12th Edited Appellate Brief to the Tenth Circut

8/3/2019 12th Edited Appellate Brief to the Tenth Circut

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PLAINTIFFS OPENING APPELLATE BRIEF Page 1

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 Title 12, 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 59e dismissing

Plaintiffs First Amended Complaint for failure to state a claim under 12(b)(6) withoutallowing plaintiffs to amend to correct any deficiencies. On October 11, 2011 plaintiffs

filed a rule 59e motion. (APPENDIX, PT 4- On 12/21/ 2011 Judge Daniels entered the

final appealable order on the Rule 59e motion. The plaintiffs filed their Notice of Appeal

on 12/ 28/2011. 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

and, 14th

Amendment, National Bank Act, Home

Owner Loan Act, Title 12,24 SEVENTH,38-101 (1), (4) (g), (4) (j), (6), (9), and (10).

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

accepting all allegations of material fact as true, viewing the allegations in the light most


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favorable to the plaintiff. Id. The Supreme Court has further held that a motion to dismi

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 indulge

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. SeeScheuer 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." (SeeLeatherman 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 relie

by plaintiffs as was required by the standard of review. The facts presented in Plfs

complaint and the subsequent briefs are sufficient to put the defendants on notice of the

claims for relief being alleged, but they also demonstrate that Plaintiffs can support theirclaims 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 GEORGEMICHAEL CURLEYv ROB PERRYET AL, 247 f.3D 1278(10th

Cir.


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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 inHernandezID 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 MUSTbe authorizedas an incidental power of the lending functions granted

by the National Bank Act to national banks which should have been

inferred by the facts and the cases cited on the motion to dismiss.

II. Whether CitiBank, as a National Bank, is a public corporation and

federal instrumentality subject to the Fifth Amendmentjust as

Amtrak was held a federal instrumentality subject to the FirstAmendment which should have been inferredby the facts and cases

cited on a motion to dismiss.

III. 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

property right under the due process clause of the 14th Amendment .

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 which should have been

inferred on a motion to dismiss.


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STATEMENT OF THE CASE

Plaintiffs brought this action after being subjected to the Colorado Rule 120 foreclosu

upon default of their mortgage payments. The foreclosing lender was CitiMortgage an

operating subsidiary and instrumentality of CitiBank N.A., a national public bankcorporation created under the National Bank Act for public and national purposes. The

foreclosing lender CitiMortgage was not the original lender which was Decision One, thu

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 or 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 o

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 du

process under the 14th Amendment requirements in a Rule 120 hearing which was brough

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 and Plaintiffs

responded on 01/10/2011.

Magistrate Craig B. Shaffer rendered his Report on 07/28/2011 to dismiss with

prejudice plaintiffs' amended complaint for failure to state a claim without allowing leave

to amend as requested, although Judge Daniels did not so state in his order.

On 08/15/2011 plaintiffs filed their amended Objection to the Report and Recom-

mendation 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


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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 (Ru

120) followed by plaintiffs response on 10/13/2009. On 10/13/2009 the Court Authorize

the Sale of plaintiffs property and on 10/16/2009 plaintiffs filed a Counter Claim which

not allowed. Throughout the Rule 120 plaintiffs objected to the sketchy proof that

CitiMortgage offered to show standing as the real party in interest. On 03/09/ 2010

plaintiffs Mason & Judi sent QWR (Qualified Written Request asking for debt verification

but was ignored. On October 13, 2010 plaintiffs were foreclosed and on October 28, 2010

Aronowitz filed for Writs of possession. On 10/29/2010 plaintiffs filed the Federal case.

SUMMARY OF ARGUMENT

CitiBank and CitiMortgage are federal instrumentalities subject to the Due Process

Clause of the 5th

Amendment. CitiBank, as a National Bank, is apublic corporation NOT

private corporationbecause 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 Ru

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 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. Evictions must be considered part of the foreclosure

as an abuse of process and by definition a denial of due processsubject to 42 US 1983.


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LAW AND ARGUMENT

A.PROCEDURAL HISTORY AND ASSIGNMENT OF ERRORSJudge 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).

