Garrett et al v. BNC Mortgage Inc. et al

Filing 117

ORDER. ORDERED that the Recommendation of United States Magistrate Judge 108 is ACCEPTED. ORDERED that Defendants U.S. Bank's and Wells Fargo's Renewed Motion for Summary Judgment 99 is GRANTED. ORDERED that Plaintiffs Motion f or Sum mary Judgment 100 is DENIED. ORDERED that the Motion to Clarify Service Date of Plaintiffs' Objection to Recommendation of United States Magistrate Judge [DKT. 111] 112 is DENIED as moot. ORDERED that this case shall be administratively closed, subject to reopening for good cause, pursuant to D.C.COLO.LCivR 41.2. ORDERED that, no later than twenty days after resolution of defendant BNC Mortgage, Inc.'s bankruptcy proceedings, the parties shall file a status report with the Court as to whether they believe the case should be reopened for good cause for any further proceedings in this Court or whether the case may be dismissed by Judge Philip A. Brimmer on 08/26/14.(jhawk, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 11-cv-03242-PAB-BNB
MICHELLE GARRETT and
RICHARD L. GARRETT
Plaintiffs,
v.
BNC MORTGAGE, INC.,
US BANK NATIONAL ASSOCIATION, as Trustee for the Structured Asset Investment
Loan Trust 2006-BNC3, and
WELLS FARGO HOME MORTGAGE, INC., owner of America’s Servicing Company,
Defendants.
_____________________________________________________________________
ORDER
_____________________________________________________________________
This matter is before the Court on the Recommendation of United States
Magistrate Judge (the “Recommendation”) [Docket No. 108] filed on March 31, 2014.
The magistrate judge recommends that the Court grant Defendants U.S. Bank’s and
Wells Fargo’s Renewed Motion for Summary Judgment [Docket No. 99] filed by
defendants U.S. Bank National Association (“U.S. Bank”) and Wells Fargo Home
Mortgage, Inc. (“Wells Fargo”) and deny Plaintiffs’ Motion for Summary Judgment
[Docket No. 100] filed by plaintiffs Michelle and Richard L. Garrett.
Plaintiffs filed an objection to the Recommendation. Docket No. 111. The Court
will “determine de novo any part of the magistrate judge’s disposition that has been
properly objected to” by plaintiffs. Fed. R. Civ. P. 72(b)(3). An objection is “proper” if it

is both timely and specific.1 United States v. One Parcel of Real Property Known as
2121 East 30th St., 73 F.3d 1057, 1059 (10th Cir. 1996). To be sufficiently specific, an
objection must “enable[ ] the district judge to focus attention on those issues–factual
and legal–that are at the heart of the parties’ dispute.” See id. (quoting Thomas v. Arn,
474 U.S. 140, 147 (1985)). In the absence of a proper objection, the Court may review
a magistrate judge’s recommendation under any standard it deems appropriate. See
Summers v. Utah, 927 F.2d 1165, 1167 (10th Cir. 1991); see also Thomas, 474 U.S. at
150 (“[i]t does not appear that Congress intended to require district court review of a
magistrate’s factual or legal conclusions, under a de novo or any other standard, when
neither party objects to those findings”). In light of plaintiffs’ pro se status, the Court
construes their filings liberally. See Haines v. Kerner, 404 U.S. 519, 520 (1972); Hall v.
Bellmon, 935 F.2d 1106, 1110 & n.3 (10th Cir. 1991).
The undisputed material facts are set forth in the Recommendation and will not
be recited here. Docket No. 108 at 3-5. The magistrate judge recommends that the
Court grant summary judgment to U.S. Bank on plaintiffs’ claim for violation of the Fair
Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., because it is
undisputed that U.S. Bank complied with the procedures set forth in Colo. Rev. Stat.
§ 38-38-101 and there is no evidence that U.S. Bank sought a money judgment from
plaintiffs. Docket No. 108 at 6. The magistrate judge recommends granting summary
judgment in favor of U.S. Bank on plaintiffs’ claim for violation of the Colorado FDCPA

1

Plaintiffs’ objections were due on April 21, 2014, Docket No. 110; signed on
April 20, 2014, Docket No. 111 at 12; and filed on April 28, 2014. Id. at 1. The Court
will nonetheless consider these objections as if they were timely filed.
2

