6th Edited Appellate Brief

JURISDICTION STATEMENT AND OPINIONS BELOW The District Court has federal question jurisdiction over Plaintiffs Mason
L. Ramsey & Judith Mae Neville's Constitutional claims pursuant to 28 U.S.C. 1331 by virtue of the National Bank Act(NBA) and the 5th Amendment. And regulations , under Title 12, Chapter 2NATIONAL BANKS , 24 SEVENTH. This court of appeals has jurisdiction under 28 U.S.C. 1291. The district court judgments under review herein was entered September 29th, 2011. (See APPENDIX, PT B and A) The judgments are based upon the district court order dated September 28th, 2011 which was based on the Report and Recommendation of the magistrate (APPENDIX, PT C) and the order pursuant to the motion to Alter and Amend dated______, 2011 dismissing Plaintiffs First Amended Complaint for failure to state a claim under 12(b)(6) without allowing plaintiffs to amend to correct any deficiencies. On October 11, 2011 plaintiffs filed a rule 59e motion to Amend and alter the judgment. (APPENDIX, PT A) On __________, 2011 the Judge entered the final appealable order on the Rule 59e motion. The plaintiffs filed their Notice of Appeal on _____,2011. This appeal is timely pursuant to Fed. R. App. P. 4(a) (1). the opinions and orders are included in the separate appendix. PART(PT) A-C CONSTITUTIONAL PROVISIONS AND STATUTES INVOLVED The text of the following statutes relevant to the determination of the present case are set forth in the unattached appendix: 5th Amendment, 14th Amendment, National Bank Act, Home Owner Loan Act, Title 12 Chapter 2-Banks And Banking , title 12,24 SEVENTH included in the separate appendix. STANDARDS OF REVIEW A ruling on a motion to dismiss for failure to state a claim under 12(b)(6) presents a question of law that the 10th Circuit reviews de novo. Lambert v. Ritter Inaugural Committee, Inc., 218 P.3d 1115, 1119 (Colo. App. 2009). The Court applies the same standards as the trial court, considering only those matters the complaint raised and
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accepting all allegations of material fact as true, viewing the allegations in the light most favorable to the plaintiff. Id. The Supreme Court has further held that a motion to dismiss under Rule 12(b)(6) will only be granted if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief (See Gibson v. United States, 781 F.2d 1334, 1337 (9th Cir. 1986) The court must accept as true the plaintiff's well-pleaded factual allegations and all reasonable inferences must be indulged in favor of the plaintiff. Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir.1984). The plaintiff need not necessarily plead a particular fact if it can be reasonably inferred from facts alleged. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) In addition Federal Rule of Civil Procedure 8(a)(2) states that a "pleading which sets forth a claim for relief shall contain a short and plain statement of the claim showing that the pleader is entitled to relief." (See Fed. R. Civ. P. 8(a).) The Supreme Court has stated that" the Rule means what it says." (See Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163, 168 (1993)) The court should apply the substantial evidence standard to show whether plaintiffs have submitted substantial evidence in the form of Supreme Court decisions in which a reasonable mind might accept that national banks are subject to individual rights guaranteed against the government by the Constitution. Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Richardson v. Perales, 402 U.S. 389, 401 (1971) Judge Daniels and the magistrate abdicated their duty to draw the reasonable inferences in favor of plaintiffs from the facts and the Supreme Court decisions relied by plaintiffs as was required by the standard of review. The facts presented in Plaintiffs complaint are sufficient to put the defendants on notice of the claims for relief being alleged, but they also demonstrate that Plaintiffs can support their claims with sufficient facts and Supreme Court decisions that this Court should not affirm the courts judgment of dismissal for failure to state a claim. In GEORGE MICHAEL CURLEY v ROB PERRY ET AL, 247 f.3D 1278(10th
Cir. 2001) the court said: We reiterate that the district court should allow a plaintiff an opportunity to cure technical errors or otherwise amend the complaint when doing so would yield a meritorious claim. Cf. Denton v. Hernandez, 504 U.S. 25, 34 (1992) The Court in Hernandez ID at p. 34 said: it would be appropriate for the Court of Appeals to consider, among other things, whether the plaintiff was proceeding pro se, see Haines v. Kerner, 404 U. S. 519, 520-521 (1972); whether the court inappropriately resolved genuine issues of disputed fact, see supra, at 32-33; whether the court applied erroneous legal conclusions, see Boag, 454 U. S., at 365, n.; whether the court has provided a statement explaining the dismissal that facilitates "intelligent appellate review," ibid.; and whether the dismissal was with or without prejudice. ISSUES PRESENTED FOR REVIEW I. Whether a Power of Sale foreclosure provision in a Trust Deed MUST be authorized as an incidental power of the express lending functions granted by the National Bank Act to national banks. Whether CitiBank, as a National Bank, is a public corporation and federal instrumentality subject to the 5th Amendment. Whether a Rule 120 foreclosure hearing MUST employ a standard of proof to qualify the lenders standing as the real party in interest by clear and convincing evidence to satisfy the protection of a fundamental property right under the due process clause of the 14th Amendment .
II. III.
IV . Whether a Rule 120 hearing violates the 14th Amendment Due Process and Equal Protection Clause because it is a summary proceeding with no right to appeal Nor a right to a jury trial. STATEMENT OF THE CASE Plaintiffs brought this action after being subjected to the Colorado Rule 120 foreclosure hearing upon default of their mortgage payments. The foreclosing lender was CitiMortgage an operating subsidiary and instrumentality of CitiBank N.A., a national public bank corporation created under the authority of the National Bank Act(NBA) for
public and national purposes and regulated and controlled by the Office of the Comptroller of the Currency. The foreclosing lender CitiMortgage was not the original lender which was Decision One, thus raising an issue of proof to foreclose as the real party in interest. The Rule 120 hearing is a non-judicial summary proceeding limited in scope with no right to appeal nor a jury trial, and requiring little proof by the lender or its attorney that the lender is the real party in interest. A copy of the original Deed of Trust with their name on it with a Certificate of Qualified Holder, a form generated by the Attorney attesting (not under penalty of perjury) to the fact that the lender is the real party in interest is all that is required by the Public Trustee and the Judge. The court does not require a notarized assignment from one lender to another. The facts thus raise the issues of the procedural due process under the 14th Amendment requirements in a Rule 120 hearing which was brought to the federal district court on federal question jurisdiction (28 U.S. 1331). On 10/29/2010, plaintiffs filed their complaint which was amended on 01/21/2011 naming only CitiBank and CitiMortgage who filed a joint motion to dismiss. Plaintiffs filed a Response to the Motion to dismiss on 01/10/2011. Magistrate Craig B. Shaffer rendered his Report and Recommendation on 07/28/2011 to dismiss with prejudice plaintiffs' amended complaint for failure to state a claim from a 12(b)(6) motion to dismiss without allowing leave to amend as requested, although Judge Daniels did not so state dismissal with prejudice in his order. On 08/15/2011 plaintiffs filed their amended Objection to the Report and Recommendation of the magistrate, and on 09/01/2011 defendants filed their Response. STATEMENT OF FACTS On November 18, 2005 Plaintiffs executed a note and Deed of Trust to Decision One Mortgage which was recorded on 12/09/2005 with the County Clerk. On August 05, 2009 Defendant CitiMortgage Case filed in Arapahoe County Court 2009 CV204434 (Rule 120) followed by plaintiffs response on 10/13/2009. On 10/13/2009 in Rule 120 Court Authorized the Sale of plaintiffs property and on 10/16/2009 plaintiffs filed a Counter
Claim --# 2009CV204434 (Rule 120) which is not allowed. On 12/ 2009 CitiMortgage entered a HAMP MODIFICATION --- accepting two payments and returning a third in February 2010 - saying that the MORTGAGE was turned over to SPECIALIZE LOAN SERVICING. On 03/09/ 2010 plaintiffs Mason & Judi sent QWR (Qualified written request asking for debt verification) Nothing was ever returned confirming the debt. On 07/ 29/2010 Plaintiffs received a letter received from Aronowitz & Mecklenburg sent copy of Deed of Trust with CitiFinancials name. On October 13, 2010 plaintiffs were foreclosed and on October 28, 2010 Aronowitz filed for Writs of possession and restitution and moved by order before 11/30/2010 . On 10/29/2010 plaintiffs filed the Federal Court Case. Throughout the Rule 120 hearing plaintiffs objected to the sketchy proof that CitiMortgage offered to show standing as the real party in interest. SUMMARY OF ARGUMENT CitiBank and CitiMortgage , its operating subsidiary and instrumentality, are federal instrumentalities subject to the Due Process Clause of the 5th Amendment. CitiBank, as a National Bank, is a public corporation NOT private corporation because national banks were created for public and national purposes. Further, the right to put a power of sale provision in a Deed of Trust which leads to no hearing as in California, or to a hearing that provides inadequate due process such as a Rule 120 foreclosure hearing in Colorado, must be authorized as an incidental power of the expressed lending powers granted by the National Bank Act; but, it must be a right that Congress can exercise itself. The Rule 120 foreclosure hearing also denies plaintiffs due process and equal protection of the laws because there is no right to appeal and no jury trial made available even though, section 23 of the Colorado Constitution holds a jury trial as a right. Also the Rule 120 foreclosure hearing involves a property interest (in this case plaintiffs home), the lender has the burden of submitting by clear and convincing evidence that it has standing to foreclose as the real part in interest to satisfy the requirements of the 14th Amendment. Following the unconstitutional foreclosure, evictions must be considered as an abuse of process and by definition a denial of due process actionable under 42 US 1983.
