Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_23-cv-00210/USCOURTS-azd-2_23-cv-00210-4/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Robert Rozich,

Plaintiff,

v. 

MTC Financial Incorporated, et al.,

Defendants.

No. CV-23-00210-PHX-DWL

ORDER 

Robert Rozich (“Plaintiff”) contacted his loan servicer, LoanCare, LLC 

(“LoanCare”), to express concerns regarding his ability to make future payments to First 

Citizens Bank and Trust Company (“CIT”) on an outstanding home equity line of credit. 

In response, LoanCare told Plaintiff he would have to be delinquent for three months before 

he could apply for hardship relief. However, after Plaintiff went into delinquency based 

on that advice and then submitted a loan modification application, LoanCare denied relief

based on CIT’s eligibility requirements. In this action, Plaintiff sued several defendants

under an array of legal theories. All of Plaintiff’s claims have either been settled or 

dismissed except for those against CIT. 

Now pending before the Court is CIT’s motion to dismiss. (Doc. 50.) For the 

reasons that follow, the motion is granted but Plaintiff is granted leave to amend.

BACKGROUND

I. Factual Allegations

The following facts, presumed true, are derived from Plaintiff’s operative pleading, 

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 1 of 18
- 2 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the First Amended Complaint (“FAC”). (Doc. 21.)

Former Defendant MTC Financial Inc. (“MTC”) is a California corporation that 

operates in Arizona. (Id. ¶ 2.)

Defendant CIT is a bank that operates in Arizona. (Id. ¶ 3.)

Former Defendant LoanCare is a company that services loans, including in Arizona. 

(Id. ¶ 4.)

On July 31, 2007, Plaintiff obtained a $150,000 home equity line of credit (“the 

HELOC”). (Id. ¶¶ 8, 11.) The HELOC is secured by a deed of trust (“DOT”) on Plaintiff’s 

home in Phoenix. (Id.) In 2010, the DOT was assigned to CIT. (Id. ¶ 10.) “The DOT was 

a Secondary Lien, with a Wells Fargo-Home Mortgage having a secured loan in first 

position.” (Id. ¶ 12.)

The “monthly payment for the Wells Fargo-Home Mortgage loan was . . . $1,377.” 

(Id. ¶ 13.) The “monthly mortgage payment under the HELOC would fluctuate based on 

the amount of the interest only payments,” with an “estimated average per month paid by 

Plaintiff” of $1,093.75. (Id. ¶ 14.) 

In 2007, “[u]pon obtaining the HELOC, the entire line of credit under the 

HELOC . . . was placed in Plaintiff’s bank account without his permission or knowledge[,] 

which would require him to pay interest on the entire amount of the HELOC.” (Id. ¶ 15.)

Plaintiff “immediately returned the funds to the lender, but already having the interest 

assessed on the entire amount of the HELOC Plaintiff transferred all of the funds in the 

HELOC to his account.” (Id. ¶ 16.) “Defendants” then “close[d] the credit line within 

one . . . year of funding the loan, for reasons not having to do with Plaintiff.” (Id. ¶ 17.)

“On or before July of 2018 Plaintiff contacted LoanCare because he foresaw 

difficulties in making future payments on the HELOC.” (Id. ¶ 18.) “LoanCare informed 

Plaintiff that he would have to be delinquent three . . . or so months before hardship relief 

would be granted.” (Id. ¶ 19.) “LoanCare1 did not discuss with Plaintiff other options 

1

In paragraph 73 of the FAC, Plaintiff suggests that he expected CIT to discuss these 

options as with him as well, which CIT failed to do.

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 2 of 18
- 3 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

available, including refinance, so that Plaintiff could remain in good standing and continue 

his monthly payments without issue.” (Id. ¶ 21.) “Plaintiff never had been delinquent on 

the payments for the HELOC.” (Id. ¶ 20.) “Around this time LoanCare removed Plaintiff’s 

access to the online HELOC account,” which meant “Plaintiff could not make or review 

payments and balances online as he always had before.” (Id. ¶¶ 22-23.)

“In September of 2018, Plaintiff submitted his Borrower Response Package/Loss 

Mitigation Application . . . based on the previous instructions from LoanCare to first allow 

the HELOC payments to become delinquent and apply for relief.” (Id. ¶ 25.) 

On September 21, 2018, LoanCare responded that Plaintiff’s application was 

incomplete. (Id. ¶ 26.) Plaintiff then provided additional information. (Id. ¶ 27.) 

On or around October 30, 2018, LoanCare confirmed in a letter to Plaintiff that the 

application was complete but also noted that it “encourage[d] [Plaintiff] to consider 

contacting servicers of any other mortgage loans secured by the same property to discuss 

available loss mitigation options.” (Id. ¶¶ 27, 30.) 

