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Zeller v. Ventures Trust 2013-I-Nh, McM Capital Partners, LLC

United States District Court, D. Colorado

February 1, 2016

PENELOPE ZELLER, an individual, Plaintiff,
v.
VENTURES TRUST 2013-I-NH, MCM CAPITAL PARTNERS, LLC, its Trustee, an Equity Purchaser from HUD, DEBRA JOHNSON, Public Trustee for Denver County, and EAGLE VISTA EQUITIES, Purchaser at Public Trustee Sale, Defendants.

          RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

          NINA Y. WANG, Magistrate Judge.

         This matter comes before the court on Defendant Ventures Trust 2013-I-NH by MCM Capital Partners, LLC Its Trustees' Motion to Dismiss Plaintiff's Complaint Pursuant to Fed.R.Civ.P. 12(b)(6) and 8(a) [#15, filed on June 16, 2015], [1] Defendant Ventures Trust 2013-I-NH by MCM Capital Partners, LLC Its Trustees' Motion to Dismiss Plaintiff's Amended Complaint Pursuant to Fed.R.Civ.P. 12(b)(6) and 8(a) [#27, filed July 8, 2015], Eagle Vista Equities, LLC's Motion to Dismiss dated January 8, 2016 [#50], and Eagle Vista Equities LLC's second Motion to Dismiss dated January 8, 2016 [#53] (collectively, "Motions to Dismiss").[2] These Motions to Dismiss were referred to this Magistrate Judge pursuant to 28 U.S.C. § 636(b)(1), the Orders of Reference dated June 3, 2015 [#11]; [#12], and the Memoranda dated June 17, 2015 [#16], July 8, 2015, and January 8, 2016 [#52]; [#54].

         BACKGROUND

         I. Factual Background

         Plaintiff Penelope Zeller ("Ms. Zeller" or "Plaintiff"), initiated this action by her pro se filing[3] of the original Complaint on May 22, 2015. [#1]. Defendant Ventures Trust 2013 I-NH by MCM Capital Partners, LLC its Trustee ("Ventures Trust") filed a Motion to Dismiss the original Complaint on June 16, 2015. [#15]. Ms. Zeller then filed the operative Amended Complaint on June 17, 2015.[4] [#18].

         In her Amended Complaint, Plaintiff alleges wrongful foreclosure and illegal transfer of her homeowner's note and deed of trust in a property located at 3030 St. Paul Street, Denver, Colorado 80205 (the "Property"), and names as defendants Ventures Trust, Debra Johnson as Public Trustee for Denver County ("Public Trustee"), and Eagle Vista Equities, Inc. ("Eagle").[5] [ Id. at 3]. She avers that the Property was the subject of a wrongful foreclosure in that that the entity who is claimed an adverse interest in the Property was not a proper plaintiff in the foreclosure action, is not a holder and due course, and did not have standing to initiate the foreclosure proceeding. [ Id. ].

         The following facts are relevant to the pending Motions to Dismiss. In 2005, Ms. Zeller obtained a mortgage to purchase the Property. [#18 at 8]. In 2007, Ms. Zeller executed a promissory note, refinancing her loan with Countrywide Home Loans ("Countrywide"). [#18 at 8]. Bank of America ("BOA") later purchased Countrywide. [#18 at 8]. In 2012, BOA initiated foreclosure proceedings on the Property, but no foreclosure sale was scheduled. [#18 at 11]. In 2013, Ventures Trust began communicating with Ms. Zeller regarding the note and, in 2014, commenced foreclosure proceedings on the property. [#18 at 13]; [#27 at 5, ¶ 5]. Ventures Trust filed a Colo. R. Civ. P. 120 proceeding and, after a contested hearing, on May 11, 2015, the District Court for the City and County of Denver, Colorado ("Denver District Court") entered an Order Authorizing Sale. [#27 at 6]; [#27-11 at 1].

         On May 22, 2015, the same day Ms. Zeller filed the initial Complaint, she also filed an ex parte application for a temporary restraining order. [#3]. Ms. Zeller filed an amended application for the temporary restraining order four days later on May 26, 2015. [#5]. The Honorable Philip A. Brimmer denied the amended application for a temporary restraining order the same day, and Ms. Zeller then filed an Amended Amended Ex-Parte Application for Temporary Restraining Order on May 27, 2015. [#8]. Judge Brimmer held a hearing and denied the Amended Amended Ex-Parte Application for Temporary Restraining Order on May 28, 2015. [#10].

