Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_10-cv-00468/USCOURTS-azd-4_10-cv-00468-3/pdf.json

Nature of Suit Code: 430
Nature of Suit: Banks and Banking
Cause of Action: 15:1601 Truth in Lending

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The Court reviews de novo the objected-to portions of the Report and Recommendation.

28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). The Court reviews for clear error the unobjected-to

portions of the Report and Recommendation. Johnson v. Zema Systems Corp., 170 F.3d 734, 739

(7th Cir. 1999); see also Conley v. Crabtree, 14 F. Supp. 2d 1203, 1204 (D. Or. 1998).

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Christina Zandonatti 

Plaintiff, 

vs.

M.E.R.S., et al., 

Defendants. 

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No. CV 10-468-TUC-JGZ

ORDER

Pending before the Court is a Report and Recommendation issued by Magistrate

Judge Bernardo P. Velasco recommending that the District Court grant in part and deny in

part the Motions to Dismiss filed by Defendants EMC and Quality Loan Service Corp.

(“Quality”) (Doc. 34.) The Magistrate Judge recommends that Plaintiff’s Complaint be

dismissed with prejudice as to all claims except her claim in Count 1 that the Substitution of

Trustee was not authorized by the current beneficiary at the time it was executed, in violation

of A.R.S. § 33-804(D). Plaintiff and Defendants have filed objections to the Report and

Recommendation.1

 (Docs. 35, 39, 40 & 44.) The Court will accept and adopt the Report and

Recommendation in part.

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2 Without explanation, Plaintiff also seeks to add an additional defendant. (Doc. 40, pg. 2.)

That request is neither a proper objection to a Report & Recommendation nor a timely request. 

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1. Plaintiff’s Objections

Plaintiff objects to the Report and Recommendation on the grounds that: (1) an

opportunity for judicial review is important; (2) Defendant’s Motions to Dismiss require

improper consideration of evidence outside the pleadings; and (3) Plaintiff disputes the

authenticity of the documents relied on by the Magistrate.2

 Each of these arguments was

previously raised by Plaintiff and properly rejected by the Magistrate Judge. In addition,

Plaintiff’s Objections have no effect on the Magistrate Judge’s correct conclusion that

Plaintiff’s Complaint should be dismissed for failure to comply with Rules 8 and 9(b) of the

Federal Rules of Civil Procedure. As Plaintiff’s objections do not undermine the analysis

and proper conclusion reached by Magistrate Judge Velasco, Plaintiff’s objections are

rejected.

2. Defendants’ Objections

The Magistrate Judge concluded that Plaintiff had alleged a plausible claim under

A.R.S. § 33-804(D) “only as to the issue of whether or not Citibank was designated a

beneficiary of the deed of trust prior to the appointment of [Quality as] the successor trustee

on January 29, 2008.” (Doc. 34, pg. 12.) The timing of Citibank’s designation as beneficiary

matters to Plaintiff’s claim because if Citibank was not the beneficiary of the deed of trust

when it signed the January 29, 2008 Substitution of Trustee appointing Quality as trustee,

then the Substitution was arguably invalid under A.R.S. § 33-804(D), which in turn means

Quality lacked authority to notice a trustee’s sale of Plaintiff’s property in January, 2010.

The Magistrate Judge further noted that this issue would be resolved if Quality provided to

the Court recorded documents demonstrating that the beneficial interest in the deed of trust

was assigned to Citibank on January 17, 2008. (Id.) The Magistrate corrected stated that the

Court is permitted to take judicial notice of “matters of public record” without converting the

Motions to Dismiss into summary judgment motions. (Id. at n. 3.) 

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In its Objection to the Report and Recommendation, Quality has referenced an

attached Assignment of Deed of Trust documenting MERS assignment of the deed of trust

to Citibank on January 17, 2008. (Doc. 39, pg. 5.) The Assignment was not recorded,

however, until March 28, 2008. See A.R.S. § 33-411 (requiring recording of instruments

affecting real property). Thus, factual and legal issues remain regarding whether the

January 29, 2008 Substitution of Trustee was valid under A.R.S. § 33-804(D). See, e.g.,

Eardley v. Greenberg, 164 Ariz. 261, 792 P.2d 724 (Ariz. 1990) (“any person who receives

an assignment of beneficial interest and does not record it is in jeopardy of having the

assignment declared invalid as against a subsequent purchaser for value without notice . . .

the trustor has standing to inquire into and raise objections about the process by which a

trustee has been substituted). 

Although Plaintiff may have a viable claim arising under A.R.S. § 33-804(D), the

Court agrees with EMC’s Objection to the Report and Recommendation that a claim under

A.R.S. § 33-804(D) may only be used to void a trustee’s sale. The Court takes judicial notice

of the Cancellation of Trustee’s Sale recorded on March 15, 2009 and attached to EMC’s

Objection. Because no trustee’s sale is currently pending, Plaintiff’s claim under A.R.S. §

33-804(D) is currently moot.

Accordingly, IT IS HEREBY ORDERED as follows:

(1) The Report and Recommendation (Doc. 34) is accepted and adopted in part.

The District Court agrees with the Magistrate Judge’s conclusion that

Defendants’ Motions to Dismiss (Docs. 25 & 27) be GRANTED.

(2) All causes of action stated in the Amended Complaint with the exception of

Plaintiff’s claim in Count One that the Substitution of Trustee was not

authorized by the current beneficiary at the time it was executed, in violation

of A.R.S. § 33-804(D), are DISMISSED WITH PREJUDICE.

(2) Plaintiff’s claim in Count One that the Substitution of Trustee was not

authorized by the current beneficiary at the time it was executed, in violation

of A.R.S. § 33-804(D), is DISMISSED WITHOUT PREJUDICE. In the

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event that a Trustee’s Sale of Plaintiff’s property is re-noticed, Plaintiff may

file an Amended Complaint pursuing this claim.

(3) The Clerk of the Court shall enter judgment accordingly and close the file in

this matter.

DATED this 16th day of March, 2012.

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