On or around November 13, 2018, LoanCare told Plaintiff in a letter that “although 

[he] may have a hardship, [he] d[id] not qualify for a loan modification.” (Id. ¶ 32.) The 

letter stated Plaintiff “was not eligible for a repayment plan, unemployment forbearance, 

or traditional modification trial, because the HELOC was not a first lien.” (Id. ¶ 35, internal 

quotation marks omitted.) The letter also stated that the denial of the application was 

“based on eligibility requirements of CIT.” (Id. ¶ 37.) Before this letter, “LoanCare had 

never informed Plaintiff that because the HELOC was not a first lien, Plaintiff would not 

qualify under any plan,” although it “knew at all times the HELOC was in second position.”

(Id. ¶¶ 36-37.) 

In March 2019, Plaintiff submitted a second mitigation application. (Id. ¶ 38.) On 

April 15, 2019, Plaintiff received a second rejection letter from LoanCare, which provided 

the same explanation that was provided in the first rejection letter. (Id. ¶¶ 39, 42, 43.)

In November 2019 and April 2020, LoanCare rejected successive applications from 

Plaintiff for the same reason. (Id. ¶¶ 44-45, 48, 52-53, 56-57.) 

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 3 of 18
- 4 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

In September 2021, Plaintiff enlisted the help of an individual named Charles M. 

Bartkiewicz to assist him with his fifth application. (Id. ¶¶ 60-62.) In an October 15, 2021 

letter, LoanCare informed Bartkiewicz that it “does not offer refinancing,” so “the only 

options for Plaintiff were to reinstate the account . . . , a short sale, or a discounted pay 

off.” (Id. ¶¶ 62-63.) The October 15, 2021 letter “also for the first time, invite[d] Plaintiff 

to make a settlement offer for a lien release.” (Id. ¶ 64.) Bartkiewicz then made three 

settlement offers on Plaintiff’s behalf, but none were accepted, and CIT “refused to ever 

provide a counteroffer.” (Id. ¶¶ 65-66.)

In a May 6, 2022 letter rejecting the second settlement offer, LoanCare stated that 

“the account remains due for the January 6, 2019, payment and the unpaid principal 

balance” was $126,407.70. (Id. ¶ 66.) In other words, “LoanCare was taking the position 

that from July 2007 through December 2018, Plaintiff had only paid” $23,592.30 “towards 

the principal.” (Id. ¶¶ 66-68.) “After Plaintiff’s online access to his account was revoked 

by Defendants, Plaintiff has never been provided an accounting showing the basis of the 

unpaid principal balance as . . . $126,407.70.” (Id. ¶ 70.) 

Plaintiff alleges that “LoanCare and CIT purposely prolonged the period that 

Plaintiff negotiated with the Defendants so that the Plaintiff would be in considerable 

arrears which would make his ability to obtain new financing from any institution 

increasingly difficult to impossible.” (Id. ¶ 71.) “During the entirety of this process, 

Defendants negatively reported each late payment destroying Plaintiff’s good credit 

rating.” (Id. ¶ 72, internal quotation marks omitted.) “Had LoanCare and/or CIT initially 

told Plaintiff to offer an amount for a discounted payoff and release of lien instead of 

advising [him] to resubmit multiple applications, then either a settlement could have been 

reached or Plaintiff would still have been in a position to obtain new financing with CIT 

or [an]other lender based on his then good credit and equity.” (Id. ¶ 73.)

II. Procedural History

On December 13, 2022, Plaintiff commenced this action in Maricopa County 

Superior Court. (Doc. 1 ¶ 1.) 

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 4 of 18
- 5 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Shortly after filing the complaint, Plaintiff obtained a temporary restraining order 

(“TRO”) to enjoin the then-impeding trustee’s sale of Plaintiff’s home. (Doc. 42-1 at 2-5.)

On January 31, 2023, LoanCare removed the action to this Court. (Doc. 1.) 

On March 9, 2023, after Plaintiff and MTC announced they had reached a settlement 

(Doc. 16), the Court dismissed all of Plaintiff’s claims against MTC. (Doc. 18.) 

On April 7, 2023, Plaintiff filed the FAC. (Doc. 21.) The FAC asserts five claims 

against LoanCare and CIT: (1) breach of contract; (2) breach of the implied covenant of 

good faith and fair dealing; (3) violation of the Arizona Consumer Fraud Act 

(“ACFA”); (4) violation of the Real Estate Settlement Procedures Act (“RESPA”); and (5) 

violation of the Truth in Lending Act (“TILA”). (Id. ¶¶ 74-106.) 

On May 22, 2023, LoanCare moved to dismiss the FAC. (Doc. 25.)

