Jacobs et al v. Credit Suisse First Boston et al
Filing
89
ORDER Denying as Moot 29 Defendant Wells Fargo Bank N.A.s Motion to Dismiss All Claims; Granting 43 Defendant Wells Fargo Bank N.A.s Motion to Dismiss All Claims Without Prejudice; Granting 46 Clarion Mortgage Capital, Inc.s Motion to Dismiss P laintiffs Amended Complaint; Granting 47 Defendants Credit Suisse First Boston, Ocwen Loan Servicing, LLCs and Vaden Law Firm, LLCs Motion to Dismiss and Request for Attorney Fees; granting 48 Motion to Dismiss; Granting 49 Motion to Dismiss Pl aintiffs First Amended Complaint Filed by Defendants Bank of America, N.A. and Countrywide Home Loans, Inc. Pursuant to Fed. R. Civ. P. 12(b)(6); Granting 66 Cherry Creek Mortgage Company, Widespread Lending Solutions, and S. Dino Perrones Motion for Sanctions by Judge Christine M. Arguello on 9/30/2011.(erv, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Christine M. Arguello
Civil Action No. 11-cv-00042-CMA-KLM
DEAN L. JACOBS; and
MARCIELLE S. JACOBS,
Plaintiffs,
v.
CREDIT SUISSE FIRST BOSTON;
OCWEN LOAN SERVICING, LLC;
CENTRAL LOAN ADMINISTRATION & REPORTING (CENLAR);
TAYLOR, BEAN & WHITTAKER MORTGAGE, INC.;
WELLS FARGO BANK, N.A.;
BANK OF AMERICA, N.A.;
COUNTRYWIDE HOME LOANS;
CHERRY CREEK MORTGAGE, INC.;
S. DINO PERRONE;
SUSAN CARTER;
CLARION MORTGAGE CAPITAL, individually and severally;
VADEN LAW FIRM, LLC;
THE STATE OF COLORADO; and
JOHN W. HICKENLOOPER, in his official capacity as
Governor of the State of Colorado,
Defendants.
ORDER GRANTING MOTIONS TO DISMISS
This matter is before the Court pursuant to Defendant Wells Fargo Bank, N.A.’s
(“Wells Fargo”) Motion to Dismiss (Doc. # 43),1 and the Plaintiffs’ response (Doc. # 42)2;
1
Wells Fargo filed a similar motion (Doc. # 29) directed at the original Complaint. The
Plaintiffs’ filing of an Amended Complaint and Wells Fargo’s filing of a motion to dismiss against
that amended pleading renders Wells Fargo’s initial motion moot.
2
The Plaintiffs filed no response to Wells Fargo’s motion challenging the sufficiency of
the Amended Complaint. The Court assumes that the Plaintiffs have elected to stand on the
arguments in their response to Wells Fargo’s motion challenging the initial Complaint.
Defendant Clarion Mortgage Capital’s (“Clarion”) Motion to Dismiss (Doc. # 46) and the
Plaintiffs’ response (Doc. # 57); Defendants Credit Suisse First Boston (“Credit Suisse”),
Owcen Loan Servicing, LLC (“Ocwen”), and Vaden Law Firm, LLC’s (“Vaden”) Motion to
Dismiss (Doc. # 47), and the Plaintiffs’ response (Doc. # 58); Defendants Cherry Creek
Mortgage Co. (“Cherry Creek”) and S. Dino Perrone’s Motion to Dismiss (Doc. # 48),
the Plaintiffs’ response (Doc. # 61), and Cherry Creek and Mr. Perrone’s reply (Doc.
# 65); Defendants Bank of America, N.A. (“BOA”) and Countrywide Home Loans’
(“Countrywide”) Motion to Dismiss (Doc. # 49), the Plaintiffs’ response (Doc. # 62), and
BOA and Countrywide’s reply (Doc. # 63); and Cherry Creek and Mr. Perrone’s Motion
for Sanctions (Doc. # 66), the Plaintiffs’ response (Doc. # 68), and Cherry Creek and
Mr. Perrone’s reply (Doc. # 80). This matter is also before the Court on Mr. John R.
Prater’s Motion to Withdraw as Counsel of Record for Plaintiffs (Doc. # 87) and
Defendants’ response (Doc. # 88).
In summary, the Plaintiffs are borrowers on a series of mortgage loans and raise
a variety of claims arising out of alleged misdeeds by the various Defendants in
connection with the servicing and enforcement of those loans. Given the relative
disparity in the level of detail in the allegations against the various moving Defendants,
the Court will forego its customary practice of reciting a consolidated factual background and instead, proceed to analyze the merits of each moving Defendant’s motion
separately, incorporating separate factual recitations as appropriate.
Each of the Defendants moves for dismissal of the claims against them pursuant
to Fed. R. Civ. P. 12(b)(6). In reviewing a motion to dismiss pursuant to Rule 12(b)(6),
the Court must accept all well-pled allegations in the Amended Complaint as true and
view those allegations in the light most favorable to the nonmoving party – the Plaintiffs.
