July 23, 2013, Utah Supreme Court Case Summaries

Utah Supreme Court

July  23, 2013

State v. Canton, 2013 UT 44, No. 20110835 (July 23, 2013)

ISSUES: Tolling of Statute of Limitations on Criminal Matters, Uniform Operations Clause

Justice Lee,

Reinaldo Canton was arrested in Utah in April 2007 and indicted on federal charges of coercion and enticement of a fifteen–year-old girl. Canton, a New Mexico resident, was released and returned to New Mexico to await trial. He remained there pending trial for over two years, though he returned to Utah on a few occasions to attend proceedings in federal court. After the federal charges were dismissed in May 2009, Canton was charged by the State of Utah with enticement of a minor under Utah Code section 76-4-401.

Canton moved to dismiss the charge based on the applicable two-year statute of limitations. In so doing, he disputed the applicability of our criminal tolling statute, which tolls the limitations period while a criminal defendant is “out of the state.” See UTAH CODE § 76-1-304(1). In Canton‘s view, this provision was inapplicable because he was “legally present” in Utah during the course of the federal court proceedings, in that he cooperated with federal authorities and appeared in various proceedings in the federal district court. Canton argued in the alternative that application of the tolling provision violated the Uniform Operation of Laws provision of the Utah Constitution. The district court denied Canton‘s motion. Canton filed this appeal.

We affirm. The criminal tolling statute applies to Canton because its text leaves no room for his notion of “legal presence.” And applying the statute to Canton does not run afoul of the Uniform Operation Clause, as Canton fails to show how any classification under the statute discriminates against him in an impermissible manner.

At ¶¶ 1-3.

Under our criminal tolling statute, “[t]he period of limitation does not run against any defendant during any period of time in which the defendant is out of the state following the commission of an offense.” UTAH CODE § 76-1-304(1). The question before us concerns the meaning of the phrase “out of the state.” Both sides agree that Canton was physically “out of the state” (in New Mexico) for most of the two years in which the limitations period is claimed to have run. Yet they disagree about the significance of that fact.

At ¶ 10.

We interpret “out of the state” to focus on the question of a person‘s physical presence within the state‘s territorial boundaries. Thus, we reject Canton‘s abstract construct of legal presence, both as a matter of (a) the “ordinary meaning” of statutory language consisting of “common, daily, nontechnical speech,” Olsen v. Eagle Mountain City, 2011 UT 10, ¶ 9, 248 P.3d 465 (internal quotation marks omitted), and (b) under the possibility that the statute may employ a “legal term of art . . . with a settled meaning in the law,” Hansen v. Hansen, 2012 UT 9, ¶ 19, 270 P.3d 531.

At ¶ 12.

The Court discusses the “ordinary meaning” of the statute’s tolling provision.

At ¶¶ 13-27.

The Court discusses Canton’s “legal term of art” argument and rejects it.

At ¶¶ 28-32.

Uniform Operations Clause

[Article I, section 24 of the Utah Constitution,] requires that “[a]ll laws of a general nature shall have uniform operation.” UTAH CONST. art I, § 24. Historically, uniform operation provisions were understood to be aimed not at legislative classification but at practical operation.  Thus, at the time of the ratification of the Utah Constitution, parallel provisions in other state constitutions were not viewed as a limit on the sorts of classifications that a legislative body could draw in the first instance, but as a rule of uniformity in the actual application of such classifications—a requirement of consistency in application of the law to those falling within the classifications adopted by the legislature, or in other words a prohibition on special privileges or exemptions therefrom.

The modern formulation of uniform operation is different. It treats the requirement of uniform operation as a state-law counterpart to the federal Equal Protection Clause. Our cases articulate a three-step test for enforcing this guarantee. First we assess “what classifications the statute creates.” See State v. Angilau, 2011 UT 3, ¶ 21, 245 P.3d 745. We then assess “whether different classes . . . are treated disparately.” Id. (alteration in original) (internal quotation marks omitted). And finally, “if there is disparate treatment between classes,” we assess “whether the legislature had any reasonable objective that warrants the disparity.” Id. (internal quotation marks omitted).