(“CFDCPA”), Colo. Rev. Stat. § 12-14-101 et seq., because plaintiffs have not produced
evidence to support their allegations that (1) U.S. Bank failed to provide plaintiffs a
written notice indicating the amount owed and the name of the secured creditor and
(2) U.S. Bank continued to contact plaintiffs without providing this information, despite
the fact that plaintiffs disputed the debt. Id. at 7. The magistrate judge recommends
that the Court grant summary judgment to both defendants on plaintiffs’ claims under
Colo. Rev. Stat. § 12-61-904.5 because that provision applies only to mortgage loan
originators and does not cover defendants. Id. at 8. Plaintiffs object to the
recommended dismissal of their claims under the FDCPA. Docket No. 111 at 6-12.
They do not object to the recommended dismissal of their claims under the CFDCPA or
Colo. Rev. Stat. § 12-61-904.5. See generally Docket No. 111.
Plaintiffs’ objections are based on their contention that U.S. Bank lacks standing
to foreclose. Specifically, plaintiffs assert that (1) they were deceived into believing that
America’s Servicing Company (“ASC”) was their mortgage servicer, even though it was
not; (2) they were deceived into believing that they were in default on their loan, even
though they were not; (3) defendants have not produced a chain of title indicating how
U.S. Bank came into possession of the promissory note; (4) the purportedly original
promissory note that U.S. Bank produced at plaintiffs’ deposition is fraudulent; (5) only
one allonge exists, which does not account for the multiple transfers of the promissory
note; (6) the allonge is not affixed to the promissory note; (7) U.S. Bank and Wells
Fargo did not lend money to plaintiffs and have not suffered an injury sufficient to
establish standing; and (8) the allonge indicates that plaintiffs’ debt has been
discharged. Docket No. 111.
3

In support of these assertions, plaintiffs submit (1) a copy of the Form 8-K filed
by the Structured Asset Investment Loan Trust 2006-BNC3 with the Securities and
Exchange Commission on September 8, 2006, Docket No. 111 at 14-19; (2) a copy of
the Certification by Qualified Holder Pursuant to 38-38-101, C.R.S., filed with the Clerk
for the Combined Court of Eagle County, Colorado by U.S. Bank, id. at 21; a copy of
plaintiff’s promissory note, id. at 22-25; (3) a copy of the allonge purportedly attached to
plaintiffs’ promissory note, id. at 27; (4) a printed table purportedly from the Eagle
County Assessor’s Office listing assignments of the deed of trust, liens, and other
information regarding the property located at 103 Rabbit Road, Carbondale, Colorado
81623, as well as other property in Colorado, id. at 29-39; and (5) a copy of the claim
that U.S. Bank filed in Richard Garrett’s case before the United States Bankruptcy
Court for the District of Colorado, id. at 41-42; see Case No. 11-21885-SBB (Bankr. D.
Colo. May 19, 2011).
Plaintiffs cite the Court’s March 7, 2013 Order, which states:
Here, plaintiffs allege that, because “there has never been any indication that
the foreclosing entity had a right to possession of the property claimed as
collateral through an enforceable security interest,” defendants violated
§ 1692f(6). Docket No. 1 at 18, ¶ 91. In support of this assertion, they allege
that U.S. Bank’s status as trustee of the pool containing plaintiff’s loan
deprived it of standing to foreclose, that public records do not disclose any
assignment of plaintiffs’ loan to U.S. Bank, that U.S. Bank has no other
evidence of assignment, and that U.S. Bank is not in possession of
documents evidencing the chain of title. Docket No. 1 at 13-15, ¶¶ 64, 66,
68, 74-77. These allegations are sufficient to state a claim under the FDCPA
against U.S. Bank, which executed the non-judicial foreclosure on plaintiffs’
property.
Docket No. 48 at 11-12 (citing Niederquell v. Bank of America, N.A., No. 11-cv-03185MSK-MJW, 2012 WL 1578060, at *5-6 (D. Colo. May 4, 2012), and Rousseau v. Bank
4

