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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 12-cv-00190-PAB-KLM
JOHN M. MBAKU,
LUVIBIDILA JOLIE LUMUENEMO,
BANK OF AMERICA, NATIONAL ASSOCIATION,
as successor by merger to BAC Home Loans Servicing, LP
f/k/a Countrywide Home Loans Servicing LP,
This matter is before the Court on the Recommendation of United States
Magistrate Judge Kristen L. Mix (the “Recommendation”) [Docket No. 22] filed on
August 20, 2012. The magistrate judge recommends that the Court grant the motion to
dismiss [Docket No. 13] filed by defendant Bank of America, National Association
(“BANA”). Plaintiffs filed timely objections [Docket No. 23] on September 4, 2012.
Thus, the Court will “determine de novo any part of the magistrate judge’s disposition
that has been properly objected to” by plaintiffs. FED. R. CIV. P. 72(b)(3). In light of
plaintiffs’ pro se status, the Court construes their filings liberally. See Haines v. Kerner,
404 U.S. 519, 520 (1972); Hall v. Bellmon, 935 F.2d 1106, 1110 & n.3 (10th Cir. 1991).
I. PLAINTIFFS’ OBJECTIONS TO MAGISTRATE JUDGE RECOMMENDATION
Plaintiffs make several objections to the Recommendation, which the Court
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A. Fair Debt Collection Practices Acts
Plaintiffs allege that defendant violated the federal Fair Debt Collection Practices
Act (“FDCPA”), see 15 U.S.C. § 1692 (2012) and the Colorado FDCPA. COLO. REV.
STAT. § 12-14-101 (2012). The Recommendation concluded that plaintiffs failed to
allege facts showing that defendant is a “debt collector” subject to the FDCPA. Docket
No. 22 at 7-9. Plaintiffs object, arguing that defendant meets the statutory definition of
a debt collector because defendant did not receive assignment of plaintiffs’ loan until
after the loan was in default. Docket No. 23 at 3.
The FDCPA defines a debt collector as a person “who uses any instrumentality
of interstate commerce or the mails in any business the principal purpose of which is
the collection of any debts, or who regularly collects or attempts to collect, directly or
indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C.
§ 1692a(6); see also COLO. REV. STAT. § 12-14-103(2)(a). An assignee is not a debt
collector under the FDCPA unless the debt is in default at the time of assignment. See
15 U.S.C. § 1692a(6)(F)(iii); see also COLO. REV. STAT § 12-14-103(2)(b)(VII)(C)
(“‘Collection agency’ does not include . . . [a]ny person collecting or attempting to collect
any debt owed or due or asserted to be owed or due another to the extent that: . . .
[s]uch activity concerns a debt which was not in default at the time it was obtained by
such person”); Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985) (“a debt
collector does not include . . . an assignee of a debt, as long as the debt was not in
As the Colorado FDCPA is patterned on the federal law, plaintiffs’ FDCPA
claims will be addressed together. See Udis v. Universal Commc’ns Co., 56 P.3d 1177,
1180 (Colo. App. 2002).
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default at the time it was assigned.”).
The complaint asserts that, as of September 2010, plaintiffs were unemployed
and were eligible for the Home Affordable Modification Program (“HAMP”). Docket No.
1 at 5, ¶ 24. The complaint also asserts that defendant instituted foreclosure
proceedings on August 16, 2010. Docket No. 1 at 3, ¶ 7; see also Docket No. 1-1 at 2
(Notice of Election and Demand for Sale by Public Trustee dated August 16, 2010). 2
The complaint further asserts that defendant did not receive assignment of the loan
until April 28, 2011. Docket No. 1 at 3, ¶ 8; Docket No. 1-1 at 4 (Assignment of Deed of
Trust from Mortgage Electronic Registration System (MERS) to BAC Home Loans
Servicing, L.P., dated April 28, 2011). Defendant does not challenge plaintiffs’
assertion that it is a debt collector because it received assignment of the loan after
default. See Docket No. 24 at 3-4.
Without identifying a statutory provision, plaintiffs allege that defendant violated
the state and federal FDCPA when it “harassed plaintiffs by sending its agents to
plaintiffs’ home on several occasions for dubious purposes.” Docket No. 1 at 15, ¶ 90.
