Ramsey et al v. Citimortgage, Inc. et al

Filing 45

ORDER Affirming and Adopting Recommendation of United States Magistrate Judge. ORDERED that Plaintiffs Objection and Amended Objection to the Recommendation 42 and 43 are OVERRULED. ORDERED that the Recommendation of United States Magistrate Jud ge 41 is AFFIRMED AND ADOPTED. ORDERED that Defendants Citibank, N.A. and CitiMortgage, Inc.s Motion to Dismiss Plaintiff's First Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(6) 32 is GRANTED consistent with this Order, and the case is DISMISSED by Chief Judge Wiley Y. Daniel on 09/28/11.(jjh, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Wiley Y. Daniel
Civil Action No. 10-cv-02653-WYD-CBS
MASON L. RAMSEY, a/k/a Mason L. Ramsey; and
JUDITH MAE NEVILLE, a/k/a Judith Mae Neville,
Plaintiffs,
v.
CITIBANK, N.A.; and
JOHN & JANE DOES 1-50,
Defendants.
_____________________________________________________________________
ORDER AFFIRMING AND ADOPTING RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
_____________________________________________________________________
This matter is before the Court on Defendants Citibank, N.A. and CitiMortgage, Inc.’s
Motion to Dismiss Plaintiff's First Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(6)
[hereinafter “Motion to Dismiss”] filed on February 11, 2011. This motion was referred to
Magistrate Judge Shaffer for a recommendation by Order of Reference dated November
4, 2010 and Memorandum of February 11, 2011. Magistrate Judge Shaffer issued a
Recommendation on July 28, 2011, which is incorporated herein by reference. He
recommends therein that the Motion to Dismiss be granted. This is discussed in more
detail below.
Plaintiffs filed an Objection to the Recommendation on August 4, 2011, and an
Amended Objection on August 15, 2011.

These Objections necessitate a de novo

determination as to those specified proposed findings or recommendations to which

objection is made since the nature of the matter is dispositive. Fed. R. Civ. P. 72(b); 28
U.S.C. § 636(b)(1).1 “In order to conduct a de novo review a court ‘should make an
independent determination of the issues ...; [it] ‘is not to give any special weight to the
[prior] determination.’” Ocelot Oil Corp. v. Sparrow Industries, 847 F.2d 1458, 1464 (10th
Cir. 1988) (quoting United States v. First City Nat. Bank, 386 U.S. 361, 368 (1967) (internal
quotation marks omitted)). While the court may place whatever reliance on the magistrate
judge’s “recommendation its merit justifies, the court must review the record in light of its
own independent judgment.” Id. I address the Objections in connection with my analysis
below of Magistrate Judge Shaffer’s Recommendation.
By way of background, this case arises as a result of a Public Trustee Foreclosure
Sale on October 13, 2010, of Plaintiffs’ property at 15881 East Girard Place, Aurora,
Colorado. CitiMortgage, Inc. [“CitiMortgage”] purchased the property as the highest bidder.
As noted in the Recommendation, the foreclosure sale was authorized by Arapahoe County
District Court Judge Charles M. Pratt by Order of October 13, 2009. A Rule 120 hearing
was held before Judge Pratt on October 19, 2009. Judge Pratt issued an Order and
Amended Order on November 6, 2009, finding that CitiMortgage had met its burden under
Rule 120 and that there was a reasonable probability that a default had occurred. The
Order stated that if Mr. Ramsey and Ms. Neville wished to pursue other claims or issues,
that needed to be done in a separate civil action, not in the Rule 120 proceeding. An Order

1

I note that Defendants argue in their Response to Plaintiffs’ Amended Objection that Plaintiffs
have not preserved any issue for de novo review because their Objection fails to specifically identify the
findings or recommendations to which they object or provide substantive analysis regarding any such
objections. Instead, it is argued that Plaintiffs offer nothing more than a superficial recitation of the original
arguments they advanced. As such, Defendants assert that the Court need not entertain Plaintiffs'
improper Objection. While I acknowledge the validity of this argument, I will nonetheless in an abundance
of caution review the Objections on a de novo basis.

