Zeller v. Ventures Trust 2013-I-NH

Filing 40

ORDER denying without prejudice 37 Motion for TRO by Judge Philip A. Brimmer on 08/10/15.(jhawk, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 15-cv-01077-PAB-NYW
PENELOPE ZELLER, an individual,
Plaintiff,
v.
VENTURES TRUST 2013-I-NH and MCM CAPITAL PARTNERS, LLC, its trustee,
EAGLE VISTA EQUITIES, purchaser at Public Trustee Sale, and
DEBRA JOHNSON, Public Trustee for Denver County,
Defendants.

ORDER

This matter is before the Court on the Application for Preliminary Injunction
Prohibiting Defendant Executing a Forceable Entry and Detainer Action Forthwith
[Docket No. 17] and the Exparte Forthwith Motion for Temporary Restraining Order on
Eviction in Wrongful Foreclosure on the Home Located at 3030 Saint Paul Street in
Denver Colorado [Docket No. 37] filed by plaintiff Penelope Zeller.
The following facts are relevant to resolving the present motion. In 2005, plaintiff
took out a mortgage loan to purchase property located on Saint Paul Street in Denver,
Colorado (the “property”). Docket No. 18 at 8. In 2007, plaintiff executed a promissory
note (the “note), refinancing her loan with Countrywide Home Loans (“Countrywide”).
Id. Bank of America (“BOA”) later purchased Countrywide. Id. at 9. Plaintiff alleges
that Countrywide and BOA engaged in a pattern of improprieties with respect to her
loan. Id. at 9-11. At the May 28, 2015 hearing on plaintiff’s motion for a temporary

