 2013.

In 2011, Stuart T. Matheson, a Utah-based attorney, conducted a non-judicial foreclosure sale on behalf of ReconTrust against the Dutchers. After that sale, the Dutchers, along with the other named plaintiffs, filed a class-action lawsuit in Utah state court alleging that Matheson and his law firm, ReconTrust, and Bank of America violated Utah law as it applies to non-judicial foreclosures. The defendants sought to remove the case to federal court and filed a motion to dismiss based in part on federal preemption. The district court held that it had jurisdiction and dismissed the complaint for failure to state a claim.

Shortly thereafter, another district court in Utah concluded in a similar case that federal law did not preempt Utah state law. This led the plaintiffs in this case to file a motion for reconsideration. They also asked for leave to amend their complaint. The district court denied all motions. Plaintiffs appealed.

The central question was whether the court had subject matter jurisdiction to hear the case. A claim may be brought in federal court if the claim is one “arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. When determining whether a claim arises under federal law, the court examines the well pleaded allegations of the complaint and ignores potential defenses.

The plaintiffs’ complaint did not assert any cause of action premised upon a violation of a federal statute or the Constitution. But the doctrine of complete preemption provides an exception to the well pleaded complaint rule. When the federal statute completely preempts the state law cause of action, a claim that comes within the scope of that cause of action, even if pleaded in terms of state law, is in reality based on federal law. Complete preemption is rare.

In the Tenth Circuit, a claim of complete preemption demands a two-part analysis: the first question is whether the federal question 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. The court concluded, after reviewing the holdings of other circuits who have reviewed the issue, that the absence of a federal cause of action precluded the court from relying on complete preemption as a jurisdictional basis for the district court to act.

The district court held in the alternative that diversity jurisdiction provided a basis for its jurisdiction. In order to invoke diversity jurisdiction, a party must show that complete diversity of citizenship exists between the adverse parties and that the amount in controversy exceeds $75,000. Complete diversity is lacking when any of the plaintiffs has the same residency as even a single defendant. Here, the plaintiffs and some of the defendants—Matheson and his law firm—shared a state of residency: Utah. The court was not persuaded that some of the defendants had been fraudulently joined.

Accordingly, the Tenth Circuit VACATED the district court’s dismissal of this action and the denial of the plaintiffs’ motions for reconsideration and to amend. The court REMANDED with instructions for the district court to determine whether it has jurisdiction to act.

Colorado Court of Appeals: Announcement Sheet, 8/15/13

On Thursday, August 15, 2013, the Colorado Court of Appeals issued seven published opinions and 37 unpublished opinions.

People v. Presson

People v. Russell

People v. Johnson

Mountain-Plains Investment Corp. v. Parker Jordan Metropolitan District

Yotes, Inc. v. Industrial Claim Appeals Office

CapitalValue Advisors, LLC v. K2D, Inc.

Winter v. Industrial Claim Appeals Office

Summaries for these cases are forthcoming, courtesy of The Colorado Lawyer.

Neither State Judicial nor the Colorado Bar Association provides case summaries for unpublished appellate opinions. The case announcement sheet is available here.