America West Bank Members L.C. v. State

This opinion is subject to revision before

publication in the Pacific Reporter

2014 UT 49

IN THE

SUPREME COURT OF THE STATE OF UTAH

AMERICA WEST BANK MEMBERS, L.C.,

Appellant,

v.

STATE OF UTAH and its agents; UTAH DEPARTMENT OF

FINANCIAL INSTITUTIONS; G. EDWARD LEARY,

Appellees.

No. 20120456

Filed October 24, 2014

Third District, Salt Lake

The Honorable Tyrone E. Medley

No. 110915676

Attorneys:

Douglas M. Durbano, L. Miles Lebaron, Jacob D. Briggs,

Layton, for appellant

Sean D. Reyes, Att‘y Gen., Peggy E. Stone,

Reed M. Stringham, III, Asst. Att‘ys Gen.,

Salt Lake City, for appellees

ASSOCIATE CHIEF JUSTICE NEHRING authored an opinion

of the Court with respect to Parts I, II.A, II.C, and III,

in which CHIEF JUSTICE DURRANT, JUSTICE DURHAM,

JUSTICE LEE, and JUSTICE PARRISH joined, and a

dissenting opinion with respect to Part II.B.

JUSTICE LEE authored an opinion of the Court, in

which CHIEF JUSTICE DURRANT, JUSTICE DURHAM,

and JUSTICE PARRISH joined.

ASSOCIATE CHIEF JUSTICE NEHRING, opinion of the Court except

as to Part II.B:

AMERICA WEST v. STATE

ACJ NEHRING, opinion of the Court except as to Part II.B

INTRODUCTION

¶ 1 America West Bank Members, L.C. (AWBM) challenges

the district court‘s dismissal of its claims against the State of Utah,

the Utah Department of Financial Institutions (UDFI), and the

director of UDFI, Mr. G. Edward Leary (collectively referred to as

the State).1 AWBM asserts that the district court erred when it

dismissed its claims for lack of sufficient factual allegations under

rule 12(b)(6) of the Utah Rules of Civil Procedure. AWBM

contends it pleaded sufficient factual allegations for breach of

contract, breach of the covenant of good faith and fair dealing,

violations of procedural and substantive due process under the

Utah Constitution, and violation of the Takings Clause of the Utah

Constitution. We affirm the decision of the district court

dismissing AWBM‘s claims.

BACKGROUND

¶ 2 America West Bank (Bank) is wholly owned by its

members, AWBM. On May 1, 2009, UDFI filed a petition in

district court for an order approving the seizure of the Bank. That

same day, the district court granted the petition without the

presence or participation of AWBM. UDFI then appointed the

Federal Deposit Insurance Corporation (FDIC) as receiver of the

Bank. The FDIC announced publicly it had been appointed

receiver of the Bank and immediately began winding down the

affairs of the Bank and liquidating its assets.

¶ 3 On June 28, 2011, AWBM filed a complaint in district

court against the State of Utah; UDFI; the commissioner of UDFI,

Mr. G. Edward Leary; and UDFI‘s supervisor of banks, Mr. Tom

Bay. AWBM also filed a notice of claim against Mr. Leary, as

required by the Utah Governmental Immunity Act (Immunity

Act).2 AWBM alleged various claims, including common law tort,

breach of contract, breach of the covenant of good faith and fair

dealing, constitutional takings, and due process violations.

Liquidation of the Bank‘s assets was ongoing when AWBM filed

its complaint. The State filed a motion to dismiss the complaint

1 AWBM initially included Mr. Tom Bay, the supervisor of

banks for UDFI, as a party. However, Mr. Bay was not properly

given notice of the claims as required by the Utah Governmental

Immunity Act and was dismissed as a party.

2 See UTAH CODE § 63G–7–401 to -904.

2

Cite as: 2014 UT 49

ACJ NEHRING, opinion of the Court except as to Part II.B

based on rules 12(b)(1) and 12(b)(6) of the Utah Rules of Civil

Procedure. AWBM opposed the motion to dismiss.

¶ 4 In its opposition to the State‘s motion to dismiss, AWBM

consented to the dismissal of some of its claims. AWBM

acknowledged that it failed to file an appropriate notice of claim

against Mr. Bay, as required by the Immunity Act, and as a result,

all claims against Mr. Bay were dismissed.3 Additionally, AWBM

conceded to the dismissal with prejudice of its claims of failure to

disclose evidence at a hearing, negligent destruction of property,

and negligence, based primarily on the existence of immunity

enjoyed by the defendants.4

¶ 5 The district court did not hold a hearing on the motion

to dismiss, but ―reviewed and considered all Memoranda in

support, opposition and reply‖ and granted the State‘s motion to

dismiss ―in full as prayed for based upon all of the reasons . . . and

legal authorities set forth in [the State‘s] [m]emoranda in support

and reply, including [AWBM‘s] concessions.‖ Based on the

minute entry and the State‘s motion to dismiss and accompanying

memorandum, the district court dismissed AWBM‘s breach of

contract, breach of the covenant of good faith and fair dealing,

and unconstitutional taking claims all due to insufficient factual

allegations in the complaint. The district court also dismissed

AWBM‘s claims of denial of procedural and substantive due

process with prejudice, because it found that the right to a pre-

3 UDFI moved to dismiss AWBM‘s claims under both rules

12(b)(1) and 12(b)(6) of the Utah Rules of Civil Procedure. The

rule 12(b)(1) dismissal for lack of subject matter jurisdiction relates

only to AWBM‘s ―fail[ure] to comply with the notice of claim

provisions of the Utah Governmental Immunity Act‖ as it relates

to Mr. Bay. Gurule v. Salt Lake Cnty., 2003 UT 25, ¶ 1, 69 P.3d 1287.

AWBM conceded that proper notice was not given to Mr. Bay,

and Mr. Bay is not a party to this appeal. Therefore, we address

the dismissal of the remaining claims through the lens of rule

12(b)(6) of the Utah Rules of Civil Procedure.

4 As is noted by AWBM in its brief, the district court did not

specify which claims were dismissed with prejudice and which

claims were dismissed without prejudice. The court‘s minute

entry simply stated that UDFI‘s motion was granted in full. We

rely on the designations used in UDFI‘s motion to determine

whether claims were dismissed with or without prejudice.

3

AMERICA WEST v. STATE

ACJ NEHRING, opinion of the Court except as to Part II.B

seizure hearing was not clearly established and, therefore, could

not form the basis of a due process claim.