LAW AND ARGUMENT A. PROCEDURAL HISTORY AND ASSIGNMENT OF ERRORS Judge Wiley Y. Daniels affirmed the magistrates Report and Recommendation and dismissed plaintiffs complaint for failure to state a claim under 12(b)(6), and in so doing committed the same errors of law by evading the inferences that should have been drawn from facts and the Supreme Court decisions as required under the standard of review. In reviewing a dismissal for failure to state a claim(12b(6), the court must accept as true the plaintiff's well-pleaded factual allegations and all reasonable inferences must be indulged in favor of the plaintiff, Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir.1984). In LAWRENCE GOLAN, et al., vs JOHN ASHCROFT, Civil Action No. 01-B1854 in the District Court of Colorado 10th Circuit, the court said : The governments motion to dismiss must, therefore, be rejected. Contrary to the governments argument, the issue is not whether plaintiffs Complaint proves that a constitutional violation has occurred on the merits. That issue must wait for trial. The only issue on this motion to dismiss is whether the Complaint states a colorable legal claim that Congresss grant and exercise of power is subject to constitutional review. It clearly does. A colorable claim is simply one that is not wholly insubstantial or frivolous. (cite) Plaintiffs have alleged more than sufficient legal grounds and allegations of harm to satisfy the liberal standards of pleading. (cite) As in the Golan case, plaintiffs have a colorable claim which is not wholly insubstantial or frivolous. Bernstein v. U.S. Dept of State, 922 F. Supp. 1426, 1433 (N.D. Cal. 1996) Plaintiffs alleged the following facts which is supported with Supreme Court citations and ample appellate citations which plaintiffs rely on, and which the court can draw the reasonable inference that defendants are governmental bodies for the purpose of individual rights guaranteed against the government by the Constitution as plaintiffs have alleged in the complaint.(APPENDIX, AMENDED COMPLAINT, PT 1): a corporation is an agency of the Government for purposes of the constitutional obligations of Government rather than the "privileges of the government," when the State has specifically created that corporation for the
14.
furtherance of governmental objectives, and not merely holds some shares but controls the operation of the corporation through its appointees. Lebron v National Railroad Passenger Corporation. 513 U.S. pgs 374, 375. 20. National Banks are federally chartered bank corporations and were created under an Act of Congress [The National Bank Act(NBA)]. 21. National Banks are public not private corporations because they were created for public and national purposes. Easton v. Iowa, 188 U.S.220 (1903). 22. National Banks are federal instrumentalities of the federal government. Easton v. Iowa, 188 U.S.220 (1903). 23. National Bank operations are regulated and controlled by the government[Easton v. Iowa, 188 U.S.220 (1903)] through the Office of The Comptroller of Currency 24. The acts of federally chartered corporations created for public and national purposes must be authorized by a law of the United States. Osborn v Bank of United States, 22 U.S.738 (1824) 25. The acts of National Banks must be authorized by its respective act of creation---The National Bank Act. 27. The power of sale provision in a contract which does not allow a hearing is not a right or power that Congress can delegate or authorize because it is not a power that Congress can exercise pursuant to the 5th Amendment. United States v Grimaud, 220 U.S. 506 (1911). 28. When the Government creates a corporation for which it lawfully acts, the activities of the corporation are governmental. Federal Land Bank v. Bismarck Co. of St. Paul, 314 U. S. 95 (1941). 29. The lending functions of CITIBANK & CITIMORTGAGE are governmental and that foreclosures are part of the general lending functions because they are constitutionally created just as in Federal Land Bank v. Bismarck Co. of St. Paul, 314 U. S. 95 (1941). 30. Plaintiff alleges that with respect to federally chartered corporations, the manner of foreclosure must be done under federal law; not state law and, federal law cannot authorize non judicial foreclosures because it is repugnant to the 5th Amendment to the Constitution. 31. The contract provisions for repossession by the seller on the buyer's default did not amount to a waiver of the appellants' procedural due process rights, those provisions neither dispensing with a prior hearing nor indicating the procedure by which repossession was to be achieved. Fuentes v. Shevin, 407 U.S. 67 32. Plaintiff submits that the use of non-judicial foreclosures by power of sale provisions violate the 5th Amendment when the remedy is sought by federally chartered corporations like national banks like CITIBANK and its subsidiary CITIMORTGAGE.
33. The Colorado Unlawful detainer Action ( 13-40-101 et seq.) is unconstitutional as applied. It must be viewed against the backdrop of the nonjudicial foreclosure which preceded the unlawful detainer. 34. As applied, it is a derivative action to complete the deprivation of property without procedural due process begun by the power of sale foreclosure which is a violation of the 5th Amendment (Bivens claim). 35. It is also a malicious abuse of process because the Colorado Unlawful Detainer Action was never meant to effectuate and complete such a deprivation of due process that was begun by the power of sale foreclosure. Though two separate events, it is one transaction. If the power of sale foreclosure is a Bivens style 5th amendment violation, then the eviction that followed must be a malicious abuse of process and the final step under color of state law in furtherance of that deprivation by CITIBANK and its subsidiary CITIMORTGAGE and by definition a denial of procedural due process. Jennings vs Shuman, 567 F.2d 1213 (3rd). In Judge Wiley Y. Daniels opinion , APPENDIX, PT B, at p. 4,5 the judge states:
Also cited by Plaintiffs is First Nat. Bank in St. Louis v. State of Missouri, 263
U.S. 640 (1924); Easton v. State of Iowa, 188 U.S. 220 (1903) and Bank of America v. City and County of San Francisco, 309 F.3d 551, 55 (9th Cir. 2009). Those cases recognized Case 1:10-cv-02653-WYD -CBS Document 45 Filed 09/28/11 USDC Colorado Page 5 of 10 -6- that Congress has created an extensive federal statutory and regulatory scheme as to national banks, and held that a state may not subject a national bank to state laws that interfere or are contrary to federal laws. Again, these are inapposite. None of these cases or other authority cited by Plaintiffs addressed or held that national banks are governmental bodies for purposes of individual rights under the Constitution.[B, U ] Judge Daniels focused narrowly on the fact that none of the Supreme Court decisions cited, specifically held that national banks are governmental bodies for the purposes of individual rights under the Constitution. As a trier of fact, Judge Daniels drew no inferences from the allegations of fact supported by these Supreme Court decisions in the light most favorable to plaintiffs before dismissing plaintiffs complaint. In a sense, the Judge abdicated his duty. Yet, in Lebron, also cited, the court held Amtrak is an agency or instrumentality of the United States for the purpose of individual rights guaranteed against the Government by the Constitution[B,U] in spite of the fact that the authorizing statute stated that Amtrak was not an agency or instrumentality of the United States and on which
the lower courts concluded that Amtrak was not a federal instrumentality. In like manner a reasonable inference that should be inferred is that CitiBank and CitiMortgage, which are instrumentalities of the United States, should be considered governmental bodies for the purpose of individual rights guaranteed against the government by Constitution. In Lebron vs. National Passenger Car Railway, 513 U.S. 374, 375, it was the 1st Amendment. In this case the 5th Amendment (Bivens claim). The fact that, as Judge Daniels held, the Supreme Court has not Specifically held that national banks as Governmental bodies for purposes of individual rights under the Constitution only shows that the Supreme Court has not specifically overtly made that decision and does not preclude him from making the reasonable inference of that conclusion. An inference is a deduction of fact that may be logically and reasonably drawn from another fact or group of facts found or otherwise established in the action. Blacks Law Dictionary. The Substantial evidence standard should be applied which is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Richardson v. Perales, 402 U.S. 389, 401 (1971) Plaintiffs have submitted facts and substantial evidence in the form of relevant Supreme Court decisions that a reasonable mind could accept that CitiBank, as a national bank, is a federal actor subject to the 5th Amendment Due Process Clause. The Supreme Court decisions cited are the foundation for the inference that national banks violate the 5th Amendment when exercising power of sale foreclosures which lead to a denial of due process. Therefore, it is not necessary that the Supreme Court specifically hold that national banks are Governmental bodies for purposes of individual rights under the Constitution. The Supreme Court has provided guidance for that conclusion as this court will find in the ensuing analysis. In like manner the due process issue and the Equal Protection issue are similarly presented and discussed further. Plaintiffs submit that CitiBank is a public corporation NOT private corporation as held by the Supreme court in Easton vs. Iowa, 188 U.S.220 (1903) citing Osborn v Bank of United States, 22 U.S.738 (1824 , and its operating subsidiary CitiMortgage are federal instrumentalities subject to the due process clause of the 5th Amendments. Plaintiffs submit
