McNees v. Ocwen Loan Servicing, LLC

Filing 123

ORDER Granting 95 Defendants' Motion for Summary Judgment, Denying as moot 108 Plaintiff's Motion to Strike, and Terminating Case. Vacating the Final Trial Preparation Conference set for July 24, 2020 and the five-day jury trial set to commence on August 10, 2020. Entered by Judge William J. Martinez on 3/30/2020.(afran)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 16-cv-1055-WJM-KLM
JOHN L. MCNEES,
Plaintiff,
v.
OCWEN LOAN SERVICING, LLC, a Delaware limited liability corporation, and
DEUTSCHE BANK NATIONAL TRUST COMPANY, as trustee for Ameriquest Mortgage
Securities Inc. Asset-Backed Passthrough Certificates, Series 2003-11, under the
pooling and servicing agreement date[d] November 1, 2003,
Defendants.

ORDER GRANTING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT,
DENYING PLAINTIFF'S MOTION TO STRIKE AS MOOT, AND TERMINATING CASE

Plaintiff John L. McNees contends that his home was unlawfully taken from him
through foreclosure. Proceeding pro se, he filed this lawsuit in May 2016. (ECF No. 1.)
At that time, the only defendants were Ocwen Loan Servicing, LLC (“Ocwen”) and
placeholder “Doe” defendants. There has since been motion practice, the appearance
and withdrawal of an attorney for McNees, and the appearance of a new attorney on his
behalf. Despite the already-lengthy proceedings, the Court granted McNees’s motion,
through his new attorney, to file a second amended complaint because the proposed
complaint was McNees’s “first professionally drafted complaint, and sets forth [his]
allegations with much greater clarity than before.” (ECF No. 64.) As filed, the Second
Amended Complaint dropped the “Doe” defendants but added Defendant Deutsche
Bank National Trust Company (“Deutsche Bank”).

Following additional motion practice, McNees’s Second Amended Complaint was
winnowed to claims for “breach of contract, breach of the implied covenant of good faith
and fair dealing, third-party breach of contract, violation of the Colorado Consumer
Protection Act [(‘CCPA’), Colo. Rev. Stat. § 6-1-105], and civil conspiracy.” (ECF No.
90 at 2.)1 By way of relief, McNees seeks: damages, including treble damages and
attorneys’ fees under the CCPA; to recover title to his home (i.e., to void Deutsche
Bank’s title and rescind the foreclosure sale); and an order of specific performance that
Deutsche Bank comply with the terms of the governing loan documents. (ECF No. 65
¶¶ 167–70.)
Currently before the Court is Defendants’ Motion for Summary Judgment. (ECF
No. 95.) For the reasons explained below, the Court grants the motion. In
consequence, judgment will enter in Defendants’ favor and McNees’s Motion to Strike
Affirmative Defense of Colorado Credit Agreement Statute of Frauds (ECF No. 108) will
be denied as moot.
I. LEGAL STANDARD
Summary judgment is warranted under Federal Rule of Civil Procedure 56 “if the
movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248–50 (1986). A fact is “material” if, under the
relevant substantive law, it is essential to proper disposition of the claim. Wright v.
Abbott Labs., Inc., 259 F.3d 1226, 1231–32 (10th Cir. 2001). An issue is “genuine” if
the evidence is such that it might lead a reasonable trier of fact to return a verdict for the
1

The Court dismissed his claims for breach of fiduciary duty, negligence, and fraud.
(See id. at 14–15, 20–24.)

2

nonmoving party. Allen v. Muskogee, 119 F.3d 837, 839 (10th Cir. 1997).
In analyzing a motion for summary judgment, a court must view the evidence and
all reasonable inferences therefrom in the light most favorable to the nonmoving party.
Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). In addition, the
Court must resolve factual ambiguities against the moving party, thus favoring the right
to a trial. See Houston v. Nat’l Gen. Ins. Co., 817 F.2d 83, 85 (10th Cir. 1987).
II. FACTS
The following facts are undisputed unless attributed to a party or otherwise
noted.
A.

Background Regarding the Home and the Mortgage
1.

1980: Original Purchase of the Property

The property at issue here is a single-family residential home in Broomfield,
Colorado (“Property”), that McNees purchased in 1980. (ECF No. 100 ¶ 1.) The record
does not state how he financed the original purchase.
2.

2003: New Mortgage (Promissory Note & Deed of Trust)

In 2003, McNees he took out a new mortgage loan against the property, in the
amount of $198,000. (Id.) Town and Country Credit Corporation financed the loan
through the usual arrangement—a promissory note in Town and Country’s favor in the
amount of $198,000, secured by a deed of trust encumbering the Property. (Id.) Four
provisions from the note or deed of trust (or both) are particularly relevant to the
disputes that eventually arose, leading to this lawsuit.
First, the deed of trust states that the lender “may return any payment or partial
payment if the payment or partial payments are insufficient to bring the Loan current,”
3

and the lender may also “accept any payment or partial payment insufficient to bring the
Loan current, without a waiver of any rights hereunder or prejudice to its rights to refuse
such payment or partial payments in the future.” (ECF No. 95-2 at 4.)
Second, the deed of trust states, “No offset or claim which Borrower might have
now or in the future against Lender shall relieve Borrower from making payments due
under the [promissory note] and this [deed of trust] or performing the covenants and
agreements secured by this [deed of trust].” (Id.)
Third, the deed of trust requires the borrower to maintain sufficient homeowner’s
insurance. (Id. at 6.) If the borrower fails to maintain insurance, the deed of trust
permits the lender to acquire insurance, potentially at a higher cost, and charge that to
the borrower:
If Borrower fails to maintain any of the [required coverages],
Lender may obtain insurance coverage, at Lender’s option
and Borrower’s expense. Lender is under no obligation to
purchase any particular type or amount of coverage.
Therefore, such coverage shall cover Lender, but might or
might not protect Borrower . . . . Borrower acknowledges
that the cost of the insurance coverage so obtained might
significantly exceed the cost of insurance that Borrower
could have obtained.
(Id.)
Fourth, the note and deed of trust both state that any notice from the lender to
the borrower will be mailed to the address of the encumbered property unless the
borrower gives the lender notice of a different mailing address. (ECF No. 95-1 at 2;
ECF No. 95-2 at 10–11.)
3.

2009: Deutsche Bank’s Acquisition and Securitization

By no later than 2009, the note ended up as one of many such notes comprising

4

a mortgage-backed security managed by Deutsche Bank. 2 Over the ensuing years,
Deutsche Bank hired various entities to service the loans. (ECF No. 100 at 9, ¶ 3.)
Each of these entities operated under a Pooling & Servicing Agreement with Deutsche
Bank. The Pooling & Servicing Agreement grants the “Master Servicer” power to
“institute foreclosure proceedings” and “to bring or respond to civil actions or complaints
(in its own name or that of the Trust Fund or the Trustee on behalf of the Trust Fund)
related to any Mortgage Loan, [or] Mortgaged Property.” (ECF No. 100-6 at 86.) It also
requires the master servicer to
service and administer the Mortgage Loans on behalf of
[Deutsche Bank] and in the best interests of and for the
benefit of the Certificateholders [essentially, the investors]
(as determined by the Master Servicer in its reasonable
judgment) in accordance with (i) the terms of the respective
Mortgage Loans and any insurance policies related thereto,
(ii) all Applicable Regulations, (iii) the terms of this
Agreement, (iv) the Loss Mitigation Action Plan, if applicable,
and (v) to the extent consistent with the preceding
requirements, in the same manner in which it services and
administers similar mortgage loans for its own portfolio,
giving due consideration to customary and usual standards
of practice of prudent mortgage lenders and loan servicers
administering similar mortgage loans . . . .
(Id.) The master servicer further has power to
waive, modify or vary any term of [a] Mortgage Loan [in
default or imminent default] (including modifications that
would change the Mortgage Rate, forgive the payment of
principal or interest or extend the final maturity date of such
Mortgage Loan), accept payment from the related Mortgagor
of an amount less than the Stated Principal Balance in final
2

The parties have conflicting accounts about what happened between closing on the
loan in 2003 and the assignment of the note to Deutsche Bank (which assignment was recorded
in 2009)—yet the parties also admit each other’s accounts. (Compare ECF No. 95 at 3, ¶¶ 1–4
with ECF No. 100 at 2; and compare ECF No. 100 at 8–9, ¶¶ 1–2 with ECF No. 106 at 5.) The
precise details are immaterial to the parties’ disputes, so the Court need not address the
conflicts.