Judge Daniels in his order on the Rule 59e (APPENDIX, pt A)held that he did not

misapprehend the cases cited by plaintiffs which supported plaintiffs claim that national

banks were governmental actors or that denied plaintiffs due process and equal protection

arguments. At p. 2 and 3, Judge Daniels states:

Thus, a motion seeking reconsideration of the judgment is appropriate where the courthas misapprehended the facts, a partys Case 1:10-cv-02653-WYD-CBS Document 49Filed 12/21/11 USDC Colorado position, or the controlling law. Id. Such a motion is notappropriate to revisit issues already addressed or advance arguments that could havebeen raised in prior briefing.

Plaintiffs attempt to make new arguments that could and should have beenraised before, such as their argument that they were deprived of due process in Case

1:10-cv-02653-WYD-CBS Document 49 Filed 12/21/11 USDC Colorado Page 2 of

3 the Rule 120 proceeding in state court because Defendants were not required to

show standing by clear and convincing evidence. They also improperly attempt to

revive an equal protection claim that was not asserted in their First Amended

Verified Complaint and which the Recommendation declined to consider.

The fact that the Rule 120 did not require defendants to show standing by clear and

convincing evidence does not mean that they were not required under the due process

clause of the 14th

amendment because the proceeding involved the potential loss of a

fundamental right as more fully discussed below.


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Judge Wiley is mistaken that plaintiffs did not raise the arguments in prior

briefing. At p. 6 in Opposition to the motion to dismiss (APPENDIX, pt 2) plfs

stated :

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 appellants' procedural due process rights, those

provisions neither dispensing with a prior hearing nor indicating the procedure by

which repossession was to be achieved.

In practical terms, it has acted to allow a bank like CITIBANK, and by extension

CITIMORTGAGE, in some states like California the right to take the propertyfrom a homeowner without a hearing and in a state like Colorado with a Public

Trustee, the right to subject a homeowner to an inadequate forum such as in the

Rule 120 hearing where a less than full and fair hearing is employed with no right

to appeal.

In the Opposition to the motion to dismiss (APPENDIX, PT 2, page 11, plaintiffs said

In 1989 the Colorado Supreme Court passed on the age-old legal maxim that a

party seeking to exercise a particular legal remedy must have standing. Standingmeans that the party must OWN the legal right to exercise a particular claim. The

party with standing is the real party in interest. In Goodwin v. District Court,

779 P.2d 837 (Colo. 1989)

At p. 12 in Plaintiffs stated Clearly, a tenant in an unlawful detainer has more

protections than a homeowner under a rule 120 procedure. Thus the facts that would

support an Equal Protection claim were present in the briefs. All of the arguments that are

in Plaintiffs Opening Brief were raised in Plaintiffs Objection to the Report andRecommendation which Judge Wiley admitted he declined to consider.

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 inLebron at pg 374 said:


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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.

The arguments below will show that both the magistrate and Judge Daniels did notcomply with the standard of review as required in applying allreasonable inferences

must be indulged in favor of the plaintiff.Swanson v. Bixler, 750 F.2d 810, 813 (10th

Cir.1984). Further, Judge Daniels claims that Such a motion is not appropriate to revisi

issues already addressed or advance arguments that could have been raised in prior

briefing is disingenuous since the record speaks loudly otherwise. All the issues and

arguments are in the briefs made available in the Appendix to Plaintiffs Opening Brief.

The Issues presented in this case are purely one of law and do not depend upon a

factual record or the factual record is sufficiently developed. United States v. Northrop

Corp., 59 F.3d 953 (9th Cir. 1995) [T]hough there is no bright-line rule to determine

whether a matter has been raised below, "a workable standard is that the argument must b

raised sufficiently for the trial court to rule on it." InIn Re E.R. Fegert, Inc., 887 F.2d 95

At Id. P 957 the court said:

The bankruptcy court did not rule on the applicability of Pearlman or invokePearlman in its decision. Nonetheless, it could have. The transcript of the February

13, 1986 hearing clearly shows that Seaboard argued the applicability of Pearlman.