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of November 20, 2009, dismissed and denied all remaining motions and objections by the
Plaintiffs. There is no evidence that Mr. Ramsey and Ms. Neville ever filed a separate civil
action in state court. Instead, they filed this action on October 29, 2010.
On October 28, 2010, CitiMortgage filed a Forcible Entry and Detainer [“FED”] action
against Plaintiffs seeking their eviction from the subject property. The Arapahoe County
District Court entered a Judgment for Possession in favor of CitiMortgage in the FED Action
on November 12, 2010. The FED Action concluded after this case was filed.
Defendants argue in their Motion to Dismiss that Plaintiff’s claims are barred by the
Rooker-Feldman doctrine because CitiMortgage’s right to foreclose on and possess the
property have already been litigated and decided in state court. Magistrate Judge Shaffer
rejected that argument, finding that the Rooker-Feldman doctrine applies only to federal
suits that are filed after state proceedings are final. (Recommendation at 9.) He further
found, and I agree, that the Court does not have sufficient information at this juncture to
determine with certainty whether Plaintiffs are seeking what in substance would be
impermissible appellate review of a “final judgment” entered by the Arapahoe County District
Court in the Rule 120 Proceeding or the FED Action. That is because it is unclear whether
or when that court entered a final order approving the Public Trustee’s sale, as required by
Colo. R. Civ. P. 120(g).
Accordingly, Magistrate Judge Shaffer found that this Court “cannot conclude that
Ms. Neville and Mr. Ramsey are seeking relief for harms caused by final state court action
rendered before this federal proceeding commenced on October 29, 2010.”
(Recommendation at 10.) That ruling does not appear to have been appealed by Plaintiffs

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in their Objections, and I find that the ruling is sound. Accordingly, this portion of the
Recommendation is affirmed.
Nonetheless, Magistrate Judge Shaffer found that the case should be dismissed on
other grounds. He noted that Plaintiffs “purport to bring a Bivens claim based upon
Defendants’ “use of non-judicial foreclosures by power of sale provisions” established by
state law; non-judicial proceedings that Plaintiffs insist are “repugnant to the 5th
Amendment.” (Recommendation at 11.) The Bivens claim is asserted in the “First Cause
of Action”, alleging a due process violation under the Fifth Amendment to the United States
Constitution. (Id.) Plaintiffs maintain in the claim that the “manner of foreclosure” by a
“federal chartered corporation” “must be done under federal law.” (Id.)
Magistrate Judge Shaffer found no support for this Bivens claim under prevailing law.
(Id.) Instead, he noted that “property” and “interests in property” are creatures of state law,
and that “the propriety of determining whether a foreclosure is appropriate is a matter of
state law, not federal law.” (Id. at 11-12.) While Plaintiffs appear to object to this holding,
I agree this portion of the Recommendation and note that Plaintiffs have not cited any
authority which holds to the contrary.
Instead, Plaintiffs focus much of their argument in the Objections on Magistrate
Judge Shaffer’s additional finding that Plaintiff cannot bring a Bivens claim against Citibank
N.A. and Citibank Mortgage, Inc. (Recommendation at 12-13.) This finding was based on
the fact that Bivens claims cannot be asserted against private corporations or entities, “even
if the putative defendant is subject to supervision and regulation by the federal government.”
(Id.) While Plaintiffs argue in their Objections that Citibank and CitiMortgage are creatures
of federal law and thus federal instrumentalities, they rely on the same cases cited in their
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First Amended Complaint and their response to the motion to dismiss which were
considered by Magistrate Judge Shaffer.

Further, their Objections simply revisit the

arguments made in their response, and do not raise specific objections to the
Recommendation.
Moreover, the cases cited by Plaintiffs are inapposite to the issue at hand. For
example, in Lebron v. Nat’l R.R. Passenger Corp., 513 U.S. 374 (1995), the Supreme Court
found that Amtrak, “though nominally a private corporation”, is “an agency or instrumentality
of the United States for the purpose of individual rights guaranteed against the Government
by the Constitution.” Id. at 379, 394. That holding was based, however, on the fact that
Amtrak was created by the government “by a special statute, explicitly for the furtherance
of federal governmental goals”, its board of directors was controlled by government
appointees, and it was wholly or partially owned by the Government. Id. at 383, 391, 397,
400. Plaintiff has not shown that CitiMortgage is similarly situated to Amtrak.
Plaintiff also cites other cases involving corporations created by the government.
See, e.g., Fed. Land Bank v. Bismark Co. of St. Paul, 314 U.S. 95 (1941); Osborn v. Bank
of United States, 22 U.S. 738 (1824)2, and Acron Investments, Inc. v. Fed. Sav. & Loan Ins.
Corp., 362 F.3d 236 (9th Cir. 1966). Plaintiffs have not shown that CitiMortgage and/or
CitiBank were created by the government or meet the definition of a government
corporation. Also cited by Plaintiffs is First Nat. Bank in St. Louis v. State of Missouri, 263
U.S. 640 (1924); Easton v. State of Iowa, 188 U.S. 220 (1903) and Bank of America v. City
and County of San Francisco, 309 F.3d 551, 55 (9th Cir. 2009). Those cases recognized

2

The Bank of the United States “authorized the United States to subscribe 20 percent of the
corporation’s stock”, and expired in 1836. Lebron, 513 U.S. at 386.