This last step incorporates varying standards of scrutiny. See State v. Robinson, 2011 UT 30, ¶ 22, 254 P.3d 183. Those standards recognize that most classifications are presumptively permissible, and thus subject only to “rational basis review.” Id. Our standards of scrutiny also recognize, however, that other classifications are so generally problematic (and so unlikely to be reasonable) that they trigger heightened scrutiny. Id. (noting that discrimination on the basis of a “suspect class” (e.g., race or gender) triggers heightened scrutiny, as do classifications implicating “fundamental right[s]”).

Canton presents no viable constitutional challenge to the application of the tolling provision to this case. The historical requirement of consistent application or enforcement (or its concomitant bar on special privileges or exemptions) is not at all implicated here, as Canton‘s gripe is that the statute sweeps too broadly—in encompassing defendants who are “out of the state” physically but still subject to its authority (and thus purportedly outside the rational reach of the tolling statute). That concern, in fact, runs precisely counter to that of the historical domain of uniform operation, which was to prescribe broad, uniform application across the entirety of a legislative class, or in other words to foreclose special privileges or exemptions from enforcement. And Canton‘s claim is similarly deficient under the modern formulation of uniform operation set forth in our caselaw, as he fails to attack the only classification drawn by the tolling statute (between those who leave the state after committing a crime and those who remain within it), and takes issue instead with the statute‘s failure to draw additional or different classifications.

Canton‘s gripe is with the legislature‘s failure to sub-classify—to draw further distinctions between compliant and non-compliant out-of-state defendants. He asserts that these two sub-classes are fundamentally different, and thus that it is unconstitutional to treat them similarly.

That is not a viable, standalone basis for a uniform operation challenge. Our uniform operation standards are focused on examining the rationality of the classifications that were made by the legislature. See Angilau, 2011 UT 3, ¶ 21 (explaining that we begin by asking “what classifications the statute creates”). And concerns of over-inclusiveness, like the one raised by Canton, are relevant only insofar as they bear on the question whether the classification that was made clears the applicable standard of scrutiny. Thus, even those litigants whose gripe is that the legislature has impermissibly grouped them into a category with other dissimilar individuals must demonstrate that the classification that put them there fails constitutional muster. Canton fails to do so, opting to question only what further sub-classifications the legislature might have made.

At ¶¶ 34-39.

Fed. Nat. Mortg. Ass’n. v. Sundquist, 2013 UT 45, No. 20110575 (July 23, 2013)

ISSUES: Federal Preemption of Utah Foreclosure Law

Justice Parrish,

Appellant Loraine Sundquist appeals from an interlocutory order requiring her to vacate her home during the pendency of an unlawful detainer action. Appellee Federal National Mortgage Association (FNMA) initiated the unlawful detainer action, claiming ownership of Sundquist’s home. FNMA claimed ownership pursuant to a trustee’s deed that it obtained from ReconTrust. ReconTrust is a national bank that conducted a nonjudicial foreclosure sale in its capacity as trustee of the trust deed that Sundquist had executed to secure her mortgage.

The interlocutory order at issue was entered at the conclusion of an immediate occupancy hearing held just two weeks after FNMA initiated the unlawful detainer action. At that hearing, Sundquist argued that ReconTrust lacked authority to conduct the foreclosure sale and convey her home to FNMA. Specifically, she argued that sections 57-1-21 and 57-1-23 of the Utah Code limit the power of sale to trustees who are either members of the Utah State Bar or title insurance companies with an office in Utah. In response, FNMA argued that ReconTrust, as a national bank, was authorized to conduct the sale under federal law and that federal law preempted the Utah statute. The district court agreed with FNMA and entered an order of restitution, requiring that Sundquist vacate her home.

We reverse. Utah Code sections 57-1-21 and 57-1-23 are not preempted by federal law. A national bank seeking to foreclose real property in Utah must comply with Utah law. We therefore vacate the district court’s order of restitution and remand for additional proceedings.

At ¶¶ 1-3.

The Court determines that Section 92a of the National Banking Act does not preempt Sections 57-1-21 and 57-1-23 of the Utah Code and a national bank seeking to foreclose real property in Utah must comply with Utah law.

At  ¶¶ 11-49.

Section 57-1-21(1)(a) defines qualified trustee as:

(i) any active member of the Utah State Bar who maintains a place within the state where the trustor or other interested parties may meet with the trustee [or]

. . .

(iv) any title insurance company or agency that:

(A) holds a certificate of authority or license . . . to conduct insurance business in the state; 

(B) is actually doing business in the state; and

(C) maintains a bona fide office in the state.