That the bankruptcy court did not rule on it is not controlling. We have ruled that

intermediate appellate courts may consider any issue supported by the record,

even if the bankruptcy court did not consider it. [B, U ]

The issues now raised in this appeal were raised sufficiently in the district court for the

court to rule on as seen in plaintiffs Objections to the magistrates Report and motion in th

Rule 59e motion and in part in the First Amended Complaint and Plaintiffs Opposition tothe motion to dismiss. Judge Daniels and the magistrate have an arbitrary and conscious

policy decision to evade the issues.


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InLAWRENCEGOLAN, et al., vs JOHN ASHCROFT, Civil Action No. 01-B-185

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 notwhether plaintiffs Complaintprovesthat 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

14. 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. 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


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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. O sborn v Bank of

United States, 22 U.S.738 (1824)

25

. The acts of National Banks must be authorized by its respective act ofcreation---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 functionsbecause 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 bywhich 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 non-

judicial 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 aviolation of the 5

thAmendment (Bivens claim).

35. It is also a maliciousabuse 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


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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 maliciousabuse 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,5

67 F.2d1213 (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 ofIowa, 188 U.S. 220 (1903) andBank of America

v. City andCounty 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 anational 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 o

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 thelight most favorable to plaintiffs before dismissing plaintiffs complaint. In a sense, the

Judge abdicated his duty. Yet, inLebron, also cited, the court held Amtrak is an agency

instrumentality of the United States for the purpose of individual rights guaranteed again

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 thatshould be inferred is that CitiBank and CitiMortgage, whic

are instrumentalities of the United States, should be considered governmental bodies fo

the purpose of individual rights guaranteed against the government by Constitution. In


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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. 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 Cour

specifically hold that national banks are Governmental bodies for purposes of individual

rights under the Constitution. The Supreme Court has provided guidance for that conclu-

sion as well as the Due Process and Equal Protection issues discussed further.

Plaintiffs submit that CitiBank is a public corporationNOTprivate 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 subsidiary CitiMortgage are federal

instrumentalities subject to the due process clause of the 5th

Amendments. Plaintiffs subm

that the Rule 120 foreclosure denied plaintiffs due process rights under the 14th

Amendment as set forth in the arguments.

At p. 11, (APPENDIX, PTC), magistrate Craig B Shaffer states:


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Plaintiffs maintain that the manner of foreclosure by a federal chartered

corporation must be done under federal law.***( theirBivens 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 federallaw, property and interests in property are creatures of state law.Barnhill v.

Johnson, 503 U.S. 393, 398 (1992). Cf. UnitedStates 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 begoverned byfederal 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 Ramse

and Judith Mae Neville. The rights referred to in the Deed of Trust is the defendants'

rights as authorizedas 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 t

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


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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 clas

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 non-

udicialtojudicial foreclosures. On that premise rest plaintiffs' claims that non-judicial

foreclosures violate the 5th

amendment when exercised by public corporations created f

public and national purposes. The magistrates holding that banks were private

corporations and not federal instrumentalities subject to due process fly 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 i

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 rea

party in interest. As Justice Scalia inLebron 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 ]


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Like Amtrak, CitiBank as a national bank is a public not private corporation because

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 foreclosu

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

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***

InRunyan 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, eitherexpressly, or as incidental to its very existence.


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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]

InHudson 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 inLebronat p. 375, ...It would allow the

government to evade its most solemn obligations by simply resorting to the corporate

orm.

InFirstNational 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 Rule120 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.


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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 thcertifiable 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 cour

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 ca

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 draw

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 plaintiff

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


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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 requiremen

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 enablin

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 o

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 th

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 which should have been inferred in the motion to dismiss.


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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 SanF

ranciset al309 F.3d 551 (9 Circuit(2002) As the court stated:

Congress has legislated in the field of banking from the days ofM'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[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 th

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


20/39


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 agovernmental actor aproprietary actaffecting millions.

In First National Bank ofEastern Arkansas v. Taylor,907 F.2d 775 the Arkansas

Insurance Department notified FNB that debt cancellation contracts were the equivalent o

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, th

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). TheComptroller, 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'sauthorization 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

ury 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 b

the National Bank Act to national banks? Thus, the self-evident inference drawn fro

the opinion in Taylorand the cases cited shows us that the National Bank Act MUST

authorize national banks, eitherexpressly or as incidental to their authority over contract

with power of sale provisions, but only powers that Congress can exercise itself.


