Mbaku v. Carrington Mortg. Servs., LLC

• Decision Date: 02 May 2017
• Docket Number: Civil Case No. 17-cv-00462-LTB-STV
• Parties: JOHN M. MBAKU and LUVIBIDILA JOLIE LUMUENEMO, Plaintiffs, v. CARRINGTON MORTGAGE SERVICES, LLC, Defendant.
• Court: U.S. District Court — District of Colorado

JOHN M. MBAKU and LUVIBIDILA JOLIE LUMUENEMO, Plaintiffs, v. CARRINGTON MORTGAGE SERVICES, LLC, Defendant.

Civil Case No. 17-cv-00462-LTB-STV

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO LEWIS T. BABCOCK, JUDGE

May 2, 2017

ORDER

This matter is before me on a Motion to Dismiss filed by Defendant, Carrington Mortgage Services, LLC ("Carrington"), seeking dismissal of the claims filed against it by Plaintiffs, John M. Mbaku and Luvibidila Jolie Lumuenemo, on the basis that they fail to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6). [Doc #5] Oral arguments would not materially assist me in my determination. After consideration of the parties' arguments, and for the reason stated, I GRANT the motion and I DISMISS this case.

I. BACKGROUND

In 2008, Taylor, Bean & Whitaker Mortgage Corporation loaned Plaintiffs $166,885 to refinance their condominium located in Denver, Colorado. The loan was evidenced by a promissory note and secured by a deed of trust. The trustee was the Arapahoe County public trustee. Plaintiffs defaulted on the loan.

Various parties attempted to foreclose on Plaintiff's condominium following their default. In October of 2011, Bank of America was the assignee of the promissory note and deed of trust. Bank of America attempted to foreclose on Plaintiff's condominium at that time by seeking an order authorizing the sale pursuant to Rule 120 of the Colorado Rules of Civil Procedure, which allows an expedited procedure for a non-judicial foreclosure sale by a public trustee. See Colo. Rev. Stat. §38-38-101(1)(providing that once a creditor defaults on a loan, the holder of the promissory note may request that the public trustee sell the property at a foreclosure sale if the deed of trust so authorizes); Colo. R. Civ. P. 120 (in order to effectuate a public trustee sale, the holder of the note must seek an order from the state district court authorizing the sale). The District Court of Arapahoe County held a hearing and authorized the sale in February of 2012 (the "First Rule 120 Order"). One week before the scheduled sale, however, Plaintiffs sued Bank of America in the United States District Court for the District of Colorado advancing numerous federal and state claims including due process and equal protection claims, as well as a claim for violations of the Colorado FDCPA, Colo. Rev. Stat. §§ 12-14-101 to -137, et seq. The District Court ultimately concluded that Plaintiffs failed to state a claim for relief, and it dismissed the complaint in three separate orders. Mbaku v. Bank of America, National Association, No. 12-CV-00190-PAB-KLM, 2014WL103806, 2014WL3906463, 2014WL4099313 (D. Colo. 2014). Plaintiffs appealed, and the Tenth Circuit affirmed in Mbaku v. Bank of America, Nat. Association, 628 F. App'x 968 (10th Cir. 2015)(unpublished).

Bank of America did not foreclose on Plaintiff's condominium on the First Rule 120 Order following the Tenth Circuit ruling. Instead, Defendant Carrington subsequently sought foreclosure of the condominium, as the holder of an evidence of debt, in February of 2016. On August 1, 2016, the District Court of Arapahoe County issued a second order authorizing thepublic trustee sale of Plaintiffs' condominium pursuant to Colo. Rev. Stat §38-38-101(1) and Rule 120 of the Colorado Rules of Civil Procedure (the Second Rule 120 Order). The condominium was thereafter foreclosed upon and sold to a third party.

Plaintiffs then filed this lawsuit in the United States District Court for the Central District of California (Southern District - Santa Ana). [Doc #4] In their First Amended Complaint, Plaintiffs allege that the condominium was improperly sold in that Carrington "did not have the necessary documents to prove that it was the proper company to pursue collection of any kind against Plaintiffs" and "[u]pon information and belief, [Carrington] utilized a forged endorsement on a promissory note to seek collection against Plaintiffs." [Doc #4 ¶7, 9, & 11]

