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Mayotte v. U.S. Bank National Association

United States Court of Appeals, Tenth Circuit

January 23, 2018

MARY M. MAYOTTE, Plaintiff - Appellant,
U.S. BANK NATIONAL ASSOCIATION, As Trustee for Structured Asset Investment Loan Trust Mortgage Pass-Through Certificates, Series 2006-4; WELLS FARGO BANK N.A.; AMERICA'S SERVICING COMPANY, and All Persons or Entities Claiming any Legal or Equitable Right, Title, Estate, Lien or Interest in the Property Described in this Complaint Adverse to Plaintiff's Title, or any Cloud upon Plaintiff's Title Thereto; DEBRA JOHNSON, Public Trustee, Defendants - Appellees.

         Appeal from the United States District Court for the District of Colorado (D.C. No. 1:14-CV-03092-RBJ-CBS)

          John E. Campbell, Campbell Law LLC, St. Louis, Missouri, for Plaintiff-Appellant.

          Jessica E. Yates, Snell & Wilmer LLP, Denver, Colorado (Allison L. Gambill, on the briefs) for Defendants-Appellees.

          Before HARTZ, HOLMES, and BACHARACH, Circuit Judges.

          HARTZ, Circuit Judge.

         On this appeal the parties have asked us to determine how, or even whether, an important-but subtle and often confusing-doctrine limiting federal-court jurisdiction should apply to a unique Colorado procedure for "nonjudicial" foreclosure of mortgages. The jurisdictional doctrine is the Rooker-Feldman doctrine, which forbids lower federal courts from reviewing state-court civil judgments. Colorado's unique procedure is Colorado Rule of Civil Procedure 120, which requires creditors pursuing nonjudicial foreclosure to first obtain a ruling by a Colorado trial court that there is a reasonable probability that a default exists. See generally Andrea Bloom, Foreclosure by Private Trustee: Now Is the Time for Colorado, 65 Denv. U. L. Rev. 41, 51, 56 (1988) (Bloom). As it turns out, we need not decide whether the Rooker-Feldman doctrine bars a federal-court challenge to a Rule 120 proceeding or ruling. We hold only that the federal-court suit before us is not barred by the Rooker-Feldman doctrine because none of the claims (at least none pursued on appeal) challenge the Rule 120 proceedings or seek to set aside the Rule 120 ruling. We leave for the district court on remand to consider what effect, if any, the Rule 120 ruling may have on this case under state-law doctrines of claim and issue preclusion.

         I. BACKGROUND

         Plaintiff Mary Mayotte was the debtor on a note held by U.S. Bank, NA. The note was secured by a deed of trust assigning a security interest in her home to the public trustee of Denver County and creating a power of sale in the trustee. Wells Fargo serviced the loan for U.S. Bank. One allegation is that Plaintiff contacted Wells Fargo to modify her loan, that Wells Fargo told her she needed to miss three payments to secure a modification, and that she eventually took this advice. Rather than granting her a modification, however, Wells Fargo placed her in default. She further alleges that the defendants fabricated documents, that their actions rendered her title unmarketable, that they have no ownership interest in her promissory note or property, that they have been unjustly enriched by accepting payments not due them, that they damaged her credit standing, and that they violated the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605 et seq. (RESPA) and the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.

         In late 2014, proceedings to sell the home to pay the note were commenced in Colorado state court under Rule 120. Before the sale, Plaintiff (proceeding pro se) filed suit in the United States District Court for the District of Colorado. In addition to seeking an injunction against the sale, she asked for damages resulting from the defendants' actions, an accounting for the money she had paid to the defendants, cancellation of the promissory note and deed of trust, and a declaration that the defendants have no interest in her home.

         The court took no action before the sale, so (still proceeding pro se) she amended her complaint and later filed a second amended complaint (the Complaint), which is now the operative complaint. The factual allegations of the Complaint were essentially the same as those in the original complaint, and most of the relief sought was also the same, except that she no longer sought an injunction to prevent the sale.[1]

         The district court dismissed Plaintiff's claim under RESPA for failure to state a claim; and, perhaps misled by unpublished decisions of this court, it dismissed the rest of the claims without prejudice under Rooker-Feldman on the ground that the claims "effectively ask[ed] the [c]ourt to unwind the results of the Rule 120 proceedings." Aplt. App. at 128. We affirm the district court's dismissal of Plaintiff's claim under RESPA because she offers no argument on the issue. See Franklin Savings Corp. v. United States, 180 F.3d 1124, 1128 n.6 (10th Cir. 1999) (failure of appellant's brief to develop argument on an issue waives that issue on appeal). Plaintiff does, however, challenge on appeal the dismissal under Rooker-Feldman. We reverse. Because of the complexity of the legal issues, we first discuss Colorado's nonjudicial-foreclosure regime and then the Rooker-Feldman doctrine.


         Nonjudicial foreclosures are available in 33 states and the District of Columbia. See Grant S. Nelson et al., Real Estate Finance Law § 7:20 n.1 (6th ed. 2014). Nonjudicial foreclosures generally allow a creditor to foreclose on a debtor's property more efficiently and less expensively than do judicial foreclosures. See id. § 7:20. Most nonjudicial-foreclosure regimes do not require hearings and have minimal notice requirements. See id.

         Colorado, however, has a unique process-requiring a public trustee and the involvement of a judge. See id. § 720 n.2; Bloom at 41, 43. Nonjudicial foreclosure is available only if the deed of trust, which authorizes sale of the property to pay a debt, names the county's public trustee as trustee. See Bloom at 45. And the beneficiary of the trust must obtain an order from a court under Colorado Rule 120 before selling the property. See id. at 46 & n.54. This requirement of judicial involvement was originally enacted to assist in the determination of the military status of debtors, in compliance with what is now called the Servicemembers Civil Relief Act, 50 U.S.C. § 3953, which protects service members from secured creditors. See generally Goodwin v. Dist. Court, 779 P.2d 837, 840-42 (Colo. 1989) (summarizing history of the rule and its construction by Colorado Supreme Court); Hal Tudor & Bruce Nelson, C.R.C.P. Rule 120: Understanding the Revision, 6 Colo. Law. 40, 41 (1977) (Tudor & Nelson). But in light of Sniadach v. Family Finance Corp. of Bay View, 395 U.S. 337, 342 (1969), which held that constitutional due process required a judicial hearing before prejudgment garnishment of wages, Rule 120 was expanded in 1976. It now requires judicial review of not just the debtor's military status but also of "the existence of the default . . . [and] the existence of other facts or circumstances authorizing, under the terms of the deed of trust described in the motion, the exercise of a power of sale contained therein." Tudor & Nelson at 46. Other issues that might affect the validity of the foreclosure, however, are not to be considered. See Plymouth Capital Co. v. Dist. Court of Elbery Cty., 955 P.2d 1014, 1017 (Colo. 1998) ("The Rule ...

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