¶ 6 Following the district court‘s dismissal of AWBM‘s

claims, AWBM filed a timely notice of appeal. AWBM appeals the

dismissal of its claims for breach of contract, breach of the

covenant of good faith and fair dealing, unconstitutional taking,

denial of procedural due process, and denial of substantive due

process.

STANDARD OF REVIEW

¶ 7 AWBM contends the district court erred when it

dismissed its causes of action for breach of contract, breach of the

covenant of good faith and fair dealing, unconstitutional taking,

and violations of procedural and substantive due process under

rule 12(b)(6) of the Utah Rules of Civil Procedure. ―A district

court‘s grant of a motion to dismiss based upon the allegations in

the plaintiff‘s complaint[] presents a question of law that we

review for correctness.‖5 When ―reviewing a dismissal under

Rule 12(b)(6) of the Utah Rules of Civil Procedure, we accept the

plaintiff‘s description of facts alleged in the complaint to be true,

but we need not accept extrinsic facts not pleaded nor need we

accept legal conclusions in contradiction of the pleaded facts.‖6

The district court‘s ruling ―should be affirmed only if it clearly

appears that [the plaintiff] can prove no set of facts in support of

his claim.‖7 ―Furthermore, it is well established that an appellate

court may affirm the judgment appealed from if it is sustainable

on any legal ground or theory apparent on the record, even if it

differs from that stated by the trial court.‖8

ANALYSIS

¶ 8 AWBM appeals the district court‘s dismissal of its claims

for breach of contract, breach of the covenant of good faith and

fair dealing, unconstitutional taking, and violations of substantive

5 Osguthorpe v. Wolf Mountain Resorts, L.C., 2010 UT 29, ¶ 10,

232 P.3d 999 (alteration in original) (internal quotation marks

omitted).

6 Id. (internal quotation marks omitted).

7 Colman v. Utah State Land Bd., 795 P.2d 622, 624 (Utah 1990).

8 Osguthorpe, 2010 UT 29, ¶ 10 (internal quotation marks

omitted).

4

Cite as: 2014 UT 49

ACJ NEHRING, opinion of the Court except as to Part II.B

and procedural due process. The district court granted the State‘s

motion to dismiss all of AWBM‘s claims. The district court

dismissed all of AWBM‘s claims under rule 12(b)(6) of the Utah

Rules of Civil Procedure for ―failure to state a claim upon which

relief can be granted.‖ The claims for breach of contract and

breach of the covenant of good faith and fair dealing were

dismissed without prejudice for failure to plead sufficient facts

supporting the claims. The claim of an unconstitutional taking,

which AWBM argued as a violation of substantive due process,

was also dismissed without prejudice for failure to plead

sufficient facts. Finally, the claims alleging a violation of

substantive and procedural due process were dismissed with

prejudice by the district court because it concluded there is no

right to a pre-seizure hearing when the State takes a financial

institution into receivership.

¶ 9 As a threshold matter, we must determine if we have

jurisdiction to hear this appeal.9 If we lack jurisdiction, we must

dismiss the appeal.10 Only if we first determine that we have

appropriate jurisdiction will we address the merits of a case.

I. THE DISTRICT COURT‘S DISMISSAL IS

A FINAL, APPEALABLE ORDER

¶ 10 The State argues that ―[t]here may be a question whether

the [c]ourt has jurisdiction to hear [AWBM‘s] claims,‖ and

contends that the order below may not be a final order subject to

appeal. ―[T]he issue of subject matter jurisdiction is a threshold

issue, which can be raised at any time and must be addressed

before [turning to] the merits of other claims . . . .‖11 We have

consistently upheld the ―final judgment‖ rule, which states that

―[a]n appeal is improper if it is taken from an order or judgment

that is not final.‖12 A ―final judgment for purposes of appeal is

9 Thomas v. Lewis, 2001 UT 49, ¶ 13, 26 P.3d 217.

10 Bradbury v. Valencia, 2000 UT 50, ¶ 8, 5 P.3d 649.

11 Houghton v. Dep’t of Health, 2005 UT 63, ¶ 16, 125 P.3d 860

(internal quotation marks omitted); see also State v. Sun Sur. Ins.

Co., 2004 UT 74, ¶ 7, 99 P.3d 818 (―Questions of subject matter

jurisdiction, because they are threshold issues, may be raised at

any time and are addressed before resolving other claims.‖).

12Bradbury v. Valencia, 2000 UT 50, ¶ 9, 5 P.3d 649. There are

exceptions to the ―final judgment‖ rule; however, none of the

(con‘t.)

5

AMERICA WEST v. STATE

ACJ NEHRING, opinion of the Court except as to Part II.B

one that resolves all claims, counterclaims, cross-claims, and

third-party claims before the court and fully and finally resolves

the case.‖13

¶ 11 ―Utah has adopted the majority rule that an order of

dismissal is a final adjudication, and thereafter, a plaintiff may not

file an amended complaint,‖14 even if such a dismissal is without

prejudice.15 This rule is rooted in the United States Supreme

Court decision United States v. Wallace & Tiernan Co.16 There, the

Court found that dismissal ―without prejudice to filing another

suit does not make the cause unappealable, for denial of relief and

dismissal of the case ended [the] suit so far as the District Court

was concerned.‖17 Our general rule in determining whether an

order is final is ―whether the effect of the ruling is to finally resolve

the issues.‖18 We do not focus on whether a dismissal was with or

without prejudice, because the ―test to be applied is a pragmatic

test.‖19

exceptions are relevant to the present case. Therefore, we focus

only on whether this dismissal is final under the final judgment

rule.

13 Merkey v. Solera Networks, Inc., 2009 UT App 130U, para. 4

(per curiam); see also Bradbury, 2000 UT 50, ¶ 10 (―To be final, the

trial court‘s order or judgment must dispose of all parties and

claims to an action.‖).

14 Nichols v. State, 554 P.2d 231, 232 (Utah 1976).

15 See Steiner v. State, 495 P.2d 809, 810–11 (Utah 1972) (holding

that a dismissal involving two defendants was a final appealable

order despite one defendant being dismissed without prejudice

while the other was dismissed with prejudice).

16 336 U.S. 793 (1949).

17 Id. at 794 n.1; see also Ciralsky v. CIA, 355 F.3d 661, 666 (D.C.

Cir. 2004) (―Most courts that have considered the question have

followed the Supreme Court‘s lead, holding that the dismissal of

an action—whether with or without prejudice—is final and

appealable.‖).