On October 26, 2023, the Court granted LoanCare’s motion to dismiss. (Doc. 28.)

On November 13, 2023, after Plaintiff declined to file a Second Amended 

Complaint as authorized in the dismissal order, the Court dismissed LoanCare. (Doc. 29.)

On November 14, 2023, the Court issued an order to show cause (“OSC”) why 

Plaintiff’s claims against CIT should not be dismissed for failure to prosecute. (Doc. 30.) 

On November 28, 2023, Plaintiff filed a response to the OSC. (Doc. 31.) Plaintiff 

affirmed his intent to pursue his claims against CIT, acknowledged that he “inadvertently 

failed to effectuate service of the [FAC] on [CIT],” and expressed his “hopes the Court will 

allow some additional time to effectuate the service of the [FAC] of [CIT] and opportunity 

to respond.” (Id. at 2.) 

On November 29, 2023, the Court deemed the OSC satisfied but ordered Plaintiff 

to promptly serve CIT and file proof of service. (Doc. 32.) 

On December 8, 2023, Plaintiff filed a proof of service indicating that CIT had been 

served with the FAC on December 5, 2023. (Doc. 33.) 

On December 20, 2023, MTC recorded a notice of trustee’s sale with the Maricopa 

County Recorder, indicating that a trustee’s sale of Plaintiff’s property was scheduled for 

March 27, 2024. (Doc. 42-1 at 7.) 

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 5 of 18
- 6 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

On December 21, 2023, Plaintiff filed an application for default as to CIT. (Doc. 

34.) The Clerk later entered the default against CIT. (Doc. 35.) 

On March 8, 2024, Plaintiff filed motions for default judgment and attorneys’ fees 

against CIT. (Docs. 36, 37.) 

That same day, counsel for Plaintiff and CIT began exchanging emails regarding 

the planned trustee’s sale, with Plaintiff taking the position that the state-court TRO 

“remains enforceable” (Doc. 42-1 at 12) and CIT taking the position that “[we] do not agree 

that a temporary restraining order issued by the Superior Court in December, 2022 has 

remained in effect for the last 15 months notwithstanding removal of the case to United 

States District Court” (Doc. 42-2 at 12). 

On March 15, 2024, notwithstanding that disagreement, CIT agreed to postpone the 

trustee’s sale to May 1, 2024. (Doc. 42-2 at 24.) Additionally, CIT informed Plaintiff that 

it “would likely be open to a further postponement pending the outcome of litigation.” (Id.

at 12.) 

On March 18, 2024, CIT filed a motion to set aside the default. (Doc. 39.) That 

same day, CIT filed a response to the motion for default judgment. (Doc. 41.) 

On March 21, 2024, Plaintiff filed a motion for expedited relief concerning the 

trustee’s sale. (Doc. 42.) 

On March 22, 2024, the Court issued an order requiring expedited briefing as to 

CIT’s motion to set aside default and staying the briefing as to Plaintiff’s motions for 

default judgment and attorneys’ fees. (Doc. 43.) 

On March 29, 2024, after full expedited briefing (Docs. 44, 45), the Court granted 

CIT’s motion to set aside the default and denied Plaintiff’s motions for default judgment 

and attorneys’ fees. (Doc. 46.)

On April 5, 2024, after full briefing (Docs. 47, 48), the Court denied Plaintiff’s 

expedited motion to preclude the trustee’s sale. (Doc. 49.)

On April 12, 2024, CIT filed the pending motion to dismiss the FAC. (Doc. 50.) 

The motion is now fully briefed (Docs. 52, 55) and neither side requested oral argument. 

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 6 of 18
- 7 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

DISCUSSION

I. Legal Standard

Under Rule 12(b)(6), “to survive a motion to dismiss, a party must allege sufficient 

factual matter, accepted as true, to state a claim to relief that is plausible on its face.” In re 

Fitness Holdings Int’l, Inc., 714 F.3d 1141, 1144 (9th Cir. 2013) (internal quotation marks 

omitted). “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. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). When 

evaluating a Rule 12(b)(6) motion, “all well-pleaded allegations of material fact in the 

complaint are accepted as true and are construed in the light most favorable to the nonmoving party.” Id. at 1444-45 (quoting Ashcroft, 56 U.S. at 678). However, the court need 

not accept legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678-80.

Moreover, “[t]hreadbare recitals of the elements of a cause of action, supported by mere 

conclusory statements, do not suffice.” Id. at 678. The court also may dismiss due to “a 

lack of a cognizable legal theory.” Mollett v. Netflix, Inc., 795 F.3d 1062, 1065 (9th Cir. 

2015) (citation omitted).