restraining order (“TRO”), plaintiff did not dispute that she is in default on the note, but
instead argued that, due to Countrywide’s and BOA’s misconduct, it was unclear what
entity was the beneficiary of the note.
In 2012, Bank of America initiated foreclosure proceedings on the property, but
no foreclosure sale was scheduled. Id. at 11. In 2013, defendant Ventures Trust 2013I-NH by MCM Capital Partners, LLC (“Ventures Trust”) began communicating with
plaintiff regarding the note and, in 2014, commenced foreclosure proceedings on the
property. Id. at 13; Docket No. 27 at 5, ¶ 5. Ventures T rust filed a Colo. R. Civ. P. 120
proceeding and, after a contested hearing, on May 11, 2015, the District Court for the
City and County of Denver, Colorado (the “state court”) entered an Order Authorizing
Sale. Docket No. 27 at 6; Docket No. 27-11 at 1.
On May 22, 2015, plaintiff filed this case against Ventures Trust and Denver
County Public Trustee Debra Johnson (the “public trustee”). Docket No. 1. Plaintif f’s
original complaint brought claims for, among other things, wrongful foreclosure, unjust
enrichment, violation of the Real Estate Procedures Act, violation of the Fair Debt
Collection Practices Act, deprivation of constitutional rights pursuant to 42 U.S.C.
§ 1983, and violation of the Fifth and Fourteenth Amendments. Docket No. 1 at 28-51.
Plaintiff filed a motion for a temporary restraining order, seeking to enjoin the public
trustee’s sale of the property. On May 28, 2015, the Court held a hearing on plaintiff’s
first motion for a TRO and denied the motion. Docket No. 10.
On May 28, 2015, the Public Trustee for the City and County of Denver held a
foreclosure sale, where defendant Eagle Vista Equities, LLC (“Eagle”) purchased the
property. Docket No. 27 at 6; Docket No. 27-13 at 1; Docket No. 17 at 10. T he public
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trustee issued a Public Trustee’s Confirmation Deed (“confirmation deed”) to Eagle,
Docket No. 27-14, and, on June 3, 2015, the state court entered an order approv ing
sale. Docket No. 27-15.
On June 11, 2015, Eagle served a notice to vacate the property, directing plaintiff
to vacate the property on or before June 16, 2015. Docket No. 25-1 at 14. On June 17,
2015, plaintiff filed an amended complaint, adding Eagle as a defendant. Docket No.
18. Plaintiff’s amended complaint asserts substantially the same claims as her original
complaint, but additionally requests injunctive relief setting aside the public trustee sale
and “an injunction as to any eviction action that MCM/Eagle Vista Equities may be
contemplating . . . .” Id. at 45 to Docket No. 18-1 at 2. Plaintiff also seeks to quiet title
in her favor. Docket No. 18-1 at 5. On June 17, 2015, plaintiff filed a motion for a
preliminary injunction, seeking to enjoin Eagle from filing a forcible entry and detainer
action to take possession of the property. Docket No. 17 at 1. Eagle filed a response.
Docket No. 25.
Eagle asserts that plaintiff refuses to vacate the property. Docket No. 25 at 1.
On June 19, 2015, Eagle filed the Complaint in Unlawful Detainer (the “detainer action”)
in the County Court for the City and County of Denver, Colorado, seeking judgment in
its favor for, among other things, “possession of the Premises.” Docket No. 25-1. On
July 2, 2015, the detainer action was transferred to the District Court for the City and
County of Denver, Colorado. A hearing on the issue of possession of the property is
set for August 12, 2015 in Denver District Court. Docket No. 37-1.
On August 7, 2015, plaintiff filed a second motion for a TRO. Docket No. 37.
Plaintiff appears to request that the Court issue a TRO enjoining the detainer action
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until the Court rules on plaintiff’s motion for a preliminary injunction. Id. at 4.
The Court turns to plaintiff’s motion for a preliminary injunction. Although the
plaintiff’s motion for a preliminary injunction sought an order enjoining Eagle from filing
an unlawful entry and detainer action in state court, Eagle has subsequently
commenced the detainer action and it remains pending in state court. Thus, plaintiff’s
specific request for relief appears to be moot. To the extent plaintiff’s motion can be
construed as seeking an order enjoining Eagle from further prosecuting the detainer
action pending in state court, the question is whether granting such relief is appropriate.
For two reasons, the Court answers that question in the negative.
The Anti-Injunction Act provides that a federal court “may not grant an injunction
to stay proceedings in a State court except as expressly authorized by Act of Congress,
or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.”
28 U.S.C. § 2283. The term “proceedings” has been held to encompass “all steps
taken or which may be taken in the state court or by its officers from the institution to
the close of the final process.” Hill v. Martin, 296 U.S. 393, 403 (1935). The AntiInjunction Act also applies to injunctions prohibiting parties from continuing to prosecute
a suit in state court. See, e.g., Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 144
(1988); see also Braverman v. New Mexico, 2011 WL 6013587, at *9-*10 (D.N.M. Oct.
19, 2011).
Plaintiff argues that, because she has brought a claim pursuant to 42 U.S.C.
§ 1983, her request for relief falls within an exception to the Anti-Injunction Act. Docket
No. 17 at 2. Exceptions to the Anti-Injunction Act “are narrow and are not [to] be
enlarged by loose statutory construction.” Chick Kam Choo, 486 U.S. at 146. The
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Supreme Court has held that 42 U.S.C. § 1983 is “an Act of Congress that falls within
the ‘expressly authorized’ exception of” the Anti-Injunction Act. Mitchum v. Foster, 407
U.S. 225, 243 (1972). Under § 1983, persons acting under the color of state law can be
held liable for depriving others of their constitutional rights. See Adickes v. S.H. Kress
& Co., 398 U.S. 144, 150 (1970). In order to show that an action was taken under color
of state law, a plaintiff must show: (1) that the “alleged constitutional deprivation [was]
‘caused by the exercise of some right or privilege created by the State or by a rule of
conduct imposed by the State or by a person for whom the State is responsible,’” and
(2) that the “‘party charged with the deprivation [was] a person who may fairly be said to
be a state actor.’” Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 50 (1999) (quoting
Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922, 937 (1982)).
Plaintiff has not established that her § 1983 claim would entitle her to the specific
injunctive relief sought in the motion for preliminary injunction. As to the first prong of a
§ 1983 claim, plaintiff alleges that the Colorado non-judicial foreclosure system is
unconstitutional, Docket No. 18 at 26, and deprived her of certain constitutional rights.
Id. at 39-40. However, the injunction that she seeks in the present m otion does not,
strictly speaking, concern such proceedings. Rather, the foreclosure process
terminated upon the state court’s order approving sale and Eagle’s receipt of the
confirmation deed. Plaintiff now seeks to enjoin Eagle from prosecuting a separate
detainer action to enforce its rights under the confirmation deed. Forcible entry and
detainer actions are governed by statute. See Colo. Rev. Stat. § 13-40-101 et seq.
Plaintiff’s motion for a preliminary injunction does not allege that the detainer action is