When considering a motion to dismiss, a court typically disregards facts
supported by documents other than the complaint unless it first converts the motion to
dismiss into a motion for summary judgment. Jackson v. Integra Inc., 952 F.2d 1260,
1261 (10th Cir. 1991). However, a court may consider documents outside of the
complaint on a motion to dismiss in certain instances. Of relevance here is the
exception permitting a court to consider documents subject to judicial notice, including
court documents and matters of public record, Tal v. Hogan, 453 F.3d 1244, 1265 n.24
(10th Cir. 2006), as well as the exception allowing consideration of such documents that
are both central to the plaintiffs’ claims and to which the plaintiffs refer in their
complaint. GFF Corp. v. Associated Wholesale Grocers, 130 F.3d 1381, 1384 (10th
Cir. 1997). The Court has examined the documents submitted by the parties in
connection with the complaint and the motion to dismiss and has determined that each
of the documents cited in this opinion may appropriately be referenced by the Court.
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1. Posting a Notice
Plaintiffs allege that on November 22, 2011, defendant posted a notice on their
front door stating in pertinent part:
This property has been determined to be vacant and abandoned. This
information will be reported to the mortgage servicer responsible for
maintaining the property. The mortgage servicer intends to protect this
property from deterioration. The property may have its locks replaced and/or
plumbing systems winterized in the next few days. If the property is NOT
VACANT and ABANDONED, please call BAC Field Services immediately at
Docket No. 1 at 15, ¶ 90; Docket No. 1-1 at 28. Plaintiffs assert that the notice
“constitutes contact by embarrassing media, so as to advertise to the whole
neighborhood its attempt to collect a debt.” Docket No. 1 at 25, ¶¶ 169, 174.
The FDCPA contains a number of substantive provisions that might apply to
plaintiffs’ factual allegations. For one, it prohibits conduct whose “natural consequence
. . . is to harass, oppress, or abuse any person in connection with the collection of a
debt.” 15 U.S.C. § 1692d; see also COLO. REV. STAT. § 12-14-106(1). Examples of
harassment include using obscene language, threatening violence, or, with the intent to
annoy or abuse any person, calling repeatedly or continuously. 15 U.S.C. § 1692d(1),
(2), (5); see also COLO. REV. STAT. § 12-14-106(1)(a), (b), (e). The FDCPA also
prohibits the use of “unfair or unconscionable means to collect or attempt to collect any
debt.” 15 U.S.C. § 1692f; see also COLO. REV. STAT. § 12-14-108(1). In this case,
defendant’s conduct does not violate § 1692d. The natural consequence of the notice
Plaintiffs challenge only the posting of the notice and not defendant’s right to
take the action described in the notice or defendant’s determination that the property
was vacant. See Docket No. 1 at 23-25.
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was to provide plaintiffs with a means of notifying defendant that their property was not
vacant. Although it is also natural that the notice would cause plaintiffs concern, the
notice itself provides a way of alleviating that concern. The alternative–changing the
locks without posting a notice–seems far more likely to “harass, oppress, or abuse”
plaintiffs. 15 U.S.C. § 1692d.
Several FDCPA provisions bar practices that might inappropriately publicize a
consumer’s debt. Specifically, the FDCPA prohibits communicating with a consumer
regarding a debt via post card, 15 U.S.C. § 1692f(7); see also COLO. REV. STAT. § 12-
14-108(1)(g), and publishing a “list of consumers who allegedly refuse to pay debts,
except to a consumer reporting agency” or to a potential creditor, employer, or insurer
of the debtor. 15 U.S.C. § 1692d(3), 1681b(a)(3); see also COLO. REV. STAT. § 12-14-
106(1)(c). The FDCPA also prohibits communicating to a third party any information
related to the collection of a debt “without the prior consent of the consumer given
directly to the debt collector, or the express permission of a court of competent
jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy.”
15 U.S.C. § 1692c(b); see also COLO. REV. STAT. § 12-14-105(2). The statute defines
communication as the “conveying of information regarding a debt directly or indirectly to
any person through any medium.” 15 U.S.C. § 1692a(2); see also COLO. REV. STAT.