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II

CitiBank, as a national bank, is a public corporation &

federal instrumentality subject to the 5th

Amendmentjust asAmtrak

was held a federal instrumentality subject to the First Amendment whichshould have been inferred in the motion to dismiss

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

avor 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 foun

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. InLebron, 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 Daniel

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


22/39


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, 6L. 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 has 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 whichexplicitly presents neitherthe "Government entity" theory northe "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]

InLebron, 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 inLebron, 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

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 , 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


23/39


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,

areto be viewed as solely organized and operated for private gain.[B,U ]

The Court in Eastonwent on to say ID at p. 230 that the principles enunciated inMcCullough 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 aprivate corporation whose principal object is

individual trade and individual profit, but as apublic corporation created forpublic

and national purposes. That the mere business of banking is, in its own nature, aprivate 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 wer

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 shou

we now consider national banks like CitiBankprivate corporations? And why not

consider them agencies of the Federal government as held in Easton at p. 239. Certainl

the Ninth Circuitwould 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 custodialorincidenta

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


24/39


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 authorizedby a law o

the United States. It is not only itself the mere creature of law, but all its actions and all i

rights are dependent on the same law. [B,U ]

InShoshone 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]

InRunyan 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, eitherexpressly, 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 charterauthorize 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 througa 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,ShoshoneandRunyan show us that


25/39


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 otherspowers which the legislature may

rightfully exercise itself. [B, I,U ]

InEaston, 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 th

Constitution only constrains the government Judge Daniels could reasonably infer that

CitiBank is a governmental body for the purpose of individual rights guaranteed against th

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 POLICYMAKERNational Banks, like CitiBank and Federal Savings Associations are federally chartere

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 purposesCitiBank, 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 agencie

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 whic

is a purely public function exclusive to the government. At Id at p. 861, the court said:

***[T]he case ofM'Culloch v. Marylandis founded on, and sustained by, the idea

that the Bank is an instrument which is "necessary and proper for carrying intoeffect the powers vested in the government of the United States."***

"Under the public function test, when private individuals or groups are endowed by

the State with powers or functions governmental in nature, they become agencies or


26/39


instrumentalities of the State and subject to its constitutional limitations. The public

function test is satisfied only on a showing that the function at issue is both traditionally

and exclusively governmental."Kirtley v. Rainey, 326 F.3d 1088, 1093 (9th Cir. 2003)

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 th

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

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). Hamilto

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 forand desirability of federal banks and their potential role in shaping a national

economy were evident from the very beginning of the United States***

InFirst 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 apolicymakerproviding 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. Paul, 314 U. S. 95 the issue was


27/39


whether the lending functions wereproprietary orgovernmental. 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 ofdelegated 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 fromBismarck, as self-evident inferences, are th

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 nationa

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 Constitutionwhen 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.

InPittman 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:


28/39


(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 Congressto

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 purposeof 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 CitiMortgageshould 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 sai

inLebron,at p. 399:


29/39


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.

InLebron, respondent also invoked the courts decision in theRegional 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

creditorbut 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 wa

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 upo

termination of a temporary financial interest, and the fact that in Amtrak the role of the

government was as apolicymakerand not as a creditor as in Conrail. The elements whic

led the court inLebronto 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


30/39


mandated by its authority under the Commerce Clause. Thus the governments control

through the regulatory agencies is as a policymakerwhere 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.

InAmerican Bankers Mortgage Corp. v Federal Home Loan Corp. (D.C. No. 94-

55967 1995, 9th

Cir.) the court decided the issue against the framework ofLebron. The

court held that Freddie Mac was not an entity subject to the due process clause of the 5th

Amendment because it was more private, and compared to Amtrak, the government contr

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 und

the due process clause. That however is not the case here for as the Court in EastonvIow

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 inLebron 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, ia governmental actor for the purpose of attaching the 5

thAmendment Due Process Clause


31/39


C.POWER OF SALE PROVISIONS SHOULD NOT BE CONSTRUED ASAIVERS 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 b

authorized by a law of the United States when the operative result is to provide a waiver o

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 acts like a waiver, allowing lende

like CitiBank and CitiMortgage, in some states like California, the right to take a home

from a homeowner without a hearing; and in 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 an

CitiMortgage to evade its most solemn obligations under the Constitution***.Lebron, a

p. 374,375

The Supreme Court Cases ofO sborn, Shoshone, and Runyanclearly stated that

whatever the corporation assumed to do including rights in contract mustbe authorizedb


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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 th

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 clau

of the 14th Amendment.

