Charlene BURNETT, Plaintiff-Appellant, v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; James H. Woodall, Defendants-Appellees.
No. 09-4216.
United States Court of Appeals, Tenth Circuit.
Feb. 1, 2013.
706 F.3d 1231
Peter J. Salmon of Pite Duncan LLP, San Diego, California, for Defendant-Appellee James H. Woodall.
SEYMOUR, Circuit Judge.
Charlene Burnett filed this action against James H. Woodall, Mortgage Electronic Registration Systems, Inc., and fifty unnamed individuals. The complaint asserted violations of the Fair Debt Collection Practices Act (FDCPA),
I.
In April 2007, Ms. Burnett purchased a home in Weber County, Utah.1 To finance this purchase, she obtained a loan from Academy Mortgage Corp. She signed a promissory note for repayment of the loan and secured it with a trust deed to the property. The trust deed identified Ms. Burnett as “Borrower,” Academy Mortgage Corp. as “Lender,” Mortgage Electronic Registration Systems, Inc. (MERS) as “beneficiary (solely as nominee for Lender and Lender‘s successor and assigns),” and Mountain View Title & Escrow as “Trustee.” Aplt.App., vol. I at 38, 39. The trust deed also provided that MERS could foreclose on and sell Ms. Burnett‘s property should she default on her payment obligations:
Borrower understands and agrees that MERS holds only lеgal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender‘s successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument.
Id. at 40 (emphasis added).
Beginning in August 2008, Ms. Burnett defaulted on her obligations under the trust deed by failing to make the required minimum monthly payments. On November 21, 2008, MERS filed a Substitution of Trustee form in Weber County. The form provided notice that MERS appointed Mr. Woodall, a Utah attorney, as successor trustee under the trust deed. Mr. Woodall filed a Notice of Default that same day. Ms. Burnett subsequently demanded that Mr. Woodall release the Notice of Default but he refused, indicating he intended to proceed with a trustee‘s sale of her property. The sale occurred on May 19, 2009.
On the day of the sale, Ms. Burnett filed this action against MERS, Mr. Woodall,
Mr. Woodall moved to dismiss the complaint for failing to state a claim upon which relief can be granted. See
II.
A. PLEADING STANDARDS
We review a district court‘s dismissal under
Two working principles underlie this standard. “First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Id. “Thus, mere ‘labels and conclusions,’ and ‘a formulaic recitation of the elements of a cause of action’ will not suffice; a plaintiff must offer specific factual allegations to support each claim.” Kan. Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir.2011) (quoting Twombly, 550 U.S. at 555); see also Iqbal, 556 U.S. at 678 (“[T]he pleading standard Rule 8 announces demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.“). “Second, only a complaint that states a plausible claim for relief survives a motion to dismiss.” Iqbal, 556 U.S. at 679. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678. The complaint must offer sufficient factual allegations “to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. Although “[s]pecific facts are not necessary” to comply with
In observing that “[t]here is disagreement as to whether this new [Twombly/Iqbal] standard requires minimal change or whether it in fact requires a significantly heightened fact-pleading standard,” we concluded that
the Twombly/Iqbal standard is a middle ground between heightened fact pleading, which is expressly rejected, and allowing complaints that are no more than labels and conclusions or a formulaic recitation of the elements of a cause of action, which the Court stated will not do. In other words, Rule 8(a)(2) still lives. Under Rule 8, specific facts are not necessary; the statement need only give the defendant fair notice of what
the claim is and the grounds upon which it rests.
Khalik v. United Air Lines, 671 F.3d 1188, 1191 (10th Cir.2012) (internal quotations, ellipsis, citations, and alterations omitted).
Determining whether a complaint states a plausible claim for relief is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679. This contextual approach means comparing the pleading with the elements of the cause(s) of action. Khalik, 671 F.3d at 1193. “[W]hile Plaintiff is not required to set forth a prima facie case for each element, she is required to set forth plausible claims” animating the elements of her causes of action. Id. Pleadings that do not allow for at least a “reasonable inference” of the legally relevant facts are insufficient. Iqbal, 556 U.S. at 678.
We apply these principles to the allegations Ms. Burnett makes in her complaint to determine whether the district court erred in dismissing the action.
B. FDCPA
The FDCPA was enacted, in part, to “eliminate abusive debt collection practices by debt collectors.”
1. Section 1692f(6)(A)
The FDCPA prohibits a “debt collector” from “[t]aking оr threatening to take any nonjudicial action to effect dispossession or disablement of property if ... there is no present right to possession of the property claimed as collateral through an enforceable security interest.”
any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.... For the purpose of section 1692f(6) of this title, such term also includes any рerson who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests.