5

satisfaction of such Mortgage Loan, or consent to the
postponement of strict compliance with any such term or
otherwise grant indulgence to any Mortgagor . . . .
(Id. at 88–89.)
New York law governs the Pooling & Servicing Agreement, without regard to
conflicts of laws. (Id. at 180.)
B.

The 2011 Loan Modification
By early 2011, the master servicer on McNees’s loan was Homeward

Residential, Inc. (“Homeward”), which is not a defendant in this lawsuit. (ECF No. 95
at 3, ¶ 5 & n.1.)
In March 2011, McNees entered into a Loan Modification Agreement with
Homeward. (Id. at 4, ¶ 7.) Apparently McNees had fallen behind on his mortgage
payments because the Loan Modification Agreement provided, among other things, that
approximately $3,900 “in pre-modification accrued late charges, modification fees, and
other expenses would be deferred until the maturity date reflected in the modification.”
(ECF No. 100 at 11, ¶ 7.) The Agreement further stated that it did not modify the
promissory note or deed of trust except as expressly stated. (ECF No. 95-5 at 1–2.)
The Loan Modification Agreement established a new monthly payment of
$1,447.24 for principal and interest, plus escrowed amounts for property taxes and
insurance, at that time calculated at $200.80—for a total new monthly payment of
$1,648.04. (ECF No. 95 at 4, ¶ 8.) On April 1, 2011, however, Homeward sent McNees
a monthly billing statement in the amount of $1,648.17 (thirteen cents higher than stated
in the Loan Modification Agreement), due May 1, 2011. (Id. ¶ 9.) Then, in May 2011,
Homeward sent McNees an escrow statement announcing that, starting June 1, 2011,
his new payment would be $1,668.26 (more than $20 higher than stated in the Loan
6

Modification Agreement) due to an escrow shortage. (Id. ¶ 12.) But McNees did not
consider either of the increased payments to be a breach of the Loan Modification
Agreement. (Id. ¶¶ 10, 13.) Rather, he began making payments of $1,668.26
beginning in June 2011. (ECF No. 100 at 11, ¶ 7.) He sent these payments by
cashier’s check from North Dakota, where he was working “in the oil field.” (Id.; ECF
No. 100-3 ¶ 21.)
C.

Lender-Placed Insurance in 2011
Sometime before October 31, 2011, McNees’s insurance coverage for the

Property lapsed. (ECF No. 95 at 5, ¶ 14.) On October 31, 2011, Homeward sent
McNees a letter stating that it had obtained temporary insurance coverage for the
Property and that it would take out a one-year lender-placed insurance (“LPI”) policy for
the property if McNees did not secure his own coverage “before the end of the
temporary insurance period.” (ECF No. 95-9 at 1–2.) The letter stated that the amount
of coverage under the LPI policy “will be based on your last known coverage amount,”
but, consistent with the deed of trust, warned that “the premium may be considerably
higher than insurance you can purchase.” (Id. at 2.)
McNees did not obtain replacement insurance before the deadline. (ECF No. 95
at 5, ¶ 17.) By letter dated January 10, 2012, Homeward notified McNees that it was
placing a one-year LPI policy on the Property, covering October 2011 through October
2012. (Id. ¶ 18.)
D.

Payment Disputes
1.

May–September 2012: Recalculation of Escrow & McNees’s Failure to
Pay Recalculated Amounts

On May 19, 2012, Homeward sent McNees his annual escrow disclosure

7

statement. (Id. at 6, ¶ 21.) The escrow statement announced that his new payment
would be $1,940.40, beginning July 1, 2012 (id. ¶ 22)—as compared to the $1,668.26
he had been paying since June 2011. 3 The bulk of the increase came from increases in
escrow and escrow shortage to cover the LPI premium, which cost about $1,200 more
per year than the previous homeowner’s policy. (See id.; ECF No. 95-12; ECF No. 100
at 12, ¶ 9.)
McNees was still (or again) working out-of-state at the time and he did not
arrange to forward his mail. (ECF No. 95 at 6, ¶ 27.) Thus, he did not receive the
escrow recalculation and he continued making payments of $1,668.26 (the old amount)
from July through October 2012. (Id. ¶¶ 23–24.) Homeward began to hold each partial
payment in a suspense account until it received sufficient funds to total $1,940.40. (Id.
¶ 25.)
2.

October–December 2012: McNees’s Dispute Regarding LPI

On October 31, 2012, Homeward sent McNees a notice that it would renew the
LPI policy for an additional year because McNees still had not obtained his own
coverage. (Id. at 7, ¶¶ 29–30.) Shortly after this, McNees realized that there was a
significant difference between what Homeward expected him to pay and what he had
been paying. (ECF No. 100 at 13, ¶ 13.) Apparently he called Homeward to complain,
because Homeward sent him a letter dated November 13, 2012, apologizing for “any
inconvenience that you may have experienced with the Customer Care Associates.”
(ECF No. 95-13 at 1.)
3

Defendants’ brief says that the escrow statement made the new payment effective
June 1, 2012 (id.), but Defendants elsewhere say July 1, 2012 (id. at 27) and the underlying
exhibit also says that new payment is “effective July 1, 2012” (ECF No. 95-12 at 1). The Court
presumes that Defendants’ initial reference to June 1 is a typo.

8

This same letter went on to discuss the late charges and other charges that had
been deferred as part of the 2011 Loan Modification Agreement. (Compare id. with
ECF No. 100 at 5 n.11; see also Part II.B, above.) It is not clear what prompted
Homeward to write about these late fees—perhaps McNees had discussed them with
Homeward in his earlier telephone conversation. In any event, the letter said that “the
late charges assessed are valid and Homeward is unable to waive them. You may
choose to pay the accrued late charges in parts, along with the monthly payments.”
(ECF No. 95-13 at 1.) McNees understands this statement as “confirm[ing] that pre2011 modification late charges were not . . . immediately due,” consistent with the Loan
Modification Agreement. (ECF No. 100 at 5 n.11.)
The letter also included a discussion of the May 2012 escrow analysis leading to
a new payment of $1,940.40 as of July 1, 2012. (ECF No. 95-13 at 3–4.) The letter
then presented, in table format, an accounting of the amounts Homeward had received
from McNees since June 2012 and how it had applied those amounts. (Id. at 4–5.)
According to this table, Homeward:
•

applied the June 2012 payment to the payment owed for that month,
because it was the correct payment amount for that month;

•

applied the July 2012 payment exclusively to the suspense account,
creating a suspense account balance of $1,668.26;

•

applied the August 2012 payment plus $272.14 from the suspense
account (i.e., the difference between $1,940.40 and $1,668.26) to the
past-due July payment, leaving $1,396.12 in the suspense account;

•

repeated that process with the September 2012 payment, applying it to

9

the past-due August payment, and leaving $1,123.98 in the suspense
account;
•

applied the October 2012 payment to the suspense account, creating a
suspense account balance of $2,792.24;

•

later in October, pulled $1,940.40 from the suspense account and applied
it to the past-due September payment, leaving $851.84 in the suspense
account;

•

applied the November 2012 payment to the suspense account, creating a
suspense account balance of $2,520.10; and

•

the next day in November, pulled $1,940.40 from the suspense account
and applied it to the past-due October payment, leaving $579.70 in the
suspense account.

