Gibbs-Squires v. Urban Settlement Servs.

• Decision Date: 14 January 2015
• Docket Number: Civil Action No. 14-cv-00488-MSK-CBS
• Parties: EUGENE M. GIBBS-SQUIRES; BABARA A. GIBBS and all others similarly situated, Plaintiffs, v. URBAN SETTLEMENT SERVICES, d/b/a Urban Lending Solutions; BANK OF AMERICA, N.A.; NATIONSTAR MORTGAGE; SPECIALIZED LOAN SERVICES; THE KORN LAW FIRM, P.A., BENJAMIN D. MOORE, and DOES 3-5, Defendants.
• Court: U.S. District Court — District of Colorado

EUGENE M. GIBBS-SQUIRES; BABARA A. GIBBSand all others similarly situated, Plaintiffs, v. URBAN SETTLEMENT SERVICES, d/b/a Urban Lending Solutions;BANK OF AMERICA, N.A.; NATIONSTAR MORTGAGE;SPECIALIZED LOAN SERVICES; THE KORN LAW FIRM, P.A.,BENJAMIN D. MOORE, and DOES 3-5, Defendants.

Civil Action No. 14-cv-00488-MSK-CBS

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

January 14, 2015

Chief Judge Marcia S. Krieger

OPINION AND ORDER ADOPTING RECOMMENDATION AND GRANTING MOTIONS TO DISMISS

THIS MATTER comes before the Court pursuant to the Plaintiffs' pro se Objections (#77, as amended # 78) to the Magistrate Judge's November 18, 2014 Recommendation (# 75) that certain motions to dismiss (# 24, 40, 45) be granted and that various motions by the Plaintiffs (# 6, 11, 16) be denied,¹ responses by Defendant Bank of America N.A. and Nationstar Mortgage (# 79) and Defendant Urban Settlement Services (# 80), and the Plaintiffs' reply (# 1).

FACTS

According to their initial pro se Complaint (# 1), in 2005, the Plaintiffs, Mr. Gibbs-Squires and Ms. Gibbs, purchased a home in Florence, South Carolina. That purchase wasfinanced by a mortgage loan extended by Defendant Bank of America ("BOA"). In or about 2009, the Plaintiffs contacted BOA seeking a modification of that loan under the Home Affordable Modification Program ("HAMP"), recently created by Congress.² They contend that they were repeatedly given false information, incorrectly told they were not eligible for a modification, and were repeatedly transferred among BOA employees.

Eventually, in 2011, they were assigned to Rogelio Chua, a BOA employee to manage their application for a HAMP modification. Although the Plaintiffs contend that they provided all requested information, they were repeatedly told by Mr. Chua that their application was incomplete. They left many messages for Mr. Chua without a response, or were told that their application was still being processed. The Plaintiffs contend that many of these communications from BOA were intentionally false and intended by BOA to delay or obstruct the Plaintiffs' efforts to obtain a modification.

In June 2012, the Plaintiffs were informed that their application was denied due to their failure to submit requested documents. The Plaintiffs sought reconsideration of that determination, only to experience additional delays. In November 2012, before any determination had been made on the Plaintiffs' request for reconsideration, BOA informed the Plaintiffs that it had sold their mortgage to Defendant Nationstar Mortgage ("Nationstar") (and/or Defendant SLS, identified in the Complaint as "Specialized Loan Servicing").³ Theycontended that the Defendants "repeatedly used mail and wire to issue knowingly false communications to the Gibbs regarding their loan modification."

Based on these allegations, their initial Complaint alleged a single claim pursuant to the Racketeer Influenced and Corrupt Organizations ("RICO") Act, 18 U.S.C. § 1962(c). They alleged that Defendants BOA; Nationstar, SLS; Urban Settlement Services, LLC ("Urban"); and various other entities and individuals⁴ conspired for the purpose of "extend[ing] as few permanent HAMP modifications as possible." The Complaint alleges that the various members of the enterprise engaged in a pattern of racketeering acts consisting of mail and wire fraud by "sending instructions to Plaintiffs and other homeowners by mail, fax, [or] email . . . directing them to provide documents . . . even though Defendants did not intend to enable homeowners who fulfilled all requirements to obtain a permanent HAMP loan modification," among other communications. The initial Complaint also sought to certify the action on behalf of a class of plaintiffs, represented by the Plaintiffs, of other HAMP applicants denied by BOA.

