Day v. Freedom Mortgage Corporation et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 1:25-cv-01557-PAB-SBP
THOMAS J. DAY,
Plaintiff,
v.
FREEDOM MORTGAGE CORPORATION,
AMANDA FERGUSON,
HEATHER DEERE,
ALPINE MORTGAGE,
TRENT T. LAURIDSON, and
JASON S. BUCKLEY,
Defendants.
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Susan Prose, United States Magistrate Judge
This civil action is before the court on Freedom Mortgage Corporation’s Motion to
Dismiss Plaintiff’s Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(6) (ECF No. 20, the
“Motion” or “Motion to Dismiss”). The Motion seeks dismissal with prejudice of all claims
asserted against Freedom Mortgage Corporation (“Freedom”) in Plaintiff Thomas J. Day’s
Amended Complaint (ECF No. 4). The undersigned considers this matter pursuant to 28 U.S.C.
§ 636(b), the Order Referring Case dated June 18, 2025 (ECF No. 7), and the Memorandum
dated September 3, 2025 (ECF No. 23).
The court has carefully reviewed the Amended Complaint, the briefing on the Motion,
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including Plaintiff’s various oppositions and responses (ECF Nos. 21, 22, 23, 29, 30, 38, 39),1
court records subject to judicial notice, and the applicable law. The court concludes that oral
argument would not materially assist in the disposition of the Motion. For the reasons set forth
below, the court respectfully RECOMMENDS that the Motion to Dismiss be GRANTED and
that all claims against Freedom Mortgage Corporation be dismissed with prejudice.
BACKGROUND
I. 	Procedural History
Plaintiff, proceeding pro se, initiated this action on May 16, 2025. ECF No. 1. He filed
the operative Amended Complaint on June 6, 2025. ECF No. 4. The Amended Complaint names
as defendants Freedom Mortgage Corporation and its counsel, Amanda Ferguson and Heather
Deere, as well as Alpine Mortgage, Trent T. Lauridson, and Jason S. Buckley. Id. Separate
motions to dismiss have been filed by Alpine Mortgage, Lauridson, and Buckley (ECF No. 11)
and Ferguson (ECF No. 13) and Deere (ECF No. 15). The court addresses those motions in
separate recommendations.
This case is related to two state-court foreclosure proceedings involving the same real
property located at 106 Rachel Lane, Breckenridge, Colorado 80424 (the “Property”). First,
Alpine Bank (named in this action as “Alpine Mortgage”) filed a nonjudicial foreclosure action
in Summit County District Court, Case No. 2025CV30090, based on Plaintiff’s default under a
2019 home-equity line of credit also secured by the Property. See ECF No. 4 at 3–4; ECF No. 11,
1 In preparing this recommendation on the Motion to Dismiss, the court has reviewed and
considered all of these papers. The court finds that the contents of those papers does not alter the
analysis here.
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Exs. F–I. Second, and as particularly relevant here, Freedom initiated a nonjudicial foreclosure
action in Summit County District Court, Case No. 2025CV30103, based on its deed of trust
encumbering the Property. See ECF No. 4 at 3–9; ECF No. 20 at 2. For ease of reference, the
court will refer to the case initiated by Freedom in Summit County District Court as the
“Freedom Foreclosure Action.”2
II. 	Facts
The Amended Complaint is lengthy and includes a mixture of factual allegations, legal
conclusions, citations to inapplicable authority, and non-justiciable rhetoric, including references
to Plaintiff as “a living man presenting myself pro se/sui juris,” demands for proof of
“consideration,” assertions of “God-given rights,” and challenges to the validity of the
underlying loan based on the creation of money through credit rather than legal tender. See, e.g.,
generally ECF No. 4; see also ECF No. 21, ECF No. 22-1, ECF No. 23, ECF No. 30, ECF No.
31 (consistent phrasing across Plaintiff’s filings). Courts within the Tenth Circuit have
recognized that similar rhetoric and theories—often associated with the so-called “sovereign
2 In evaluating the Motion to Dismiss, the court may consider documents incorporated by
reference in Plaintiff’s pleading, as well as other filings in the Freedom Foreclosure Action,
which are subject to judicial notice. See, e.g., Gee v. Pacheco, 627 F.3d 1178, 1186 (10th Cir.
2010) (on a motion to dismiss, the court may consider documents the complaint incorporates by
reference; “documents referred to in the complaint if the documents are central to the plaintiff’s
claim” and there is no dispute concerning their authenticity; and matters subject to judicial
notice) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)); see also
St. Louis Baptist Temple, Inc. v. Fed. Deposit Ins. Corp., 605 F.2d 1169, 1172 (10th Cir. 1979) (a
court may take judicial notice of filings in related cases, “both within and without the federal
judicial system, if those proceedings have a direct relation to matters at issue”). Here, the
Freedom Foreclosure Action is expressly referenced in the Amended Complaint and forms part
of the factual backdrop for Plaintiff’s claims against Freedom, which arise from the same loan
default and related enforcement proceedings.
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citizen” movement—do not supply a cognizable legal basis for relief and may be disregarded
when evaluating the sufficiency of a complaint. See Sipple v. Zevita, No. 5:23-cv-4038-HLT,
2023 WL 4706621, at *3-4 (D. Kan. July 24, 2023); id. at *3 (“Courts show no hesitation in
rejecting as frivolous arguments based on the theory of sovereign citizenship.”); see also, e.g.,
United States v. Sellors, 572 F. App’x 628, 632 (10th Cir. 2014) (finding arguments associated
with the “sovereign citizen” movement “patently frivolous”); United States v. Palmer, 699 F.
App’x 836, 838 (10th Cir. 2017) (“As for Palmer’s sovereign state citizen argument, reasonable
jurists could also not disagree that the claim is plainly frivolous.”). To the extent such allegations
constitute legal conclusions or rely on legally-unsupported theories, the court does not credit
them for purposes of evaluating the Motion. Khalik v. United Air Lines, 671 F.3d 1188, 1191
(10th Cir. 2012) (“We will disregard conclusory statements and look only to whether the
remaining[ ] factual allegations plausibly suggest the defendant is liable.”).
Stripped of these extraneous contentions, the Amended Complaint alleges that on
September 28, 2018, Plaintiff executed a promissory note and deed of trust (Loan No.
0058913856) in the original principal amount of $636,446.00 with CMG Mortgage, Inc., d/b/a
CMG Financial, secured by the Property. ECF No. 4 at 5); ECF No. 20 at 2. The deed of trust
named Mortgage Electronic Registration Systems, Inc. (“MERS”) as nominee for the lender and
was recorded on October 2, 2018, at Reception No. 974858 in the Summit County real property
records. See ECF No. 13-1 (authenticated copy of Deed of Trust).3 Freedom later became the
servicer and holder of the note through a corporate assignment of the deed of trust from MERS,
3 In fact, the deed of trust to which Plaintiff refers was actually dated February 26, 2015. See
ECF No. 13-1 at 7.
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recorded on October 31, 2022, at Reception No. 1123670. ECF No. 4 at 5; ECF No. 13-2
(authenticated copy of Assignment).
Plaintiff contends that the origination documents failed to disclose the precise “funding
mechanism” of the loan, and that this omission rendered the loan invalid or unenforceable. ECF
No. 4 at 4. He further alleges that Freedom, through its counsel Ferguson and Deere, concealed
the true funding source and refused to provide documentation he demanded—specifically, wire
transfer records, accounting ledgers, and the original “wet-ink” promissory note—after he sent
self-styled “Affidavits of Truth” to Freedom on March 12 and April 22, 2025. ECF No. 4 at 5–6.