(Id.) Following the table, the letter said that “[t]he account is currently due for the
November 1, 2012 payment in the amount of $1,940.40, with the outstanding late
charges [and similar charges that had been deferred in the Loan Modification
Agreement],” all of which summed up to $5,953.06. (Id. at 5.) However, given the
$579.70 in the suspense account, “the total amount due on the loan is $5,373.36.” (Id.)
McNees contacted Homeward and the LPI insurance provider to dispute the cost
of the LPI policy—specifically, he considered it an “overcharge” because the policy
“overvalued” the Property. (ECF No. 100 at 13, ¶ 13; ECF No. 95 at 7, ¶ 28.) Among
his communications with Homeward was a handwritten letter that Homeward received
on December 18, 2012, which included a check for $1,668.26. (ECF No. 95 at 7, ¶ 32;
ECF No. 95-15.) The letter demanded that Homeward apply the payment “in the order

10

of principal, interest, taxes and the remainder to insurance,” and declared that “[a]ny
outstanding balance due to insurance charges will be in suspense until this issue is
resolved as per your fiduciary duties as possessor of this note.” (Id.)
One day later (December 19, 2012), Homeward sent McNees a letter titled
“Notice of Right to Cure.” (ECF No. 95-16.) The letter identified Homeward as the
servicer and Deutsche Bank as the creditor. (Id. at 1.) It further stated that McNees
was required to pay $7,429.50 by January 23, 2013, and if he did so, he could “continue
with the contract as though [he] were not late [in making payments].” (Id.) But “[i]f you
do not pay by this date,” the letter continued, “we may exercise our rights under the
law.” (Id.) 4
3.

January–February 2013: Continuing LPI Disputes & Recalculation of
Escrow

Homeward sent McNees a letter dated January 7, 2013, that was similar to the
November 13, 2012 letter, but with updated numbers reflecting how payments had been
applied in December. (ECF No. 100-7.) In that respect, Homeward had placed all of
McNees’s December payment ($1,668.26) into the suspense account (creating a
balance of $2,247.96), and then pulled $1,940.40 from the suspense account and
applied it to the past-due November payment (leaving a suspense account balance of
$307.56). (Id. at 7.) The letter announced that “[t]he account is currently due for the
4

McNees says that the cure amount of $7,429.50 was inaccurate because it failed to
account for his December 2018 check, and improperly included fees that had been deferred in
the Loan Modification Agreement. (ECF No. 100 at 5 n.13.) Defendants respond that the cure
amount was good through January 23, 2013, meaning that it must have included the January 1,
2013 payment. (ECF No. 106 at 3, ¶ 33.) As for the deferred charges, Defendants point out
that the Loan Modification Agreement did not modify Deutsche Bank’s rights under the deed of
trust, including the right to accelerate all amounts owed: “thus once the loan went into default
Deutsche Bank was no longer required to defer demanding payment of those amounts.” (Id.)
The Court need not decide whether this presents a genuine dispute of material fact for reasons
that will become clear in Part III.B, below.

11

December 1, 2012 payment and subsequent payment [i.e., the January 1, 2012
payment] in the amount of $3,880.80 [i.e., $1,940.40 x 2].” (Id.) The letter further stated
that the total amount due, including late charges at issue in the Loan Modification
Agreement, minus funds in the suspense account, was $7,672.66. (Id.)
On January 8, 2013, McNees sent a letter to Homeward accusing it of “fail[ing] to
do [its] fiduciary duty,” and enclosing a payment of $1,668.26. 5 (ECF No. 95 at 8,
¶¶ 34–35.) 6 No party points the Court to any tabulation (as in the November 13, 2012
and January 7, 2013 letters) of how Homeward applied this payment. The parties
appear to agree, however, that Homeward applied it as it had applied previous short
payments. (See ECF No. 100 at 13, ¶ 15; ECF No. 106 at 6 n.5.) In other words,
Homeward deposited it into the suspense account, creating a balance of $1,975.82, and
then drew $1,940.40 from the suspense account and applied it to the past-due
December payment, leaving a suspense account balance of $35.42.
The Notice of Right to Cure letter from the previous month set a deadline of
January 23, 2013, for a cure payment. McNees did not pay the cure payment by that
date. (ECF No. 95 at 9, ¶ 39.)7

5

At times McNees’s version of events says that he submitted payments in 2013 of
$1,668,28, not $1,668.26. (See ECF No. 100 at 13, ¶¶ 15–16.) And within the same brief,
McNees sometimes claims differing payment amounts for the same month. (Compare id. at 6
n.16 (February 2013 payment was $1,668.23) with id. at 13, ¶ 16 (February 2013 payment was
$1,668.28).) Homeward’s official ledger consistently shows payments of $1,668.26 for the
relevant months (see ECF No. 95-19), so the Court will use that amount and assume that
McNees’s variable amounts are typos. The difference between these amounts makes no
difference in the Court’s analysis.
6

It is unclear if McNees had received Homeward’s January 7, 2013 letter by the time he
sent this letter to Homeward.
7

McNees purports to deny this, but his denial is only an argument that he was not
required to make a cure payment because, among other things, Homeward was demanding the
late charges that had been deferred in the Loan Modification Agreement. (ECF No. 100 at 6

12

On February 5, 2013, Homeward sent McNees an escrow disclosure statement,
announcing that the monthly payment would be reduced to $1,795.40, effective January
1, 2013. (ECF No. 95 at 8, ¶ 36.) McNees says that the escrow recalculation was due
to a recalculation of the value of his home, done at his request, in turn leading to a
recalculation of the LPI policy premium. (ECF No. 100 at 4 n.10.)
On February 19, 2013, Homeward received from McNees a payment of
$1,668.26. (ECF No. 100 at 13, ¶ 16.) McNees does not say why he continued to
submit his usual amount instead of $1,795.40. Unlike previous correspondence (and
certain correspondence discussed below), McNees does not claim that he failed to
receive the February 5, 2013 escrow recalculation—which, in any event, he says was
done at his request.
It is not clear if Homeward deposited McNees’s February 19 payment into the
suspense account. If it had, it would have created a balance of $1,703.68—not enough
to cover the past-due January payment of $1,795.40.
On February 21, 2013, Homeward sent McNees another “Notice of Right to
Cure” letter, demanding that McNees pay $7,808.58 by March 28, 2013. (ECF No. 95
at 8, ¶ 38.)
Defendants claim that, on February 22, 2013, Homeward sent McNees a letter
notifying him that Ocwen was replacing Homeward as the servicer for the loan, effective
March 11, 2013. (Id. ¶ 40.) McNees says he “received the transfer letter several
months after the fact and it was backdated.” (ECF No. 100 at 6 n.19.)

n.18.) The basic fact—that he did not make a cure payment by appointed date—remains
undisputed.

13

4.

