Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_09-cv-08224/USCOURTS-azd-3_09-cv-08224-1/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:2201 Declaratory Judgment

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Michael J. Brosnahan, 

Plaintiff, 

vs.

JP Morgan Chase Bank, formerly

Washington Mutual Bank; California

Reconveyance Company, 

Defendants. 

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No. CV09-8224-PCT-JAT

ORDER

Pending before the Court are Plaintiff’s Motion to Compel Court and Defendants to

Adhere to ERIE Doctrine (Doc. 34), Motion to Compel Defendant’s Attorneys to Submit an

Affidavit to this Court (Doc. 39), Motion to Sequester Original Note (Doc. 48), and Motion

for Stay of all Non-Judicial Proceedings (Doc. 40), as well as Defendants’ Motion to Dismiss

(Doc. 35) and Motion to Strike “Plaintiff’s Response to Defendants Baseless and Frivolus

[Sic] ‘Support of Motion to Dismiss Plaintiff’s Amended Complaint’” (Doc. 43). The Court

now rules on the Motions. 

I. BACKGROUND

Plaintiff Brosnahan executed a Deed of Trust in favor of his lender, Washington

Mutual Bank (“WaMu”), on December 15, 2004. The Trustee was Defendant California

Reconveyance Company (“CRC”). The Deed of Trust covered the property at 22

Hummingbird Cir., Sedona, AZ 86336. 

WaMu was placed into receivership on September 25, 2008, with the Federal Deposit

Insurance Corporation (“FDIC”) appointed as Receiver. Defendant JP Morgan Chase Bank

(“Chase”) acquired certain assets of WaMu, including a number of notes and deeds of trust.

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Chase’s Purchase and Assumption Agreement with the FDIC provides that any claims that

arose against WaMu prior to September 25, 2008 that might result in liability remained with

the FDIC.

At some point, Plaintiff fell behind on or stopped making his mortgage payments. As

a result, on or around September 10, 2009, CRC issued a Notice of Trustee Sale set to occur

on December 14, 2009 at 11:30 a.m. 

Plaintiff filed his original Complaint on December 13, 2009. Plaintiff alleged three

causes of action: 1) Due process deprivation; 2) “Deprivation of Plaintiff’s Rights Under

Cognovit Note” (Doc. #1, p. 7); and 3) “Deprivation of Plaintiff’s Rights Due to

Unconscionability and Adhesion Contracts” (Doc. #1, p. 13) and sought Declaratory and

Injunctive relief. Defendants filed a Motion to Dismiss on January 15, 2010. (Doc. #11.)

Plaintiff did not file a response to the Motion. 

The Court granted Defendant’s Motion to Dismiss, giving Plaintiff twenty (20) days

to file an Amended Complaint in compliance with Federal Rule of Civil Procedure 8. (Doc.

#27.) Plaintiff filed an Amended Complaint on June 15, 2010. (Doc. #33.) Plaintiff asserts

six Counts, including two involving standing, two involving a variant on the vapor money

theory, one involving the show-me-the-note theory, and one which appears to allege fraud,

conversion, and TILA violations. In addition to these enumerated Counts, Plaintiff continues

to assert constitutional claims and unconscionability and adds various allegations that

Defendants are terrorists committing acts of war against the United States. 

Plaintiff also filed a “Motion to Compel Court and Defendants to Adhere to ERIE

Doctrine” on June 15, 2010 (Doc. #34), a “Motion to Compel Defendant’s Attorneys to

Submit an Affidavit to this Court” on August 6, 2010 (Doc. #39), and a Motion for Stay of

all Non-Judicial Proceedings on August 20, 2010 (Doc. #40). 

Defendants filed a Motion to Dismiss Amended Complaint on July 1, 2010 (Doc. #35)

and a Motion to Strike “Plaintiff’s Response to Defendants Baseless and Frivolus [Sic]

‘Support of Motion to Dismiss Plaintiff’s Amended Complaint’” on August 23, 2010 (Doc.

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#43).

II. LEGAL STANDARD

To survive a 12(b)(6) motion for failure to state a claim, a complaint must meet the

requirements of Federal Rule of Civil Procedure 8(a)(2). Rule 8(a)(2) requires a “short and

plain statement of the claim showing that the pleader is entitled to relief,” so that the

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

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

47 (1957)). 

Although a complaint attacked for failure to state a claim does not need detailed

factual allegations, the pleader's obligation to provide the grounds for relief requires “more

than labels and conclusions, and a formulaic recitation of the elements of a cause of action

will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). The factual allegations

of the complaint must be sufficient to raise a right to relief above a speculative level. Id.