Freedom responded on April 29, 2025, providing a payment history and certain loan documents,
but declined to provide the requested origination/funding details. Id. at 5.
On April 16, 2025, Freedom, through its attorneys, recorded a Notice of Election and
Demand for Sale (“NED”), thus commencing the Freedom Foreclosure Action, based on
Plaintiff’s default under the 2018 loan, claiming a balance due of $506,076.75. ECF No. 4 at 4,
7; ECF No. 13-3 (authenticated copy of recorded NED). Plaintiff alleges the foreclosure process
was defective because the notices purportedly omitted information required by Colorado law and
were made without providing “pre-NED notices, Combined Notices, [Colorado] Rule [of Civil
Procedure] 120 hearing notices, or cure statements.” ECF No. 4 at 4. In later filings, Plaintiff
states that he has since entered into a new thirty-year loan agreement with Freedom (which he
describes as having been signed under duress) and that the Freedom Foreclosure Action has been
placed in abeyance, but he maintains that Freedom still has not provided the funding-related
documentation he seeks. ECF No. 30 at 1–2; ECF No. 38 at 1–2.
Plaintiff raises six claims against Freedom: violation of the Truth in Lending Act, 15
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U.S.C. § 1601 et. seq. (“TILA”) (Claim One); violation of the Fair Debt Collection Practices Act
(“FDCPA”), 15 U.S.C. § 1692 et seq. (Claim Two); violation of the Real Estate Settlement
Procedures Act (“RESPA”), 12 U.S.C. § 2605 et seq. (Claim Three); deprivation of due process
under the Fifth and Fourteenth Amendments, actionable via 42 U.S.C. § 1983 (Claim Four);
violation of the Colorado Consumer Protection Act (“CCPA”), Colo. Rev. Stat. § 6-1-101 et seq.
(Claim Five); and fraud, “supported by consideration under Colorado common law” and the
Uniform Commercial Code (“U.C.C.”) § 3-501(b)(2) (Claim Six). ECF No. 4 at 3-6. As relief for
each claim, Plaintiff requests damages and declaratory and injunctive relief. Id. at 8-9.
LEGAL STANDARD
Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a complaint for
“failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). In deciding a
motion under Rule 12(b)(6), the court must “accept as true all well-pleaded factual allegations
. . . and view these allegations in the light most favorable to the plaintiff.” Casanova v. Ulibarri,
595 F.3d 1120, 1124 (10th Cir. 2010) (quoting Smith v. United States, 561 F.3d 1090, 1098 (10th
Cir. 2009)). “The burden is on the plaintiff to frame a ‘complaint with enough factual matter
(taken as true) to suggest’ that he or she is entitled to relief.” Robbins v. Oklahoma, 519 F.3d
1242, 1247 (10th Cir. 2008) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
A plaintiff may not rely on mere labels or conclusions, “and a formulaic recitation of the
elements of a cause of action will not do.” Twombly, 550 U.S. at 555. Rather, “a complaint must
contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); see also Robbins, 519 F.3d at 1247
(explaining that plausibility refers “to the scope of the allegations in a complaint,” and that the
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allegations must be sufficient to nudge a plaintiff’s claims “across the line from conceivable to
plausible”). The ultimate duty of the court is to “determine whether the complaint sufficiently
alleges facts supporting all the elements necessary to establish an entitlement to relief under the
legal theory proposed.” Forest Guardians v. Forsgren, 478 F.3d 1149, 1160 (10th Cir. 2007).
In applying these principles, the court is mindful that Plaintiff proceeds pro se and thus
affords his papers and filings a liberal construction. Smith v. Allbaugh, 921 F.3d 1261, 1268 (10th
Cir. 2019). But the court cannot and does not act as his advocate, United States v. Griffith, 928
F.3d 855, 864 n.1 (10th Cir. 2019), and applies the same procedural rules and substantive law to
Plaintiff as to a represented party. See Requena v. Roberts, 893 F.3d 1195, 1205 (10th Cir. 2018);
see also Dodson v. Bd. of Cnty. Comm’rs, 878 F. Supp. 2d 1227, 1236 (D. Colo. 2012) (“Pro se
status does not relieve Plaintiff of the duty to comply with various rules and procedures
governing litigants and counsel, or the requirements of the substantive law and, in these regards,
the Court will treat Plaintiff according to the same standard as counsel licensed to practice law
before the bar of this Court.”).
ANALYSIS
For the reasons that follow, the court finds that Plaintiff has stated no legally cognizable
claim for relief.
I. 	Plaintiff’s claims rest on legally unsupported theories concerning loan consideration
and debt extinguishment.
The core contention underlying Plaintiff’s claims is that he cannot be made to pay back
the loan, which is unenforceable, because Freedom allegedly provided no lawful consideration.
ECF No. 4 at 3-8. Specifically, he alleges that the loan was not funded through the advancement
of Freedom’s own money or lawful tender, but instead was created through credit, bookkeeping
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entries, or undisclosed funding mechanisms, rendering the indebtedness void for lack of
consideration. He further alleges that because Freedom has not produced the original promissory
note or otherwise demonstrated the source of loan funding, the note, deed of trust, and
subsequent foreclosure efforts are void. See id.
Although Plaintiff does not explicitly describe his theory using any particular label, the
substance of his allegations closely mirrors what courts commonly refer to as the
“redemptionist”4 or “vapor money” theory. Under that theory, borrowers contend that debts
arising from loans funded through credit—rather than physical currency or specie—are
unenforceable, lack consideration, or may be discharged through unilateral demands for proof of
funding or presentment of negotiable instruments:
The genesis of the vapor money theory is that the decision by the United States in
1933 to discard the gold standard resulted in the federal government’s bankruptcy,
after which lenders have been creating unenforceable debts because they are
lending credit rather than legal tender. Accordingly, under the vapor money theory,
a loan imposes no repayment obligation if the indebtedness was funded with credit
as opposed to hard currency.
Mercado v. Transp. Funding, LLC, No. 2:23-CV-02052-HLT, 2025 WL 388661, at *3 (D. Kan.
Feb. 4, 2025) (quoting Thomas v. All In Credit Union, No. 23-00215-TFM-B, 2023 WL
9197752, at *8 (S.D. Ala. Dec. 19, 2023), report and recommendation adopted, 2024 WL
4 The “redemptionist” theory “propounds that a person has a split personality: a real person and a
fictional person called the ‘strawman. The ‘strawman’ purportedly came into being when the
United States went off the gold standard in 1993, and, instead, pledged the strawman of its
citizens as collateral for the country’s national debt. Redemptionists claim that government has
power only over the strawman and not over the live person, who remains free. Individuals can
free themselves by filing UCC financing statements, thereby acquiring an interest in their
strawman.” Monroe v. Beard, 536 F.3d 198, 203 n.4 (3d Cir. 2008). Here, Plaintiff here labels
himself “a living man presenting Sui Juris.” See ECF No. 1 at 1.
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312682 (S.D. Ala. Jan. 25, 2024)). In essence, proponents of the theory believe that borrowers
may “essentially convert a payment demand into legal tender and magically extinguish [their]
debts” through unilateral action. Thomas, 2023 WL 9197752, at *8.