II. Count One—Breach Of Contract

A. The Parties’ Arguments

In Count One of the FAC, Plaintiff asserts a claim for breach of contract. (Doc. 21 

¶¶ 74-83.) The FAC alleges that the underlying contract was the DOT, that LoanCare acted 

as CIT’s agent with respect to the DOT, and that CIT (via LoanCare) breached the DOT in 

three ways: (1) CIT “breached [its] duty to provide only a line of credit able to be used on 

a revolving nature by initially advancing the full amount of the HELOC without Plaintiff’s 

knowledge or consent, then closing it altogether”; (2) CIT “breached [its] duty to apply all 

Plaintiff’s payments in the required order”; and (3) CIT “breached [its] duty by not 

providing a notice of acceleration and opportunity for Plaintiff to reinstate his account or 

bring court action to defend acceleration and/or sale.” (Id.)

CIT argues that Count One should be dismissed because Plaintiff “fails to allege 

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 7 of 18
- 8 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

what provisions of the alleged contract [CIT] breached, and fails to allege, with any 

specificity whatsoever, any damages that resulted from such a breach.” (Doc. 50 at 3.)

CIT also argues that “Plaintiff fails to allege, with any specificity whatsoever, how his 

payments were misapplied and fails to allege that his loan was accelerated or that 

foreclosure proceedings were initiated.” (Id. at 3-4.)

Plaintiff responds that the FAC “goes into great detail as to most of these areas, and 

if not, can be cured with a simple amendment.” (Doc. 52 at 4.) Plaintiff also argues that, 

under the DOT, CIT had a duty “to provide a line of credit able to be used on a revolving 

nature, which [CIT] did not do for the entire time of the HELOC.” (Id.) Plaintiff next 

argues that CIT breached its contractual duties by failing “to apply all Plaintiff’s payments 

in a certain order,”

2 by failing “to provide an accounting,” and by failing “to provide a 

notice of acceleration and opportunity for Plaintiff to reinstate his account or bring court 

action to defend acceleration and/or sale . . . .” (Id.) Plaintiff argues that these duties 

“derive” as a matter of “common sense” from unspecified “provisions” within the DOT 

and that the FAC’s “allegations, taken as whole, provide [CIT] with the requisite notice 

under Rule 8, Fed.R.Civ.P.” (Id. at 4-5.) Regarding damages, Plaintiff argues that the 

FAC alleges damages with sufficient specificity in the form of “unpaid principal, excess 

fees, accrued interest, attorney fees and costs, and other compensatory, consequential, and 

statutory damages as applicable.” (Id. at 5.) In support, Plaintiff cites Seven Words LLC 

v. Network Sols., 260 F.3d 1089 (9th Cir. 2001). Id. Plaintiff argues that unless CIT can 

show prejudice from the lack of a more detailed computation of damages at this stage, he

need not produce such a computation until discovery. (Id.)

CIT reiterates its arguments in its reply and adds that Plaintiff’s allegation in 

paragraph 15 of the FAC that a breach occurred in 2007 when the “full amount” was 

“initially advanced” cannot succeed because “the statute of limitations for a breach of 

contract action is six years.” (Doc. 55 at 2.)

2 Paragraph 78 of the FAC lists the appropriate order as: “1. Prepayment charges; 2. 

Amounts due on the Account to secure advances; Escrow payments; 4. Late charges; 5. 

Finance charges and other fees; 6. Accrued finance charges; and 7. Principal balance.”

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 8 of 18
- 9 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

B. Analysis

A breach of contract claim has three elements under Arizona law: (1) the existence 

of a contract, (2) its breach, and (3) resulting damages. Graham v. Asbury, 540 P.2d 656, 

657 (Ariz. 1975).

The Court agrees with CIT that the FAC’s allegations are insufficient to establish 

the second element of breach. Plaintiff alleges that certain duties arose from the DOT as a 

matter of “common sense,” including the duty to provide a line of credit on a “revolving 

nature” (Doc. 21 ¶ 77), to apply payments in a particular order (id. ¶ 78), and to provide 

notice of acceleration and/or sale (id. ¶ 79). However, Plaintiff does not provide a copy of 

the DOT as an attachment to the FAC and fails to tether his allegations to any particular 

provision within the DOT. Additionally, even assuming CIT might owe the alleged duties 

to Plaintiff under the DOT, the FAC does not plead any facts suggesting that CIT breached 

those duties—the FAC does not, for example, explain how CIT failed to provide credit of 

a “revolving nature,” how CIT misapplied the payments, or how a failure to abide by the 

payment application order listed in paragraph 78 of the FAC caused Plaintiff harm. Nor 

does Plaintiff allege that CIT had a duty under the DOT to provide a proper “accounting.” 