March–Early June 2013: Ocwen Assumes Servicing Role & McNees
Continues to Pay Pre-Recalculation Amounts

McNees sent a payment of $1,668.26 to Homeward on March 5, 2013. (Id. at 14,
¶¶ 17–18.) He says he sent this payment to Homeward, not Ocwen, because he had
not yet received notice of the transfer of his loan. (Id. ¶ 17.) As of March 5, however,
Homeward was still the servicer for six more days. In any event, Homeward received
the check, endorsed it on March 15, 2013, and transferred it to Ocwen, which received it
on March 20, 2013. (Id. ¶ 18.)
The Notice of Right to Cure letter from February 2013 set a deadline of March
28, 2013, for a cure payment. McNees did not pay the cure payment by that date.
(ECF No. 95 at 9, ¶ 39.) 8
On March 29, 2013, an Ocwen representative called McNees to say that he was
three payments behind and that Ocwen had not received a March 2013 payment. (ECF
No. 100 at 14, ¶ 19.) McNees responded that he had sent payments for February and
March 2013 and could not be three payments behind. (Id.) McNees also complained
that “the prior servicer was overcharging for LPI,” and the Ocwen representative
responded that LPI is costly and McNees could still obtain his own insurance. (Id.)
McNees made payments to Ocwen of $1,668.26 in both April and May 2013. (Id.
¶¶ 21–22.) McNees’s account statements for that month (received from Ocwen) did not
specifically state that his regular monthly payment was $1,795.40. Instead, they
itemized all of the current charges (principal, interest, and escrow), minus previous
partial payments, yielding a total due by the first of the next month; followed by an
itemization of past-due principal, interest, and escrow, yielding a total of “Past Due
8

See n.7, above.

14

Amounts DUE IMMEDIATELY”; and finally an itemization of late charges persisting
since the Loan Modification Agreement, with no claim as to a due date. (ECF No. 100-9
at 2, 4 (capitalization in original).) 9
In “late May 2013,” McNees secured his own homeowner’s policy through
Allstate, and Allstate notified Ocwen by fax on June 4, 2013, that the new premium was
$1,228.57. (ECF No. 100 at 15, ¶ 23.) Ocwen did not recalculate the escrow amount in
light of the information received from Allstate. (Id. ¶ 24.) McNees does not say if he
asked Ocwen to recalculate escrow at this time.
E.

Default Proceedings
1.

Late June–August 2013: Inconsistent Notices of Default

McNees paid Ocwen $1,668.26 on June 17, 2013. (Id. at 16, ¶ 25.) Like his
April and May 2013 account statements, his June 2013 statement nowhere specifically
stated that his expected monthly payment was $1,795.40. (Id.)
On June 21, 2013, Ocwen sent McNees two “Notice of Default” letters. (Id. ¶ 26.)
The first was a Colorado-specific demand letter on a form Ocwen only sent to Colorado
borrowers. (Id.) The second was on a form not specific to Colorado borrowers. (Id.)
One of the notices demanded a cure amount of $6,948.05, and the other demanded
$7,708.10. (Id. nn.57–58.) Both notices purported to itemize the currently due charges,
but those itemized amounts did not add up to either cure amount. (Id.) 10
9

A specific example is reproduced in Part III.D, below.

10

McNees further emphasizes that neither cure amount matched the $9,503.50 that was
supposedly “due immediately” according to his June 2017 account statement, received a few
days before he received the notices of default. (Id. ¶¶ 25, 27.) But the June 2013 account
statement did not say that $9,503.50 was due immediately. That figure is the total amount owed
when accounting for all of the charges itemized on the statement, including the monthly
payment expected on July 1, 2013, past-due monthly payments, and the late charges at issue in
the Loan Modification Agreement. (See ECF No. 100-9 at 6.) As before, no due date is

15

McNees paid $1,668.26 on July 15, 2013. (Id. at 17, ¶ 28.) He paid the same
amount on August 12, 2013. (Id. ¶ 29.) As before, he received monthly account
statements that did not specifically state that his regular monthly payment should be
$1,795.40. (Id. ¶¶ 28–29.)
On August 22, 2013, Ocwen sent McNees two more “Notice of Default” letters.
(Id. ¶ 30.) As before, one was Colorado-specific and the other was not; both claimed
different cure amounts; and the itemized figures in both notices did not add up to either
cure amount. (Id.)
2.

September–December 2013: Additional Payments & Claims Regarding
the March 2013 Lost Payment

McNees paid Ocwen $1,668.26 on September 12, 2013; $1,673.34 on October
4, 2013; and $1,673.34 on November 6, 2013. (Id. at 18, ¶¶ 33–35.) It is unclear why
McNees added $5.08 to the October and November payments. Regardless, his
account statements for those months did not specifically show that his regular monthly
payment should be $1,795.40. (Id. at 18–19, ¶¶ 33–34, 36)
On November 12, 2013, Ocwen sent McNees a letter about his March 2013
payment—the payment McNees sent to Homeward and Homeward forwarded to
Ocwen, but Ocwen never applied to McNees’s account. (Id. at 18, ¶ 35; see also Part
II.D.4, above.) In that letter, Ocwen announced that it had returned McNees’s check—
actually a cashier’s check from his North Dakota bank—“to the remitter” on March 29,
2013. (ECF No. 100 at 18, ¶ 35.) However, the North Dakota bank has no record of
receiving the check. (Id.)

assigned to the late charges. (Id.) The only amount the June 2013 statement declares to be
due immediately is the past-due monthly payments, calculated at $5,386.20. (Id.)

16

In December 2013, McNees sent two payments to Ocwen, both in the amount of
$1,673.34. (Id. at 19, ¶ 38.) He does not explain why he sent two payments, nor the
amount of the payments. As it turned out, Ocwen rejected those payments. (ECF No.
100-3 ¶ 42; ECF No. 106 at 8 n.18.) McNees says that Ocwen rejected his November
and October 2013 payments also, but he was not aware of those rejections until months
later because Ocwen would send the cashier’s checks back to the bank and it would
take time for the bank to refund the amount into McNees’s account. (ECF No. 100-3
¶ 42.)
3.

January–Early July 2014: Additional Payments & Additional Notices of
Default

McNees paid Ocwen $1,673.34 on January 7, 2014. (ECF No. 100 at 20, ¶ 39.)
On January 14, 2014, Ocwen sent McNees a Colorado-specific “Notice of Default”
letter, once again demanding a cure amount that bore no relation to the various
itemized charges. (Id.)
A few days later, Ocwen sent a January 2014 account statement “that for the first
time . . . plainly identified the mortgage payment amount of $1795.40.” (Id.) The same
statement said that Ocwen had refunded McNees’s January 7 payment on January 9,
2014. (Id.; ECF No. 100-17 at 2.) In other words, Ocwen rejected the January
payment.
On February 4, 2014, McNees paid Ocwen $1,673.34. (ECF No. 100 at 20,
¶ 40.) Ocwen accepted this payment. (Id.)
On February 15, 2014, Ocwen sent yet another “Notice of Default” letter claiming
a cure amount of $16,013.24. (Id. & n.74.) Unlike in the previous letters, this cure
amount is the sum of the itemized amounts listed in the letter. (Id.) That same day,

17

however, Ocwen also sent a Colorado-specific “Notice of Default” letter claiming a cure
amount of $15,263.17, which was not the sum of the itemized amounts listed. (Id. at 21,
¶ 41.)
McNees paid Ocwen $1,673.34 in each of March and April 2014, and $1,669.20
in each of May, June, and July 2014. (Id. ¶ 42; ECF No. 100-3 ¶ 48.) It is not clear how
he chose these payment amounts. His statements for February and March 2014, both
of which showed what was owed as of the first of the following month, specified
$1,795.40 as the expected monthly payment. (ECF No. 100-17 at 14, 18.) His
statements for April and May 2014, both of which showed what was owed as of the first
of the following month, specified $1,803.93 as the expected monthly payment. (Id. at
22, 26.)11 The reason for the increase to $1,803.93 is not clear.
McNees says that his March, April, and May 2014 statements “did not reflect the
payments [he] made in those months.” (ECF No. 100 at 21, ¶ 42.) Defendants say that
this is because Ocwen rejected those payments. (ECF No. 106 at 9 n.22.) When
foreclosure proceedings eventually commenced (see below), Ocwen’s representatives
communicated to McNees’s attorney that Ocwen had rejected and returned every
payment McNees made from March 2014 onward. (See ECF No. 100-21 at 2–3; ECF
No. 100-23 at 3.)
4.

