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Chase v. Bank of New York

United States District Court, D. Colorado

May 6, 2014

MORRIS CHASE, Plaintiff,
BANK OF NEW YORK, Defendant.


R. BROOKE JACKSON, District Judge.

This case is before the Court on defendants' motions to dismiss [ECF Nos. 15 and 18] and Magistrate Judge Tafoya's accompanying Amended Report and Recommendation [ECF No. 28]. There is also a pending motion to substitute for the plaintiff filed by the Trustee in Mr. Chase's pending bankruptcy case. [ECF No. 31.] The Court agrees with the defendants and Judge Tafoya that Mr. Chase is not the real party in interest, and that while Mr. Chase brings one claim-for mail fraud-that is not the property of the bankruptcy estate, this allegation fails to state a claim and must be dismissed. Therefore the Court adopts the entirety of Judge Tafoya's Report and Recommendation. The Court also grants the Trustee's motion to substitute and dismisses Mr. Chase from the case.

I. Factual Background

Mr. and Ms. Chase executed a promissory note and accompanying deed of trust securing a debt on August 16, 2005. [ECF No. 15, Exs. A and B.][1] Defendant Castle Stawiarski, LLC ("Castle") later initiated foreclosure proceedings on the property securing the debt. [ECF No. 15, Ex. C.] As part of these proceedings, Castle began a Rule 120 Proceeding seeking an order authorizing sale of the property. [ECF No. 15, Ex. D.]

Mr. Chase filed for bankruptcy on January 31, 2012. [ECF No. 15, Ex. E (Bankruptcy Petition No. 12-11701-EEB).] In that petition, Mr. Chase did not disclose any potential legal claims against any party. Id. at 20, ¶ 21. Mr. Chase was discharged from the bankruptcy proceedings on May 16, 2012, the Trustee filed a Report of No Distribution on October 9, 2012, and the Bankruptcy Court accepted the report and closed the case on November 13, 2012. [ECF No. 15, Ex. F.]

In February 2013, after the close of Mr. Chase's bankruptcy case, Marie Barclay, an Assistant Vice President for a subsidiary of Bank of America, executed a Release of Deed of Trust on the second deed of trust on the encumbered property. Ms. Barclay also sent the Release to the Adams County Public Trustee who executed the Release and recorded it in the country property records. [ECF No. 18, Ex. 1, 2.] Mr. Chase alleges that these actions, "essentially clouded the title by using the U.S. Mail to commit fraud, by stating the original note for the second mortgage was sent to Plaintiff" though Mr. Chase claims he never received it. He theorizes that "Defendants are clearing the way to make the foreclosure sale on the property more attractive for investors." [ECF No. 4, ¶ 30.]

II. Procedural Background

Mr. Chase filed his initial claims against the defendants in Adams County Combined Court on August 1, 2013. Most of his allegations sprung out of the foreclosure proceedings, including perceived violations of the Fourteenth Amendment of the U.S. Constitution, the Truth and Lending Act ("TILA"), the Colorado Consumer Protection Act ("CCPA"), and fraud on the court. [ECF No. 4.] He also alleged that in February 2013, defendants Bank of America and Marie Barclay committed mail fraud in connection with their mailing of documents related to the mortgage. Id. ¶ 30.

The defendants removed the case to federal court on August 22, 2013 pursuant to 28 U.S.C. §§ 1331, 1367, 1441, and 1446. [ECF No. 1.] Defendants Castle Stawiarski, LLC, and Allison Berry ("Castle Defendants") moved to dismiss on the grounds that (1) Mr. Chase is not the real party in interest to pursue pre-petition claims; (2) Mr. Chase has failed to plead his claims with the specificity required by Federal Rules of Civil Procedure 8 and 9; (3) and Mr. Chase's substantive claims lack merit. The other defendants joined that motion to dismiss. [ECF No. 17.] Ms. Barclay also moved separately to dismiss for insufficient process and lack of jurisdiction under Federal Rule 12(b)(2) and (4).

Judge Tafoya reviewed the motions and the pleadings and recommended that the Court grant the motion to dismiss Mr. Chase's mail fraud allegations for failure to state a claim. [ECF No. 28.] She concluded that the remainder of Mr. Chase's claims arose before he filed bankruptcy, and his failure to list them during his bankruptcy proceedings meant that they remained the property of the bankruptcy estate. As a result, the Trustee, not Mr. Chase, is the real party in interest to bring the claims related to the foreclosure. Rather than dismissing the case for lack of standing, Judge Tafoya recommended giving the Trustee a reasonable amount of time to join the action or substitute for Mr. Chase. Mr. Chase objected to Judge Tafoya's recommendations, claiming that he received "[im]proper legal advice" during the bankruptcy, and that he sufficiently pleaded his fraud claim "by inference." [ECF No. 30.] He also suggested that an opportunity to amend the complaint could "repair any defects." Id. The Trustee, Cynthia Skeen, subsequently filed a motion to substitute for Mr. Chase on December 3, 2013. [ECF No. 31.]

III. Discussion

Following the issuance of a magistrate judge's recommendation on a dispositive matter the district court judge must "determine de novo any part of the magistrate judge's disposition that has been properly objected to." Fed.R.Civ.P. 72(b)(3). The district judge is permitted to "accept, reject, or modify the recommended disposition; receive further instruction; or return the matter to the magistrate with instructions." Id. When a magistrate judge issues an order on a non-dispositive pretrial matter, "[t]he district judge in the case must consider timely objections and modify or set aside any part of the order that is clearly erroneous or is contrary to law." Fed.R.Civ.P. 72(a).

In reviewing a motion to dismiss, the Court must accept the well-pleaded allegations of the complaint as true and construe them in plaintiff's favor. However, the facts alleged must be enough to state a claim for relief that is plausible, not merely speculative. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). A plausible claim is a claim that "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949 (2009). Allegations that are purely conclusory need not be assumed to be true. Id. at 1951.

Because Mr. Chase represents himself pro se, the Court "review[s] his pleadings and other papers liberally and hold[s] them to a less stringent standard than those drafted by attorneys." Trackwell v. United States, 472 F.3d 1242, 1243 (10th Cir. 2007) (citations omitted). However, a pro se litigant's "conclusory allegations without supporting factual averments are insufficient to ...

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