Dismissal for failure to state a claim is warranted under these circumstances. See, e.g., 

Kramer v. Ocwen Loan Servicing LLC, 2014 WL 1827158, *5 (D. Ariz. 2014) (“Kramer 

makes reference to the Deed of Trust only once in his complaint, and has neither attached 

a copy nor identified any relevant sections. Kramer does not allege any particular breach 

of that contract, nor does he allege any benefit under that contract that was impaired. . . . 

[N]othing in the Deed of Trust guarantees Kramer the right to receive truthful information 

about the loan modification process. Kramer has failed to identify benefits due under the 

loan origination contract or how Defendants impaired those benefits with the requisite 

specificity.”); Ripa v. Fed. Nat. Mortg. Ass’n, 2013 WL 5705426, *4 (D. Ariz. 2013)

(“Plaintiff does not explain, however, how the actions of Defendants breached the Note 

and Deed of Trust. Indeed, Plaintiff makes reference to the Deed of Trust only once in his 

Complaint and has neither attached a copy nor identified any relevant sections. Plaintiff 

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 9 of 18
- 10 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

does not allege any particular breach of that contract, nor does he allege any benefit under 

that contract that was impaired.”); Schultz v. BAC Home Loans Servicing, LP, 2011 WL 

3684481, *3 (D. Ariz. 2011) (“Plaintiff has pointed to no authority showing she was owed 

any accounting on the note, nor provided the Court with any evidence that any payments 

she made were not, in fact, credited to her. For all these reasons, Plaintiff has failed to state 

a claim for relief in Count One.”).

3

 

III. Count Two—Breach Of The Implied Covenant Of Good Faith And Fair Dealing

A. The Parties’ Arguments

In Count Two of the FAC, Plaintiff asserts a claim for breach of the implied 

covenant of good faith and fair dealing. (Doc. 21 ¶¶ 84-88.) The FAC alleges that the 

underlying contract was the DOT and that “Defendants have a long history into the present 

of committing wrongful acts against borrowers, including those complained of by the 

Plaintiff, including failure to provide a proper accounting, purposely not applying or 

misapplying payments, not informing Plaintiff [of] his rights as required under the DOT, 

constantly telling Plaintiff to submit another application knowing it will be denied because 

it is a second lien, not informing Plaintiff that LoanCare cannot ‘refinance’ until October 

2021, and not negotiating in good faith to purposely cause delay all the while negatively 

reporting to credit agencies so Plaintiff has no hope of refinancing with any lender.” (Id.

¶ 86.) The FAC continues: “Defendants’ actions to mislead and deceive Plaintiff into 

default so that his application would be granted, knowing the applications would be denied, 

all the while negatively reporting to credit agencies, and forever ruining his opportunity to 

refinance, was an act of malice, purposely and knowingly done to harm Plaintiff.” (Id.

¶ 87.)

CIT moves to dismiss Count Two because Plaintiff “fails to explain what acts or 

omissions of [CIT] allegedly breached the implied covenant of good faith and fair dealing, 

3 Given this determination, it is unnecessary to resolve CIT’s other arguments as to 

why Count One should be dismissed, including the statute-of-limitations argument raised 

for the first time in CIT’s reply. Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007)

(“The district court need not consider arguments raised for the first time in a reply brief.”). 

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 10 of 18
- 11 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

and fails to describe how an alleged breach by [CIT] prevented him from receiving the 

benefits and entitlements of the deed of trust in question.” (Doc. 50 at 4.) CIT also argues 

that “Plaintiff’s allegations are entirely conclusory, devoid of specificity, and [Plaintiff]

fails to allege, with any specificity whatsoever, what damages he allegedly suffered as a 

result of [CIT’s] alleged conduct.” (Id.) 

Plaintiff responds that, in paragraph 86 of the FAC, he “was specific to all of [CIT’s]

actions and non-actions in support of his claim for breach of good faith and fair dealing.” 

(Doc. 52 at 6.) 

In reply, CIT reiterates its earlier arguments and also identifies the statute of 

limitations as a reason why Plaintiff should be required to provide further details about the 

challenged acts (and whether they occurred within the statutory period). (Doc. 55 at 2-3.)

B. Analysis

“Arizona law implies a covenant of good faith and fair dealing in every contract.” 

Keg Rests. Ariz., Inc. v. Jones, 375 P.3d 1173, 1186 (Ariz. Ct. App. 2016). “The covenant 

requires that neither party do anything that will injure the right of the other to receive the 

benefits of their agreement.” Wagenseller v. Scottsdale Mem’l Hosp., 710 P.2d 1025, 1038 

(Ariz. 1985). “[A] party may . . . breach its duty of good faith without actually breaching 

an express covenant in the contract.” Wells Fargo Bank v. Arizona Laborers, Teamsters 

& Cement Masons Loc. No. 395 Pension Tr. Fund, 38 P.3d 12, 29 (Ariz. 2002).

