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Bank of New York Mellon v. Cuevas

United States District Court, D. Colorado

April 4, 2018




         This is an action for deficiency judgment. The case is before the court on the referred motion (doc. 44) of Plaintiff Bank of New York Mellon (the “Bank”) for summary judgment against the pro se Defendants Richard Cuevas and Alisha Cuevas. For the following reasons, pursuant to Federal Rule of Civil Procedure 56(e), the court gives the Bank an opportunity to supplement the record before the court makes its recommendation on the motion.

         The court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A party asserting that a fact cannot be or is genuinely disputed must support the assertion by … citing to particular parts of materials in the record … or showing that the materials cited do not establish the … presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1)(A), (B). Although both Defendants answered the complaint (in April 2017, as to Ms. Cuevas in Docs. 8 and 13, and June 2017 as to Mr. Cuevas, Doc. 25), appeared in telephone conferences (see minutes, docs. 54, 55 and 56), and participated in settlement negotiations with the Bank after it filed its motion for summary judgment, neither Defendant responded to the motion.

         However, even in the absence of a response, the court must review whether the movant has shown it is entitled to judgment as a matter of law.

[A] party's failure to file a response to a summary judgment motion is not, by itself, a sufficient basis on which to enter judgment against the party. The district court must make the additional determination that judgment for the moving party is “appropriate” under Rule 56. … The court should accept as true all material facts asserted and properly supported in the summary judgment motion. But only if those facts entitle the moving party to judgment as a matter of law should the court grant summary judgment.

Reed v. Bennett, 312 F.3d 1190, 1195 (10th Cir. 2002). “By failing to file a response within the time specified by the local rule, the nonmoving party waives the right to respond or to controvert the facts asserted in the summary judgment motion.” Id. Thus, both Defendants waived “the right to respond or to controvert the facts asserted” in the Bank's motion, but if the Bank has not supported a material fact, the court cannot grant summary judgment.

         The Bank seeks a deficiency judgment against Defendants jointly and severally in the amount of $111, 985.72. The Bank recognizes in its motion it “must establish the amount of the debt, the sale price, that the sale price was applied to the debt, and the resulting deficiency.” Nat'l Canada Corp. v. Dikeou, 868 P.2d 1131, 1134 (Colo.App. 1993). See Doc. 44 motion at p. 4 (“lender must establish the total debt, sale price and the deficiency after applying the sale proceeds”).

         As to the first element - the amount of the debt - the Bank is entitled to include in the debt at the time of the foreclosure sale the outstanding principal, accrued interest, and late charges. Doc. 44-2 (promissory note) at p. 3 ¶ 6. The promissory note also provides:

If the Note Holder has required me to pay immediately in full as described above, the Note Holder will have the right to be paid back by me for all of its costs and expenses in enforcing this Note to the extent not prohibited by applicable law. Those expenses include, for example, reasonable attorneys' fees.

Doc. 44-2, Promissory Note at p. 2 of 3, ¶ 6(E) (emphasis added). The deed of trust provides:

If (a) Borrower fails to perform … then Lender may do and pay for whatever is reasonable or appropriate to protect Lender's interest in the Property and rights under this Security Instrument …. Lender's actions can include, but are not limited to: … paying reasonable attorneys' fees to protect its interest in the Property and/or rights under this Security Instrument. * * * Any amounts disbursed by Lender under this Section 9 shall become additional debt of Borrower secured by this Security Instrument.

Doc. 44-2, Deed of Trust at p. 8 of 15, ¶ 9 (emphasis added).

         Colorado law limits the lender's expenses - with some possible exceptions regarding expenses in the foreclosure process itself - to those which are reasonable or appropriate. C.R.S. § 38-38-107. The statute governing the Bank's bid likewise restricts the lender's additional costs to “estimated reasonable costs and expenses of holding, marketing, and selling the property, net of income received.” C.R.S. § 38-38-106(6) (emphasis added). Cf., National Canada, 868 P.2d at 1139 (remanding for determination of reasonableness of the attorney fees and costs bank sought in deficiency action). See also San Miguel Basin State Bank v. Oliver, 748 P.2d 1342, 1345-46 (Colo.App. 1987) (reversing and remanding deficiency judgment in part because there was no evidence that the attorney fees added to the debt in foreclosure were reasonable); In re Lederman Enterps., Inc., 106 B.R. 674, 677-78 (Bankr. D. Colo. 1989) (“In general, Colorado has recognized the right of lenders to have reasonable costs and fees allowed in connection with foreclosure actions, ” emphasis added).

         As to Mr. Cuevas, the Bank does not need evidence to support the amount of the debt. Mr. Cuevas failed to answer the Bank's requests for admission. The certificate of service on the requests states the Bank served them to Mr. Cuevas by U.S. mail at the mailing address he has given for use in this case, and by email to his gmail account. Doc. 44-6 at p. 9. Counsel for the Bank advised Mr. Cuevas, by mail and email, that it had not received answers to the requests for admission within their due date and requested answers by September 30, 2017. On September 29, 2017 Mr. Cuevas emailed the Bank's counsel, stating he would send responses in a few days. But the Bank never received them. Doc. 44-5, Affidavit of Taylor T. Haywood ΒΆΒΆ 3-5. He thus has admitted all facts which the Bank requested ...

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