that the Rule 120 foreclosure hearing denied plaintiffs due process rights under the 14th Amendment as set forth in the arguments. At p. 11, (APPENDIX, PT C), magistrate Craig B Shaffer states: Plaintiffs maintain that the manner of foreclosure by a federal chartered corporation must be done under federal law.***( their Bivens claim finds no support under prevailing law. Plaintiffs first claim is premised, in part, on the belief that some unspecified federal law establishes a foreclosure procedure that overrides state law. To the contrary, [I]n the absence of any controlling federal law, property and interests in property are creatures of state law. Barnhill v. Johnson, 503 U.S. 393, 398 (1992). Cf. United States v. Bissell, 504 F.3d 956, 968 (observing that [t]rust deeds are generally creatures of state law). At p.1 of the report(APPENDIX C), the magistrate took judicial notice of the defendant's trust deed which stated that both state law and federal law is applicable to the parties rights and obligations which is central to plaintiffs' argument in this case: The Deed of Trust states that the parties rights and obligations shall be governed by federal law and the law of the jurisdiction in which the Property is located. See Exhibit 2 (doc.#32-2), at p. 14 of 60, attached to Defendants Motion to Dismiss Plaintiffs First Amended Complaint.[B ] The controlling federal law over the parties rights and obligations in the Deed of Trust would be the National Bank Act and the 5th Amendment. The parties referred to in the Deed of Trust would be the defendants, CitiBank N.A. and CitiMortgage which implicates the government through the National Bank Act; and Plaintiffs, Mason L Ramsey and Judith Mae Neville. The rights referred to in the Deed of Trust is the defendants' rights as authorized as an incidental power of the expressed lending powers of a bank pursuant to the powers granted through the National Bank Act, such as the right to put a Power of Sale provision which leads to a 5th Amendment denial of procedural due process. It also involves the right of plaintiffs NOT to be deprived of property without procedural due process under the 14th amendment. The obligations implicitly referred to in the Trust Deed includes the obligations of the government through it instrumentalities,
CitiBank and CitiMortgage, not to evade its most solemn obligations under the Constitution. Lebron vs. National Passenger Car Railway, 513 U.S. 374, 375 Plaintiffs have never denied that property, and interest in property and trust deeds are creatures of state law, but national bank corporations like CitiBank N.A., and its instrumentality, CitiMortgage, are creatures of federal law. It is interesting to note that prior to the Civil War the term property was applied to blacks to deny them the constitutional protections afforded to a person until men and women of conscience said enough, they are not property . Because these men and women said enough, this class of persons has become doctors, lawyers, and even judges. Both Judge Daniels and the magistrate arbitrarily designating National Banks as private corporations' denied the Constitutional protections to homeowners when the Supreme Court in Easton citing Osborn, has held that national banks are public corporations. While a state may establish the manner of foreclosures private citizens and private corporations may undertake, the pivotal issue in this case is the nature of the banks as public corporations acting as federal instrumentalities which dictates the manner of foreclosure from nonjudicial to judicial foreclosures. On that premise rest plaintiffs' claims that non-judicial foreclosures violate the 5th amendment when exercised by public corporations created for public and national purposes. The magistrates holding that banks were private corporations and a not federal instrumentalities subject to due process flies in the face of the Supreme Court decisions cited in plaintiff's argument and posed in plaintiff's complaint. Power of Sale foreclosures deny due process which either do not allow a hearing such as in California, or subjects a homeowner to a procedure that does not allow a full and fair hearing with no right to appeal and a willingness on the part of the Trustee and the Judge to accept from the lender less than certifiable proof that the lender is the real party in interest. As Justice Scalia in Lebron ID, at p. 374 said: Amtrak is an agency or instrumentality of the United States for the purpose of individual rights guaranteed against the Government by the Constitution. *** A contrary holding would allow the government to evade its most solemn constitutional obligations by simply resorting to the corporate form.[B,U ]
Like Amtrak, CitiBank as a national bank is a public not private corporation because it is a federal instrumentality, created for public and national purposes. Easton citing Osborn . The decision by Justice Scalia took into account the fact that the authorizing statute specifically stated that Amtrak was NOT an agency or instrumentality of the Government. National banks cannot deny that they are federal instrumentalities. The magistrate says that [F]oreclosure proceedings are generally handled by state courts, not federal courts. Plaintiffs are not advocating that federal courts be used as foreclosure venues. Foreclosures should be in state court where a full and fair hearing and a right to be able to rebut dubious proof given by a lender that the party seeking foreclosure is the real party in interest which is NOT the case in a rule 120 hearing. Because a 14th Amendment protected interest is involvedproperty, the standard of proof requires a heightened burden of proof--clear and convincing evidence and is discussed more fully in sections III & IV. At the bottom of p.11 of the magistrates report (APPENDIX, PT C), the magistrate refers to Edward v. Dubrish, 2009 Wl 1683989, at *11. Colo. 2009) and states Foreclosure is a contractual matter, governed by state law. But when it comes to national banks , like CitiBank, the Supreme Court in Osborn, at pgs 823,824 said: The case of the Bank is, we think, a very strong case of this description. The charter of incorporation not only creates it, but gives it every faculty which it possesses. The power to acquire rights of any description, to transact business of any description, to make contracts of any description, to sue on those contracts, is given and measured by its charter, and that charter is a law of the United States. This being can acquire no right, make no contract, bring no suit, which is not authorized by a law of the United States. It is not only itself the mere creature of a law, but all its actions and all its rights are dependent on the same law*** In Runyan v. Lessee of Coster, 39 U .S. 122 , p. 129 (1840) the court Said: ***[T]hat a corporation possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence. That corporations created by statute must depend for their powers and the mode of exercising them, upon the true construction of the statute.
***he corporation must show that the law of its creation gave it authority to make such contracts[B,U added] In Hudson County Water Co. v. McCarter, 209 U. S. 349 (1908) the court said: One whose rights, such as they are, are subject to state restriction cannot remove them from the power of the state by making a contract about them. But the contract, the execution of which is sought to be prevented here was illegal when it was made. The contract will carry with it the infirmity of the subject matter In that case it was a state statute. In this case it is the 5th and 14th amendments. The constraints of the government pass on to CitiBank, and CitiMortgage, and cannot be avoided by putting a power of sale clause in a contract to put them beyond the reach of the 5th Amendment. As Justice Scalia said in Lebron at p. 375, ...It would allow the government to evade its most solemn obligations by simply resorting to the corporate form. First National Bank v. Missouri, 263.S. 640 (1924)pgs 666,667 the court said: National banks, like other corporations, have such powers as their creator confers on them, expressly or by fair implication, and none other. Thomas v. West Jersey R. Co., 101 U. S. 71, 101 U. S. 82; Logan County National Bank v. Townsend, 139 U. S. 67, 139 U. S. 73. Powers not so conferred are in effect denied; a prohibition is implied from the failure to grant them. First National. Bank v. National Exchange Bank, 92 U. S. 122, 92 U. S. 128; California National Bank v. Kennedy, 167 U. S. 362, 167 U. S. 367. In short, all the powers of a national bank, like its right to exist at all, have their source in the laws of the United States. [B, U ] At p. 14, APPENDIX, PT C, the magistrate said: Plaintiffs contend, however, that they were denied due process because the Rule 120 Proceeding did not provide a full and fair hearing, nor [did] it provide appellate review. In support of this argument, Plaintiffs rely on Lindsey v. Normet, 405 U.S. 56 (1972)*** Like Rule 120 of the Colorado Rules of Civil Procedure, the Oregon statute did not prevent the evicted tenant from bringing his own action against the landlord or seeking affirmative relief in a subsequent lawsuit. Id. at 66. But, the rule 120 is far from being like the FED action in Oregon. While the Oregon
FED actions and the Colorado FED action have the right to jury trial and a right to appeal, the rule 120 proceeding does not. The rule 120 hearing allows the lender to submit less than certifiable proof to show that it is the real party in interest. An issue which draws into question the standard of proof required under the 14th Amendment when a fundamental property interest is involved. And While one has a right to file a separate action in a court of competent jurisdiction which is also allowed in FED actions, you must post a bond, or cash as required by the judge. A bond that no bond holder would post and an economy where no one has any money to pay cash in order to stay. One must move out before he can vindicate his rights. FED actions have a right to a jury trial as well as a right to appeal. Why do FED actions have more rights than an owner who is being foreclosed? This draws into question the Equal Protection of the Law. The substantive due process clause guarantees the fairness of laws, and that laws will be reasonable and not arbitrary. A violation of a fundamental right is subject to strict scrutiny. The government has the burden of showing that the action is necessary to promote a compelling or overriding state interest. If no fundamental right is involved, the rational basis test is used for economic liberties. But a fundament right is involved---property (plaintiffs home)-- which a Rule 120 procedures unnecessarily burdens plaintiffs property rights. Neither the defendants nor the Government can point to any compelling state interest because the only thing that activates a rule 120 hearing is the power of sale provision. Absent the power of sale provision, defendants would be required to take plaintiffs through a judicial foreclosure. If it were a compelling state interest, the state would have required all foreclosures to be processed through a Rule 120 hearing. There is a failure of Due Process in foreclosure proceedings. The rush to process foreclosures means that the required affidavits under oath were not actually attested, and rushed through courts with little scrutiny. Plaintiffs protested vigorously in the Rule 120 hearing the proof submitted by the CitiMortgage that they were the real party in interest. In many cases, the debt is owed to the lender who will eventually get the collateral. Because the money is clearly owed by the borrower, the relaxed attitude in getting
