BRISCOE, Chief Judge.
Although this case presents significant questions regarding the interaction of federal banking and state foreclosure laws, our focus is upon a more fundamental question: whether the district court even had jurisdiction to consider the issues raised. Plaintiffs
On the limited record presented, we conclude that the district court erred in determining it had jurisdiction to hear this case. Exercising jurisdiction under 28 U.S.C. § 1291, we vacate the district court's order of dismissal and its rulings on plaintiffs' motion for reconsideration and motion to amend. We remand for proceedings consistent with this opinion.
In November 2007, Richard and Gwen Dutcher borrowed money from and executed a securing deed of trust in favor of Countrywide Bank. In February 2011, Countrywide assigned the beneficial interest in the trust deed to BAC Home Loans Servicing, LP, which in turn appointed ReconTrust as the successor trustee. ReconTrust filed a notice of non-judicial foreclosure with the Utah County Recorder. On June 14, 2011, Stuart T. Matheson, a Utah-based attorney, conducted a non-judicial foreclosure sale on behalf of ReconTrust.
Shortly after that sale, the Dutchers, along with the other named plaintiffs, filed a class-action lawsuit in Utah state court alleging that Matheson and his law firm, ReconTrust, and Bank of America had violated Utah law as it applies to non-judicial foreclosures. Under Utah law, only certain trustees may conduct a non-judicial foreclosure: 1) any active member of the state bar "who maintains a place within the state where the trustor or other interested parties may meet with the trustee," Utah Code Ann. § 57-1-21(1)(a)(i); and 2) title insurance companies that "actually do[] business" and maintain "bona fide office[s] in the state," Utah Code Ann. § 57-1-21(1)(a)(iv). See Utah Code Ann. § 57-1-21(3). Thus, plaintiffs argued, ReconTrust, a Texas-based bank, had no authority
The defendants took two approaches in response. First, they sought to remove the case to federal court. They argued that the district court had jurisdiction under either the Class Action Fairness Act, or diversity jurisdiction. Second, the defendants filed a motion to dismiss. They argued that federal banking laws permitted ReconTrust to exercise the non-judicial power of sale thereby preempting application of the cited provision of Utah state law to the foreclosures at issue.
The district court held that it had jurisdiction under both 28 U.S.C. § 1331 and § 1332. It then dismissed the complaint for failure to state a claim. But shortly thereafter, another district court in Utah concluded in a similar case that federal law did not preempt Utah state law. See Bell v. Countrywide Bank, N.A., 860 F.Supp.2d 1290, 1297-1309 (D.Utah 2012). This led the plaintiffs in this case to file a motion for reconsideration. They also asked for leave to amend their complaint. The proposed amended complaint no longer named Matheson and his law firm as defendants. It also dropped a number of the causes of action, including conversion, wrongful lien, and intentional infliction of emotional distress.
In July 2012, the district court issued an order denying all pending motions. Regarding the motion for reconsideration, the district court said: 1) that plaintiffs had waived the arguments they now wanted the court to consider because they failed to raise them in their initial brief; and 2) that "clear error" does not result simply because another district court reached a different outcome. As the district court continued to believe that the plaintiffs had presented no viable causes of action, it also denied the motion to amend. Finally, the district court denied the State of Utah's motion to intervene as untimely.
The plaintiffs now appeal both the district court's initial decision dismissing their complaint and the subsequent decisions denying their motions. The State of Utah has filed an amicus curiae brief on behalf of the plaintiffs-appellants. We have also asked for and received an amicus brief from the Office of Comptroller of Currency ("OCC"), which administers the federal statute at issue in this case, 12 U.S.C. § 92a.
"Federal courts are courts of limited jurisdiction; they must have a statutory basis for their jurisdiction." Rural Water Dist. No. 2 v. City of Glenpool, 698 F.3d 1270, 1274 (10th Cir.2012) (quotation omitted). The federal removal statute, 28 U.S.C. § 1441, permits a defendant to remove to federal court "any civil action brought in a State court of which the district courts of the United States have
We review de novo whether the district court had jurisdiction to act. United States ex rel. Hafter v. Spectrum Emergency Care, Inc., 190 F.3d 1156, 1160 (10th Cir.1999). "Since federal courts are courts of limited jurisdiction, we presume no jurisdiction exists absent an adequate showing by the party invoking federal jurisdiction." Id. As the parties removing this case to federal court, the defendants bear the burden of establishing jurisdiction by a preponderance of the evidence. Id.