In Zortman v. J.C. Christensen & Associates, 870 F. Supp. 2d 694, 707-08 (D.
Minn. 2012), the court held that a debt collector did not violate the FDCPA’s prohibition
on third-party communications by leaving a voicemail message identifying neither a
consumer nor a debt. The message stated, in pertinent part: “We have an important
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message from J.C. Christensen & Associates. This is a call from a debt collector.” Id.
Plaintiffs argue that the posted notice was unlawful because it wrongfully
published plaintiffs’ status as debtors. Docket No. 1 at 25, ¶¶ 169, 174. However, the
notice does not violate § 1692d(3) as it does not state that plaintiffs “allegedly refuse to
pay debts,” only that defendant believed the residence to be vacant. It does not violate
§ 1692c(b) as it does not identify a debtor or a debt. See Zortman, 870 F. Supp. 2d at
707-08. It states that the property has been determined to be vacant and abandoned
and that its status will be reported to the mortgage servicer. Docket No. 1-1 at 28.
Given the importance of providing notice to individuals at risk of losing their home, the
purpose of the FDCPA would not be served by punishing defendant’s conduct here.4
Plaintiffs’ general statement that defendant’s agents made several other visits for
“dubious” purposes, without additional information, is too vague to state a claim under
the FDCPA. See FED. R. CIV. P. 8; see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(“A claim has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct
2. Deceptive Representations
The FDCPA bars the use of “false, deceptive, or misleading representation[s] or
The importance of notice in this instance is underscored by Colorado law,
which requires that a party seeking foreclosure post a notice of the upcoming Rule 120
hearing “in a conspicuous place on the property that is the subject of the sale. If
possible, the notice shall be posted on the front door of the residence.” COLO. REV.
STAT. § 38-38-105(3).
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means in connection with the collection of any debt,” 15 U.S.C. § 1692e, including the
“threat to take any action that cannot legally be taken.” Id. at § 1692e(5); see also
COLO. REV. STAT. § 12-14-107. Plaintiffs allege that defendant violated the FDCPA by
falsely misrepresenting itself as a mortgagee, Docket No. 1 at 25, ¶¶ 168, 173, and that
defendant lacked the right to foreclose on plaintiffs’ property. Docket No. 1 at 15, ¶ 84.
Under Colorado law, a “holder of an evidence of debt” may elect to foreclose
when a borrower has violated a covenant in a deed of trust. COLO. REV. STAT. § 38-38-
101(1). A holder of an evidence of debt (“holder”) is the “person in actual possession of
or person entitled to enforce an evidence of debt.” Id. at § 38-38-100.3(10). The term
includes the “person in possession of a negotiable instrument evidencing a debt, which
has been duly negotiated to such person or to bearer or indorsed in blank.” Id. at § 38-
38-100.3(10)(c). In order to foreclose, the holder must file a notice of election and
demand signed by the holder (or the holder’s attorney) and the original evidence of debt
with the public trustee for the country where the property is located. Id. at § 38-38-
101(1)(b). However, in lieu of filing the original evidence of debt, the holder may
foreclose as a “qualified holder” by filing a “copy of the evidence of debt and a
certification signed and properly acknowledged by a holder of an evidence of debt . . .
under which the holder claims to be a qualified holder and certifying or stating that the
copy of the evidence of debt is true and correct.” Id. at § 38-38-101(b)(II). A qualified
holder must also agree to:
indemnify and defend any person liable for repayment of any portion of the
original evidence of debt in the event that the original evidence of debt is
presented for payment to the extent of any amount, other than the amount
of a deficiency remaining under the evidence of debt after deducting the
amount bid at sale.
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Id. at §§ 38-38-101(1)(b)(II), (2)(a); see also In Re Miller, 666 F.3d 1255, 1264-65 (10th
Cir. 2012) (“holder of an evidence of debt” may foreclose under Colorado law by
producing a copy of the evidence of the debt, a copy of the deed of trust, and a
qualified holder statement).