Courts within the Tenth Circuit and elsewhere have consistently rejected such arguments
as legally baseless. Mercado, 2025 WL 388661, at *3 (describing the theory as one that has been
“summarily, universally, and rightly rejected”) (collecting cases); Baldwin v. Glob. Lending
Servs., LLC, No. CIV-25-121-D, 2025 WL 1426564, at *2-3 (W.D. Okla. May 16, 2025); Sipple,
2023 WL 4706621, at *1, *3–4.5 As one court has aptly described the essence of the matter,
redemptionist arguments are “frivolous legal arguments made in an attempt to avoid paying for
the car,” Podgorny v. Ally Fin., No. CV-21-00288-PHX-DJH, 2022 WL 672676, at *2 (D. Ariz.
2022)—or, as is the case here, to avoid paying hundreds of thousands of dollars owed to a lender.
This court likewise rejects this wholly-discredited theory that finds no support in the law.
Here, Plaintiff contends that Freedom was obligated to demonstrate that lawful money
was advanced at the origination of the loan (that is, that the lender placed its own funds at risk),
to verify the source of loan funds upon demand, and to produce original loan instruments and
internal funding records as prerequisites to enforcing the debt. See ECF No. 4 at 3-9; ECF No. 20
5 Accord, e.g., Adams v. Partners, No. 24-CV-943-PP, 2025 WL 101615, at *3 (E.D. Wis. Jan.
15, 2025); Farina v. Navy Fed. Credit Union, No. 3:24-cv-287-TKW-HTC, 2024 WL 3333270,
at *2 (N.D. Fla. June 28, 2024), report and recommendation adopted, 2024 WL 3330586 (N.D.
Fla. July 8, 2024); Marshall v. Mechanics Bank Auto Fin., No. 2:22-CV-06973-MCS-KS, 2023
WL 2628674 (C.D. Cal. Feb. 15, 2023); Price v. Lakeview Loan Servicing, LLC, No. 2:19-cv-
655-FtM-29MRM, 2021 WL 1610097, at *2-3 (M.D. Fla. Apr. 26, 2021), aff’d, No. 21-11806,
2022 WL 896816 (11th Cir. Mar. 28, 2022); Swain v. Dir. of Corr., No. 19-CV-03882-EMC,
2019 WL 7020322, at *2 (N.D. Cal. Dec. 20, 2019); McLaughlin v. CitiMortgage, Inc., 726 F.
Supp. 2d 201, 213-14 (D. Conn. 2010).
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at 2–3. No such obligations exist under federal law, Colorado law, or the Uniform Commercial
Code, and as discussed above, courts have uniformly rejected the theory that loans funded
through credit, accounting entries, or similar banking mechanisms lack consideration or are
unenforceable. See, e.g., Mercado, 2025 WL 388661, at *3. It is beyond cavil that loans funded
through bank credit are a routine and lawful feature of modern banking and create valid,
enforceable repayment obligations—which Plaintiff here obviously seeks to avoid.
Nor does a borrower’s unilateral demand for proof of consideration, verification of
funding sources, or production of original documents operate to discharge a debt or nullify a
security interest. Courts confronting materially identical arguments have rejected them as a
matter of law. See Brown v. Selene Fin. LP, No. 1:22-CV-04690-LMM, 2023 WL 4996552
(N.D. Ga. June 1, 2023), report and recommendation adopted, 2023 WL 3335060 (N.D. Ga.
May 9, 2023) (rejecting borrower’s contention that mortgage debt was unenforceable because it
was allegedly not funded with “actual money,” and characterizing the argument as a variant of
the discredited “vapor money” theory).
Because each of Plaintiff’s claims brought in this lawsuit (couched in whatever legal garb)
rests on the premise that the loan was void or unenforceable due to the alleged absence of lawful
consideration or failure of proof of consideration—that is, the “vapor money” or similarly
unsupported theory—that alone is “sufficient to grant [the] Motion to Dismiss, as . . . these
theories have been universally and emphatically rejected by numerous federal courts for at least
the last 25 years.” See Baldwin, 2025 WL 1426564, at *3 n.4 (citing McLaughlin, 726 F. Supp.
2d at 214). Accordingly, dismissal with prejudice of all claims against Freedom is warranted on
this basis alone. See, e.g., Brereton v. Bountiful City Corp., 434 F.3d 1213, 1219 (10th Cir. 2006)
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(“A dismissal with prejudice is appropriate where a complaint fails to state a claim under Rule
12(b)(6) and granting leave to amend would be futile.”); Viegas v. Kane, No. 23-cv-03291-PAB-
MDB (D. Colo. 2023) (ECF No. 38 at 16 n.6 ), report and recommendation adopted, ECF No.
42 (dismissing with prejudice a due process claim alleging that a foreclosure action was
premised on “unjust cause” and that the defendants colluded in effectuating the foreclosure “with
a fraudulent security instrument,” and observing that “Plaintiffs have caused Defendants and the
court [to expend] significant time and resources on what appear to be entirely meritless claims
about a foreclosure action that has long been resolved in state court”) (citing Avery v. Wade, No.
22-4093, 2022 WL 17544077, at *2 (10th Cir. Dec. 9, 2022) (finding that the district court
“didn’t abuse its discretion in dismissing [the plaintiff’s] claims with prejudice” because he
raised “indisputably meritless legal theories”) (cleaned up)).
II. 	Plaintiff otherwise fails to state a plausible claim for relief.
Even if the vapor money theory were viable (which it decidedly is not), the Amended
Complaint fails to allege sufficient factual matter to state a plausible claim for relief on any of
the six claims broad against Freedom. In the interest of providing a complete recommendation
for review by Chief Judge Brimmer, the court addresses the additional pleading defects
compelling dismissal of each claim.
A. 	Truth in Lending Act (Claim One)
In Claim One, Plaintiff alleges that Freedom (and its attorneys, Ferguson and Deere)
violated the Truth in Lending Act by concealing the funding mechanism of the 2018 loan and
failing to provide the documentation he demanded in his March and April 2025 “Affidavits of
Truth.” Specifically, Plaintiff contends that the origination documents omitted details regarding
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the loan’s funding source (e.g., whether the lender advanced its own funds, used bookkeeping
entries, or involved the Federal Reserve), thereby misleading him as to the loan’s validity, and
that Freedom’s April 29, 2025 response to his demands—while providing a payment history—
omitted the requested wire transfers, records reflecting compliance with generally-accepted
accounting principles, and the original promissory note, all in purported violation of the TILA
disclosure requirements. ECF No. 4 at 3-4.
TILA imposes civil liability on “any creditor who fails to comply with any requirement
imposed under this part, including any requirement under section 1635, subsection (f) or (g) of
section 1641 of this title, or part D or E of this subchapter.” 15 U.S.C. § 1640(a). A creditor is
required to disclose the total amount financed by the agreement, the finance charge, the annual
percentage rate, and the schedule of payments in the credit agreement. Id. § 1638. A TILA claim
must be brought “within one year from the date of the occurrence of the violation.” Id. § 1640(e).
The statute of limitations begins to run “when credit is extended through the consummation of
the transaction between the creditor and its customer without the required disclosures being
made.” Betancourt v. Countrywide Home Loans, Inc., 344 F. Supp .2d 1253, 1258 (D. Colo.
2004).
Freedom argues that the TILA claim must be dismissed on two ground: first, because it is
time-barred, and second, because Freedom—as a “subsequent servicer”—cannot be held liable
based on the facts alleged by Plaintiff. Motion at 4. The court agrees, on both counts.