of New York, No. 08-cv-00205-PAB-BNB, 2009 WL 3162153, at *8 (D. Colo. Sept. 29,
2009)). Plaintiffs contend that “[n]o evidence exists in this Court’s record to controvert
Plaintiffs’ claims” that U.S. Bank lacked standing to foreclose. Docket No. 111 at 9,
¶ 17.
Plaintiffs mistake the burden of proof applicable on summary judgment. It is not
defendants’ burden to disprove plaintiffs’ allegations, but rather plaintiffs’ burden to
produce evidence sufficient for a reasonable juror to find that plaintiffs have proved
those allegations by a preponderance of the evidence. See Ricci v. DeStefano, 557
U.S. 557, 586 (2009) (“where the nonmoving party ‘will bear the burden of proof at trial
on a dispositive issue,’ the nonmoving party bears the burden of production under Rule
56 to ‘designate specific facts showing that there is a genuine issue for trial’”) (quoting
Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)); Scott v. Harris, 550 U.S. 372, 380
(2007) (“‘[w]hen the moving party has carried its burden under Rule 56(c), its opponent
must do more than simply show that there is some metaphysical doubt as to the
material facts”) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 586-87 (1986)); Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 885 (1990) (“[Celotex,
477 U.S. at 323,] made clear that Rule 56 does not require the moving party to negate
the elements of the nonmoving party’s case; to the contrary, ‘regardless of whether the
moving party accompanies its summary judgment motion with affidavits, the motion
may, and should, be granted so long as whatever is before the district court
demonstrates that the standard for the entry of summary judgment, as set forth in Rule
56(c), is satisfied.’”) (emphasis in original).

5

Plaintiffs have offered no evidence to support the proposition that they were not
in default on their loan or that ASC and Wells Fargo were “trying to collect on a
completely different account than Garretts’ account.” Docket No. 111 at 3-4, ¶ 6. In
addition, there is insufficient evidence to support the proposition that U.S. Bank was not
in possession of plaintiffs’ original promissory note at the time it certified to the state
court that it was a qualified holder of the note under Colo. Rev. Stat. § 38-38-100.3 et
seq. See Docket No. 111 at 10-11, ¶ 20 (“In their depositions, the Garretts refused to
acknowledge that the signatures on the documents appear to be originals and each
repeatedly questioned the authenticity of the originals.”). Plaintiffs’ only evidence in
support of this contention is testimony from their depositions during which they
challenged the authenticity of the note that U.S. Bank presented to them as the original.
This testimony does not disclose facts based on plaintiffs’ personal knowledge that
would support plaintiffs’ contentions, but rather consists of speculation, unsupported
assertion, and equivocation. See, e.g., Docket No. 105-1 at 18 (Michelle Garrett, dep.,
at 32, l.9-13) (“Q. Does that look like the way that you sign your name? A. It’s possible
that it looks like the way I sign my name. I bet it’s a copy. It could be a copy.”); Docket
No. 105-1 at 16 (Michelle Garrett dep., at 30, ll.4-7) (“the rest of the reason [that I
believe this isn’t the original note] is this is not the right size paper, and everything your
client has reported to me to be true is not true”); Docket No. 105-2 at 9 (Richard
Garrett, dep., at 16, ll.3-9) (“A. Do I have any reason to believe that it’s not [the original
note]? And without trying to be derogatory, we have received so many things that
were–that proved later to be deceptive in the course of these events, that for me, it
would–at best, it would be a 50/50. Maybe it is, maybe it isn’t. I don’t know.”).
6

Accordingly, this testimony constitutes no more than a scintilla of evidence from which a
reasonable jury could conclude that U.S. Bank was not in possession of the original
promissory note at the time it initiated foreclosure proceedings. See Skrzypczak v.
Roman Catholic Diocese of Tulsa, 611 F.3d 1238, 1244 (10th Cir. 2010) (“To survive
summary judgment, nonmovant’s affidavits must be based upon personal knowledge
and set forth facts that would be admissible in evidence; conclusory and self-serving
affidavits are not sufficient.”).
Likewise, plaintiffs’ contentions that (1) “[i]n order for U.S. Bank to actually be the
qualified holder of the note, there would need to be three (3) different Allonges,” Docket
No. 111 at 5, ¶ 8; and (2) a “separate piece of paper Allonge was presented to Garretts
at their depositions and was not ‘affixed’ to anything,” id. at 6, ¶ 14, do not raise a
genuine dispute of material fact regarding U.S. Bank’s standing to foreclose. The
allonge is endorsed in blank, entitling the entity in possession of the note to enforce it;
the allonge need not contain any signature from the purchaser to be enforceable. See
Colo. Rev. Stat. § 4-3-205(b) (“When indorsed in blank, an instrument becomes
payable to bearer and may be negotiated by transfer of possession alone until specially
indorsed.”); Colo. Rev. Stat. § 38-38-100.3(10) (the person “in possession of a
negotiable instrument evidencing a debt, which has been . . . indorsed in blank” is
“presumed to be the holder of an evidence of debt”). Plaintiffs provide no evidence in
support of their contention that the allonge is not affixed to the promissory note. See
Rossin v. Southern Union Gas Co., 472 F.2d 707, 712 (10th Cir. 1973) (“argument by
brief is not evidence”).

