                                                                                  FILED
                                                                      United States Court of Appeals
                      UNITED STATES COURT OF APPEALS                          Tenth Circuit

                             FOR THE TENTH CIRCUIT                            June 6, 2018
                         _________________________________
                                                                          Elisabeth A. Shumaker
                                                                              Clerk of Court
JOHN M. MBAKU; LUVIBIDILA JOLIE
LUMUENEMO,

      Plaintiffs - Appellants,

v.                                                          No. 17-1189
                                                (D.C. No. 1:17-CV-00462-LTB-STV)
CARRINGTON MORTGAGE                                          (D. Colo.)
SERVICES, LLC,

      Defendant - Appellee.
                      _________________________________

                             ORDER AND JUDGMENT*
                         _________________________________

Before BRISCOE, HOLMES, and PHILLIPS, Circuit Judges.
                  _________________________________

       This is the second lawsuit brought by John M. Mbaku and Luvibidila Jolie

Lumuenemo challenging the non-judicial foreclosure of their condominium in

Denver, Colorado. The district court dismissed both lawsuits for failure to state a

claim. We affirmed the dismissal of Plaintiffs’ first suit and now affirm the dismissal

of this action.



       *
        After examining the briefs and appellate record, this panel has determined
unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
submitted without oral argument. This order and judgment is not binding precedent,
except under the doctrines of law of the case, res judicata, and collateral estoppel. It
may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1
and 10th Cir. R. 32.1.
                                   BACKGROUND

      In 2008, Plaintiffs obtained a loan to refinance their Denver condominium.

The loan was evidenced by a promissory note (“Note”) and secured by a deed of trust

(“Deed of Trust”). Plaintiffs defaulted on the loan a year later.

      The Deed of Trust granted the public trustee the power to sell the property

upon notification from the Note holder that the debtor was in default. The legal

requirements and process for a debt holder to exercise this right to non-judicial

foreclosure are set forth in C.R.S. § 38-38-101 et seq. and Rule 120 of the Colorado

Rules of Civil Procedure.

      In compliance with this process, the Note holder, Bank of America, N.A.,

moved in October 2011 for an order authorizing the trustee to sell the property. After

holding a hearing, a Colorado district court authorized the sale in February 2012.

One week before the scheduled sale, Plaintiffs sued Bank of America in federal

district court in Colorado, asserting, among other things, that the bank had violated

the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-1692p, through

the attempted foreclosure, and that Colorado’s non-judicial foreclosure process was

unconstitutional because it violated the Fourteenth Amendment’s Due Process

Clause. The district court granted Bank of America’s motions to dismiss for failure

to state a claim, and this court affirmed. See Mbaku v. Bank of Am., Nat’l Ass’n,

628 F. App’x 968 (10th Cir. 2015) (unpublished) (“Mbaku I”).

      Bank of America ultimately did not foreclose on Plaintiffs’ property. Instead,

Defendant Carrington Mortgage Services, LLC, as the new holder of the Note and

                                           2
Deed of Trust, moved in February 2016 for an order authorizing the trustee to sell the

property. The same Colorado district court authorized the sale on August 1, 2016,

and the property was later sold to a non-party.

       Plaintiffs responded by filing this action against Carrington in federal district

court in the Central District of California, alleging that Carrington had violated the

FDCPA and its California counterpart in foreclosing on their Denver condominium

and renewing their claim that Colorado’s non-judicial foreclosure process was

unconstitutional because it did not provide due process. Carrington moved to

transfer the action to the District of Colorado and to dismiss under Federal Rule of

Civil Procedure 12(b)(6) for failure to state a claim. The federal district court in

California granted the motion to transfer and deferred ruling on the motion to

dismiss. Following the transfer, the Colorado district court granted Carrington’s

motion to dismiss and entered judgment dismissing Plaintiffs’ claims with prejudice.

This appeal followed.