18 Bowles v. State ex rel. Utah Dep’t of Transp., 652 P.2d 1345,

1346 (Utah 1982).

19First of Denver Mortg. Investors v. C. N. Zundel & Assocs., 600

P.2d 521, 528 (Utah 1979) (citing Brown Shoe Co. v. United States,

(con‘t.)

6

Cite as: 2014 UT 49

ACJ NEHRING, opinion of the Court except as to Part II.B

¶ 12 In the present case, there are no counterclaims, cross-

claims, or third-party claims. The district court determined it did

not have an adequately pleaded complaint before it and dismissed

the complaint, thereby ending the suit as far as the district court

was concerned.20 The pragmatic effect of the dismissal was to

fully terminate the case in the district court. Because we follow

the majority rule that an order of dismissal is a final adjudication,

and because our test for finality is a pragmatic one, we conclude

that we have jurisdiction to hear this appeal.

II. THE DISTRICT COURT DID NOT ERR WHEN

IT DISMISSED AWBM‘S CLAIMS

¶ 13 On appeal, AWBM relies heavily on the principle that,

on a motion to dismiss, the court must ―accept the plaintiff‘s

description of facts alleged in the complaint to be true.‖21

Additionally, rule 8(a) of the Utah Rules of Civil Procedure sets a

liberal standard for complaints, requiring only that a complaint

―contain a short and plain: (1) statement of the claim showing that

the party is entitled to relief; and (2) demand for judgment for

specified relief.‖22 ―A dismissal is a severe measure and should be

370 U.S. 294 (1962)); see also 15A CHARLES ALAN WRIGHT, ARTHUR

R. MILLER & EDWARD H. COOPER, FEDERAL PRACTICE AND

PROCEDURE § 3913 (2d ed. 2013) (―[T]he finality requirement

should not be applied as a sterile formality, but instead should be

applied pragmatically . . . .‖); Allied Air Freight, Inc. v. Pan Am.

World Airways, Inc., 393 F.2d 441, 444 (2d Cir. 1968) (―We do not

believe that this distinction should control: dismissals with and

without prejudice are equally appealable as final orders.‖).

20 See Wallace & Tiernan Co., 336 U.S. at 794 n.1; Moore v.

Pomory, 620 A.2d 323, 325 (Md. 1993) (holding that a dismissal of a

plaintiff‘s complaint without prejudice ―does not mean that the

case is still pending in the trial court and that the plaintiff may

amend his complaint or file an amended complaint in the same

action,‖ but rather ―the case is fully terminated in the trial court‖).

21 Osguthorpe v. Wolf Mountain Resorts, L.C., 2010 UT 29, ¶ 10,

232 P.3d 999 (internal quotation marks omitted).

22 This court has not had occasion to address the heightened

plausibility standard for pleadings set forth by the United States

Supreme Court in Bell Atlantic Corporation v. Twombly, 550 U.S.

544, 570 (2007), and we express no opinion here regarding that

(con‘t.)

7

AMERICA WEST v. STATE

ACJ NEHRING, opinion of the Court except as to Part II.B

granted by the trial court only if it is clear that a party is not

entitled to relief under any state of facts which could be proved in

support of its claim.‖23 Keeping these principles in mind, we

address each of AWBM‘s claims in turn.

A. The District Court Did not Err When It Dismissed AWBM’s

Claims for Breach of Contract and Breach of the

Covenant of Good Faith and Fair Dealing

¶ 14 The district court dismissed AWBM‘s claims for breach

of contract and breach of the covenant of good faith and fair

dealing due to a lack of sufficient factual allegations in the

complaint. AWBM argues that its complaint properly stated a

claim for breach of contract. Particularly, AWBM claims it has

alleged the existence of a contract between the State and AWBM,

that the State breached the contract, and that AWBM is entitled to

damages as a result. AWBM claims that due to its assertion of a

right to damages, it can be implied or inferred that AWBM

performed its obligations under the contract. Conversely, the

State argues that one cannot prove a breach of contract claim

without alleging the actual existence of a contract. We agree with

the State.

¶ 15 Because ―[r]ule 12(b)(6) concerns the sufficiency of the

pleadings, not the underlying merits of a particular case[,] . . . the

issue before the court is whether the petitioner has alleged enough

in the complaint to state a cause of action, and this preliminary

question is asked and answered before the court conducts any

hearings on the case.‖24 The complaint need only ―contain a short

and plain: (1) statement of the claim showing that the party is

entitled to relief; and (2) demand for judgment for specified

relief.‖25 In order to properly state a claim for a breach of contract,

a party must ―allege[] sufficient facts, which we view as true, to

satisfy each element.‖26 ―The elements of a prima facie case for

breach of contract are (1) a contract, (2) performance by the party

seeking recovery, (3) breach of the contract by the other party, and

approach.

23 Colman v. Utah State Land Bd., 795 P.2d 622, 624 (Utah 1990).

24 Alvarez v. Galetka, 933 P.2d 987, 989 (Utah 1997).

25 UTAH R. CIV. P. 8(a).

26 MBNA Am. Bank v. Goodman, 2006 UT App 276, ¶ 6, 140 P.3d

589.

8

Cite as: 2014 UT 49

ACJ NEHRING, opinion of the Court except as to Part II.B

(4) damages.‖27 AWBM contends that it has alleged all of the

required elements, either specifically or by implication and

inference.28

¶ 16 Beyond stating the elements required to show a prima

facie case for breach of contract, we have not specified what it

means to provide a ―short and plain statement‖ of a breach of

contract claim ―showing that the party is entitled to relief.‖29 We,

as well as the court of appeals, have hinted at the requirements.30

We take this opportunity to clarify what is required for a ―short

and plain‖ statement for relief for a breach of contract claim under

the Utah Rules of Civil Procedure.31

27 Bair v. Axiom Design, L.L.C., 2001 UT 20, ¶ 14, 20 P.3d 388.

28 AWBM‘s complaint regarding breach of contract states:

22. Defendants have breached a contract between the

parties.

23. Plaintiffs have been damaged as a result of

Defendants‘ breach.

24. Plaintiffs are entitled to recover damages in an

amount to be proven at trial, which are currently

unknown and ongoing, plus attorneys fees and

interest.

