Matchett v. BSI Fin. Servs.

1

RADONNA MATCHETT, Plaintiff-Appellant, v. BSI FINANCIAL SERVICES, Defendant-Appellee.

No. 21-4142

United States Court of Appeals, Tenth Circuit

July 21, 2023

(D.C. No. 2:21-CV-00211-DAK) (D. Utah)

Before CARSON, Circuit Judge, LUCERO, Senior Circuit Judge, and ROSSMAN, Circuit Judge.

ORDER AND JUDGMENT ^[*]

Joel M. Carson, III Circuit Judge

This appeal marks the second time we have considered whether Utah law allows mortgagors to sue under the Utah Consumer Sales Practices Act ("UCSPA") when mortgage servicers charge them improper fees. The first time, in Berneike v CitiMortgage, Inc., 708 F.3d 1141, 1149-50 (10th Cir. 2013), we held that they cannot. This time, because that holding remains good law, stare decisis requires the same result.

Plaintiff Radonna Matchett appeals the district court's dismissal of her UCSPA and breach-of-contract claims alleging that Defendant BSI Financial Services improperly charged her certain fees. She also asks us to certify two questions concerning the UCSPA's scope to the Utah Supreme Court. Exercising jurisdiction under 28 U.S.C § 1291, we affirm the dismissal of Plaintiff's claims and deny her request for certification.

I.

In June 2008, Plaintiff obtained a residential mortgage loan.^[1] As part of that process, Plaintiff signed two mortgage documents-a promissory note memorializing the loan's terms and a deed of trust securing the loan against the real property Plaintiff purchased with the loan's proceeds. Defendant services Plaintiff's mortgage. A mortgage servicer receives the borrower's periodic payments due under the loan and passes those payments on to the loan's owner. See 12 CFR § 1024.2(b).

The Parties' dispute focuses on certain fees Defendant charged Plaintiff to make her mortgage payments over the phone. Seven times between September 2017 and April 2018, Plaintiff tried to pay her mortgage online, but failed because of an error with Defendant's online system. Each time, Defendant's error forced Plaintiff to make her payments over the phone.^[2] And each time she paid Defendant over the phone, Defendant charged her a $20 "convenience" fee-an amount between ten and fifty times more than Defendant's actual cost of taking a phone payment.

Three years later, Plaintiff sued Defendant in Utah state court alleging that Defendant violated the UCSPA and breached the mortgage documents by charging her those $20 fees.^[3] While Plaintiff's case was pending, Defendant allegedly began adding the legal fees it incurred defending Plaintiff's action to the balance of her mortgage. So Plaintiff amended her complaint to assert a claim under the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"). After Plaintiff amended her complaint to assert a federal claim, Defendant removed the case to the United States District Court for the District of Utah.

Before the district court, Defendant moved to dismiss Plaintiff's UCSPA and breach-of-contract claims. After considering briefing and holding a hearing, the district court granted Defendant's motion and dismissed both claims with prejudice. As for Plaintiff's UCSPA claims, the district court reasoned Plaintiff could not state a plausible claim because the UCSPA does not regulate mortgage loans or mortgage servicers. The district court also concluded that even if the UCSPA applied to mortgage servicers, Defendant's alleged conduct does not plausibly violate the UCSPA. As for Plaintiff's breach-of-contract claim, the district court held that she failed to plausibly allege that Defendant breached the mortgage documents. Lastly, ten days after the court's ruling, the Parties agreed to dismiss Plaintiff's FDCPA claim.

After the stipulated dismissal of her federal claim, Plaintiff moved the district court to allow her to amend her complaint and refile her state-law claims in Utah state court. Plaintiff also asked the district court to certify two questions of state law-whether the UCSPA applies to mortgages and mortgage servicers, and whether Defendant's alleged conduct could violate its terms-to the Utah Supreme Court. The district court denied both requests in a final memorandum decision and order.

Plaintiff timely appealed. She contends the district court erred either by granting Defendant's motion to dismiss or by denying her request to amend her complaint. She also asks us to certify her UCSPA questions to the Utah Supreme Court.

II.

We turn first to Plaintiff's motion asking us to certify her UCSPA questions to the Utah Supreme Court. We allow parties to submit independent requests for the certification of state-law questions alongside their first merits brief. See Pino v. United States, 507 F.3d 1233, 1235 (10th Cir. 2007); 10th Cir. R. 27.4. And although we review a district court's denial of a motion to certify for an abuse of discretion, see Society of Lloyd's v. Reinhart, 402 F.3d 982, 1001 (10th Cir. 2005), we exercise our own independent discretion de novo when a party asks us to certify a question to a state high court directly. See Pino, 507 F.3d at 1235-36.

