2014 COA 79
Colo. Ct. App.2014Background
- Owner (Raymond L. Fiseus) discovered in 2011–2012 that his wife had recorded powers of attorney and two deeds of trust (2008 and 2009) on his separately titled home; owner never authorized the encumbrances and was unaware of the loans.
- Wife signed purported powers of attorney using owner’s signature and had their daughter notarize those signatures; wife handled family finances and concealed loan documents.
- Banks (Liberty Mortgage, BB&T, and Branch Banking & Trust) held the 2009 deed of trust (Branch) and defended its validity; banks filed counterclaims for foreclosure, unjust enrichment, and an equitable lien and a third-party theft claim against wife.
- Owner filed a spurious lien petition under Colo. Rev. Stat. §§ 38-85-201 to -204 and C.R.C.P. 105.1 seeking expedited relief; trial court found the 2009 deed of trust spurious, ordered its release, and awarded owner attorney fees and costs.
- Trial court dismissed the banks’ counterclaims and third-party claim from the spurious-lien proceeding, allocated burden of proof to banks (court’s allocation deemed harmless), rejected ratification and holder-in-due-course defenses, and awarded appellate fees on remand.
Issues
| Issue | Plaintiff's Argument (Fiseus) | Defendant's Argument (Banks) | Held |
|---|---|---|---|
| Statute of limitations — accrual date | Action timely; accrual when owner actually discovered the deed (Dec 2011–Jan 2012) | Recording (Apr 15, 2009) gave constructive notice and started the two‑year limitations period | Accrual was not automatic on recording; trial court’s finding that accrual no earlier than Apr 2010 (and actual discovery in 2011–2012) was upheld; petition timely |
| Counterclaims/third‑party claims in spurious‑lien proceeding | N/A (owner sought expedited proceeding) | Banks argued they could assert foreclosure, unjust enrichment, equitable lien, and third‑party theft within the spurious proceeding | C.R.C.P. 105.1 and § 38‑85‑204’s expedited scheme controls; counterclaims and third‑party claims stricken without prejudice; banks may pursue them in separate actions |
| Burden of proof at show‑cause hearing | Banks should bear burden to justify lien invalidity (owner framed issues) | Banks disputed burden placement | Even if court erred in allocation, error was harmless because banks presented full case and suffered no prejudice; judgment stands |
| Ratification by tax returns | Owner’s claiming of mortgage interest deductions on returns amounted to ratification or failure to renounce | Owner lacked knowledge of material facts and therefore did not ratify; no duty to repudiate deductions shown | Banks failed to prove owner had knowledge of all material facts; no ratification |
| Holder‑in‑due‑course defense | Banks contended Branch was a holder in due course and took free of forgery defenses | Banks argued the note+deed operate together to create negotiable status | Deed of trust is a security instrument, not a negotiable instrument; Branch not a holder in due course; defense unavailable |
| Attorney fees under spurious‑lien statute | Owner requested mandatory fees | Banks argued they had rational grounds and no misconduct so fees should not be imposed | § 38‑85‑204(2) mandates awarding costs and reasonable attorney fees to prevailing petitioner; trial court’s fee award affirmed and appellate fees remanded to trial court for determination |
Key Cases Cited
- Upson v. Goodland State Bank & Trust Co., 823 P.2d 704 (Colo. 1992) (recording statutes should not operate to prejudice prior‑in‑time innocent parties)
- Westar Holdings P’ship v. Reece, 991 P.2d 328 (Colo. App. 1999) (discussing evidentiary presentation in Rule 105.1 show‑cause hearings)
- Deutsche Bank Tr. Co. Americas v. Samora, 321 P.3d 590 (Colo. App. 2013) (spurious lien accrual and limitations discussion)
- Georg v. Metro Fixtures Contractors, Inc., 178 P.3d 1209 (Colo. 2008) (holder in due course elements under the UCC)
- Haberl v. Bigelow, 855 P.2d 1368 (Colo. 1993) (note retains negotiable character when secured, but security instrument is not itself a negotiable instrument)