29 UTAH R. CIV. P. 8(a)(1).

30 See Shah v. Intermountain Healthcare, Inc., 2013 UT App 261,

314 P.3d 1079. In Shah, the court of appeals found that a patient‘s

complaint against her physician and hospital ―specifically

identified contractual relationships‖ despite the absence of a

written contract. Id. ¶ 17. The court of appeals ultimately rejected

the plaintiff‘s claims on other grounds. Id. ¶ 18. Additionally, in

Canfield v. Layton City, we concluded that a ―violation of . . .

written employment rules‖ sufficiently ―outline[d] a breach of

contract claim‖ and was sufficient to withstand dismissal for

failure to state a claim upon which relief can be granted. 2005 UT

60, ¶¶ 7, 15, 22–23, 122 P.3d 622.

31 See Peak Alarm Co. v. Salt Lake City Corp., 2010 UT 22, ¶ 70

n.13, 243 P.3d 1221 (noting we have not addressed Twombly‘s

heightened plausibility standard for pleadings under the Federal

Rules of Civil Procedure).

9

AMERICA WEST v. STATE

ACJ NEHRING, opinion of the Court except as to Part II.B

¶ 17 The Utah Rules of Civil Procedure contain an appendix

of forms, and we turn to those forms for guidance in outlining the

pleading requirement of a ―short and plain statement‖ for breach

of contract. Form four, entitled ―Complaint--Promissory Note,‖

and form five, entitled ―Complaint--Multiple Claims,‖ are

particularly helpful. These forms illustrate the standard of

pleading in a complaint for a breach of a promissory note, which

is a contract, and a multi-count complaint that specifically

includes a breach of contract. As exemplars, these forms indicate

that, at a minimum, a breach of contract claim must include

allegations of when the contract was entered into by the parties,

the essential terms of the contract at issue, and the nature of the

defendant‘s breach.32 These essential elements are required to

fulfill the requirements of a ―short and plain‖ statement under our

pleading standard. These minimal allegations will ―give the

defendant fair notice of the nature and basis or grounds of the

claim and a general indication of the type of litigation involved.‖33

¶ 18 AWBM has not met this standard. AWBM‘s complaint

implies the existence of a contract and a breach of that contract.

However, AWBM made no allegations regarding the date when

the contract was entered into, the essential terms of the contract,

nor the nature of the defendant‘s breach. Without the allegations

outlined above, there can be no claim for a breach of contract. We

therefore affirm the district court‘s dismissal without prejudice of

AWBM‘s breach of contract claim.

¶ 19 A claim for breach of the covenant of good faith and

fair dealing is a derivative of the breach of contract claim.

Because AWBM did not allege the existence of facts required to

plead a breach of contract, it has also failed to plead a breach of

the covenant of good faith and fair dealing. Accordingly, we

affirm the district court‘s dismissal without prejudice of AWBM‘s

claim for breach of the covenant of good faith and fair dealing.

B. The District Court Did not Err When It Dismissed

AWBM’s Due Process Claims with Prejudice

¶ 20 Today, the court concludes that AWBM‘s due process

claims should be dismissed without prejudice. I disagree, and I

32 See UTAH R. CIV. P., Forms 4 & 5.

33 Canfield, 2005 UT 60, ¶ 14 (internal quotation marks

omitted).

10

Cite as: 2014 UT 49

ACJ NEHRING, opinion of the Court except as to Part II.B

would hold that the district court properly dismissed the due

process claims with prejudice. As the court notes,34 the district

court dismissed AWBM‘s claims alleging violations of substantive

and procedural due process with prejudice. The district court

found that AWBM failed to demonstrate a ―clearly established‖

right to a pre-seizure hearing, which is a requirement to receive

damages for a due process violation under the Utah

Constitution.35 AWBM argues the district court erred when it

dismissed its procedural and substantive due process claims.

AWBM does not clearly state what constituted a violation of its

procedural and substantive due process rights; however, on the

face of its complaint and on appeal, AWBM argues that errors or

inadequacies in the procedure surrounding the seizure of the

Bank violated its right to due process.36 This is clearly a

procedural due process claim.37 AWBM has not asserted it was

34 Infra ¶ 37.

35 See Spackman ex rel. Spackman v. Bd. of Educ., 2000 UT 87, ¶ 23,

16 P.3d 533.

36 AWBM argues that UDFI did not show a sufficient

emergency or special need for seizure of the Bank, and thus failed

to follow the applicable statutes. However, AWBM has not

challenged the findings of the commissioner, UDFI, or the district

court regarding the seizure of the Bank. The record contains no

evidence of the commissioner‘s findings or the seizure

proceedings. AWBM has simply alleged that the proceedings

violated their ―constitutional, common law, and statutory rights.‖

Without more, we must presume the regularity of those

proceedings. State v. Chettero, 2013 UT 9, ¶ 32, 297 P.3d 582

(―[W]hen crucial matters are not included in the record, the

missing portions are presumed to support the action of the trial

court.‖ (internal quotation marks omitted)); State v. Pritchett, 2003

UT 24, ¶ 13, 69 P.3d 1278 (same). Thus, I decline to address this

specific argument.

37 AWBM‘s complaint alleged violations of substantive due

process. However, AWBM‘s allegations of substantive due

process referred to the seizure of the bank without just

compensation, a point AWBM concedes on appeal. Because

AWBM‘s substantive due process claims are just another iteration

of a takings claim, we examine them under the Takings Clause,

infra, Part II.C.

11

AMERICA WEST v. STATE

ACJ NEHRING, opinion of the Court except as to Part II.B

deprived of any fundamental right. Therefore, I decline to

address AWBM‘s allegation of substantive due process violations

as an independent claim.

¶ 21 I agree with the court that the Spackman test must be

satisfied in order for AWBM to be entitled to damages. I also

agree with the court that the elements of Spackman are not set

forth in the complaint and thus, the district court properly

dismissed AWBM‘s due process claim under Utah Rule of Civil

Procedure 12(b)(6).38 However, in my view, AWBM‘s due process

claims were properly dismissed with prejudice.

¶ 22 Under the first element of Spackman, AWBM must show

that it ―suffered a flagrant violation of [its] constitutional rights.‖39

A right is ―not clearly established unless its contours are

sufficiently clear that a reasonable official would understand that

what he [or she] is doing violates that right.‖40 This ―ensures that

a government employee is allowed the ordinary human frailties of

forgetfulness, distractibility, or misjudgment without rendering

[him or her]self liable for a constitutional violation.‖41 We have

also recognized that ―it will be easier for a plaintiff to demonstrate

a flagrant violation where precedent clearly establishes that the

defendant‘s alleged conduct violates a provision of the

constitution.‖42 Conversely, ―in the absence of relevant precedent

recognizing the right and prohibiting the alleged conduct, it will

be more difficult for a plaintiff to prevail.‖43 Additionally, there

are circumstances where conduct ―will be so egregious and

unreasonable that it constitutes a flagrant violation of a

constitutional right even in the absence of controlling

precedent.‖44

¶ 23 We have never addressed the question of whether a pre-

seizure hearing is required when a financial institution is seized.