                                        DISCUSSION

       A.      Standard of Review

       We review a dismissal for failure to state a claim under Rule 12(b)(6) de novo,

accepting as true all well-pleaded factual allegations in the complaint and viewing them

in the light most favorable to the plaintiff. SEC v. Shields, 744 F.3d 633, 640 (10th Cir.

2014). To withstand a Rule 12(b)(6) motion to dismiss, the complaint “must contain

sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its

face.’” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). A claim is plausible

                                                3
“when the plaintiff pleads factual content that allows the court to draw the reasonable

inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

But a pleading that offers only “labels and conclusions or a formulaic recitation of the

elements of a cause of action” does not meet this standard. Id. (internal quotation marks

omitted). Nor does a complaint that “tenders naked assertions devoid of further factual

enhancement.” Id. (internal quotation marks and bracket omitted). Rather, the complaint

must “give the defendant fair notice of what the claim is and the grounds upon which it

rests.” Khalik v. United Air Lines, 671 F.3d 1188, 1192 (10th Cir. 2012) (internal

quotation marks and ellipsis omitted).

       In determining whether a complaint has alleged a plausible claim for relief, we

“consider the complaint in its entirety, as well as other sources courts ordinarily examine

when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated

into the complaint by reference, and matters of which a court may take judicial notice.”

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). In this case, we

have taken judicial notice of relevant court documents from the state and federal

proceedings described above. 1




       1
         Carrington requested that the district court take judicial notice of these
documents under Federal Rule of Evidence 201. Plaintiffs did not object to that request
below and included these documents in the record on appeal. We have considered them
only “to show their contents, not to prove the truth of matters asserted therein.” Tal
v. Hogan, 453 F.3d 1244, 1264 n.24 (10th Cir. 2006) (internal quotation marks
omitted).
                                             4
      B.     FDCPA Claim

      To state a claim under the FDCPA, Plaintiffs “must allege sufficient facts to

plausibly suggest that [Carrington] is a debt collector whose efforts to collect a debt

from [them] violated . . . provisions of the FDCPA.” Burnett v. Mortg. Elec.

Registration Sys., Inc., 706 F.3d 1231, 1238-39 (10th Cir. 2013). The parties’

argument in the district court focused on whether Plaintiffs sufficiently pled that

Carrington’s conduct violated the statute.

      Plaintiffs alleged in their amended complaint that Carrington violated § 1692e

of the FDCPA by making false representations in collecting their debt and violated

§ 1692f(1) by “fail[ing] to provide any agreement that authorizes any amount of

collection.” Aplt. App. Vol. I at A39.2 They now argue they sufficiently supported

these allegations by further alleging that Carrington knew or had reason to know

“that it does not have sufficient documentation to demonstrate that it is the proper

party to collect against Plaintiffs.” Id. at A38.

      The district court held these allegations were conclusory and therefore

insufficient to state a plausible claim under the FDCPA. We agree. The amended

complaint alleges no facts supporting Plaintiffs’ bald assertion that Carrington is not

entitled to enforce the Note and Deed, and therefore does not provide Carrington with the


      2
          Section 1692e states that “[a] debt collector may not use any false,
deceptive, or misleading representation or means in connection with the collection of
any debt,” and provides examples of conduct that violates this prohibition. 15 U.S.C.
§ 1692e. Section 1692f(1) forbids a debt collector from “collect[ing] any amount . .
. unless such amount is expressly authorized by the agreement creating the debt or
permitted by law.” Id. § 1692f(1).
                                             5
required notice of the FDCPA claims and the grounds on which they are based. See

Khalik, 671 F.3d at 1192; see also Iqbal, 556 U.S. at 678 (“[T]ender[ing] naked

assertions devoid of further factual enhancement” does not state a claim) (internal

quotation marks and bracket omitted).3

       Plaintiffs point to Garrett v. BNC Mortgage, Inc., 929 F. Supp. 2d 1120, 1127

(D. Colo. 2013), as demonstrating that they sufficiently pled a FDCPA claim by alleging

Carrington lacked sufficient documentation to establish its right to foreclose. But Garrett

involved an entirely different FDCPA provision, § 1692f(6),4 and the complaint there

contained additional allegations that are not present in Plaintiffs’ amended complaint.

