United States District Court, D. Colorado
ORDER ADOPTING AND AFFIRMING THE RECOMMENDATION OF
UNITED STATES MAGISTRATE JUDGE SCOTT T. VARHOLAK
CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE
matter comes before the Court on three Motions to Dismiss
Plaintiff John Pembroke's Complaint-one filed by
Defendant Trans Union, LLC (Doc. # 102); another filed by
Defendant Select Portfolio Servicing, Inc. (SPS) (Doc. #
103); and a third filed by Defendant JPMorgan Chase Bank,
N.A. (Doc. # 105). Also before the Court is Defendant Equifax
Information Services, LLC's Renewed Motion for Judgment
on the Pleadings. (Doc. # 122.) This Court referred all four
motions to United States Magistrate Judge Scott T. Varholak
pursuant to 28 U.S.C. § 636 and Fed.R.Civ.P. 72. (Doc #
106, 107, 123.) On October 27, 2017, Magistrate Judge
Varholak issued a Recommendation (Doc. # 127), wherein he
recommends that this Court grant Defendants Trans Union's
and Equifax's Motions (Doc. ## 102, 122) and grant in
part and deny in part Defendants SPS' and Chase's
Motions (Doc. ## 103, 105). (Id. at 1- 2.) Mr.
Pembroke timely filed Objections to select portions of the
Recommendation. (Doc. # 128.) For the following reasons, the
Court overrules Mr. Pembroke's Objections and affirms and
adopts Magistrate Judge Varholak's Recommendation in its
GENERAL BACKGROUND AND PROCEDURAL HISTORY
Judge Varholak's Recommendation provides an extensive
recitation of the factual and procedural background in this
case. The Recommendation is incorporated herein by reference.
See 28 U.S.C. § 636(b)(1)(B); Fed.R.Civ.P.
72(b). Thus, the factual background of this dispute will be
reiterated only to the extent necessary to address Mr.
action arises from the allegedly inaccurate reporting of Mr.
Pembroke's consumer credit and the purported failure of
Consumer Reporting Agencies (CRAs), and the entities that
provide relevant information to CRAs (furnishers), to
reinvestigate and correct these deficiencies. (Doc. # 95.)
Mr. Pembroke specifically claims that Trans Union, Equifax,
and Experian (the CRA Defendants) and SPS and Chase (the
Furnisher Defendants) improperly reported him as personally
liable for debts that instead are solely enforceable against
the John J. Pembroke Trust (JJP Trust) and the Linda D.
Pembroke Living Trust (collectively, the Pembroke Trusts).
(Doc. # 95 at ¶¶ 10, 15.)
debts stem from a refinance loan of $1.905 million, which Mr.
Pembroke negotiated with Washington Mutual Bank (WaMu) in
2006. John J. Pembroke Living Trust v. U.S.
Bank, N.A., 15CA1610 (Colo. Ct. App. June 1, 2017) (COA
Judgment) at ¶ 2; see also John J. Pembroke Living
Trust v. U.S. Bank Nat'l Assoc., 2014CV30592,
Judgment and Decree of Foreclosure (Colo. Dist. Ct. Aug. 7,
2015) (State Court Judgment) at ¶¶
As part of the loan transaction, Mr. Pembroke executed and
delivered to WaMu a promissory note (Note), and the Pembroke
Trusts executed a securing deed of trust. COA Judgment,
¶ 2; State Court Judgment at ¶¶ 3, 16 In 2012,
due to a claimed default on the Note, U.S. Bank National
Association (U.S. Bank) began foreclosure proceedings. COA
Judgment at ¶ 5; (Doc. # 127 at 3.) The Pembroke Trusts
contested the foreclosure and sought an injunction against it
in Jefferson County District Court. (Doc. # 127 at 4.) The
Jefferson County District Court found against the Pembroke
Trusts and entered a decree of foreclosure, which the
Pembroke Trusts appealed and the Colorado Court of Appeals
affirmed. See generally COA Judgment; State Court
Judgment at 3-4.
pertinent here, Mr. Pembroke was not a party to the state
court proceedings. He did, however, testify at trial on
behalf of the JJP Trust. (Doc. # 103-3.) There, as he does in
this case, Mr. Pembroke contended that he executed the Note
as Trustee of the JJP Trust, not in his personal capacity,
and he is not, therefore, personally liable on the defaulted
Note. (Doc. ## 103-3 at 76-77; 128 at 3-4.)
Jefferson County District Court did not resolve the issue of
Mr. Pembroke's personal liability on the Note, stating
“Mr. Pembroke is not a party to this case, and this
judgment and decree of foreclosure does not decide whether
Mr. Pembroke is personally liable under the [Note].”
State Court Judgment at ¶ 3. The District Court did
find, however, that Mr. Pembroke signed and initialed the
original Note in his individual capacity,  and added that
“[U.S. Bank] reserved its right to seek a deficiency
judgment, if any, against the maker of the [Note] in a
separate action.” Id. at ¶¶ 3, 16.
In affirming the District Court's decision, the Colorado
Court of Appeals did not disturb these findings.
the state court proceedings remained pending, the JJP Trust
initiated a federal lawsuit in this Court, wherein it again
disputed the validity and enforceability of the Note and
attempted to stop the debt collection activities of various
entities, including the Furnisher Defendants. John J.