documents properly notarized runs afoul of due process. Ignoring procedural requirements risks infringing people's liberties when it comes to collections activities and bankruptcy filings, and brings turmoil to the economy. Although due process tolerates variances in procedure "appropriate to the nature of the case," Mullane v. Central Hanover Trust Co., 339 U.S.06, 313 (1950) it is nonetheless possible to identify its core goals and requirements. First, "Procedural due process rules are meant to protect persons not from the deprivation, but from the mistaken or unjustified deprivation of life, liberty, or property."Carey v. Piphus, 435 U.S.47, 259(1978). Thus, the required elements of due process are those that "minimize substantively unfair or mistaken deprivations" by enabling persons to contest the basis upon which a State proposes to deprive them of protected interests.Fuentes v. Shevin, 407 U.S. 67, 81 (1972) The core of these requirements is notice and a hearing before an impartial tribunal. Due process may require an opportunity for confrontation and cross-examination, and for discovery. Thus, the required elements of due process are those that "minimize substantively unfair or mistaken deprivations" by enabling persons to contest the basis upon which a State proposes to deprive them of protected interests. Fuentes ID. At pg 81 "Procedural due process rules are shaped by the risk of error inherent in the truth-finding process as applied to the generality of cases." Mathews v. Eldridge, 424 U.S. 319. Judge Daniels and the magistrate avoided applying the facts to plaintiffs arguments supported by the Supreme Court decisions cited. I A Power of Sale foreclosure provision Must be authorized as An incidental power of the express lending functions granted by the National Bank Act to national banks. INTRODUCTION AND BACKGROUND The history of national banking legislation has been "one of interpreting grants of both enumerated and incidental `powers' to national banks and federal savings associations [which include savings banks]. Bank of America et al v City of San Francisco et al 309 F.3d 551 (9 Circuit(2002) As the court stated:
Congress has legislated in the field of banking from the days of M'Culloch v. Maryland, 17 U.S. 316, 325-26 (1819), *** Indeed, since the passage of the National Bank Act in 1864, the federal presence in banking has been significant. (cite). Similarly, since the passage of the HOLA in 1933, OTS regulations have governed the "powers and operations of every federal savings and loan association from its cradle to its corporate grave." de la Cuesta, 458 U.S. at 145, 102 S.Ct. 3014 [B,I] Several Supreme Court cases have held that all of the powers of national banks are derived from the Laws of United States; and national banks are federal instrumentalities created for national and public purposes. Osborn v Bank of United States, 22 U.S.738 (1824) On that premise the question presented is whether a law of the United States, like the National Bank Act, can authorize a power of sale foreclosure to a national bank like CitiBank, a federal instrumentality and public bank corporation, acting through its subsidiary CitiMortgage without violating the 5th Amendment. Plaintiffs submit that in this case defendants violated both the 5th Amendment (Bivens claim) under color of federal law and the 14th Amendment by using power of sale foreclosure under color of state law The Colorado Foreclosure Law by requiring a Public Trustee, an agent of the State to subject a homeowner to a rule 120 hearing which is limited in scope without a right to appeal and sketchy requirement demanded of the lender to show standing , as well as an eviction under the 14th Amendment , both under color of state law, actionable under 42 US 1983. The Supreme Court has made numerous decisions relevant in determining whether non-judicial procedures were applicable given the nature of these corporations as federal instrumentalities. Though several appellate courts have had occasion to determine the constitutionality of non-judicial procedures in the form of a power sale provisions, none have vetted the corporations seeking this remedy in light of relevant Supreme Court decisions. The issue goes to the core of the nature of federally chartered corporations created for public and national purposes. This issue deals with the right of these corporations to put such a provision in a contract as a power of sale provision, and rests on whether foreclosure is a governmental act or a proprietary act affecting millions. In First National Bank of Eastern Arkansas v. Taylor ,907 F.2d 775 the Arkansas
Insurance Department notified FNB that debt cancellation contracts were the equivalent of credit life insurance policies, and thus subject to state insurance laws. The Commissioner initially urged that such a prohibition does not conflict with federal law because the National Bank Act does not grant national banks the power to offer debt cancellation contracts. In addition to enumerating specific powers, including the lending of money, the National Bank Act grants national banks the power to exercise "all such incidental powers as shall be necessary to carry on the business of banking." 12 U.S.C. Sec. 24 (Seventh). The Comptroller, through 12 C.R. Sec.7.7495, interpreted "incidental powers" to include debt cancellation contracts. The court in Taylor said: the district court found, the debt cancellation contracts were directly related to FNB's expressly-authorized lending power. ***, [W]e deem the Comptroller's authorization of this activity as reasonable and within the incidental powers granted by the National Bank Act.[U and B ] This court is asked, Is a power of sale foreclosure provision which leads to either no hearing as in California, or to a less than full and fair hearing without a right to appeal or jury and sketchy proof provided by the lender or his attorney that the lender is the real party in interest within the incidental powers of the express lending powers granted by the National Bank Act to national banks? Thus, the self-evident inference drawn from the opinion in Taylor and the cases cited shows us that the National Bank Act MUST authorize national banks, either expressly or as incidental to their grant of authority over contracts with power of sale provisions, but only powers that Congress can exercise itself. II CitiBank, as a national bank, is a public corporation & federal instrumentality subject to the 5th Amendment Judge Daniels erred in dismissing plaintiffs complaint on the magistrates Report and Recommendation. Both the Judge and the magistrate failed to apply the requirements of the standard of review which requires all reasonable inferences must be indulged in
favor of the plaintiff. Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir.1984) Both the magistrate and the judge misapprehended the Supreme Court citations relied by plaintiffs by holding that the Supreme Court decisions did not specifically hold that national banks are governmental bodies for the purpose of individual rights guaranteed against the government, and that national banks are private corporations not subject to a Bivens claim.( APPENDIX, PT B, at p. 4,5) Upon further scrutiny, those assertions will be found to be untenable. Judge Daniels should have decided the issue by applying the facts and Supreme Court decisions under the substantial evidence standard. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Richardson v. Perales, 402 U.S. 389, 401 (1971) Thus, a reasonable mind would have accepted the facts and these Supreme Court decisions were adequate to support the conclusion that a national bank, like CitiBank, is a governmental body for the purpose of individual rights guaranteed against the government by the Constitution. In Lebron, the court was faced with same decision that Judge Daniels faced, but the court did not evade plaintiffs arguments and facts that Amtrak was a governmental body as did Judge Daniels and the magistrate towards the same argument and facts against CitiBank. The Court in Lebron, at pgs 378-380 said: The United States Court of Appeals for the Second Circuit reversed. 12 F.3d 388 (1993). The panel's opinion first noted that Amtrak was, by the terms of the legislation that created it, not a Government entity, id., at 390; and then concluded that the Federal Government was not so involved with Amtrak that the latter's decisions could be considered federal action, id., at 391-392. Chief Judge Newman dissented. We granted certiorari. 511 U.S. 1105 (1994). We have held once, Burton v. Wilmington Parking Authority, 365 U.S. 715, 6 L. Ed. 2d 45, 81 S. Ct. 856 (1961), and said many times, that actions of private entities can sometimes be regarded as governmental action for constitutional purposes. (cites) It is fair to say that "our cases deciding when private action might be deemed that of the state have not been a model of consistency." Edmonson v. Leesville Concrete Co., 500 U.S. 614, 632, 114 L. Ed. 2d 660, 111 S. Ct. 2077 (1991) (O'CONNOR, J., dissenting). It may be unnecessary to traverse that difficult terrain in the present case, since Lebron's first argument is that Amtrak is not a private entity but Government itself. Here, however, we are
