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Valentine v. PNC Financial Services Group, Inc.

United States District Court, D. Colorado

August 1, 2019




         This Recommendation addresses PNC Financial Services Group, Inc., PNC Bank, N.A., and PNC Mortgage's ("Defendants") Motion to Dismiss Amended Complaint ("Motion to Dismiss"). [ECF. #40.] It also addresses Plaintiff Elet Valentine's ("Valentine") Opposed Request to File 2nd Amended Complaint and Add Defendants ("Motion to Amend"). [ECF. #67.] These motions were referred to the magistrate judge for a recommendation. [ECF. #41 & ECF. #68.] The Court has reviewed both motions, the related briefing, and the governing law. Oral argument will not materially assist this Court's analysis. For the following reasons, the Court RECOMMENDS the Motion to Dismiss be GRANTED in part and DENIED in part, and the Motion to Amend be DENIED.


         The Court is recommending that Defendants' Motion to Dismiss be granted in part and denied in part. Specifically, the Court recommends that Valentine's breach of contract claims as they pertain solely to Defendants' alleged failure to properly apply loan payments be allowed to proceed. The Court concludes the Amended Complaint fails to state any other plausible claims for relief, and therefore, the Court recommends dismissal of the other claims in the Amended Complaint.

         Regarding Valentine's Motion to Amend, the Court reviewed the proposed Second Amended Complaint and has determined it does not comply with Fed.R.Civ.P. 8, which requires a short and plain statement of the claims. Additionally, the proposed amendments in the Second Amended Complaint would be futile because they do nothing to cure the deficiencies in the Amended Complaint-therefore, the Second Amended Complaint would be subject to dismissal for the same reasons the Court recommends granting (in part) the Motion to Dismiss. For these reasons, the Court recommends denying the Motion to Amend.

         The Parties will have 14 days after service of this Recommendation to file specific written objections to this Recommendation with Judge Arguello for her review. Judge Arguello may either adopt this Recommendation or reject this Recommendation and issue an order based on her own findings and conclusions. Should Judge Arguello adopt this Recommendation, then the case will proceed on the allegations in the Amended Complaint, and only on the claim for breach of contract based on Defendants' alleged failure to properly apply or credit loan payments.

         A. BACKGROUND

         Valentine proceeds pro se in this matter. She brought this action alleging 11 claims for relief related to Defendants' handling of her residential mortgage loan, which resulted in Colo. R. Civ. P. 120 proceedings in state court (the "Rule 120 Proceeding"). On August 1, 2018, the state trial court issued an order authorizing the foreclosure sale of Valentine's home pursuant to C.R.S. § 38-38-101 et seq. Valentine then initiated this action and requested the entry of a temporary restraining order and preliminary injunction to stop the foreclosure. [ECF. #6.] Defendants voluntarily agreed to forego the sale at least until a ruling on Valentine's request for injunctive relief. [ECF. #20.]

         On September 28, 2018, this Court recommended that Valentine's request for a preliminary injunction and restraining order be denied. [ECF. #42.] The District Judge adopted this recommendation. [ECF. #71.] Thereafter, Defendants proceeded with the foreclosure sale on November 29, 2018, and the state district court entered an Order Approving Sale on December 21, 2018.[1] [ECF. #70-1]

         The 11 claims for relief in the Amended Complaint include: (1) equitable tolling; (2) breach of promissory note; (3) breach of deed of trust; (4) unjust enrichment; (5) fraud in the inducement; (6) fraudulent concealment; (7) fraudulent misrepresentation; (8) vicarious liability; (9) abuse of process; (10) unfair and deceptive acts or practices under the Colorado Consumer Protection Act; and (11) extreme and outrageous conduct. [ECF #36.] Generally, these claims arise out of allegations that, for at least a ten-year period, Defendants failed to properly apply, or otherwise account for, her monthly mortgage payments; inflated her account with improper and unexplained additional fees and charges; improperly instigated state court foreclosure proceedings; and, by their handling of her account, violated certain federal and state laws and breached provisions of the promissory note and deed of trust. [See generally ECF #36.]

         Defendants move to dismiss all 11 claims. They argue the Amended Complaint should be dismissed under the Rooker-Feldman doctrine and because Valentine has failed to state claims upon which relief could be granted. [ECF. #40.] In addition to filing a Response to the Motion to Dismiss, [2] Valentine also moved to file a Second Amended Complaint which seeks to add new parties and new factual allegations. [ECF. #67.]


         1. Review of a Pro Se Party's Filings

         A federal court must construe a pro se plaintiff's pleadings "liberally" and hold the pleadings "to a less stringent standard than formal pleadings filed by lawyers." Smith v. United States, 561 F.3d 1090, 1096 (10th Cir. 2009). But the court "will not supply additional factual allegations to round out a plaintiffs complaint or construct a legal theory on plaintiffs behalf." Id. (citing Whitney v. New Mexico, 113 F.3d 1170, 1173-74 (10th Cir. 1997)). The Tenth Circuit has suggested:

[I]f the court can reasonably read the pleadings to state a valid claim on which the plaintiff could prevail, it should do so despite the plaintiffs failure to cite proper legal authority, his confusion of various legal theories, his poor syntax and sentence construction, or his unfamiliarity with pleading requirements.

Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991). However, it is not "the proper function of the district court to assume the role of advocate for the pro se litigant." Id.; see also Dunn v. White, 880 F.2d 1188, 1197 (10th Cir. 1989) ("[W]ewill not supply additional facts, nor will we construct a legal theory for plaintiff that assumes facts that have not been pleaded.").

