Crotts et al v. Gunnison Valley Bank et al
Filing
11
MEMORANDUM DECISION and Ordergranting 6 Motion to Dismiss. Case Closed. Magistrate Judge Samuel Alba no longer assigned to case. Signed by Judge Clark Waddoups on 2/28/12. (jmr)
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION
RYAN CROTTS and SABRINA CROTTS
MEMORANDUM DECISION
AND ORDER
Plaintiffs,
vs.
Case No. 2:11-cv-1113 CW
GUNNISON VALLEY BANK et al.,
District Judge Clark Waddoups
Defendants.
Magistrate Judge Samuel Alba
INTRODUCTION
Plaintiffs Ryan and Sabrina Crotts, as pro se litigants, filed a complaint and motion for
temporary restraining order pertaining to the foreclosure of their home and pending eviction. The
case was referred to United States Magistrate Judge Samuel Alba under 28 U.S.C. § 636(b)(1)(B).
On December 19, 2011, Judge Alba issued a Report and Recommendation, recommending that
Plaintiffs’ motion for a temporary restraining order be denied. Plaintiffs filed an Objection on
January 3, 2012 that asserts this case cannot be handled by a magistrate judge because it is a suit in
equity. Subsequently, Defendants Gunnison Valley Bank, Paul Andersen, V. Lowry Snow, and
Snow Jensen & Reece filed a motion to dismiss under Rules 12(b)(1) and 12(b)(6) of the Federal
Rules of Civil Procedure. Plaintiffs have not responded to the motion. The court grants the motions
to dismiss.
BACKGROUND
Gunnison Valley Bank (the “Bank”) provided a short-term construction loan to Ryan Crotts
on March 6, 2008 in the amount of $194,675. After the Bank foreclosed on the loan, Plaintiffs
moved to enjoin their eviction. Plaintiffs assert the foreclosure is not valid because the Bank did not
sign the loan agreement and the note and deed of trust were bifurcated during an improper
securitization transaction. As a result, the Bank cannot show that it had a perfected interest in
Plaintiffs’ home.
Plaintiffs’ first cause of action states that Defendants lacked standing to foreclose because
they failed to perfect a security interest in Plaintiffs’ home. Within this same claim, Plaintiffs also
assert the loan violated state and federal laws because it was deceptive and fraudulent. Plaintiffs
assert that the “loan” from the Bank was not actually a loan because the Bank did not fund the loan
from its capital assets and provided nothing of value. Instead, the loan was an “investment contract”
that the Bank fraudulently induced Plaintiffs to enter. Because the loan is purportedly invalid,
Plaintiffs contend they hold title to the property free and clear, and that taking their property is a
violation of their civil liberties. Moreover, Plaintiffs contend the Bank’s actions violate 15 U.S.C.
§§ 78r(a) and 78cc(b) of the Securities Exchange Act and 18 U.S.C. § 513(a) of the criminal code.
Finally, Plaintiffs contend that by calling the transaction a “loan,” Defendants have violated 15
U.S.C. § 1692 of the Fair Debt Collection Practices Act (“FDCPA”) because it has made a false or
misleading statement.
Plaintiffs second cause of action asserts the Bank concealed that the loan would be
securitized and that the loan’s character would change because no single party would hold the Note.
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As a result, Plaintiffs allege they were fraudulently induced to enter into the “loan” in violation of
the Truth in Lending Act (“TILA”) and the Real Estate Settlement Procedures Act (“RESPA”). The
remaining five causes of action arise under state law, including fraud in the inducement, intentional
infliction of emotional distress, slander of title, quiet title, and declaratory judgment seeking
equitable relief.
ANALYSIS
I.
RULE 12(b)(1) MOTION
A.
Standard of Review
Defendants seek to dismiss Plaintiffs’ Complaint based on Rule 12(b)(1) of the Federal Rules
of Civil Procedure. Rule 12(b)(1) challenges may consist of a facial attack or a factual attack.
E.F.W. v. St. Stephen’s Indian High Sch., 264 F.3d 1297, 1303 (10th Cir. 2001). A facial attack
challenges the sufficiency of the complaint. Id. (citation omitted). “In addressing a facial attack,
the district court must accept the allegations in the complaint as true.” Id. (citation omitted). In
contrast, a factual attack looks beyond the “allegations contained in the complaint and challenge[s]
the facts upon which subject matter jurisdiction depends.” Id. (quotations and citation omitted).
In such instances, a “court does not presume the truthfulness of the complaint’s factual allegations,”
but “has wide discretion to allow affidavits, other documents, and a limited evidentiary hearing to
resolve disputed jurisdictional facts.” Id. (quotations and citations omitted). Here, Defendants have
introduced documents to prove the existence of the loan at issue and affidavits pertaining to
jurisdiction. The facts contained in the documents go beyond those alleged in the Complaint. The
court therefore construes Defendants’ motion as a factual attack.
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B.
Statute of Limitations
Plaintiffs assert claims under 15 U.S.C. §§ 78r(a) and 78cc(b) of the Securities Exchange Act
and under the FDCPA, TILA and RESPA. Defendants assert the statute of limitations on these
claims commenced when the loan documents were signed because Plaintiffs contend that is when
the alleged fraudulent representations and false loan occurred. The court concurs.