satisfied that the argument that Amtrak is a Government entity is fairly embraced within the question set forth in the petition for certiorari which explicitly presents neither the "Government entity" theory nor the "closely connected to Government" theory of First Amendment application, but rather the facts that would support both. The argument in the petition, moreover, though couched in terms of a different but closely related theory, fairly embraced the argument that Lebron now advances. See Pet. for Cert. 16-18.[B.U] In Lebron, ID. At pg 397, the court went on to say: That Government-created and controlled corporations are (for many purposes at least) part of the Government itself has a strong basis, not merely in past practice and understanding, but in reason itself. It surely cannot be that government, state or federal, is able to evade the most solemn obligations imposed in the Constitution by simply resorting to the corporate form. [B,U ] As in Lebron, plaintiffs arguments are based on the facts, the entire record on appeal, and the historical opinions of the Supreme Court which embrace both theories in support of the conclusion that CitiBank N.A. is a governmental body for the purpose of individual rights guaranteed against the government by the Constitution . In this case the 5th Amendment Due Process Clause. In Easton v Iowa,188 U.S.220 , pg. 230 the court said: We think that this view of the subject is not based on a correct conception of the federal legislation creating and regulating national banks.***Having due regard to the national character and purposes of that system, we cannot concur in the suggestion that national banks, in respect to the powers conferred upon them, are to be viewed as solely organized and operated for private gain.[B,U ] The Court in Easton went on to say ID at p. 230 that the principles enunciated in McCullough v Maryland, 17 U.S. 316(1819), and in Osborn v Bank of the United States, 22 U.S.738 (1824), though expressed in respect to banks incorporated directly by acts of Congress, were still applicable to the later and present system of national banks. The Court cited with approval the holding of the latter by Chief Justice Marshall: The bank is not considered as a private corporation whose principal object is individual trade and individual profit, but as a public corporation created for public and national purposes. That the mere business of banking is, in its own nature, a
private business, and may be carried on by individuals or companies having no political connection with the government, is admitted, but the bank is not such an individual or company. It was not created for its own sake or for private purposes. It has never been supposed that Congress could create such a corporation.[B, I, U ] In view of the holding in Osborn which Justice Marshall held that national banks were public and not private bank corporations because they were created for public and national purposes , which was approved and held applicable to later national bank corporations not directly created by Congress by the Supreme Court in Easton, why should we now consider national banks like CitiBank private corporations? And why not consider them agencies of the Federal government as held in Easton at p. 239. Certainly the Ninth Circuit would have considered CitiBank and CitiMortgage, as a self evident inference, agencies of the federal government because, as the court held in Acron Investments, Inc. et al v Federal Savings and Loan Insurance Corporation , 363 F.2nd 236,1966) , government control of the corporations is more than custodial or incidental. In Osborn at p. 22 U.S. 823 the court said of these national banks: The charter of incorporation not only creates it, but gives it Every faculty which it possesses. The power to acquire rights of any description, to transact business of any description, to sue on those contracts, is given and measured by its charter, and that charter is a law of the United States. Take the case of a contract, which is put as the strongest against the Bank. [H]as this being a right to make this particular contract? **[T]his question, too, depends entirely on a law of the United States [B] The court in Osborn, at p. 823, made it clear that national banks which are federally chartered bank corporations like CitiBank, created under an act of Congress could . . .acquire no right, make no contract, bring no suit, which is not authorized by a law of the United States. It is not only itself the mere creature of law, but all its actions and all its rights are dependent on the same law. [B,U ] In Shoshone Mining Co. v. Rutter, 177 U.S. 505,509,510 , the court said: A corporation has no powers and can incur no obligations except as authorized or provided for in its charter. Its power to do any act which it assumes to do, and its liability to any obligation which is sought to be cast upon it, depend upon its
charter, and when such charter is given by one of the laws of the United States there is the primary question of the extent and meaning of that law[B,U] In Runyan v. Lessee of Coster, 39 U .S. 122 , p. 129 (1840) the court Said: ***[T]hat a corporation possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence. That corporations created by statute must depend for their powers and the mode of exercising them, upon the true construction of the statute. The corporation must show that the law of its creation gave it authority to make such contracts[B,U ] Did the law of its creation, the NATIONAL BANK ACT, give CitiBank & CitiMortgage the right to make this contract with a power of sale provision? Can the government by way of a federal charter authorize a right to a bank to do what it is forbidden to do itself? It is clear that the government can impart no greater power through a charter than it possesses itself. As John Locke said nearly 300 years ago: ***Nobody can transfer to another more power than he has in himself [ TWO TREATISE OF GOVNMENT, BOOK II] The courts in Osborn, Shoshone and Runyan show us that banks foreclosures MUST be done under the authority of the federal charter which is the National Bank Act . In United States v Grimaud, 220 U.S. 506,517 (1911) the court said: ***Congress may certainly delegate to others powers which the legislature may rightfully exercise itself. [B, I,U ] In Easton, at p. 239, the court said 'National banks are instrumentalities of the Federal government, created for a public purpose, and as such necessarily subject to the paramount authority of the United States. [B, U] The paramount authority of the United States is the Constitution includes the 5th Amendment Due Process Clause. If the Constitution only constrains the government Judge Daniels could reasonably infer that CitiBank is a governmental body for the purpose of individual rights guaranteed against the government by the Constitution. Banks cannot choose what part of the Constitution it would allow itself to be subjected to. B. GOVERNMENT CONTROL OVER BANKS IS AS A POLICYMAKER
National Banks, like CitiBank and Federal Savings Associations are federally chartered corporations created under acts of Congress (The National Bank Act of 1864(NBA) and The Homeowner Loan Act of 1933(HOLA) respectively, for public and national purposes. CitiBank, as a national bank, was not created for its own sake, or for private purposes. .., Osborn at p. 823 . National banks and federal savings associations are among the agencies of the United States created to advance the governments public economic policy goals under the Commerce Clause to engage in fostering commerce throughout the nation which is a purely public function exclusive to the government. As a reward national banks and federal savings associations benefit by not paying state taxes, avoiding state predatory lending laws through the concept of Federal preemption, allowing them to export high interest for the credit card thus avoiding the state usury laws. The expansion of the national banking system in 1864 with the creation of the Office of the Comptroller of the Currency ushered a more progressive agenda to implement Hamiltons vision that there was a symbiotic relationship between agriculture, commerce, and manufacturing, and that progress in each of these sectors was necessary for Americas economic development. Long before the Revolution , Hamilton recognized that the future of America lay in business and industry, and that a Central Bank was necessary to the nation in cases of emergency in the financing of war. (Report of Credit II, Dec. 1790). Hamilton understood that to develop into an industrial power, America would need a powerful economic system. In the OCCs -- National Banks and the Dual Banking System (2003) p. 3 it was stated: Although a system of national banks would not be created until 1863, the need for and desirability of federal banks and their potential role in shaping a national economy were evident from the very beginning of the United States*** In First National Bank v. Missouri, 263 U.S. 640 (1924) at p.664 the court said: The national banks organized under the act are instruments designed to be used to aid the government in the administration of an important branch of the public service. They are means appropriate to that end. *** Thus, the government's control over the operations of national banks is as a
policymaker providing guidance for national goals through the regulatory agencies to maintain exclusive control over the bank operations which does not terminate. In Federal Land Bank v. Bismarck Co. of St. Pa, 314 U. S. 95 the issue was whether the lending functions were proprietary or governmental. The court said: The argument that the lending functions of the federal land banks are proprietary, rather than governmental, misconceives the nature of the federal government with respect to every function which it performs. The federal government is one of delegated powers, and from that it necessarily follows that any constitutional exercise of its delegated powers is governmental. (cite) It also follows that, when Congress constitutionally creates a corporation through which the federal government lawfully acts, the activities of such corporation are governmental. (cites) As part of their general lending functions, the land banks are authorized to foreclose their mortgages and to purchase the real estate at the resulting sale. They are "instrumentalities of the federal government, engaged in the performance of an important governmental function."(cites) )[B,U] The conclusions that can be drawn from Bismarck, as self-evident inferences, are that if the lending activities of the land bank are governmental, and foreclosure is part of the general lending functions as the court held, then foreclosure is a governmental activity, and the federal land bank is a governmental actor. In like manner Citibank , as a national bank and sister entity created by Congress for an equally public purpose and under equally established guidelines must, as a self-evident inference, be a governmental actor for the purpose of 5th Amendment rights guaranteed against the government by the Constitution when foreclosing. It is a reasonably inference that Judge Daniels and the magistrate should have drawn in the motion to dismiss as required under the standard of review. In Pittman v. Home Owners' Loan Corp.308 U. S. 21, the court said: ***that the activities of the Corporation through which the national government lawfully acts must be regarded as governmental functions, and as entitled to whatever immunity attaches to those functions when performed by the government itself through its departments. (cite) [B]