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that Congress has created an extensive federal statutory and regulatory scheme as to
national banks, and held that a state may not subject a national bank to state laws that
interfere or are contrary to federal laws. Again, these are inapposite. None of these cases
or other authority cited by Plaintiffs addressed or held that national banks are governmental
bodies for purposes of individual rights under the Constitution.
Magistrate Judge Shaffer cited cases in the Recommendation which did make such
a finding, i.e., that national banks are not governmental entities for purposes of Bivens even
though they are subject to federal regulation. See Morast v. Lance, 807 F.2d 926, 931 (11th
Cir. 1987) (declining to extend the Bivens cause of action to a nationally chartered bank),
overruled on other grounds, Haddle v. Garrison, 525 U.S. 121 (1998); Fletcher v. Rhode
Island Hosp. Trust Nat’l Bank, 496 F.2d 927, 932 n.8 (1st Cir. 1974) (federal regulation of
a national bank will not support a Bivens cause of action against that bank); Tare v. Bank
of America, 2009 WL 799236, at *10 (D. N.J. 2009) (holding that a national bank was not
a federal officer for purposes of Bivens); Panis v. Mission Hills Bank, N.A., 1993 WL 390399,
at *4 (D. Kan. 1993) (“Although Mission Hills Bank is a national bank, it is a private
organization, not a governmental entity . . . for purposes of Bivens or section 1983 actions”).
I find that these cases are well reasoned, that Plaintiffs have not shown why those cases
are inapposite, and that Magistrate Judge Shaffer’s reliance on these cases is sound.
Accordingly, I affirm and adopt that portion of the Recommendation which found that
Citibank, N.A. and CitiBank Mortgage are not subject to Bivens actions as they are private
entities.
Further, even if a Bivens claim could be brought against these Defendants,
Magistrate Judge Shaffer found that the First Cause of Action asserting due process should
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be dismissed. (Recommendation at 13-16.) He stated that “it appears to be undisputed that
... Ms. Neville and Mr. Ramsey received actual and timely notice of the Rule 120
Proceedings and the subsequent FED action, and in each action were afforded an
opportunity to be heard.” (Id. at 14.) Further, he found that Plaintiffs were actively involved
in the Rule 120 Proceeding, and that they “continued to file materials to the state court even
after that action concluded and an Order Authorizing Sale was entered.” (Id. at 16.)
Magistrate Judge Shaffer stated that “Rule 120 specifically provides that granting a motion
for sale does not prejudice the right of any person aggrieved by that order from “seek[ing]
injunctive or other relief in any court of competent jurisdiction”, and “the state court
repeatedly advised Ms. Neville and Mr. Ramsey of their right to pursue an independent
action” if they wished to pursue other claims and issues relating to the subject property”.
(Id. at 15, 16.) Under these circumstances, Magistrate Judge Shaffer found that “Plaintiffs
cannot plausibly argue that the Rule 120 Proceeding compromised or infringed upon their
due process rights.” (Id. at 16.)
The facts relied on by Magistrate Judge Shaffer in regard to the Rule 120 proceeding
and the notice to Plaintiffs that they could pursue an independent action in regard to claims
relating to their property are undisputed.

Plaintiffs argue, however, that Colorado

foreclosure law under Colo. R. Civ. P. 120 violates due process as it does not provide for
a full and fair hearing and does not provide a right to appeal or a jury trial. I disagree. As
noted in the Recommendation, Plaintiffs received actual and timely notice of the Rule 120
Proceedings and the subsequent FED Action and in each action were afforded an
opportunity to be heard. (Recommendation at 14.) Further, to the extent Plaintiffs continue
to rely on Lindsey v. Normet, 405 U.S. 56 (1972), a case previously cited in Plaintiffs’
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opposition to the motion to dismiss, Magistrate Judge Shaffer correctly found that Lindsey
does not support their position. (Recommendation at 14-15). Like Rule 120 of the Colorado
Rules of Civil Procedure, the Oregon statute at issue in Lindsey did not prevent the evicted
tenant from bringing his own action against the landlord or seeking affirmative relief in a
subsequent lawsuit. Lindsey, 405 U.S. at 66-67. Lindsey held it is permissible to segregate
an action for possession of property from other actions arising out of the same factual
situation, and rejected a similar due process challenge. The same analysis would apply to
Colorado’s Rule 120 proceedings and foreclose Plaintiffs’ due process claim.
Plaintiffs also argue as to the “Second Cause of Action” brought under 42 U.S.C.
§ 1983 that Colorado’s FED statute, C.R.S. § 13-40-101 et seq., is unconstitutional as
applied to the facts to the extent it allowed Defendants “to complete the deprivation of
property without procedural due process.”