Rule 8(a)(2) “requires a ‘showing,’ rather than a blanket assertion, of entitlement to relief.

Without some factual allegation in the complaint, it is hard to see how a claimant could

satisfy the requirement of providing not only ‘fair notice’ of the nature of the claim, but also

‘grounds’ on which the claim rests.” Id. (citing 5 C. Wright & A. Miller, Federal Practice

and Procedure §1202, pp. 94, 95(3d ed. 2004)).

Rule 8's pleading standard demands more than “an unadorned,

the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949

(2009)(citing Twombly, 550 U.S. at 555). A complaint that offers nothing more than naked

assertions will not suffice. To survive a motion to dismiss, a complaint must contain

sufficient factual matter, which, if accepted as true, states a claim to relief that is “plausible

on its face.” Iqbal, 129 S.Ct. At 1949. Facial plausibility exists if the pleader pleads factual

content that allows the court to draw the reasonable inference that the defendant is liable for

the misconduct alleged. Id. Plausibility does not equal “probability,” but plausibility

requires more than a sheer possibility that a defendant has acted unlawfully. Id. “Where a

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1

 Plaintiff filed one response to Defendants’ Motion to Dismiss, which he styled as

a reply, on July 15, 2010 and a second, entitled “Plaintiff’s Response to Defendants Baseless

and Frivolus ‘Support of Motion to Dismiss Plaintiff’s Amended Complaint,’” on August 3,

2010. 

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complaint pleads facts that are ‘merely consistent’ with a defendant's liability, it ‘stops short

of the line between possibility and plausibility of ‘entitlement to relief.’” Id. (citing Twombly,

550 U.S. at 557).

In deciding a motion to dismiss under Rule 12(b)(6), the Court must construe the facts

alleged in the complaint in the light most favorable to the drafter of the complaint and the

Court must accept all well-pleaded factual allegations as true. See Shwarz v. United States,

234 F.3d 428, 435 (9th Cir. 2000). Nonetheless, the Court does not have to accept as true

a legal conclusion couched as a factual allegation. Papasan v. Allain, 478 U.S. 265, 286

(1986).

III. ANALYSIS AND CONCLUSION

The Court is mindful that Plaintiff is proceeding pro se in this matter, and pro se

pleadings are to be liberally construed. Haines v. Kerner, 404 U.S. 519, 520-21 (1972). In

an effort to follow the spirit and the letter of the Supreme Court’s mandate in Haines, the

Court granted Plaintiff leave to file an amended compliant in conformance with Rule 8.

However, Plaintiff’s Amended Complaint is no closer to conformance with Rule 8's pleading

standards than his original Complaint. Rule 8 requires more than “an unadorned,

the-defendant-unlawfully-harmed-me accusation.” Iqbal, 129 S.Ct. at 1949 (2009)(citing

Twombly, 550 U.S. at 555). A plaintiff must state viable claims and facts to support those

claims. Neither Plaintiff’s Amended Complaint, nor either of his Responses1

 to Defendants’

Motion to Dismiss Amended Complaint, state a claim upon which relief can be granted. 

Detailing each of the allegations of Plaintiff’s voluminous Amended Complaint and

two Responses at length is unnecessary. The Court can address the first five Counts of

Plaintiff’s Amended Complaint summarily, but will go into more detail on Count VI. 

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2

 Plaintiff filed a Motion to Sequester the Genuine Original Adjustable Rate Note

(Doc. 48) on September 30, 2010. Because Defendants have no obligation to produce the

original Note, the Court will deny the motion–assuming the motion is even procedurally

proper.

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In Counts I and II, Plaintiff alleges that Defendants are not the real parties in interest

and accordingly lack standing. Plaintiff has not alleged, however, that Defendants are

seeking to prosecute an action in this Court or any other. Thus, their status as real parties in

interest capable of prosecuting an action is not at issue. 

In Counts III and IV, Plaintiff alleges that Defendants “did not put their assets at risk”

and may have only “lent credit.” Plaintiff elaborates on these two Counts with his self-styled

“show-me-the-loan” theory, which appears to be a variant of the vapor money theory that has

been rejected by many courts. See, e.g., Nichols v. Bosco, No. CV 10-1872-PHX-FJM, 2010

WL 3909205 at * 3 (D. Ariz. Oct. 1, 2010) (citing Kuder v. Wash. Mut. Bank, No. CIV S-08-

3087-LKK-DAD-PS, 2009 WL 2868730 at * 3 (E.D. Cal. Sept. 2, 2009). Plaintiff’s theory

is difficult to understand, but the essence seems to be that because no money actually passed

from Defendants to Plaintiff, no loan was in fact made. However, even on the level of

common sense, Plaintiff’s theory fails. If Defendants had failed to provide a loan, Plaintiff

would have been unable to purchase the property. 