In this instance, defendant complied with Colorado law by submitting a copy of
plaintiffs’ promissory note endorsed in blank, a copy of the deed of trust, and a qualified
holder statement. Docket No. 1-1 at 9, 13-19, 24-26. Thus, defendant has complied
with the statutory requirements under Colorado law. See COLO. REV. STAT. § 38-38-
101. As plaintiffs’ allegations establish that defendant complied with Colorado’s
statutory foreclosure requirements, plaintiffs do not state a claim under § 1692e.
B. Truth in Lending Act
The magistrate judge recommended that the Court dismiss plaintiffs’ claim under
the Truth in Lending Act (“TILA”) because it is time-barred. Docket No. 22 at 11; see 15
U.S.C. §§ 1601 et seq. Plaintiffs object on the grounds that signing their loan
documents did not consummate their loan agreement because those documents do not
identify the “true lender.” Docket No. 23 at 6. Plaintiffs assert that Taylor Bean and
Whitaker Mortgage Corporation (“TBW”), the entity that the loan documents list as the
lender, is not the “true lender” because it “did not loan plaintiffs a single dollar” and that
“someone else or some other entity . . . funded, lent, or table funded the loan.” Docket
Under TILA, “[t]able funding occurs when the creditor does not provide the
funds for the transaction at consummation out of the creditor’s own resources, including
drawing on a bona fide warehouse line of credit, or out of deposits held by the creditor.
Accordingly, a table-funded transaction is consummated with the debt obligation initially
payable by its terms to one person, but another person provides the funds for the
transaction at consummation and receives an immediate assignment of the note, loan
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No. 23 at 5. Plaintiffs further assert that the “promissory note should have been
between the plaintiffs and the true lender” and that TBW’s “false representation”
regarding its identity as lender precluded the necessary “meeting of the minds.” Docket
No. 23 at 6.
A consumer must bring a TILA claim within one year of the violation, which
occurs when the consumer credit transaction is consummated. 15 U.S.C. § 1640(e);
Stevens v. Rock Springs Nat’l Bank, 497 F.2d 307, 309 (10th Cir. 1974). State law
determines the date on which the transaction is deemed consummated. 12 C.F.R.
§ 226 (Suppl. I 2011).
In Jackson v. Grant, 890 F.2d 118, 120-21 (9th Cir. 1989), the court held that a
borrower’s loan was not consummated when he signed the promissory note and deed
of trust because the name of the lender was left blank on both documents. In addition,
the borrower received a statement indicating that the broker was not the lender, that the
lender was not presently known, and that the borrower was not guaranteed a loan. Id.
The court held that the loan agreement did not become binding until the broker
subsequently agreed to fund the loan itself. Id. at 121. In In re Ramsey, 176 B.R. 183,
187 (B.A.P. 9th Cir. 1994), the court distinguished Jackson because the borrower in
that case knew who was financing the loan when he signed the loan documents. The
court held that he was legally obligated on the loan as of the “date he signed the
contract, or other evidence of the debt obligation.” 12 C.F.R. § 226 (Suppl. I 2011).
When a loan is table funded, TILA imposes restrictions on the payments that a creditor
may receive. Id. TILA does not state that table funding alters the statute of limitations
for filing a claim. See 12 C.F.R. § 226.36; 12 C.F.R. § 226.23(a)(3).
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promissory note and deed of trust and agreed to borrow money from an identifiable
The situation here is similar to In re Ramsey. Plaintiffs’ deed of trust identifies
TBW as the lender. Docket No. 1 at 13. As of February 22, 2008, the date the deed of
trust was signed, plaintiffs were obligated on their mortgage to TBW. See In re
Ramsey, 176 B.R. at 187; see also Pennington v. Equifirst Corp., 2011 WL 1541283, at
*4 (D. Kan. Apr. 21, 2011) (“Contrary to the situation in Jackson, plaintiffs’ proposed
amended complaint alleges that the documents plaintiffs signed on March 23, 2007
identified the lender on the promissory note and the mortgage as defendant EquiFirst
. . . . Thus, the lender was identified and plaintiffs cannot rely upon the holding in
Jackson to claim that there was no meeting of the minds with the lender.”).