38 Infra ¶ 40.

39 Jensen ex rel. Jensen v. Cunningham, 2011 UT 17, ¶ 58, 250 P.3d

465 (internal quotation marks omitted).

40 Id. ¶ 66 (internal quotation marks omitted).

41 Id. (alteration in original) (internal quotation marks omitted).

42 Id. ¶ 67.

43 Id.

44 Id.

12

Cite as: 2014 UT 49

ACJ NEHRING, opinion of the Court except as to Part II.B

However, this question has been squarely addressed by the

United States Supreme Court under the Federal Due Process

Clause. While procedural due process generally requires notice

and a hearing, ―[t]here are extraordinary situations that justify

postponing notice and opportunity for a hearing.‖45 Those

situations ―must be truly unusual,‖ and a ―seizure without

opportunity for a prior hearing‖ is allowed ―[o]nly in a few

limited situations.‖46 The Court has held that the limited

situations justifying a seizure without a prior hearing must, at a

minimum, meet three requirements:

First, in each case, the seizure [must be] directly

necessary to secure an important governmental or

general public interest. Second, there [must be] a

special need for very prompt action. Third, the State

[must keep] strict control over its monopoly of

legitimate force; the person initiating the seizure

[must be] a government official responsible for

determining, under the standards of a narrowly

drawn statute, that it was necessary and justified in

the particular instance.47

The Court has held that seizure of property without a prior hearing

is justified ―to collect the internal revenue of the United States, to

meet the needs of a national war effort, to protect against the

economic disaster of a bank failure, and to protect the public from

misbranded drugs and contaminated food.‖48 The court

acknowledges that the United States Supreme Court concluded

that a seizure without a prior hearing meets this standard.49

¶ 24 In Fahey v. Mallonee, the Supreme Court was presented,

as we are here, with the issue of whether a ―hearing after the

conservator takes possession [of a bank] instead of before‖ was

constitutional.50 The Court acknowledged that dispensing with a

45Fuentes v. Shevin, 407 U.S. 67, 90 (1972) (internal quotation

marks omitted).

46 Id. at 90–91.

47 Id. at 91.

48 Id. at 91–92 (emphasis added) (footnotes omitted).

49 Infra ¶ 42 n.2.

50 332 U.S. 245, 253 (1947).

13

AMERICA WEST v. STATE

ACJ NEHRING, opinion of the Court except as to Part II.B

pre-seizure hearing when a financial institution is seized is indeed

a ―drastic procedure,‖ but that ―the delicate nature of the

institution and the impossibility of preserving credit during an

investigation has made it an almost invariable custom to apply

supervisory authority in this summary manner.‖51 The Court

held that ―in the light of the history and customs of banking,‖ the

seizure of a financial institution without a prior hearing is not

―unconstitutional.‖52 Thus, procedural due process does not

require a pre-seizure hearing when a state seizes a bank, provided

a post-seizure hearing is available.53 The Utah Financial

Institutions Act provides a post-seizure hearing, and AWBM had

the opportunity for a post-seizure hearing.54

¶ 25 The Utah Court of Appeals has also addressed this issue.

In Brown v. Weis, the court of appeals addressed an argument

similar to the one presented by AWBM.55 The court of appeals

reiterated the three factors set forth in Fuentes and noted that

―[o]ne of the very situations cited by the Fuentes court as

ordinarily satisfying the above criteria is the necessity of

protecting against the economic disaster of a bank failure.‖56 The

court of appeals, relying primarily on Fuentes, concluded that the

summary seizure of a failing financial institution is in the public

interest and that due process did not require a pre-seizure

hearing.57

51 Id.

52 Id. at 254.

53 Fahey, 332 U.S. at 253–54.

54 UTAH CODE § 7–2–3.

55 871 P.2d 552, 558 (Utah Ct. App. 1994).

56 Id. at 566 (citing Fuentes, 407 U.S. at 91–92).

57 Id. at 566–67; see also Roslindale Coop. Bank v. Greenwald, 638

F.2d 258, 260 (1st Cir. 1981) (―The drastic consequences of bank

failure or mismanagement and ‗the impossibility of preserving

credit during an investigation‘ call for prompt and decisive action

and place this proceeding among the ‗extraordinary situations‘ in

which notice and hearing may be postponed until after seizure.‖

(quoting Fahey, 332 U.S. at 253; Fuentes, 407 U.S. at 90–91 & n.23));

Gregory v. Mitchell, 459 F. Supp. 1162, 1165–66 (M.D. Ala. 1978)

(―Summary seizure of a bank[—]i.e., seizure without a prior

(con‘t.)

14

Cite as: 2014 UT 49

ACJ NEHRING, opinion of the Court except as to Part II.B

¶ 26 The court is correct that Fuentes outlines a context-

dependent and fact-specific test.58 However, we need not ―assess

the question based on the facts and circumstances‖ of every

individual case, as the court suggests.59 The court notes that

―Fuentes articulates the general standards under which property

may be seized without a hearing‖ and Fahey concluded that a

―seizure without a hearing had met that standard.‖60 However, the

court fails to distinguish between a pre-seizure and post-seizure

hearing, opting instead to lump the two together.61 Fuentes does

not stand for the proposition that each and every due process

challenge is subject to the fact-intensive three-part test announced

in the opinion. Rather, the Fuentes Court was determining

whether prejudgment replevin statutes should be included in the

―few limited situations‖ where ―outright seizure [would be

allowed] without opportunity for a prior hearing.‖62 The United

States Supreme Court held that the replevin statutes at issue did

require an opportunity to be heard before property was taken.63

But what has been made clear by the Court is that ―in light of the

history and customs of banking‖ and the need to protect both

customers and the public from a bank failure, the seizure of a

hearing[—]has been approved by many courts, including the

Supreme Court of the United States, on the ground [that] such

action is justified by the potential economic disaster of a bank

failure.‖); Hoffman v. State, 834 P.2d 1218, 1219 n.2 (Alaska 1992)

(―[T]he federal due process clause does not require a pre-seizure

hearing when a state seizes a bank.‖ (citing Fahey, 332 U.S. at 253–

54)).

