CIT Bank, N.A. v. Turner et al
ORDER Denying Plaintiff's 56 Unopposed Motion for Entry of Default Judgment Against Defendant Northern Colorado Water Conservancy District. On or before December 2, 2016, CIT Bank shall fileon behalf of itself, James Turner, and Susan Masona joint status report briefly explaining the parties' respective claims and defenses that remain for trial, and briefly describing the major factual issues the Court will be asked to resolve with respect to those claims and defenses. ORDERED by Judge William J. Martinez on 11/18/2016. (cthom, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 15-cv-1841-WJM-MJW
CIT BANK, N.A., a national bank,
JAMES R. TURNER,
SUSAN MASON, a/k/a Susan Turner, and
NORTHERN COLORADO WATER CONSERVANCY DISTRICT,
ORDER DENYING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT
Before the Court is Plaintiff CIT Bank’s Unopposed Motion for Entry of Default
Judgment Against Defendant Northern Colorado Water Conservancy District (“Default
Judgment Motion”). (ECF No. 56.) For the reasons explained below, the Court denies
this motion without prejudice to appropriate relief at a later stage of the case. The
Court will also order the parties to file a status report regarding the scope of the
upcoming bench trial.
I. BACKGROUND & PROCEDURAL HISTORY
In this action, CIT Bank accuses Defendant James Turner of obtaining a
mortgage loan secured by certain Boulder County real property, while intentionally
failing to disclose to the lender that he had illegally subdivided the property, rendering it
“unbuildable.” (See generally ECF No. 1.) Turner has also failed to make payments
under the Promissory Note (“Note”) enforcing the terms of the loan. CIT Bank claims to
be the current holder of the Note, and has brought causes of action for reformation of
the deed of trust, foreclosure, and breach of the Note.
Although CIT Bank’s primary focus is Turner’s liability, CIT Bank also named
various governmental entities as Defendants because those Defendants may also have
an interest in Turner’s property. Save for the Northern Colorado Water Conservancy
District (“Conservancy District”), CIT Bank has since stipulated to dismiss all of those
additional entities. (See ECF Nos. 24, 25, 26, 34, 38.)
Regarding the Conservancy District, CIT Bank’s complaint says little. The
complaint notes that the Conservancy District is a Colorado public agency. (ECF No. 1
¶ 7.) Aside from that, the only other mention of the Conservancy District is in CIT
Bank’s third cause of action, which seeks a decree of foreclosure in the alternative to
CIT Bank’s primary claim for reformation of the Note so that it encumbers all of the
subdivided parcel. (Id. ¶¶ 94–103.) In this context, CIT Bank alleges that the
Conservancy District “may claim an interest” in the property on account of certain
instruments found in Boulder County real property records. (Id. ¶ 100.) In other words,
it appears that the Conservancy District was named as a Defendant to ensure that the
Court could “accord complete relief among existing parties.” Fed. R. Civ. P. 19(a)(1)(A).
CIT Bank served process on the Conservancy District on September 3, 2015,
making the Conservancy District’s answer due on September 24, 2015. (See ECF No.
18.) The Conservancy District never filed an answer or other responsive pleading and
has never otherwise appeared in this case. The Clerk of Court entered default against
the Conservancy District on November 3, 2015. (ECF No. 45.)
CIT Bank subsequently filed the Default Judgment Motion at issue here. (ECF
No. 56.) CIT Bank does not request default judgment on any specific cause of action,
but instead proposes a default judgment finding that the Conservancy District has an
interest in the relevant property that would be superior to any interest CIT Bank might
acquire, and therefore, “in the event that CIT [Bank] or its designee obtains an interest
(the ‘CIT Interest’) in the Original Property, or any portion thereof, pursuant to any
order, judgment, or decree entered in this action, or otherwise by foreclosure, CIT
[Bank] or its designee shall take the CIT Interest subject to the Conservancy District
Interest.” (ECF No. 56-2 at 2–3.)
CIT Bank submits a highly unusual request for default judgment, given that it
asks the Court to declare CIT Bank’s potential interest to be subordinate to the
Conservancy District’s interest. This is not normally something that would require a
judgment, much less a default judgment. A request for the latter normally seeks relief
against a party up to the limit of the relief sought in the complaint. See Fed. R. Civ. P.
54(c) (“A default judgment must not differ in kind from, or exceed an amount, what is
demanded in the pleadings.”). Here, CIT Bank’s complaint does not demand any
particular relief against the Conservancy District.
If CIT Bank wishes to establish the Conservancy District’s superior position, CIT
Bank could simply acknowledge its own subordinate position and conduct its af fairs
accordingly. If CIT Bank wanted something more formal, it could state its position on
the record—as it has effectively done now—and voluntarily dismiss the Conservancy
District under Federal Rule of Civil Procedure 41(a)(1)(A)(i) or (ii).
In any event, the Court finds that it should not at this time enter anything in the
form of a judgment regarding the Conservancy District. As noted, CIT Bank does not
seek judgment on any particular cause of action. It instead requests a contingent
declaration of rights—contingent, it seems, on whether it eventually prevails on its
alternative cause of action for a decree of foreclosure. (See ECF No. 1 ¶¶ 94–103.)
Indeed, it is doubly contingent given that it turns both on whether CIT Bank elects to
pursue the foreclosure remedy and whether it is entitled to that remedy. In that light,
any declaration of rights relative to foreclosure would be an advisory opinion, which the
Court may not issue. See United States v. Burlington N. R.R. Co., 200 F.3d 679, 699
(10th Cir. 1999) (“It is fundamental that federal courts do not render advisory opinions
and that they are limited to deciding issues in actual cases and controversies.” (internal
quotation marks omitted)). The Default Judgment Motion will be denied without
prejudice to seeking appropriate relief at a later stage in this case.
III. NEED FOR A STATUS REPORT
On June 23, 2016, the Court granted CIT Bank’s motion for partial summary
judgment on its claim for breach of the Note. (See ECF No. 58.) This matter remains
set, however, for a bench trial to begin January 4, 2017. The Court presumes that CIT
Bank still wishes to pursue its claims for reformation and/or foreclosure. It would
nonetheless be helpful to receive from the parties a joint status report briefly explaining
their respective claims and defenses that remain for trial, and briefly describing the
major factual issues the Court will be asked to resolve with respect to those claims and
defenses. The Court’s formal order, below, therefore requests such a status report.
For the reasons set forth above, the Court ORDERS as follows:
Plaintiff’s Unopposed Motion for Entry of Default Judgment Against Defendant
Northern Colorado Water Conservancy District (ECF No. 56) is DENIED
WITHOUT PREJUDICE as premature; and
On or before December 2, 2016, CIT Bank shall file—on behalf of itself, James
Turner, and Susan Mason—a joint status report brief ly explaining the parties’
respective claims and defenses that remain for trial, and briefly describing the
major factual issues the Court will be asked to resolve with respect to those
claims and defenses. To the greatest extent possible, the Court encourages the
parties to agree upon the language of the joint status report, but the joint status
report may contain the parties’ separate statements on any matter where no
agreement could be reached.
Dated this 18th day of November, 2016.
BY THE COURT:
William J. Martínez
United States District Judge
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