But with the immunities the obligations of government must also attach as was held in Lebron, at p. 375 when the court said: (c) ***Like some other Government corporations, Amtrak's authorizing statute provides that it "will not be an agency or establishment of the United States Government,***" (d) Although 541 is assuredly dispositive of Amtrak's governmental status for purposes of matters within Congress's control--e. g., whether it is subject to statutes like the Administrative Procedure Act-and can even suffice to deprive it of all those inherent governmental powers and immunities that Congress has the power to eliminate-e. g., sovereign immunity from suit-it is not for Congress to make the final determination of Amtrak's status as a Government entity for purposes of determining the constitutional rights of citizens affected by its actions. The Constitution constrains governmental action by whatever instruments or in whatever modes that action may be taken*** (e) Amtrak is an agency or instrumentality of the United States for the purpose of individual rights guaranteed against the Government by the Constitution. ***A contrary holding would allow the government to evade its most solemn constitutional obligations by simply resorting to the corporate form[B,U ] Like Amtrak, national banks including CitiBank and its operating subsidiary CitiMortgage are federal instrumentalities. The banks are members in banking systems created to advance the governments economic public goals, and controlled through the director of The Comptroller of the Currency. Like Amtrak CitiBank and CitiMortgage should be considered government entities for purposes of determining the constitutional rights of citizens affected by its actions. Homeowners are citizens whose constitutional rights are affected by non- judicial foreclosures exercised by federally chartered corporations like CitiBank and its instrumentality CitiMortgage. To paraphrase an old saying, that with great power comes great obligations. This is no less true when Congress confers enumerated and incidental powers on a bank it creates for important governmental functions. It follows that with the immunities from taxation and state laws the constitutional obligations of the government must also attach. For as Justice Scalia said in Lebron, at p. 399:
But it does not contradict those statements to hold that a corporation is an agency of the Government for purposes of the constitutional obligations of Government rather than the "privileges of the government," when the State has specifically created that corporation for the furtherance of governmental objectives, and not merely holds some shares but controls the operation of the corporation through its appointees. In Lebron, respondent also invoked the courts decision in the Regional Rail Reorganization Act Cases, 419 U. S. 102 (1974), which found that Consolidated Rail Corporation, or Conrail, not to be a federal instrumentality, despite the President's power to appoint, directly or indirectly, 8 of its 15 directors. See id., at 152, n. 40; Regional Rail Reorganization Act of 1973, 301, 87 Stat. 1004. But the court specifically observed in that case, that the directors were placed on the board to protect the United States' interest "in assuring payment of the obligations guaranteed by the United States," and that "[f]ull voting control ... will shift to the shareholders if federal obligations fall below 50% of Conrail's indebtedness." 419 U. S. , at 152. Moreover, we noted, "[t]he responsibilities of the federal directors are not different from those of the other directors to operate Conrail at a profit for the benefit of its shareholders, ...which contrasts with the public interest "goals" set forth in Amtrak's charter, ***. Amtrak is worlds apart from Conrail: The Government exerts its control not as a creditor but as a policymaker, and no provision exists that will automatically terminate control upon termination of a temporary financial interest. In distinguishing Amtrak from Conrail for the purpose of determining that Amtrak was a federal instrumentality subject to constitutional constraints, the court focused on the control of the corporation by the government, the public interest goals of the corporation, that no provision existed that would automatically terminate the governments control upon termination of a temporary financial interest, and the fact that in Amtrak the role of the government was as a policymaker and not as a creditor as in Conrail. The elements which led the court in Lebron to attach the constitutional obligations of the 1st amendment to the corporation can also be attributed against CitiBank and CitiMortgage in attaching its 5th amendment obligation because defendants are federal instrumentalities created for public and national purposes in carrying out the governments public economic goals as mandated by its authority under the Commerce Clause. Thus the governments control
through the regulatory agencies is as a policymaker where control would never terminate. Control of the operations is exercised by the director of the OCC over national banks and the director of the OTS over Federal Savings Associations. In American Bankers Mortgage Corp. v Federal Home Loan Corp. (D.C. No. 9455967 1995, 9th Cir.) the court decided the issue against the framework of Lebron. The court held that Freddie Mac was not an entity subject to the due process clause of the 5 th Amendment because it was more private, and compared to Amtrak, the government control over the operations was much less. Neither case decided what would be the bare minimum control over the operations by the government that would suffice to put a corporation under the due process clause. That however is not the case here for as the Court in Easton v Iowa explained the governments control over the operations of national banks at p. 239: Our conclusions, upon principle and authority, are that Congress, having power to create a system of national banks, is the judge as to the extent of the powers which should be conferred upon such banks, and has the sole power to regulate and control the exercise of their operations[B,I,U] In federal savings associations the government control is clarified in Fidelity Fed. S. & L. v. De la Cuesta, 458 U.S. 141 (1982) p. 161, as the court said: The broad language of 5(a) expresses no limits on the Board's authority to regulate the lending practices of federal savings and loans. [cites]*** And Congress' explicit delegation of jurisdiction over the "operation" of these institutions must empower the Board to issue regulations governing mortgage loan instruments. Since the elements which led the Court in Lebron to attach the constitutional constraints to Amtrak could be attributed to CitiBank in this case, Judge Daniels and the magistrate could have reasonably inferred that CitiBank, acting through its subsidiary, is a governmental actor for the purpose of attaching the 5th Amendment Due Process Clause. C. POWER OF SALE PROVISIONS SHOULD NOT BE CONSTRUED AS WAIVERS OF A HOMEOWNERS PROCEDURAL DUE PROCESS National Banks, like CitiBank, its subsidiary CitiMortgage and Federal Savings
Associations, are federal instrumentalities advancing the economic public goals of the government. It is a designation critical in determining their status as federal actors, and whether the use of a power of sale provision in a mortgage contract is constitutional. At issue is whether a power of sale provision assigning a right to a Trustee upon default can be authorized by a law of the United States when the operative result is to provide a waiver of a homeowners due process requirements under the 14th and 5th Amendments of the Constitution as well as relief of the governments constitutional obligations. A waiver that is not knowingly made and a constitutional obligation so slyly evaded. The power of sale provision exercised upon default cannot dictate what due process is due, for as the court in Fuentes v. Shevin, 407 U.S. 67 (1972) said: The contract provisions for repossession by the seller on the buyer's default did not amount to a waiver of the plaintiffs' procedural due process rights, those provisions neither dispensing with a prior hearing nor indicating the procedure by which repossession was to be achieved.(cite) In practice, the power of sale foreclosure provision has acted like a waiver, allowing banks like CitiBank, and by extension CitiMortgage, in some states like California, the right to take a home from a homeowner without a hearing; and in a state like Colorado with a Public Trustee, the right to subject a homeowner to an inadequate Rule 120 hearing where a less than full and fair hearing is employed with no right to appeal and minimal requirement for the lender to prove that it has standing to foreclose. It also allows the government, through CitiBank and CitiMortgageto evade its most solemn obligations under the Constitution***. Lebron, at p. 374,375 The Supreme Court Cases of Osborn v Bank of United States, 22 U.S.738 (1824), Shoshone Mining Co. v. Rutter, 177 U.S. 505, Runyan v. Lessee of Coster, 39 U .S. 122 , p. 129 (1840) clearly stated that whatever the corporation assumed to do including rights in contract must be authorized by a law of the United States. The appellate courts in the power of sale cases embraced each others' decisions without reference to Supreme Court decisions which concluded that corporations created by Congress were governmental, and
were content with the notion that Congress could adopt local customs on debtor creditor relations when the issue must be decided under federal law---The National Bank Act. III A Rule 120 foreclosure hearing MUST employ a standard of proof to qualify the lenders standing as the real party in interest by clear and convincing evidence to satisfy the protection of a fundamental property right under the due process clause of the 14th Amendment. Under color of state lawThe Colorado Rule 120 Foreclosure Law, plaintiffs were foreclosed. The Foreclosure law provides for a Public Trustee, an agent of the state, administering a process that provides inadequate due process to homeowners. The rule 120 hearing is discriminatory against homeowners who have no right to a jury and no right to appeal while the Colorado justice system provides a jury and right to appeal in FED actions for tenants who can appeal from a negative ruling . Foreclosure of a deed of trust by public trustee's sale is activated by a power of sale limited to two issues: a. the debtor is in default and, action collateral to such hearing is necessary to resolve all other issues. (cite) b. To establish the status of the debtor with respect to military service.(cite) Borrowers who raise arguments that the Rule 120 hearing won't address, can file a separate civil case. Homeowners have no right to appeal nor a jury trial, and limited defenses. Standing is presumed in favor of the lender upon its averments by the lender or its attorney that the lender is a real party in interest. But, judges routinely accept less than certifiable proof to determine who the real party in interest is. A copy of the original deed of trust and certificate of qualified holder which is a form generated by the lenders attorney without a notarized assignment as proof which brings us to the standard of proof to be employed in the Rule 120 to determine the lender's claim as a holder of the mortgage to satisfy the 14th amendment. In Plymouth Capital Co. v. District Court, 1955 P.2d 1014 (1998) the court said:
