Davidson v. Bank of Am. N.A.

KENNETH R. DAVIDSON, Plaintiff, v. BANK OF AMERICA N.A.,and GREEN TREE SERVICING LLC, Defendants.

Civil Action No. 14-cv-01578-CMA-KMT

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

February 1, 2016

RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

Magistrate Judge Kathleen M. Tafoya

This matter is before the court on Defendant Bank of America, N.A.'s ("BANA") "Motion to Dismiss Plaintiff's Amended Complaint" (Doc. No. 92 ["BANA's Mot."], filed August 24, 2015), to which Plaintiff has filed a Response. (Doc. No. 99, filed September 10, 2015). Additionally, Defendant Green Tree Servicing LLC's ("Green Tree") has filed a "Motion to Dismiss Plaintiff's Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(6)" (Doc. No. 83 ["GT's Mot."], filed August 10, 2015), to which Plaintiff has responded (Doc. No. 101, filed September 14, 2015) and Green Tree has replied. (Doc. No. 115-1 ["Reply"], filed October 22, 2015).

Also before the Court is Plaintiff's "Motion for Leave to File Third Amended Complaint" (Doc. No. 109 ["Mot. to Am."], filed on September 28, 2015), to which Green Tree has responded (Doc. No. 117, filed October 22, 2015) and Plaintiff has replied. (Doc. No. 121, filed November 5, 2015.) Finally, Plaintiff has also filed a "Forthwith Motion for TRO/Permanent Injunction Against Green Tree Servicing, LLC to Resurrect a Foreclosure Order to Avoid the Six Year Statute of Limitations of the Rule 120 Case 2013CV30922" (Doc. No. 122, filed January 2, 2016), to which Green Tree has responded. (Doc. No. 126, filed January 26, 2016.)

STATEMENT OF THE CASE

This case involves the challenge to a foreclosure of a property in Littleton, Colorado ("Property"). (GT's Mot. at 1.) Plaintiff initially obtained the subject mortgage loan on July 19, 2005 from America's Wholesale Lender. (Doc. No. 79 ["Am. Comp."] at 7, filed July 24, 2015; GT's Mot. at 1; Doc. No. 83-1 ["Note"].) On that date, Plaintiff also executed a Deed of Trust encumbering the Property. (Doc. No. 83-2 ["Deed of Trust"].) Under the Deed of Trust, Plaintiff granted and conveyed the Property to Mortgage Electronic Systems, Inc. ("MERS"), solely as nominee for AWL and its successors and assigns, as security for the repayment of the Note. (Deed of Trust at 9.) Countrywide Home Loans, Inc., doing business as AWL, indorsed the Note to BANA, and BANA indorsed the Note in blank. (Note at 4.) MERS executed an Assignment of Deed of Trust to BANA on July 21, 2011. (Doc. No. 83-3.)

Plaintiff contends that BANA failed to properly credit certain of his payments to his mortgage loan in 2009 and 2010. (Am. Comp. at 2-3, 7, 9.) He also alleges that BANA initiated an improper Intent to Accelerate on his mortgage loan on September 16, 2009. (Am. Comp. at 7, 9, 12.) According to Plaintiff, he was not delinquent on his mortgage payments at that time. (Id.) He also complains that BANA never disclosed within the terms of the Note the procedure for accelerating the loan. (Id.)

On March 15, 2011, Plaintiff sent a Notice of Right to Cancel to BANA, purportedly pursuant to the Truth in Lending Act ("TILA"), indicating Plaintiff's intent to cancel/void the mortgage loan based on various allegations, including but not limited to, that the mortgage was obtained by wrongful acts of fraud, fraudulent inducement, concealment and fraudulent misrepresentation, BANA's failure to provide Plaintiff with required disclosures, Plaintiff's contention that BANA had voided the mortgage as a result of improper accelerations, and BANA's alleged failure to properly apply Plaintiff's mortgage payments. (Doc. No. 1 at 29-31.) BANA, by and through counsel, responded to Plaintiff's Notice of Right to Cancel on May 12, 2011, stating that TILA's right of rescission does not apply to purchase money transactions, which the Note represented as Plaintiff had used the funds from the mortgage loan to purchase the Property. (Doc. No. 1 at 33.) BANA further explained that even if a right to rescind applied, it was subject to a three year limitation and Plaintiff's mortgage was executed in 2005, six years prior to Plaintiff's Notice of Right to Cancel. (Id.)

