Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_15-cv-00365/USCOURTS-azd-2_15-cv-00365-1/pdf.json

Nature of Suit Code: 240
Nature of Suit: Torts to Land
Cause of Action: 28:1441 Petition for Removal

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA

David A. Kester, on behalf of himself and 

all others similarly situated, 

Plaintiff, 

v. 

CitiMortgage, Inc.; CR Title Services, Inc.; 

and Does 1 to 25, inclusive, 

Defendants.

No. CV-15-00365-PHX-NVW

ORDER 

 This is a putative class action of foreclosed homeowners for statutory damages 

under A.R.S. § 33-420(A). The statute penalizes persons claiming an interest or lien in 

real property for recording a document “knowing or having reason to know that the 

document is forged, groundless, contains a material misstatement or false claim or is 

otherwise invalid . . . .” For each such document, the statute imposes a $5,000 penalty. 

Plaintiff alleges three documents relating to the trustee’s sale of his house were 

recorded in violation of the statute because they were acknowledged before a notary 

whose commission had been revoked ten days earlier. He also alleges this defect in 

acknowledgment affected hundreds or perhaps thousands of other documents. On 

Plaintiff’s theory, statutory penalties could run into the millions of dollars. 

Before the Court is Defendants’ Motion to Dismiss Plaintiff’s Amended Class 

Action Complaint (Doc. 16) for failure to state a claim upon which relief can be granted. 

The Motion will be granted. 

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I. LEGAL STANDARD 

A motion to dismiss under Rule 12(b)(6), Federal Rules of Civil Procedure, tests 

the legal sufficiency of the complaint. The motion may be based on “the lack of a 

cognizable legal theory” or “the absence of sufficient facts alleged under a cognizable 

legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). A 

complaint need include “only enough facts to state a claim for relief that is plausible on 

its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). 

All allegations of material fact are assumed to be true and construed in the light 

most favorable to the non-moving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th 

Cir. 2009). However, that does not apply to legal conclusions or conclusory factual 

allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Threadbare recitals of the 

elements of a cause of action, supported by mere conclusory statements, do not suffice.” 

Id. “A claim has facial plausibility when the plaintiff pleads factual content that allows 

the court to draw the reasonable inference that the defendant is liable for the misconduct 

alleged.” Id. “The plausibility standard is not akin to a ‘probability requirement,’ but it 

asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. The 

complaint must permit reasonable inference of more than the mere possibility of 

misconduct. Id. If the plaintiff’s pleadings fall short of this standard, dismissal is 

appropriate. 

II. FACTUAL ALLEGATIONS ASSUMED TO BE TRUE 

The following are Plaintiff’s allegations. On August 17, 2010, the Arizona 

Secretary of State received a complaint accusing notary public Kristin Lindner of 

improperly notarizing documents for Defendants when the signer was not present. (Doc. 

1-1 at 11.) Plaintiff alleges on “information and belief” that Defendants became aware of 

the complaint and the Secretary of State’s subsequent investigation “no later than 

September 2010.” (Id.) Despite this knowledge, Defendants “took no steps to remove or 

take any other action with respect to Ms. Lindner what [sic] would prevent her from the 

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performance of notarial services on their behalf.” (Id.) In a report dated December 6, 

2010, the Secretary of State determined, among other things, that Lindner had “failed to 

record requisite journal information,” “failed to properly perform the acknowledgment” 

on the complainant’s document, “failed to state her commission-expiration date in the 

notarial certificate,” and “executed a statement known to be false,” all in violation of 

Arizona notary law. (Id. at 23-24.) The Secretary of State therefore revoked Lindner’s 

commission, effective December 6, 2010. (Id. at 23.) 

Plaintiff alleges, again on “information and belief,” that for three months after 

learning of the revocation, Defendants permitted Lindner to continue notarizing 

documents on their behalf, including assignments of deeds of trust, substitutions of 

trustee, notices of default, and notices of trustee’s sale. (Id. at 12.) Defendants recorded 

these post-revocation documents in county recorders’ offices across Arizona, California, 

Nevada, Idaho, and Oregon and used them to institute trustee’s sales against hundreds of 

properties. (Id.) Defendants have so far “made no attempt to reconstitute, re-do, or renotarize the invalid documentation properly, nor have they made any attempt to advise 

any purported current owners of the properties or the Deeds of Trust purportedly 

encumbering those properties that there is or may be an issue with the title they believe 

they have.” (Id. at 13.) 

