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Rader v. Citibank, N.A.

United States District Court, D. Colorado

October 14, 2014

CITIBANK, N.A. as Successor Trustee to U.S. Bank National Association, as Successor to Wachovia Bank National Association as Trustee for the Certificate Holders of Mastr Alternative Loan Trust 2004-1 Mortgage Pass Through Certificates Series 2004-1, MORTGAGE REGISTRATION SYSTEMS, INC., UBS WARBURG REAL ESTATE SECURITIES, INC., OCWEN LOAN SERVICING LLC, and DOES 1-10, Defendants.



This matter comes before the Court on Defendants'[1] Motion to Dismiss (Doc. # 17), filed on August 27, 2014. For the following reasons, the Court grants the motion.


In October of 2003, Steven Rader signed a promissory note ("the Note") in favor of Greenpoint Mortgage Funding Inc., in the principal amount of $630, 000. (Doc. # 17-10.) The Note was secured by a Deed of Trust on his primary residence, located at 47 Bennett Court, Pagosa Springs, Colorado 81147 ("the Property.") ( Id .; see also Doc. #17-1 at 1.)[2] In late 2008, the Raders stopped making payments on this Note. (Doc. # 17-1.) At some point thereafter, U.S. Bank National Association, N.A. ("U.S. Bank") assumed the servicing rights on the Raders' loan. (Doc. # 17-2 at 2.)

This matter has been on two litigation tracks - one in state court, and one in federal. As for the state court action, in September of 2012, U.S. Bank initiated foreclosure proceedings on the Property, pursuant to Rule 120 of the Colorado Rules of Civil Procedure. (Doc. # 17-2.) Specifically, U.S. Bank filed a copy of the original Note and a "Statement by Attorney for Qualified Holder" with the Archuleta district court ("the Rule 120 court"), pursuant to Colo. Rev. Stat. § 38-8-101(1)(b). (Doc. # 17-9.) In March of 2014, U.S. Bank filed a Motion to Substitute Petitioner after the mortgage was transferred to Citibank. (Doc. # 17-5.) At a hearing regarding the Motion to Substitute, Citibank presented an original Note bearing a blank indorsement, as well as evidence of the Raders' payment history. (Doc. # 17-6 at 21, 30.) After this hearing, the court granted the motion, finding that Citibank was the real party in interest and that the Raders had defaulted on the note. ( Id. at 46-47.) The Raders appealed the Rule 120 court's order, and the Colorado Court of Appeals affirmed the lower court's findings.[3] (Doc. # 18 at 2.) On July 28, 2014, the state court entered an order authorizing the sale of the Property.[4] (Doc. # 17-8.)

The Raders commenced their federal action in March of 2014 by filing a Complaint against U.S. Bank. (Doc. # 1.) The Complaint is relatively simple, and contains two counts - one claim for declaratory and injunctive relief, and one for quiet title. (Id. at 9-12.) Specifically, it alleges that the Note on the Property was not properly transferred through various mortgager entities, such that no entity has proven that it has standing to initiate foreclosure proceedings. ( Id. at 9.)

Defendants move to dismiss Plaintiffs' Complaint, arguing that as a qualified holder of the original Note, they have standing to enforce that Note and foreclose on the Property.[5] (Doc. # 17.)


Rule 12(b)(6) provides that a court may dismiss a complaint for "failure to state a claim upon which relief can be granted." See Fed.R.Civ.P. 12(b)(6). In deciding a motion under Rule 12(b)(6), the Court must "accept as true all well-pleaded factual allegations... and view these allegations in the light most favorable to the plaintiff." Casanova v. Ulibarri, 595 F.3d 1120, 1124 (10th Cir. 2010) ( quoting Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009)). However, a plaintiff may not rely on mere labels or conclusions, "and a formulaic recitation of the elements of a cause of action will not do." See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

To withstand a motion to dismiss, a complaint must contain sufficient allegations of fact to state a claim for relief that is not merely conceivable, but is also "plausible on its face." Id. at 570. As the Tenth Circuit explained in Ridge at Red Hawk, L.L.C. v. Schneider, "the mere metaphysical possibility that some plaintiff could prove some set of facts in support of the pleaded claims is insufficient; the complaint must give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual support for these claims." 493 F.3d 1174, 1177 (10th Cir. 2007) (emphasis in original). It is the plaintiff's burden to frame a complaint with enough factual matter - taken as true - to suggest that he or she is entitled to relief. Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008). Ultimately, the Court has a duty to determine whether the complaint sufficiently alleges facts supporting all the elements necessary to establish an entitlement to relief under the legal theory proposed. Forest Guardians v. Forsgren, 478 F.3d 1149, 1160 (10th Cir. 2007). "[F]actual allegations that contradict... a properly considered document are not well-pleaded facts that the court must accept as true." GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1385 (10th Cir. 1997); see also Rapoport v. Asia Electronics Holding Co., Inc., 88 F.Supp.2d 179, 184 (S.D.N.Y.2000) ("If [the] documents contradict the allegations of the... complaint, the documents control and [the] court need not accept as true the allegations in the... complaint.")

Generally, a court considers only the contents of the complaint when ruling on a Rule 12(b)(6) motion. Gee v. Pacheco, 627 F.3d 1178, 1186 (10th Cir. 2010). Nevertheless, a court may consider materials in addition to the pleadings in certain circumstances. For example, it may consider documents attached to the complaint, or documents referred to in and central to the complaint, when no party disputes their authenticity. Id. The Court may also consider "matters of which a court may take judicial notice." Id. ( quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)). In particular, if a plaintiff does not incorporate by reference or attach a document to his or her complaint, a defendant may submit an undisputably authentic copy which may be considered in ruling on a motion to dismiss. GFF Corp., 130 F.3d at 1384; see also Utah Gospel Mission v. Salt Lake City Corp., 425 F.3d 1249, 1253-54 (10th Cir. 2005) (noting that a document which is "central to the plaintiff's claim and referred to in the complaint may be considered in resolving a motion to dismiss, at least where the document's authenticity is not in dispute."). The Court may take judicial notice of a fact which is not subject to reasonable dispute, a requirement that is satisfied if the fact is "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed.R.Evid. 201(b)(2).

Defendants offered ten exhibits in support of their Motion to Dismiss and three in support of their Reply. Plaintiffs appended no exhibits either to their Complaint or to their Response to Defendants' Motion to Dismiss. In their Response, Plaintiffs do not dispute the authenticity of any of these exhibits in and of themselves, but rather, disagree with the Defendants about the legal conclusions that can be drawn from these exhibits; they allege, for example, that "there is a conflict in claimed ownership of the [N]ote, " but do not allege the Note itself is fraudulent or inauthentic in any way. (Doc. # 18 at 4.) Accordingly, this Court may consider the public records attached as exhibits to Defendants' Motion, including the documents filed in Archuleta County case number 2012-cv-000143, without converting the pending Motion to Dismiss into a motion for summary judgment. See Pacheco, 627 F.3d at 1186; GFF Corp., 130 F.3d at 1384.


Colorado foreclosure law allows a holder of evidence of a debt to foreclose upon breach of the terms of the deed of trust. Under Colorado law, a promissory note is a negotiable instrument that is freely assignable, Colo. Rev. Stat. § 4-3-104, [6] and if an instrument is payable to the bearer, it may be negotiated to a holder by transfer of possession alone, Colo. Rev. Stat. § 4-3-201. The term "holder" also includes a "person in possession of a negotiable instrument ...

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