The Colorado Court of Appeals issued its opinion in Mackall v. JPMorgan Chase Bank, N.A. on Thursday, September 11, 2014.
Bankruptcy—Dismissal—Standing—Issue Preclusion—Failure to State a Claim.
Plaintiffs purchased a home and subsequently refinanced it. After the court issued a written order authorizing JPMorgan Chase Bank (Chase), the assigned lender, to sell the house, plaintiffs filed a Chapter 13 petition for bankruptcy. The bankruptcy court dismissed the bankruptcy proceeding before confirmation of a plan or discharge. Plaintiffs thereafter filed a civil complaint against Chase, alleging that Chase’s note was fraudulent and that Chase was not the proper party to enforce it. The district court granted Chase’s motion to dismiss some of plaintiffs’ claims.
On appeal, Chase contended that plaintiffs lacked standing to assert any claims against it because (1) all of the claims were actionable when plaintiffs filed for bankruptcy, and (2) plaintiffs failed to disclose the claims to the bankruptcy court. When a bankruptcy case is dismissed, the debtor is granted standing to assert any claim that it possessed before it filed for bankruptcy, regardless of whether it disclosed the claim to the bankruptcy court during the bankruptcy proceedings. Here, the dismissal of the bankruptcy petition re-vested the claims in plaintiffs, and they had standing to bring those claims against Chase after the dismissal.
Plaintiffs argued that the district court erred in dismissing some of their claims based on issue preclusion. The district court held that both the CRCP 120 order authorizing sale and the bankruptcy court order allowing Chase’s proof of claim precluded some of plaintiffs’ claims. Because the bankruptcy court ruling had preclusive effect on these issues, plaintiffs were barred from re-litigating the issues that were dismissed based on issue preclusion.
Plaintiffs also argued that the district court erred by dismissing several of their claims for failure to state a claim. Because the complaint failed to allege that Chase filed the CRCP 120 actions for any purpose other than to obtain an order authorizing sale, the district court properly dismissed plaintiffs’ abuse of process claim. Plaintiffs’ complaint failed to allege that their property was on the market for sale and, therefore, the district court properly dismissed plaintiffs’ slander of title claim. Additionally, plaintiffs claims for breach of contract, implied covenant of good faith and fair dealing, and promissory estoppel were properly dismissed because the statute of frauds barred any unwritten modification of the loan agreement. Finally, because Chase had the right to seek enforcement of the promissory note against plaintiffs, plaintiffs’ claim for intentional infliction of emotional distress failed. The judgment was affirmed.