7

The remaining issues plaintiffs raise regarding the assignment of the note and
deed of trust are not material. See Colo. Rev. Stat. § 38-38-101 (holder of evidence of
debt may initiate foreclosure proceedings by filing, among other things, a notice of
election and demand, a copy of the evidence of debt, and a certification that the holder
possesses an evidence of debt). There is no genuine dispute of fact that U.S. Bank
was in possession of the original promissory note, indorsed in blank, and that it
complied with the procedural requirements set forth in Colo. Rev. Stat. § 38-38-101.
See Docket No. 99 at 5-6, ¶¶ 10-13; Docket No. 99-4; Docket No. 111 at 5-6, ¶¶ 10-13.
How this note came into U.S. Bank’s possession is not relevant to its right to initiate
non-judicial foreclosure proceedings under Colorado law. See Colo. Rev. Stat. § 4-3202(a)(iii) (“Negotiation is effective even if obtained . . . in breach of duty or as part of
an illegal transaction.”). Accordingly, there is no basis for finding that U.S. Bank
violated § 1692f(6)2 of the FDCPA.
Plaintiffs argue that the magistrate judge erred in not addressing the arguments
raised in their motion for summary judgment. Docket No. 111 at 1. However, the
arguments plaintiffs raise in their motion for summary judgment and the evidence they
submit track the issues addressed in their objection to the Recommendation. Compare
Docket No. 100 at 4-7 with Docket No. 111 at 2-12. Thus, plaintiffs’ motion for
summary judgment does not raise any dispute of material fact that defendants U.S.
Bank and Wells Fargo are entitled to summary judgment on plaintiffs’ remaining claims.
2

This provision prohibits “[t]aking or threatening to take any nonjudicial action to
effect dispossession or disablement of property if . . . there is no present right to
possession of the property claimed as collateral through an enforceable security
interest.” 15 U.S.C. § 1692f(6)(A).
8

The Court has reviewed the substantive discussions in the Recommendation to
which plaintiffs do not object and has found that there is “no clear error on the face of
the record,”3 see Fed. R. Civ. P. 72(b), Advisory Committee Notes. Wherefore, it is
ORDERED that the Recommendation of United States Magistrate Judge [Docket
No. 108] is ACCEPTED. It is further
ORDERED that Defendants U.S. Bank’s and Wells Fargo’s Renewed Motion for
Summary Judgment [Docket No. 99] is GRANTED. It is further
ORDERED that Plaintiffs’ Motion for Summary Judgment [Docket No. 100] is
DENIED. It is further
ORDERED that the Motion to Clarify Service Date of Plaintiffs’ Objection to
Recommendation of United States Magistrate Judge [DKT. 111] [Docket No. 112] is
DENIED as moot. It is further
ORDERED that this case shall be administratively closed, subject to reopening
for good cause, pursuant to D.C.COLO.LCivR 41.2.4 It is further

3

This standard of review is something less than a “clearly erroneous or contrary
to law” standard of review, Fed.R.Civ.P. 72(a), which in turn is less than a de novo
review. Fed.R.Civ.P. 72(b).
4

On January 6, 2012, defendant BNC Mortgage, Inc. (“BNC”) filed a notice of
stay of proceedings, stating that it had declared bankruptcy on January 9, 2009.
Docket No. 16. These proceedings appear to be ongoing. See Case No. 09-10137-scc
(Bankr. S.D.N.Y. Jan. 9, 2009).
9

ORDERED that, no later than twenty days after resolution of defendant BNC
Mortgage, Inc.’s bankruptcy proceedings, the parties shall file a status report with the
Court as to whether they believe the case should be reopened for good cause for any
further proceedings in this Court or whether the case may be dismissed.

DATED August 26, 2014.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

10