         On May 28, 2015, the Public Trustee held a foreclosure sale, in which Eagle purchased the Property. [#27 at 6]; [#27-13 at 1]; [#17 at 10]. The Public Trustee issued a Public Trustee's Confirmation Deed to Eagle, [#27-14], and on June 3, 2015, the Denver District Court entered an order approving sale [#27-15]. On June 11, 2015, Eagle served a notice to vacate the Property, directing Ms. Zeller to vacate the property on or before June 16, 2015. [#25-1 at 14].

         On June 17, 2015, Ms. Zeller filed an application for a preliminary injunction against Eagle [#17] to enjoin it from evicting her from the Property in state court. Eagle asserts that Plaintiff refused to vacate the Property. [#25 at 1]. Two days later, Eagle filed the Complaint in Unlawful Detainer in the County Court for the City and County of Denver, Colorado ("Denver County Court"), seeking judgment in its favor for, among other things, "possession of the Premises." [#25-1]. On July 2, 2015, the detainer action was transferred to the Denver District Court.

         On August 7, 2015, Ms. Zeller then filed another motion for a temporary restraining order to prevent her eviction from the Property. [#37]. On August 10, 2015, Judge Brimmer denied the application for a preliminary injunction [#17] and the motion for a temporary restraining order [#37] without prejudice, concluding that the Anti-Injunction Act, 28 U.S.C. § 2283, and Younger v. Harris, 401 U.S. 37 (1971) prohibited the court from interfering in the detainer action that was pending in state court. [#40].

         On November 23, 2015, Eagle filed a Status Report in this case providing an update on the state court action between Eagle and Ms. Zeller. [#48]. Eagle represented that on September 28, 2015, summary judgment was ordered in favor of Eagle and against Ms. Zeller on all issues. [#48 at 1]. Ms. Zeller filed a Motion to Reconsider, and the state court denied that motion on November 18, 2015. [ Id. ]. Eagle represented that at the time of its Status Report, it was proceeding under state law to obtain possession of the Property. [ Id. ].

         II. Procedural Background of the Pending Motions to Dismiss

         The Amended Complaint includes a number of claims based on different legal theories relating to what Ms. Zeller alleges was the wrongful foreclosure on the Property. [#18]. These claims include: (1) unjust enrichment; (2) violation of the Real Estate Procedures Act ("RESPA"), and its implementing regulation, Regulation X; (3) violation of the Fair Debt Collection Practices Act ("FDCPA"), and (4) violation of the Fourteenth and Fifth Amendments based on the deprivation of Ms. Zeller's Property without due process, and deprivation of constitutional rights pursuant to 42 U.S.C. § 1983. See generally [ id. ]. Ms. Zeller seeks a declaration that she has the only valid interest in the Property. [ Id. at 4]. She further requests that the court set aside the Public Trustee sale that occurred on May 28, 2015 as void and invalid and order the title to the Property to be quieted in her favor. [ Id. at 45-46].

         Ventures Trust filed its Second Motion to Dismiss, directed at the Amended Complaint, on July 8, 2015. [#27]. Ventures Trust contends that the claims against it should be dismissed because Plaintiff's claims are barred by the Rooker-Feldman doctrine, which prevents the federal court from exercising subject matter over Ms. Zeller's claims because they were already decided by a state court. [ Id. ]. Ventures Trust also argues that Ms. Zeller's Amended Complaint fails to state a plausible claim under Fed.R.Civ.P. 8(a)(2), including because she relies entirely on "vague unsupported legal theories, bare assertions and wild speculation." [#27-1 at 3]. According to Ventures Trust, the only facts discernible from the Amended Complaint show that Ms. Zeller obtained a loan to purchase the Property, defaulted on the loan, and was foreclosed by an entity with standing to foreclose under Colorado law. [ Id. ].

