Dutcher v. Matheson
2013 U.S. App. LEXIS 16685
| 10th Cir. | 2013Background
- Plaintiffs (including Richard and Gwen Dutcher) filed a Utah class action alleging ReconTrust (a Texas-based national bank), Bank of America, and Utah counsel Stuart Matheson unlawfully conducted non‑judicial foreclosures in violation of Utah Code § 57‑1‑21 and related state causes of action.
- Defendants removed to federal court asserting federal-question jurisdiction (complete preemption by federal banking law, 12 U.S.C. § 92a), diversity jurisdiction, and CAFA jurisdiction; defendants also moved to dismiss on preemption grounds.
- The district court concluded it had federal-question and diversity jurisdiction and dismissed the complaint for failure to state a claim; it later denied plaintiffs’ motions for reconsideration and to amend and denied Utah’s motion to intervene.
- On appeal the Tenth Circuit reviewed subject‑matter jurisdiction de novo and questioned whether the district court properly exercised jurisdiction at all.
- The Tenth Circuit held the district court lacked a proper basis to exercise jurisdiction on the record presented: complete preemption failed because § 92a does not provide a private federal cause of action; fraudulent‑joinder was not established as to the Utah attorney/firm (defeating diversity); and CAFA jurisdictional questions should be resolved in the first instance by the district court.
- The Tenth Circuit vacated the dismissal and related orders and remanded for the district court to determine jurisdiction (including CAFA), denying other ancillary requests as moot or premature.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal question jurisdiction exists via complete preemption of Utah foreclosure law by 12 U.S.C. § 92a | State law claims govern; no federal cause of action asserted | § 92a preempts state law; plaintiffs’ state claims are really federal | No: complete preemption fails because § 92a lacks an implied or statutory private right of action, so federal‑question jurisdiction not established |
| Whether defendants proved fraudulent joinder of Utah attorney/firm to obtain diversity jurisdiction | Plaintiffs allege independent torts by Utah attorney/firm; claims against them viable | Utah counsel is immune to non‑client claims absent fraud, collusion, or privity; thus they were fraudulently joined | No: defendants failed to meet heavy burden; Oxendine does not bar independent tort claims against counsel as agent, so complete diversity not shown |
| Whether CAFA provides federal jurisdiction | CAFA should apply to remove to federal court and support jurisdiction | Defendants asserted CAFA; district court did not decide it initially | Undecided on appeal: Tenth Circuit remanded for district court to resolve CAFA jurisdiction in the first instance |
| Whether district court properly exercised jurisdiction and decided merits/motions | Plaintiffs sought reconsideration and leave to amend after conflicting authority emerged | District court dismissed on merits and denied motions | Vacated: appellate court held district court erred in assuming jurisdiction and deciding merits without resolving jurisdictional defects; remand required |
Key Cases Cited
- Beneficial Nat’l Bank v. Anderson, 539 U.S. 1 (federal‑question / well‑pleaded complaint rule and complete preemption discussion)
- Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (courts must have jurisdiction before reaching merits)
- Devon Energy Prod. Co. v. Mosaic Potash Carlsbad, Inc., 693 F.3d 1195 (10th Cir.) (two‑part complete‑preemption framework)
- United States ex rel. Hafter v. Spectrum Emergency Care, Inc., 190 F.3d 1156 (10th Cir. 1999) (burden on removing party to establish jurisdiction)
- Oxendine v. Overturf, 973 P.2d 417 (Utah 1999) (Utah discussion of duties to non‑clients in lawyer malpractice context; interpreted narrowly)
- B.C. Recreational Indus. v. First Nat’l Bank of Boston, 639 F.2d 828 (1st Cir. 1981) (earlier circuit decision suggesting relief might be pursued under bank‑liability statutes)
- In re CoreStates Trust Fee Litig., 39 F.3d 61 (3d Cir. 1994) (analysis that § 92a is not part of the National Bank Act and limits on invoking § 93)
- Gilmore v. Weatherford, 694 F.3d 1160 (10th Cir.) (narrow scope of the "substantial question" federal‑question doctrine)