Plaintiffs concede that their loan documents identify TBW as the lender. Docket
No. 23 at 6; see also Docket No. 1-1 at 13, 24. Thus, plaintiffs’ loan was consummated
when they signed the documents on February 22, 2008 and their TILA claim is time-
C. Emergency Mortgage Relief Act
The magistrate judge recommended that plaintiffs’ complaint under the
Emergency Mortgage Relief Act (“EMRA”) be dismissed because plaintiffs failed to
allege that they contacted the Department of Housing and Urban Development (“HUD”)
or another federal agency regarding their request for emergency mortgage relief, as
required by the statute. Docket No. 22 at 10; see 12 U.S.C. § 2702(2). Plaintiffs object
to the Recommendation on the grounds that, in the case of an application for relief as
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part of the Home Affordable Modification Program, EMRA requires that the holder of the
mortgage submit all necessary documents. Docket No. 23 at 4.
Plaintiffs argument runs counter to the plain language of EMRA, which states
that no assistance shall be extended unless the “mortgagor and holder of the mortgage
have indicated in writing to the Secretary of Housing and Urban Development . . . and
to any agency or department of the Federal Government responsible for the regulation
of the holder that circumstances . . . make it probable that there will be a
foreclosure . . . . ” 27 U.S.C. § 2702(2); see also Lopezlena v. Litton Loan Serv., LP,
2012 WL 4479580, at *2 (W.D. Wash. 2012). There is no legal basis exempting
plaintiffs from EMRA’s requirements.
Thus, plaintiffs have failed to state a claim for relief under EMRA.
D. State Law Claims
The magistrate judge, having recommended dismissal of plaintiffs’ federal
claims, recommended that the Court decline to exercise supplemental jurisdiction over
their state law claims. Docket No. 22 at 12. However, the Court retains subject matter
jurisdiction on the basis of diversity and will thus consider plaintiffs’ state law claims de
novo. See Docket No. 1 at 4, ¶ 18 (“Plaintiffs are citizens of Colorado and the
defendant is a corporate citizen of North Carolina. The amount in controversy exceeds
$160,000.00.”); Docket No. 24 at 2-3 (“this Court also has jurisdiction over this matter
pursuant to 28 U.S.C. § 1332, because the parties are completely diverse and the
amount in controversy exceeds $75,000.”).
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Plaintiffs allege that defendant defrauded them by misrepresenting its authority
to foreclose on their property. Docket No. 1 at 20, ¶¶ 114-19.
A claim for fraud requires a plaintiff to show: “(1) that the defendant made a false
representation of material fact; (2) that the one making the representation knew that it
was false; (3) that the person to whom the representation was made was ignorant of
the falsity; (4) that the representation was made with the intention that it be acted upon;
and (5) that the reliance resulted in damage to the plaintiff.” Vinton v. Virzi, 269 P.3d
1242, 1247 (Colo. 2012). In “averments of fraud or mistake, the circumstances
constituting fraud or mistake shall be stated with particularity.” COLO. R. CIV. P. 9(b).
Plaintiffs allege that: (1) defendant falsely represented its legal right to foreclose
on their property; (2) defendant knew this representation was false; (3) plaintiffs acted
in reliance on defendant’s false representation when they filed for bankruptcy; and (4)
they suffered harm as a result of the bankruptcy filing. Docket No. 1 at 6, ¶ 35; id. at
15, ¶¶ 84, 88-89. 6
Plaintiffs do not allege that defendant initiated foreclosure proceedings with the
intent of inducing plaintiffs’ reliance. On the contrary, plaintiffs allege that defendant
In the same section of the complaint, entitled “Scheme to Defraud Plaintiffs out
of their Home,” Docket No. 1 at 15, plaintiffs allege that defendant should have been
estopped from foreclosing because it did not object to the bankruptcy court’s discharge
of plaintiffs’ debts. Docket No. 1 at 15, ¶ 87. It is not clear whether this allegation is
part of the fraud claim or an independent matter. However, a Chapter 7 discharge
voids only personal debts and does not preclude a mortgagee’s ability to foreclose on
the collateral. 11 U.S.C. § 524(a); In re Vogt, 257 B.R. 65, 70 (Bankr. D. Colo. 2000)
(“it is clear that a creditor that holds security for the discharged debt can still foreclose
on the collateral to collect that debt”).