A claim may be brought in federal court if the claim is one "arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. When determining whether a claim arises under federal law, "we examine the `well pleaded' allegations of the complaint and ignore potential defenses." Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003). "A suit arises under the Constitution and laws of the United States only when the plaintiff's statement of his own cause of action shows that it is based upon those laws or that Constitution." Id. (quotation and alteration omitted). The plaintiffs' complaint did not assert any cause of action premised upon a violation of a federal statute or the Constitution.
But the doctrine of complete preemption provides an exception to the well-pleaded complaint rule. "When the federal statute completely pre-empts the state-law cause of action, a claim which comes within the scope of that cause of action, even if pleaded in terms of state law, is in reality based on federal law." Id. That said, "[c]omplete preemption is ... quite rare." Johnson v. MFA Petroleum Co., 701 F.3d 243, 248 (8th Cir.2012).
In our circuit, "a claim of complete preemption demands a two-part analysis: first, we ask whether the federal
While the district court held that federal law preempted state law, it never actually determined whether the plaintiffs have a private right of action under federal law. It appears that the district court assumed plaintiffs would have a private right of action for violation of federal law. But by doing so, the court impermissibly exercised hypothetical jurisdiction. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101-02, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) ("For a court to pronounce upon the meaning or the constitutionality of a state or federal law when it has no jurisdiction to do so is, by very definition, for a court to act ultra vires.").
The defendants argue that 12 U.S.C. § 92a preempts state law. Section 92a(a) states that:
In addition, 12 U.S.C. § 92a(k)(1) permits the OCC to take steps to revoke this permit if a "national banking association is unlawfully or unsoundly exercising, or has unlawfully or unsoundly exercised ... the powers granted by this section."
In order to determine whether complete preemption is applicable here, we must first address whether federal law provides a private right of action to sue for violations of 12 U.S.C. § 92a. The statute does not on its face include this right, so if the right exists, it must be either implied, or derived through a cause of action provided in another statute. "Congressional intent is determinative" in deciding whether there are private rights of action to enforce federal law. Boswell v. Skywest Airlines, Inc., 361 F.3d 1263, 1267 (10th Cir.2004).
We are not the first circuit to consider this question. But of the three circuits that have, only one has concluded there is a private right of action to sue for violations of 12 U.S.C. § 92a. See B.C. Recreational Indus. v. First Nat'l Bank of Boston, 639 F.2d 828, 833 n. 10 (1st Cir.1981); but see In re Corestates Trust Fee Litig., 39 F.3d 61, 66-69 (3rd Cir.1994); Blaney v. Florida Nat'l Bank at Orlando, 357 F.2d 27, 30-31 (5th Cir.1966). In B.C. Recreational, the First Circuit suggested that the plaintiffs could sue a national bank for acting as a fiduciary without a permit from the Comptroller, in violation of 12 U.S.C. § 92a(a). It did not, however, conclude that 12 U.S.C. § 92a itself provided a private right of action. Instead, it said an aggrieved party could file a lawsuit under
But in our view, the First Circuit made a crucial mistake in its analysis. It erred in assuming that 12 U.S.C. § 92a was part of the National Bank Act. It is not. "While designated by the editors of the U.S.Code as 12 U.S.C. § 92a, the enacting legislation and accompanying legislative history did not amend, repeal or even mention the National Bank Act." In re Corestates, 39 F.3d at 67. Indeed, 12 U.S.C. § 92a is not covered by the text of 12 U.S.C. § 93(a). Section 93 prohibits violations of "any provisions of title 62 of the Revised Statutes." 12 U.S.C. § 93. But Title 62 of the Revised Statutes does not include the trust laws codified at 12 U.S.C. § 92a.
Of course, an implied private right of action could exist under 12 U.S.C. § 92a itself. However, no court has ever held 12 U.S.C. § 92a contains an implied private right of action. And the defendants have not asked us to so hold. See Aplee. Supp. Br. at 15 (citing only B.C. Industries). We therefore conclude that — even assuming that federal law preempts Utah law — the absence of a federal cause of action precludes us from relying on complete preemption as a jurisdictional basis for the district court to act.
The district court held in the alternative that diversity jurisdiction also provided a basis for its jurisdiction. In order to invoke diversity jurisdiction, "a party must show that complete diversity of citizenship exists between the adverse parties and that the amount in controversy exceeds $75,000." Symes v. Harris, 472 F.3d 754, 758 (10th Cir.2006). Complete diversity is lacking when any of the plaintiffs has the same residency as even a single defendant. Here, the plaintiffs and some of the defendants — Matheson and his law firm — share a state of residency: Utah.
