Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-02120/USCOURTS-azd-2_10-cv-02120-0/pdf.json

Nature of Suit Code: 450
Nature of Suit: Interstate Commerce
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

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NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Nicholas John Schwartz, 

Plaintiff, 

vs.

Chase Home Finance, LLC, et.al., 

Defendants. 

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No. CV 10-2120-PHX-FJM

ORDER

The court has before it defendants Chase Home Finance, LLC, CPCC Delaware

Business Trust, and U.S. Bank, N.A.'s, motion to dismiss (doc. 5) and plaintiff Nicholas

Schwartz's response to the motion to dismiss (doc. 10). Defendants did not file a reply. We

also have before us plaintiff's motion to amend complaint (doc. 11). Defendants did not file

a response.

Plaintiff originally filed this action alleging violations of the Home Affordable

Modification Program ("HAMP"), breach of contract, and wrongful foreclosure on

September 20, 2010 in the Superior Court of Arizona in Maricopa County. Defendants

removed the case to this court on October 4, 2010 on the basis of federal question jurisdiction

under 28 U.S.C. § 1331. Defendants move to dismiss plaintiff's complaint under Rule

12(b)(6), Fed. R. Civ. P.

Plaintiff entered into a mortgage loan transaction, secured by a Deed of Trust, with

Case 2:10-cv-02120-FJM Document 13 Filed 12/13/10 Page 1 of 5
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 After foreclosing on plaintiff's home, however, Chase then contacted plaintiff to

initiate the application process for a loan modification. Complaint, exhibit A.

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Chase to purchase property in Glendale, Arizona. Plaintiff resided in that home for

seventeen years until he defaulted on his mortgage obligation in 2009. Plaintiff then retained

the National Association of Consumer Advocates ("NACA") to assist him in submitting an

application to Chase for a loan modification under HAMP. NACA contacted Chase to begin

a modification process. According to plaintiff, Chase refused to negotiate with NACA,

ignored his application,1

 foreclosed on the property and initiated a forcible entry and detainer

action.

Plaintiff's complaint asserts four claims for relief: 1) breach of contract; 2) violation

of the duty of good faith and fair dealing; 3) violation of HAMP; and 4) wrongful

foreclosure. In his response, plaintiff abandoned his violation of HAMP claim, recognizing

that it fails as a matter of law because HAMP does not have an express or implied private

right of action. Defendants argue that plaintiff fails to plead any plausible claims for relief

and therefore his entire complaint should be dismissed.

I. Motion to Dismiss

A. Breach of Contract

To plead a breach of contract claim, plaintiff must allege the formation of a contract,

its breach, and damages. See Chartone, Inc. v. Bernini, 83 P.3d 1103, 1111 (Ariz. App.

2004). Before a third party can present a breach of contract claim, he must prove he is an

intended beneficiary of the contract. Klamath Water Users Protective Ass'n. v. Patterson,

204 F.3d 1206, 1210 (9th Cir. 2000). An intended beneficiary exists if "recognition of a right

to performance in the beneficiary is appropriate to effectuate the intention of the parties and

. . . the circumstances indicate that the promisee intends to give the beneficiary the benefit

of the promised performance. Id. at 1211.

Plaintiff appears to allege two separate breach of contract claims. First, plaintiff

contends that defendants violated HAMP by refusing to consider his application for a loan

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modification. This claim fails because HAMP is a federal law, not a contract between

plaintiff and defendants. Plaintiff cannot assert a private right of action under HAMP, "even

disguised as a breach of contract claim." Marks v. Bank of Am., No. 03: 10-cv-08039-JAT,

2010 WL 2572988, *16 (D. Ariz. June 22, 2010). Second, plaintiff seems to argue that

Chase and NACA entered into some contract requiring Chase to accept loan modification

applications, and that by refusing to do so Chase violated that contract. Plaintiff fails to

identify the contract, identify the breached provision, or allege how he is an intended

beneficiary. Thus, even under the less stringent pro se standard, plaintiff's complaint fails

to assert a plausible breach of contract claim. 