58 Infra ¶ 42.

59 Infra ¶ 42.

60 Infra ¶ 42 n.2 (emphases added).

61 Clearly, the lack of an opportunity to be heard, either pre- or

post-seizure, would have immense due process implications.

62Fuentes, 407 U.S. at 90–91 (footnote omitted). The court

acknowledges this proposition also. Infra ¶ 42 n.2.

63 Fuentes, 407 U.S. at 96. The Court also noted that its holding

was ―a narrow one,‖ in that the State retained the power ―to seize

goods before a final judgment in order to protect the security

interests of creditors,‖ provided those creditors ―tested their claim

to the goods through the process of a fair prior hearing.‖ Id.

15

AMERICA WEST v. STATE

ACJ NEHRING, opinion of the Court except as to Part II.B

financial institution without a prior hearing does not violate the

Due Process Clause if a post-seizure hearing is available.64 In the

present case, a post-seizure hearing was available, thus there is no

violation of due process.

¶ 27 It is not correct that this holding would create a ―per se

rule insulating all bank seizures from constitutional challenge

under the Due Process Clause.‖65 Instead, I simply acknowledge

and agree with what the United States Supreme Court has held:

in the context of a bank seizure, due process does not require a

pre-seizure hearing if a post-seizure hearing is available; a post-

seizure hearing is enough.66 The seizure of a failed bank before a

hearing meets the test in Fuentes. ―The drastic consequences of

bank failure or mismanagement and the impossibility of

preserving credit during an investigation call for prompt and

decisive action and place [a bank seizure] among the

extraordinary situations in which notice and hearing may be

postponed until after seizure.‖67 A post-seizure hearing is

available under the Utah Financial Institutions Act and may be

initiated within ten days after a bank is seized.68 Additionally, the

commissioner of the UDFI is the only government official capable

of initiating a bank seizure.69 AWBM is not entitled to and has no

constitutional right to a pre-seizure hearing.70 AWBM challenged

64 Id. at 91; Fahey, 332 U.S. at 254–56.

65 Infra ¶ 42.

66 See Fuentes, 407 U.S. at 90–91; Fahey, 332 U.S. at 253–54;

accord First Fed. Savs. Bank & Trust v. Ryan, 927 F.2d 1345, 1358 (6th

Cir. 1991); Roslindale Coop. Bank, 638 F.2d at 260; FDIC v. Am. Bank

Trust Shares, Inc., 629 F.2d 951, 954–55 (4th Cir. 1980); Turner v.

Officers, Dirs. & Emps. of Mid Valley Bank, 712 F. Supp. 1489, 1500–

02 (E.D. Wash. 1988); Salinas Valley Cmty. Fed. Credit Union v. Nat’l

Credit Union Admin., 564 F. Supp. 701, 706 (N.D. Cal. 1983); FDIC

v. Bank of San Marino (In re Bank of San Marino), 213 Cal. Rptr. 602,

607 (Ct. App. 1985).

67 Roslindale Coop. Bank, 638 F.2d at 260 (citation omitted)

(internal quotation marks omitted).

68 UTAH CODE § 7–2–3(1)(a).

69 Id. § 7–2–1.

70 Fahey, 332 U.S. at 253–54.

16

Cite as: 2014 UT 49

ACJ NEHRING, opinion of the Court except as to Part II.B

the bank seizure under the Due Process Clause because the State

seized its bank without first providing AWBM with a hearing.

Thus, under no circumstance can AWBM prove facts that show

that it was entitled to a pre-seizure hearing. Thus, AWBM cannot

meet the first element of Spackman showing that there was a

flagrant violation of its constitutional right, as there is no right to a

pre-seizure hearing.71

¶ 28 AWBM cannot prove the first element of Spackman.

There can be no flagrant violation of a non-existent right. Clear

precedent from the United State Supreme Court indicates that

there is no right to a pre-seizure hearing when a financial

institution is seized by the state, and due process is satisfied if a

post-seizure hearing is available.72 Therefore, AWBM has no

clearly established right to a pre-seizure hearing. Its due process

71 It should also be said that it is not enough to merely allege a

constitutional violation under the first element of Spackman. In

order to meet the first Spackman element, the violation must be

―flagrant.‖ 2000 UT 87, ¶ 23. To establish a ―flagrant violation,‖ a

defendant must have violated a right whose ―contours [are]

sufficiently clear that a reasonable official would understand that

what he is doing violates that right.‖ Id. (internal quotation marks

omitted). First, AWBM had no right to a pre-seizure hearing and

thus the State‘s agents had no understanding that the seizure of

the bank violated any right. Second, AWBM has made allegations

of a flagrant violation, but it conceded to the dismissal of those

claims with prejudice in the district court. The majority concludes

otherwise. Infra ¶ 41. In its complaint, AWBM alleged that State

agents either intentionally or negligently failed to disclose

material information in a verified petition to the district court

when seeking the bank seizure. On appeal, AWBM argues that

this failure to disclose material information was a flagrant

violation. But even if this were the case, AWBM has already

conceded the dismissal of these allegations with prejudice.

AWBM cannot now resurrect a forfeited argument and should not

be given an opportunity to relitigate claims it has already

conceded. Thus, under the circumstances, AWBM cannot prove

any set of facts in support of a ―flagrant‖ violation. This further

supports the district court‘s dismissal of AWBM‘s due process

claim with prejudice.

72 Fuentes, 407 U.S. at 91–92; Fahey, 332 U.S. at 254–56.

17

AMERICA WEST v. STATE

ACJ NEHRING, opinion of the Court except as to Part II.B

rights are preserved by its opportunity for a post-seizure hearing,

at which time AWBM could have brought constitutional

challenges to the seizure of the bank. Thus, I would affirm the

district court‘s dismissal of AWBM‘s due process claims with

prejudice.