On December 16, 2010, ten days after her commission had been revoked, Lindner 

notarized an assignment of deed of trust, a substitution of trustee, and a notice of trustee’s 

sale on Plaintiff’s property. (Id.) These three documents were recorded in the Maricopa 

County recorder’s office, the last initiating a trustee’s sale of the property to satisfy the 

defaulted note secured by the deed of trust. (Id.; see Doc. 16-1 at 3, 7, 10.)1

Plaintiff filed this action in Maricopa County Superior Court on December 8, 

2014. (Doc. 1 at 2.) His Amended Class Action Complaint, submitted on January 27, 

 1

 Doc. 16-1 contains copies of these documents, as recorded. The complaint relies 

on these documents and their authenticity is not disputed. Therefore they may be 

considered in ruling on Defendants’ 12(b)(6) motion. Swartz v. KPMG LLP, 476 F.3d 

756, 763 (9th Cir. 2007). 

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2015, requests certification of a class comprising “[a]ll property owners or beneficial title 

holders whose properties were the subject of recordations by Defendants . . . in the Office 

of the County Recorder wherever situated during the applicable statutory limitations 

period that were notarized in the State of Arizona by employees of Defendants at a time 

when their Notary Licenses had been revoked or suspended.” (Doc. 1-1 at 14, 18.) 

The Complaint’s single cause of action is under A.R.S. § 33-420(A), which 

penalizes persons claiming an interest or lien in real property for knowingly recording a 

document that is “forged, groundless, contains a material misstatement or false claim or 

is otherwise invalid”: 

A. A person purporting to claim an interest in, or a lien or encumbrance 

against, real property, who causes a document asserting such claim to be 

recorded in the office of the county recorder, knowing or having reason to 

know that the document is forged, groundless, contains a material 

misstatement or false claim or is otherwise invalid is liable to the owner or 

beneficial title holder of the real property for the sum of not less than five 

thousand dollars, or for treble the actual damages caused by the recording, 

whichever is greater, and reasonable attorney fees and costs of the action. 

(Emphasis added.) The broader statutory section, A.R.S. § 33-420, is entitled “False 

documents; liability; special action; damages; violation; classification.” It contains four 

other subsections. Subsection B authorizes a special action to clear title, in addition to an 

action for damages: 

B. The owner or beneficial title holder of the real property may bring an 

action pursuant to this section in the superior court in the county in which 

the real property is located for such relief as is required to immediately 

clear title to the real property as provided for in the rules of procedure for 

special actions. This special action may be brought based on the ground 

that the lien is forged, groundless, contains a material misstatement or false 

claim or is otherwise invalid. The owner or beneficial title holder may 

bring a separate special action to clear title to the real property or join such 

action with an action for damages as described in this section. In either 

case, the owner or beneficial title holder may recover reasonable attorney 

fees and costs of the action if he prevails. 

Subsection C further penalizes a person named in a document described in subsection A 

if the person fails to timely correct the document upon request: 

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C. A person who is named in a document which purports to create an 

interest in, or a lien or encumbrance against, real property and who knows 

that the document is forged, groundless, contains a material misstatement or 

false claim or is otherwise invalid shall be liable to the owner or title holder 

for the sum of not less than one thousand dollars, or for treble actual 

damages, whichever is greater, and reasonable attorney fees and costs as 

provided in this section, if he willfully refuses to release or correct such 

document of record within twenty days from the date of a written request 

from the owner of beneficial title holder of the real property. 

Subsection D creates a presumption that documents containing unauthorized property 

interests or liens are groundless and invalid: 

D. A document purporting to create an interest in, or a lien or 

encumbrance against, real property not authorized by statute, judgment or 

other specific legal authority is presumed to be groundless and invalid. 

Subsection E renders a person in violation of subsection A guilty of a class 1 

misdemeanor: 

E. A person purporting to claim an interest in, or a lien or encumbrance 

against, real property, who causes a document asserting such claim to be 

recorded in the office of the county recorder, knowing or having reason to 

know that the document is forged, groundless, contains a material 

misstatement or false claim or is otherwise invalid is guilty of a class 1 

misdemeanor. 

Plaintiff alleges that revocation of the notary’s commission rendered the three 

documents relating to the trustee’s sale of his property and hundreds or thousands of 

other documents “forged, groundless, or otherwise invalid,” triggering the $5,000.00 per 

document penalty of § 33-420(A) because Defendants knew the commission had been 

revoked. (Doc. 1-1 at 17.) (Trustee’s sales typically involve recordation of three 

acknowledged documents, as in Plaintiff’s case.) He further alleges that Defendants 

violated the statute by “failing to correct and retract documents they recorded that they 

knew or should have known had been recorded in violation of the statute,” though he 

does not allege that he asked them to do so. (Id.) 

Plaintiff does not claim that these documents or transactions were substantively 

invalid. Nor does he claim that the signatures on these documents were inauthentic or 

unauthorized or that the notary did not in fact witness the signatures. He claims only that 

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the certificates of acknowledgment accompanying these documents were signed by a 

notary whose commission had been revoked. (See Doc. 16-1 at 3, 7, 10.) 

