Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-00995/USCOURTS-azd-2_11-cv-00995-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

First Horizon Home Loans, a Division of

First Tennessee Bank, N.A., 

Plaintiff, 

vs.

Centerpiece Mortgage, LLC, an Arizona

Corporation; Kirk Jungbluth, an

individual; Real Estate Research

Corporation, an Arizona corporation;

James Moore, an individual; Reliant

Appraisal Service, an Arizona

Corporation; Does I through X, and Roe

Corporations I through X, inclusive, 

Defendants. 

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No. CV-11-0995-PHX-JAT

ORDER

Pending before the Court is Defendants Jungbluth and Real Estate Research

Corporation’s Rule 12(b)(6) Motion to Dismiss (Doc. 15). Plaintiff has filed a Response to

the Motion to Dismiss (Doc. 19) and Defendants have filed a Reply in support of their

Motion to Dismiss (Doc. 21). For the reasons that follow, Defendants’ Motion to Dismiss

is denied.

 I. BACKGROUND

Plaintiff entered into a Mortgage Broker Agreement (the “Broker Agreement”) with

Defendant Centerpiece Mortgage, LLC (“Centerpiece”) in 2005 (Doc. 1, Exhibit 1). Plaintiff

alleges that, pursuant to the Broker Agreement, Centerpiece brokered loans for Plaintiff. (Id.

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at ¶ 14). Plaintiff alleges that thirty-two of the loans that Centerpiece brokered for it were

based on incorrect income and/or employment information. (Id.). Plaintiff further alleges

that Defendants Jungbluth, Real Estate Research Corporation, Moore, and Reliant Appraisal

Service (the “Appraisal Defendants”) conducted appraisals on the properties brokered by

Centerpiece and consistently overvalued those appraisals. (Id. at 15). Plaintiff alleges that

the borrowers on the subject loans subsequently defaulted and the properties were foreclosed

and sold. (Id. at 16). Plaintiff alleges that it was required to purchase the subject loans

because the loans were based on incorrect income, employment information, and/or

overvaluations. (Id. at 17). Plaintiff alleges that Centerpiece is required to indemnify it for

the damages that Plaintiff has incurred as a result of the foreclosures. (Id. at 18). 

Plaintiff alleges that the Appraisal Defendants breached their duty of professionalism

to Plaintiff by providing overvaluations of the subject properties. (Id. at 35). Plaintiff

further alleges that the Appraisal Defendants negligently misrepresented the appraised

valuation of the subject properties to Plaintiff and Plaintiff relied on those representations.

(Id. at ¶¶ 40 & 41).

 Defendants Kirk Jungbluth and Real Estate Research Corporation (collectively the

“RERC Defendants”) seek dismissal of the claims against them on two bases. First, the

RERC Defendants argue that Plaintiff failed to state a claim upon which relief can be granted

because it failed to allege a date or time frame for any of the alleged acts of misconduct by

Defendants. Second, the RERC Defendants argue that Plaintiff has failed to bring its claim

within the applicable statute of limitations. 

II. LEGAL STANDARD

The Federal Rules of Civil Procedure embrace a notice-pleading standard. All that

is required to survive a Rule 12(b)(6) motion is “a short and plain statement of the claim

showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), in order to “‘give the

defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47

(1957)). In pleading the grounds of the claim, the plaintiff need not provide “detailed factual

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1

 There appears to be a month, day, and year on the Broker Agreement. However,

the complete date is illegible on the Court’s copy. 

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allegations,” id.; however, the plaintiff must plead enough facts “to raise a right to relief

above the speculative level.” Id. at 1965. This does “not impose a probability requirement

at the pleading stage.” Id. at 556. 

“[W]hen a complaint adequately states a claim, it may not be dismissed based on a

district court’s assessment that the plaintiff will fail to find evidentiary support for his

allegations or prove his claim to the satisfaction of the factfinder.” Id. at 563. Further, when

analyzing a motion to dismiss for failure to state a claim, the court must construe the

complaint in the light most favorable to the plaintiff, accept its factual allegations as true, and

draw all reasonable inferences in favor of the plaintiff. See Assoc. for Los Angeles Deputy

Sheriffs v. County of Los Angeles, 648 F.3d 986 (9th Cir. 2011).

III. ANALYSIS

The RERC Defendants first argue that Plaintiff has “failed to state a claim upon which

relief can be granted considering they have not designated a date or time frame for their

cause of action.” (Doc. 15 at 2). Plaintiff did not specifically refer to any dates or a time

frame from which its claims arose in the Complaint. However, Plaintiff did attach a copy of

the Broker Agreement, dated in 2005,1

 as Exhibit 1 to its Complaint. Plaintiff argues that it

was not required to allege the date of the appraisals because it sufficiently put Defendants

on notice of its claims and the grounds for those claims. 

While the RERC Defendants are correct that allegations of time are material when

testing the sufficiency of a pleading, see Federal Rule of Civil Procedure 9(f), Rule 9(f) does

not require specific allegations of time, but merely states that such allegations are material

if they are made. See Suckow Borax Mines Consol. v. Borax Consol., 185 F.2d 196, 204 (9th

Cir.1951); 5A CHARLES ALAN WRIGHT, ET. AL., FEDERAL PRACTICE AND PROCEDURE §

1308 (3d ed. 2011). While it is true that an allegation in the Complaint as to when

Defendants’ alleged wrongful conduct occurred would provide greater notice to Defendants,

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2

 Since the parties all cited to Arizona law to argue their positions related to the

Motion to Dismiss, the Court assumes that the parties agree that Arizona substantive law

applies to this diversity action. 

