Henson v. Bank of Am.

Decision Date25 March 2013
Docket NumberCivil Action No. 12–cv–00098–CMA–CBS.
Citation935 F.Supp.2d 1128
PartiesMark A. HENSON, and Suzanne M. Henson, Plaintiffs, v. BANK OF AMERICA, a National Association, and Castle Stawiarski, LLC, a Colorado limited liability company, Defendants.
CourtU.S. District Court — District of Colorado

OPINION TEXT STARTS HERE

Matthew R. Osborne, Matthew R. Osborne, P.C., Denver, CO, Richard K. Blundell, Law Office of Richard K. Blundell, Greeley, CO, for Plaintiffs.

Melissa Louise Cizmorris, Victoria Elena Edwards, Akerman Senterfitt LLP, Phillip A. Vaglica, Christopher T. Groen, The Castle Law Group, LLC, Denver, CO, for Defendants.

ORDER ON PENDING DISPOSITIVE MOTIONS

CHRISTINE M. ARGUELLO, District Judge.

This matter is before the Court on Defendant Bank of America, N.A.'s Motion to Dismiss (Doc. # 34), filed on June 1, 2012, and Defendant Castle Stawiarski, LLC's Motion to Dismiss (Doc. # 43), filed on July 5, 2012. Plaintiffs Mark and Suzanne Henson filed their Response to Bank of America's Motion to Dismiss (Doc. # 40) on June 29, 2012, and a Response to Defendant Castle Stawiarski, LLC's Motion to Dismiss (Doc. # 49) on July 26, 2012. Defendants Bank of America and Castle Stawiarksi, LLC filed their reply briefs (Doc. 50 and 53) on July 30, 2012, and August 14, 2012, respectively.

I. FACTUAL BACKGROUND

Mark and Suzanne Henson commenced this litigation on January 13, 2012, by filing a Complaint (Doc. # 1) against Defendant Bank of America, consisting of 18 pages, 139 numbered paragraphs and 14 claims for relief. Plaintiffs' Second Amended Complaint (Doc. # 29) was filed on May 11, 2012, with claims against Defendants Bank of America and Castle Stawiarski.1 The Second Amended Complaint, which is the current operative pleading, includes 203 numbered paragraphs, 39 pages, and 12 claims for relief.

The parties do not dispute that on November 22, 2005, the Hensons borrowed $242,000 from Ryland Mortgage Company for the purchase of their primary residence. ( See Doc. # 29, ¶ 6.) This transaction was memorialized with a Note and separately executed Deed of Trust. The Deed of Trust or “Security Instrument” denominated the Hensons as “borrower,” Ryland Mortgage Company as “lender,” and Mortgage Electronic Registration Systems, Inc. (“MERS”), as well as its successors and assigns, as “the beneficiary of this Security Instrument.” 2 At some point thereafter, Countrywide Home Loans Servicing, LP assumed the servicing rights on the Hensons' loan. ( Id., ¶ 8.) Plaintiffs concede that in 2009, Bank of America N.A. acquired Countrywide Home Loans Servicing LP and changed the name of that entity to BAC Home Loans Servicing, L.P. ( Id., ¶ 9.)

Under Colorado law, a promissory note is a negotiable instrument that is freely assignable.

If an instrument is payable to bearer, it may be negotiated by transfer of possession alone. [E]vidence that the Note itself has been indorsed [ sic] in blank and that the Defendant is the holder of that Note is sufficient evidence of the Defendant's interest in the Deed of Trust.” “Whether or not [the original lender] executed any separate assignment of the Deed of Trust to the Defendant is not relevant because proof that the Defendant is the holder of the Note is conclusive as to Defendant's interest in the Deed of Trust.”

Colorado law defines a [h]older of an evidence of debt” as, among other things, [t]he person in possession of a negotiable instrument evidencing a debt, which has been duly negotiated to such person or to bearer or indorsed [ sic] in blank.”

Patrick v. Bank of New York Mellon, No. 11–cv–01304, 2012 WL 934288, at *13–14 (D.Colo. Mar. 1, 2012) (unpublished) (internal citation omitted) (noting that the foreclosure process in Colorado does not require the holder of an evidence of debt to produce the original note or assignment or transfer documents from the original lender). See also Utah Cnty. Recorder v. Lexington Mortg., Inc., No. 2:11–CV–528, 2012 WL 1188460, at *3 (D.Utah April 9, 2012) (unpublished) (recognizing the “well-settled principle that [t]he transfer of the note carries with it the security, without any formal assignment or delivery, or even mention of the latter’ (citation omitted)).

