United States District Court, D. Colorado
SHERRON L. LEWIS, JR., Plaintiff,
JP MORGAN CHASE BANK, NATIONAL ASSOC., LARRY CASTLE, in his individual and corporate capacity, CINDY LOWERY-GRABER, and THE CASTLE LAW GROUP, LLC, Defendants.
PHILIP A. BRIMMER, District Judge.
This matter is before the Court on the Order and Recommendation of United States Magistrate Judge (the "Recommendation") [Docket No. 90] filed on December 12, 2013. The magistrate judge recommends that, pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court grant in part the motions to dismiss filed by defendants Larry Castle, Cindy Lowery-Graber, and the Castle Law Group, LLC (collectively the "Castle defendants") [Docket No. 31] and defendant JPMorgan Chase Bank, National Association ("Chase") [Docket No. 60]. Plaintiff Sherron L. Lewis, Jr. filed a timely objection. Docket No. 97. The Court will "determine de novo any part of the magistrate judge's disposition that has been properly objected to" by plaintiff. Fed.R.Civ.P. 72(b)(3). In the absence of a proper objection, the Court may review a magistrate judge's recommendation under any standard it deems appropriate. See Summers v. Utah, 927 F.2d 1165, 1167 (10th Cir. 1991); see also Thomas v. Arn, 474 U.S. 140, 150 (1985) ("[i]t does not appear that Congress intended to require district court review of a magistrate's factual or legal conclusions, under a de novo or any other standard, when neither party objects to those findings"). In light of plaintiff's pro se status, the Court construes his filings liberally. See Haines v. Kerner, 404 U.S. 519, 520 (1972); Hall v. Bellmon, 935 F.2d 1106, 1110 & n.3 (10th Cir. 1991).
Because the Recommendation contains a detailed statement of the case, the Court will only discuss the facts relevant to the resolution of plaintiff's objections. See Docket No. 90 at 3-9. The magistrate judge recommends that the Court dismiss with prejudice Mr. Lewis' claims brought pursuant to 42 U.S.C. § 1983; dismiss with prejudice Mr. Lewis' fifth claim for violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq. ; dismiss with prejudice Mr. Lewis' sixth claim for violation of the FDCPA against defendant Chase; dismiss with prejudice Mr. Lewis' claim that the Castle defendants violated of § 1692e and § 1692f of the FDCPA; dismiss without prejudice Mr. Lewis' claim that the Castle defendants violated § 1692g of the FDCPA; and dismiss without prejudice all of Mr. Lewis' claims arising under state law. Docket No. 90 at 26-27. Mr. Lewis objects to the Recommendation's conclusion that the Court should dismiss his § 1983 claims against all defendants and his FDCPA claims against defendant Chase. Docket No. 97 at 2, 8.
A. 42 U.S.C. § 1983 Claims
Mr. Lewis brings his second and fourth claims under 42 U.S.C. § 1983, alleging that defendants violated his due process rights. Docket No. 1 at 13-15, 18-21. Mr. Lewis' second claim for relief is based on defendants' actions related to the Home Equity Line of Credit Deed of Trust ("HELOC DOT"). Docket No. 1 at 13-15. Mr. Lewis alleges that defendants misused the Colorado non-judicial foreclosure procedure through a "deliberate failure to compel the Rule 120 proceeding." Id. at 14, ¶ 30. Mr. Lewis' fourth claim for relief is based upon defendants' actions related to the mortgage deed of trust ("mortgage DOT"), a deed of trust on which defendants, following a Rule 120 proceeding, obtained an order authorizing sale. Id. at 18-21. Mr. Lewis alleges that defendants misused the Colorado non-judicial foreclosure procedure by submitting knowingly false information to the Denver County Public Trustee ("Public Trustee"), the state court during the Rule 120 proceeding, and to Mr. Lewis himself. Id. at 20-21, ¶¶ 57, 61. The primary basis for Mr. Lewis' fourth claim, however, is that defendants used the Colorado non-judicial foreclosure procedure to violate his constitutional right to due process. Id. at 20-21. Mr. Lewis also claims that Colo. Rev. Stat. § 38-38-101 and Colo. R. Civ. P. 120 "work in direct contravention of the Constitutional Due Process clause" and that the Castle defendants were involved in the legislative process that led to the enactment of the Colorado non-judicial foreclosure procedure. Id. at 19, 20 ¶¶ 55, 60. The Recommendation concluded that Mr. Lewis failed to allege that defendants were state actors under § 1983. Docket No. 90 at 14-15. Mr. Lewis objects on several grounds. Docket No. 97 at 2-8.
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., 475 U.S. 922, 937 (1982)).