Plaintiffs bring four claims against Carrington: 1) Violations of the Federal Fair Debt Collection Practices Act, 15 U.S.C. §1692, et seq.; 2) Violations of the California Fair Debt Collection Practices Act, Cal. Civ. Code §1788(2)(h); 3) "As Applied" Violation of the Fourteenth Amendment Due Process Clause; and 4) "Facial Challenge" Violation of the Fourteenth Amendment Due Process Clause. Carrington responded by filing this Motion to Dismiss with the District Court for the Central District of California. [Doc #5] In addition, Carrington filed a Motion to Transfer Case to this court. On February 17, 2017, after both motions were fully briefed, Judge David O. Carter granted the Motion to Transfer, and deferred ruling on the Motion to Dismiss which is now at issue here. [Doc #1]

II. DEFENDANT'S PENDING MOTION TO DISMISS

In its Motion to Dismiss Carrington contends that Plaintiffs' claims against it should be dismissed for failure to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6). A claim will survive dismissal under Rule 12(b)(6) if it alleges a plausible claim forrelief; that is, the "factual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The concept of "plausibility" at the dismissal stage refers not to whether the allegations are likely to be true; rather, "[t]he question is whether, if the allegations are true, it is plausible and not merely possible that the plaintiff is entitled to relief under the relevant law." Christy Sports, LLC v. Deer Valley Resort Co., Ltd., 555 F.3d 1188, 1192 (10th Cir. 2009)(citing Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008)).

Thus, when considering a Rule 12(b)(6) motion a court accepts as true all well-pled factual allegations in a complaint and view these allegations in the light most favorable to the plaintiff, as the sufficiency of a complaint is a question of law. Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009)(citing Moore v. Guthrie, 438 F.3d 1036, 1039 (10th Cir. 2006)). A complaint need not set forth detailed factual allegations, yet a "pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action" is insufficient. Bell Atl. v. Twombly, supra, 550 U.S. at 555; see also Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)(ruling that "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice").

"Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atl. v. Twombly, supra, 550 U.S. at 555 (citation omitted). "[T]he mere metaphysical possibility that some plaintiff could prove some set of facts in support of the pleaded claims is insufficient; the complainant must give the court reason to believe that this plaintiff has areasonable likelihood of mustering factual support for these claims." Ridge at Red Hawk, LLC v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007)(emphasis omitted).

III. FEDERAL & CALIFORNIA FDCPA CLAIMS

Plaintiffs claim that Carrington violated provisions of both the Federal and the California Fair Debt Collection Practices Act (the "Federal FDCPA" and the"California FDCPA") by foreclosing on Plaintiffs' condominium when it knew it lacked sufficient standing to pursue the underlying debt. [See Doc #24] I conclude, however, that Plaintiffs' FDCPA claims, even when the factual allegations as alleged are viewed in their favor, are insufficient to raise a plausible claim for relief.

In the First Claim for Relief in their First Amended Complaint (the "Complaint"), Plaintiffs allege that Carrington violated the Federal FDCPA by:

a. Falsely stating themselves as the legal owner/holder of the debt which is a mischaracterization of the status of the debt under 15 U.S.C. §1692e(2);

b. Failed to provide any agreement that authorizes any amount of collection, under 15 U.S.C. §1692f(1);

c. Upon information and belief, have pursued collection of a debt past the statute of limitations, which is a misrepresentation of the legal status of the debt, under 15 U.S.C. §1692e(2);

d. False reporting to credit reporting agency as to the ownership of the debt, under 15 U.S.C. §1692e(8);

e. False reporting to credit reporting agency as to the character of the debt, in failing to report it as a FHA loan, under 15 U.S.C. §1692e(8); and

f. Otherwise utilizing false and deceptive means to collect a debt, under 15 U.S.C. §1692e(10). [Doc #4 ¶21]

In their Second Claim for Relief, Plaintiffs allege that Carrington violated the California FDCPA as follows:

a. Attempting to and collecting upon a consumer debt by means of making a false representation that a consumer debt has been sold, assigned, or referred toa debt collector for collection, which is unlawful under Cal. Civ. Code §1788.13(k).

b. Attempting to and collecting upon a consumer debt by means of communication to Plaintiffs that money is owed to assigned party unless the claim is actually assigned to the collection agency, which no evidence has shown that it is, which is unlawful under Cal. Civ. Code §1788.13(l). [Doc #4 ¶29]

The supporting facts, as alleged by Plaintiffs, are that in February of 2016 Carrington sought foreclosure and sale of Plaintiffs' condominium "backed by a loan purportedly held by Bank of America against Plaintiffs." [Doc #4 ¶6] And, in August of 2016, the condominium "was sold pursuant to [Carrington's] conduct." [Doc #4 ¶7] Carrington's allegedly improper conduct is set forth in the Complaint, in its entirety, as follows:

1. [Carrington] did not have the necessary documents to prove that it was the proper company to pursue collection of any kind against Plaintiffs, and upon information and belief, still does not have said documents.

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