Pembroke Living Trust v. U.S. Bank Nat'l Assoc.,
Civil Action No. 16-cv-00020-CMA-MEH (D. Colo. 2016) (2016
Lawsuit), Doc. ## 57 at 1; 58 at 4. The Furnisher Defendants
moved to dismiss JJP Trust's Complaint. 2016 Lawsuit,
Doc. ## 32, 33, 37. This Court granted their motions,
primarily on grounds that the underlying issues had already
been raised and adjudicated in state court and were otherwise
barred by the applicable statute of limitations. (Doc. ## 60,
in early 2016, Mr. Pembroke requested a copy of his credit
report from the CRA Defendants. (Doc. # 95 at ¶ 14.) He
received credit reports that reflected a delinquency on the
Note and a home equity line of credit as personal liabilities
against him. (Id.) Mr. Pembroke disputed those
reports through the CRA Defendants' online dispute
request system. He also raised his concerns in letters to the
CRA and Furnisher Defendants. (Id. at ¶ 16.) In
so doing, Mr. Pembroke alerted the CRA and Furnisher
Defendants to the state court proceedings as proof that he
was not personally liable on the Note and requested that the
debt be removed from his credit report. (Id. at
¶ 17.) The CRA Defendants did not correct the
information. (Id. at ¶ 18) As a result, Mr.
Pembroke alleges that he sustained significant financial
losses, including over $665, 000.00 in lost business income.
(Id. at ¶¶ 21, 23-24, 27-28.)
Pembroke's Second Amended Complaint subsequently raises
seven claims for relief: Claims One and Two seek relief under
the Fair Credit Reporting Act (FCRA), against the CRA
Defendants; Claim Three seeks relief under the FCRA against
the Furnisher Defendants; Claim Four contends that all
Defendants were negligent in their reporting; Claim Five
raises defamation allegations against all Defendants; Claim
Six seeks relief against all Defendants for the intentional
infliction of emotional distress; and Claim Seven alleges
that the Furnisher Defendants violated the Fair Debt
Collections Practices Act (FDCPA).
Defendants' Motions to Dismiss seek to dismiss all of Mr.
Pembroke's claims under Federal Rules of Civil Procedure
12(b)(1), 12(b)(6), and 12(c). (See ## 102, 103, 105, 122).
With regard to those motions, Magistrate Judge Varholak
recommends as follows: First, he recommends that
Plaintiff's Claims One and Two be dismissed entirely
because, among other reasons, they amount an improper
collateral attack on the underlying debt. Second, he
recommends that Claims Four, Five, and Six be dismissed as
against the CRS Defendants but allowed to proceed as against
the Furnisher Defendants. Third, he recommends that Claim
Seven against the Furnisher Defendants be dismissed as barred
by claim preclusion but that Claim Three against the
Furnisher Defendants be allowed to proceed.
OBJECTIONS AND STANDARD OF REVIEW
party has objected to Magistrate Judge Varholak's
Recommendation with respect to Claims Three, Four, Five, and
Six. “[T]he district court is accorded considerable
discretion with respect to the treatment of unchallenged
magistrate reports. In the absence of timely objection, the
district court may review a magistrate's report under any
standard it deems appropriate.” Summers v. State of
Utah, 927 F.2d 1165, 1167 (10th Cir. 1991). After
reviewing the Recommendation of Magistrate Judge Varholak, in
addition to applicable portions of the record and relevant
legal authority, the Court is satisfied that the conclusions
in the Recommendation that were not objected to are sound and
not clearly erroneous or contrary to law. See Fed.
R. Civ. P. 72(a). The Court there affirms and adopts
Magistrate Judge Varholak's Recommendation that Claims
Three, Four, Five, and Six be allowed to proceed against the
Furnisher Defendants; and Claims Four, Five, and Six be
dismissed as against the CRS Defendants.
Pembroke, however, objects to Magistrate Judge Varholak's
Recommendation with respect to Claims One, Two, and Seven. He
specifically “objects to the Recommendations
determinations that his FCRA claims against [the CRA
Defendants] be dismissed” and “that his FDCPA claim
against [the Furnisher Defendants] be dismissed.”
Because Fed.R.Civ.P. 72(b)(3) requires that the district
judge conduct a de novo review of any part of the
Recommendation that has been properly objected to, the Court
reviews de novo Magistrate Judge Varholak's
Recommendation with respect to Claims One, Two, and Seven.
conducting the review, a “district judge may accept,
reject, or modify the recommended disposition; receive
further evidence; or return the matter to the magistrate
judge with instructions.” Id. Any arguments
raised for the first time in objections are deemed waivable
and need not be considered by the district court.
Marshall v. Chater, 75 F.3d 1421, 1426 (10th Cir.
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). A claim is facially plausible “when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. (citing
Twombly, 550 U.S. at 556). The scope of the
allegations may not be “so general that they encompass
a wide swath of conduct, much of it innocent” or else
the plaintiff has ‘not nudged [his] claims across the
line from conceivable to plausible.'” Robbins
v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008)
(quoting Twombly, 550 U.S. at 570). 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.” Twombly, 550 U.S. at 555. The
ultimate duty of the court is 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).
“A motion for judgment on the pleadings under Rule
12(c) is treated as a motion to dismiss under Rule
12(b)(6).” Atl. Richfield Co. v. Farm Credit Bank
of Wichita, 226 F.3d 1138, 1160 (10th Cir. 2000).