1. Right or Privilege Created by the State
The Court turns to the first prong of the test. Mr. Lewis' second claim for relief, and to a lesser extent his fourth claim for relief, allege that defendants misused the Colorado non-judicial foreclosure procedure. 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, 547 U.S. at 941). Thus, to the extent Mr. Lewis alleges that defendants failed to use (or misused) state procedures, Mr. Lewis fails to allege that he 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 (internal quotations omitted).
2. State Actor
The Court turns to the second prong of the test. In order to determine whether a private party can be considered a state actor under § 1983, a court may 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). Under the nexus test, a plaintiff must allege "a sufficiently close nexus between the State and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of the State itself.'" Id. (quoting Jackson v. Metropolitan Edison Co., 419 U.S. 345, 351 (1974)). Under the symbiotic relationship test, the plaintiff must show that "the state has so far insinuated itself into a position of interdependence' with the private party' so as to create a symbiotic relationship between the two. Gallagher, 49 F.3d at 1447 (quoting Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 175 (1972)). Under the public function test, a plaintiff must show that a private party exercised "powers traditionally exclusively reserved to the State." Jackson, 419 U.S. at 352. Under the joint action test, a plaintiff must show that a private party is "a willful participant in joint activity with the State or its agents." Adickes, 398 U.S. at 152 (internal quotation marks omitted). The question asked by each test is whether "the conduct allegedly causing the deprivation of a federal right [is] fairly attributable to the State." Lugar, 457 U.S. at 937.
Mr. Lewis' primary argument is that defendants and the Public Trustee engaged in joint action. Mr. Lewis alleges that the Public Trustee "works at the behest" of defendants and that the defendants used the authority of the Public Trustee to deprive Mr. Lewis of his constitutional rights. Docket No. 97 at 2-3. A private party invoking a state legal procedure does not transform itself into a state actor. Read v. Klein, 1 F.App'x 866, 871 (10th Cir. 2001); accord Ramsey v. Citibank, N.A., No. 10-cv-02653-WYD-CBS, 2011 WL 4485918, at *5 (D. Colo. Sep. 28, 2011) (adopting recommendation of magistrate judge that bank who invoked Rule 120 was not state actor under § 1983). The "mere acquiescence of a state official in the actions of a private party is not sufficient." Gallagher, 49 F.3d at 1453; accord Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 164 (1978).
Some courts look to the requirements for establishing a conspiracy when considering whether a private party engaged in joint action and conclude that a state action may be found if "public and private actors share a common, unconstitutional goal [such as] if a state actor has participated in or influenced the challenged decision or action." Gallagher, 49 F.3d at 1454 (internal quotation marks omitted). In Cobb v. Saturn Land Co., Inc., 966 F.2d 1334 (10th Cir. 1992), a private party exercised its right to obtain pre-judgment oil and gas liens under Oklahoma law. Id. at 1335. Plaintiff argued that, although the liens were never enforced, the statutory scheme was unconstitutional and frustrated his ability to sell the encumbered property. Id. The Tenth Circuit adopted the district court's finding that "the actions of the county clerk, who merely accepted and recorded the required lien materials prepared by Defendant and then issued filing notices to Plaintiff, were not substantial enough to bring Plaintiff's claim within the ambit of § 1983." Id. at 1337; see also Sullivan, 526 U.S. at 53 (holding that when a private party files a form with a state agency or state official and such agency official processes the form for technical compliance, the private party is not transformed into a state actor).
Mr. Lewis' claim that the Colorado non-judicial foreclosure procedure gave defendants "complete power" to decide whether or not to foreclose is simply an allegation that defendants made use of state legal procedures. See Read, 1 F.App'x at 871. Similarly, Mr. Lewis' allegation that, "[b]ut for this power given to the Defendants by the state, " defendants could have not initiated (or failed to initiate) foreclosure proceedings, Docket No. 97 at 4, ¶¶ 5-7, is plainly insufficient to transform defendants into state actors. See Flagg Bros., 436 U.S. at 164 (rejecting argument that private action can be attributed to the state because action was authorized by state statute). Allegations that defendants filed a notice of election and demand with the Public Trustee and that the Public Trustee processed defendants' notice of election and demand and issued a notice of hearing are insufficient to show that the state and defendants engaged in a joint activity. See Cobb, 966 F.2d at 1337. Moreover, Mr. Lewis fails to allege a conspiracy between defendants and the Public Trustee, or any other state official, and does not otherwise allege that the state compelled defendants' decision to file a notice of election and demand and to commence a Rule 120 proceeding. See Flagg Bros., 436 U.S. at 166. Rather, if Colorado lacked a non-judicial foreclosure procedure, "its courts would still be faced with the ...