See id. at 1227 (referencing allegations that the bank’s “status as trustee of the pool

containing plaintiff’s loan deprived it of standing to foreclose, that public records do not

disclose any assignment of plaintiffs’ loan to [the bank], that [the bank] has no other



       3
          Plaintiffs also summarily alleged in their amended complaint that Carrington
violated § 1692e of the FDCPA by making false credit reports, seeking to collect the
debt beyond the statute of limitations, and relying on a forged endorsement. The
district court concluded these allegations were insufficient to state a FDCPA claim
because they too were conclusory and not supported by factual allegations. It also
held Plaintiffs were precluded from relying on the allegedly forged endorsement to
state a claim because this issue was decided against them in Mbaku I. See Mbaku I,
628 F. App’x at 975 (affirming district court’s dismissal of claim that Bank of
America forged Note’s endorsement because Plaintiffs provided no factual basis for
this allegation). Plaintiffs did not challenge these holdings in their opening brief and
thus forfeited appellate review of them. See Bronson v. Swensen, 500 F.3d 1099,
1104 (10th Cir. 2007).
       4
         This provision prohibits a debt collector from foreclosing or threatening to
foreclose on property through non-judicial action without a “present right to possession
of the property claimed as collateral through an enforceable security interest” or under
other specified conditions. 15 U.S.C. § 1692f(6).
                                              6
evidence of assignment, and that [the bank] is not in possession of documents evidencing

the chain of title”). Garrett therefore offers scant support to Plaintiffs.

       Nor are Plaintiffs’ allegations plausible. Carrington produced documentation with

its Rule 120 motion that presumptively established its right to foreclose on the property.

Under Colorado foreclosure law, a “holder of an evidence of debt” may elect to foreclose

upon showing the debtor breached a deed-of-trust provision. Colo. Rev. Stat.

§ 38-38-101(1); McDonald v. OneWest Bank, F.S.B., 680 F.3d 1264, 1266 (10th Cir.

2012). A “[h]older of an evidence of debt” is “the person in actual possession of or

person entitled to enforce an evidence of debt.” Colo. Rev. Stat. § 38-38-100.3(10). This

definition presumptively includes a “person in possession of a negotiable instrument

evidencing a debt, which has been duly negotiated to such person or to bearer or indorsed

in blank.” Id. § 38-38-100.3(10)(c); see, e.g., McDonald, 680 F.3d at 1266.

       Colorado law further provides that a “qualified holder,” which includes

Carrington,5 may document its status as a holder of an evidence of debt in a non-judicial

foreclosure by providing the Rule 120 court with a “copy of the evidence of debt” and a

statement signed by the holder’s attorney that (1) cites the basis on which the party

claims to be a qualified holder, (2) states that the attached copy of the evidence of debt is

true and correct, and (3) further states that the holder’s use of the copy is subject to the

conditions described in Colo. Rev. Stat. § 38-38-101(2)(a), which essentially require the



       5
        A “qualified holder” includes a “federal housing administration approved
mortgagee.” Colo. Rev. Stat. § 38-38-100.3(20)(f). Plaintiffs do not dispute that
Carrington is a qualified holder under this provision.
                                               7
holder to indemnify and defend the debtor in the event the original evidence of debt is

later presented for payment. Colo. Rev. Stat. § 38-38-101(1)(b)(II), (2)(a).

       Carrington complied with Colorado law by submitting the following documents

with its Rule 120 motion for authorization of sale: a copy of the Note indorsed in blank, a

copy of the Deed of Trust, and a qualified-holder statement by its attorney. See Aplt.