3

 Plaintiff also alleges a breach of the duty of professionalism against the RERC

Defendants. The Court is aware of no such cause of action under Arizona law. However,

the RERC Defendants have not alleged that such a cause of action does not exist, nor does

it seek to dismiss the Count for the breach of the duty of professionalism on that ground.

Accordingly, the Court declines to address the issue at this stage of the proceedings. 

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such an allegation is not required by the Federal Rules of Civil Procedure because such a

requirement would not be appropriate in all cases and, in some cases, a plaintiff may need

to engage in discovery solely within a defendant’s possession to obtain the relevant

information. 

Accordingly, to determine if allegations of time and place are necessary, the Court

must decide if, without them, the statement of the claim is so ambiguous and vague that the

opponent cannot adequately respond. See 5A CHARLES ALAN WRIGHT, ET. AL., FEDERAL

PRACTICE AND PROCEDURE § 1309 (3d ed. 2011). 

Under Arizona law,2

 to prove a claim for negligent misrepresentation,3 a plaintiff must

establish the following:

[o]ne who, in the course of his business, profession or employment, or in any

other transaction in which he has a pecuniary interest, supplies false

information for the guidance of others in their business transactions is subject

to liability for pecuniary loss caused to them by their justifiable reliance upon

the information, if he fails to exercise reasonable care or competence in

obtaining or communicating the information. 

Sage v. Blagg Appraisal Co., Ltd., 209 P.3d 169, 170, 209 P.3d 169 (Ariz. Ct. App. 2009)

(quoting Restatement (Second) of Torts § 522).

In its Complaint, Plaintiff alleges that the RERC Defendants, in the course of their

profession, negligently supplied inaccurate appraisal values to Plaintiff and Plaintiff

justifiably relied on those inaccurate appraisal values to their detriment. Plaintiff has alleged

enough facts to establish a claim for negligent misrepresentation. Further, although Plaintiff

does not provide any dates for the appraisals, Plaintiff identified the Corporation for which

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4

 These addresses are contained in Exhibit 2 to Plaintiff’s Complaint. On ruling on

a motion to dismiss, it is appropriate to consider the allegations contained in the pleadings

and exhibits attached to the Complaint. See Colony Cove Props., LLC v. City of Carson, 640

F.3d 948, 955 (9th Cir. 2011).

5

 See ARIZ. REV. STAT. ANN. § 12-542(1) (2011).

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 “The two-year statute of limitations begins to run when the plaintiff knows or

should have known of the defendant’s negligent conduct, or when the plaintiff is first able

to sue.” See Hall v. Romero, 685 P.2d 757, 761 (Ariz. Ct. App. 1984). 

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the RERC Defendants allegedly provided the appraisals and attached a list of the addresses

of the subject properties for which Defendants allegedly misrepresented the appraised value.4

These allegations are not ambiguous or vague and they provide the RERC Defendants with

fair notice of the claims against them and the grounds upon which they rest. Accordingly,

Plaintiff has stated a claim upon which relief can be granted. 

Defendants next argue that Plaintiff has failed to bring its claim within the applicable

statute of limitations. Defendants argue that, because Plaintiff only referred to the 2005

Agreement in its Complaint, the two-year statute of limitations applicable to claims for

negligent misrepresentation5

 has run. Defendants assert that any appraisals conducted by the

RERC Defendants would have occurred no later than 2007. (Doc. 15 at 3). However, for

the defense of the running of the statute of limitations to be decided on a motion to dismiss,

the untimeliness must clearly appear on the face of the complaint. See Supermail Cargo, Inc.

v. U.S., 68 F.3d 1204, 1206 -1207 (9th Cir. 1995) (“A motion to dismiss based on the

running of the statute of limitations period may be granted only ‘if the assertions of the

complaint, read with the required liberality, would not permit the plaintiff to prove that the

statute was tolled.’”) (quoting Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir.

1980). 

In this case, the relevant dates do not appear on the face of the Complaint. Further,

there is significant dispute between the parties as to when Plaintiff discovered the RERC

Defendants’ alleged negligence.6

 Defendants have not presented the Court with

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uncontroverted evidence that irrefutably demonstrates that Plaintiff discovered or should

have discovered the negligent conduct more than two years before it filed its Complaint.

Without such evidence, the Court cannot decide, as a matter of law, that the statute of

limitations has run in this case. See Nevada Power Co. v. Monsanto Co., 955 F.2d 1304,

1307 (9th Cir. 1992) (internal quotation omitted) (“[i]n determining when an action has

accrued under a discovery-based statute of limitations, the question of when the alleged

wrongdoing was or should have been discovered is a question of fact. It may be decided as

a matter of law only when uncontroverted evidence irrefutably demonstrates plaintiff

discovered or should have discovered the . . . conduct.”). Where, as here, the running of the

statute of limitations cannot be determined on the face of the complaint, a statute of

limitations defense is more properly determined on a motion for summary judgment. See

Vernon v. Heckler, 811 F.2d 1274, 1278 (9th Cir. 1987); Jablon, 614 F.2d at 682. 

Based on the foregoing,

IT IS ORDERED denying the RERC Defendants’ Motion to Dismiss (Doc. 15). 

DATED this 9th day of December, 2011.

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