[T]he scope and purpose of a Rule 120 hearing is very narrow: the trial court must determine whether there is a reasonable probability that a default or other circumstance authorizing exercise of a power of sale has occurred. Beyond that narrow determination that a reasonable probability that there was a default, the court does not concern itself of any relevant evidence bearing on the lender's standing as the real party in interest. In Plaintiffs' Response in Opposition to the Motion to Dismiss p12, lns 13-22(APPENDIX, PT 2), plaintiffs said: The Original holder of the Mortgage and Deed of Trust of plaintiffs was Decision One. At the rule 120 hearing, CITIMORTGAGE never produced proof of the assignment from Decision One to CITIMORTGAGE/CITIFINANCIAL of its rights under the mortgage and Deed of Trust[ In spite of our strenuous objections at the hearing]. What CITIMORTGAGE did send to plaintiffs was an altered copy of the original Deed of Trust with their name in the upper left hand corner. ***It was obvious that they made a copy of the original Deed of Trust and replaced it with the name of CITIFINANCIAL. Subsequent to the adverse ruling which did not properly allow the issue of standing which was clearly required by the ruling in Goodwin v. District Court, 779 P.2d 837 (Colo. 1989)*** [B ] We also objected in the federal court to the sub-standard level of proof that the lower court allowed CitiMortgage to submit that it was the real party in interest. In APPENDIX, PT 2 at, pg 13, lns 1-17 Response to Motion to Dismiss, plfs said: The abuses cited by plaintiff in this case regarding a rule 120 hearing are not the exception but the rule. At least two other cases have surfaced raising the same issuesPrater et al vs. Bank of New York Mellon et al and BRUCE C. McDONALD vs. FEDERAL HOME LOAN MORTAGE CORPORATION Case Number 2010cv6. ***In both cases the issue was based on the false documents submitted by the law firm to show that the lenders were the real parties in interest. Law firms like Aronowitz & Mecklenburg need only produce copies of those documents accompanied by a certification of qualified holder, a document generated by the law firm attesting that the bank has the right to foreclose on the homeowner. ***[B,U ] What is starting to emerge from these three cases is a pervasive pattern of deception being practiced by the lenders and their respective attorneys like Aronowitz & Mecklenburg, in the various counties in Colorado as well as
venues across this nation; and, a pattern of misfeasance on the part of the Public Trustees who are all too willing to accept less than certifiable proof that the lender is the real party in interest as the lien-holder. [B,] The 14th Amendment of the United States Constitution states *** [N]or shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws. [B,U ] The Supreme Court of Hawaii in STATE v. KOTIS, No 18823(1999) said: ***The Addington Court 99 S.Ct. 1804, 60 L.Ed.2d 323 (1979). considered what standard of proof [was] required by the Fourteenth Amendment to the Constitution in a civil proceeding brought under state law. *** The Addington court noted that the standard of proof by clear and convincing evidence had been required in civil cases involving allegations of fraud or some other quasicriminal wrongdoing by the defendant because [t]he interests at stake in those cases are deemed to be more substantial than mere loss of money Because the Rule 120 hearing involves a fundamental property interest ( plaintiffs home) which is protected by the due process clause of the 14th Amendment, the standard of proof before a persons property is taken should be by clear and convincing evidence which should extend to the determination of who is the real party in interest with standing to foreclose. But the Public Trustee in the Rule 120 hearing only requires that the foreclosing Lender present a copy of the Trust Deed and an Affidavit, a form generated by the Lender or its' attorney that the lender is the real party in interest without requiring that it be attested to under penalty of perjury. No notarized assignment by the original lender to the foreclosing lender need be provided , nor was it provided in the Rule 120 hearing which is the subject of this case. When it comes to a claim against the property there should be a heightened burden of proof. In Colorado, a party filing a claim of adverse possession must establish through clear and convincing evidence that the possession is actual, adverse, hostile, under claim of right, exclusive, and uninterrupted for eighteen consecutive years with a good faith belief that the possessor is the actual owner of the property. Colo. Rev. Stat. -41-101 (2010) Not so in a rule 120 hearing. The standard of proof should be no less than that provided in a claim of adverse possession and as commanded in
Addington v. Texas, 441 U.S. 418, 99 S.Ct. 1804, 60 L.Ed.2d 323 (1979) where the proof involving a right under the 14th Amendment is by clear and convincing evidence. In light of Goodwin v. District Court, 779 P.2d 837 (Colo. 1989) which held that a real party in interest defense must be allowed in a Rule 120 , the lenders burden MUST be by clear and convincing evidence. The Due Process Clause does prevent the deprivation of liberty or property upon application of a standard of proof too lax to make reasonable assurance of accurate fact finding. Hawkins v. Bleakly, 243 U.S. 0, 214 ; Thus, as the court in Addington said: "[T]he function of a standard of proof, as that concept is embodied in the Due Process Clause and in the realm of fact finding, is to 'instruct the fact finder concerning the degree of confidence our society thinks he should have in the correctness of factual conclusions for a particular type of adjudication."' Plaintiffs are not limited from raising this argument in support of their claim that they were denied due process in the Rule 120 , for as the court in Lebron at pg 374 said: Our traditional rule is that [o]nce a federal claim is properly presented, a party can make any argument in support of that claim; parties are not limited to the precise arguments they made below. IV
.
A Rule 120 hearing violates the 14th Amendment Due Process and Equal Protection Clause because it is a summary proceeding with no right to appeal Nor a right to a jury trial.
In LINDSEY V. NORMET, 405. S. 56 (1972) the court said: This Court has recognized that, if a full and fair trial on the merits is provided, the Due Process Clause of the Fourteenth Amendment does not require a State to provide appellate review, (cites) Conversely, if a full and fair trial on the merits is NOT provided, the Due Process Clause of the Fourteenth Amendment requires a State to provide appellate review. The Rule 120 hearing does not provide a full and fair hearing, nor does it provide appellate review. The state can deny one or the other but cannot deny both. The inclusion by the
Court of the above quoted passage must be read and analyzed in the context of the procedures implicit in the FED action referred in Lindsey. The complaint in Lindsey alleged that the tenant was limited in the defenses it could set up in the FED action. If the FED action itself in Lindsey was a full and fair hearing which would include issues the tenant could have brought in a separate action then there was no requirement for the state to provide appellate review. But, if the FED action in Lindsey was a summary proceeding without appellate review, then plaintiffs submit that a reasonably strong inference that could have been drawn in the motion to dismiss by the magistrate and Judge Daniels is that the Supreme Court would have held that the FED action would be in violation of the 14th amendment and would have required the State in the Oregon FED action to provide appellate review to satisfy the Due Process Clause of the 14th Amendment, otherwise it would have had no relevance to the case itself and no need to include it. In Lindsey, ID at p. 64 the court stated the FED procedure: The Oregon Forcible Entry and Wrongful Detainer Statute may be tried to either a judge or a jury, and the only issue is whether the allegations of the complaint are trueA defendant who loses such a suit may appeal The FED action in Colorado, like the FED action in Lindsey, does have a constitutional right to appeal [article 40, 13-40-120] and a right to a jury [Colorado Constitution, section 23], has a right to counter-claim even though the actions are summary with a right to file a separate action to determine other issues that cannot be addressed in such summary proceedings. A rule 120 foreclosure hearing has none of those rights with the exception of the right to a separate action. In Lindsey, ID. At pg. 78, the court said When an appeal is afforded, however, it cannot be granted to some litigants and capriciously or arbitrarily denied to others without violating the Equal Protection Clause . Why then is a Homeowner precluded in a Rule 120 foreclosure proceeding from a right to appeal, a right to a jury trial, and a right to counter-claim when these rights are afforded in the Colorado FED action? There is no rational basis for this arbitrary and disparate treatment