On February 27, 2015, Defendants removed the action to this court under the 

Class Action Fairness Act. (Doc. 1 at 7.) There are no questions of federal law. No 

class has yet been certified. 

III. A.R.S. § 33-420 REQUIRES MATERIALITY FOR A PENALTY. 

 It is undisputed that the defect in the certificates of acknowledgment of the 

trustee’s sale documents is immaterial to Plaintiff. Defendants say that is fatal to the 

claim; Plaintiff says otherwise. The Court first addresses this central issue.2

A. Textual Analysis 

Again, a penalty may arise under A.R.S. § 33-420(A) only if the recorded 

document is flawed in one of the following ways: it is “forged, groundless, contains a 

material misstatement or false claim or is otherwise invalid.” 

 2

 Neither party briefed the threshold question whether A.R.S. § 33-420 applies at 

all to latent defects in certificates of acknowledgment asserted only after the trustee’s 

sale. The statute combats a serious problem: recordation of false property claims. Its 

title is aimed at “False documents.” It punishes violations with severe monetary liability 

and misdemeanor criminal liability. A.R.S. § 33-420(A), (C), (E). This statute is a poor 

fit for Plaintiff’s facts. 

The trustee’s sale documents here are not “false,” as Plaintiff does not contest their 

terms or legal effect. They are not “forged,” as Plaintiff does not claim any signatures are 

inauthentic. And they do not seem “groundless” or otherwise “invalid,” as Plaintiff does 

not dispute any underlying property claims. See A.R.S. § 33-420(D) (documents with 

unauthorized property claims are presumed “groundless” and “invalid”); cf. Whitman v. 

Am. Trucking Assocs., 531 U.S. 457, 466 (2001) (“Words that can have more than one 

meaning are given content . . . by their surroundings . . . .”). 

Another remedy for Plaintiff’s challenge already exists in the statutory scheme. 

A.R.S. § 33-513 (“When an acknowledgment is properly made, but defectively certified, 

any party interested may bring an action in the superior court to obtain a judgment 

correcting the certificate.”). Thus, it is a fair question whether § 33-420 applies at all to 

these latent defects in certificates of acknowledgment. But because other grounds are 

dispositive, the Court does not decide this question. 

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Plaintiff reads the statutory text as allowing a penalty for immaterial flaws in a 

recorded document—that is, flaws that do not affect him. He notes that the statute lists 

various flaws disjunctively and that the word “material” only appears next to the words 

“misstatement or false claim,” not the words “forged,” “groundless,” or “otherwise 

invalid.” Plaintiff infers that materiality is not a necessary element of § 33-420(A) claims 

that a document is “forged,” “groundless,” or “otherwise invalid.” 

Plaintiff’s reading defies ordinary principles of statutory interpretation and 

common sense. The words “forged,” “groundless,” and “invalid” each imply a sense of 

materiality. One does not “forge” a document to no effect. A document cannot be 

“groundless” or “invalid” without reference to a meaningful external standard of 

“ground” or “validity.” The reason the word “material” does not appear next to each of 

these words is that such drafting would be unnecessary and awkward. In contrast, the 

words “misstatement” and “false claim” do not imply a sense of materiality. Both words 

refer to innumerable communications within a document that the legislature would have 

no reason to punish, such as a “false claim” that the third page of a document is page two. 

For those words, “material” is a useful qualifier. 

Context underscores the need for materiality here. This is a punitive and criminal 

statute. Subsection A imposes a penalty of $5,000 or treble actual damages for each 

illegal document. Subsection C imposes an additional penalty of $1,000 or treble actual 

damages for willful failure to correct such documents upon request. Perhaps most 

gravely, subsection E classifies a violation of subsection A as a class 1 misdemeanor. 

These subsections “must be interpreted consistently” to the extent they use identical 

language. Wyatt v. Wehmueller, 167 Ariz. 281, 285, 806 P.2d 870, 874 (1991). Thus, 

Plaintiff’s interpretation would make the recording of a document with inconsequential 

flaws not only unlawful and expensive, but criminal. 

More generally, the purpose of A.R.S. § 33-420 is to “protect property owners 

from actions clouding title to their property.” Wyatt, 167 Ariz. at 286, 806 P.2d at 875. 

But an immaterial flaw in a property document, by definition, would not cloud Plaintiff’s 

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title. “Statutes must be given a sensible construction which accomplishes the legislative 

intent behind them and which avoids absurd results.” Collins v. State, 166 Ariz. 409, 

415, 803 P.2d 130, 136 (Ct. App. 1990). Plaintiff’s construction contorts the statute to 

yield a harsh, purposeless result. Materiality must be an element of penalty claims under 

A.R.S. § 33-420(A). 

