Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-01919/USCOURTS-azd-2_10-cv-01919-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1441 Petition for Removal

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NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Martin R. Brown; Delaine M. Brown, 

Plaintiffs, 

vs.

Brian T. Moynihan, et al., 

Defendants. 

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No. CV-10-1919-PHX-FJM

ORDER

The court has before it defendants Brian T. Moynihan, Richard K. Davis, Saul

Sanders, Larry B. Litton, Jr., U.S. Bank, Bank of America, Credit-Based Asset Servicing and

Securitization, LLC, and Litton Loan Servicing’s motion to dismiss (doc. 6), plaintiffs’

response (doc. 7), and defendants’ reply (doc. 14). We also have defendants Kevin

McCarthy and Quality Loan Service Corporation’s motion to dismiss (doc. 16), plaintiffs’

response (doc. 18), defendants’ reply (doc. 21), and plaintiffs’ supplemental responses (docs.

22 and 23), and defendants’ motion to strike (doc. 20). Finally, we have before us what

plaintiffs describe as a “motion to sequester the genuine original adjustable rate note until

final adjudication of this matter” (doc. 13).

On July 6, 2006, plaintiffs entered into a mortgage loan transaction in the amount of

$318,750 for the purchase of residential real property located in Peoria, Arizona. The loan

was secured by a Deed of Trust, executed by plaintiffs and recorded in the Maricopa County

Case 2:10-cv-01919-FJM Document 24 Filed 11/09/10 Page 1 of 5
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Recorder’s office. A Substitution of Trustee was recorded on March 24, 2009. Assignments

of the Deed of Trust were recorded on May 19, 2009, and July 14, 2009. A Notice of

Trustee’s Sale was recorded on March 24, 2009, for a sale on June 23, 2009. The trustee’s

sale did not occur and a new Notice of Trustee’s Sale was recorded on September 21, 2009,

with a sale date of December 21, 2009. Eventually, the trustee’s sale was rescheduled for

September 2, 2010. Plaintiffs filed their complaint on August 24, 2010, in the Superior Court

of Arizona in Maricopa County. The court granted plaintiffs’ motion for temporary

restraining order, enjoining the trustee’s sale. On September 7, 2010, defendants removed

the case to federal court. 

Plaintiffs’ complaint, filed against five financial institutions and six presidents/CEOs

of those institutions, purports to allege a single count for “Declaratory Relief,” although this

claim is not related to any specific cause of action. Plaintiffs broadly challenge the validity

of their home loan, arguing that the Deed of Trust, Assignments of Deed of Trust, and

Substitution of Trustee are invalid, that the foreclosure papers were “fraudulently” notarized,

and that defendants have no right to non-judicial foreclosure. They contend that they were

“tricked” into believing they received a loan, that they never obtained an actual loan for the

purchase of the property, but instead simply traded a promissory note for the house in what

they call a “currency exchange.” Complaint ¶¶ 93, 141. Finally, they argue that the Deed

of Trust is unenforceable because the related promissory note “was not integral to the Deed

of Trust.” Id. ¶¶ 28-30. Plaintiffs’ claims are based in large part on the opinions of

purported “expert” Cynthia J. Cantrell, who is involved in a series of similar cases in this

court, both on her own behalf, see, e.g., Cantrell v. Bank of America, No. 10-CV-2145-FJM

(D. Ariz. filed Oct. 6, 2010), and as a purported “expert” for others, see, e.g., Nichols v.

Bosco, No. 10-CV-1872-FJM (D. Ariz. filed Sept. 1, 2010). 

Defendants now move to dismiss the complaint under Rule 12(b)(6), Fed. R. Civ. P.,

for plaintiffs’ failure to state a claim. To survive a motion to dismiss, “a complaint must

contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible

on its face.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v.

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Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974 (2007)). The court is not “required to

accept as true allegations that are merely conclusory, unwarranted deductions of fact, or

unreasonable inferences.” Spreewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir.

2001). Likewise, a dismissal under Rule 12(b)(6) can 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). 