2
Stidham v. Peace Officer Standards and Training, 265 F.3d 1144, 1149 (10th Cir.
2001), quoting Sutton v. Utah State Sch. for the Deaf & Blind, 173 F.3d 1226, 1236
(10th Cir. 1999). The Court must limit its consideration to the four corners of the
Amended Complaint, any documents attached thereto, and any external documents that
are referenced in the Amended Complaint and whose accuracy is not in dispute.
Oxendine v. Kaplan, 241 F.3d 1272, 1275 (10th Cir. 2001); Jacobsen v. Deseret Book
Co., 287 F.3d 936, 941 (10th Cir. 2002); Dean Witter Reynolds, Inc. v. Howsam, 261
F.3d 956, 961 (10th Cir. 2001).
In Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009), and Bell Atlantic Corp. v. Twombly,
550 U.S. 544 (2007), the Supreme Court clarified what constitutes a “well-pleaded fact”
for purposes of a Rule 12 analysis. A pleader is not required to set forth “detailed
factual allegations,” but must offer more than “labels and conclusions,” a “formulaic
recitation of the elements of a cause of action,” or “naked assertions devoid of further
factual enhancement.” Iqbal, 129 S.Ct. at 1949. The cases make clear that it is facts,
not conclusions, that must be pled; “the tenet that a court must accept as true all of the
allegations contained in a complaint is inapplicable to legal conclusions,” including “legal
conclusion[s] couched as a factual allegation.” Id. at 1949-50.
A.
WELLS FARGO’S MOTION (DOC. # 43)
The Amended Complaint is exceedingly sparse with regard to specific allegations
against Wells Fargo. Indeed, only a single specific factual averment mentions Wells
Fargo, indicating that a June 2006 refinancing of existing debt by the Jacobs resulted in
a payoff of a home equity line of credit that Wells Fargo had previously extended to the
3
Jacobs.3 Every other reference to Wells Fargo in the Amended Complaint occurs
collectively, with Wells Fargo being listed among numerous other Defendants in largely
conclusory assertions of misconduct, divorced from any specific factual allegations
describing Wells Fargo’s own conduct. (See e.g. Doc. # 40, ¶ 50 (Wells Fargo, among
17 other Defendants, “engaged in a regular pattern of violations of . . . the Real Estate
Settlement Procedures Act [“RESPA”] with respect to responding to requests for
borrowers. . .”); ¶ 57 (“As a proximate result of the fraudulent, negligent or reckless
conduct of” Wells Fargo, among 18 others, “the Plaintiffs credit has been impaired
. . . .”); ¶ 61 (Wells Fargo, among 17 others, “have caused to be recorded various
documents including a Notice of Sale which has impaired the Plaintiffs’ title. . .”).
Simply put, there are no well-pled facts in the Amended Complaint that would
give rise to any cognizable claim against Wells Fargo. With the exception of the single
specific allegation noted above, every reference to Wells Fargo in the Amended
Complaint is precisely the sort of “formulaic recitation of the elements of a cause of
action,” or “legal conclusion couched as a factual allegation” that Twombly and Iqbal
prohibit. The Amended Complaint gives no hint whatsoever as to what particular
conduct by Wells Fargo constituted the alleged violation of RESPA, which particular
act by Wells Fargo caused the Jacobs’ credit to be impaired, what documents filed
by Wells Fargo allegedly impaired the Jacobs’ title, etc. The failure of the Amended
Complaint to contain any well-pled allegations against Wells Fargo borders on being
sanctionable as frivolous; at a minimum, it warrants dismissal of the claims against
Wells Fargo under Fed. R. Civ. P. 12(b)(6). Accordingly, Wells Fargo’s Motion is
3
One other allegation mentions Wells Fargo as one of the links in a chain of
assignments of the Jacobs’ initial loan, but does not identify any particular conduct by Wells
Fargo.
4
granted in its entirety and all claims against Wells Fargo are dismissed without
prejudice.
B.
BOA AND COUNTRYWIDE’S MOTION (DOC. # 49)
The Jacobs’ claims against BOA and Countrywide are similarly frivolous. Other
than situations in which BOA is reflexively included in groups of Defendants that are
the subject of conclusory allegations like those described above, BOA is otherwise
mentioned in the Amended Complaint only in two paragraphs purporting to identify the
parties. Paragraphs 6 and 7 purport to identify BOA and Countrywide, but are primarily
devoted to lengthy and inflammatory diatribes against these Defendants for conduct that
is not necessarily alleged to have occurred in this action. At best, the only well-pled
facts in paragraphs 6 and 7 of the Amended Complaint with regard to BOA are the facts
that: (i) “[BOA] is an alleged assignee on Plaintiffs’ mortgage”; and (ii) that “Countrywide
allegedly assigned the right to service the [Plaintiffs’] mortgage loan to [BOA]” and that
the Plaintiffs dispute the effectiveness of that assignment in some unspecified way.