An analysis of the well-pleaded facts compels the conclusion that the claim is time-
barred. Based on Plaintiff’s allegations, the loan transaction was consummated on September 28,
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2018. ECF No. 4 at 3.6 Consequently, the statute of limitations began to run on that date and
expired one year later: on September 28, 2019. This lawsuit, of course, was not filed until years
after that—on May 16, 2025. Plaintiff makes no rejoinder to the argument that the TILA claim is
time-barred, see generally ECF No. 30, and this court can conceive of no legal justification,
under the circumstances presented here, for extending the statute of limitations some six years
past its expiration. See Heil v. Wells Fargo Bank, N.A., 298 F. App’x 703, 706 (10th Cir. 2008)
(recognizing that a TILA claim is subject to equitable tolling which allows plaintiffs to “sue after
the statutory period has expired if they have been prevented from doing so due to inequitable
circumstances”).
Plaintiff does not argue that the statute of limitations should be equitably tolled, and even
if he had, there is nothing in the record plausibly suggesting that he could meet his burden to
prove that tolling should be employed here. See id. at 707 (a plaintiff bears “the burden of
proving that the limitations period should be equitably tolled”). The instant record gives no
indication that Plaintiff lacked awareness of all the facts on which his TILA claim is based by
September 28, 2019, when he knew the details he claims to be of significant importance now
were not contained in the loan origination documents. See, e.g., Centennial Bankshares, Inc. v.
Utah through Utah Dep’t of Fin. Institutions, 834 F. App’x 448, 452 (10th Cir. 2020)
(“[E]quitable tolling is not available for those who could have known of the relevant information
but inexcusably and unreasonably slept on their rights.”).
6 As previously noted, the public record establishes that the Deed of Trust was in fact executed
on February 26, 2015. See ECF No. 13-1 at 7.
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Neither are there any well-pleaded facts indicating that Freedom was somehow
responsible for creating “inequitable circumstances” that prevented Plaintiff from filing suit
within the limitations period. See Heil, 298 F. App’x at 706 (“‘Equitable tolling’ is the doctrine
under which plaintiffs may sue after the statutory time period has expired if they have been
prevented from doing so due to inequitable circumstances.”); see also Dalton v. Countrywide
Home Loans, Inc., 828 F. Supp. 2d 1242, 1249 (D. Colo. 2011) (rejecting an equitable tolling
argument where “Plaintiff has not alleged that Defendants prevented her from determining that
there were inadequacies in their disclosures under TILA. To the contrary, the facts plausibly
show that it is Plaintiff, if anyone, who has generated the “inequitable circumstances” in the
relationship between the litigants here by pursuing claims based on legally baseless theories
plainly designed to absolve him from the obligation to pay back his loan. Plaintiff’s TILA claim
is time-barred and, because that defect cannot be rectified, should be dismissed with prejudice.
See, e.g., Gee, 627 F.3d at 1181 (affirming dismissal with prejudice where claims were barred by
statute of limitations); McGowan v. Wal-Mart Stores, 757 F. App’x 786, 788 n.3 (10th Cir. 2019)
(explaining that dismissals based on untimeliness are ordinarily with prejudice).
Even if the claim were not time-barred, it cannot proceed against Freedom, a subsequent
servicer of the 2018 loan and not the originating lender. “Under TILA, a subsequent ‘assignee
will not be liable unless the TILA disclosure violations are apparent on the documents provided
to the assignee by the original lender.’” Salazar v. PennyMac Mortg. Inv. Tr. Holdings I, LLC,
No. CV 19-517 KG/LF, 2019 WL 4458961, at *7 (D.N.M. Sept. 17, 2019) (quoting Khalsa v.
Bank of Am. Nat’l Ass’n, 2017 WL 3602045, at *2 (D.N.M.) (citing 15 U.S.C. § 1641(a) (“[A]ny
civil action for a violation of this subchapter . . . which may be brought against a creditor may be
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maintained against any assignee of such creditor only if the violation for which such action or
proceeding is brought is apparent on the face of the disclosure statement[.]”)). In this case,
Plaintiff fails to allege facts plausibly showing that it is apparent on the face of the assignment
documents that the original lender, MERS, did not make the required TILA disclosures.
Finally, while TILA imposes specific disclosure obligations on creditors at the time of the
consummation of a loan—such as setting forth of the finance charge, annual percentage rate, and
payment schedule—it does not require disclosure, years after closing and upon the buyer’s
unilateral demand, of the documents Plaintiff claims he did not receive here: documents
reflecting internal funding mechanics, wire transfer records, accounting ledgers, or the original
promissory note. See generally 15 U.S.C. § 1638(a); Regulation Z, 12 C.F.R. § 1026.18. Plaintiff
identifies no specific material disclosure required by TILA or Regulation Z that was omitted at
origination, nor does he plead any resulting actual or statutory damages distinct from the
consequences of his own default on the 2018 loan. His demand for a plethora of internal records
wholly removed from anything TILA requires is clearly animated by the frivolous vapor money
theory that compels rejection of his claims in total and that bears no relation to the text or
purpose of TILA.
Accordingly, Claim One fails as a matter of law and should be dismissed with prejudice.
See Brereton, 434 F.3d at 1219.
B. 	Fair Debt Collection Practices Act (Claim Two)
In Claim Two, Plaintiff alleges that Freedom violated the FDCPA by issuing an allegedly
defective Notice of Election and Demand on April 16, 2025, by misrepresenting the validity of
the debt, and by failing to provide “pre-NED notices, Combined Notices, Rule 120 hearing
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notices, or cure statements.” ECF No. 4 at 4. Plaintiff cites 15 U.S.C. §§ 1692e and 1692g(b) and
contends that these actions constituted false or misleading debt collection practices and a failure
to validate the debt. This claim does not survive scrutiny under Rule 12(b)(6).
To state a claim under the FDCPA, a plaintiff must allege facts plausibly demonstrating
that (1) he is a “consumer,” under § 1692a(3); (2) the obligation at issue is a “debt” arising from
a transaction primarily for personal, family, or household purposes; (3) the defendant is a “debt
collector” as defined in 15 U.S.C. § 1692a(6); and (4) the defendant violated a specific provision
of the FDCPA. Tavernaro v. Pioneer Credit Recovery, Inc., 43 F.4th 1062, 1067 (10th Cir.
2022). Plaintiff has not alleged that Freedom is a debt collector under the statute. Rather, his
allegations against Freedom arise from its role as the servicer of the loan, secured by a deed of
trust on the Property, and from its subsequent efforts, through counsel, to enforce that security
interest after Plaintiff’s default, including causing the NED to be recorded and pursuing
nonjudicial foreclosure. See ECF No. 4 at 4.
Entities whose principal purpose is not debt collection—including creditors and servicers
collecting debts owed to themselves—are generally excluded from the FDCPA’s primary
definition of “debt collector.” See 15 U.S.C. § 1692a(6)(F) (excluding from the definition of
‘debt collector” “any person collecting or attempting to collect any debt owed or due or asserted
to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary
obligation or a bona fide escrow arrangement; (ii) concerns a debt which was originated by such
person; (iii) concerns a debt which was not in default at the time it was obtained by such person;
or (iv) concerns a debt obtained by such person as a secured party in a commercial credit
transaction involving the creditor”); see also Obduskey v. McCarthy & Holthus LLP, 586 U.S.
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466, 477 (2019) (recognizing that “those who engage in only nonjudicial foreclosure proceedings
are not debt collectors within the meaning of the Act”). In the foreclosure context, “the vast
majority of courts, especially in this District, have found that foreclosure activities are outside
the scope of the FDCPA.” Schwitzer v. Wells Fargo Bank, N.A., No. 12-cv-01367-RBJ-MJW,
2013 WL 607832, at *5 (D. Colo. Feb. 19, 2013) (citing Wessler v. Colonial Nat’l Mortg., No.
11-cv-02683-RBJ-KMT, 2012 WL 5949730 (Bankr. D. Colo. Aug. 21, 2012), report and
recommendation adopted, 2012 WL 5949581 (Bankr. D. Colo. Nov. 28, 2012)).