B. Breach of Duty of Good Faith and Fair Dealing 

Plaintiff next contends that Chase violated the covenant of good faith and fair dealing

contained in a modification agreement. This claim contradicts plaintiff's allegations that

Chase never entered into a loan modification agreement. While it is true that a covenant of

good faith and fair dealing is implied in every contract, plaintiff must actually plead facts

demonstrating the existence of the underlying contract. Plaintiff's own allegations contradict

a finding that a loan modification contract existed between Chase and plaintiff. 

Furthermore, even if plaintiff contended that Chase breached its duty of good faith and

fair dealing implied in the Deed of Trust, plaintiff fails to allege that Chase acted to impair

any of plaintiff's contract benefits. See Rawlings v. Apodaca, 151 Ariz. 149, 153, 726 P.2d

565, 569 (1986). Because plaintiff has not provided us with the Deed of Trust, we have no

way of knowing the contract benefits to which plaintiff was entitled. See id. (stating that "the

relevant inquiry will always focus on the contract itself"). Because plaintiff's complaint does

not contain sufficient factual matter, which, if accepted as true, would state a claim for relief

that is "plausible on its face," the claim must be dismissed. See Ashcroft v. Iqbal, 129 S.Ct.

1937, 1949 (2009).

C. Wrongful Foreclosure

Plaintiff's final claim is asserted against all defendants and seeks damages for

wrongful foreclosure. Plaintiff contends that "defendant Thayse," who is not actually a

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named defendant, bought the property knowing that violations of the trustee statute had

occurred, and that the property was not purchased for fair market value. 

First, we note that plaintiff cannot assert a claim against an unnamed defendant.

Second, Arizona has not recognized a cause of action for wrongful foreclosure. Even

Herring v. Countrywide Home Loans, Inc., No. CV06-2622-PHX-PGR, 2007 WL 2051394

at * 5 (D. Ariz. July 13, 2007), requires plaintiff to assert that he was not actually in default.

That is not the case here.

Additionally, plaintiff simply cannot make conclusory statements alleging violations

of the trustee statute. Plaintiff must plead facts to state a plausible claim that the trustee

statute was violated. Accordingly we grant defendants' motion to dismiss plaintiff's wrongful

foreclosure claim.

II. Motion to Amend

Rule 15(a)(1), Fed. R. Civ. P. permits a party to amend its pleading once as a matter

of right within 21 days after service of a motion under Rule 12(b), Fed. R. Civ. P.

Defendants filed their motion to dismiss on October 14, 2010. Plaintiff did not file his

response and motion to amend until November 19, 2010, more than 21 days after the filing

of a Rule 12(b), Fed. R. Civ. P. motion. However, because we granted plaintiff an extension

until November 19, 2010 to file a response (doc. 9), we will construe that extension to apply

to the time period in which to amend its pleading once as a matter of right. Therefore, we

will grant plaintiff's motion to amend on condition that plaintiff comply with LRCiv. 15.1.

LRCiv. 15.1 requires a party who moves for leave to amend to attach a copy of the

proposed amended pleading as an exhibit to the motion. The proposed amended pleading

must indicate how it differs from the original pleading by bracketing or striking through the

text to be deleted and underlining the text to be added. Since we have granted the motion to

amend, plaintiff must file the amended pleading in this court and then file and serve the

amended pleading on all parties within fourteen days of the filing of this order. 

We also urge plaintiff to seek the advice of counsel. If he does not have a lawyer, he

may wish to call the Lawyer Referral Service of the Maricopa Bar Association at 602-257-

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4434.

It is ORDERED GRANTING defendants' motion to dismiss (doc. 5) and plaintiff's

motion to amend (doc. 11).

DATED this 13th day of December, 2010.

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