         Defendant Eagle filed two Motions to Dismiss on January 8, 2016. [#50, #53]. Eagle argues that due to the state court's judgment on its behalf, it is entitled to dismissal on Zeller's claims in this case pursuant to Fed.R.Civ.P. 12(b)(1) and (6), claim preclusion, res judicata and collateral estoppel. [#53 at 2]. Eagle also requests an order for attorneys' fees incurred in preparing its Motion to Dismiss. [ Id. at 8]. Ms. Zeller responds that preclusion should not apply in this proceeding because there was not a final judgment in the state court that related to Eagle and the subject matter in this case, which she characterizes as fraud, was not addressed within the previous judgment. [#55 at 6].

         Defendant Debra Johnson, Public Trustee for the City and County of Denver, has not joined any of the currently pending Motions to Dismiss. She filed her Answer to the Amended Complaint on August 7, 2015. [#38].

         ANALYSIS

         I. Standard of Review

         A. Fed.R.Civ.P. 12(b)(1)

         It is well-settled that federal courts are courts of limited jurisdiction, and as such, "are duty bound to examine facts and law in every lawsuit before them to ensure that they possess subject matter jurisdiction." The Wilderness Soc. v. Kane Cty., Utah, 632 F.3d 1162, 1179 n.3 (10th Cir. 2011) (Gorsuch, J., concurring). Indeed, courts have an independent obligation to determine whether subject matter jurisdiction exists, even in the absence of a challenge from any party. Image Software, Inc. v. Reynolds & Reynolds, Co., 459 F.3d 1044, 1048 (10th Cir. 2006) (citing Arbaugh v. Y & H Corp., 546 U.S. 500 (2006)). Under Fed.R.Civ.P. 12(b)(1), a court may dismiss a complaint for lack of subject matter jurisdiction. When a court dismisses a case under Rule 12(b)(1), this is not a determination on the merits of the case, but only a decision that the court lacks the authority to adjudicate the action. See Castaneda v. INS, 23 F.3d 1576, 1580 (10th Cir. 1994) (recognizing federal courts are courts of limited jurisdiction and may only exercise jurisdiction when specifically authorized to do so). A court that lacks jurisdiction "must dismiss the cause at any stage of the proceeding in which it becomes apparent that jurisdiction is lacking." Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir. 1974). The burden of establishing subject matter jurisdiction is on the party asserting jurisdiction. See Basso, 495 F.2d at 909. Accordingly, Plaintiff in this case bears the burden of establishing that this Court has jurisdiction to hear her claims.

         A motion to dismiss pursuant to Rule 12(b)(1) may take two forms: a facial attack or a factual attack. Stuart v. Colo. Interstate Gas Co., 271 F.3d 1221, 1225 (10th Cir. 2001); Holt v. United States, 46 F.3d 1000, 1002 (10th Cir. 1995). "In reviewing a facial attack on the complaint, a district court must accept the allegations in the complaint as true." Holt, 46 F.3d at 1002. Mere conclusory allegations of jurisdiction are insufficient. Groundhog v. Keeler, 442 F.2d 674, 677 (10th Cir. 1971). Nevertheless, "a court is required to convert a Rule 12(b)(1) motion to dismiss into a Rule 12(b)(6) motion or a Rule 56 summary judgment motion when resolution of the jurisdictional question is intertwined with the merits of the case." Id. As explained in the Holt case, "the jurisdictional question is intertwined with the merits of the case if subject matter jurisdiction is dependent on the same statute which provides the substantive claim in the case." Holt, 46 F.3d at 1002.

         B. Standard Applied to Review of a Pro Se Litigant's Pleadings

         When a litigant appears before the court 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); seeHaines v. Kerner,404 U.S. 519, 520-21 (1972). This rule "applies to all proceedings involving a pro se litigant." Hall v. Bellmon, 935 F.2d 1106, 1110 n.3 (10th Cir. 1991) (citations omitted). However, "the court cannot take on the responsibility of serving as the litigant's attorney in constructing arguments and searching the record." Garrett v. Selby Connor Maddux & Janer,425 F.3d 836, 840 (10th Cir. 2005); see alsoFirstenberg v. City of Santa Fe, New Mexico,696 F.2d 1018, 1024 (10th Cir. 2012) ...


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