But we do not exercise that discretion lightly. See Colony Ins. Co. v. Burke, 698 F.3d 1222, 1235-36 (10th Cir. 2012). Congress did not create diversity jurisdiction for the convenience of the federal courts. See Meredith v. City of Winter Haven, 320 U.S. 228, 234 (1943). When a party properly invokes that jurisdiction, we ordinarily answer the state-law questions necessary to render judgment. See Colony Ins., 698 F.3d at 1235 (citing Copier ex rel. Lindsey v. Smith &Wesson Corp., 138 F.3d 833, 838 (10th Cir.1998)). As a result, we will certify only state-law questions that are both "unsettled and dispositive." Kan. Jud. Rev. v. Stout, 519 F.3d 1107, 1119 (10th Cir. 2008) (quoting Anaconda Mins. Co. v. Stoller Chem. Co., 990 F.2d 1175, 1177 (10th Cir. 1993)).

Plaintiff's proposed question fails those minimum criteria. Plaintiff asks us to certify whether the Utah Mortgage Lending and Services Act ("MLSA"), Utah Code Ann. § 70D-2-101 et seq., preempts all UCSPA claims against mortgage servicers. But as we discuss in section IV, even if the MLSA does not preempt all UCSPA claims against mortgage servicers, our precedent forecloses Plaintiff's particular UCSPA claim. See Berneike v. CitiMortgage, Inc., 708 F.3d 1141, 1149-50 (10th Cir. 2013). And because Berneike governs Plaintiff's UCSPA claim, Plaintiff's state-law question is neither unsettled nor dispositive. Accordingly, we deny her motion for certification.

III.

Moving to the merits of Plaintiff's appeal, she first asserts that the district court erred by granting Defendant's motion to dismiss her UCSPA claim for the failure to state a claim. We review de novo the district court's grant of Defendant's motion. Albers v. Bd. of Cnty. Comm'rs of Jefferson Cnty., Colo., 771 F.3d 697, 700 (10th Cir. 2014).

Plaintiff argues the district court should not have dismissed her claims because the Utah Supreme Court would allow her to assert a UCSPA claim against her mortgage servicer. Defendant responds that we have already held that the Utah Supreme Court bars UCSPA claims based on mortgage servicing in Berneike, 708 F.3d at 1149-50. Because we agree with Defendant that Berneike controls, we affirm the dismissal of Plaintiff's UCSPA claim.

In Berneike, a homeowner asserted UCSPA claims against her mortgage servicer for alleged overcharges and improper fees. Berneike, 708 F.3d at 1143. The district court dismissed her claims. Id. at 1149. And we affirmed, interpreting the Utah Supreme Court's decision in Carlie v. Morgan, 922 P.2d 1 (Utah 1996), to bar UCSPA claims when the complained-of conduct is governed by other, more specific law. Id. at 1149-50. In Carlie, the Utah Supreme Court concluded that the Utah Fit Premises Act-which provides specific remedies to residential tenants whose rental units become uninhabitable because of health and safety violations-precludes residential tenants from bringing UCSPA claims based on those violations. See Carlie, 922 P.2d at 6. So, by analogy, the Berneike panel held that because the MLSA specifically regulates mortgage servicing, the Utah Supreme Court would similarly disallow UCSPA claims based on wrongful conduct in the mortgageservicing context. Berneike, 708 F.3d at 1150.

Thus, Plaintiff cannot state a UCSPA claim against Defendant. Just as in Berneike, Plaintiff alleges that Defendant, her mortgage servicer, charged her improper fees while servicing her mortgage. While Plaintiff vigorously contends that the Utah Supreme Court would only disallow UCSPA claims under Carlie when the other, more specific law provides a remedy for the defendant's alleged conduct, the Berneike panel's broad reading of Carlie forecloses her argument.^[4] Because we are bound by Berneike's holding that the Utah Supreme Court forbids UCSPA claims by a mortgagor against a mortgage servicer based on allegedly wrongful overcharges and fees, we affirm the dismissal of Plaintiff's UCSPA claim.

IV.

Plaintiff next appeals the district court's decision to dismiss her breach-of-contract claim for the failure to state a claim upon which relief can be granted. As before, we review the district court's ruling de novo. Albers v. Bd. of Cnty. Comm'rs of Jefferson Cnty., Colo., 771 F.3d 697, 700 (10th Cir. 2014). To state a breach-of-contract claim under Utah law, Plaintiff must plausibly allege: (1) a contract, (2) performance by the party seeking recovery, (3) a breach by the other party, and (4) damages. Daz Mgmt., LLC v. Honnen Equip. Co., 508 P.3d 84, 91 n.26 (Utah 2022) (citing Richards v. Cook, 314 P.3d 1040, 1043 (Utah Ct. App. 2013)).

Plaintiff's only breach allegation reads: "to the extent Defendant's conduct is governed by the mortgage agreement, Defendant...