B. Case Law 

The case authority does not read materiality out of the statute. Plaintiff relies 

principally on In re Mortgage Electronic Registration Systems, Inc., 754 F.3d 772 (9th 

Cir. 2014), an action for penalties under § 33-420(A) for documents relating to a trustee’s 

sale that were “notarized in blank and ‘robosigned’ with forged signatures.” Id. at 782. 

The court did not discuss whether materiality is necessary for liability for invalid 

recordations. Neither did the district court. Materiality was obvious. 

Plaintiff also cites two Arizona cases that discussed § 33-420(A) without 

discussing materiality and infers from this silence that materiality is not required under 

the statute. Delmastro & Eells v. Taco Bell Corp., 228 Ariz. 134, 263 P.3d 683 (Ct. App. 

2011); SWC Baseline & Crismon Inv’rs, LLC v. Augusta Ranch Ltd. P’ship, 228 Ariz. 

271, 265 P.3d 1070 (Ct. App. 2011). But the more reasonable inference is simply that 

neither court needed to discuss materiality. 

The most relevant case is Sitton v. Deutsche Bank National Trust Co., 233 Ariz. 

215, 311 P.3d 237 (Ct. App. 2013). There, like here, the plaintiff brought an action under 

§ 33-420 based on recorded documents relating to the trustee’s sale of her home. Id. at 

216 ¶ 2, 311 P.3d at 238. She alleged, among other things, that assignments of a note and 

deed of trust contained misstatements and other defects. Id. at 217 ¶¶ 6-8, 311 P.3d at 

239. The court agreed that the assignments misrepresented certain dates and the 

assignor’s identity and that these misrepresentations “could be material” to certain future 

assignees. Id. at 221 ¶ 32, 311 P.3d at 243. But these misrepresentations were 

immaterial to the plaintiff because, as explained below, they “could have had no effect on 

[her] choice of actions.” Id. Because the plaintiff “could not show that the assignments 

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contained a material misstatement or false claim, she could not prevail on her 

§ 33-420(A) claims.” Id. at 222 ¶ 34, 311 P.3d at 244 (emphasis in original). 

Plaintiff contends Sitton’s emphasis on materiality applies only to the “material 

misstatement or false claim” prong of § 33-420(A), not the “forged,” “groundless,” or 

“otherwise invalid” prongs. But the opinion itself is not expressly limited to any 

statutory prong. In fact, part of the opinion characterized the plaintiff as attacking the 

original lender’s “authority to make valid assignments.” Id. at 220 ¶ 27, 311 P.3d at 242 

(emphasis added). And the opinion includes broad statements that seem applicable to the 

entire statute. See, e.g., id. at 216 ¶ 2, 311 P.3d at 238 (“We affirm because . . . A.R.S. 

§ 33-420(A) does not support relief in favor of a person who could not have been harmed 

by a recorded misrepresentation.”). Sitton thus suggests that materiality is a required 

element of any § 33–420(A) claim. Nothing in Sitton suggests that materiality is not a 

requirement. 

C. The Acknowledgment Defect Was Not Material to Plaintiff

Again, it is undisputed that the acknowledgment defect in the documents relating 

to the trustee’s sale of Plaintiff’s property was not material to Plaintiff. Nevertheless, it 

merits explanation why. 

A misrepresentation in a recorded document is “material” if “a reasonable person 

would attach importance to its existence or nonexistence in determining [his or her] 

choice of action in the transaction in question.” Sitton, 233 Ariz. at 221 ¶ 31, 311 P.3d at 

243 (quoting Caruthers v. Underhill, 230 Ariz. 513, 521 ¶ 28, 287 P.3d 807, 815 (Ct. 

App. 2012)). 

In Sitton the misrepresentations in the recorded assignments of the note and deed 

of trust were not material to the plaintiff because they could not have affected the 

plaintiff’s choice of action in the transaction in question. The plaintiff was liable on the 

note, and at the time of closing her “choices were to repay the money pursuant to the 

terms of the note, renegotiate the terms of the note, or default and cause foreclosure.” Id.

at 222 ¶ 33, 311 P.3d at 244. The misrepresentations in the recorded assignments did not 

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affect these choices because the plaintiff’s “liability on the note remained the same no 

matter who was assigned as beneficiary, or when.” Id. The misrepresentations about the 

timing and sequence of the assignments were immaterial to the plaintiff as the 

owner/trustor. Id. at 221-22 ¶¶ 32-33, 311 P.3d at 243-44. 