         2. The Motion to Dismiss and Fed.R.Civ.P. 12(b)(6)

         In deciding a motion under Fed.R.Civ.P. 12(b)(6), the Court must "accept as true all well-pleaded factual allegations . . . and view these allegations in the light most favorable to the plaintiff." Casanova v. Ulibarri, 595 F.3d 1120, 1124-25 (10th Cir. 2010) (quoting Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009)). But the Court is not "bound to accept as true a legal conclusion couched as a factual allegation." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In addition, when considering a Rule 12(b)(6) motion, the court may consider exhibits attached to the complaint without converting the motion to a motion for summary judgment under Fed.R.Civ.P. 56. See Hall v. Bellmon, 935 F.2d 1106, 1112 (10th Cir. 1991); Fed.R.Civ.P. 10(c).

         To 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." Iqbal, 556 U.S. at 678 (internal quotation marks omitted). A claim is 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. This standard requires more than the mere possibility that a defendant has acted unlawfully. Id. Facts that are "merely consistent" with a defendant's liability are insufficient. Id. "[T]o state a claim in federal court, a complaint must explain what each defendant did to [the plaintiff]; when the defendant did it; how the defendant's actions harmed [the plaintiff]; and what specific legal right the plaintiff believes the defendant violated." Nasious v. Two Unknown B.I.C.E. Agents, 492 F.3d 1158, 1163 (10th Cir. 2007).

         The Court's ultimate duty 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). "Nevertheless, the standard remains a liberal one, and 'a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that recovery is very remote and unlikely.'" Morgan v. Clements, No. 12-cv-00936-REB-KMT, 2013 WL 1130624, at *1 (D. Colo. Mar. 18, 2013) (quoting Dias v. City & County of Denver, 567 F.3d 1169, 1178 (10th Cir. 2009)).

         3. The Motion to Amend and Fed.R.Civ.P. 15

         Rule 15(a) provides that "[t]he court should freely give leave [to amend a pleading] when justice so requires." Fed.R.Civ.P. 15(a)(2).

If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits. In the absence of any apparent or declared reason- such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.-the leave sought should, as the rules require, be "freely given."

Foman v. Davis, 371 U.S. 178, 182 (1962). "The purpose of the Rule is to provide litigants the maximum opportunity for each claim to be decided on its merits rather than on procedural niceties." Minter v. Prime Equip. Co., 451 F.3d 1196, 1204 (10th Cir. 2006) (citations and internal quotation marks omitted).

         "A proposed amendment is futile if the complaint, as amended, would be subject to dismissal." Full Life Hospice LLC v. Sebelius, 709 F.3d 1012, 1018 (10th Cir. 2013) (internal quotation marks omitted). In determining whether a proposed amendment should be denied as futile, the court must analyze a proposed amendment as if it were before the court on a motion to dismiss under Rule 12(b)(6). Hunt v. Riverside Transp., No. 11-2020-DJW, 2012 WL 1893515, at *3 (D. Kan. May 23, 2012). The defendant bears the burden of showing futility. Hunt, 2012 WL 1893515, at *3; see also Carefusion 213, LLC v. Prof'l Disposables, Inc., No. 09-2616-KHV-DJW, 2010 WL 4004874, at *5 (D. Kan. Oct. 12, 2010).

         C. ANALYSIS

         1. The Motion to Dismiss the Amended Complaint

         a. The Rooker-Feldman Doctrine Does Not Apply

         Defendants argue the Amended Complaint should be dismissed in its entirety because it seeks appellate-like review of the state court's Rule 120 Order, and therefore, is barred by the Rooker-Feldman doctrine.[3] The Court is guided in its analysis by the Tenth Circuit's decision in Mayotte v. U.S. Bank Natl Assoc, 880F.3d 1169 (10th Cir.2018). In Mayotte, which had a factual scenario similar to the one here, the Tenth Circuit considered whether Rooker-Feldman applied to Colorado's procedures for "nonjudicial" foreclosures of mortgages.[4] The Circuit observed that a Rule 120 decision is simply a determination that a sale of "property can proceed unless some other court, which need pay no attention to the finding by the Rule 120 court, decides to halt or otherwise modify the sale." Id. at 1173. The rights created by a Rule 120 decision, therefore, are limited to clearing title to the property and are "not definitive on other matters." Id. at 1172-73.

         The Circuit noted the Rooker-Feldman doctrine "does not deprive a federal court of jurisdiction to hear a claim just because it could result in a judgment inconsistent with a state-court judgment." Id. at 1174. It clarified that "[w]hat is prohibited under Rooker-Feldman is a federal action that tries to modify or set aside a state-court judgment because the state proceedings should not have led to that judgment." Id. (emphasis in original). "In other words, an element of the claim must be that the state court wrongfully entered its judgment." Id. at 1174.

         The Court reviewed the Amended Complaint and does not read it to allege that the state district court wrongfully issued its orders in the Rule 120 Proceeding. Nor does the Amended Complaint specifically seek to invalidate the state district court's orders issued in those proceedings. Consequently, the Court concludes the Rooker-Feldman doctrine does not apply and affords no basis for dismissal of the Amended Complaint.

         b. The Amended Complaint's Breach of Contract Claims

         The Amended Complaint asserts two breach of contract claims. As the Court understands these claims, one alleges that Defendants breached the Promissory Note (Claim Two) by failing to properly apply loan payments and violating provisions of the Housing and Urban Development ("HUD") guidelines. The second breach of contract claim alleges that Defendants breached the Deed of Trust (Claim Three) in various ways. Defendants contend that Valentine failed to allege sufficient facts to establish any breach of contract.

         To maintain a breach of contract claim, a plaintiff must establish (1) the existence of a contract; (2) performance by the plaintiff or justification for nonperformance; (3) failure to perform by the defendant; and (4) resulting damage to the plaintiff. W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1058 ...

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