between a tenant and a homeowner whose property interest is at risk. Homeowners as a class should not to be singled out for "arbitrary and irrational" treatment when seeking legal relief made available by the State. See Bankers Life & Casualty Co. v. Crenshaw, 486 U.S. 71, 83 (1988) The Colorado Rule 120 foreclosure law discriminates against homeowners and bears no rational relation to a legitimate end and therefore does not comport with equal protection. White v. Colorado, 157 1226,1232 (10th Cir. 2001) D. EVICTION DUE TO A POWER OF SALE IS A 14th AMENDMENT ABUSE OF PROCESS ACTIONABLE UNDER 42 US 1983. The eviction should be viewed against the backdrop of the power of sale foreclosure as one transaction. If the power of sale foreclosure was a 14th Amendment and/or a 5th Amendment violation (a Bivens claim) then it follows that the eviction as a derivative action to the non-judicial foreclosure is an abuse of process even if it is not malicious, and by definition a denial of procedural due process Jennings vs. Shuman, 567 F.2d 1213 (3rd), and the final step under color of state law in furtherance of the deprivation by defendants begun by the power of sale foreclosure. CONCLUSION In sum, the 14th and 5th Amendment, the legislative history of national banks, the Supreme Court case law and common sense support a holding, as self evident inferences, that the defendants are governmental bodies, and that plaintiffs have been denied both due process and the equal protection of the law by being subjected to a Rule 120 hearing by CitiBank, a national bank through its instrumentality CitiMortgage. Plaintiffs have stated enough facts & law to establish a Bivens claim by the inferences that could be drawn by the Judge as required on a motion to dismiss. Even though the Supreme Court has as yet not specifically held that national banks are governmental bodies for the purpose of individual rights guaranteed against the government by the Constitution, those Supreme Court cases do provide the framework which, coupled with the facts alleged, in which the judge could have made the reasonably strong inference to support that conclusion as required by the Standard of Review. The court in Lebron at p. 397 offers guidance when it
said That Government-created and -controlled corporations are (for many purposes at least) part of the Government itself has a strong basis, not merely in past practice and understanding, but in reason itself. Thus, the conclusion held in Bismarck that the lending functions including foreclosure were governmental, and the conclusion in Lebron that Amtrak was a governmental body, were both premised on the fact that both entities were federal instrumentalities just as CitiBank and it operating subsidiary, CitiMortgage. The inference drawn from that fact is that foreclosure is a governmental act and CitiBank and CitiMortgage are governmental actors subject to the 5th Amendment. The cases cited show that the power of sale provision must be authorized by the National Bank Act as an incidental power of the express lending function and that lenders must prove by clear and convincing evidence their status as the real party in interest to satisfy the due process clause of the 14th Amendment in the Rule 120 foreclosure hearing. It also follows that the eviction that followed the deprivation of property in the foreclosure must viewed as part of the foreclosure and an abuse of process which is by definition a denial of due process. Any deficiencies in the complaint can be amended. Respectfully submitted, ___________________ MASON L. RAMSEY _________________ Judith Mae Neville Date:___________, 2011
Date:___________, 2011
PLAINTIFFS OPENING APPELLATE BRIEF
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TABLE OF AUTHORITIES PAGE Cases Acron Investments, Inc. et al v Federal Savings and Loan Insurance Corporation , 363 F.2nd 236 (9th Circuit, 1966)....35 American Bankers Mortgage Corp. v Federal Home Loan Corp. (D.C. No. 94-55967 1995, 9th Cir.) .................................................................... 1, 35 Bank of America et al v City of San Francisco et al 309 F.3d 551 (9th Circuit(2002) .................................................................................................... 1 Black's Law Dictionary.. Carey v. Piphus, 435 U.S. 247, 259(1978). ............................................................. 1 Easton v. Iowa,188 U.S.220 (1903) ................................................................... 1, 35 Denton v. Hernandez, 504 U.S. 25, 34 (1992).. Edward v. Dubrish, 2009 Wl 1683989, at *11. Colo. 2009) ........................... 1, 35 Federal Land Bank v. Bismarck Co. of St. Paul, 314 U. S. 95 (1941) .......... 1, 35 Fidelity Fed. S. & L. v. De la Cuesta, 458 U.S. 141 (1982)............................. 1, 35 First National Bank of Eastern Arkansas v. Taylor ,907 F.2d 775 .................... 1 First National Bank v. Missouri, 263 U.S. 640 (1924) .......................................... 1 Fuentes v. Shevin, 407 U.S. 67, 81 (1972).1, 35 Gibson v. United States, 781 F.2d 13341, GEORGE MICHAEL CURLEY v ROB PERRY ET AL, 247 f.3D 1279(10th Cir.2001)
Goodwin v. District Court, 779 P.2d 837 (Colo. 1989)1, 35 Hawkins v. Bleakly, 243 U.S. 210, 214 (1917);...................................................... 1 HUDSON COUNTY WATER CO. V. McCARTER, 209 U. S. 349(1908)1 Jennings vs. Shuman, 567 F.2d 1213 (3rd)1 Lambert v. Ritter Inaugural Committee, Inc., 218 P.3d 1115, 1119 (Colo. App. 2009) .................................................................. 1 LAWRENCE GOLAN, et al., vs JOHN ASHCROFT, Civil Action No. 01-B-1854..5 Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit,507 U.S. 163, 168 ... Lebron vs National Passenger Car Railway, 513 U.S. 374 ............................ 1, 35 LINDSEY V. NORMET, 405 U. S. 56 (1972) ....................................................... 1 Mathews v. Eldridge, 424 U.S. 319, 344 (1976)............................................... 1, 35 McCullough v Maryland, 17 U.S. 316(1819)................................................... 1, 35 Mullane v. Central Hanover Trust Co., 339 U.S. 306, 313 (1950) ...................... 1 Jennings vs. Shuman, 567 F.2d 1213 (3rd) ....................................................... 1, 35 Osborn v Bank of United States, 22 U.S.738 (1824) ....................................... 1, 35 Pittman v. Home Owners' Loan Corp., 308 U. S. 21 ........................................... 1 PLYMOUTH CAPITAL CO. v. DISTRICT COURT 955 P.2d 1014 (1998)1, 35 Richardson v. Perales, 402 U.S. 389....................................................................... 1 Runyan v. Lessee of Coster, 39 U .S. 122 ........................................................ 1, 35 Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) . Sheehan v. Sullivan (1899) 126 Cal. 189 ................................................................ 1 Shoshone Mining Co. v. Rutter, 177 U.S. 505 ....................................................... 1 STATE v. KOTIS, No 18823(1999).................................................................. 1, 35 Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir.1984)...5 United States v Grimaud, 220 U.S. 506 (1911) ............................................... 1, 35 White v. Colorado, 157 1226,1232 (10th Cir. 2001) Statutes 28 U.S.C. 1291 ........................................................................................................ 1 28 U.S.C. 1331 .................................................................................................. 1, 35 38-41-101 (2010) ................................................................................................. 1, 35 Colo. Rev. Stat. 38-41-101 (2010) ........................................................................ 1 Fed. R. Civ. P. 8(a). Home Owner Loan Act (HOLA)............................................................................ 1 Home OwnerLoan Act (HOLA)............................................................................. 1 National Bank Act(NBA) .................................................................................. 1, 35
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Other Authorities TWO TREATESE OF GOVERNMENT, BOOK II ..................................... 1, 35 the Report of Credit II, Dec. 1790) ........................................................................ 1 TWO TREATISE OF GOVERNMENT, BOOK II ............................................ 1 USLegal.com ...................................................................................................... 1, 35 Statutes 42 US 1983 .......................................................................................................... 1, 35 Rule 12(b)(6)....................................................................................................... 1, 35 Rule 120 hearing ...................................................................................................... 1 Regulations 12 C.F.R. Sec.7.7495, ............................................................................................... 1 12 U.S.C. Sec. 24 (Seventh). .................................................................................... 1 Title Twelve, Chapter 2BANKS AND BANKING--NATIONAL BANKS ( 21216d) ..................................................................................................... 1, 35 Constitutional Provisions 14th Amendment . ..................................................................................................... 1 5th Amendments ................................................................................................. 1, 35
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Substantial Evidence. Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Richardson v. Perales, 402 U.S. 389, 401 (1971
Jesseca Gonzales,et al vs City of Castle Rock,et,(D.C. No. 00-D-1285, 2004, 10 Cir.)
, Ms. Gonzales must show that she was deprived of a constitutional right by a person acting under color of state law. Jacobs, Visconsi & Jacobs, Co. v. City of Lawrence, 927 F.2d 1111, 1115 (10th Cir. 1991). At issue here is whether Ms. Gonzales due process rights, pursuant to the Fourteenth Amendment of the U.S. Constitution, were violated when the officers failed to enforce her restraining order against her husband
Text of Section 23: Trial by Jury Grand Jury The right of trial by jury shall remain inviolate in criminal cases; but a jury in civil cases in all courts, or in criminal cases in courts not of record, may consist of less than twelve persons, as may be prescribed by law. Hereafter a grand jury shall consist of twelve persons, any nine of whom concurring may find an indictment; provided, the general assembly may change, regulate or
abolish the grand jury system; and provided, further, the right of any person to serve on any jury shall not be denied or abridged on account of sex, and the general assembly may provide by law for the exemption from jury service of persons or classes of pers
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JURISDICTION STATEMENT AND OPINIONS BELOW The District Court has federal question jurisdiction over Plaintiffs Mason

PLAINTIFFS OPENING APPELLATE BRIEF

PLAINTIFFS OPENING APPELLATE BRIEF

PLAINTIFFS OPENING APPELLATE BRIEF

Jesseca Gonzales,et al vs City of Castle Rock,et,(D.C. No. 00-D-1285, 2004, 10 Cir.)

PLAINTIFFS OPENING APPELLATE BRIEF

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