Here, Freedom is alleged to have “later serviced” the CMG-originated loan and to have
pursued foreclosure on its own behalf through retained counsel. ECF No. 4 at 4. Plaintiff does
not allege, however, that Freedom’s “principal purpose” is debt collection, that it “regularly
collects or attempts to collect” debts owed to another, or that it acquired the loan only after it was
already in default. In the absence of such factual allegations, the Amended Complaint does not
plausibly allege that Freedom is a “debt collector” subject to the Act. See Williams v.
Dovenmuehle Mortg., Inc., No. 24-cv-00447-CNS-NRN, 2024 WL 3340984, at *5 (D. Colo.
May 23, 2024) (recommending dismissal of FDCPA claim where the defendants began servicing
the loan after the plaintiff went into default), report and recommendation adopted, 2024 WL
3912503 at *3 (D. Colo. July 22, 2024) (recognizing, in affirming dismissal of the claim, that
“[c]reditors that acquire a non-defaulted loan in order to service it are also acting more like the
original creditors, so are also excluded” from the FDCPA’s definition of debt collector).
Even if Freedom could be treated as a “debt collector,” the specific conduct challenged
here—recording an NED and initiating nonjudicial foreclosure on a deed of trust—falls within
the enforcement of a security interest, which the Supreme Court has held is not “debt collection”
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covered by most of the FDCPA’s provisions. The Supreme Court has explained that “those who
engage in only nonjudicial foreclosure proceedings are not debt collectors within the meaning of
the Act” for purposes other than § 1692f(6), which is not applicable here.7See Obduskey v.
McCarthy & Holthus LLP, 586 U.S. 466, 477 (2019). Plaintiff’s FDCPA theory against Freedom
focuses entirely on its role in initiating nonjudicial foreclosure and issuing associated notices,
rather than on any separate effort to collect money from Plaintiff apart from enforcing the deed
of trust. ECF No. 4 at 4–5. Under Obduskey, such foreclosure activity falls outside the FDCPA’s
core prohibitions, including §§ 1692e and 1692g(b).
The claim would still fail for failure to state a plausible claim for relief even if Freedom
were subject to the FDCPA. Plaintiff does not identify any concrete misrepresentation or practice
by Freedom that independently violates §§ 1692e or 1692g(b). He asserts in general terms that
the NED “misrepresented the debt’s validity” and that Freedom failed to provide “pre-NED
notices or cure statements,” but these assertions are entirely derivative of his contention that the
2018 mortgage is void for lack of “lawful consideration” and for failure to disclose internal
funding mechanisms. ECF No. 4 at 3–5. As discussed in the court’s analysis of Plaintiff’s “vapor
money” theory, that contention is legally baseless and does not render otherwise accurate
foreclosure notices “false” or “misleading” within the meaning of § 1692e. Nor does Plaintiff
allege that he submitted a written validation request triggering § 1692g(b) or that Freedom failed
7 Section 1692f(6) defines conduct violating the FDCPA to include: “Taking or threatening to
take any nonjudicial action to effect dispossession or disablement of property if—(A) there is no
present right to possession of the property claimed as collateral through an enforceable security
interest; (B) there is no present intention to take possession of the property; or (C) the property is
exempt by law from such dispossession or disablement.”
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to provide the limited verification that provision requires.
Because Plaintiff has not plausibly alleged that Freedom is a “debt collector,” has
challenged conduct that lies outside the FDCPA’s principal scope, and has not identified any
specific actionable misrepresentation or failure to validate attributable to Freedom, Claim Two
fails as a matter of law and should be dismissed with prejudice.
C. 	Real Estate Settlement Procedures Act (Claim Three)
“The purpose of RESPA is to make sure that consumers receive information regarding
the nature, settlement costs, and servicing of home loans.” Henson v. Bank of Am., 935 F. Supp.
2d 1128, 1144 (D. Colo. 2013) (citing 12 U.S.C. § 2601(a)). RESPA
provides a mechanism for borrowers to seek information from and protest errors to
their mortgage servicers. Specifically, RESPA requires servicers to respond to a
borrower’s Qualified Written Request. A QWR is a “written correspondence” from
the borrower to the servicer that (1) identifies the borrower and the borrower’s
account; and (2) either (a) asserts an error in the borrower’s account or (b) requests
information related to the 	servicing 	of 	the borrower’s account. 12 	U.S.C.
§ 2605(e)(1). Once a servicer receives a QWR, it must “provide a written response
acknowledging 	receipt 	of 	the 	correspondence 	within 	5 	[business] 	days.”
§ 2605(e)(1)(A). Then, within 30 business days, the servicer must (1) correct the
asserted error; (2) explain why it believes the account isn’t in error; (3) provide the
requested information; or (4) explain why the requested information is unavailable.
§ 2605(e)(2).
Fowler v. Bank of Am., Corp., 747 F. App’x 666, 668-69 (10th Cir. 2018). And so in order to
plead a plausible claim under § 2605(e), a plaintiff must allege facts plausibly showing
(1) submission of a QWR that identifies the borrower and account and either asserts an account
error or seeks servicing-related information; (2) the servicer’s failure to timely and adequately
respond; and (3) actual damages causally linked to the violation or a pattern or practice of
noncompliance entitling the plaintiff to statutory damages. See id. at 669.
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Freedom moves to dismiss the RESPA claim for two reasons: first, because Plaintiff’s
allegations concerning the “Affidavits of Truth” that Plaintiff sent to Freedom on March 12 and
April 22, 2025—“requesting wire transfers, GAAP-compliant records, and the original note,”
ECF No. 4 at 5—do not plausibly show that these documents constituted QWRs and thus cannot
be the basis for a RESPA claim, and, second, because Plaintiff fails to allege actual damages
causally connected to any conduct undertaken by Freedom. See ECF No. 20 at 7.
Starting with the argument that the “Affidavits of Truth” were not QWRs, Freedom
argues that the factual contentions concerning these documents—which requested “wire
transfers, GAAP-complaint records, and the original promissory note”—concern the origination
of the loan, not Freedom’s servicing of it. ECF No. 20 at 8. A QWR must relate to the
“servicing” of a loan, which RESPA defines as “receiving any scheduled periodic payments from
a borrower pursuant to the terms of any loan, including amounts for escrow accounts . . ., and
making the payments of principal and interest and such other payments with respect to the
amounts received from the borrower as may be required pursuant to the terms of the loan.” 12
U.S.C. § 2605(i)(3).
Plaintiff makes no substantive response to this argument. His rejoinder consists of the
assertion that “[t]he Amended Complaint. . . states [a] plausible claim[] under [RESPA],” ECF
No. 30 at 1, and that “QWRs sent on April 1, 2024, February 3, 2025, and February 14, 2025,
received inadequate responses, causing damages.” Id. at 3. The contention that Plaintiff has
stated a plausible RESPA claim is merely a legal conclusion, which the court disregards in
evaluating whether the claim survives a motion to dismiss. See Iqbal, 556 U.S. at 678 (“the tenet
that a court must accept as true all of the allegations contained in a complaint is inapplicable to
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legal conclusions”). And the documents Plaintiff allegedly sent to Freedom on April 1, 2024, and
February 3 and February 14, 2025, are not mentioned in his pleading. See ECF No. 4 at 5 (basing
the RESPA claim on the “Affidavits of Truth” dated March 12 and April 22, 2025). Plaintiff
cannot amend his pleading “by alleging new facts in [his] response to a motion to dismiss.” In re
Qwest Communications Int’l, Inc., 396 F. Supp. 2d 1178, 1203 (D. Colo. 2004). In any event, the
allegations about these additional “QWRs” sent in April 2024 and February 2025 do not
plausibly indicate that these documents (1) identified Plaintiff and his account and (2) asserted an
error in that account or requested information “related to the servicing” of his account. See
Fowler, 747 F. App’x at 668-69.
