Dalton v. Countrywide Home Loans Inc., Civil Action No. 10–cv–01234–LTB–MJW.

828 F.Supp.2d 1242

Leanne R. DALTON, Plaintiff,

v.COUNTRYWIDE HOME LOANS, INC., a New York corporation; Bank of America, National Association, a National Banking Association, f/k/a Countrywide Bank, FSB; and Bac Home Loans Servicing, LLP, a Texas Limited Partnership, Defendants.

Civil Action No. 10–cv–01234–LTB–MJW.

United States District Court, D. Colorado.

Dec. 1, 2011.

Otto K. Hilbert, II, Robinson, Waters & O'Dorisio, P.C., Denver, CO, for Plaintiff.

John Kevin Bridston, Sean Michael Hanlon, Holland & Hart, LLP, Denver, CO, for Defendants.

MEMORANDUM OPINION AND ORDER

BABCOCK, District Judge.

This case is before me on Defendants' Motion for Judgment on the Pleadings Pursuant to Fed.R.Civ.P. 12(c) and for Summary Judgment Pursuant to Fed.R.Civ.P. 56 and D.C. Colo. LCivR 56.1 [Doc # 27]. After consideration of the motion, all related pleadings, and the case file, I grant Defendants' motion in part and deny it in part for the reasons set forth below.

I. Background

This action arises out of financing Plaintiff obtained for the purchase of property in Evergreen, Colorado and for the construction of improvements on that property. For purposes of Defendants' motion, the following facts are undisputed unless otherwise noted.

On June 29, 2007, Plaintiff, a real estate broker associate, purchased real property located at 34305 Ranchero Road, Evergreen (the “Property”) that was to serve as her primary residence. To finance the purchase, Plaintiff obtained two loans which closed on the June 29, 2007 purchase date: (1) Mortgage Loan Number 176028895 had a principal balance of $649,999; and (2) Mortgage Loan Number 176028903 was for a line of credit in the amount of $173,651. In connection with these loans (the “June Loans”), Plaintiff executed Loan Application Disclosure Acknowledgments, a Truth in Lending Disclosure Statement, Important Terms of Our Home Equity Line of Credit, and Settlement Statements.

On July 19, 2007, Plaintiff entered into a construction contract for improvements to the Property. To finance this construction, Plaintiff applied for additional loans that would also replace the June Loans. On September 7, 2007, the June Loans were refinanced as a construction loan, Mortgage Loan Number 17765156 in the principal amount of $1,470,000 (the “September Construction Loan”), and a line of credit, Mortgage Loan Number 177615172 in the principal amount of $176,500 (the “September LOC”). Plaintiff was not eligible for a first draw under the September LOC until the improvements to the Property were completed. Under the September Construction Loan, the improvements to the property were to be completed by March 10, 2009 for a price not to exceed $640,533.

In connection with the September Construction Loan and the September Line of Credit (the “September Loans”), Plaintiff again executed Loan Application Disclosure Acknowledgments, a Truth in Lending Disclosure Statement, Important Terms of Our Home Equity Line of Credit, and a Settlement Statement, as well as an Addendum to Home Equity Credit Line Agreement and Disclosure Statement. Plaintiff claims, however, that she did not become aware that legally required disclosures in any of the loan documents were inaccurate or incomplete until more than two years after the September Loans closed.

On September 14, 2007, Defendant Countrywide Home Loans, Inc. (“Countrywide”) made the first disbursement under the September Construction Loan. To be eligible for disbursements under the September Construction Loan, Plaintiff had to certify that “the estimated cost to complete construction does not exceed the sum of the undisbursed Loan Amount plus the amount held in the Project Control Account.”

By May of 2008, the percentage of the September Loans disbursed was greater than the percentage of construction completed, and disbursement of the remaining loan proceeds would not be sufficient to pay the remaining construction costs. Around this time, after disbursing a total amount of over $1.43 million, Countrywide ceased making disbursements under the September Loans. A vice president of Defendants admits that he could have approved further disbursements but declined to do so because, among other things, “[t]here was not work on the property that justified additional funds or loan proceeds being advanced.” Plaintiff asserts that the sole reason given to her for Defendants' refusal to make further disbursements was the fact that the Property was in a high foreclosure area.