Late July 2014–December 2015: Foreclosure

Ocwen stopped sending its typical monthly statements and instead, beginning in
late July 2014, sent statements demanding the total amount due on the loan. (ECF
No. 100 at 21, ¶ 43.) The July 2014 statement specifically announced, “Your loan has

11

Ocwen did not send a monthly statement in June 2014. (ECF No. 100 at 21, ¶ 43.)

18

been accelerated and the accelerated amount is now due.” (ECF No. 100-17 at 34.)
McNees made no payment to Ocwen in August 2014, but paid $1,669.20 in each
of September, October, November, and December 2014 (ECF No. 100-3 ¶ 48), and the
same amounts in January, February (twice), and April 2015 (id. ¶ 51)—all of which
Ocwen apparently rejected. McNees also asked Ocwen to perform an escrow analysis
in April 2015 on account of the Allstate policy McNees had secured in late May 2013.
(ECF No. 100 at 15, ¶ 24; see also Part II.D.4, above.) That escrow analysis reduced
his monthly payment “back to roughly $1690.00 per month.” (ECF No. 100 at 15, ¶ 24.)
The escrow recalculation was, however, something of a sideshow by that time.
The main event had begun back on October 21, 2014, when Deutsche Bank filed a
motion in Broomfield County Court for an order authorizing a foreclosure sale. (ECF
No. 95 at 12, ¶ 55.) McNees retained an attorney to contest the foreclosure proceeding,
and that attorney filed an objection on November 25, 2014, arguing that Deutsche Bank
had miscalculated his monthly payments had overcharged him, and that he otherwise
timely made all required payments. (Id. ¶ 56.) The Broomfield County Court entered an
order on May 4, 2015 authorizing foreclosure. (Id. ¶ 57.) Deutsche Bank bought the
Property at auction on December 9, 2015. (Id. ¶ 58.) 12

12

McNees purports to dispute the statements in this paragraph, but does not explain the
basis of his dispute. (See ECF No. 100 at 8.) The statements are therefore deemed
undisputed. In any event, filings in the Broomfield County Court are matters of public record
(see ECF Nos. 95-27, 95-28, 95-29, 95-30), and McNees cannot possibly mean to say that he
denies the Property was sold at foreclosure—the foreclosure is foundational to his claims
against Defendants.

19

III. ANALYSIS
A.

Statute of Limitations for CCPA Violations and Civil Conspiracy (Deutsche
Bank Only)
Defendants first argue that, as against Deutsche Bank, the statute of limitations

for McNees’s civil conspiracy and CCPA claims expired before McNees filed suit
against Deutsche Bank. (ECF No. 95 at 14–21.) 13
McNees filed this lawsuit on May 9, 2016 (ECF No. 1), naming Ocwen and others
as defendants, but he did not propose naming Deutsche Bank as a defendant until
September 12, 2018, when he moved for leave to file a second amended complaint
(ECF No. 63). The Court granted that motion, and the Second Amended Complaint
was officially filed, on September 17, 2018. (ECF Nos. 64, 65.)
The parties appear to agree that September 17, 2018, is the date by which the
statute of limitations should be judged as to Deutsche Bank (see ECF No. 95 at 15;
ECF No. 100 at 23–24), 14 unless the relation back doctrine applies (discussed below).
In that light, McNees’s civil conspiracy claim needed to accrue on or after September
17, 2016, see Deutsche Bank Tr. Co. Americas v. Samora, 321 P.3d 590, 594–95
(Colo. App. 2013) (applying two-year tort catch-all statute of limitations contained in
Colorado Revised Statute § 13-80-102(1)(a) to civil conspiracy), and his CCPA claim
needed to accrue on or after September 17, 2015, see Colo. Rev. Stat. § 6-1-115

13

Defendants’ statute of limitations argument extends only to the civil conspiracy and
CCPA claims, and only as against Deutsche Bank. McNees’s arguments that all of his claims
are timely against both Defendants (see ECF No. 100 at 26–30) are therefore irrelevant to the
extent they go beyond Defendants’ argument.
14

Given the parties’ agreement, the Court need not address whether the date on which
the plaintiff moved for leave to amend is the proper date for statute of limitations purposes. In
this case, the date on which McNees moved and the date the Court granted that motion were
only five days apart, so it likely would not matter in any event.

20

(three-year statute of limitations).
McNees does not argue that his CCPA and civil conspiracy claims against
Deutsche Bank accrued on or after those dates. He instead argues for relation back of
his claims against Deutsche Bank to the filing of the original complaint against Ocwen
on May 9, 2016. (ECF No. 100 at 23–26.)
An amendment to a pleading relates back to the date of the
original pleading when * * * the amendment changes the
party or the naming of the party against whom a claim is
asserted, if Rule 15(c)(1)(B) is satisfied [i.e., “the
amendment asserts a claim or defense that arose out of the
conduct, transaction, or occurrence set out—or attempted to
be set out—in the original pleading”] and if, within the period
provided by Rule 4(m) for serving the summons and
complaint [i.e., 90 days], the party to be brought in by
amendment:
(i) received such notice of the action that it will not be
prejudiced in defending on the merits; and
(ii) knew or should have known that the action would have
been brought against it, but for a mistake concerning the
proper party’s identity.
Fed. R. Civ. P. 15(c)(1)(C).
Anticipating McNees’s reliance on this rule, Defendants argue in their motion that
“McNees has presented no evidence that the omission of Deutsche Bank as a
descendent from his earlier complaints was the result of a ‘mistake’ as the term is used
in [Rule 15(c)(1)(C)(ii)]” because “McNees was familiar with Deutsche Bank years prior
to the filing of even his original Complaint,” including through Notices of Right to Cure
from December 2012 on February 2013, which identified Deutsche Bank as the creditor.
(ECF No. 95 at 16.)15 McNees responds with the Supreme Court’s holding in Krupski v.