App. Vol. I at A156-74. This documentation was sufficient to presumptively establish

Carrington’s right to foreclose on Plaintiffs’ property after their default. See In re Miller,

666 F.3d 1255, 1264-65 (10th Cir. 2012) (recognizing that Colorado law permits non-

judicial foreclosure based on this documentation). Plaintiffs do not allege any facts that

would rebut this presumption, and instead argue only that the documentation Carrington

presented should not be sufficient because a statement by a holder’s attorney is

self-serving. But Colorado law is otherwise. Accordingly, Plaintiffs’ allegation, without

more, that Carrington lacks documentation to establish its right to enforce the Note and

Deed of Trust does not state a plausible claim under the FDCPA.6

       C.     California FDCPA claim

       Plaintiffs concede that their claims under the California counterpart to the

FDCPA, the Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code

§ 1788-1788.33, “turn on whether the [federal] FDCPA claims remain and apply.”


       6
          After the district court issued its decision and briefing was completed in this
appeal, we held that a party enforcing a security interest through a non-judicial
foreclosure proceeding is not a “debt collector” as necessary to state a FDCPA claim.
See Obduskey v. Wells Fargo, 879 F.3d 1216, 1220-23 (10th Cir. 2018), petition for
cert. filed, No. 17-1307 (U.S. Mar. 15, 2018). This decision provides an alternative
ground on which to affirm the dismissal of Plaintiffs’ FDCPA claims.
                                              8
Aplt. Br. at 17; see Cal. Civ. Code § 1788.17 (incorporating federal FDCPA

provisions). Consequently, because Plaintiffs failed to state a federal FDCPA claim,

they have also failed to state a claim under the California counterpart.7

       D.     Due Process Claims

       The Fourteenth Amendment’s Due Process Clause provides that no State may

“deprive any person of life, liberty, or property, without due process of law.”

U.S. Const. amend. XIV, § 1. Due process of law requires that the State provide a

notice and a meaningful opportunity to object to the deprivation. See In re C.W.

Mining Co., 625 F.3d 1240, 1244-45 (10th Cir. 2010). Plaintiffs allege in their

amended complaint that Colorado’s non-judicial foreclosure process violates due

process, both facially and as applied. We agree with the district court that Plaintiffs

failed to state a claim on either basis.

              1.     Facial challenge

       Plaintiffs allege in their amended complaint that Colorado’s non-judicial

foreclosure process is unconstitutional on its face because it allows “a company like

Defendant [] to foreclose on a property, without any requirement to demonstrate its

legal standing or legal ownership of the alleged debt,” and provides the debtor with

only “an inadequate opportunity to be heard[] and to challenge the legal standing

and/or identity” of the company seeking to foreclose. Aplt. App. at A41. Plaintiffs

made this same argument in Mbaku I, and we rejected it. See 628 F. App’x

       7
        Because we affirm the district court’s decision on this basis, we do not
address Carrington’s arguments that the California statute does not apply as a matter
of law under the facts alleged.
                                           9
at 972-73. Plaintiffs do not contend that there has been a material change in the law

in the three years since, but nonetheless renew their argument.

       Our decision in Mbaku I is unpublished and therefore is not binding precedent.

See 10th Cir. R. 32.1. We nonetheless find its discussion of this issue thorough and

persuasive and hence rely on it here. See United States v. Austin, 426 F.3d 1266, 1274

(10th Cir. 2005) (stating we may rely on an unpublished order if it “has persuasive value

with respect to a material issue in a case and would assist the court in its disposition”).

       As we explained in Mbaku I, under Colorado’s non-judicial foreclosure process,

the holder of the evidence of debt secured by the deed of trust must obtain a court order

authorizing the public trustee to sell the secured property in foreclosure. Plymouth

Capital Co. v. Dist. Ct., 955 P.2d 1014, 1015 (Colo. 1998). Under Rule 120, the process

for obtaining this order begins with an interested person filing a verified motion seeking

an order authorizing the sale of the property. Colo. R. Civ. P. 120(a) (2016).8 The

moving party must also issue a notice of this request to the debtor and all other persons

known or believed to have an interest in the property who might be materially affected by

such sale. Id. R. 120(a), (b).