With one supplementation, the same can be said about the Amended Complaint’s
allegations against Countrywide. The only additional instance in which a specific action
involving Countrywide is referenced in the Amended Complaint is the observation that
the June 2006 refinance also resulted in a Countrywide loan being paid off in addition to
the Wells Fargo loan.
For the reasons stated with regard to Wells Fargo’s motion, the Court finds
that the Amended Complaint utterly fails to allege any particular conduct by BOA or
Countrywide that would give rise to any cognizable claim for relief. Accordingly, BOA
and Countrywide’s Motion to Dismiss is granted, and all claims against them are
dismissed without prejudice.
5
C.
CLARION’S MOTION (DOC. # 46)
The Amended Complaint is only slightly more forthcoming regarding the actions
allegedly committed by Clarion. The Amended Complaint first mentions Clarion as
being involved in “a long pattern of deceptive and predatory lending practices”
consisting of “contacting Plaintiffs by telephone and fraudulently inducing Plaintiffs to
refinance their home . . in bogus no cost refinancing schemes.” Although the Jacobs
allege a “pattern” of such refinancings, the Amended Complaint specifically describes
only one – an instance in June 2006 in which the Jacobs were “fraudulently induced to
refinance by . . . Clarion” into a new loan “despite the fact that their income did not
support” the monthly payment required by the new loan. Notably, the Amended
Complaint does not identify with particularity any of the allegedly “fraudulent” statements
that Clarion used to “induce” the Plaintiffs into the June 2006 refinancing, as required by
Fed. R. Civ. P. 9(b). See e.g. Jensen v. America’s Wholesale Lender, 425 F. App’x
761, 763-64 (10th Cir. 2011) (allegations that mortgage lenders made “false and
misleading statements” to borrower was insufficient to plead fraud with particularity as
required by Rule 9(b)) (citing United States ex rel. Sikkenga v. Regence Bluecross
Blueshield of Utah, 472 F.3d 702, 726–27 (10th Cir. 2006) (to satisfy Rule 9(b)’s
particularity requirement, pleader of fraudulent statement must identify “the time, place,
and contents of the false representation, the identity of the party making the false
statements, and the consequences thereof”)). In all other respects, the Amended
Complaint mentions Clarion only as one of several defendants accused in conclusory
allegations of “transmitt[ing] false and adverse credit information about the Plaintiffs,”
“[making] numerous material misrepresentations to Plaintiffs,” “defraud[ing] Plaintiffs,”
and so on.
6
Disregarding the Jacobs’ conclusory and insufficiently pled allegations of
“fraudulent inducement,” the Court is left only with a single well-pled allegation that in
2006, Clarion encouraged the Jacobs to take out a refinance loan “that their income did
not support.” Assuming that fact to be true, the Court turns to the question of whether
that fact is sufficient to support any of the claims the Jacobs assert against Clarion.
The Jacobs’ Claim 1 sounds in breach of contract. Because the Jacobs have not
alleged that Clarion was a contracting party to the 2006 refinance – the Amended
Complaint alleges that the lender was Taylor, Bean & Whittaker Mortgage Inc. (“Taylor”)
– the allegation that Clarion encouraged the Jacobs to enter into a refinance they could
not afford does not state a claim for breach of contract.
The Jacobs’ Claim 2 alleges “predatory lending . . . in violation of” unspecified
“Federal and State laws.” This Court is not aware of, and the Jacobs’ response to
Clarion’s motion does not reveal, any particular statutory or common-law source of a
claim for “predatory lending,” and thus, the Jacobs have failed to state a cognizable
claim of this type. To the extent the clam is construed to be one for simple fraud, the
Jacobs have failed to plead the essential components of any such fraud with the
requisite particularity.
The Jacobs’ Claim 3 alleges “wrongful foreclosure.” Given that the only well-pled
factual allegation against Clarion makes no mention whatsoever of Clarion foreclosing
on the Jacobs, they have failed to state a wrongful foreclosure claim against Clarion.
Moreover, the Court notes that Colorado does not recognize a claim based on “wrongful
foreclosure.” Schwartz v. Bank of America, N.A., No. 10–cv–01225, 2011 WL 1135001,
at * 4 (D. Colo. Mar. 28, 2011) (unpublished); Commercial Equity Corp. v. Majestic Sav.
& Loan Ass’n, 620 P.2d 56, 58 (Colo. App. 1980) (refusing to recognize wrongful
7
foreclosure as a viable claim). Even if a cognizable claim for “wrongful foreclosure”
existed, this Court lacks jurisdiction to interfere with the state court’s foreclosure-related
judgments. Any allegations concerning the propriety of the foreclosure proceedings are
more appropriately pursued in an independent action in state court. (See Beeler Props.
LLC v. Lowe Enters. Residential Investors, LLC, No. 07-cv-00149, 2007 WL 1346591,
at *3 (D. Colo. May 7, 2007) (unpublished)).