15

By its text, Rule 15(c)(1)(C) applies to a pleader’s attempt to “change[] the party or the
naming of the party against whom a claim is asserted,” not to a pleader’s attempt to add a party

21

Costa Crociere that “Rule 15(c)(1)(C)(ii) asks what the prospective defendant knew or
should have known during the Rule 4(m) period, not what the plaintiff knew or should
have known at the time of filing [the] original complaint.” 560 U.S. 538, 548 (2010)
(emphasis in original). In this light, the question is not so much whether the plaintiff
actually made a mistake, but whether “the proper defendant could reasonably believe
that the plaintiff made no mistake.” Id. at 549.
Here, Defendants offer no argument why Deutsche Bank could reasonably
believe that McNees made no mistake. In addition, McNees asserts that Deutsche
Bank was on notice of the lawsuit from the beginning because McNees sued Ocwen,
and the rights and responsibilities granted to Ocwen in the Pooling & Servicing
Agreement mean that “Ocwen . . . is effectively Deutsche Bank for servicing and
foreclosure purposes.” (ECF No. 100 at 25 (emphasis in original).) McNees also cites
unpublished cases from this District holding that a lawsuit against one party acts as
notice to another party if the two parties’ business operations and activities are closely
related. (Id.) In reply, Defendants address neither the argument that Ocwen effectively
acted as Deutsche Bank nor the case law McNees cites. (See ECF No. 106 at 18–20.)
In this light, the Court agrees with McNees that his original complaint, which
named Ocwen as a defendant, provided the notice required by Rule 15(c)(1)(C)(i); and
to an existing claim. Some courts have therefore held that the rule only applies when seeking to
substitute one party for another, while doctrines such as tolling address whether additional
parties may be added when the statute of limitations has otherwise expired. See, e.g.,
Telesaurus VPC, LLC v. Power, 2011 WL 5024239, at *1–7 (D. Ariz. Oct. 21, 2011) (surveying
courts’ diverging approaches to this question and concluding that Rule 15(c)(1)(C) applies only
to substitution, not addition). Here, the Second Amended Complaint added Deutsche Bank to
claims McNees was also asserting against Ocwen. But Defendants make no argument that
Rule 15(c)(1)(C) is the inappropriate rule to apply in this circumstance. Defendants argue only
that there was no mistake within the meaning of Rule 15(c)(1)(C)(ii). Accordingly, the Court
need not decide whether cases such as Telesaurus properly interpret Rule 15(c)(1)(C).

22

as for Rule 15(c)(1)(C)(ii), Deutsche Bank could not have reasonably viewed McNees’s
failure to sue it separately as something other than a mistake. Thus, the date McNees
filed the original complaint against Ocwen (May 9, 2016) is the date by which all
statutes of limitations should be judged. Defendants make no argument that McNees’s
civil conspiracy and CCPA claims against Deutsche Bank are untimely even if judged by
that date. The Court therefore rejects Defendants’ statute of limitations argument as to
the civil conspiracy and CCPA claims asserted against Deutsche Bank.
B.

Breach of Contract & Breach of the Covenant of Good Faith and Fair
Dealing
Defendants next argue that McNees cannot prove his claims for breach of

contract and breach of the covenant of good faith and fair dealing. The elements of
breach of contract in Colorado are: “(1) the existence of a contract; (2) performance by
the plaintiff or some justification for nonperformance; (3) failure to perform the contract
by the defendant; and (4) resulting damages to the plaintiff.” W. Distrib. Co. v. Diodosio,
841 P.2d 1053, 1058 (Colo. 1992) (citations omitted) (“Diodosio”). “The performance
element . . . means substantial performance,” i.e., even if the plaintiff has “deviated from
[the contract] in trifling particulars,” the defendant received “substantially the benefit [it]
expected.” Id. (internal quotation marks omitted).
As for the breach of the implied covenant of good faith and fair dealing, it may
apply
when one party has discretionary authority to determine
certain terms of the contract, such as quantity, price, or time.
The covenant may be relied upon only when the manner of
performance under a specific contract term allows for
discretion on the part of either party. However, it will not
contradict terms or conditions for which a party has
bargained.

23

Amoco Oil Co. v. Ervin, 908 P.2d 493, 498 (Colo. 1995) (citations omitted).
Drawing from these principles, Defendants argue that McNees cannot succeed
on his contract claims because he cannot prove the second element of breach of
contract: “performance by [himself] or some justification for nonperformance.” Diodosio,
841 P.2d at 1058. Defendants understand McNees to be alleging that Defendants’
breaches began with Ocwen’s mishandling of his March 2013 payment (during the
transition from Homeward to Ocwen), and those breaches continued with Ocwen’s
miscalculations (or inconsistent calculations) about cure amounts and Ocwen’s choice
to sometimes accept his payments and sometimes reject them. As it turns out,
McNees’s response brief confirms Defendants’ understanding of McNees’s contract
claims—in particular, that “occurrences from March 2013 onward . . . form the basis for
[his] claims against [Defendants].” (ECF No. 100 at 2; see also id. at 30–36.)
Defendants contend that McNees was already in substantial breach by that time, with
no justification for nonperformance. Defendants’ argument runs as follows:
•

McNees’s homeowner’s insurance lapsed in October 2011.

•

Homeward (Ocwen’s predecessor) purchased the LPI policy and charged
it to McNees, as it was entitled to do under the deed of trust.

•

In May 2012, Homeward recalculated the necessary escrow payments to
compensate for the LPI policy, yielding a new monthly payment of
$1,940.40, beginning July 1, 2012.

•

Homeward sent notice of the new payment to McNees in May 2012.
McNees may not have received it then, but that was due to McNees’s
failure to have his mail forwarded. Homeward fulfilled its obligation under

24

the note and deed of trust to send notice to the address of the
encumbered property.
•

McNees, unaware of the recalculation, continued to pay the previous
monthly amount of $1,668.26 from July through October 2012.

•

When McNees learned in late October or early November 2012 that he
had been underpaying, he intentionally chose to continue underpaying
because he believed the LPI policy premium was too high. He specifically
declared that “[a]ny outstanding balance due to insurance charges will be
in suspense until this issue is resolved” (ECF No. 95-15), contrary to the
deed of trust’s provision stating that “[n]o offset or claim which Borrower
might have now or in the future against Lender shall relieve Borrower from
making payments due under the [promissory note] and this [deed of trust]”
(ECF No. 95-2 at 4).

•

By the time Homeward sent the second “Notice of Right to Cure” letter (on
February 21, 2013), McNees was far enough behind that his February
2013 payment plus the remainder in the suspense account was not
enough to cover the January 2013 payment. In other words, he was two
months behind.

•

McNees never paid the cure amount.

•

Accordingly, McNees cannot prove that he performed, or had a
justification for not performing, as of the time Defendants’ alleged
breaches arose.

(ECF No. 95 at 22–30, 34–35.)

25

What is McNees’s response to this chain of reasoning? To the Court’s surprise,
he mostly ignores it. Indeed, the legal argument section of his response brief entirely
ignores it. (See ECF No. 100 at 23–40.) As for the factual section of his brief, he
addresses only two of Defendants’ premises: the LPI policy and the calculation of the
cure amount.
Concerning the LPI policy, he describes it as “excessive,” “unwarranted,” and an
“overcharge.” (See, e.g., ECF No. 100 at 3 n.4; id. at 4, nn.9–10; id. at 13, ¶ 13.) But
these attacks are purely rhetorical. He never addresses the language from the deed of
trust invoked by Defendants, which forbids McNees’s self-help approach (i.e., paying
only what he personally believed to be reasonable), and he never cites any authority
that would otherwise override the deed of trust’s language on this question—indeed, he
says nothing at all about this part of the deed of trust.
Concerning the calculation of the cure amount, McNees insists that it
inappropriately included the pre-modification late charges that the 2011 Loan
Modification Agreement deferred until the end of the modified loan term. 16 Even if true,
McNees cannot reasonably dispute that, by the end of February 2013, he had failed to
pay enough to cover either his January or February 2013 payments. McNees offers no
authority for the notion that his actions could still be considered “substantial
performance” when he was two months behind due to self-help efforts that were
prohibited by the relevant contract. 17 In addition, the undisputed evidence shows he

16

See n.4, above.