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was motivated in part by its expectation that plaintiffs would not challenge the
foreclosure. Docket No. 1 at 15, ¶ 85 (“in furtherance of its fraud scheme, BOA made
the strategic decision that most homeowners will not challenge its claimed status as
mortgagee/assignee”). Instead of remaining passive as they allege defendants hoped,
plaintiffs attempted to prevent the foreclosure by filing for bankruptcy, objecting to
defendant’s evidence in the Rule 120 hearing, and filing a motion for a preliminary
injunction in this Court. See, e.g., Docket No. 1 at 2, ¶ 5 (plaintiffs challenged identity
and credibility of witnesses in Rule 120 hearing); id. at 6, ¶ 36 (“In their bankruptcy
petition, plaintiffs indicated to the Bankruptcy Court their intention to keep their
residential property.”); see id. at 4, ¶¶ 13-17 (seeking preliminary injunction against
foreclosure sale). Plaintiffs do not allege that defendant sought to induce plaintiffs to
file for bankruptcy. Thus, plaintiffs fail to state a claim for fraud.
2. Colorado Consumer Protection Act
Plaintiffs allege that defendant “affirmatively misrepresented and knowingly
concealed, suppressed and failed to disclose material facts” in violation of the Colorado
Consumer Protection Act (“CCPA”). Docket No. 1 at 21, ¶ 125; see COLO. REV. STAT.
§§ 6-1-101, 6-1-105.
A private cause of action under the CCPA has five elements:
(1) that the defendant engaged in an unfair or deceptive trade practice; (2)
that the challenged practice occurred in the course of defendant’s business,
vocation, or occupation; (3) that it significantly impacts the public as actual
or potential consumers of the defendant’s goods, services, or property; (4)
that the plaintiff suffered injury in fact to a legally protected interest; and (5)
that the challenged practice caused the plaintiff’s injury.
Hall v. Walter, 969 P.2d 224, 235 (Colo. 1998). Section 6-1-105(1)(e) prohibits
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“[k]nowingly mak[ing] a false representation as to the characteristics, ingredients, uses,
benefits, alterations, or quantities of goods, food, services, or property or a false
representation as to the sponsorship, approval, status, affiliation, or connection of a
person therewith.” A “false representation” is one that induces action or inaction or has
the capacity to attract consumers. Rhino Linings USA, Inc. v. Rocky Mountain Rhino
Lining, Inc., 62 P.3d 142, 147 (Colo. 2003). To determine whether a false
representation significantly impacts the public, courts consider “(1) the number of
consumers directly affected by the challenged practice, (2) the relative sophistication
and bargaining power of the consumers affected by the challenged practice, and (3)
evidence that the challenged practice has previously impacted other consumers or has
the significant potential to do so in the future.” Id. at 149.
Plaintiffs’ complaint does not clearly state the conduct that allegedly constitutes a
false representation under the CCPA. Plaintiffs allege that defendant misrepresented
its right to foreclose on their home, but absent allegations that this conduct has or will
affect other consumers, this is not sufficient to state a CCPA claim. See Rhino Linings,
62 P.3d at 149. Plaintiffs also allege that defendant is “well aware of MERS’ dubious
status as a proper mortgage registry” but nonetheless “proceeds with foreclosure” and
that “MERS lacks internal controls to ensure accuracy, while holding itself out to the
courts, investors, and the public as an authoritative source of mortgage title.” Docket
No. 1 at 8, ¶ 42. These allegations do not establish that defendant made a false
representation within the meaning of the CCPA, as plaintiffs do not allege that
defendant’s representation of its relationship with MERS induces consumer action or
inaction or tends to attract customers. See Rhino Linings, 62 P.3d at 147. Thus,
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plaintiffs fail to state a claim under the CCPA.
Plaintiffs also argue that defendant was negligent per se in violating the CCPA.
