Bell v. Countrywide Bank, N.A.
2012 U.S. Dist. LEXIS 35530
D. Utah2012Background
- Plaintiffs allegedly defaulted on a promissory note secured by a Utah deed of trust on their primary residence.
- ReconTrust, as successor trustee, recorded a notice of default and election to sell on October 8, 2009.
- Plaintiffs filed suit challenging the prospective sale in Utah; the case was removed to federal court on diversity grounds.
- Plaintiffs sought leave to amend to address ReconTrust’s authority to foreclose and add promissory estoppel claims; amended complaint was filed September 15, 2011.
- Defendants moved to dismiss under Rule 12(b)(6) arguing plaintiffs exceeded the court’s leave to amend; the court addressed mootness and ReconTrust’s authority.
- The court held that ReconTrust lacks authority to conduct nonjudicial foreclosures in Utah and denied the dismissal motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the case is moot due to substitution of trustee | Plaintiffs may be subjected to ReconTrust's actions again; issue not moot | ReconTrust ceased operations; mootness applies | Not moot; live controversy remains |
| Whether ReconTrust has authority to foreclose nonjudicially in Utah | ReconTrust is unauthorized to foreclose in Utah | 12 U.S.C. § 92a and 12 C.F.R. § 9.7(d) permit nationwide fiduciary powers | ReconTrust not authorized to exercise power of sale in Utah; Utah law controls |
| Whether 12 C.F.R. § 9.7(d) deference under Chevron applies | Chevron deference should apply to OCC interpretation | OCC interpretation governs nationwide fiduciary power | Do not defer; Congress spoke to the precise issue; statute applies Utah law |
| What law governs ReconTrust’s foreclosure authority | Utah law applies; permits only certain entities to foreclose | National bank powers under § 92a preempt Utah law considerations | Utah law governs the power of sale; ReconTrust cannot foreclose nonjudicially in Utah |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading requires more than a mere recital of the elements)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility pleading standard applies after Twombly)
- First Nat'l Bank of Bay City v. Fellows, 244 U.S. 416 (U.S. 1917) (statutory interpretation considerations for national banks and state law)
- National Bank v. Commonwealth, 76 U.S. 353 (U.S. 1869) (dual banking system and state law interaction)
- Bank of Am. v. City & County of San Francisco, 309 F.3d 551 (9th Cir. 2002) (state vs federal influence on banking activities)
- Cuomo v. Clearing House Ass’n, 557 U.S. 519 (U.S. 2009) (Comptroller interpretation of statutes not always permissible)
- Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25 (U.S. 1996) (statutory preemption and competitive neutrality between banks)