The same pleading omissions characterize Plaintiff’s minimal allegations regarding the
“Affidavits of Truth,” the contents of which are not described in his pleading. See ECF No. 4 at
5. He therefore has not plausibly alleged that these documents amounted to QWRs to which
Freedom was obliged to respond. See 12 U.S.C. § 2605(e)(1)(B) (a QWR must include
information allowing the servicer “to identify[] the name and account of the borrower” and “a
statement of the reasons for the belief of the borrower, to the extent applicable, that the account
is in error or provides sufficient detail to the servicer regarding other information sought by the
borrower”). Notably, Plaintiff does allege that Freedom responded to the “Affidavits of Truth”
by providing a “payment history,” which would relate to the servicing of the account. ECF No. 4
at 5. While he complains that Freedom did not respond with “funding details,” id., the reasonable
inference to be drawn from that allegation is that details concerning “funding” would relate to
the origination—not the servicing—of the loan.
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Regardless, even if Plaintiff had plausibly alleged that the “Affidavits of Truth” were
QWRs and that Freedom’s response was incomplete, “not all RESPA violations are actionable.”
Fowler, 747 F. App’x at 669. “RESPA creates a private cause of action only for borrowers who
can show actual damages from a servicer’s noncompliance.” Id. at 669 (citing 12 U.S.C.
§ 2605(f)(1)(A)). Borrowers may recover statutory damages of up to $2,000 per violation only if
they can show the violation was part of a “pattern or practice of noncompliance” with the
requirements of the statute. See id. § 2605(f)(1)(B). Therefore “to survive a Rule 12(b)(6) motion
to dismiss a claim under § 2605(e) of RESPA, plaintiffs must plead actual damages stemming
from the failure to respond to requests or a pattern or practice of misconduct.” Fowler, 747 F.
App’x at 670 (citing Toone v. Wells Fargo Bank, N.A., 716 F.3d 516, 523 (10th Cir. 2013);
Renfroe v. Nationstar Mortg., LLC, 822 F.3d 1241, 1246 (11th Cir. 2016) (explaining “there
must be a ‘causal link’ between the alleged [RESPA] violation and the damages”) (quotation
omitted)); Hintz v. JPMorgan Chase Bank, N.A., 686 F.3d 505, 511 (8th Cir. 2012) (holding that
conclusory allegation that RESPA violations caused plaintiffs over $50,000 in damages failed to
state a claim)).
Here, Plaintiff has not plausibly alleged that he suffered any actual damages stemming
from Freedom’s failure to respond to his satisfaction to the “Affidavits of Truth,” nor do the
well-pleaded facts plausibly show that any noncompliance was part of a pattern or practice of
misconduct on Freedom’s part. The unadorned assertion that Freedom’s supposedly “inadequate
response contributed to the defective foreclosure process,” see ECF No. 4 at 5, likewise
demonstrates no violation of RESPA by Freedom. Instead, that allegation merely reflects
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Plaintiff’s studied adherence to the proposition that the fanciful “vapor money” theory absolves
him from the obligation to repay a debt in excess of five hundred thousand dollars.
In short, no inference of a violation of RESPA by Freedom may be drawn Plaintiff’s
allegations. His RESPA claim should be dismissed with prejudice.
D. 	Section 1983 Due Process Claim (Claim Four)
In Claim Four, Plaintiff alleges that Freedom’s initiation of the foreclosure “without
providing pre-NED notices, Combined Notices, Rule 120 hearing notices, or cure statements,”
violated his due process rights and caused damages—including, specifically the obligation to pay
the amounts he borrowed to finance his purchase of the Property. See ECF No. 4 at 5-6. “To state
a claim under § 1983, a plaintiff must allege the violation of a right secured by the Constitution
and laws of the United States, and must show that the alleged deprivation was committed by a
person acting under color of state law.” West v. Atkins, 487 U.S. 42, 48 (1988). Claim Four fails
at the threshold because Plaintiff has not plausibly alleged that Freedom acted under color of
state law.
“Section 1983 was enacted ‘to deter state actors from using the badge of their authority to
deprive individuals of their federally guaranteed rights and to provide relief to victims if such
deterrence fails.’” Schaffer v. Salt Lake City Corp., 814 F.3d 1151, 1156 (10th Cir. 2016)
(quoting Haines v. Fisher, 82 F.3d 1503, 1508 (10th Cir. 1996) (quoting Wyatt v. Cole, 504 U.S.
158, 161 (1992)). “The traditional definition of acting under color of state law requires that the
defendant in a § 1983 action exercised power possessed by virtue of state law and made possible
only because the wrongdoer is clothed with the authority of state law.” Id. (quoting Haines, 82
F.3d at 1508) (emphasis added); see also, e.g., Silva v. US Bank, Nat’l Assoc., 294 F. Supp. 3d
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1117, 1130 (D. Colo. 2018), report and recommendation adopted sub nom. Silva v. US Bank,
Nat’l Assoc. as Tr. under Pooling & Serv. Agreement dated as of Feb. 1, 2007, No. 17-cv-01529-
WJM-KLM, 2018 WL 10561514 (D. Colo. Mar. 19, 2018) (“Section 1983 establishes liability
based on the actions of the government and its agents.”) (citing Gallagher v. Neil Young
Freedom Concert, 49 F.3d 1442, 1446-47 (10th Cir. 1995)).
Put another way, when a § 1983 claim is “based on the conduct of a private individual,
that conduct constitutes state action if it is fairly attributable to the state.” Scott v. Hern, 216 F.3d
897, 906 (10th Cir. 2000) (cleaned up). And the conduct of a private actor is “fairly attributable
to the state” only if two conditions are met:
First, the deprivation must be caused by the exercise of some right or privilege
created by the State or by a rule of conduct imposed by the State or by a person for
whom the state is responsible. Second, the private party must have acted together
with or . . . obtained significant aid from state officials or engaged in conduct
otherwise chargeable to the State.
Pino v. Higgs, 75 F.3d 1461, 1465 (10th Cir. 1996) (quoting Wyatt, 504 U.S. at 161). It is
impossible to reasonably infer the existence of either condition from Plaintiff’s pleading.
It has long been established that financial institutions and their legal counsel engaged in
foreclosure proceedings do not operate under color of state law pursuant to § 1983. See, e.g.,
Elliott v. May, 122 F. App’x 944, 946 (10th Cir. 2004) (upholding dismissal of a § 1983 claim
brought against private mortgage lenders who failed to refinance the plaintiff’s home loan
because the “private entities” were not “acting under ‘color of state law’” in making that
refinancing decision); Ramsey v. Citibank, N.A., No. 10-cv-02653-WYD-CBS, 2011 WL
4485922, at *10 (D. Colo. July 28, 2011), report and recommendation adopted, 2011 WL
4485918 (D. Colo. Sept. 28, 2011), aff’d, 475 F. App’x 711 (10th Cir. 2012) (holding that a
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plaintiff’s challenge to a bank’s utilization of eviction and foreclosure proceedings under
Colorado law did not “transform Citibank N.A. or CitiMortgage, Inc. into agents of the state”).