The Jacobs’ Claim 4 alleges slander of title. In order to state an actionable claim
for slander of title, Plaintiffs must allege: (1) slanderous words, (2) falsity, (3) malice,
and (4) special damages. Fountain v. Mojo, 687 P.2d 496, 500 (Colo. App. 1984).
“Special damages involve some effect on the owner’s ability to sell the property. At a
minimum, the property must be on the market for sale, and the tort must create a cloud
upon the title; then the expense of legal proceedings to remove the cloud on title
satisfies the damages requirement. Attorney fees and costs in removing the cloud on
title also constitute special damages in a slander of title action.” Skyland Metro. Dist. v.
Mountain West Enter., LLC, 184 P.3d 106, 131 (Colo. App. 2007) (internal citations and
quotations omitted) (emphasis added). Once again, the only well-pled fact alleged
against Clarion makes no mention of Clarion “recording various documents” slandering
the Jacobs’ title.
The Jacobs’ Claim 5 alleges a violation of the Colorado Consumer Protection Act
(“CCPA”), C.R.S. § 6-1-101, et seq. To state an actionable CCPA claim, Plaintiff must
allege that: (1) the defendant engaged in an unfair or deceptive trade practice; (2) the
challenged practice occurred in the course of defendant’s business, vocation, or
occupation; (3) it significantly impacts the public as actual or potential consumers of
the defendant’s goods, services, or property; (4) the plaintiff suffered injury in fact to a
8
legally protected interest; and (5) the challenged practice caused the plaintiff’s injury.
Ivar v. Elk River Partners, LLC, 705 F. Supp. 2d 1220, 1241 (D. Colo. 2010). If one
element of a CCPA claim is not met, the entire claim fails. See Mayhew v. Cherry
Creek Mortgage Co., No. 09-cv-00219, at 2009 U.S. Dist. LEXIS 125725, at *33
(D. Colo. Dec. 21, 2009) (unpublished). Additionally, a CCPA claim must be pled with
particularity pursuant to Fed. R. Civ. P. 9(b). Duran v. Clover Club Foods Co., 616
F. Supp. 790, 793 (D. Colo. 1985). Because the Jacobs’ unadorned allegations lack the
requisite particularity, the Jacobs have failed to state a cognizable CCPA claim against
Clarion.
The Jacobs’ Claim 6 alleges “slander of credit.” As with the claim for “predatory
lending,” the Jacobs do not identify any statutory or common-law source for such a
claim. Accordingly, the Court finds that no cognizable claim of this sort is alleged
against Clarion.
The Jacobs’ Claim 7 alleges intentional infliction of emotional distress against
Clarion, presumably under Colorado law. To state such a claim, the Jacobs must allege
facts showing that Clarion engaged in extreme and outrageous conduct, that it did so
recklessly or with the intention of causing them to suffer emotional distress, and that the
conduct did indeed cause them to suffer such distress. Llewellyn v. Shearson Fin.
Network, Inc., 622 F. Supp. 2d 1062, 1068 (D. Colo. 2009). To be actionable, the
conduct must be “so outrageous in character and so extreme in degree as to go beyond
all possible bounds of decency and to be regarded as atrocious and utterly intolerable in
a civilized society.” Id. The mere allegation that Clarion encouraged the Jacobs to take
out a loan that was not suited to their financial condition does not, as a matter of law,
rise to this level.
9
The Jacobs’ Claim 8 alleges violations of a laundry-list of subsections of the Fair
Debt Collections Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. In order to assert
an actionable FDCPA claim, Plaintiffs must allege a claim against debt collectors. See
15 U.S.C. § 1692(e) (“the purpose of this subchapter is to eliminate the abusive debt
collection practices by debt collectors”). After wading through the Jacobs’ dense, longwinded, and vague allegations, the Court finds that the Jacobs’ have failed to allege
facts concerning Clarion’s conduct as a debt collector.
The Jacobs’ Claim 9 alleges a violation of RESPA. In pertinent part, RESPA
requires that “[e]ach person who makes a federally related mortgage loan shall disclose
to each person who applies for the loan, at the time of application for the loan, whether
the servicing of the loan may be assigned, sold or transferred to any other person at any
time while the loan is outstanding.” 12 U.S.C. § 2605(a). Additionally, at the time of any
such transfer, “[e]ach servicer of a federally related mortgage loan shall notify the
borrower in writing of any assignment, sale, or transfer of the loan to any other person.”
12 U.S.C. § 2605(b)(1). Services of federally related mortgage loans are obligated to
respond to inquiries from borrowers regarding the servicing of their loans, and such
responses must adhere to certain statutory requirements with respect to timing and
content. See 12 U.S.C. § 2605(c). Under 12 U.S.C. § 2609, RESPA sets forth certain
collection and notification requirements regarding mortgage-related escrow accounts
established for the purpose of assuring payment of taxes, insurance premiums, or other
charges with respect to the property.