In Count V, Plaintiff alleges that Defendants purposely destroyed the original Note

to “securitize” it. Despite being warned not to assert any legal theory based on Defendants’

alleged lack of the original Note, Plaintiff continues to assert that Defendants are not the

“holder in due course” because they do not possess the original Note and therefore cannot

foreclose on the property. But Arizona’s non-judicial foreclosure statute does not require

presentation of the original Note before commencing a trustee’s sale.2

 Diessner v. Mortgage

Elec. Registration Sys., 618 F.Supp.2d 1178, 1187 (D. Ariz. 2009). And this Court has

previously rejected the show-me-the-note theory as a basis for relief. See, e.g., Mansour v.

Cal-Western Reconveyance Group, 618 F.Supp.2d 1178, 1181 (D. Ariz. 2009). 

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In Count VI, Plaintiff alleges that Defendants used “‘legalese’ in the mortgage

documents as a means of converting Real Property from its true owner to Defendants,” which

he deems a criminal act of “conversion through fraudulent means.” Plaintiff further alleges

that the mortgage documents are evidence of a criminal act and cannot be used by the Court

in this action. 

To the extent Plaintiff alleges Defendants’ attempt to foreclose on the property is an

act of conversion, the claim fails as a matter of law. This Court has previously rejected a

conversion theory in a mortgage foreclosure case. Cervantes v. Countrywide Home Loans,

Inc., 2009 WL 3157160 (D. Ariz. September 24, 2009). Plaintiff’s allegations amount to

conversion not of chattel or personal property, but real property. But Arizona has no tort of

conversion of real property. See Strawberry Water Co. v. Paulsen, 207 P.3d 654, 659 (Ariz.

Ct. App. 2008) (distinguishing different types of water rights and stating, “[W]ater rights are

real property interests, and thus cannot be converted because they are not chattels.”). 

If Plaintiff’s allegation in Count VI is instead one of fraud, he has failed to plead such

a claim with sufficient particularity. In Arizona, a fraud claim requires proof of nine

elements: (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker’s knowledge

of its falsity or ignorance of its truth; (5) the speaker’s intent that it be acted upon by the

recipient in a manner reasonably contemplated; (6) the hearer’s ignorance of the falsity of

the representation; (7) the hearer’s reliance on the truth of the representation; (8) the right to

rely on it; and (9) consequent and proximate injury. Echols v. Beauty Built Homes, Inc., 647

P.2d 629, 631 (1982). When alleging fraud, “a party must state state with particularity the

circumstances constituting fraud.” Fed. R. Civ. P. 9(b). Mere conclusory allegations of

fraud will not suffice; the complaint must contain statements of the time, place, and nature

of the alleged fraudulent activities.” A.G. Edwards & Sons, Inc. v. Smith, 736 F. Supp. 1030,

1033 (D. Ariz. 1989). Threadbare assertions that Defendant’s use of “legalese” was part of

a fraudulent scheme are not sufficient to state a claim, and Plaintiff fails to plead enough

facts to support a claim that the mortgage documents themselves were somehow fraudulent.

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3

 Defendants continue to argue that Plaintiff must exhaust administrative claims

processing before bringing a claim against WaMu for pre-receivership conduct that may

result in monetary damages. The Court will not reach Defendant’s failure to exhaust

argument because it finds that Plaintiff’s Amended Complaint fails to meet the pleading

standards of Rule 8 as articulated in Twombly and Iqbal.

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If Plaintiff means by Count VI to assert Truth in Lending Act (TILA) violations, he

fails to allege any facts to support theories under this statute. To survive a motion to dismiss

on a TILA claim, Plaintiff would have to assert specific facts regarding an alleged failure on

the part of his lender3

 to make adequate disclosures of certain terms and conditions before

consummation of the loan transaction as required by TILA. See 15 U.S.C. § 1601 et seq.

In addition, Plaintiff would have to address why his claim would not be barred by the oneyear statute of limitations under TILA. See 15 U.S.C. § 1640(e). Plaintiff’s assertion that

Defendants used “legalese” in the loan documents, without more, is not sufficient to state a

claim under TILA, and such a claim therefore fails. 

In addition to the six enumerated Counts of his Amended Complaint, Plaintiff asserts

a number of other claims. But no independent cause of action for “Cognovit Note” exists,

nor is unconscionability a stand-alone cause of action. In addition, generalized allegations

of terrorism or other acts of war committed by Defendants are not sufficient to state a claim

upon which relief can be granted.