Under color of state lawThe Colorado Rule 120, plaintiffs were foreclosed. The

Foreclosure law provides for a Public Trustee, an agent of the state, administering a proce

that provides inadequate due process to homeowners.

The rule 120 hearing is discriminatory against homeowners who have no right to a

ury 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

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 toresolve 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


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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 mortgag

to satisfy the 14th amendment.

InPlymouth 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

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 ***It was obvious that they made a copy of theoriginal 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 ]

Plaintiffs objected in the federal court to the sub-standard level of proof that the lowe

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


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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. ***

***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,U]

The Colorado Legislature amended portions of 38-38-100.3 (10) and 38-38-100.3 (11

(14), and (19), of the Colorado Revised Statutes. The new subsections read in relevant par

SECTION 2. 38-38-101 (1), (4) (g), (4) (j), (6), (9), and (10),

Colorado Revised Statutes, are amended, and the said 38-38-101 (4) isfurther amended BY THE ADDITION OF A NEW PARAGRAPH, to read:

38-38-101. Holder of evidence of debt may elect to foreclose.

(1) Documents required. Whenever a holder of an evidence of debt

declares a violation of a covenant of a deed of trust and elects to publish all

or a portion of the property therein described for sale, the holder or the

attorney for the holder shall file the following with the public trustee of the

county where the property is located:

***or (II) A copy of the evidence of debt and a certification signed and properly

acknowledged by a holder of an evidence of debt acting for itself or as agent,nominee, or trustee under subsection (2) of this section or a statement signed by the

attorney for such holder, citing the paragraph of section 38-38-100.3 (20) under

which the holder claims to be a qualified holder and certifying or stating that the

copy of the evidence of debt is true and correct and that the use of the copy is

subject to the conditions described in paragraph (a) of subsection (2)

In enacting this statute, the Colorado legislature memorialized a procedure which is

inherently unconstitutional because it allows a lender to submit less than certifiable proof

that it is the real party in interest with standing to foreclose on a homeowners propertyinterest which is supposedly a fundamental right protected under the 14

thAmendment.

The 14th Amendment of the United States Constitution states *** [N]or shall any

state deprive any person of life, liberty, orproperty, without due process of law; nor den


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to any person within its jurisdiction the equal protection of the laws. [B,U ]

The Supreme Court of Hawaii inSTATEv. KOTIS, No 18823(1999) said:

***The Addington Court 99 S. Ct. 1804, 60 L.Ed.2d 323 (1979) consideredwhat 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 quasi-

criminal 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) the standard of proof before a persons property is taken should be by clear andconvincing evidence which should extend to the determination ofwho is the real party i

interest with standing to foreclose. But the Public Trustee in the Rule 120 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 withou

requiring that it be attested to under penalty of perjury. No notarized assignment by the

original lender to the foreclosing lender of the note 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 agains

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

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 inAddington v. Texas, 441 U.S. 418, (1979)

In light ofGoodwin v. District Court, 779 P.2d 837 (Colo. 1989) which held that on

a debtor in a Rule 120 proceeding raises the "real party in interest" defense, therefore, th


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burden should devolve upon the party seeking the order of sale to show that he or sh

is indeed the real party in interest. The lenders burden MUST therefore be by clear an

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."'

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

which should have been inferred in the motion to dismiss?

InLINDSEYV. NORMET, 405 US. 56 (1972) the court said:

This Court has recognized that, if a full and fair trial on the merits is provided, theDue 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 otherbut cannotdeny 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 inLindsey. The complaint inLindsey

alleged that the tenant was limited in the defenses it could set up in the FED a