Mr. Woodall does not deny that he qualifies as a “debt collector” under
Ms. Burnett seems to have several theories for why Mr. Woodall and the other defendants violated this provision of the FDCPA. Her primary argument is that MERS did not have authority under Utah law to act as a beneficiary, either at the origination of the loan or when it sold the loan to new lenders or as a part of a securitized trust. She relies on
Ms. Burnett is correct that MERS is not a beneficiary as that term is defined in
Ms. Burnett also contends any rights originally accorded to MERS in the trust deed were lost by transfer of the debt from the original lender to new lenders or through securitization.3 She argues MERS was legally required to obtain express authorization from any new principals prior to appointing Mr. Woodall for the purpose of initiating a nonjudicial foreclosure.
This argument is foreclosed by our decision in Commonwealth Prop. Advocates, LLC v. Mortg. Elec. Registration Sys., Inc., 680 F.3d 1194 (10th Cir.2011). In Commonwealth, we rejected the claim that MERS lost its authority to foreclose once the debt secured by a Utah trust deed had been securitized and sold on the open market. Id. at 1204-05. Like the trust deed in this case, the trust deed in Commonwealth provided that “MERS (as nominee for Lender and Lender‘s successors and assigns) has the right[] ... to foreclose and sеll the Property.” Id. at 1202 (internal quotation marks omitted). We observed that the Utah Court of Appeals had concluded this language authorizes MERS to initiate foreclosure proceedings against the collateral even after the underlying debt has been resold. See Id. at 1203-04 (discussing Commonwealth Prop. Advocates v. Mortg. Elec. Registration Sys., Inc., 263 P.3d 397, 399, 402 (Utah Ct.App. 2011), cert. denied, 268 P.3d 192 (Utah
does nothing to prevent MERS from acting as nominee for Lender and Lender‘s successors and assigns when it is permitted by the Deed of Trust.... [W]e do not interpret the statute as preventing, implying, or somehow indicating that the original parties to the Note and Deed of Trust cannot validly contract at the outset to hаve someone other than the beneficial owner of the debt act on behalf of that owner to enforce rights granted in the security instrument....
Commonwealth Prop. Advocates, 263 P.3d at 403 (citing
As in Commonwealth, the trust deed here explicitly allowed MERS to foreclose on Ms. Burnett‘s property. Accordingly, Mr. Woodall, as MERS‘s assignee, was also so authorized. Because he thereby had a present right to possession of the property, Mr. Woodall did not violate
2. Sections 1692e and 1692g
Outside of the limited context of
Ms. Burnett contends her complaint sets forth sufficient allegations to establish that Mr. Woodall violated
We have not yet decided whether a non-judicial foreclosure may itself qualify as debt collection under these provisions of the FDCPA. Cases from other circuits have analyzed this issue in varying fashions, as we described in Maynard v. Cannon, 401 Fed.Appx. 389, 395-96 (10th Cir.2010) (unpublished). See also
As we explained in Maynard,
Under Utah law, a non-judicial foreclosure is commenced by a trustee filing a notice of default, and after a three-month no-action period, the trustee can sell the trust property at public auction.
Utah Code Ann. §§ 57-1-23 ,-24,-27. A non-judicial foreclosure differs from a judicial foreclosure in that the sale does not preserve to the trustee the right to collect any deficiency in the loan amount personally against the mortgagor. See 59A C.J.S. Mortgages § 874. Thus, a non-judicial foreclosure allows the trustee to obtain proceeds from the sale of the foreclosed property, and no more. Under Utah law, for Household to recover any deficiency against Maynard personally, it would be required to commence a separate contract action as permitted under the loan documents. SeeUtah Code Ann. § 57-1-32 (“[W]ithin three months after any sale of property under a trust deed ... an action may be commenced to recover the balance due on the obligation for which the trust deed was given as security.“).
401 Fed.Appx. at 391-92. Thus, in Utah, “[w]hen a debt has yet to be reduced to a personal judgment against a mortgagor, a non-judicial foreclosure does not result in a mortgagor‘s obligation to pay money—it merely results in the sale of property subject to a deed of trust.” Id. at 394.