The mere fact that Clarion encouraged the Jacobs to take out an unsuitable loan
does not constitute a violation RESPA. Beyond citing to the various sections of the
RESPA, the Jacobs fail to assert any plausible facts in support of the RESPA claim.
10
The Jacobs do not appear to name Clarion as a Defendant in Claims 9 and 10.
Claim 11 alleges generally “unfair and/or deceptive acts and practices,” and specifically
alleges that Clarion “received a kickback” for “charging Plaintiffs for unnecessary force
placed insurance.” No well-pled allegation in the Amended Complaint gives any
indication of how Clarion charged the Jacobs for such insurance or explains how Clarion
“received a kickback” for doing so. This claim also asserts that Clarion is in violation of
an unspecified state law “prohibit[ing] unfair and deceptive acts and practices,” but does
not identify what Colorado law is being invoked. Under these circumstances, the Court
finds that the Jacobs’ Claim 11 fails to state a cognizable claim against Clarion.
Finally, the Jacobs assert an unnumbered “claim” contending that “the nonjudicial foreclosure process in Colorado [is] unconstitutional.” This claim asserts that
Clarion, among others, has “taken the untenable and unconstitutional position that
Courts should overlook inadequate and incomplete documentation because due
process considerations are immaterial.” Nothing in the Amended Complaint offers any
specific factual averment that indicates what, if any, position Clarion took with regard to
any foreclosure against the Jacobs, and thus, this assertion fails to state any cognizable
claim against Clarion.
Accordingly, because the Amended Complaint fails to allege any cognizable
claim against Clarion, Clarion’s Motion to Dismiss (Doc. #46) is granted.
D.
CHERRY CREEK AND MR. PERRONE’S MOTION TO DISMISS (DOC. # 48)
AND MOTION FOR SANCTIONS (DOC. # 66)
Cherry Creek is described in the Amended Complaint as a mortgage broker,
for whom Mr. Perrone worked. Like Clarion, Cherry Creek and Mr. Perrone are only
11
specifically mentioned as having “fraudulently induce[d]” the Jacobs to refinance their
indebtedness into another loan that was “extremely unfavorable to Plaintiffs.”
For all practical purposes, the allegations against Cherry Creek and Mr. Perrone
are subject to the same analysis as the claims against Clarion above. For the same
reasons, Cherry Creek and Mr. Perrone’s motion to dismiss is granted.
Cherry Creek and Mr. Perrone, along with former Defendant Widespread
Lending Solutions, Inc. (“Widespread”), have separately moved for sanctions against
the Jacobs under Fed. R. Civ. P. 11(b).4 An attorney’s signature on a filing constitutes
a representation that the attorney has conducted a reasonable inquiry into legal and
factual matters contained therein, that the filing is not being interposed for any improper
purpose, that the claims therein are warranted by existing law, and that the factual
representations therein are supported by evidence in existence or likely to be
discovered. Fed. R. Civ. P. 11(b)(1), (2); Glenn v. First Nat’l Bank of Grand Junction,
868 F.2d 368, 370 (10th Cir. 1989).
The Jacobs’ Amended Complaint suffers from a variety of defects that, together,
suffice to render its allegations against Cherry Creek and Mr. Perrone sanctionable.
First, the Amended Complaint is a classic example of “shotgun pleading.” This type of
pleading contains several counts or causes of action, each of which incorporates by
reference the entirety of its predecessors. Strategic Income Fund, LLC v. Spear, Leeds
& Kellogg Corp., 305 F.3d 1293, 1296 (11th Cir. 2002). As a result, each successive
claim is supported by the accumulation of all of the preceding factual and legal
averments, even though many – or even most – of those previous averments are
4
The Jacobs’ dismissed all of their claims against Widespread approximately one
month after the motion for sanctions was filed.
12
irrelevant to the current claim. Id. Shotgun pleading is an attractive option for the
pleader, who can simply recite an extended narrative at the beginning of the pleading,
and proceed to state numerous claims by simply reciting the formulaic elements of the
claim and referring holistically to the preceding narrative as support. But doing so
places an inordinate burden on the party responding to that pleading, and on the Court
interpreting it, requiring them to parse the narrative repeatedly and attempt to
independently extract the particular factual averments that are relevant to each
individual claim. Essentially, the shotgun pleader foists off one of the pleading lawyer’s
critical tasks – sifting a mountain of facts down to a handful of those that are relevant to
a given claim – onto the reader. As a result, courts roundly decry shotgun pleading as a
subject of “great dismay,” “intolerable,” and “in a very real sense . . . [an] obstruction of
justice,” Id. at 1295-96 n. 9, 10 and cases cited therein.