By their own admission, the Hensons experienced financial difficulties and were unable to stay current on their mortgage, missing payments in April, May, June, and July 2010. ( See Doc. # 29, ¶ 12.) On July 15, 2010, BAC Home Loans Servicing filed a “Notice and Election of Demand to foreclose on the Hensons' residence” and “certified ... to the Adams County Trustee that it was authorized to commence ... foreclosure proceedings ... because it was the ‘current holder of the indebtedness.’ ( Id., ¶¶ 13 and 15.) Defendant Bank of America insists that the Notice of Election and Demand for Sale properly certified that BAC Home Loans Servicing was a “Holder of Evidence of Debt” as that term is defined in Colo.Rev.Stat. § 38–38–100.3(10). 3

Faced with foreclosure, the Hensons initiated Chapter 13 bankruptcy proceedings on January 11, 2011. ( Id., ¶ 16.) In connection with that bankruptcy case, on April 25, 2011, BAC Home Loans Servicing filed a proof of claim attesting that “that the Note and Deed of Trust pertaining to the Plaintiffs' loan and residence were assigned to BAC on March 15, 2011,” rather than on July 15, 2010, “as previously misrepresented to the Plaintiffs, the Adams County Public Trustee, and the Adams County District Court.” ( Id., ¶¶ 18 and 19.) During a hearing held before Magistrate Judge Craig B. Shaffer on November 8, 2012, the Hensons' counsel conceded that this apparent discrepancy provides the factual predicate for all of the twelve claims for relief asserted in the Second Amended Complaint. ( See Doc. # 67 at 64.)

Plaintiffs' First Claim alleges that Defendants Bank of America and Castle Stawiarski, along with other entities and various individuals, “while employed by or associated with an enterprise as defined in Colo.Rev.Stat. § 18–17–103(a), unlawfully, feloniously, and knowingly conducted or participated” in that enterprise or its operations through a pattern of racketeering activity, in violation of Colo.Rev.Stat. §§ 18–17–104(3) and 18–17–105. The First Claim further alleges that the named defendants, “directly and in concert” with other entities and named individuals, “conspired, collaborated or jointly endeavored to engage in” twenty different predicate acts “related to the conduct of the foreclosure churning enterprise,” including state law criminal violations for offering a false document for recording, forgery, criminal impersonation, and criminal possession of a forged instrument, as well as violations of the federal mail and wire fraud statutes.

The Second Claim alleges that Defendants Bank of America and Castle Stawiarski violated the Colorado Consumer Protection Act (“CCPA”), Colo.Rev.Stat. § 6–1–715, by making a “false statement of fact on July 15, 2010 when it misrepresented to the Adams County Public Trustee and to the Hensons that it was the current holder of the indebtedness.” The Second Claim further contends that Defendants violated the CCPA “by publishing the Plaintiffs' full social security numbers on the Note which was attached to the Motion for Order Authorizing Sale on September 10, 2010 and filed as a public document on LexisNexis.”

Plaintiffs' Third Claim is brought against Defendant Bank of America based upon an alleged violation of Colo.Rev.Stat. § 38–40–104. Specifically, the Hensons allege that Bank of America failed to adequately respond to an inquiry sent on November 5, 2010, requesting information concerning payment dates, the purpose of payments, and the receipt of all foreclosure fees and costs charged to the Hensons' accounts during the preceding two years, as well as copies of escrow statements for the past two years, an explanation of how those escrow fees were calculated, and a payment history for the past two years. Plaintiffs contend that Bank of America failed to provide all the requested information or documentation. For this Claim, Plaintiffs are seeking actual damagesand statutory damages of $1,000.00, together with reasonable attorney fees and costs.

The Fourth, Sixth, Seventh, Tenth, Eleventh, and Twelfth Claims assert violations of the Real Estate Settlement and Procedures Act (“RESPA”), 12 U.S.C. §§ 2601–1617, based on Defendant Bank of America's alleged failure to properly respond to a series of qualified written requests for information submitted by the Hensons on January 11, February 17, March 30, April 13, and April 19, 2011. For each of these claims, Plaintiffs are requesting statutory and/or actual damages, plus all reasonable attorneys fees and costs.

The Fifth and Eighth Claims are brought under the Truth in Lending Act (“TILA”), 15 U.S.C. § 1641(f), based upon Defendant Bank of America's alleged failure to properly respond to the Hensons' January 11 and February 17 requests for identification of the owner of their mortgage loan. The Ninth Claim alleges that Defendant Bank of America violated TILA, 15 U.S.C. § 1641(g), by failing to provide the Hensons with timely written notice that Bank of America “purchased the Hensons' note and Deed of Trust from an entity named ‘MERS' for the sum of $10.00 on March 15, 2011.” For each of their alleged TILA violations, Plaintiffs seek “maximum statutory damages of $4,000.00 ... plus all reasonable attorney fees and costs.”

II. ANALYSIS

Rule 12(b)(6) provides that a court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” SeeFed.R.Civ.P. 12(b)(6). In deciding a motion under Rule 12(b)(6), the Court must “accept as true all well-pleaded factual allegations ... and view these allegations in the light most favorable to the plaintiff.” Casanova v. Ulibarri, 595 F.3d 1120, 1124 (10th Cir.2010) (quoting Smith v. United States, 561 F.3d 1090, 1098 (10th Cir.2009)). However, a plaintiff may not rely on mere labels or conclusions, “and a formulaic...

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