We pointed out in Maynard, however, that the initiation of foreclosure proceedings may be intended to pressure the debtor to pay her debt. As in Maynard, we need not decide whether filing a nonjudicial foreclosure constitutes collection of debt within the meaning of the FDCPA. Even if a debt collector acts “in connection with the collection of a debt” when pursuing a nonjudicial foreclosure, Ms. Burnett failed to allege sufficient faсts to plausibly state a claim that Mr. Woodall violated the FDCPA.
a. § 1692e
Ms. Burnett‘s allegations with regard to
b. Making demands for payment—via “payoffs,” “reinstatement demands,” emails, faxes, correspondence, telephone calls and/or meetings, and the like—which asserted that attorneys’ fees are due and owing when (i) they have not been liquidated and declared by a Court to be due and owing, and (ii) they in-
clude amounts not authorized by the Note or by statute.
c. Recording and circulating notices of default which claim that amounts are due and owing to MERS....
d. Making demands for payment or giving accountings which do not credit Burnett for all payments made and the like.
Id. at 8-9 (Complaint, ¶ 28). These allegations are too conclusory, vague and confusing to give each “defendant fair notice of what the ... claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555. Ms. Burnett‘s complaint is not just deficient because it attributes actions to a large group of collective “defendants,” which inсludes fifty unknown Doe defendants in addition to MERS and Mr. Woodall, but also because it is a litany of diverse and vague alleged acts (“emails, faxes, correspondence, and/or meetings, and the like“) with zero details or concrete examples. Compare Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1216-18 (11th Cir.2012) (allegations included specific letter from defendant law firm demanding full and immediate payment of amount claimed due). From such broad allegations against a large and mostly anonymous group of people, this court cannot “draw the reasonable inference that the defendant [Mr. Woodall] is liable for the misconduct alleged,” because we cannot tell which defendant is alleged to have done what, nor can we tell what the misconduct was. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
We do know from the complaint that Mr. Woodall filed the Notice of Default, which set forth the principal amount of the note, stated that a default had been made in paying the monthly payments, and set forth the total amount due, including foreclosure costs, as $10,917.54. Aplt.App., vol. I at 56. But Ms. Burnett consented to the filing of such a notice in the trust deed she signed. As we held in Maynard, 401 Fed.Appx. at 396, “[t]he filing of the notice of default does not in and of itself violate the FDCPA.... The notice was simply the first step in a foreclosure on her house, not a demand for payment.”
It is not unfair to require Ms. Burnett to provide details about the other alleged “demands for payment.” We have previously noted that one of the chief criticisms of Twombly‘s plausibility standard “is that plaintiffs will need discovery before they can satisfy plausibility requirements when there is asymmetry of information, with the defendants having all the evidence.” Gee v. Pacheco, 627 F.3d 1178, 1185 (10th Cir.2010). Such a concern is absent here, however, where Ms. Burnett apparently was a recipient of the allegedly false representations made through “‘payoffs,’ ‘reinstatement demands,’ emails, faxes, correspondence, telephone calls and/or meetings, and the like.” Aplt.App., vol. I at 8-9. Where the plaintiff is the one who ostensibly received these communications and is well-positioned to know, for example, the dates they were received and who sent them, the failure to include any such detail is fatal to the complaint. Khalik, 671 F.3d 1188, 1194 (10th Cir.2012) (holding complaint alleging retaliatory firing deficient for lack of facts when plaintiff should have known at least to whom she complained, when, and how; who criticized her work, where, and when; and plaintiff failed to plead any such facts). As in Khalik, Ms. Burnett could have provided additional factual support for her allegations with little effort because the details were known to her. Notably, she did not еven mention these allegations in her response to Mr. Woodall‘s motion to dismiss.
b. Section 1692g
In support of her claim that
This allegation is especially inscrutable because of the broad assertions in paragraph 28 of the Complaint that the “defendants,” which includes MERS and Woodall, were sending many communications to the plaintiff, in the form of emails, faxes, and “the like.” Section 1692g liability requires an “initial communication ... in connection with the collection of any debt” to trigger the notice obligation—but when does Ms. Burnett assert that this “initial communication” took place? Having attributed a slew of communications to a slew of defendants makes it impossible to tell. And for the reasons disсussed above and in Khalik, given the fact that Ms. Burnett herself is the one who allegedly received these communications, it is not improper to require her to plead more detail so as to understand when she alleges
A court must be able to “infer more than the mere possibility of misconduct.” Iqbal, 556 U.S. at 679. Because Ms. Burnett‘s complaint fails to adequately allege plausible violations of the FDCPA by Mr. Woodall, the district court properly dismissed these claims.
C. Utah Consumer Sales Practices Act
Ms. Burnett‘s complaint also alleges all of the defendants engaged in unconscionable conduct and committed deceptive acts and practices by making false representations in connection with the nonjudicial foreclosure of her property in violation of the Utah Consumer Sales Practices Act. See
“The UCSPA generally prohibits deceptive or unconscionable acts or practices by a supplier in connection with a consumer transaction.”