Negligence per se is a common law doctrine under which “legislative enactments . . .
can prescribe the standard of conduct of a reasonable person, or duty, such that a
violation of the statute or ordinance constitutes a breach of duty of care.” Lombard v.
Colo. Outdoor Educ. Ctr., Inc., 266 P.3d 412, 417 (Colo. App. 2011). As the Court has
held that plaintiffs fail to state a claim for breach of the CCPA, they cannot establish the
requisite violation of a statute necessary to a claim for negligence per se.
3. Breach of Contract
Plaintiffs allege that defendant breached its contractual obligations by failing to
adhere to HUD regulations and by breaching the covenant of good faith and fair
Breach of contract has four elements: the existence of a contract; the plaintiff’s
performance of the contract or justification for non-performance; the defendant’s breach
of the contract; and resulting damages. W. Distrib. Co. v. Diodosio, 841 P.2d 1053,
1058 (Colo. 1992). The performance element requires “substantial performance,”
meaning that the defendant has “received substantially the benefit he expected.” Id.
(internal citations omitted).
Here, plaintiffs do not allege that they substantially performed the contract. They
concede that their loan went into default and do not offer a justification for non-
performance. See Docket No. 23 at 3; see also Docket No. 1-1 at 2 (Notice of Election
and Demand for Sale by Public Trustee stating that plaintiffs violated deed of trust
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covenants by failing to pay principal and interest when due). Thus, they cannot assert a
claim for breach of contract. See W. Distrib., 841 P.2d at 1058.
4. Intentional Infliction of Emotional Distress
Plaintiffs allege that defendant intentionally caused plaintiffs severe emotional
distress by posting a notice on plaintiffs’ front door stating that it had determined the
property was vacant. Docket No. 1 at 23.
Intentional infliction of emotional distress (“IIED”) has three elements: “(1) the
defendant engaged in extreme and outrageous conduct; (2) recklessly or with the intent
of causing the plaintiff severe emotional distress; (3) causing the plaintiff to suffer
severe emotional distress.” Han Ye Lee v. Colorado Times, Inc., 222 P.3d 957, 966-67
(Colo. App. 2009). The “level of outrageousness required for conduct to create liability”
under this tort is “extremely high” as it must be “so outrageous in character, and so
extreme in degree, as to go beyond all possible bounds of decency and to be regarded
as atrocious, and utterly intolerable in a civilized community.” Coors Brewing Co. v.
Floyd, 978 P.2d 663, 666 (Colo. 1999) (internal citations omitted).
Plaintiffs’ allegations do not rise to this level. It was neither extreme nor
outrageous for an entity possessing and filing the requisite documentation under
Colorado law to institute foreclosure proceedings on borrowers in default. See COLO.
REV. STAT. § 38-38-101. Nor was it extreme or outrageous for defendant to post the
notice on plaintiffs’ front door, which, as discussed earlier, serves the purpose of
providing notice to any occupants of action that will be taken to preserve the property.
Plaintiffs do not allege conduct on the part of defendants that could reasonably be
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considered “utterly intolerable in a civilized community.” See Coors Brewing, 978 P.2d
at 666. Thus, plaintiffs’ claim for intentional infliction of emotional distress fails.
5. Negligent Infliction of Emotional Distress
Plaintiffs allege that defendant’s conduct constitutes negligent infliction of
emotional distress. Docket No. 1 at 23, ¶¶ 153-56.
A claim for negligent infliction of emotional distress (“NIED”) requires a showing
that “defendant’s negligence created an unreasonable risk of physical harm and caused
the plaintiff to be put in fear for his or her own safety, that this fear had physical
consequences or resulted in long-continued emotional disturbance, and that the
plaintiff’s fear was the cause of the damages sought.” Draper v. DeFrenchi-Gordineer,
282 P.3d 489, 496-97 (Colo. App. 2011). Plaintiffs have not alleged that defendant
created a risk of physical harm and thus this claim fails.
Plaintiffs allege that defendant breached its duty of care by posting the notice on
plaintiffs’ home. A claim for negligence has four elements: duty; breach of duty;
causation; and damages. Redden v. SCI Colo. Funeral Servs., Inc., 38 P.3d 75, 80
Plaintiffs allege that defendant acted negligently by posting a notice on their door
informing them that their locks would be changed unless they called the listed number.