17

McNees says he was “a single payment behind” when he began disputing the LPI
policy (ECF No. 100 at 5 n.13), and “less than a single payment behind” when Homeward
accepted his February 2013 payment (id. at 6, n.16). He does not explain his math. For both
propositions, he instead cites the entirety of his 10-page summary judgment affidavit—which

26

had no intent to pay any cure amount, but instead to fight Homeward’s supposed
breaches of fiduciary duty. (See Parts II.D.2 & II.D.3, above.)
Given McNees’s total lack of relevant argument or authorities, the Court deems
him to confess Defendants’ argument that his material breaches before March 2013
prevent him from being able to prove that he substantially performed. Because he
cannot prove that basic element, he cannot sue Defendants for alleged breaches that
postdated his own material breach.
C.

Third-Party Breach of Contract
Defendants argue that McNees cannot prove his third-party breach of contract

claim. This claim rests on the notion that McNees was a third-party beneficiary of the
Pooling & Servicing Agreement, particularly its wide grant of discretion to the master
servicer to “grant indulgence” to a borrower in default. (ECF No. 100 at 30–31 (quoting
ECF No. 100-6 at 88–89); see also Part II.A.3, above.)
New York law governs the Pooling & Servicing Agreement. (ECF No. 100-6
at 180.) It therefore also applies to any claim for third-party breach of contract. See
Restatement (Second) of Contracts § 309 cmt. b (1981) (“Where there is a contract, the
right of a beneficiary is subject to any limitations imposed by the terms of the contract.”);
Brown v. Fryer, 2013 WL 1191405, at *2 (D. Colo. Mar. 22, 2013); cf. ADT Sec. Servs.,
Inc. v. Apex Alarm, LLC, 430 F. Supp. 2d 1199, 1201 (D. Colo. 2006) (“a forum
selection clause encumbers a third-party beneficiary who could reasonably have
foreseen its designation as beneficiary”).

contains no calculations on this issue. (See ECF No. 100-3.) Regardless, he still cites no
authority for the notion that one can be behind on one’s payments in any amount due to selfhelp efforts prohibited by the relevant contract, yet nonetheless be in substantial performance.

27

The Second Circuit, applying New York law, has passingly endorsed the Fifth
Circuit’s statement that “‘courts invariably deny mortgagors third-party status to enforce
[pooling and servicing agreements].’” Rajamin v. Deutsche Bank Nat’l Tr. Co., 757 F.3d
79, 86 (2d Cir. 2014) (quoting Reinagel v. Deutsche Bank Nat’l Tr. Co., 735 F.3d 220,
228 n.29 (5th Cir.2013)). Defendants suggest that the Court may deny McNees’s thirdparty beneficiary claim on this basis alone. (ECF No. 106 at 15.) The Fifth Circuit’s
statement may well be true—McNees does not cite, and the Court has not found, any
case allowing a mortgagor to sue as a third-party beneficiary under a pooling and
servicing agreement. But whatever the Second Circuit saw in the Fifth Circuit’s
approach, the analysis in Rajamin appears to turn on a failure to plausibly allege the
necessary elements of a third-party breach claim under New York law, rather than a
blanket prohibition of this sort of claim. See id. at 86–87. The Court will therefore
examine the elements.
To sustain a third-party breach of contract claim under New York law, McNees
must prove
(1) the existence of a valid and binding contract between
other parties, (2) that the contract was intended for his
benefit and (3) that the benefit to him is sufficiently
immediate, rather than incidental, to indicate the assumption
by the contracting parties of a duty to compensate him if the
benefit is lost.
Burns Jackson Miller Summit & Spitzer v. Lindner, 451 N.E.2d 459, 469 (N.Y. 1983). 18
No party disputes that the first element is satisfied here. As for the second and
18

If Colorado law applied, the analysis would be essentially the same. See Baker v.
Wood, Ris & Hames, Prof’l Corp., 364 P.3d 872, 881 (Colo. 2016) (“Colorado law recognizes
that a person not a party to an express contract may bring an action on the contract if the
parties to the agreement intended to benefit the non-party, provided that the benefit claimed is a
direct and not merely incidental benefit of the contract.”).

28

third elements, McNees’s only argument is that
McNees and other borrowers are plainly intended thirdbeneficiaries [sic] of the [Pooling & Servicing Agreement],
since it permitted Ocwen to “grant indulgence to any
Mortgagor ([such as] waivers, modifications, variances,
forgiveness of principal or interest, postponements, or
indulgences . . .[)]” and permitted Ocwen to “waive, modify or
vary any term of such Mortgage Loan (including
modifications that would change the Mortgage Rate, forgive
the payment of principal or interest or extend the final
maturity date of such Mortgage Loan), accept payment from
the related Mortgagor of an amount less than the Stated
Principal Balance in final satisfaction of such Mortgage Loan,
or consent to the postponement of strict compliance with any
such term.”
(ECF No. 100 at 31 (quoting ECF No. 100-6 at 88–89).) McNees appears to argue that
the mere existence of this provision shows the requisite intent to bestow an enforceable
benefit on the third-party mortgagors. He cites no authority for this proposition. Nor
does he explain what benefit was conferred upon him by this wide-open discretion
granted to the servicer.
In addition, the Pooling & Servicing Agreement directs the servicer to “service
and administer the Mortgage Loans on behalf of [Deutsche Bank] and in the best
interests of and for the benefit of the Certificateholders (as determined by the Master
Servicer in its reasonable judgment).” (ECF No. 100-6 at 86.) In other words, if the
Pooling & Servicing Agreement seeks to confirm or unenforceable benefit on anyone, it
is not the mortgagors. 19
Accordingly, the Court agrees with Defendants that McNees is unable to prove
an essential element of this third-party breach of contract claim. Defendants are entitled
19

Notably, when McNees quotes this portion of the Pooling & Servicing Agreement, he
omits, via ellipses, the portion about servicing in the best interests of the Certificateholders.
(See ECF No. 100 at 30.)

29

to summary judgment on this claim.
D.

CCPA
The Colorado Legislature enacted the CCPA “to regulate commercial activities

and practices which, because of their nature, may prove injurious, offensive, or
dangerous to the public. The CCPA deters and punishes businesses which commit
deceptive practices in their dealings with the public by providing prompt, economical,
and readily available remedies against consumer fraud.” Rhino Linings USA, Inc. v.
Rocky Mountain Rhino Lining, Inc., 62 P.3d 142, 146 (Colo. 2003).
To prove a private cause of action under the CCPA, a
plaintiff must show:
(1) that the defendant engaged in an unfair or deceptive
trade practice;
(2) that the challenged [unfair or deceptive] practice occurred
in the course of defendant’s business, vocation, or
occupation;
(3) that [the challenged unfair or deceptive practice]
significantly impacts the public as actual or potential
consumers of the defendant’s goods, services, or property;
(4) that the plaintiff suffered injury in fact to a legally
protected interest; and
(5) that the challenged practice caused the plaintiff’s injury.
Id. at 146–47.
Defendants argue that, whatever McNees claims to be the unfair or deceptive
trade practices, he cannot prove the third element of his claim, regarding significant
public impact. (ECF No. 95 at 32–33, 36–37.)
[The] relevant considerations to determine whether a
challenged practice significantly impacts the public within the
context of a CCPA claim . . . include (1) the number of
consumers directly affected by the challenged practice,