Plaintiff continues to allege constitutional claims, despite failing to name them in

separate Counts, but has named only private actors as Defendants. Plaintiff cannot state

constitutional claims against private citizens whose actions are not fairly attributable to the

government. Morse v. N. Coast Opportunities, Inc., 118 F.3d 1338, 1340 (9th Cir. 1997)

(internal citations omitted). Any and all constitutional claims alleged against Defendants

therefore fail. 

Plaintiff attaches an unsworn document to his Amended Complaint entitled “Mortgage

Document Examination and Investigation Report” in support of his claims that either the loan

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is void because Defendants allegedly do not possess the original Note or no loan was made.

Defendants assert that the report, which Plaintiff apparently purchased from a forensic

document examiner, cuts against both of these claims. The Court agrees that the report adds

nothing to the Amended Complaint and has already dismissed the show-me-the-note and

show-me-the-loan claims as a matter of law. 

Plaintiff requests that the Court order “the ‘contract’/mortgage/Deed of trust/Note

hereby forever rescinded” and order Defendants to reconvey the deed to Plaintiff, repair and

restore Plaintiff’s credit, return all money paid by Plaintiff to Defendants, and cancel all

foreclosure proceedings. Because Plaintiff has failed to state a cognizable claim, the Court

is unable to grant Plaintiff the relief he seeks. 

Plaintiff has filed a “Motion to Compel Court and Defendants to Adhere to ERIE

Doctrine.” (Doc. #34.) The Court is aware that under the Erie doctrine, a federal court

sitting in diversity applies state substantive law and federal procedural law, Gasperini v.

Center for Humanities, Inc., 518 U.S. 415 (1996), and acts accordingly. Plaintiff has also

filed a “Motion to Compel Defendants’ Attorneys to Submit an Affidavit to this Court

Stating whether or not they are Representing the Holder in Due Course and the Creditor in

this Matter.” (Doc. #39.) However, nothing requires Defendants’ counsel to submit an

affidavit of this type to the Court. Moreover, the Court has ruled previously that Defendants

do not have to possess the original Note. The Court therefore will deny both motions.

Plaintiff has also filed a Motion for Stay of all Non-Judicial Proceedings. (Doc. #40.)

In order to prevail on a motion for injunctive relief, Plaintiff must show that: (1) he is likely

to succeed on the merits; (2) he is likely to suffer irreparable harm in the absence of

preliminary relief; (3) the balance of equities tips in his favor; and (4) an injunction is in the

public interest. Am. Trucking Assoc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir.

2009) (citing Winter v. Natural Res. Defense Council, 129 S.Ct. 365, 374 (2008)). Because

the Court has found that Plaintiff failed to state a cognizable claim in his Amended

Complaint, he necessarily cannot demonstrate a likelihood of success on the merits. The

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Court therefore will deny Plaintiff’s Motion for Stay of all Non-Judicial Proceedings.

Defendants have filed a Motion to Strike Plaintiff’s second Response (Doc. #38) as

an untimely and unauthorized supplement to the response Plaintiff filed on July 15, 2010.

(Doc. #36.) The Court agrees with Defendants that the local rules do not permit Plaintiff’s

second Response, see L.R.Civ.P. 7.1, and that Plaintiff offers nothing new or relevant in his

second filing. However, a determination to strike is in the discretion of the Court, and

Defendants have not demonstrated how the allegations contained in Plaintiff’s second

Response will cause prejudice. See XY Skin Care & Cosmetics, LLC v. Hugo Boss USA, Inc.,

No. CV-08-1467-PHX-ROS, 2009 WL 2382998, at *1 (D. Ariz. Aug. 4, 2009). In any case,

nothing in the second Response altered the Court’s analysis. The Court will therefore deny

Defendants’ Motion to Strike.

Plaintiff has failed to state a claim upon which relief can be granted in the Amended

Complaint. The Court therefore will grant Defendants’ Motion to Dismiss. 

Accordingly,

IT IS ORDERED GRANTING Defendants’ Motion to Dismiss (Doc. 35) with

prejudice. 

IT IS FURTHER ORDERED DENYING Plaintiff’s Motion to Compel Court and

Defendants to Adhere to ERIE Doctrine (Doc. 34), Motion to Compel Defendants’ Attorneys

to Submit an Affidavit (Doc. 39), and Motion for Stay of all Non-Judicial Proceedings (Doc.

#40), as well as Defendants’ Motion to Strike (Doc. 43). 

IT IS FURTHER ORDERED DENYING Plaintiff's Motion to Sequester the Genuine

Original Adjustable Rate Note (Doc. 48).

DATED this 25th day of October, 2010.

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