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part of the allegedly unconstitutional foreclosure system, and does not allege that the
detainer statutory scheme is unconstitutional or otherwise functions to deprive plaintiff
of a constitutional right. No basis exists for so concluding. See Butler v. Farner, 704
P.2d 853, 858 (Colo. 1985) (rejecting due process challenge to detainer statute). 1
Moreover, alleging a “‘private misuse’ of state laws” fails to satisfy the first prong of the
color of law test. Yanaki v. Iomed, Inc., 415 F.3d 1204, 1209 (10th Cir. 2005) (citing
Lugar, 457 U.S. at 941). Thus, to the extent plaintiff alleges that Eagle failed to use (or
misused) state procedures, plaintiff fails to allege that she was deprived of a
constitutional right by “the State or by a rule of conduct imposed by the State or by a
person for whom the State is responsible.” See Sullivan, 526 U.S. at 50.
As to the second prong of a § 1983 claim, in order to determine whether a
private party can be considered a state actor under § 1983, a court m ay apply a variety
of tests depending on the facts of each case. Gallagher v. Neil Young Freedom
Concert, 49 F.3d 1442, 1448 (10th Cir. 1995). However, regardless of which test is
applied, plaintiff fails to allege sufficient facts upon which to conclude that Eagle is a

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Plaintiff’s motion for a TRO primarily argues that Colorado’s non-judicial
foreclosure scheme is unconstitutional. See Docket No. 37 at 3. However, to the
extent plaintiff argues that the “Summary Forcible Entry and Detainer proceeding do[es]
not provide a full and fair hearing,” id., plaintiff appears to assert that the detainer
statutory scheme violates her due process rights. Plaintiff fails to support her argument
with citation to authority or provide relevant facts regarding the detainer proceeding. In
the absence of such a showing, the Court lacks a sufficient basis upon which to
conclude that the detainer proceeding violates plaintiff’s due process rights. See
Butler, 704 P.2d at 858 (citing Lindsey v. Normet, 405 U.S. 56 (1972)); Schuler v.
Oldervik, 143 P.3d 1197, 1201 (Colo. App. 2006) (rejecting argument that detainer
proceeding violated due process in part because defendants could have brought
counterclaim to quiet title under Colo. R. Civ. P. 105 or requested to delay trial pursuant
to Colo. Rev. Stat. § 13-40-114).
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state actor. See Lewis v. JP Morgan Chase Bank, Nat’l Assoc., No. 13-cv-01375-PABKLM, 2014 WL 1217948, at *3-*4 (D. Colo. March 24, 2014) (concluding, after
application of multiple tests, bank and law firm that engaged in foreclosure proceedings
were not state actors under § 1983).
Because plaintiff seeks to enjoin a state court action that is separate from and
subsequent to the allegedly unconstitutional foreclosure proceedings and because
plaintiff has failed to establish that Eagle – the party against whom she seeks injunctive
relief – is a state actor, plaintiff fails to establish that the injunctive relief her motion
requests against Eagle is cognizable pursuant to § 1983. Because “[a]ny doubts as to
the propriety of a federal injunction against state court proceedings should be resolved
in favor of permitting the state courts to proceed in an orderly fashion to finally
determine the controversy,” see Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623, 630
(1977) (quotation omitted), the Court concludes that the Anti-Injunction Act prohibits the
Court from interfering in the detainer action. See, e.g., Parker v. Remo Enters., LLC,
No. 08-cv-01425-DME-KLM, 2008 WL 2914336, at *1 (D. Colo. July 22, 2008)
(declining, in exercise of discretion, to enjoin state court forcible entry and detainer
proceeding).
Even assuming that plaintiff’s request to enjoin the detainer action falls within an
exception to the Anti-Injunction Act, the rule of Younger v. Harris, 401 U.S. 37 (1971),
additionally requires the Court to abstain from interfering in the detainer action. In
Younger, the Supreme Court ruled that a district court’s injunction of a pending state
court criminal prosecution violated “the national policy forbidding federal courts to stay

