Dutcher v. Matheson
2016 U.S. App. LEXIS 19696
10th Cir.2016Background
- Plaintiffs (putative Utah class) sued ReconTrust (a Texas-chartered national bank subsidiary of Bank of America) and others in Utah state court, alleging illegal non-judicial foreclosures because ReconTrust lacked authority under Utah law to exercise the power of sale.
- Defendants removed under the Class Action Fairness Act (CAFA); the district court denied remand and granted defendants’ motion to dismiss, holding federal law authorized ReconTrust’s conduct.
- This Court in Dutcher I remanded for the district court to revisit CAFA jurisdiction; on remand the district court again found CAFA jurisdiction, denied jurisdictional discovery, and re-adopted its dismissal.
- Central legal question on the merits: which State’s law § 92a(a) incorporates when a national bank (ReconTrust) with fiduciary activity in multiple states conducts a foreclosure — Utah (plaintiffs) or Texas (defendants) — and whether the OCC regulation 12 C.F.R. § 9.7(d) governing that question is entitled to deference.
- The district court applied the OCC regulation, found the § 9.7(d) factors pointed to Texas, concluded Texas law permitted ReconTrust’s nonjudicial foreclosures, and dismissed the complaint.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court properly exercised CAFA jurisdiction (remand denial) | Dutcher: CAFA exceptions (local controversy, home-state, discretionary) apply and remand required | Defendants: CAFA thresholds met; exceptions do not apply (prior similar class action, not all primary defendants Utah citizens) | Affirmed: CAFA jurisdiction proper; plaintiffs failed to carry burden to trigger exceptions |
| Local controversy exception — whether a prior filed class action defeats the exception | Dutcher: Coleman did not bar exception because it was not a certified class action | ReconTrust: Coleman was filed as a class action with substantially similar factual allegations | Affirmed: Coleman was a prior filed class action with similar facts; fourth prong of exception failed |
| Home-state and discretionary exceptions — whether "the primary defendants are citizens of the State" requires all primary defendants to be Utah citizens | Dutcher: any primary defendant being Utah citizen suffices (Matheson/MMOJ are Utah citizens) | ReconTrust: "the primary defendants are" requires all primary defendants to be citizens of the state | Affirmed: "the primary defendants are" means all; plaintiffs cannot satisfy the prerequisite for remand |
| Whether ReconTrust had authority to foreclose under 12 U.S.C. § 92a(a) and whether OCC regulation 12 C.F.R. § 9.7(d) is controlling | Dutcher: § 92a(a)’s plain meaning points to Utah; alternatively, § 9.7(d) is an unreasonable Chevron interpretation and should not be applied | ReconTrust: § 92a(a) is ambiguous; OCC regulation applies (bank "located" where it accepts appointment, executes fiduciary documents, and makes discretionary fiduciary decisions); those acts occurred in Texas, so Texas law governs | Affirmed dismissal: § 92a(a) ambiguous; plaintiffs waived/failed to preserve Chevron challenge and application arguments; court adopted § 9.7(d) result that Texas law governs and ReconTrust had power of sale |
Key Cases Cited
- Coffey v. Freeport McMoran Copper & Gold, 581 F.3d 1240 (10th Cir. 2009) (CAFA jurisdiction and exceptions framework)
- Barnett Bank of Marion Cty., N.A. v. Nelson, 517 U.S. 25 (1996) (federal bank powers are subject to state law limitations)
- Chevron U.S.A., Inc. v. Nat’l Res. Def. Council, Inc., 467 U.S. 837 (1984) (agency deference framework)
- Dutcher v. Matheson, 733 F.3d 980 (10th Cir. 2013) (prior panel remand directing district court to determine CAFA jurisdiction)
- Woods v. Standard Ins. Co., 771 F.3d 1257 (10th Cir. 2014) (statutory-text interpretation of "the primary defendants" in CAFA exceptions)
- Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303 (2006) (term "located" can vary by context)
- Ron Pair Enters., Inc. v. United States, 489 U.S. 235 (1989) (statutory-interpretation principles)
- Fed. Nat’l Mortg. Ass’n v. Sundquist, 311 P.3d 1004 (Utah 2013) (state-court view rejecting OCC regulation's reach; discussed by the panel but not followed due to waiver)