Docket No. 1 at 24, ¶ 158. They further allege that this act directly and proximately
caused them “severe emotional distress, mental pain and suffering and adverse
physical consequences.” Docket No. 1 at 24, ¶ 160.
Case 1:12-cv-00190-PAB-KLM Document 26 Filed 02/01/13 USDC Colorado Page 18 of 19
However, plaintiffs’ allegations do not establish that defendant breached a duty
owed to plaintiffs. See Iqbal, 556 U.S. at 678. Plaintiffs state that defendant had a duty
to “exercise reasonable care with respect to plaintiffs as to certain facts, including but
not limited to the fact that defendant’s agent threatened to lock plaintiffs’ [sic] out of
their home by changing the locks, was reasonably foreseeable.” Docket No. 1 at 24,
¶ 159. This statement is not sufficient to state a negligence claim, as it merely restates
the challenged conduct without explaining the nature of the duty at issue. These
assertions do not establish any breach of duty on defendant’s part. Thus, plaintiffs
have failed to state a claim for negligence.
E. Due Process
Plaintiffs object to the Recommendation on the grounds that it does not address
their claim that Rule 120 of the Colorado Rules of Civil Procedure violates the due
process clause of the Constitution. Docket No. 23 at 2 (“Plaintiffs also alleged in their
complaint that it is a due process violation for the state court to allow a financial entity
such as Bank of America (BOA) to proceed with foreclosure sale without evidence that
the trust deed and note have been duly transferred.”); see COLO. R. CIV. P. 120; see
U.S. Const., amend. XIV, § 1. Although this claim is not enumerated as a cause of
action in the complaint, it is alleged in the complaint’s introduction, which states in part:
Because it is so limited in scope, and plaintiffs contend that it violates the
due process clause of the U.S. Constitution by improperly shifting the burden
from the bank to the plaintiffs, the language of C.R.C.P. 120 invites
homeowners such as plaintiffs to file their own lawsuit in another forum and
raise their objections and defenses there. In other words, the bank as
movant need not prove it is the real party in interest but plaintiffs need to
prove they are not. . . . Indeed, C.R.C.P. 120 provides for no deposition,
witnesses may testify via telephone even when their identity and credibility
is challenged as was done by plaintiffs in this case. The defendant is
Case 1:12-cv-00190-PAB-KLM Document 26 Filed 02/01/13 USDC Colorado Page 19 of 19
deemed to have standing by mere possession of a note, without regard to
ownership of the mortgage, the note, the assignment, as well as forgery and
other misrepresentation. . . . To illustrate, plaintiffs could illegally obtain or
otherwise steal a promissory note and mortgage from any bank or other
private entity, and present themselves at a Colorado Rule 120 hearing and
be deemed by mere possession of the note to be the proper party to
foreclose. The state court, without more, would issue an order for
Docket No. 1 at 2-3, ¶¶ 4-6. Construed liberally, Haines, 404 U.S. at 520, this language
alleges both a facial challenge to Rule 120 and an as-applied challenge premised on
plaintiffs’ proceedings in state court. Defendant did not move to dismiss this claim, and
thus it survives. Docket No. 13.
For the foregoing reasons, it is
ORDERED that the Recommendation of United States Magistrate Judge [Docket
No. 22] to dismiss plaintiffs’ state law claims and plaintiffs’ federal claims under the
FDCPA, EMRA, TILA, and HUD regulations is ACCEPTED. It is further
ORDERED that defendants’ motion to dismiss [Docket No. 13] is GRANTED.
Plaintiffs’ due process claim survives.
DATED February 1, 2013.
BY THE COURT:
s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge
Although “a court may dismiss sua sponte when it is patently obvious that the
plaintiff could not prevail on the facts alleged,” Hall, 935 F.2d at 1110, such dismissals
are “strong medicine, and should be dispensed sparingly.” Chute v. Walker, 281 F.3d
314, 319 (1st Cir. 2002). The Court concludes that sua sponte dismissal is not
appropriate in this instance.