Secondly (and perhaps relatedly), the Jacobs’ Amended Complaint also betrays
the pleader’s failure to rigorously analyze the claims insofar as many claims are
reflexively asserted against large numbers of Defendants, even when there is no
apparent reason for certain Defendants to be named in those claims. Typically, this
defect occurs when the plaintiff sues a large number of defendants for a series of
discrete events in which not every defendant participated in completely; nevertheless,
the pleader lazily asserts claims against “the defendants” generally, without attempting
to sort out the individual actors alleged to be liable for each individual action or discrete
claim. See, e.g., Robbins v. Oklahoma, 519 F.3d 1242, 1249-50 (10th Cir. 2008)
(“Given the complaint's use of either the collective term ‘Defendants’ or a list of the
defendants named individually but with no distinction as to what acts are attributable to
whom, it is impossible for any of these individuals to ascertain” what particular acts they
13
are accused of doing); Meek v. Torossian, No. Civ.-01-1459, 2002 WL 32026156 at *9
(W.D. Okla. Dec. 17, 2002) (unpublished) (describing such practice as “inherently
vexatious”). But the mere fact that the Jacobs listed the Defendants by name, rather
than grouping them under a single label, hardly mitigates the problem. As noted above,
there are numerous claims in the Amended Complaint where a given Defendant is
named, but where nothing whatsoever in the factual recitation gives any suggestion that
the given Defendant actually participated in the conduct apparently underlying that
claim. See, e.g., Claim 4 (alleging that Cherry Creek and Mr. Perrone slandered the
Jacobs’ title by “record[ing] various documents,” but the Amended Complaint never
mentions Cherry Creek or Mr. Perrone recording any document against the Jacobs,
much less a document that is slanderous of their title). In other filings, the Jacobs
appear to admit that they lack any demonstrable belief that a particular Defendant is
indeed liable to them, stating that they are “unsure who is the real party in interest” – i.e.
who actually owns their note and mortgage – and thus, they appear to operate under
the erroneous assumption that they may simply lob generalized assertions against
everyone involved in the transaction, and that it is each Defendants’ burden “to prove
that they were the real party in interest at the initiation of the foreclosure action.” (Doc.
# 61 at 5).
Third, the Amended Complaint clearly discloses the Jacobs’ counsel’s
unfamiliarity with the requirements of fact pleading, as set forth in cases such as
Twombly and Iqbal. Those cases unambiguously require pleaders to allege facts,
not conclusions, and clearly provide that a pleading that consists simply of formulaic
recitations of elements or conclusory assertions of liability fail to state a claim.
By definition, an attorney who “apparently does not know what is necessary to state
14
a claim” violates Rule 11 by filing an unsupported pleading. Glenn, 868 F.2d at 370.
For the reasons discussed above, the Jacobs’ Amended Complaint clearly runs afoul
of Twombly and Iqbal’s requirements.
Fourth, both the Amended Complaint and the Jacobs’ responses to the
Defendants’ motions indicate that the Jacobs have asserted “claims” for which there
is no recognized cause of action, or, at the very least, the Jacobs are unaware of the
applicable law that might govern such a claim. Claim 2’s assertion of “predatory
lending” insists that the Defendants’ actions are “in violation of Federal and State laws,”
but neither the Amended Complaint nor the Jacobs’ responses to the Defendants’
motions attempts to identify those “Federal and State laws” creating a cause of action
for “predatory lending,” much less identify the elements of such a claim. Claim 6
asserts “slander of credit,” which again purports to be asserted “pursuant to state and
federal law,” but for which the Jacobs have never cited the authority recognizing and
describing such a claim. Claim 11 recites a variety of “deceptive acts and practices”
that many Defendants allegedly engaged in (without identifying which Defendants
allegedly engaged in which practices), and proceeds to explain that “each state . . .
where [the various Defendants] do business has a law that prohibits Unfair and
Deceptive Acts and Practices (‘UDAP laws’),” then goes on to assert that “the conduct
described in the previous paragraph of this complaint violates these UDAP laws.”
Again, the Jacobs have never attempted to identify the “UDAP laws” they invoke,
and indeed, by all appearances, this generic invocation of some unknown state law
prohibiting deceptive practices would appear to be entirely duplicative of the Jacobs’
Claim 5, which specifically invokes Colorado’s Consumer Protection Act, insofar as all
15
of the allegedly deceptive practices directed at the Jacobs appears to have occurred
in Colorado.
Fifth, the Jacobs’ Amended Complaint appears to primarily trade not on factual
averments specific to the Jacobs, but rather, on generalized outrage directed at the
Defendants for conduct occurring elsewhere and affecting others. Paragraphs 2 - 7,
which nominally purport to identify six of the Defendants, occupy eight full pages of
the Amended Complaint. Contained therein are entirely irrelevant and purposefully
inflammatory references to criminal investigations of certain Defendants, the practice
of certain Defendants to outsource work to foreign countries, bankruptcies involving
certain Defendants, certain Defendants’ receipt of taxpayer bailouts, and numerous
assertions that various Defendants engaged in “nationwide scheme[s]” of unfair and
fraudulent business practices, even though the Jacobs here do not purport to represent
the interests of those harmed by the Defendants elsewhere. It is apparent to the Court
that the pleader’s purpose is not simply to vindicate the Jacobs’ own particular rights,
but to use the judicial system as a soapbox to vent more broadly about wrongs by the
Defendants that have no direct connection to the Jacobs.
