Judith Z. Miller and Thomas C. Miller, Plaintiffs-Appellants,
Bank of New York Mellon, as Trustee for the Certificate Holders of CWABS, Asset-Backed Certificates 2004-10, f/k/a Bank of New York; Bank of America, N.A.; and Countrywide Home Loans, Inc., Defendants-Appellees.
and County of Denver District Court No. 12CV3907 Honorable
Kenneth M. Laff, Judge
Dale Parrish, PC, Edward Dale Parrish, James Wade Noland,
Golden, Colorado, for Plaintiffs-Appellants
Holland & Hart LLP, Christina F. Gomez, Sean M. Hanlon,
Denver, Colorado, for Defendant-Appellee Bank of New York
Akerman LLP, Justin D. Balser, Melissa L. Cizmorris, Denver,
Colorado, for Defendants-Appellees Bank of America and
Countrywide Home Loans
1 In this case involving dual tracking, a process where banks
pursue foreclosure on a home while negotiating a loan
modification, plaintiffs, Judith Z. and Thomas C. Miller (the
Millers), filed claims against five financial institutions
(collectively the Banks). The Millers contend that the Banks
improperly subjected them to dual tracking in violation of
the consent judgment that resulted from the National Mortgage
Settlement generally prohibiting dual tracking, as discussed
below. The district court dismissed their complaint for
failure to state a claim for relief, and the Millers appeal
from that judgment. We affirm.
2 We consider only facts alleged in the Millers' amended
complaint, the documents they attached as exhibits or
incorporated by reference, and matters proper for judicial
notice. Fry v. Lee, 2013 COA 100, ¶ 19, __ P.3d
__, __. We view all facts in the light most favorable to the
Millers. Id. at ¶ 17, __ P.3d at __.
3 In September 2004, the Millers signed a note and deed of
trust to obtain a $422, 750 loan to purchase a house in
Denver. The loan was a three-year adjustable rate mortgage
with an initial annual interest rate of 8.075%. CHL
originally gave them the loan, under the trade name of
America's Wholesale Lender. A deed of trust, given to
MERS as beneficiary, secured the loan.
4 The Millers began missing payments in 2007, and CHL began
foreclosure proceedings on the house. In 2008, CHL
transferred the loan to BNY Mellon, and BANA serviced the
loan on BNY Mellon's behalf. MERS also assigned its
interest in the deed of trust to BNY Mellon.
5 The Millers separately filed for bankruptcy, and they both
received discharges in 2009. Following the conclusion of both
bankruptcy cases, BANA told the Millers to vacate the house.
The Millers instead stayed in the house and eventually
entered into negotiations with BANA regarding a loan
6 In February 2012, BNY Mellon moved for an order authorizing
the public trustee to proceed with a foreclosure sale in the
Denver County District Court against the Millers under
7 In June 2012, while the Rule 120 action was pending, the
Millers filed their own complaint against the Banks in the
Denver County District Court to quiet title to the house in
their favor. The Millers alleged that BNY Mellon had not
established an unbroken chain of title and that the Millers
had not been afforded due process in the Rule 120 action
because the court had not conducted a hearing.
8 In July 2012, the court in the Rule 120 action held a
hearing and authorized the sale of the house. Meanwhile, the
Millers continued negotiating a loan modification with BANA.
9 On December 31, 2012, BANA sent two contradictory letters
to the Millers. One letter stated that their request for a
loan modification had been denied, and the other stated that
their request had been approved.
10 In 2013, BANA and the Millers agreed to a loan
modification, although the Millers averred in their amended
complaint that they accepted the modified loan under duress
because of the threat of foreclosure. They began making payments
three months before they executed the loan modification
agreement in May 2013. They agreed to add all their unpaid
and deferred interest, fees, charges, escrow advances, and
other costs, excluding unpaid late charges, to the
outstanding principal balance, for a combined balance of
$630, 077.16. BANA permanently forgave $220, 077.16 of that
balance, leaving a new principal balance of $410, 000. BANA
also deferred $72, 321.19 of the new balance until the end of
the life of the loan, with no accrued interest. BANA applied
an initial 2% annual interest rate to the remainder, which
would eventually increase to 3.375%.
11 BNY Mellon dismissed the Rule 120 action in September
2013, seven months after the Millers began making modified
payments and four months after the execution of the
12 In October 2014, the Millers amended their complaint,
asserting claims for breach of the implied duty of good faith
and fair dealing, intentional infliction of emotional
distress, fraud, and negligence. The Banks moved to dismiss
the Millers' amended complaint.
13 The court granted the motion. It ruled that the
Millers' tort claims were barred by the economic loss
rule because the Millers had not identified any duty
independent of the parties' contractual obligations. The
court also dismissed the Millers' contract claim for
breach of the implied duty of good faith and fair dealing
because it concluded that the Millers did not have a
reasonable expectation that their original loan would be
modified or that the Banks would not engage in dual tracking.
14 The Millers raise two contentions on appeal: (1) the
district court erred in determining that the economic loss
rule barred their tort claims and (2) the court erred in
dismissing their contract claim because they had a reasonable
expectation that the Banks would not engage in dual tracking
and would modify their loan. We disagree.
Motion to Dismiss Standard of Review
15 We review de novo a district court's grant of a motion
to dismiss. Fry, ¶ 17, __ P.3d at __.
16 A motion to dismiss tests the formal sufficiency of a
complaint. Town of Alma v. AZCO Constr., Inc., 10
P.3d 1256, 1259 (Colo. 2000). It is looked upon with
disfavor, and a complaint should not be dismissed unless it
appears beyond a doubt that a claimant can prove no set of
facts in support of his or her claim which would entitle him
or her to relief. Pub. Serv. Co. of Colo. v. Van
Wyk, 27 P.3d 377, 385-86 (Colo. 2001). Motions to
dismiss should only be granted when the ...