C. The District Court Did not Err When It Dismissed AWBM’s

Claim for an Unconstitutional Taking Without Prejudice

Due to Insufficient Factual Allegations

¶ 29 The district court dismissed AWBM‘s Takings Clause

claim for failure to allege sufficient facts to justify the cause of

action. AWBM argues that it has pleaded sufficient facts to

demonstrate that it had a protectable property interest, and that

its property was taken by government action. AWBM argues that,

therefore, it is entitled to ―just compensation.‖

¶ 30 Article I, section 22 of the Utah Constitution reads,

―Private property shall not be taken or damaged for public use

without just compensation.‖73 This section, Utah‘s Takings

Clause, is ―distinct from, and provid[es] greater protection than,

those constitutional provisions that provide compensation only

for the ‗taking‘ of private property.‖74 This broad guarantee of

just compensation ―is triggered when there is any substantial

interference with private property which destroys or materially

lessens its value, or by which the owner‘s rights to its use and

enjoyment is in any substantial degree abridged or destroyed.‖75

¶ 31 Although the Utah Takings Clause provides greater

protection than its federal counterpart, we have adopted the

federal distinction between a physical and regulatory taking.76

This distinction is important, as the two takings have ―markedly

73 The Takings Clause of the Utah Constitution expressly

provides a damage remedy for a violation—―just compensation.‖

Because of this textual constitutional right to damages, we do

not address AWBM‘s takings claim under Spackman. 2000 UT 87,

¶ 20.

74 Utah Dep’t of Transp. v. Admiral Beverage Corp., 2011 UT 62,

¶ 21, 275 P.3d 208.

75 Id. ¶ 22 (internal quotation marks omitted).

76 B.A.M. Dev., L.L.C. v. Salt Lake Cnty., 2006 UT 2, ¶ 32, 128

P.3d 1161.

18

Cite as: 2014 UT 49

ACJ NEHRING, opinion of the Court except as to Part II.B

different analytical formulas.‖77 Generally, there are two

principal steps in the takings analysis.78 First, a claimant must

demonstrate some protectable interest in property.79 Second, the

claimant must show that the property interest was taken or

damaged by government action.80 The district court dismissed

AWBM‘s takings claim for a failure to allege sufficient facts to

support the claim, particularly that AWBM did not demonstrate

that the taking was for a public use. AWBM argues it has alleged

these elements. We disagree and affirm the district court‘s

dismissal without prejudice.

¶ 32 A compensable taking may occur in either of two ways.81

A property owner ―may suffer a physical invasion or permanent

occupation of his or her property,‖ or may be deprived of

property when a regulatory scheme ―go[es] too far and impinge[s]

on private freedom.”82 ―Physical takings without just

compensation are unconstitutional ‗without regard to whether the

action achieves an important public benefit or has only minimal

economic impact on the owner.‘‖83 Regulatory takings, unlike

physical takings, ―do not always trigger an obligation to

compensate the property owner.‖84 When a regulatory scheme

does not involve a physical invasion or permanent occupation,

“[t]he Supreme Court has assigned no set formula to determine

whether a regulatory taking is unconstitutional‖; instead, the

77Id.; see also id. ¶¶ 32–33 (noting the difference between a

physical and regulatory taking).

78 Admiral Beverage Corp., 2011 UT 62, ¶ 22.

79 Id.; Harold Selman, Inc. v. Box Elder Cnty., 2011 UT 18, ¶ 23,

251 P.3d 804; Intermountain Sports, Inc. v. Dep’t of Transp., 2004 UT

App 405, ¶ 8, 103 P.3d 716.

80 See Admiral Beverage Corp., 2011 UT 62, ¶ 22; Harold Selman,

Inc., 2011 UT 18, ¶ 23; Intermountain Sports, Inc., 2004 UT App 405,

¶ 8.

81 Golden Pac. Bancorp v. United States, 15 F.3d 1066, 1071–72

(Fed. Cir. 1994).

82 Id. (internal quotation marks omitted).

83 B.A.M. Dev., L.L.C., 2006 UT 2, ¶ 32 (quoting Loretto v.

Teleprompter Manhattan CATV Corp., 458 U.S. 419, 434–35 (1982)).

84 Id. ¶ 33.

19

AMERICA WEST v. STATE

ACJ NEHRING, opinion of the Court except as to Part II.B

Court has engaged in an ―essentially ad hoc, factual inquir[y].‖85

In conducting this inquiry, the Court looks to several factors, such

as the ―economic impact of the regulation, its interference with

reasonable investment-backed expectations, and the character of

the government action.‖86

¶ 33 According to AWBM‘s complaint, ―it appears that the

Plaintiff and its Members have lost all of the ownership, goodwill,

equity, capital, and investments that they made in the Bank.‖ This

is the extent of AWBM‘s allegations contained in its complaint,

and neither we nor the district court can discern whether this

alleged taking constituted a physical or regulatory taking. This

distinction has a marked impact on UDFI‘s response and defense,

the district court‘s analysis, and the outcome. Without more, we

cannot agree that AWBM has sufficiently pleaded a taking, and

we thus affirm the district court‘s dismissal of the claim, but do so

without prejudice.87

III. THE DISTRICT COURT DID NOT HOLD AWBM

TO A HEIGHTENED PLEADING STANDARD

¶ 34 AWBM argues that the district court erred when it

dismissed AWBM‘s causes of action because it applied a higher

pleading standard than that dictated by rule 8 of the Utah Rules of

Civil Procedure. AWBM argues the district court erred when it

relied on the State‘s motion to dismiss and accompanying

memorandum that cited to Ellefsen v. Roberts88 and Heathman v.

Hatch.89 It argues that the district court‘s reliance on these cases

resulted in the application of a heightened pleading standard. We

disagree. Heathman involved a claim of fraud, which requires

heightened pleading under rule 9 of the Utah Rules of Civil

85 Id. (internal quotation marks omitted).

86 Id. (internal quotation marks omitted).

87 Although we announce today that a claim for a compensable

taking under Article I, section 22 of the Utah Constitution must

allege the type of taking (physical or regulatory), we express no

opinion on the heightened pleading standard required by federal

courts under Twombly.

88 526 P.2d 912 (Utah 1974).

89 372 P.2d 990 (Utah 1962).

20

Cite as: 2014 UT 49

ACJ NEHRING, opinion of the Court except as to Part II.B

Procedure.90 But the State did not argue that heightened pleading

was required here. The State cited Heathman for the proposition

that the objective of the pleading rules under the Utah Rules of

Civil Procedure ―is to require that the essential facts upon which

redress is sought be set forth with simplicity, brevity, clarity and

certainty so that it can be determined whether there exists a legal

basis for the relief claimed[.]‖91

¶ 35 Similarly, the State cited Ellefsen for the proposition that

―[t]he sufficiency of plaintiff‘s pleadings, which are construed

together, must be determined by the facts pleaded rather than the

conclusions stated.‖92 There is no indication on the record, nor

can we discern any evidence from the record, that the district

court applied a heightened pleading standard.