On May 26, 2011, Plaintiff filed for Chapter 7 bankruptcy in the United States Bankruptcy Court for the District of Colorado. (BANA's Mot. at 2; Doc. No. 101-2.) Plaintiff obtained an Order of Discharge on September 2, 2011 and the case was closed on April 29, 2013. (BANA's Mot. at 2.)

On June 17, 2013, BANA transferred the Note and Deed of Trust to Green Tree. (Am. Comp. at 4-5; Doc. No. 83-4.) In October 2013, Green Tree initiated a Rule 120 foreclosure action on the Note. (Am. Comp. at 5; Doc. No. 83-5.) On December 6, 2013, Green Tree filed a Motion for Order Authorizing Sale with the Douglas County District Court. (Doc. No. 83-7.) Following a hearing, Green Tree obtained an Order Authorizing Sale on January 14, 2015. (Am.Comp. at 17; Doc. No. 83-8; Doc. No. 83-10.) On February 2, 2015, Green Tree terminated the foreclosure proceedings. (Am. Comp. at 18; Doc. No. 83-9.)¹

Based on the above events, Plaintiff asserts (1) breach of contract, (2) breach of the implied duty of good faith and fair dealing, (3) wrongful foreclosure, (4) a constitutional challenge to Colorado's foreclosure procedure, and (5) intentional infliction of emotional distress. By these actions, Plaintiff is seeking injunctive relief preventing Defendants from foreclosing on his Property, $1,000,000 in compensatory damages, free and clear title to the Property, declaratory judgment that Colorado foreclosure proceedings violate due process guarantees, legal fees and costs, as well as punitive damages. (Am. Comp. at 14, 22.)

LEGAL STANDARDS

1. Pro Se Plaintiff

Plaintiff is proceeding pro se. The court, therefore, "review[s] his pleadings and other papers liberally and hold[s] them to a less stringent standard than those drafted by attorneys." Trackwell v. United States, 472 F.3d 1242, 1243 (10th Cir. 2007) (citations omitted); see also Haines v. Kerner, 404 U.S. 519, 520 (1972) (holding allegations of a pro se complaint "to less stringent standards than formal pleadings drafted by lawyers"). However, a pro se litigant's "conclusory allegations without supporting factual averments are insufficient to state a claim upon which relief can be based." Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991) (citations omitted). A court may not assume that a plaintiff can prove facts that have not been alleged, or that a defendant has violated laws in ways that a plaintiff has not alleged. AssociatedGen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983); see also Whitney v. New Mexico, 113 F.3d 1170, 1173-74 (10th Cir. 1997) (a court may not "supply additional factual allegations to round out a plaintiff's complaint"); Drake v. City of Fort Collins, 927 F.2d 1156, 1159 (10th Cir. 1991) (the court may not "construct arguments or theories for the plaintiff in the absence of any discussion of those issues").²

2. Failure to State a Claim Upon Which Relief Can Be Granted

Federal Rule of Civil Procedure 12(b)(6) provides that a defendant may move to dismiss a claim for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). "The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted." Dubbs v. Head Start, Inc., 336 F.3d 1194, 1201 (10th Cir. 2003) (citations and quotations omitted).

"A court reviewing the sufficiency of a complaint presumes all of plaintiff's factual allegations are true and construes them in the light most favorable to the plaintiff." Hall v. Bellmon, 935 F.2d 1106, 1198 (10th Cir. 1991). "To survive a motion to dismiss, a complaintmust contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Plausibility, in the context of a motion to dismiss, means that the plaintiff pleaded facts which allow "the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. The Iqbal evaluation requires two prongs of analysis. First, the court identifies "the allegations in the complaint that are not entitled to the assumption of truth," that is, those allegations which are legal conclusion, bare assertions, or merely conclusory. Id. at 679-81. Second, the Court considers the factual allegations "to determine if they plausibly suggest an entitlement to relief." Id. at 681. If the allegations state a plausible claim for relief, such claim survives the motion to dismiss. Id. at 679.

Notwithstanding, the court need not accept conclusory allegations without supporting factual averments. Southern Disposal, Inc., v. Texas Waste, 161 F.3d 1259, 1262 (10th Cir. 1998). "[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S at 678. Moreover, "[a] pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.' Nor does the complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Id. (citation omitted). "Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of 'entitlement to relief.'" Id. (citation omitted).

ANALYSIS

1. First and Second Claims for Relief - Breach of Contract & Breach of Implied Duty of Good Faith and Fair Dealing

Plaintiff asserts breach of contract and breach of the implied duty of good faith and fair dealing claims against both Defendan...