The Court agrees with CIT that Plaintiff has not pleaded a valid claim for breach of 

the implied covenant. Many of the allegations in paragraph 86 of the FAC are simply 

vague, conclusory labels—for example, that CIT has committed “wrongful acts” and was 

“not negotiating in good faith.” (Doc. 21 ¶ 86.) These are not well-pleaded facts and are 

not entitled to a presumption of truth. Iqbal, 556 U.S. at 678-80. Moreover, the implied 

covenant does not exist to vindicate “some unspecified notion of fairness.” Villegas v. 

Transamerica Fin. Servs., Inc., 708 P.2d 781, 784 (Ariz. Ct. App. 1985). In light of 

Plaintiff’s failure to provide a copy of the DOT or at least plead concrete details about its 

provisions, Plaintiff has failed to plausibly establish that CIT’s conduct deprived him of 

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 11 of 18
- 12 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

specific benefits flowing from the DOT. Schwartz v. Chase Home Fin., LLC, 2010 WL 

5151326, *2 (D. Ariz. 2010) (“[E]ven 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. 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. 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.”) (cleaned up).

Other allegations in the FAC, although more specific, are simply not covered by the 

implied covenant. For example, the allegation that CIT failed to “inform[] Plaintiff that 

LoanCare cannot refinance until October 2021” (Doc. 21 ¶ 86) does not establish that CIT 

deprived Plaintiff of any benefit flowing from the DOT. It merely identifies an action that 

Plaintiff views as unfair, and Plaintiff does not allege that the DOT contains a provision 

that entitles him to the right to receive truthful information about the loan modification 

process. Cf. Kramer, 2014 WL 1827158 at *5 (dismissing implied-covenant claim because

“nothing in the Deed of Trust guarantees [the plaintiff] the right to receive truthful 

information about the loan modification process”). Similarly, although the FAC alleges 

that CIT failed to “negotiat[e] in good faith to purposely cause delay” (Doc. 21 ¶ 86), “the

implied covenant of good faith and fair dealing does not extend to negotiation.” Vera v. 

Wells Fargo Bank, N.A., 2011 WL 334286, *3 (D. Ariz. 2011). Nor does CIT failing “to 

provide a proper accounting” violate any alleged benefit flowing from the DOT to Plaintiff. 

Finally, as for the allegation that CIT “negatively report[ed] to credit agencies” (Doc. 21 

¶ 86), Plaintiff once again fails to show how such conduct might conceivably deprive him 

of a benefit flowing from the DOT. Vera, 2011 WL 334286 at *3 (dismissing impliedcovenant claim where “plaintiff has not pled facts suggesting that Wells Fargo was 

obligated to refrain from reporting to the credit bureaus”).

For these reasons, Count Two is dismissed.

4

4 As with Count One, this conclusion makes it unnecessary to reach CIT’s other 

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 12 of 18
- 13 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

III. Count Three—ACFA

A. The Parties’ Arguments

In Count Three of the FAC, Plaintiff asserts a claim for consumer fraud in violation 

of the ACFA. (Doc. 21 ¶¶ 89-94.) Plaintiff alleges that “Defendants partook in deceptive 

and unfair acts and/or practice, fraud, false pretense, false promise, misrepresentation, or 

concealment, suppression or omission of material facts with intent that Plaintiff rely on 

such concealment, suppression or omission, in connection with advising Plaintiff to allow 

the HELOC to go into default for roughly three (3) months, advising Plaintiff to fill out 

multiple applications, knowing they would not be granted for the same reason that the 

HELOC was a second lien, not informing Plaintiff of certain rights, [and] not informing 

Plaintiff that LoanCare could not ‘refinance’ until much later and too late.” (Id. ¶ 90.) 

Plaintiff also alleges fraud in relation to a $10 monthly fee. (Id. ¶¶ 91-92.)

CIT seeks dismissal of Count Three because “the alleged ‘advisements’ were not 

made in connection with the ‘sale or advertisement of merchandise,’ Plaintiff fails to allege 

that he actually relied on such advertisements, Plaintiff fails to allege that he suffered any 

alleged injury as a proximate cause of such advertisements, and Plaintiff fails to allege the 

injuries that he suffered with specificity.” (Doc. 50 at 5.) CIT also argues that “Plaintiff’s 

claim for violation of A.R.S. § 6-635 fails because it does not apply to the HELOC loan in 

question pursuant to A.R.S. § 6-602.” (Id.) 

In response, Plaintiff does not dispute any of these points and states that he 

understands that Count Three is “likely subject to dismissal.” (Doc. 52 at 7).

B. Analysis

Given Plaintiff’s non-opposition, and for the reasons stated in an earlier order 

dismissing Count Three as to LoanCare (Doc. 28 at 7-9), Count Three is dismissed.