The same is true here. The acknowledgment defect in the property documents 

could not have affected Plaintiff’s choice of action as the owner/trustor. The purpose of 

the acknowledgment here was to effect constructive notice to later buyers or 

encumbrancers. A deed of trust recorded under the Deed of Trust Act “provides 

constructive notice of the deed’s contents to ‘all persons,’ including subsequent 

purchasers.” Manicom v. CitiMortgage, Inc., 236 Ariz. 153, 156 ¶ 8, 336 P.3d 1274, 

1277 (Ct. App. 2014) (quoting A.R.S. § 33-818). But such constructive notice is 

effective only if the deed of trust or other document is properly acknowledged and 

notarized: 

Except as otherwise provided in this section, a trust deed, substitution of 

trustee, notice of resignation of trustee, assignment of a beneficial interest 

under a trust deed, notice of sale, cancellation of notice of sale, trustee’s 

deed, deed of release, and any instrument by which a trust deed is 

subordinated or waived as to priority, if acknowledged as provided by law, 

shall from the time of being recorded impart notice of the content to all 

persons, including subsequent purchasers and encumbrancers for value. 

A.R.S. § 33-818 (emphasis added); see also W. W. Planning, Inc. v. Clark, 10 Ariz. App. 

86, 88, 456 P.2d 406, 408 (1969) (“Before an instrument will be deemed to be lawfully 

recorded and to impart constructive notice it must have been acknowledged.”). 

Accordingly, defective acknowledgment does not invalidate the documents as such; at 

most it defeats constructive notice.3

 3

 It is not clear there was a failure of constructive notice here. That the documents 

were acknowledged before a notary whose commission had expired is at most a latent 

defect, as anyone searching county records would have thought the documents were 

properly acknowledged and notarized. See In re Wonderfair Stores, Inc. of Arizona, 511 

F.2d 1206, 1214 (9th Cir. 1975) (holding, under Arizona law, that even if certain pages of 

a recorded lease were not properly acknowledged or notarized, lease gave constructive 

notice because defect was “technical” and “not apparent from the instrument”); accord In 

re Bisbee, 157 Ariz. 31, 35, 754 P.2d 1135, 1139 (1988) (citing In re Wonderfair with 

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Here any failure of constructive notice could not harm Plaintiff. He could lose no 

right or interest. It would not reduce the number of bidders who appear at the trustee’s 

sale because only people with actual notice do that. Indeed, in usual commercial 

circumstances it is hard to imagine practical harm to anybody from lack of constructive 

notice of a pending trustee’s sale. Admittedly, if an intervening buyer had no actual or 

constructive notice of the pending trustee’s sale, that buyer might prevail over a later 

buyer at the trustee’s sale. See Phipps v. CW Leasing, Inc., 186 Ariz. 397, 401, 923 P.2d 

863, 867 (Ct. App. 1996). But that circumstance is improbable. An intervening buyer 

without notice of the pending sale would still have constructive notice of the previously 

recorded deed of trust. That buyer could not get clear title without paying off the note, 

which would cause the beneficiary to cancel the trustee’s sale altogether. 

Even if one can imagine circumstances in which someone else would be harmed, 

all that matters here is that failure of constructive notice could not harm Plaintiff as the 

owner/trustor. Even “an unrecorded instrument is fully enforceable between the parties 

to the transaction,” since “recording acts are intended to protect a later purchaser’s 

reliance on a seller’s title and to provide a means of resolving competing title claims, not 

to invalidate a transfer between the parties to the deeds of trust.” 3502 Lending, LLC v. 

CTC Real Estate Serv., 224 Ariz. 274, 277, 229 P.3d 1016, 1019 (Ct. App. 2010). The 

documents relating to the trustee’s sale of Plaintiff’s house were substantively valid. 

Plaintiff does not claim title to the house or seek to unwind the sale. Rather, he seeks a 

windfall based on an immaterial acknowledgment defect. In the words of Sitton, the 

acknowledgment defect could not have affected Plaintiff’s choice of action in the 

transaction in question. Therefore, it was immaterial to him as a matter of law and his 

claim under A.R.S. § 44-420(A) fails. 

 

approval). This is not a case where acknowledgment was wholly lacking or flawed in a 

recognizable way. E.g., Phipps v. CW Leasing, Inc., 186 Ariz. 397, 399, 923 P.2d 863, 

865 (Ct. App. 1996) (recorded document wholly lacked certificate of acknowledgment 

and so gave no constructive notice). The parties have not briefed this question. 

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IV. BY OPERATION OF LAW THE ACKNOWLEDGMENTS ARE FULLY 

VALID. 

Even apart from the immateriality to Plaintiff of the acknowledgment defect, two 

statutes validate the acknowledgments in any event. Under the governing recording 

statutes and the Deed of Trust Act, the acknowledgments were fully validated after 

having been recorded for one year and when the property passed to a purchaser for value 

and without notice. Both those times have long passed. The acknowledgments have 

been doubly redeemed. The Court need not decide what penalties Plaintiff would have if 

he had filed an action before then. 