And private actors “do not engage in state action simply by availing [themselves] of a state
procedure,” Scott, 216 F.3d at 906, including by “instituting a routine civil suit”—which is
insufficient to “transform a litigant’s actions into those taken under color of state law.” Hirsch v.
Copenhaver, 839 F. Supp. 1524, 1531 (D. Wyo. 1993) (quotation omitted). “Similarly, relief
under § 1983 cannot be premised solely on an argument that a private actor misused available
state procedures, particularly in the absence of overt and significant assistance from state
officials.” Ramsey, 2011 WL 4485922, at *10 (citing Cobb v. Saturn Land Company, Inc., 966
F.2d 1334, 1336-37 (10th Cir. 1992)).
Plaintiff fails to offer any supporting allegations or details tending to suggest that “state
officials and [Freedom] have acted in concert in effecting a particular deprivation of
constitutional rights.” Wittner v. Banner Health, 720 F.3d 770, 777 (10th Cir. 2013) (quoting
Gallagher, 49 F.3d at 1453); see also Beedle v. Wilson, 422 F.3d 1059, 1073 (10th Cir. 2005)
(“[W]hen a plaintiff attempts to assert the state action required for a § 1983 claim against private
actors based on a conspiracy with government actors, mere conclusory allegations with no
supporting factual averments are insufficient. Rather, the plaintiff must specifically plead facts
tending to show agreement and concerted action.”) (internal citations and quotations omitted)).
Stated otherwise, Plaintiff’s allegations permit no inference that any state official had any
involvement whatsoever in this matter. The well-pleaded facts—construed in the light most
favorable to Plaintiff—merely allege that Freedom utilized the available legal processes when
Plaintiff defaulted on the loan.
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For these reasons, Claim Four fails as a matter of law and should be dismissed with
prejudice. See, e.g., Brereton, 434 F.3d at 1219.
E. 	Colorado Consumer Protection Act (Claim Five)
In Claim Five, Plaintiff alleges that Freedom violated the CCPA by misrepresenting the
validity of the loan, concealing its “loan funding mechanisms,” and pursuing a “defective”
foreclosure. See ECF No. 4 at 6. As to Freedom specifically, Plaintiff focuses on its alleged
concealment of the 2018 loan’s “funding mechanism” and issuance of a “defective” NED. Id.
Under the CCPA, “[a] person engages in a deceptive trade practice when, in the course of
the person’s business, the person knowingly or recklessly makes a false representation as to the
characteristics, ingredients, uses, [or] benefits of goods[.]” Colo. Rev. Stat. § 6-1-105(1)(e) (in
relevant part, cleaned up). To successfully press a private cause of action under this statute, a
plaintiff must show:
(1) the defendant engaged in an unfair or deceptive trade practice; (2) that the
challenged practice occurred in the course of defendant’s business, vocation or
occupation; (3) that it significantly impacts the public as actual or potential
consumers of the defendant’s goods, services, or property; (4) that the plaintiff
suffered the injury in fact to a legally protected interest; and (5) that the challenged
practice caused the plaintiff’s injury.
HealthONE of Denver, Inc. v. UnitedHealth Grp. Inc., 805 F. Supp. 2d 1115, 1120 (D. Colo.
2011) (quoting Rhino Linings USA, Inc. v. Rocky Mountain Rhino Lining, Inc., 62 P.3d 142, 146-
47 (Colo. 2003)); see also Hall v. Walter, 969 P.2d 224, 235 (Colo. 1998) (same). “All elements
of a CCPA claim must be met; otherwise, the claim fails as a matter of law.” HealthONE, 805 F.
Supp. 2d at 1120. In addition, because Plaintiff’s CCPA theory sounds in fraud and deception, he
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must meet the heightened pleading requirements set forth in Federal Rule of Civil Procedure
9(b). HealthONE, 805 F. Supp. 2d at 1120-21 (citations omitted).
Plaintiff’s pleading fails to allege any of the elements of a CCPA claim. To begin with,
his factual allegations center on a single, private dispute over the terms, validity, and
enforcement of a home‑equity loan and the resulting foreclosure on his property at 106 Rachel
Lane in Breckenridge, Colorado. Colorado courts routinely hold that essentially private disputes
of this sort—even where one party is a business—do not “significantly impact the public” as
actual or potential consumers, and thus fall outside the CCPA’s reach. See Hall, 969 P.2d at 235;
Rhino Linings, 62 P.3d at 149-50. The facts alleged here permit of no reasonable inference that
Freedom engaged in a broader pattern of similar conduct toward other borrowers, that the
challenged practices were part of a systematic scheme, or that any member of the public beyond
Plaintiff himself was affected. Plaintiff’s conclusory assertion that “other Colorado
homeowners” were impacted, ECF No. 4 at 6, is wholly lacking in supporting factual averments.
On the face of the Amended Complaint, then, Claim Five concerns only a one‑off dispute
between a borrower and the servicer of his loan and thus fails the public‑impact element as a
matter of law.
Neither does the Amended Complaint plausibly allege that Freedom engaged in any
deceptive trade practice at all, let alone one pled with the particularity that Rule 9(b) requires.
Plaintiff’s allegations—that Freedom “conceal[ed]” funding for the loan and pursued “defective
foreclosure and lawsuit processes,” ECF No. 4 at 6, serve to emphasize that the claim rests on the
discredited vapor money theory, which, as previously discussed, courts have uniformly rejected
as legally frivolous. Plaintiff identifies no specific false statement attributable to Freedom, of any
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kind; no misleading advertising or consumer‑facing representation; and no omission of
information that Colorado law requires Freedom to have disclosed in the circumstances alleged.
Instead, he proclaims the debt lacks “validity” because Freedom’s actions fail to conform with
his views as an adherent of the vapor money theory. His conclusory assertions that Freedom
engaged in “concealment” concerning the loan, or that there was some overarching unidentified
defect in the legal process, lack the concrete factual support required to plausibly establish any
actionable misrepresentation on Freedom’s part and are insufficient to satisfy his pleading
burden. See Iqbal, 556 U.S. at 678.
In sum, Plaintiff has not plausibly alleged that Freedom’s actions violated the Colorado
Consumer Protection Act, and Claim Five should be dismissed with prejudice.
F. 	Common-Law Fraud/U.C.C. Violation (Claim Six)
In Claim Six, Plaintiff alleges “Fraud and Lack of Consideration” under Colorado
common law and the Uniform Commercial Code, asserting that all Defendants, including
Freedom, “concealed the funding mechanisms” of both mortgages (including “potential Federal
Reserve involvement or note monetization”) and “failed to present the original promissory notes”
despite his demands, purportedly in violation of U.C.C. § 3-501(b)(2). ECF No. 4 at 6. As
previously noted, the court has determined that Claim Six, like all of Plaintiff’s claims, must be
dismissed because it is grounded on an entirely discredited and frivolous legal theory. However,
even if this defect could be overlooked—and it cannot—the claim should not proceed because
Plaintiff’s allegations fail to state a plausible claim for relief.
Under Colorado law, a plaintiff must plead fraud with particularity, setting forth well-
pleaded facts plausibly demonstrating the following elements: “(1) that the defendant made a
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false representation of a material fact; (2) that the one making the representation knew it was
false; (3) that the person to whom the representation was made was ignorant of the falsity;
(4) that the representation was made with the intention that it be acted upon; and (5) that the
reliance resulted in damage to the plaintiff.” Bristol Bay Prods., LLC v. Lampack, 312 P.3d 1155,
1160 (Colo. 2013). Federal Rule of Civil Procedure 9(b) further requires that, “[i]n alleging fraud
or mistake, a party must state with particularity the circumstances constituting fraud or mistake.”