But the defendants argued, and the district court agreed, that the
The district court relied on the second prong of the fraudulent joinder test — the inability of plaintiffs to establish a cause of action against either Matheson or his law firm in state court — to conclude fraudulent joinder had been established here. The district court held that under Utah law "it is well established that an attorney cannot be held liable to a non-client absent fraud, collusion or privity of contract." App'x at 145 (quotation omitted). Because plaintiffs made no effort to show "independent misbehavior" by Matheson or the law firm, any claim against those parties would necessarily fail, the court said. Id. Therefore, the court ruled that Matheson and his law firm need not be considered by the court when determining whether the requirements for diversity jurisdiction have been satisfied. Id. at 145-46. The defendants have likewise argued, citing Oxendine v. Overturf, 973 P.2d 417 (Utah 1999), that "as mere counsel and agent of ReconTrust, the Law Firm Defendants are immune from suits by non-clients for actions taken in representing their clients `absent fraud, collusion or privity of contract.'" Aplee. Supp. Br. at 4.
We disagree with this interpretation of Utah law. The Utah Supreme Court has not created a blanket rule of immunity for lawyers acting as agents for their clients in the absence of fraud, collusion, or privity of contract. Instead, the court has simply limited the circumstances in which a lawyer owes a duty of care to non-clients from actions arising out of the provision of legal services.
In Oxendine, the mother of a decedent sued the decedent's personal representatives and personal representatives' attorney because she had not received the benefits to which she was entitled under Utah's wrongful death statute. 973 P.2d at 419-20. The mother argued "that as a statutory wrongful death heir she automatically acquired the status of third party beneficiary of the attorney-client agreement because the sole purpose of that agreement was to provide a benefit to the statutory heirs." Id. at 421. While the Utah Supreme Court did say that "[h]istorically, an attorney could not be held liable to a non-client absent fraud, collusion or privity of contract," it made this statement when referring to the duties owed to non-clients when rendering legal services. Id. This is evidenced by the very next line in the opinion: "The modern trend is to abandon or relax the privity requirement recognizing that under certain circumstances a lawyer may have a duty to exercise reasonable care toward a non-client." Id. The plaintiffs are not asserting that Matheson and his law firm breached a duty of care that they, as lawyers, owed to the plaintiffs. The plaintiffs are asserting that Matheson and law firm committed independent torts. As a result, Oxendine is not relevant to the circumstances presented here.
A hypothetical demonstrates the problem with the defendants' argument that
Because Oxendine does not support the defendants' broad proposition regarding the immunity of counsel when acting as agent for their clients, we cannot hold that Matheson and his law firm were fraudulently joined. However, that does not mean that the plaintiffs have stated a valid claim against Matheson and his law firm. Or even that Matheson and his law firm are not somehow fraudulently joined. But the defendants needed to clear a high hurdle to prove something they have yet to prove, i.e. fraudulent joinder. We are left then with the presence of non-diverse parties and thus we conclude that diversity jurisdiction has not been established.
But the defendants raised yet another basis for federal jurisdiction that the district court did not address: the Class Action Fairness Act. See 28 U.S.C. § 1332(d). "The Class Action Fairness Act ... confer[s] federal jurisdiction over class actions involving at least 100 members and over $5 million in controversy when minimal diversity (between any defendant and any plaintiff member) is met." Prime Care of Northeast Kan., LLC v. Humana Ins. Co., 447 F.3d 1284, 1285 (10th Cir.2006). But there are both permissive and mandatory exceptions to this rule. See 28 U.S.C. § 1332(d)(3), (4).
While the parties complied with our instruction to address Class Action Fairness Act jurisdiction in supplemental briefing, we do not believe it appropriate to resolve this thorny question without further development in the district court. Applying the Act and its exceptions involves shifting burdens of proof. See, e.g., Frederick v. Hartford Underwriters Ins. Co., 683 F.3d 1242, 1245-48 (10th Cir.2012) ("Once a defendant meets this burden [of proving amount in controversy by a preponderance of the evidence], remand is appropriate only if the plaintiff can establish that it is legally impossible to recover more than $5,000,000."). Whether the requirements of the Class Action Fairness Act have been
As we cannot affirm the district court's jurisdictional ruling on the record before us, we VACATE the district court's dismissal of this action and the denial of the plaintiffs' motions for reconsideration and to amend. We REMAND with instructions for the district court to determine whether it has jurisdiction to act and, relatedly, to rule in the first instance whether the Class Action Fairness Act provides jurisdiction. We DENY the plaintiffs' motion to supplement the record. We DENY as moot plaintiffs' motion to strike and defendants' motion for leave to file supplemental briefs.