Rather than responding to the pleading deficiencies raised in defendants’ motions to

dismiss, plaintiffs’ responses consist largely of a rambling diatribe of baseless allegations of

fraudulent and criminal activity leveled against defendants and their lawyers, based on a

misguided understanding of Arizona law governing deeds of trust. 

Under Arizona law, a “power of sale is conferred upon the trustee of a trust deed

under which the trust property may be sold . . . after a breach or default in performance of

the contract or contracts, for which the trust property is conveyed as security.” A.R.S. § 33-

807(A). The Arizona statutes governing the sale of foreclosed property through a trustee’s

sale do not require that the foreclosing party produce a physical copy of the original

promissory note. Plaintiffs’ arguments that defendants have no right to non-judicial

foreclosure unless they show possession of the original note or that they are the “holder in

due course” have been consistently rejected by this court. See, e.g., Diessner v. Mortgage

Elec. Regis. Sys., 618 F. Supp. 2d 1184, 1187 (D. Ariz. 2009). 

We also reject plaintiffs’ argument that the chain of title is broken and evidence of

“fraud” exists if a notary dated and signed an instrument after the date of signature. Arizona

law does not require a notary to actually witness a signature. A.R.S. § 33-503; City

Consumer Servs. Inc. v. Metcalf, 161 Ariz. 1, 4-5, 775 P.2d 1065, 1068-69 (1989). 

Plaintiffs’ theory that they never actually received a loan and that the transaction was

a “currency exchange” is also without merit. Complaint ¶¶ 92-93. Although difficult to

understand, this argument appears to be that because plaintiffs never actually had possession

of the currency there was no “loan.” Such claims have been referred to as a “vapor money”

theory and have been roundly rejected as “frivolous.” See, e.g., Agra v. OneWest Bank,

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2009 WL 3526585, at *4 (C.D. Cal. Oct. 23, 2009) (and cases cited therein). From a

common sense standpoint, it is hard to believe plaintiffs take it seriously. The argument

ignores the fact that plaintiffs accepted the benefits of the loan transaction (which they now

contend never occurred) by using the proceeds of the loan to purchase a house that they are

presumably still living in to this day.

Plaintiffs’ claims against the individual defendants must be dismissed because there

are no allegations of any personal participation or even knowledge of the banking

institutions’ alleged wrongful conduct. Dawson v. Withycombe, 216 Ariz. 84, 101, 163 P.3d

1034, 1051 (Ct. App. 2007). Corporate officers cannot be held personally liable for a

corporation’s wrongful conduct solely by virtue of the office they hold. 

We deny plaintiffs’ motion to sequester the genuine original note (doc. 13). Even

assuming the motion is procedurally proper, we have already concluded that defendants have

no obligation to produce the original note.

Finally, defendants have filed a motion to strike certain statements from plaintiffs’

response (doc. 18) as irrelevant, false, and scandalous (doc. 20). While we agree with

defendants that much of plaintiffs’ responses contain irrelevant and abusive commentary, it

is nevertheless useful to consider the entire context of the briefings in rendering this decision.

Defendants’ motion to strike is denied (doc. 20).

We conclude that plaintiffs have failed to state a claim upon which relief can be

granted. Accordingly, the complaint is dismissed in its entirety. And because it cannot be

saved by amendment, the dismissal is with prejudice. 

IT IS ORDERED GRANTING defendants’ motions to dismiss (docs. 6 and 16).

IT IS ORDERED DENYING defendants’ motion to strike (doc. 20).

IT IS ORDERED DENYING plaintiffs’ motion to sequester the genuine original

adjustable rate note (doc. 13). 

The clerk shall enter final judgment. 

The scheduling conference set for November 19, 2010 is vacated. We urge plaintiffs

to seek the advice of counsel. If they do not have one, they may wish to contact the Lawyer

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Referral Service of the Maricopa County Bar Association at 602-257-4434. While it is true

that the current status of the mortgage and banking sector is problematic, it takes a lawyer

to identify meritorious claims.

DATED this 9th day of November, 2010.

Case 2:10-cv-01919-FJM Document 24 Filed 11/09/10 Page 5 of 5