The analytical and pleading defects in the Amended Complaint are thrown into
sharp relief by the Jacobs’ response to the motion for sanctions. Contrary to the
Amended Complaint’s terseness and baffling lack of detail as to how Cherry Creek and
Mr. Perrone are connected to the claims being asserted, the response to the motion for
sanctions lays out a somewhat detailed, factually-plausible5 explanation for the Jacobs’
5
The Court does not suggest that it finds any merit in the logic laid out by the Jacobs
with regard to the possibility of Cherry Creek’s liability. Rather, the Court simply observes that,
taken at face value, the circumstances described by the Jacobs might, at least arguably, permit
the inferences the Jacobs have drawn.
16
decision to name Cherry Creek in many of the claims. (The decision to name
Mr. Perrone in most of those claims largely remains a mystery.) The Jacobs explain
that they “have not been able to determine who owns their note and or mortgage,” and
posit that, because they have not uncovered any evidence that Cherry Creek assigned
the note and mortgage to another entity, the note and mortgage may still be owned by
Cherry Creek, not any of the other Defendants. If Cherry Creek is indeed the true
owner of the note, arguably, some of the conduct alleged to be improper here may be
conduct for which Cherry Creek bears legal liability. But the fact remains that the
Amended Complaint makes no mention whatsoever of the Jacobs’ investigation into
Cherry Creek’s status, nor the facts that led the Jacobs to the conclusion that Cherry
Creek may still be the owner of their note and mortgage.6 The Amended Complaint is
so bereft of colorable claims against Cherry Creek and Mr. Perrone, and so riddled with
indicia of an ulterior motive against other Defendants, that the Court can only conclude
that it was interposed for the improper purposes of harassment and vexation against
Cherry Creek and Mr. Perrone (among others). Moreover, the failure of the Amended
Complaint to state a cognizable claim against Cherry Creek and Mr. Perrone is so
obvious that no reasonable attorney could have believed that the claims contained
within it against Cherry Creek and Mr. Perrone were warranted by existing law.
Accordingly, Cherry Creek and Mr. Perrone’s motion for sanctions is granted.
By definition, the sanction to be imposed under Rule 11 is one that is imposed on the
6
Indeed, the Amended Complaint states, without qualification, that “Plaintiffs’ loan
was sold . . . no less than eleven times.” Docket # 40, ¶ 19. The only hint in the Amended
Complaint that the Jacobs might question whether the loan was actually legally transferred
to another entity comes in a curiously-worded tautological speculation that “if any of the
purported assignments . . . were done improperly then [the Defendant currently claiming
ownership of the note and mortgage] . . . lacked standing to bring the foreclosure action.” Id.
(emphasis added).
17
attorney signing the defective filing, not on the client who may be entirely unaware of
the frivolousness of that attorney’s conduct. Fed. R. Civ. P. 11(c)(1). For the reasons
set forth above, this Court finds it proper that Mr. Prater, the Jacobs’ counsel, be the
target of the sanctions. The purpose of the sanction is to deter the repetition of the
conduct, although where the sanction is imposed at the request of a party victimized
by the conduct, such deterrence may be achieved in part or whole by requiring the
sanctioned attorney to pay the reasonable attorney’s fees and costs incurred by the
victimized party. Fed. R. Civ. P. 11(c)(4).
The Court takes judicial notice of the fact that Mr. Prater has filed several actions
in this District similar to this one, and that the pleadings in those cases are similar to the
one at issue here in many respects.7 At the time the Amended Complaint in this action
was filed on February 2, 2011, motions to dismiss pursuant to Fed. R. Civ. P. 12(b)(6)
had been filed in each of the other cases, specifically asserting (among other things)
that Mr. Prater’s pleadings ran afoul of Twombly and Iqbal, and that Mr. Prater’s filings
failed to identify authority for “claims” such as “predatory lending” and “wrongful
foreclosure.” In such circumstances, this Court cannot conclude that the defects in
the Amended Complaint here were the result of an isolated mistake or fleeting
carelessness, but rather, the Court finds them to be the result of Mr. Prater’s
fundamental misunderstanding of the requirements of federal pleading. For this reason,
7
Andersson v. Bank of New York Mello, D.C. Colo. Case no. 10-cv-2974-CMA; Prater
v. Bank of New York Mellon, 10-cv-2995-WJM; Boeke v. HSBC Mortgage Corp., 10-cv-3002CMA.
The Court notes that it has not, nor does it intend to, subject those pleadings to the
same depth of analysis that it has given to the Amended Complaint here. The Court bases its
conclusion that the pleadings in these other cases are “similar” to the Jacobs’ pleading here by
virtue of the fact that all of the actions set forth precisely the same claims, in precisely the same
order, and with nearly identical language. This Court has not attempted to determine whether
the factual averments in those pleadings are as deficient as those presented in this case.