Shortly thereafter, the Plaintiffs filed a pro se Amended Complaint (# 8). It purported to incorporate the entirety of the existing Complaint, and added additional parties (including Defendants Korn Law Firm, P.A., and Benjamin D. Moore, a Referee for the 12^th Judicial Circuit Court in South Carolina who apparently presided over foreclosure proceedings on the Plaintiffs' home), allegations, and claims. In addition to the existing RICO claim, the newly-added claims are: (i) a claim under the Equal Credit Opportunity Act ("EQOA"), 15 U.S.C. § 1691e, in that all Defendants are "creditors" under that Act who failed to comply with regulations requiring them to make timely determinations and provide reasons for denials of credit; (iii) a claim underCalifornia's Consumer Legal Remedies Act ("CLRA"), Cal. Civ. § 1750 et seq.,⁵ apparently against all Defendants, in that the Defendants "practices" - namely, promising to provide the Plaintiffs with information about their request for reconsideration - "constitute unfair business practices under the CLRA"; (iii) violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200 et seq., in that the Defendants actions "conduct is unfair under the UCL" because "there is no benefit to society in allowing [the Defendants] to serially breach its [agreements], mislead borrowers regarding their ability to obtain loan modifications, or foreclose on borrowers [eligible for HAMP relief]"; (iv) breach of contract (under an unspecified jurisdiction's common law), in that the Defendants entered into "an enforceable contract requiring [them] to provide [the Plaintiffs] an offer to permanently modify their loans"; (iv) a claim captioned as "breach of contract" but primarily complaining that Defendant The Korn Law Firm commenced a foreclosure action against the Plaintiffs without cause and that the firm made fraudulent representations to the court in pursuing that action, and that Defendants including Mr. Moore conspired to advance that lawsuit; (v) breach of the implied covenant of good faith and fair dealing (under an unspecified jurisdiction's common law) in that the Defendants abused their discretion under agreements to permanently modify the Plaintiffs mortgage loan terms; (vi) promissory estoppel (under an unspecified jurisdiction's common law), in that the Defendants promised the Plaintiffs that "if their representations continued to be true and correct," a modification of loan terms would follow, and that the Plaintiffs relied on that representation instead of taking actions such as declaring bankruptcy or making an "efficient breach" of the mortgage loan terms; (vii) fraudulent misrepresentation (under an unspecified jurisdiction's common law), in that the Defendants' written modification agreements misrepresented to thePlaintiffs the Defendants' willingness to enter into a permanent modification of the loan terms; (viii) unjust enrichment/restitution (under an unspecified jurisdiction's common law), in that the Plaintiffs made "monthly payments that shouldn't have been made," conferring an unnecessary benefit on the Defendants; (ix) claims under "42 U.S.C. § 1981, 1982, 1983, 1985, 1986, and 1988" in that the Defendants' actions were undertaken to "target [African-Americans] as a specific group"; (x) a claim invoking various provisions of the RICO Act, similar to that alleged in the initial complaint, and further alleging "violation of the Hobbs Act, 28 U.S.C. § 1951 . . .," including "illegally foreclosing on homes" in various states as predicate racketeering acts.

Several of the Defendants filed motions to dismiss. Mr. Moore's pro se motion (# 24) sought dismissal for lack of personal jurisdiction, improper venue, insufficiency of process, and failure to state a claim under Fed. R. Civ. P. 12(b)(2), (3), (4), (5), and (6). BOA and Nationstar moved (# 40) to dismiss the claims due to lack of personal jurisdiction and failure to state a claim under Rule 12(b)(2) and (6).⁶ Urban moved (# 45) to dismiss for failure to state a claim under Rule 129(b)(6). Separately, Mr. Gibbs-Squires filed a variety of pro se motions, seeking an injunction against further foreclosure proceedings,⁷ sanctions against various Defendants, and leave to amend the Complaint, among other things.

The Court referred all of the motions to the Magistrate Judge for appropriate disposition. On November 18, 2014, the Magistrate Judge issued a combined Recommendation and ruling (#75) on the motions. Specifically, the Magistrate Judge found that: (i) as to the existence of personal jurisdiction over the non-Colorado Defendants (Mr. Moore, BOA, and Nationstar)under the ECOA and state-law claims, the Plaintiffs did not plead facts sufficient to show that the Defendants maintained sufficient minimum contacts with Colorado to permit the exercise of jurisdiction consistent with the Due Process clause; (ii) although the RICO Act permits nationwide service of process (and thus, personal jurisdiction), the Plaintiffs failed to adequately plead the essential elements of a RICO enterprise or a pattern of racketeering activity; (iii) the Amended Complaint failed to comply with Fed. R. Civ. P. 8's requirement of a "short and plain statement" of the pertinent facts and relief requested; (iv) the Plaintiffs' proposed Second Amended Complaint would not cure the jurisdictional and pleading defects, warranting denial of the request for leave to amend. Thus, the Magistrate Judge recommended that this Court grant the motions to dismiss and deny Mr. Gibbs-Squires' motions seeking a preliminary injunction, and the Magistrate Judge denied the motions over which he exercised authority under Fed. R. Civ. P. 72(a), including the Plaintiffs' motion to amend.

The Plaintiffs timely filed an Objection (# 77) to the Recommendation. Although the second half of that document digresses into irrelevant tangents about Bill Cosby and Mr. Gibbs-Squires' indictment in an unrelated matter, a generous reading of its first half indicates that the Plaintiffs contend that: (i) the Magistrate Judge erred in noting that the Plaintiffs had not served Nationstar or Mr. Moore; (ii) the...