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Murry v. Ocwen Loan Servicing LLC,

United States District Court, D. Colorado

February 21, 2017

OCWEN LOAN SERVICING LLC, and WELLS FARGO BANK, N.A., as Trustee for the Certificate Holders of Park Place Securities, Inc., Asset-Backed Pass-Through Certificates, Series 2005-WCH1, Defendants.



         This order addresses defendants' motion to dismiss [ECF No. 12]. The motion is granted, and the case is dismissed.


         In November 2004 plaintiff Albert Murry borrowed about $150, 000 from Olympus Mortgage Company. ECF No. 1, Williams Aff. ¶ 6.A.[1] Mr. Murry executed a promissory note and a deed of trust encumbering his real property at 2494 F 1/4 Road in Grand Junction, Colorado (the Property). Id. ¶¶ 6.A-B. The deed was eventually assigned to defendant Wells Fargo Bank, N.A. (Wells Fargo). ECF No. 1 at 5. Defendant Ocwen Loan Servicing, LLC (Ocwen) apparently claims to be Mr. Murry's loan servicer. See Id. at 2; ECF No. 1, Schramm Aff. ¶¶ 4-6.[2]

         On February 20, 2013 Ocwen sent a notice of default to Mr. Murry. Id. at 5. On September 22, 2014 Wells Fargo initiated a foreclosure proceeding against the Property under Rule 120 of the Colorado Rules of Civil Procedure. See ECF No. 1 at 5; Motion for Order Authorizing Sale, Wells Fargo Bank National Association v. Al Murry, No. 2014CV30683 (Mesa Cnty., Colo. Dist. Ct. Sept. 22, 2014).[3] Mr. Murry does not contest that he defaulted on his mortgage. See ECF No. 1 at 4. Instead, he argues defendants have no legal right to seek foreclosure. Id. at 16. Nevertheless, the Mesa County District Court issued an Order Authorizing Sale of the Property on October 10, 2014. See ECF No. 1 at 5; Order Authorizing Sale, Wells Fargo, No. 2014CV30683 (Mesa Cnty., Colo. Dist. Ct. Oct. 10, 2014).

         Mr. Murry brought this action in May 2016 to prevent defendants from foreclosing on the Property. ECF No. 1. Defendants have filed a motion to dismiss. ECF No. 12.


         To survive a 12(b)(6) motion to dismiss, the complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). While the Court must accept the well-pleaded allegations of the complaint as true and construe them in the light most favorable to the plaintiff, Robbins v. Wilkie, 300 F.3d 1208, 1210 (10th Cir. 2002), purely conclusory allegations are not entitled to be presumed true, Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009). However, so long as the plaintiff offers sufficient factual allegations such that the right to relief is raised above the speculative level, he has met the threshold pleading standard. See Twombly, 550 U.S. at 556. “The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted.” Sutton v. Utah State Sch. for Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 1999) (quoting Miller v. Glanz, 948 F.2d 1562, 1565 (10th Cir. 1991)).

         When, as here, a case involves a pro se party, the court will “review his pleadings and other papers liberally and hold them to a less stringent standard than those drafted by attorneys.” Trackwell v. U.S. Gov't, 472 F.3d 1242, 1243 (10th Cir. 2007). Nevertheless, it is not “the proper function of the district court to assume the role of advocate for the pro se litigant.” Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991). A “broad reading” of a pro se plaintiff's pleadings “does not relieve the plaintiff of the burden of alleging sufficient facts on which a recognized legal claim could be based.” Id. Pro se parties must “follow the same rules of procedure that govern other litigants.” Green v. Dorrell, 969 F.2d 915, 917 (10th Cir. 1992).


         Mr. Murry raises six claims against defendants for (1) declaratory judgment that defendants have no interest in the Property that would allow them to enforce the promissory note; (2) declaratory judgment that the note and deed were rescinded; (3) wrongful foreclosure; (4) mortgage fraud; (5) violation of 42 U.S.C. § 1985(3); and (6) fraud on the court. Based on these claims, Mr. Murry argues that he is entitled to a preliminary injunction. The Court will address each argument in turn.

         A. Declaratory Relief.

         First, Mr. Murry contends that neither Ocwen nor Wells Fargo has an interest in the Property because the purported assignment of the promissory note to Wells Fargo is invalid. ECF No. 1 at 6. Because this Court sits in diversity jurisdiction, it follows Colorado's substantive law. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). Under Colorado law, the person in physical possession of a note is the note holder. Colo. Rev. Stat. § 38-38-100.3(10). A promissory note holder can freely transfer the note, see Colo. Rev. Stat. § 4-3-104, and enforce it, id. § 4-3-301. Indeed, a person may be “entitled to enforce the instrument even though the person . . . is in wrongful possession of the instrument.” Id. Mr. Murry does not dispute that Wells Fargo holds his promissory note. See ECF No. 1 at 6; ECF No. 16 at 4-5 (“Defendants' [sic] hold only a void deed and cancelled note by operation of federal law.”). Therefore, his claim to a declaratory judgment that defendants cannot enforce the note fails as a matter of law.

         In the alternative, Mr. Murry argues that he voided the note and deed by mailing a rescission letter to Ocwen on May 6, 2013. ECF No. 1 at 13. The Truth in Lending Act lets consumers rescind a loan under certain circumstances. See 15 U.S.C. § 1635 (2012). But the Act exempts “residential mortgage transaction[s].” Id. § 1635(e)(1). And, in any event, the Act makes clear that this “right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first.” Id. § 1635(f). Consummation of the transaction “means the time that a consumer becomes contractually obligated on a credit transaction.” 12 C.F.R. § 226.2(a)(12). Here, Mr. Murry became contractually ...

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