CONCLUSION

¶ 36 We affirm the district court‘s dismissal of all of AWBM‘s

claims. AWBM‘s claims for breach of contract and breach of the

covenant of good faith and fair dealing are dismissed without

prejudice. AWBM‘s due process claims are dismissed without

prejudice. Finally, AWBM has not adequately pleaded its takings

claim, and the claim is dismissed without prejudice.

90 Id. at 991. Heathman also addressed claims of negligence. Id.

91 Id. at 992.

92 Ellefsen, 526 P.2d at 915.

21

AMERICA WEST v. STATE

JUSTICE LEE, opinion of the Court

JUSTICE LEE, opinion of the Court:

¶ 37 We affirm the district court‘s dismissal of plaintiff‘s

procedural due process claim, but find error in the dismissal of

the claim with prejudice. The defect in that claim is a failure to

plead the claim at an adequate level of detail. And for that reason

the dismissal should have been without prejudice.

¶ 38 In order to state a claim for monetary damages for an

alleged violation of the constitution, a plaintiff must allege three

elements: (1) the plaintiff ―suffered a flagrant violation of his or

her constitutional rights,‖ (2) ―existing remedies do not redress

[the plaintiff‘s] injuries,‖ and (3) ―equitable relief, such as an

injunction, was and is wholly inadequate to protect the plaintiff‘s

rights or redress his or her injuries.‖ Spackman ex rel. Spackman v.

Bd. of Educ. of Box Elder Cnty. Sch. Dist., 2000 UT 87, ¶¶ 23–25, 16

P.3d 533 (internal quotation marks omitted).

¶ 39 The complaint under review falls far short of alleging

those elements. It makes the limited allegation that due process

required a pre-seizure hearing, by baldly asserting that the

applicable legal standard was not met. Thus, according to the

complaint, the seizure was not ―directly necessary to secure an

important governmental or general public interest,‖ there was no

―special need for very prompt action,‖ and the responsible

governmental official had not concluded that the seizure was,

―pursuant to a narrowly-drawn statute, necessary and justified in

this particular instance.‖ See Fuentes v. Shevin, 407 U.S. 67, 91

(1972) (articulating the test for determining when a pre-seizure

hearing is required under the Due Process Clause).

¶ 40 This is merely an allegation that a constitutional

violation occurred, satisfying only half of the first element of the

Spackman test. To survive a rule 12(b)(6) motion, the plaintiff also

must allege that the violation was ―flagrant,‖ that alternative

remedies would not redress the plaintiff‘s damages, and that

equitable relief was ―wholly inadequate.‖ Spackman, 2000 UT 87,

¶¶ 23, 25. These essential elements are set forth nowhere in the

complaint. Thus, this claim was properly dismissed for failure to

state a claim.

¶ 41 The district court granted the defendants‘ motion to

dismiss ―in full.‖ And the motion sought dismissal ―with

prejudice,‖ so the district court‘s judgment was apparently a

dismissal with prejudice. Such a dismissal is a ―drastic remedy,‖

Bonneville Tower Condo. Mgmt. Comm. v. Thompson Michie Assocs.,

728 P.2d 1017, 1020 (Utah 1986), which is generally appropriate

22

Cite as: 2014UT 49

JUSTICE LEE, opinion of the Court

―only if it appears to a certainty that [a] plaintiff cannot state a

claim.‖ Alvarez v. Galetka, 933 P.2d 987, 991 (Utah 1997) (quoting

5A CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL

PRACTICE AND PROCEDURE § 1357 (2d ed. 1990)).1

¶ 42 Justice Nehring contends that a pre-seizure hearing is

never required under the Due Process Clause. And he accordingly

concludes that plaintiffs are categorically incapable of stating a

claim as a matter of law. See supra ¶ 26. We see the matter

differently. Granted, in Fahey v. Mallonee, 332 U.S. 245 (1947), the

Supreme Court held that seizure of a financial institution under

the Home Owners‘ Loan Act of 1933 was appropriate. See id. at

253–54. But the operative test—subsequently articulated in

Fuentes2—is a fact-intensive one. Thus, although no hearing was

required in Fahey, there is no per se rule in controlling precedent.

The governing test (in Fuentes) is more context-dependent and

fact-specific. And that test is incompatible with the notion of a

per se rule insulating all bank seizures from constitutional

challenge under the Due Process Clause. Instead, Fuentes calls on

courts to assess the question based on the facts and circumstances

of an individual case, considering whether the specific seizure at

issue is ―directly necessary to secure an important governmental

interest‖; whether there is a ―special need for very prompt

action‖; and whether the responsible state actor determined

―under the standards of a narrowly drawn statute, that it was

necessary and justified in the particular instance.‖ 407 U.S. at 91

1 At some point, the failure to plead a claim at a sufficient level

of detail could sustain a dismissal with prejudice, but that remedy

is usually reserved for cases where the plaintiff has had multiple

opportunities to amend and has continually failed to state a claim.

Foman v. Davis, 371 U.S. 178, 182 (1962) (holding that leave to

amend should generally be freely given, unless the plaintiff

―repeated[ly] fail[s] to cure deficiencies by amendments

previously allowed‖). That exception has no application here, as

this was plaintiff‘s first attempt to assert this claim.

2 Fuentes concerned a prejudgment writ of replevin statute, not

a bank seizure. 407 U.S. at 69. But Fuentes articulates the general

standards under which property may be seized without a hearing.

Id. at 91. The Court then went on to list several examples where it

had concluded that seizure without a hearing had met that

standard, including in Fahey. Id. at 91–92 & nn. 24–28.

23

AMERICA WEST v. STATE

JUSTICE LEE, opinion of the Court

(emphasis added). Thus, Fahey may be read to deem it unlikely

that a pre-seizure hearing is required by due process; but it does

not state a per se rule, or necessitate such a result in all cases.

¶ 43 Under the fact-intensive Fuentes analysis, we cannot

conclude ―to a certainty‖ that it is impossible for the plaintiff to

allege facts sustaining the conclusion that a pre-seizure hearing

was required by due process in this case. Here the complaint did

little more than allege that a seizure occurred and summarily

recite the Fuentes test. And in light of the limited factual basis set

forth in the complaint, it is impossible to conclude that there are

no facts under which the plaintiff could allege a colorable due

process claim.

¶ 44 We affirm the dismissal of the plaintiff‘s procedural due

process claim, but find error in the dismissal of the claim with

prejudice and accordingly direct the district court to enter a

judgment of dismissal without prejudice.

——————

24