Carlie v. Morgan, 922 P.2d 1, 5-6 (Utah 1996) (internal quotation marks omitted); see also
a sale, lease, assignment, award by chance, or other written or oral transfer or disposition of goods, services, or other property, both tangiblе and intangible (except securities and insurance) to, or apparently to, a person for ... primarily personal, family, or household purposes....
The district court held that Ms. Burnett‘s UCSPA claim was preempted by the combined effect of Utah‘s trust deed statute, which provides a comprehensive and detailed regulatory scheme governing trustee conduct, including civil remedies and criminal consequences for violations, and the resulting ability of trustors/debtors to have a foreclosure sale set aside where a trustee hаs acted with fraud, irregularity or want of notice. On appeal, Ms. Burnett maintains the district court
The Utah Court of Appeals has held that “[t]he detailed procedural requirements for a trustee‘s sale of real property under
The Utah Supreme Court has held the UCSPA may be preempted by a more specific state law that addresses the precise aspect of the relationship at issue. Carlie, 922 P.2d at 6, but it has not decided whether the UCSPA is preempted by the Utah trust deed provisions. We need not deсide that question in this case. Ms. Burnett‘s UCSPA claim fails for the same reason her FDCPA claims failed: she provides insufficient factual allegations to plausibly state her claim.
Ms. Burnett alleges all of the defendants are “suppliers” within the meaning of the UCSPA and “[t]he false representations by defendants referred to herein, and other actions complained of herein, constitute deceptive acts or practices, and/or unconscionable conduct in connection with a consumer transaction....” Aplt.App., vol. I at 10. These “false representations” apparently refer to the same allegations we found insufficient to allege a violation of
D. Breach of Duty
Ms. Burnett‘s complaint alleges that a person appointed as a trustee under a trust deed owes a duty of good faith and reasonablenеss to the trustor.5 She claims
As we have already explained, MERS had authority under Utah law to act as a beneficiary and the trust deed permitted MERS to undеrtake a nonjudicial foreclosure when Ms. Burnett defaulted on her obligations. Mr. Woodall was under no duty to investigate MERS‘s authority beyond the language of the trust deed. In addition, while Ms. Burnett‘s complaint alleges Mr. Woodall should have postponed the sale of her property because MERS was unable to produce the original note, she makes no argument on appeal regarding why it was necessary for MERS to possess the note in order to appoint Mr. Woodall as substitute trustee, nor has she provided authorities relevant to this issue. “We will not review an issue in the absence of reasoned arguments advanced by the appellant as to the grounds for its appeal.” Burlington N. & Santa Fe Ry. Co. v. Grant, 505 F.3d 1013, 1031 (10th Cir.2007); see also Bronson v. Swensen, 500 F.3d 1099, 1105 (10th Cir.2007) (“[C]ursory statements, without supporting analysis and case law, fail to constitute the kind of briefing that is necessary to avoid application of the forfeiture doctrine.“).
Accordingly, we affirm the district court‘s dismissal of this claim.
E. Remaining Claims
We may quickly dispense with Ms. Burnett‘s remaining arguments. Ms. Burnett appeals the district court‘s dismissal of her slander of title claim. A slander of title claim has four elements in Utah. A plaintiff must prove: “(1) there was a publication of a slanderous statement disparaging claimant‘s title, (2) the statement was false, (3) the statement was made with malice, and (4) the statement caused actual or special damages.” First Sec. Bank of Utah, N.A. v. Banberry Crossing, 780 P.2d 1253, 1256-57 (Utah 1989). “A slanderous statement is one that is derogatory or injurious to the legal validity of an owner‘s title or to his or her right to sell or hypothecate the property....” Id. at 1257 (alteration in original) (internal quotation marks omitted).
Ms. Burnett claims that Mr. Woodall‘s filings of the notice of default and notice of trustee‘s sale were slanderous because “MERS had no right or standing” to foreclose on her property. Aplt.App., vol. I at 14. As we have held, Ms. Burnett is wrong. Because MERS had authority under the trust deed to foreclose and Mr. Woodall was properly appointed as substitute trustee to carry out the foreclosure, the district court correctly dismissed this claim.
Similarly, the district court properly dismissed Ms. Burnett‘s request for a declaratory judgment. She seeks declarations that MERS acted without authority, that Mr. Woodall could not be a substitute trustee, and that MERS must produce the note. For all the reasons explained above, Ms. Woodall‘s challenges to MERS and Mr. Woodall‘s authority to foreclose are without merit. As a result, Ms. Burnett is not entitled to declaratory relief.
III.
For the reasons stated above, we AFFIRM.
SEYMOUR
Circuit Judge