A. The Recording Statutes

Under A.R.S. § 33-411, a document affecting real property must be properly 

recorded in order to give constructive notice to subsequent purchasers: 

A. No instrument affecting real property gives notice of its contents to 

subsequent purchasers or encumbrance holders for valuable consideration 

without notice, unless recorded as provided by law in the office of the 

county recorder of the county in which the property is located. 

A.R.S. § 33-411(A). Proper recordation, in turn, generally requires a proper certificate of 

acknowledgment: 

B. An instrument shall not be deemed lawfully recorded unless it has 

been previously acknowledged in the manner prescribed in this chapter 

except in the case of master mortgages as provided in § 33-415. 

A.R.S. § 33-411(B). However, any “defect, omission or informality in the certificate of 

acknowledgment” is cured when the document has been recorded for longer than one 

year: 

C. For purposes of this section, an instrument affecting real property 

containing any defect, omission or informality in the certificate of 

acknowledgment and which has been recorded for longer than one year in 

the office of the county recorder of the county in which the property is 

located shall be deemed to have been lawfully recorded on and after the 

date of its recording. 

A.R.S. § 33-411(C) (emphasis added). 

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Plaintiff’s challenge here is for a “defect, omission or informality in the certificate 

of acknowledgment” in the recorded documents. But this action was filed nearly four 

years after the recordings. Therefore, even if the defective acknowledgments invalidated 

the documents when originally recorded, in whole or in part, such invalidation has been 

cured back to the date of the recording by the passage of a year. A.R.S. § 33-411(C). 

Plaintiff argues § 33-411(C) does not apply here because it is explicitly limited 

“[f]or purposes of this section.” But “this section” includes subsection B’s requirement 

that an instrument be properly “acknowledged” in order to be lawfully recorded. Thus, 

the one-year cure of “any defect, omission or informality in the certificate of 

acknowledgment” reaches the documents Plaintiff claims were improperly recorded. The 

very title of § 33-411—“acknowledgment required for proper recording”—supports this. 

After one year, therefore, § 33-411(C) cures an acknowledgment defect as though 

the document was “lawfully recorded on and after the date of its recording.” The broad 

purpose is to prevent belated objections based on mere defects in acknowledgments in 

documents that are regular on their face. That purpose of saving honest transactions 

cannot have the perverse effect of retroactively imposing constructive notice to a time 

when there was none and invalidating transactions that were valid when made. Phipps v. 

CW Leasing, Inc., 186 Ariz. 397, 401, 923 P.2d 863, 867 (Ct. App. 1996) (document 

recorded without acknowledgment “deemed to have been lawfully recorded on and after 

the date of its recording as to anyone purchasing after the year’s period, but not as to 

someone who purchased during that period”). 

In Phipps a right of first refusal was not acknowledged at all and was unrecorded 

for several years. Id. at 399, 923 P.2d at 865. A few months after it was recorded, the 

owner sold to a different person without knowledge of the right of first refusal. Id. The 

buyer prevailed over the holder of the unacknowledged right of first refusal because the 

court concluded there was no constructive notice at the time he bought. Id. at 402, 923 

P.2d at 868. Thus, the court excluded retroactive constructive notice from the retroactive 

cure of defective acknowledgment, to avoid substantive injustice that would defeat, not 

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serve, the purpose of § 33-411(C). The court’s opinion does not limit the statute’s 

otherwise broad instruction to deem defective documents “lawfully recorded on and after 

the date of its recording.” Nor does the opinion govern the facts of this case. Phipps

dealt with the complete absence of any acknowledgment in a recorded document, not the 

revocation of a notary’s commission in an acknowledgment otherwise valid on its face. 

The court itself noted that a total absence of acknowledgment “may not even fall within 

the language of A.R.S. section 33-411(C),” which addresses only a “defect, omission or 

informality in the certificate of acknowledgment.” Id. at 402 n.1, 923 P.2d at 868 n.1. 

Seizing on that distinction, Plaintiff argues § 33-411(C) does not apply here 

because the revocation of the commission is more than just a “defect, omission or 

informality” in the acknowledgment but rather a complete absence of acknowledgment. 

This is unpersuasive because the acknowledgment was regular on its face. The defect 

was exactly the kind that cannot be recognized and that people cannot be expected to 

ferret out by checking the licensing status of every notary with whom they deal and 

whose seal is facially valid. 

The case Plaintiff relies on is of little help. In Zrihan v. Wells Fargo Bank, N.A., 

No. CV-12-02073-PHX-DGC, 2014 WL 348197 (D. Ariz. Jan. 31, 2014), the evidence 

on summary judgment clashed on whether the principal’s signature itself was true or 

forged. Id. at *4. There was no evidence on whether the notary was licensed or not at the 

time, but the notary’s purported seal listed the expiration date of her commission beyond 

what the statutes allowed. See id. Zrihan reached no legal conclusion and denied 

summary judgment. 

