Raymond L. Fiscus, a/k/a Ray Fiscus, Petitioner-Appellee,
Liberty Mortgage Corporation, a Georgia corporation; BB& T Corporation, a North Carolina corporation; and Branch Banking and Trust Company, a North Carolina corporation, Respondents-Appellants
County District Court No. 12CV4196. Honorable Valerie J.
Farina & Kampf, David M. Dodero, Nicholas H. Gower, Grand
Junction, Colorado, for Petitioner-Appellee.
Waldeck, Milburn, & Krohn, L.L.P., Christopher G. McAnany,
Grand Junction, Colorado, for Respondents-Appellants.
by JUDGE MILLER. Webb and Gabriel, JJ., concur.
[¶1] Appellants, Liberty Mortgage
Corporation, BB& T Corporation, and Branch Banking and Trust
Company (collectively, the banks), appeal the trial
court's order declaring Branch Banking and Trust's
deed of trust against the property owned by appellee, Raymond
L. Fiscus, a/k/a Ray Fiscus (owner), invalid and ordering its
release. The banks also appeal the trial court's order
awarding owner attorney fees and costs. We affirm and remand
with directions for further proceedings regarding owner's
attorney fees on appeal.
[¶2] Owner sued the banks under the spurious
lien statute, sections 38-35-201 to -204, C.R.S. 2013,
seeking to have a deed of trust recorded by Branch Banking
and Trust in 2009 declared spurious. The deed of trust on
owner's separately owned property was recorded after his
wife executed it as his attorney-in-fact, based on a forged
power of attorney. The trial court declared the deed of trust
spurious and ordered its release. On appeal, the banks
challenge the trial court's rulings regarding (1) the
statute of limitations; (2) whether counterclaims and
third-party claims may be raised in spurious lien actions,
which is an issue of first impression discussed in Part IV;
(3) the allocation of the burden of proof; (4) whether owner
ratified the deed of trust; (5) whether a holder in due
course defense was available to the banks; and (6) the award
of attorney fees and costs to owner. We affirm the trial
[¶3] Owner filed his petition for a show
cause hearing under the spurious lien statute and C.R.C.P.
105.1, seeking to invalidate the 2009 deed of trust. The
banks counterclaimed against owner, asking to judicially
foreclose on the property, alleging unjust enrichment, and
seeking an equitable lien against the property. The banks
also filed a third-party complaint against wife alleging
theft. The trial court held that counterclaims and
third-party claims are not permitted in this limited
statutory proceeding and dismissed them without prejudice
under C.R.C.P. 12(f).
[¶4] The court held a three-day hearing on
the show cause petition, at which owner, wife, wife's
daughter, a forensic document expert, and a representative of
BB& T testified. The trial court found the following facts,
and its findings are supported by the record.
[¶5] Owner and Vicky Casper-Fiscus (wife)
were married in 1985. In 1987, owner purchased in his own
name a property that served as the couple's marital
residence. During the marriage, wife handled the household
bills and financial matters, including the payment of the
couple's mortgage loan, and arranging for the preparation
of their joint tax returns through an accounting firm. Owner
did not regularly review bank statements for the couple's
[¶6] In August 2008, a deed of trust on
owner's property was recorded to secure a loan made by
Wells Fargo Financial in the amount of approximately
$220,000. Wife executed the deed of trust by signing it in
her own name, as owner's attorney-in-fact. A relatively
small portion of the proceeds from the loan was used to pay
off the remaining balance of the original 1987 mortgage loan.
In April 2009, another deed of trust on owner's property
was recorded securing a loan made by Liberty Mortgage in the
amount of $220,000. Wife also executed this deed of trust as
owner's attorney-in-fact. Wife used the proceeds of the
2009 loan to pay off the loan secured by the 2008 deed of
trust, which was then released. Owner was unaware of the 2008
and 2009 loans and deeds of trust.
[¶7] In December 2011, a representative from
Merrill Lynch called owner to request authorization for a
$5000 transfer wife had attempted to initiate from his IRA
account. Owner learned from the representative that wife
previously had transferred $10,000 from his IRA account.
Owner determined that wife had done so with the assistance of
her son-in-law, who had impersonated owner on the phone.
Owner obtained a credit report and discovered numerous
unauthorized credit cards open in his name, as well as a
$220,000 deed of trust in favor of Branch Banking and Trust
of which he had been previously unaware.
[¶8] In January 2012, owner researched
property records in his name and discovered the 2008 and 2009
deeds of trust. He also discovered that powers of attorney
had been recorded on the same dates the deeds of trust had
been recorded. Each power of attorney purported to authorize
wife to act as owner's attorney-in-fact. Wife signed
owner's name on the power of attorney forms, and her
daughter notarized his purported signature.
[¶9] Owner filed a report with the sheriff
regarding wife's unauthorized actions. He notified Branch
Banking and Trust that he had been a victim of identity theft
and requested that his loan account be closed immediately.
[¶10] Based on these facts, the trial court
concluded that the 2009 deed of trust was a spurious lien and
document and ordered that it be released. It also awarded
owner $82,248.98 in attorney fees and costs incurred in
pursuing this action.
The Spurious Lien Statute
[¶11] A spurious lien is a purported lien or
claim of lien that, as pertinent here, " [i]s not
created, suffered, assumed, or agreed to by the owner of the
property it purports to encumber . . . ." §
38-35-201, C.R.S. 2013. The spurious lien statute provides
for an expedited show cause proceeding to determine the
validity of a lien upon the filing of a petition supported by
an affidavit alleging that the petitioner's real property
has been encumbered by a recorded or filed lien or document.
§ 38-35-204, C.R.S. 2013. The statute also requires the
award of attorney fees and costs to the prevailing party.
§ § 38-35-204(1)(c), (2)-(3). C.R.C.P. 105.1 sets
forth specific procedures governing show cause actions under
the spurious lien statute. See Westar Holdings
P'ship v. Reece, 991 P.2d 328, 331-32 (Colo.App.
Statute of Limitations
[¶12] The banks contend the trial court
erred when it held that owner's spurious lien petition
was not barred by the statute of limitations. We disagree.
Standard of Review
[¶13] We review de novo a trial court's
application of the statute of limitations where the facts
relevant to the date on which the statute of limitations
accrues are undisputed. Sterenbuch v. Goss, 266 P.3d
428, 432 (Colo.App. 2011).
Law and Analysis
[¶14] Spurious lien actions must be brought
within two years of accrual. § 13-80-102(1)(i), C.R.S.
2013; Deutsche Bank Trust Co. Americas v. Samora,
321 P.3d 590, 2013 COA 81, ¶ 21. A cause of action
accrues on the date " both the injury and its cause are
known or should have been known by the exercise of reasonable
diligence." § 13-80-108(1), C.R.S. 2013. The
parties disagree about when owner's action accrued.
[¶15] Owner first became aware of the deed
of trust between December 2011 and January 2012, when he
learned of the loan from his credit report and searched the
real property records. The banks, however, argue that the
recording of the deed of trust on April 15, 2009, constituted
constructive notice of the deed to owner, and that the
statute of limitations for owner's spurious lien action
expired two years later on April 15, 2011. Under the
banks' argument, owner's action, which was filed on
March 29, 2012, was untimely.
[¶16] The banks rely on section
38-35-106(1), C.R.S. 2013, the general recording notice
statute, which provides:
Any written instrument required or permitted to be
acknowledged affecting title to real property, whether
acknowledged, unacknowledged, or defectively acknowledged,
after being recorded in the office of the county clerk and
recorder of the county where the real property is situate,
shall be notice to ...