At ¶ 12.

ReconTrust is neither a member of the Utah State Bar nor a title insurance company or agency with an office in the State of Utah. ReconTrust was therefore not a qualified trustee with the power of sale under Utah Code sections 57-1-21 and 57-1-23. However, FNMA argues that Utah law does not apply to ReconTrust because [under the National Banking Act (“NBA”)], as a national bank, ReconTrust is subject to the laws of Texas, not Utah. Under Texas law, ReconTrust is arguably authorized to conduct a nonjudicial foreclosure sale. See Tex. Fin. Code §§ 32.001, 182.001. 

At ¶ 13.

Whether ReconTrust is subject to the laws of Utah or Texas depends on where it is “located.” As a national bank, ReconTrust operates under the National Banking Act, 12 U.S.C. § 1 et seq., and is regulated by the Office of the Comptroller of Currency (Comptroller). The NBA gives the Comptroller authority “to grant . . . to national banks . . . the right to act as trustee . . . under the laws of the State in which the national bank is located.” 12 U.S.C. § 92a(a) (emphasis added). And section 92a(b) of the NBA provides that “exercise of such powers by national banks shall not be deemed to be in contravention of State or local law.”

At ¶ 14.

The issue of whether the NBA preempts Utah law governing the qualification of trustees has been addressed by the Utah federal district courts, with differing results. In three cases, the federal district courts have found that federal law preempts Utah law and have therefore concluded that the laws of Texas apply. Garrett v. ReconTrust Co., N.A., 2011 WL 7657381, at *2 (D. Utah 2011) (holding that because ReconTrust is located in Texas, it acts as a trustee in Texas, and therefore “the state laws that apply to ReconTrust by virtue of section 92a are those of Texas, rather than Utah.”); Dutcher v. Matheson, 2012 WL 423379, at *7 (D. Utah 2012) (holding that Texas law governs ReconTrust, and even if it did not, that section 92a of the NBA preempts Utah law because Utah title insurance companies compete with ReconTrust); Baker v. BAC Home Loans Servicing LP, 2012 WL 464024, at *4 (D. Utah 2012) (following Dutcher).

In four cases, however, the federal district courts have reached the contrary result and held that Utah law is not preempted. Cox v. ReconTrust Co., N.A., 2011 WL 835893, at *6 (D. Utah 2011) (stating that “[u]nder a straight forward reading of [section] 92a(b), this court must look to Utah law in its analysis of whether ReconTrust’s activities in Utah exceed ReconTrust’s trustee powers”); Coleman v. ReconTrust Co., N.A., U.S. Dist. LEXIS 138519 (D. Utah 2011) (agreeing with the reasoning applied in Cox); Loomis v. Meridias Capital, Inc., 2011 WL 5844304 (D. Utah 2011) (same); Bell v. Countrywide Bank, N.A., 860 F. Supp. 2d 1290 (D. Utah 2012) (same). We find Judge Jenkins’ analysis in Bell to be particularly persuasive, and follow much of this same analysis here. Like Judge Jenkins, we conclude that ReconTrust is subject to the laws of Utah when exercising the power to sell property located in Utah.

At ¶¶ 17-18.

We must first examine the language of section 92a of the NBA to see if it unambiguously addresses the question of where a national bank is located. If so, that is the end of the matter. On the other hand, if the statute is ambiguous, we then look to the federal regulations to determine whether the interpretation they adopt is based on a permissible construction of the NBA. [Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842–43 (1984) (footnotes omitted)].

At ¶ 20.

The Court determines that “Under the Plain Language of Section 92a, a National Bank

Performing Trustee’s Duties Must Comply with the Law of the State in Which the Duties Are Performed.”

At ¶¶ 21-29.

Although consideration of the regulation interpreting section 92a is unnecessary because the statutory language is not ambiguous and because Congress did not intend to delegate to the Comptroller the power to preempt the historic power of the states to regulate the foreclosure of real property, we think it worth noting that we find the Comptroller’s current interpretation of the statute, which is found in the Code of Federal Regulations, to be unreasonable. Again, we quote from Judge Jenkins. “[E]ven if the statute is not clear and demands interpretation,” the “interpretation in 12 C.F.R. [section] 9.7(d) modifies the statute and is unreasonable—if not irrational—and therefore does not deserve deference.” Bell, 860 F. Supp. 2d at 1298.

At ¶ 39.