(Recommendation at 16.)

Once again,

Magistrate Judge Shaffer found no support in the law for such claims. (Id.) First, he found
that Plaintiffs failed to allege facts that would establish a violation of their constitutional
rights, as required to state a § 1983 claim. (Id. at 17.) He also found that “§ 1983 does not
impose liability in the absence of action by a person acting under color of state law”, and that
Plaintiffs did not allege facts that would satisfy the “color of law” element of a § 1983 claim.
(Id. at 17-18.)
Among other grounds for his finding, Magistrate Judge Shaffer stated that “a plaintiff
does not satisfy the ‘state action’ element of a § 1983 action by alleging the deprivation of
property through unlawful or malicious conduct committed by a private actor.”
(Recommendation at 18.) He also found that to the extent Plaintiffs “contest the legal merits
of Defendants’ eviction efforts, that challenge will not suffice to transform Citibank N.A. or
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CitiMortgage, Inc. into agents of the state” as “a private party does not become a state actor
simply by seeking relief through state judicial proceedings.” (Id.) Similarly, Magistrate
Judge Shaffer found that “relief under § 1983 cannot be premised solely on an argument
that a private actor misused available state procedures, particularly in the absence of overt
and significant assistance from state officials”, and that Plaintiffs did not allege any “active
involvement by any state official.” (Id. at 19.) I find no error with Magistrate Judge Shaffer’s
findings, and overrule any objections as to his recommendation to dismiss this claim
asserted under 42 U.S.C. § 1983.
Finally, as to Plaintiffs’ state law claim for “negligent or intentional infliction of extreme
emotional distress”, Plaintiffs allege that “the adjustable rate mortgages that the defendants
extended to sub-prime borrowers with no proof of income introduced an unacceptable risk,”
and that Defendants’ failure to offer Plaintiffs “a loan modification,” and the “ensuing
foreclosure and eviction caused plaintiffs’ extreme emotional distress over the loss of their
house that they called home for the past ten years.” (Recommendation at 19.) The
Recommendation found that this claim also should be dismissed as “[t]he First Amended
Verified Complaint fails to allege any facts that would sustain a claim for intentional infliction
of emotional distress.” (Id. at 19.) Indeed, the Recommendation noted that “[u]nder
Colorado law, “the level of outrageousness required for conduct to create liability for
intentional infliction of emotional distress is extremely high”, and that Plaintiffs alleged
“nothing more than a conclusory assertion of ‘extreme emotional distress’” which was
insufficient to state a claim. (Id. at 19-20.) Plaintiffs’ Objections do not state any grounds
for overruling this portion of the recommendation, and I affirm Magistrate Judge Shaffer’s

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finding that Plaintiffs’ state law claim for “negligent or intentional infliction of extreme
emotional distress” should be dismissed.
Based on the findings in the Recommendation, Magistrate Judge Shaffer
recommends that the Motion to Dismiss be granted in its entirety. (Recommendation at 20.)
He further recommends that the action be dismissed without prejudice as no amendment
could cure the legal deficiencies in the claims advanced by Plaintiffs. (Id.) I affirm and
adopt the Recommendation in its entirety, and overrule Plaintiffs’ Objections, including any
objections that I have not specifically addressed herein.
Accordingly, it is
ORDERED that Plaintiffs Objection and Amended Objection to the Recommendation
(ECF Nos. 42 and 43) are OVERRULED. It is
FURTHER ORDERED that the Recommendation of United States Magistrate Judge
dated July 28, 2011 (ECF No. 41) is AFFIRMED AND ADOPTED. In accordance therewith,
it is
ORDERED that Defendants Citibank, N.A. and CitiMortgage, Inc.’s Motion to Dismiss
Plaintiff's First Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(6) filed on February
11, 2011 (ECF No. 32) is GRANTED consistent with this Order, and the case is
DISMISSED.
Dated: September 28, 2011
BY THE COURT:
s/ Wiley Y. Daniel
Wiley Y. Daniel
Chief United States District Judge

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