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Aurora Bank FSB v. Network Mortgage Services, Inc.

United States District Court, D. Colorado

March 17, 2014

AURORA BANK FSB, a Federal Savings Bank, Plaintiff,
NETWORK MORTGAGE SERVICES, INC., a Washington corporation d/b/a NETWORK HOME LOANS, Defendant.


PHILIP A. BRIMMER, District Judge.

This matter is before the Court on a Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue and Memorandum in Support [Docket No. 16] filed by defendant Network Mortgage Services, Inc. The Court has subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1332.


This case arises out of defendant Network Mortgage Services, Inc.'s sale of home mortgage loans to plaintiff Aurora Bank FSB, formally Lehman Brothers Bank FSB. Docket No. 1 at 1, ¶ 1. Plaintiff's home office and principal place of business is, and has been at all times relevant, in Littleton, Colorado. Id. at 2, ¶ 3; Docket No. 20-1 at 3, ¶ 10. Defendant is incorporated in the state of Washington and its principal place of business is in Lynwood, Washington. Docket No. 1 at 2, ¶ 4. Defendant is a "correspondent lender" who originates home mortgage loans and sells them to various buyers on the secondary mortgage market. Id. at 2, ¶ 8-9.

On June 21, 2006, defendant applied to plaintiff's Littleton, Colorado office seeking "correspondent lender" status in order to perform mortgage loan business with plaintiff; plaintiff's employees in the Littleton office reviewed the application. Docket No. 20-1 at 2, ¶¶ 3-4. Subsequently, Lehman Brothers Bank, FSB and defendant entered into a Loan Purchase Agreement (the "Agreement"), which provided for defendant's sale of mortgage loans to plaintiff. Docket No. 1 at 3, ¶10-12. The Agreement lists Lehman Brothers Bank, FSB as having an office in Wilmington, Delaware, Docket No. 1-1, but plaintiff has provided an affidavit stating that all correspondence regarding the Agreement was conducted from the Littleton office. Docket No. 20-1 at 3, ¶ 12. The Agreement indicates that the plaintiff would be subject to the Aurora Loan Services' "Seller's Guide." Docket No. 1-1 at 1. Pursuant to the Seller's Guide, defendant represented and warranted that: the notes and mortgages provided were genuine; defendant's representations were true and accurate; the documents furnished by defendant were true and accurate; the origination of loans was legal, proper, and conformed to industry standards; and that defendant did not commit fraud in connection with originating the loans. Docket No. 1 at 3-4, ¶ 14. In the event of a breach of the Agreement or Seller's Guide, defendant was required, at plaintiff's election, to repurchase the loans at issue or indemnify plaintiff from any loss sustained from defendant's breach. Id. at 4, ¶¶ 15-16. The Agreement stated that the laws of the State of New York would apply to the relationship between the parties. Docket No. 1-1 at 2.

Pursuant to the Agreement, defendant sold numerous loans to plaintiff, including the Lopez and Maldonado Loans (collectively, the "Subject Loans"). Docket No. 1 at 3, ¶ 13; Docket No. 1-2. Defendant corresponded with employees in the Littleton office regarding the sale and purchase of the Subject Loans. Docket No. 20-1 at 3, ¶ 11. Defendant sent the Subject Loans' origination files and loan documents to the Littleton office. Id. at 4, ¶ 17. Plaintiff claims that, after reviewing the Subject Loans at the Littleton office, it discovered that the Subject Loans' borrowers made material misrepresentations and that the Subject Loans were not in compliance with the Seller's Guide's underwriting guidelines. Docket No. 1 at 5, ¶ 22. From its Littleton office, plaintiff demanded that defendant repurchase the Subject Loans or indemnify plaintiff for losses relating to the Subject Loans. Id. at 5, ¶ 19; see also Docket No. 20-1 at 4, ¶¶ 18-19. Defendant did not comply with plaintiff's demands. Docket No. 1 at 5, ¶ 20.[1]

On January 9, 2013, plaintiff filed the instant action. It brings claims against defendant for breach of contract, breach of express warranty, and unjust enrichment. Docket No. 1 at 6-8. Specifically, plaintiff alleges that defendant breached the Agreement and Seller's Guide because the Subject Loans contained material misrepresentations and underwriting errors and that, as a result, defendant failed or refused to repurchase the Subject Loans or indemnify plaintiff as required by the Agreement and Seller's Guide. Id. Defendant moved to dismiss all claims pursuant to Fed.R.Civ.P. 12(b)(2) and 12(b)(3). Docket No. 16.


The purpose of a motion to dismiss under Rule 12(b)(2) is to determine whether the Court has personal jurisdiction. The plaintiff bears the burden of establishing personal jurisdiction over defendants. Rambo v. Am. S. Ins. Co., 839 F.2d 1415, 1417 (10th Cir. 1988). The plaintiff can satisfy its burden by making a prima facie showing of personal jurisdiction. Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008). The Court will accept the well-pleaded allegations of the complaint as true to determine whether plaintiff has made a prima facie showing that personal jurisdiction exists. AST Sports Science, Inc. v. CLF Distribution Ltd., 514 F.3d 1054, 1057 (10th Cir. 2008). If the presence or absence of personal jurisdiction can be established by reference to the complaint, the Court need not look further. Id. The plaintiff, however, may also make this prima facie showing by putting forth evidence that, if proven to be true, would support jurisdiction over the defendant. Dudnikov, 514 F.3d at 1070. "[A]ny factual disputes in the parties' affidavits must be resolved in plaintiffs' favor." Id.

In reviewing a motion to dismiss for improper venue pursuant to Rule 12(b)(3), "the court must draw all reasonable inferences and resolve all factual conflicts in favor of the plaintiff.'" Hancock v. Am. Tel. & Tel. Co., Inc., 701 F.3d 1248, 1260 (10th Cir. 2012) (quoting 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1352 (2004)).


A. Personal Jurisdiction

In a diversity case, a federal court has personal jurisdiction over a defendant if jurisdiction is consistent with the state's long arm statute and if jurisdiction does not violate the due process clause of the Fourteenth Amendment. Benton v. Cameco Corp., 375 F.3d 1070, 1074-75 (10th Cir. 2004). The Colorado long arm statute, Colo. Rev. Stat. § 13-1-124, has been construed to extend jurisdiction to the full extent of the Constitution, so the jurisdictional analysis here reduces to a single inquiry of whether jurisdiction offends due process. Pro Axess, Inc. v. Orlux Distrib., Inc., 428 F.3d 1270, 1276 (10th Cir. 2005); Classic Auto Sales, Inc. v. Schocket, 832 P.2d 233, 235 (Colo. 1992); Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187, 1193 (Colo. 2005).

Personal jurisdiction comports with due process where a defendant has minimum contacts with the forum state and where those contacts are such that jurisdiction does not offend "traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945). Minimum contacts may be established under the doctrines of general jurisdiction or specific jurisdiction. Where general jurisdiction is asserted over a non-resident defendant who has not consented to suit in the forum, minimum contacts exist if the plaintiff demonstrates that the defendant maintains "continuous and systematic general business contacts" in the state. OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir. 1998). Specific jurisdiction is present where the defendant has purposefully directed its activities at the residents of the forum and the litigation results from injuries that arise out of or relate to those ...

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