18
one component of the sanction, intended to deter Mr. Prater from such pleading in the
future, will be a requirement that, within 6 months of this Order, Mr. Prater complete a
Continuing Legal Education course devoted primarily to educating lawyers regarding
proper pleading. Mr. Prater shall certify his completion of this component of the
sanction by affidavit, filed in this action.
In addition, the Court finds that effective deterrence also requires the payment
of reasonable attorney’s fees to Cherry Creek and Mr. Perrone. As such, Defendants
Cherry Creek and Mr. Perrone are permitted to file documentation in support of their
reasonable attorney’s fees. In light of the award of sanctions, the Court reserves ruling
on the Unopposed Motion to Withdraw as Counsel of Record (Doc. # 87).
E.
DEFENDANTS CREDIT SUISSE, OCWEN, AND VADEN’S MOTION TO
DISMISS (DOC. # 47)
Defendants Credit Suisse, Ocwen, and Vaden also seek dismissal of the claims
against them, namely: breach of contract, predatory lending, wrongful foreclosure,
slander of title, violation of the Colorado Consumer Protection Act, slander of credit,
infliction of emotional distress, violation of the FDCPA, violation of RESPA, violation
of the Truth in Lending Act, unfair and deceptive acts and practices, and breach of
reinstatement.
As with the Jacobs’ claims against all the other Defendants, the Court finds that
these claims are similarly lacking in any substance. The Court has devoted abundant
judicial resources to parsing out Plaintiffs’ dense allegations and in noting the repeated
deficiencies in Plaintiffs’ sloppy pleading. For the reasons already discussed ad
nauseam, the Court finds that dismissal of Plaintiffs’ claims against Defendants Credit
Suisse, Ocwen, and Vaden is also warranted.
19
CONCLUSION
Accordingly, for the foregoing reasons, IT IS ORDERED THAT:
(1)
Defendant Wells Fargo Bank N.A.’s Motion to Dismiss All Claims
(Doc. # 29) is DENIED AS MOOT;
(2)
Defendant Wells Fargo Bank N.A.’s Motion to Dismiss All Claims
(Doc. # 43) is GRANTED and all claims against Wells Fargo are
DISMISSED WITHOUT PREJUDICE;
(3)
Motion to Dismiss Plaintiffs’ First Amended Complaint Filed by Defendants
Bank of America, N.A. and Countrywide Home Loans, Inc. Pursuant to
Fed. R. Civ. P. 12(b)(6) (Doc. # 49) is GRANTED and all claims against
Bank of America and Countrywide are DISMISSED WITHOUT
PREJUDICE;
(4)
Clarion Mortgage Capital, Inc.’s Motion to Dismiss Plaintiff’s Amended
Complaint (Doc. # 46) is GRANTED and all claims against Clarion are
DISMISSED WITHOUT PREJUDICE;
(5)
Cherry Creek Mortgage Company, Widespread Lending Solutions, and
S. Dino Perrone’s Motion to Dismiss all Claims (Doc. # 48) is GRANTED
and all claims against Cherry Creek, Widespread, and D. Perrone are
DISMISSED WITHOUT PREJUDICE;
(6)
Cherry Creek Mortgage Company, Widespread Lending Solutions, and
S. Dino Perrone’s Motion for Sanctions (Doc. # 66) is GRANTED, and
accordingly:
20
(a)
Mr. John R. Prater, counsel for Cherry Creek Mortgage Company,
Widespread Lending Solutions, and S. Dino Perrone, shall
complete, and certify completion of, a continuing legal education
course devoted primarily to the proper pleading standards, within
six months of this Order;
(b)
Mr. Prater shall personally reimburse Cherry Creek Mortgage
Company, Widespread Lending Solutions, and S. Dino Perrone
their reasonable attorney’s fees incurred in connection with their
efforts to obtain dismissals of the claims lodged against them in an
amount to be determined by the Court; and
(c)
Cherry Creek Mortgage Company, Widespread Lending Solutions,
and S. Dino Perrone shall file documentation of the reasonable
attorney’s fees incurred in connection with their efforts to obtain
dismissals of the claims lodged against them by no later than close
of business on Friday, October 14, 2011. The submissions in
support of attorney’s fees shall comport with the Court’s local rules.
(7)
In light of the award of sanctions against Mr. Prater, the Court reserves
ruling on his Unopposed Motion to Withdraw as Counsel of Record (Doc.
# 87); and
(8)
Defendants Credit Suisse First Boston, Ocwen Loan Servicing, LLC’s and
Vaden Law Firm, LLC’s Motion to Dismiss and Request for Attorney Fees
(Doc. # 47) is GRANTED and all claims against Defendants Credit Suisse
21
First Boston, Ocwen Loan Servicing, LLC and Vaden Law Firm, LLC are
DISMISSED WITHOUT PREJUDICE.
DATED: September
30 , 2011
BY THE COURT:
_______________________________
CHRISTINE M. ARGUELLO
United States District Judge
22
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