Plaintiff also argues A.R.S. § 12-550 provides a four-year statute of limitations for 

his penalty claim. This is true. Sitton v. Deutsche Bank Nat’l Tr. Co., 233 Ariz. 215, 

219, 311 P.3d 237, 241 (Ct. App. 2013). But § 33-411(C) is not a statute of limitations. 

Rather, it deems a document with a defective certificate of acknowledgment “to have 

been lawfully recorded on and after the date of its recording.” This operates differently 

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from a statute of limitations: here the claims, if any, are erased. If there was a claim in 

the beginning, now there is not and never was one. 

This interpretation of § 33-411(C) is consistent with Arizona and federal cases 

holding that minor technical defects in a notarization or the underlying property 

document do not defeat an otherwise proper recording under Arizona law. See Watson 

Constr. Co. v. Amfac Mortg. Corp., 124 Ariz. 570, 575-76, 606 P.2d 421, 426-27 (1979) 

(recorded deed of trust gave constructive notice despite missing caption and two pages); 

In re Bisbee, 157 Ariz. 31, 35, 754 P.2d 1135, 1139 (1988) (recorded deed of trust gave 

constructive notice despite failing to name trustee); In re Wonderfair Stores, Inc. of 

Arizona, 511 F.2d 1206, 1214 (9th Cir. 1975) (recorded lease gave constructive notice 

under Arizona law despite improper acknowledgment); AA Am. Dev. Corp. v. United 

States, No. CIV06-2450-PHX-SMM, 2007 WL 2330869, at *5 (D. Ariz. Aug. 14, 2007) 

(notice of lis pendens recorded for more than one year but lacking acknowledgment gave 

constructive notice under Arizona law); Robertson v. DLJ Mortg. Capital, Inc., No. CV12-8033-PCT-LOA, 2012 WL 4840033, at *11 (D. Ariz. Oct. 11, 2012), aff’d (Mar. 29, 

2013) (rejecting “technical arguments” under Arizona law against documents recorded 

for more than one year). 

B. The Deed of Trust Act 

The Deed of Trust Act itself independently cured the defect in the 

acknowledgment years before Plaintiff brought this action. The original Deed of Trust 

Act addressed procedural defects in trustee’s sales and documents, “including recording”: 

The trustee’s deed shall raise the presumption of compliance with the 

requirements of the deed of trust and this chapter relating to the exercise of 

the power of sale and the sale of the trust property, including recording, 

mailing, publishing and post of notice of sale and the conduct of sale. A 

trustee’s deed shall constitute conclusive evidence of the meeting of those 

requirements in favor of purchasers or encumbrancers for value and 

without actual notice. 

A.R.S. § 33-811(B) (emphasis added). Plaintiff alleges that he and the class members 

lost their homes by foreclosure or forced sales. Unless the buyers knew of the revocation 

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of the notary’s commission, they were purchasers “for value without notice.” Plaintiff 

does not allege that any buyers did know. In fact, at oral argument he conceded he has no 

basis to allege that the third party who purchased his home was anyone other than a 

purchaser for value and without actual notice. Thus, this statute independently renders 

Plaintiff’s claims non-existent by legislating that all such compliance is deemed to have 

occurred (regardless of the historical facts). This extinguishes Plaintiff’s penalty claims 

under A.R.S. § 33-420(A). 

This extinguishment of claims by A.R.S. § 33-811(B) is different from the 

§ 33-811(C) waiver of “all defenses and objections to the sale” not raised before sale: 

The trustor, its successors or assigns, and all persons to whom the trustee 

mails a notice of a sale under a trust deed pursuant to § 33-809 shall waive 

all defenses and objections to the sale not raised in an action that results in 

the issuance of a court order granting relief pursuant to rule 65, Arizona 

rules of civil procedure, entered before 5:00 p.m. mountain standard time 

on the last business day before the scheduled date of the sale. 

A.R.S. § 33-811(C). This subsection protects the buyer’s title from cloud by cutting off 

the trustor’s defenses and objections to the sale. A § 33-420(A) penalty is not a defense 

or objection to the sale and so is not cut off by subsection 811(C): 

[F]ailure to enjoin a trustee’s sale does not waive claims for monetary 

awards under § 33-420(A). Section 33-811(C) contemplates the waiver of 

“defenses and objections to the sale” only, and nothing in § 33-420(A) 

provides a defense to a sale or makes recovery contingent upon a sale. 

Sitton, 233 Ariz. at 218 ¶ 13, 311 P.3d at 240. 