IV. Count Four—RESPA

A. The Parties’ Arguments

In Count Four of the FAC, Plaintiff asserts a claim for violating RESPA. (Doc. 21 

dismissal arguments related to Count Two.

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 13 of 18
- 14 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

¶¶ 95-101.) More specifically, the FAC alleges that CIT violated 12 C.F.R. § 1024.39(b). 

(Doc. 21 ¶¶ 96.)5

CIT seeks dismissal of Count Four for three reasons: (1) § 1024.39(b) “does not 

confer upon borrowers a private right of action against lenders”; (2) § 1024.39(b) “only 

applies to delinquent borrowers, and Plaintiff has failed to allege that he is a delinquent 

borrower”; and (3) Plaintiff fails to allege the damages he suffered from the violation with 

“any specificity whatsoever.” (Doc. 50 at 5-6.)

Plaintiff responds to CIT’s first argument by citing the Court’s previous order 

granting LoanCare’s motion to dismiss, in which the Court declined to rule on whether 

§ 1024.39(b) confers a private right of action because Plaintiff had failed to allege the 

required damages resulting from the § 1024.39(b) violation. (Doc. 52 at 7.) Plaintiff now 

concedes that he has failed to allege such damages and seeks leave to do so. (Id. at 7-8.)

In response to CIT’s second argument, Plaintiff argues that by elsewhere in the FAC

admitting default and indebtedness, he has effectively alleged that he was a delinquent 

borrower. (Id.) 

CIT reiterates its arguments in reply. (Doc. 55 at 4-5.)

B. Analysis

Because Plaintiff concedes he failed to plead damages resulting from a RESPA 

violation, Count Four is dismissed. 

V. Count Five—TILA

A. The Parties’ Arguments 

In Count Five of the FAC, Plaintiff asserts a claim for violating TILA. (Doc. 21 

¶¶ 102-06.) After alleging that “[s]ervicers are required to implement qualified loss 

mitigation plan[s] based on standard industry practice” pursuant to “the guidelines issued 

by the Secretary of the Treasury under the Emergency Economic Stabilization Act of 

5 Although the FAC also includes allegations regarding 12 C.F.R. § 1024.41(d) (Doc. 

21 ¶ 98), Plaintiff does not defend the sufficiency of that portion of Count Four in his 

response and concedes it is “likely subject to dismissal.” (Doc. 52 at 8.) Accordingly, the 

analysis here is limited to the parties’ dispute over 12 C.F.R. § 1024.39(b). 

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 14 of 18
- 15 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2008,” Plaintiff alleges that “LoanCare, for the first time, after almost three (3) years of 

dealings, specifically stated in the October 21, 2021, letter that refinancing was not an 

available option because it was a servicer.” (Id. ¶¶ 103, 105.) According to Plaintiff, this 

resulted in unspecified “violations of TILA.” (Id. ¶ 106.)

CIT argues that Count Five should be dismissed because it “fails to allege that [CIT]

violated any specific provision of TILA, and fails to allege any specific damages that he 

suffered as a result of an alleged violation of TILA by [CIT].” (Doc 50 at 6.) 

In response, Plaintiff argues that the FAC was not intended to allege a claim based 

directly on a violation of TILA. (Doc. 52 at 8-9.) According to Plaintiff, the FAC was not 

intended to allege that the Home Affordable Modification Program (“HAMP”) guidelines, 

such as 15 U.S.C. § 1639a(c), create a legal duty, but rather that the guidelines “describe a 

duty of care that was not met by [CIT], and that the standard of care is set forth by [those 

guidelines], to include a loan modification, workout, or other loss mitigation plan, a loan 

sale, real property disposition, trial modification, pre-foreclosure sale, and deed in lieu of 

foreclosure, and a refinancing of a mortgage.” (Id. at 9.) Plaintiff thus contends that Count 

Five is “based on negligence” and seemingly argues that CIT owed him a duty “to offer 

certain programs,” which it then breached “by not offering the entirety of the programs.” 

(Id.) Plaintiff cites Markle v. HSBC Mortg. Corp. (USA), 844 F. Supp. 2d 172 (D. Mass. 

2011), to support this theory and requests leave to amend to better explain that theory. (Id.)

In its reply, CIT reiterates its earlier arguments and adds that Markle supports its 

contention that 15 U.S.C. § 1639a(c) does not create a legal duty “to comply with HAMP 

guidelines or else face lawsuits.” (Doc. 55 at 5.)