       If the debtor or another interested party files a response to the motion, the court

must hold a hearing and determine whether there is a reasonable probability “of a default

or other circumstances authorizing, under the terms of the instrument described in the


       8
         The Colorado Supreme Court revised Rule 120 in 2017, after the sale of the
Plaintiffs’ property. All citations to the rule in this decision are to the 2016 version
unless otherwise noted. The 2017 revisions did not change the process described
herein.
                                              10
motion, the exercise of a power of sale.” Id. R. 120(d); see also id. R. 120(e) (explaining

that there is no hearing absent a response). “The court’s resolution of the Rule 120

motion . . . should necessarily encompass a consideration not only of the evidence offered

by the creditor seeking the order of sale but also of any evidence offered by the debtor to

controvert the moving party’s evidence or to support a legitimate defense to the motion.”

Goodwin v. Dist. Court, 779 P.2d 837, 842 (Colo. 1989).

       Over 25 years ago, the Colorado Supreme Court held in Goodwin that one of the

defenses a debtor is entitled to assert in a Rule 120 proceeding is that the party seeking

authorization is not the real party in interest, id., that is, is not a “party who, by virtue of

substantive law, has the right to invoke the aid of the court in order to vindicate the legal

interest in question,” id. at 843. If the debtor asserts this defense, the burden is on “the

party seeking the order of sale to show that he or she is indeed the real party in interest.”

Id. Rule 120 thus provides a mechanism for the debtor to dispute that the party seeking

authorization for the foreclosure sale is entitled to do so. In addition, although the grant

or denial of a motion to authorize sale under Rule 120 is not appealable, the rule provides

that “parties aggrieved by the Rule 120 court’s decision may seek injunctive or other

relief in a court of competent jurisdiction.” Plymouth Capital Co., 955 P.2d at 1017;

see Colo. R. Civ. P. 120(d). Colorado’s non-judicial foreclosure process therefore

provides the debtor with both notice of the potential property deprivation and an

opportunity to be heard, as required to satisfy due process.

       Plaintiffs dismiss this reasoning and result on the ground that Rule 120 itself does

not state that a debtor can assert a real party defense. But as just described, the Colorado

                                               11
Supreme Court has construed Rule 120 as allowing debtors to raise this defense in a

Rule 120 proceeding. Plaintiffs simply ignore this long-standing Colorado law, and their

argument is meritless as a result. Their rule-based argument is also moot at this point,

because the Colorado Supreme Court recently revised Rule 120, among other things, to

confirm that the scope of inquiry at a Rule 120 hearing includes “whether the moving

party is the real party in interest.” Colo. R. Civ. P. 120(d)(1)(C) (2018).

       2.     As applied challenge

       Plaintiffs also allege Colorado’s non-judicial foreclosure process violated due

process as applied to them. An “as applied” constitutional challenge differs from a

facial challenge because it “concedes that the statute may be constitutional in many

of its applications, but contends that it is not so under the particular circumstances of

the case.” United States v. Carel, 668 F.3d 1211, 1217 (10th Cir. 2011) (internal

quotation marks omitted). But Plaintiffs make no argument that due process was

violated under the particular circumstances of their Rule 120 proceeding, and instead

merely restate the facial challenge we have already rejected. See Aplt. App. at A41

(alleging process was unconstitutional as applied because it allowed Carrington to

foreclose on Plaintiffs’ property “without the specific opportunity for Plaintiffs to put

Defendant to its proof with respect to its legal ownership of the debt”). We find no

merit in this argument for the reasons stated in the preceding section.




                                             12
                             CONCLUSION

We affirm the district court’s dismissal of Plaintiffs’ claims.


                                     Entered for the Court


                                     Gregory A. Phillips
                                     Circuit Judge




                                    13