But § 33-811(B) does what § 33-811(C) does not: it legislates that the procedural 

requirement at issue, recording, was met. The premise for a § 33-420(A) penalty is 

expunged ab initio. Subsection 811(B) legislates for the past as well as the future. That 

must mean the then-unasserted § 33-420(A) penalty cannot be asserted after the sale 

because it does not exist. 

The Court need not address the legal effect of a plaintiff bringing this kind of 

§ 33-420(A) penalty claim before the sale concluded. The Plaintiff here did not. If he 

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had, the beneficiary would have cancelled the sale and re-noticed it. The noticed sale 

would never have been completed. 

V. PLAINTIFF HAS ADEQUATELY PLED KNOWLEDGE. 

Plaintiff alleges “on information and belief” that Defendants knew the notary’s 

commission had been revoked. Defendants argue this allegation is insufficient. 

“Although there is no express authorization in the federal rules for pleading on 

information and belief, allegations in this form have been held to be permissible, even 

after the Twombly and Iqbal decisions.” 5 Charles Alan Wright et al., Federal Practice 

& Procedure § 1224 (3d ed., Apr. 2015 update) (collecting cases). “Pleading on 

information and belief is a desirable and essential expedient when matters that are 

necessary to complete the statement of a claim are not within the knowledge of the 

plaintiff but he has sufficient data to justify interposing an allegation on the subject.” Id. 

The Ninth Circuit has adopted this approach after Twombly and Iqbal in at least one 

context. Carolina Cas. Ins. Co. v. Team Equip., Inc., 741 F.3d 1082, 1088 (9th Cir. 

2014) (holding that “when information regarding a defendant that is necessary to 

establish diversity of citizenship is not reasonably available to a plaintiff, the plaintiff 

should be permitted to plead jurisdictional allegations as to those defendants on 

information and belief and without affirmatively asserting specific details regarding the 

citizenship of those defendants”). 

“Some cases suggest that when allegations are made on the basis of information 

and belief, the facts on which the pleader’s belief is founded should also be alleged.” 5 

Wright et al., Federal Practice & Procedure § 1224, supra. That requirement may be 

appropriate, depending on the circumstances. In Menard v. CSX Transportation, Inc., for 

example, the plaintiff alleged “upon information and belief” that a company’s employees 

“knew” he was injured and “had sufficient time to take action to prevent further injury to 

him.” 698 F.3d 40, 44 (1st Cir. 2012). The First Circuit noted that the complaint 

provided no facts indicating that the plaintiff was seen by the company’s employees or 

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that he could have been rescued. Id. The court stated: “[I]f he had any facts to support 

this assertion, they should have been set forth. ‘Information and belief’ does not mean 

pure speculation.” Id. Ultimately, however, the First Circuit vacated the district court’s 

dismissal of the complaint and remanded to give the plaintiff an opportunity to say more 

if he could. Id. at 45-46. 

Here, it is unlikely that the Defendant corporations knew on December 16 of 

revocation of the notary’s commission on December 6. The most forceful inference from 

these circumstances is that the notary kept her revocation secret to keep her job as long as 

possible. It is difficult to believe highly regulated businesses would knowingly let a 

revoked notary keep doing their notarizations. There would be no benefit, even illicit 

benefit, for them to do that. 

Nevertheless, whether Defendants in fact knew or had reason to know that the 

notary’s commission had been revoked may not be a matter within Plaintiff’s knowledge. 

Therefore Plaintiff’s allegation survives the minimal pleading standard. 

In reaching this conclusion, the Court does not accept Plaintiff’s theory that the 

notary’s own knowledge of her revocation may be “imputed” to Defendants under agency 

law principles. The Arizona Supreme Court expressly foreclosed this sort of theory with 

respect to the knowledge requirement under A.R.S. § 33-420(A). Wyatt v. Wehmueller, 

167 Ariz. 281, 285, 806 P.2d 870, 874 (1991). 

VI. LEAVE TO AMEND WOULD BE FUTILE. 

Leave to amend should be freely given when justice so requires. Fed. R. Civ. P. 

15(a)(2). In deciding whether to grant leave to amend, courts consider bad faith, undue 

delay, prejudice to the opposing party, futility of amendment, and whether the party has 

previously amended his pleadings. Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995). 

Futility of amendment can, by itself, justify the denial of leave to amend. Id.

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Here, Plaintiff’s claim fails as a matter of law for the reasons explained above and 

cannot be cured by amended pleadings. Therefore, this action must be dismissed without 

leave to amend. 

 IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss Plaintiff’s 

Amended Class Action Complaint (Doc. 16) is granted. 

IT IS FURTHER ORDERED that the Clerk enter judgment dismissing this action 

with prejudice for failure to state a claim upon which relief can be granted. 

The Clerk shall terminate this case. 

 Dated this 31st day of March, 2016. 

 

Neil V. Wake

United States District Judge

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