Defendants have provided evidence to show the documents at issue were executed on March
6, 2008. The statute of limitations for FDCPA claims is one year. 15 U.S.C. § 1692k(d). Plaintiffs
did not file their Complaint until December 5, 2011. Plaintiffs’ FDCPA claim is barred by the
statute of limitations.
The statute of limitations for the Securities Exchange Act claims is one year from the date
of discovery, but in no case more than three years from the date the cause of action accrued. 15
U.S.C. §§ 78r(c), 78cc(b). Even assuming the three year period applies here, Plaintiffs’ claims fall
outside that time period. Consequently, these claims are also time-barred.
Plaintiffs’ TILA and RESPA claims are also time-barred. Depending on the relief sought,
TILA has a one-year or a three-year statute of limitations. See 15 U.S.C. § 1635(f) (providing a
three-year statute of limitations for rescission claims); 15 U.S.C. § 1640 (providing a one-year statute
of limitations for damages claims). RESPA has a similar statute of limitations. See 12 U.S.C. §
2614 (providing a three-year statute of limitations for loan servicing issues and a one-year statute of
limitations for issues pertaining to kickbacks and title insurance). Again, even if the court assumes
the three-year statute of limitations applies, Plaintiffs’ claims are time-barred.
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C.
No Private Right of Action
Plaintiffs further assert a claim under 18 U.S.C. § 513(a). This is a criminal statute, with no
express private right of action. Because “[d]ecisions whether to prosecute or file criminal charges
are generally within the prosecutor’s discretion, . . . Plaintiffs have no standing to institute a federal
criminal prosecution and no power to enforce a criminal statute.” Smith v. Nat’l City Mortg., Case
No. A-09-cv-881, 2010 U.S. Dist. LEXIS 86221, at *14 15 (W.D. Tex. Aug. 23, 2010) (citations
omitted). This claim, therefore, does not afford the court jurisdiction.
II.
RULE 12(b)(6) MOTION
A.
Standard of Review
Defendants also contend Plaintiffs’ Complaint should be dismissed under Rule 12(b)(6).
Under this motion, a court must “accept as true all well-pleaded facts, as distinguished from
conclusory allegations, and view those facts in the light most favorable to the nonmoving party.”
Maher v. Durango Metals, 144 F.3d 1302, 1304 (10th Cir. 1998) (citation omitted). Importantly,
the complaint must include “enough facts to state a claim to relief that is plausible on its face.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Typically, a court only looks at a complaint and
any documents attached thereto when deciding a Rule 12(b)(6) motion. A court may consider
outside documents, however, if they are referred to in the complaint and central to a plaintiff’s claim.
GFF Corp. v. Assoc. Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir. 1997) (citations
omitted). Under such circumstances, the court does not convert the motion into one for summary
judgment. See id.
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B.
Failure to State a Claim
Plaintiffs remaining federal claim is for deprivation of civil liberties. Plaintiffs’ Complaint
largely asserts that the loan at issue was not an actual loan because the lender did not give true value
for the loan. Plaintiffs also assert the loan is invalid due to securitization. This court has repeatedly
rejected claims based on an alleged split of the note and deed of trust. Moreover, Defendants have
provided documents to show that Ryan Crotts did execute loan documents. Although Plaintiffs may
dispute that true value was given, the documents speak for themselves. Additionally, Plaintiffs’ civil
liberties claim is stated in conclusory terms that are factually unsupported. Finally, in a state court
proceeding, title to the property at issue was quieted in the Bank’s favor “free and clear of any
right[,] title or interest of the [Plaintiffs in this matter].” See Default Judgment & Order Against
Ryan Crotts & Sabrina Crotts, ¶ 6 (Dkt. No. 6, Ex. 1 at 46).1 Based on these factors, the court
concludes that Plaintiffs have failed to state a valid deprivation of their civil liberties and hereby
dismisses this claim under Rule 12(b)(6).
The remaining claims in this case are state law claims for which this court declines to
exercise supplemental jurisdiction. Accordingly, the court hereby dismisses this case, but does so
without prejudice.2
1
A court may take judicial notice of appropriate matters, including “facts which are a matter
of public record,” without converting a 12(b)(6) motion into a summary judgment motion. Tal v.
Hogan, 453 F.3d 1244, 1264 n.24 (10th Cir. 2006) (quotations and citation omitted).
2
With the exception of Plaintiffs’ civil liberties claim, the court has dismissed the claims
based on lack of jurisdiction. In the Tenth Circuit, any dismissal based on lack of jurisdiction must
be done without prejudice. Brereton v. Bountiful City Corp., 434 F.3d 1213, 1216 (10th Cir. 2006)
(citations omitted).
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CONCLUSION
For the reasons stated above, the court GRANTS Defendants’ motion to dismiss without
prejudice.3 Because the court’s ruling is dispositive, the court does not address Plaintiffs’ Objection
to Judge Alba’s Report and Recommendation. The parties shall bear their own costs.
DATED this 28th day of February, 2012.
BY THE COURT:
____________________________________
Clark Waddoups
United States District Judge
3
Docket No. 6.
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