30

(2) the relative sophistication and bargaining power of the
consumers affected by the challenged practice, and
(3) evidence that the challenged practice has previously
impacted other consumers or has the significant potential to
do so in the future.
Rhino Linings, 62 P.3d at 149.
Defendants say that McNees’s only possible evidence of public impact is “his
awareness of instances of prior litigation against Ocwen by the Colorado Attorney
General or others” (ECF No. 95 at 12, ¶ 59), which is “no[t] admissible evidence” (id. at
32–33, 36–37). Defendants emphasize that, in response to and interrogatory regarding
public impact, McNees directed Defendants to a Denver Business Journal article
reporting on settlement proceeds available to 3,850 Colorado homeowners under a
consent judgment in a 2013 lawsuit brought by the Colorado Attorney General against
Ocwen in the United States District Court for the District of the District of Columbia.
(ECF No. 95-31 at 2.)20 When asked about this same topic at his deposition, he said
that his accusations were based on “public knowledge” of “lawsuits.” (ECF No. 95-7 at
27–29.) Defendants argue that this sort of recounting of news reports about lawsuits
cannot be admitted into evidence. See Fed. R. Civ. P. 56(c)(2) (“A party may object
that the material cited to support or dispute a fact cannot be presented in a form that
would be admissible in evidence.”).
In response, McNees does not argue that his testimony in this regard is
admissible. Nor does he argue, e.g., that he may (and is prepared to) introduce the

20

In that lawsuit, the Colorado Attorney General alleged things such as “failing to timely
and accurately apply payments,” “failing to provide accurate and timely information to borrowers
seeking information about loss mitigation services,” and “with respect to [loans that had been
modified], deceptively seeking to collect payments from the consumer under the mortgage’s
original unmodified terms.” (Id.)

31

consent judgment itself into evidence, or that he can prove he is among the 3,850
Colorado homeowners entitled to relief under that judgment. Instead, he argues that he
has other evidence showing public impact. The Court will address that additional
evidence shortly. But given McNees’s failure to respond to Defendants’ argument that
he lacks admissible evidence regarding other lawsuits, the Court deems McNees to
concede Defendants’ argument on that matter.
McNees asserts two other theories of public impact. The first theory relies on the
existence of the Colorado-specific notice of default letters that he received on multiple
occasions, along with testimony from an Ocwen representative that Ocwen initiated
about 2,700 and single-family residential foreclosures in Colorado between 2013 and
2016. (ECF No. 100 at 37–38.) McNees says that his Colorado-specific letters usually
never added up correctly, and he presumes that the other 2,700 borrowers likewise
received mathematically incoherent notices. (Id.) However, to show public impact
(assuming a mathematically incoherent notice is an unfair or deceptive trade practice),
McNees needs evidence that other borrowers actually received the kinds of notices he
received. His presumption alone is not evidence. Consequently, this theory fails to
show public impact.
McNees’s second theory is that the monthly statements he received from Ocwen
between March and December 2013 were unfair or deceptive because they did not
specify his regularly expected monthly payments. (ECF No. 100 at 38.) Ironically,
McNees himself resorts to a bit of deception to give this claim more gravity, claiming
that Ocwen eventually included the regularly expected payment on its monthly
statements “at the urging of the Consumer Financial Protection Bureau” (id.)—as if the

32

CFPB came after Ocwen specifically on this matter. The supporting exhibit, however,
shows nothing so interesting. The exhibit is a “Guide to Understanding Your New Billing
Statement.” (ECF No. 100-28.) 21 It has a question-and-answer section containing the
following:
Q: Why has my statement changed?
A: The redesigned Mortgage Account Statement matches
new guidelines set by the Consumer Financial Protection
Bureau in 2013.
(Id.) In other words, as far as McNees's evidence reveals, Ocwen was acting on a
general directive to all servicers.
In any event, it is not clear that McNees was ever deceived by the lack of an
explicit statement about his expected monthly payment. As noted above (Part II.D.3),
his payment in 2013 was $1,795.40, which was announced to him in a February 2013
escrow recalculation statement—which, he says, was generated at his request. Thus, it
is not clear that Ocwen’s failure to state that number explicitly on his monthly
statements had any effect on him. But if it did, the Court agrees with Defendant that a
reasonable jury could not deem the 2013 account statements to be “deceptive” within
the meaning of the CCPA. (ECF No. 106 at 13–14.)
Below is an example of the relevant portion of the account statement (this one
happens to be from April 2013):

21

McNees says that this document was mailed to all borrowers in December 2013 (ECF
No. 100 at 38), but the document itself bears no date.

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(ECF No. 100-9 at 2.) This shows that the “Current Amount Due by 05/01/13” is
$254.28, which is the sum of principal, interest, and escrow ($1,795.40), minus the
“Partial Payment Amount” (apparently the balance of his suspense account at the time).
McNees does not claim that paying the “Current Amount Due” would not have satisfied
his upcoming monthly payment obligation. Thus, he has no evidence that the 2013
account statements were deceptive. 22
For these reasons, the Court finds that Defendants are entitled to summary
judgment on McNees’s CCPA claim.
E.

Civil Conspiracy
Under Colorado law, civil conspiracy “is a derivative cause of action that is not

actionable per se.” Double Oak Const., L.L.C. v. Cornerstone Dev. Intern., L.L.C., 97
P.3d 140, 146 (Colo. App. 2003). In other words, civil conspiracy is not a traditional
cause of action, but “is a means for establishing vicarious liability for [an] underlying
22

McNees further complains that Ocwen’s account statements stopped displaying his
expected monthly payment from July 2014 onward (ECF No. 100 at 39), but that is because
Ocwen had accelerated his loan by then, so there was no longer any incremental monthly
payment that would satisfy McNees’s obligations to Ocwen (see Part II.E.4, above).

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[wrong].” Halberstam v. Welch, 705 F.2d 472, 479 (D.C. Cir. 1983). “If the acts alleged
to constitute the underlying wrong provide no cause of action, then there is no cause of
action for the conspiracy itself.” Double Oak, 97 P.3d at 146.
The Court has found that McNees’s primary causes of action fail, so his
derivative civil conspiracy claim must fail as well. Even if one or more of the primary
causes of action were viable, his argument for civil conspiracy is that “Deutsche Bank
. . . failed . . . [to] supervise[] Ocwen’s loan servicing activities in any way.” (ECF
No. 100 at 39.) He cites no authority for the notion that a failure to supervise amounts
to a civil conspiracy. Cf. Jet Courier Serv. Inc. v. Mulei, 771 P.2d 486, 502 (Colo. 1989)
(elements of civil conspiracy are: (1) two or more persons, (2) an object to be
accomplished, (3) an agreement on the object or course of action, (4) one or more
unlawful overt acts, and (5) damages proximately caused by the unlawful overt act(s)).
For these reasons, Defendants are entitled to summary judgment on McNees’s
civil conspiracy claim.
IV. CONCLUSION
For the reasons set forth above, the Court ORDERS as follows:
1.

Defendants’ Motion for Summary Judgment (ECF No. 95) is GRANTED;

2.

McNees’s Motion to Strike Affirmative Defense of Colorado Credit Agreement
Statute of Frauds (ECF No. 108) is DENIED AS MOOT;

3.

The Final Trial Preparation Conference set for July 24, 2020 and the five-day jury
trial set to commence on August 10, 2020, are both VACATED;

4.

The Clerk shall enter judgment in favor of Defendants and against Plaintiff, and
shall terminate this case; and

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5.

Defendants shall have their costs upon compliance with D.C.COLO.LCivR 54.1.
Dated this 30th day of March, 2020.
BY THE COURT:

______________________
William J. Martinez
United States District Judge

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