B. Analysis

The Court agrees with CIT that Count Five is subject to dismissal. As an initial 

matter, only the most liberal reading of the FAC could support Plaintiff’s contention that 

Count Five is not a claim arising directly under § 1639a(c)—in which case it would be 

subject to dismissal—but rather is a negligence claim and merely seeks to use the 

guidelines referenced in § 1639a(c) to set the standard of care. Nowhere does the FAC 

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 15 of 18
- 16 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

mention negligence. Moreover, paragraph 103 of the FAC provides that “[s]ervicers are 

required to implement qualified loss mitigation plan[s] . . . as set forth by the guidelines” 

and paragraph 106 provides that Plaintiff’s damages were as “a result of [CIT’s] violations 

of TILA.” This language suggests that CIT’s alleged violations of TILA—not its breach 

of any otherwise-owed duty—form the basis of Plaintiff’s claim.

But even assuming Plaintiff was attempting to assert a negligence claim, he has not 

alleged with sufficient specificity the source of CIT’s otherwise-owed duty to comply with

§ 1639a(c). If Plaintiff meant to suggest the source of this duty is the DOT, then the FAC 

fails to allege this with sufficient specificity for all of the reasons stated earlier regarding 

Counts One and Two. Courts have not hesitated to dismiss similar claims. Wright v. Chase 

Home Fin. LLC, 2011 WL 2173906, *1 (D. Ariz. 2011) (granting motion to dismiss where 

“Plaintiff asserts that HAMP amended her note and deed of trust to impose additional 

duties on defendants”); Short v. Chase Home Fin. LLC, 2011 WL 9160941, *3 (D. Ariz.

2011) (granting motion to dismiss, even though “Plaintiffs assert that they have not brought 

suit to enforce HAMP,” because “this assertion is belied by the complaint’s 

allegations . . . [which] make clear . . . that the central issue in this case is Chase’s 

compliance with HAMP”).

For these reasons, Count Five is dismissed. See also Mollett, 795 F.3d at 1065

(dismissal may be based on “a lack of a cognizable legal theory”).

VI. Leave to Amend

A. The Parties’ Arguments

CIT asks the Court to dismiss without leave to amend because any amendment 

would be futile: “Plaintiff fails to allege any wrongful acts or omissions on the part of 

[CIT], save, perhaps the alleged denial of ‘applications’ . . . and it is entirely unclear as to 

how a denial of applications for loan modification or otherwise would give rise to a claim 

against Defendant.” (Doc. 50 at 7.)

Plaintiff requests leave to amend in the event of dismissal and argues that CIT “does 

not adequately explain why an amendment could not cure [CIT’s] allegations that the FAC 

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 16 of 18
- 17 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

does not allege wrongful acts or omissions.” (Doc. 52 at 10.)

B. Analysis

Rule 15(a) of the Federal Rules of Civil Procedure “advises the court that ‘leave [to 

amend] shall be freely given when justice so requires.’” Eminence Cap., LLC v. Aspeon, 

Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (citation omitted). “This policy is ‘to be applied 

with extreme liberality.’” Id. (citation omitted). Thus, leave to amend should be granted 

unless “the amendment: (1) prejudices the opposing party; (2) is sought in bad faith; (3) 

produces an undue delay in litigation; or (4) is futile.” AmerisourceBergen Corp. v. 

Dialysist W., Inc., 465 F.3d 946, 951 (9th Cir. 2006). 

Applying these standards, Plaintiff’s request for leave to amend is granted. As the 

Court noted when granting Plaintiff’s request for leave to amend the FAC in the aftermath 

of LoanCare’s successful motion to dismiss (which raised many of the same arguments 

that CIT raises here), “[a]lthough LoanCare may be correct that any amendment attempt 

would be futile, as Plaintiff’s claims against LoanCare are being dismissed based on legal 

deficiencies that, as far as the Court can tell, could not be cured through the pleading of 

additional facts, the policy of extreme liberality underlying Rule 15(a) counsels in favor of 

giving Plaintiff one more chance at amendment.” (Doc. 28 at 17.)

...

...

...

...

...

...

...

...

...

...

...

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 17 of 18
- 18 -

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Accordingly,

IT IS ORDERED that:

1. CIT’s motion to dismiss (Doc. 50) is granted. 

2. Plaintiff may file a Second Amended Complaint (“SAC”) as to CIT within 

14 days of the issuance of this order. Any changes shall be limited to attempting to cure 

the deficiencies raised in this order and Plaintiff shall, consistent with LRCiv 15.1(a), 

attach a redlined version of the pleading as an exhibit.

3. If Plaintiff does not file a SAC within 14 days of the issuance of this order, 

the Clerk shall dismiss CIT as a Defendant and, because CIT is the last remaining 

Defendant, the Clerk shall then enter judgment accordingly and terminate this action.

Dated this 9th day of October, 2024.

Case 2:23-cv-00210-DWL Document 56 Filed 10/10/24 Page 18 of 18