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or enjoin pending state court proceedings except under special circumstances.” Id. at
41. Younger abstention dictates “that federal courts not interfere with state court
proceedings by granting equitable relief – such as injunctions of important state
proceedings or declaratory judgments regarding constitutional issues in those
proceedings – when such relief could adequately be sought before the state court.”
Rienhardt v. Kelly, 164 F.3d 1296, 1302 (10th Cir. 1999). T hus, after Younger, even
when a federal court would otherwise have jurisdiction to grant equitable relief, the court
must abstain from exercising jurisdiction when a judgment on the claim would interfere
with ongoing state criminal or civil proceedings. D.L. v. Unified Sch. Dist., 392 F.3d
1223, 1227-28 (10th Cir. 2004).
The Supreme Court has established a threefold analysis for abstention under
Younger. A federal court must abstain if (1) there is an ongoing state judicial, civil, or
administrative proceeding, (2) which implicates important state interests, and (3) in
which there is an adequate opportunity to raise constitutional challenges. Middlesex
Cnty. Ethics Comm. v. Garden State Bar Ass’n, 457 U.S. 423, 431-32 (1982); Crown
Point I, LLC v. Intermountain Rural Elec. Ass’n, 319 F.3d 1211, 1215 (10th Cir. 2003).
As noted above, Younger abstention is a bar not only to claims for injunctive relief, but
also to claims requesting a declaratory judgment concerning the constitutionality of a
state law. Younger, 401 U.S. at 45 (“[t]he accused should first set up and rely u[p]on
his defense in the state courts, even though this involves a challenge of the validity of
some statute, unless it plainly appears that this course would not afford adequate
protection”); Rienhardt, 164 F.3d at 1302. Moreover, Younger abstention is not

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discretionary and, if abstention applies, a court must dismiss the claim without
prejudice. D.L. Unified, 392 F.3d at 1228.
As to the first prong of the Younger analysis, the detainer action remains
pending in state court. See Docket No. 37-1. As to the second prong, the Supreme
Court has held it to be “beyond question” that ensuring the security of titles to real
estate is “an essential state interest.” BFP v. Resolution Trust Corp., 511 U.S. 531, 544
(1994) (rejecting interpretation of bankruptcy code provision that would place the “title of
every piece of realty purchased at foreclosure . . . under a federally created cloud”). An
order enjoining the detainer action would prohibit Eagle from enforcing its rights under
the confirmation deed, which would implicate the state’s interest in security of title to
real property. As to the third prong, plaintiff does not allege any facts or otherwise
establish that she would be unable to raise constitutional challenges in defense of the
detainer action, and the Court finds no basis for so concluding. The Colorado Supreme
Court has held that the forcible entry and detainer statutory scheme “provides a
mechanism for ensuring that defendants will have an opportunity to fully present
available defenses.” Butler, 704 P.2d at 858.
Because plaintiff’s request for injunctive relief meets the three prongs of the
Younger analysis, abstention is necessary unless (1) “the state proceeding is motivated
by a desire to harass or is conducted in bad faith”; (2) the challenged statute is
“flagrantly and patently violative of express constitutional prohibitions in every clause,
sentence and paragraph, and in whatever manner and against whomever an effort
might be made to apply it”; or (3) there are other extraordinary circumstances involving

