2014 COA 120
Colo. Ct. App.2014Background
- Plaintiffs Mackall and Hutchins refinanced their home and executed a promissory note later assigned to MERS.
- Chase Home Finance served as loan servicer and pursued multiple C.R.C.P. 120 foreclosures, with orders to sell granted then dismissed without prejudice in 2010 and 2011.
- In 2012, MERS assigned the note to Chase, which obtained a C.R.C.P. 120 order authorizing sale after a hearing.
- In 2012 the plaintiffs filed for Chapter 7 (Chapter 18) bankruptcy; Chase filed a proof of claim which the bankruptcy court allowed, then the bankruptcy case was dismissed for failure to comply with disclosure requirements.
- In February 2018, plaintiffs filed a civil complaint asserting various claims against Chase and seeking to vacate the sale order; Chase moved to dismiss under Rule 12(b)(5).
- The district court dismissed claims, some on issue preclusion based on the 120 order and bankruptcy order, and others for failure to state a claim; plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| standing after dismissal | Mackall/Hutchins lacked disclosure but retain claims post-dismissal. | No standing since claims were within the estate and undisclosed. | Debtors have standing after dismissal. |
| Whether bankruptcy order survives dismissal before discharge | Order should be vacated upon dismissal; may not survive. | Order survives dismissal under §349(b)(2) and remains binding. | Bankruptcy court's order allowing proof of claim survives dismissal. |
| Preclusive effect of bankruptcy order in state court | Bankruptcy order should not have preclusion in state court. | Order has preclusive effect and bars related claims. | Bankruptcy order had preclusive effect in state court. |
Key Cases Cited
- In re Kane, 254 F.3d 325 (1st Cir.2001) (issue preclusion binds same parties if essential to judgment)
- Crawford v. 758 F.3d 473, 758 F.3d 473 (2d Cir.2014) (349(b)(8) revesting; §554(d) not overriding §349)
- Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497 (Sup. Ct.2001) (state courts apply federal rules to preclusion in federal-question cases)
- Heck v. Humphrey, 512 U.S. 477 (Sup. Ct.1994) (federal rules govern preclusion of federal judgments)
- Barrow v. D.A.N. Joint Venture Props. of N. Carolina, LLC, 755 S.E.2d 641 (N.C.App.2014) (federal common law governs preclusive effect of federal judgments)