Schwartz v. Celestial Seasonings, Inc., 124 F.3d 1246, 1252 (10th Cir. 1997) (quoting Lawrence
Nat’l Bank v. Edmonds (In re Edmonds ), 924 F.2d 176, 180 (10th Cir. 1991)). Measured against
these standards, Plaintiff’s allegations state no plausible claim for relief.
First, Claim Six rests on the same fallacious vapor money premise that underlies
Plaintiff’s other claims: that the loan was “fraudulent” or “unsupported by consideration”
because it was allegedly funded with “credit” instead of “lawful money,” and because Freedom
did not produce internal wire records, balance‑sheet entries, or Federal Reserve documentation.
See generally ECF No. 4 (including allegations demanding “proof of consideration” and
asserting loan invalidity for lack of lawful funding); see also ECF Nos. 21, 23, 31 (repeated
demands across Plaintiff’s opposition papers for proof of “lawful consideration” and
identification of the funding source). But the Amended Complaint does not identify any specific
false representation by Freedom about a material fact, including about the amount, terms, or
legal status of the loan, nor does it articulate any specific omission of a fact Freedom was legally
required to disclose. Instead, Plaintiff simply dubs the loan invalid and fraudulent, and asserts
that the communications about it are premised on concealment and misrepresentation, see ECF
No. 4 at 6, because Freedom has not endorsed his sovereign‑citizen views on consideration and
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negotiable instruments. Such naked legal conclusions, unmoored from well‑pleaded facts, do not
satisfy Rule 9(b). See Tal v. Hogan, 453 F.3d 1244, 1263 (10th Cir. 2006) (finding that “[f]ailure
to adequately allege any one of the nine elements [of a claim under the Racketeer Influenced and
Corrupt Organizations Act] is fatal to the fraud claim,” and affirming the trial court’s dismissal
of that claim under Rule 12(b)(6)).
Second, Plaintiff’s reliance on U.C.C. § 3‑501(b)(2) (as adopted in Colo. Rev. Stat.
§ 4‑3-501(b)(2)) is misplaced. That section addresses presentment and notice of dishonor in the
context of negotiable instruments; it governs what must be done when a person “entitled to
enforce” an instrument demands payment and the obligor questions the presentment, and it sets
forth certain rights to inspect the instrument and receive notice upon dishonor. It does not:
(a) create a freestanding cause of action for borrowers against lenders; (b) require a lender, on
pain of fraud liability, to produce original promissory notes, wire confirmations, internal ledgers,
or “proof of consideration” whenever a borrower demands them; or (c) allow a debtor to
discharge a mortgage loan by sending pseudo‑legal documents and declaring the instrument
“dishonored.” ECF No. 11, Ex. D (Plaintiff’s self-styled “Affidavit of Truth/Proof of Claim”
attempting to invoke U.C.C.-style dishonor to discharge the debt).
Courts confronting similar attempts to weaponize U.C.C. provisions to advance vapor
money or “bill of exchange” schemes have uniformly rejected them as patently meritless. See,
e.g., McGee v. Nissan Motor Acceptance Corp., 619 F. App’x 555, 556 (7th Cir. 2015)
(dismissing as frivolous the claim that a lender’s refusal to accept the borrower’s “bill of
exchange” canceled the underlying debt under the U.C.C.); Zickafoose v. Upstart Network, Inc,
No. 8:25-CV-1280-AAS, 2025 WL 2879548, at *5 (M.D. Fla. Oct. 9, 2025) (“Mr. Zickafoose’s
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claims are an iteration of the vapor money theory. In attempting to discharge liability through
various UCC provisions, Mr. Zickafoose’s argument is the functional equivalent of attempting to
create money by signing ‘W/O Recourse’ to pay off the loan. Thus, Mr. Zickafoose’s breach of
contract claim lacks legal merit because it is an iteration of the rejected vapor money theory.”)
(internal citations omitted); Aalaam v. Equifax Info. Servs., LLC, No. 5:24-CV-00209-KDB-
DCK, 2025 WL 492010, at *1 (W.D.N.C. Feb. 13, 2025) (observing, in granting defendants’
motion to dismiss, that the plaintiff “erroneously believes that he does not have to pay valid
mortgage and other debts based on the widely discredited ‘vapor money” theory and/or his
contention that Article 3 of the UCC permits him to simply declare his debts discharged based on
his ‘tender’ of so-called ‘negotiable instruments,’” and stating that “[t]his case is the third
installment in his trilogy of wasteful litigation”). Claim Six merely re‑labels this same
discredited theory as “fraud” and “U.C.C. 3‑501.”
Third, to the extent Claim Six purportedly hinges on “lack of consideration,” see ECF No.
4 at 6, that is yet another restatement of Plaintiff’s vapor money theory. He does not allege that
he failed to receive the loan proceeds, that he did not use the funds to purchase or refinance the
Property, or that Freedom did not service an actual debt; rather, he contends that because the
underlying funding may have involved “bookkeeping entries” or secondary-market transactions,
and because Freedom has not shared those internal records with him, the loan is void for lack of
“lawful money.” See generally id. These allegations do not plausibly plead “the who, what,
when, where and how of the alleged fraud,” as is required under Rule 9(b). See Tatten v. Bank of
America Corp., 912 F. Supp. 2d 1032, 1040 (D. Colo. 2012). They are instead conclusory
proclamations concerning Plaintiff’s subjective beliefs by which he would extricate himself from
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the obligation to repay his debt.
Because Plaintiff has failed to allege any statements contained in specific documents
made by particular persons that are purportedly fraudulent, and why, Claim Six fails to state a
legally cognizable claim and should be dismissed with prejudice.
* 	* 	*
In summary, all of Plaintiff’s claims must be dismissed because they rest on patently
frivolous legal theories that have been universally and emphatically rejected by federal courts for
decades. That alone warrants dismissal, with prejudice, of all claims against Freedom. But even
if that fundamental defect is overlooked, and the substance of the allegations examined, Plaintiff
has failed to state any plausible claim for relief under the operative legal standards. Dismissal
with prejudice of the claims against Freedom is justified for this additional reason.
CONCLUSION
Consistent with the foregoing, the undersigned respectfully RECOMMENDS8 that
Freedom Mortgage Corporation’s Motion to Dismiss Plaintiff’s Amended Complaint Pursuant to
Fed. R. Civ. P. 12(b)(6) (ECF No. 20) be GRANTED, and that all claims asserted against
8 Rule 72 of the Federal Rules of Civil Procedure provides that within fourteen (14) days after
service of a Magistrate Judge’s order or recommendation, any party may serve and file written
objections with the Clerk of the United States District Court for the District of Colorado.
28 U.S.C. §§ 636(b)(1)(A), (B); Fed. R. Civ. P. 72(a), (b). Failure to make any such objection
will result in a waiver of the right to appeal the Magistrate Judge’s order or recommendation. See
Sinclair Wyo. Ref. Co. v. A & B Builders, Ltd., 989 F.3d 747, 783 (10th Cir. 2021) (firm waiver
rule applies to non-dispositive orders); but see Morales-Fernandez v. INS, 418 F.3d 1116, 1119,
1122 (10th Cir. 2005) (firm waiver rule does not apply when the interests of justice require
review, including when a “pro se litigant has not been informed of the time period for objecting
and the consequences of failing to object”).
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Freedom Mortgage Corporation be dismissed with prejudice.
DATED: February 23, 2026 	BY THE COURT:
______________________________
Susan Prose
United States Magistrate Judge
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