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irreparable injury. Moore v. Sims, 442 U.S. 415, 424 (1979) (internal citations and
alterations omitted); Younger, 401 U.S. at 53. Plaintiff has not demonstrated that any
of these circumstances are present in this case. W ith respect to the question of
whether plaintiff will suffer irreparable injury if the detainer action is not enjoined, for the
reasons stated on the record at the TRO hearing, even if, as plaintiff alleges, Ventures
Trust was not a proper holder of the note and therefore lacked standing to foreclose on
the property, plaintiff essentially admits that she is in default on the note to the proper
holder of the note. Thus, she has not established that she has a possessory interest in
the property such that she would suffer irreparable harm if the detainer action were to
proceed. Pursuant to the Younger abstention doctrine, plaintiff’s motion for a
preliminary injunction will be denied without prejudice.
Plaintiff also appears to contend that the relief she seeks is proper pursuant to
Ex parte Young, 209 U.S. 123 (1908). In Ex parte Young, the Supreme Court
recognized an exception to Eleventh Amendment immunity under which a state officer
may be enjoined from “taking any steps towards the enforcement of an unconstitutional
enactment, to the injury of complainant.” Id. at 159. The Ex parte Young exception,
however, is narrow and applies only to prospective relief and may not be used to obtain
a declaration that a state officer has violated a plaintiff's federal rights in the past.
Buchwald v. Univ. of New Mexico Sch. of Med., 159 F.3d 487, 495 (10th Cir. 1998).
The present motion for a preliminary injunction does not appear directed at the public
trustee or any other state officer in his or her official capacity. Rather, plaintiff seeks to
enjoin Eagle – a private entity – from prosecuting the detainer action. Moreover, to

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whatever extent plaintiff seeks an injunction requiring the public trustee to set aside the
sale of the property, the relief she seeks is retroactive, not prospective. See Verizon
Md., Inc. v. Pub. Serv. Comm’n of Md., 535 U.S. 635, 645 (2002) (holding that court
considering Ex parte Young claim “need only conduct a straightforward inquiry into
whether [the] complaint alleges an ongoing violation of federal law and seeks relief
properly characterized as prospective” (quotation omitted)). Thus, Ex parte Young does
not apply to the injunctive relief requested in the present motion.2
Because plaintiff is not entitled to a preliminary injunction, her motion for a TRO
and the relief requested therein is moot. See Docket No. 37 at 4.
For the foregoing reasons, it is
ORDERED that plaintiff’s Application for Preliminary Injunction Prohibiting
Defendant Executing a Forceable Entry and Detainer Action Forthwith [Docket No. 17]
and the Exparte Forthwith Motion for Temporary Restraining Order on Eviction in
Wrongful Foreclosure on the Home Located at 3030 Saint Paul Street in Denver
Colorado [Docket No. 37] are DENIED without prejudice.

2

The Court concludes that it can appropriately resolve the present motion without
a hearing. See Prosper, Inc. v. Innovative Software Techs, 188 F. App’x 703, 706 (10th
Cir. 2006) (unpublished) (holding that district court did not abuse its discretion in failing
to hold a hearing on motion for preliminary injunction); Reynolds & Reynolds Co. v.
Eaves, 1998 WL 339465, at *3 (10th Cir. June 10, 1998) (table decision) (rejecting
argument that court was required to hold evidentiary hearing on motion for preliminary
injunction)
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DATED August 10, 2015.
BY THE COURT:

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

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