After Defendants ceased making disbursements under the September Loans, Plaintiff used her own funds to pay some construction costs. Plaintiff alleges that she did so because Defendants misrepresented that they would make further disbursements once certain improvements were completed. Plaintiff did not deposit her personal funds into the Project Control Account.

Improvements on the Property were not completed by the required completion date of March 10, 2009, and Plaintiff's direct construction costs exceeded the approved amount of $640,533. Plaintiff did not make any payments on the September Loans after December of 2008 and did not repay the September Loans when due.

In April of 2009, Plaintiff sold the Property for $850,000 in a short sale which she claims Defendants encouraged and coerced her to do in part by threats of foreclosure. Defendants received $775,312.49 in proceeds from the short sale, leaving an unpaid balance on the September Loans in excess of $600,000. Defendants are not seeking to recover the amount of this deficiency but did provide information relating to the September Loans to the credit reporting agencies. Plaintiff alleges that she was denied refinancing for the Property based on information that Defendants provided to the credit reporting agencies.

Defendants argue that they are entitled to the entry of judgment in their favor on each of Plaintiff fifteen claims based on various defenses and legal theories. I apply federal law to Plaintiff's federal question claims and Colorado law to her state based claims.

II. Standard of Review

A motion for judgment on the pleadings under Fed.R.Civ.P. 12(c) is governed by the same standard of review applicable to a motion to dismiss under Fed.R.Civ.P. 12(b)(6). Corder v. Lewis Palmer School Dist. No. 38, 566 F.3d 1219, 1223 (10th Cir.2009). Under Rule 12(b)(6), “[d]ismissal is appropriate only if the complaint, viewed in the light most favorable to plaintiff, lacks enough facts to state a claim to relief that is plausible on its face.” United States ex rel. Conner v. Salina Regional Health Center, 543 F.3d 1211, 1217 (10th Cir.2008) (internal quotations and citations omitted). A claim is plausible on its face “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) ( citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Although plaintiffs need not provide detailed factual allegations to survive a motion to dismiss, they must provide more than labels and conclusions, a formulaic recitation of the elements of a cause of action, or conclusory allegations. Ashcroft, 129 S.Ct. at 1949–50; Twombly, 550 U.S. at 555, 127 S.Ct. 1955.

The purpose of a summary judgment motion under Rule 56 is to assess whether trial is necessary. White v. York Int'l Corp., 45 F.3d 357, 360 (10th Cir.1995). Rule 56 provides that summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, admissions, or affidavits show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The non-moving party has the burden of showing that there are issues of material fact to be determined. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

A party seeking summary judgment bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, interrogatories, and admissions on file together with affidavits, if any, which it believes demonstrate the absence of genuine issues for trial. Celotex, 477 U.S. at 323, 106 S.Ct. 2548; Mares v. ConAgra Poultry Co., Inc., 971 F.2d 492, 494 (10th Cir.1992). Once a properly supported summary judgment motion is made, the opposing party may not rest on the allegations contained in his complaint, but must respond with specific facts showing the existence of a genuine factual issue to be tried. Otteson v. United States, 622 F.2d 516, 519 (10th Cir.1980); Fed.R.Civ.P. 56(e).

If a reasonable juror could not return a verdict for the non-moving party, summary judgment is proper and there is no need for a trial. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The operative inquiry is whether, based on all documents submitted, reasonable jurors could find by a preponderance of the evidence that the plaintiff is entitled to a verdict. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). However, summary judgment should not enter if, viewing the evidence in a light most favorable to the nonmoving party and drawing all reasonable inferences in that party's favor, a reasonable jury could return a verdict for that party. Anderson, 477 U.S. at 252, 106 S.Ct. 2505; Mares, 971 F.2d at 494.

III. Analysis

A. The Statute of Limitations on Plaintiff's Claims Based on TILA and HOEPA

Plaintiff's Ninth, Tenth, Eleventh, and Twelfth Claims for Relief allege violations of the Truth in Lending Act (“TILA”) and the Home Ownership and Equity Protection Act (“HOEPA”) while Plaintiff's Fourteenth Claim for Relief alleges violations of related Colorado statutes, C.R.S. §§ 5–3–101, 5–3–106 & 5–3.5–103. Defendants argue that these claims are barred by the applicable one-year statute of limitations....