Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_16-cv-02441/USCOURTS-azd-2_16-cv-02441-2/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 15:1692 Fair Debt Collection Act

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Adam C. Cytron, 

Plaintiff, 

v. 

PHH Mortgage Corporation, USAA Federal 

Savings Bank, Jason P Sherman, Kari 

Sheehan, and Daniel C Schmidt, 

Defendants. 

No. CV-16-02441-PHX-DGC

ORDER 

 Defendants PHH Mortgage Corporation, Kari Sheehan, and Daniel C. Schmidt 

move to dismiss pro se Plaintiff Adam C. Cytron’s claims against them pursuant to 

Federal Rule of Civil Procedure 12(b)(6). Doc. 26. Defendant Jason P. Sherman has 

filed a separate motion, joining the first motion and asserting an independent argument 

that Plaintiff’s claims are barred by A.R.S. § 33-807(E). Doc. 27. The motions are fully 

briefed. Docs. 28, 29, 35, 36. The Court concludes that oral argument will not aid in its 

decision. See Fed. R. Civ. P. 78(b). The Court will grant Defendants’ motion and grant 

Plaintiff leave to file a first amended complaint. 

I. Background. 

 On July 21, 2016, Plaintiff filed a 101-page complaint. Docs. 1 (Pages 1-62), 1-1 

(Pages 63-101). The Complaint contains lengthy and disjointed factual allegations. 

From what the Court can decipher, the heart of Plaintiff’s Complaint is as follows. In 

2008, Plaintiff entered into a mortgage loan with Defendants and executed a deed of trust. 

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Doc. 1-1 at 23. Plaintiff unsuccessfully attempted to obtain a loan modification from 

Defendants on several occasions between 2008 and 2015. Doc. 1 at 5. Plaintiff received 

notice that a trustee sale of his property was scheduled to take place on July 22, 2016. Id.

at 12. The Complaint contained an emergency motion asking the Court to enter a 

temporary restraining order (“TRO”) to prevent the trustee sale. Id. The Court denied 

the motion. Doc. 6. The trustee’s sale of Plaintiff’s property was completed on July 22, 

2016, and a trustee’s deed was recorded on July 25, 2016. Doc. 26-1. 

 The remainder of the Complaint is difficult to decipher. It refers to dozens of laws 

and regulations relating to securities and lending, but makes only rare attempts to connect 

those laws and regulations to the few facts alleged. See Docs. 1, 1-1. On Page 90 of the 

Complaint, Plaintiff suggests nine claims: 

(1) declaratory relief; (2) negligence; (3) quasi contract; (4) violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692; (5) 

violation of the Real Estate Settlement Procedures Act (“RESPA”), 12 

U.S.C. § 2605; (6) violation of Business and Professions Code § Title 32[;] 

(7) accounting; (8) breach of contract; and (9) breach of implied covenant and good faith and fair dealing. 

Doc. 1-1 at 27. 

II. Failure to Comply with Rule 8. 

 As an initial matter, the Court finds that the entire Complaint may be dismissed 

under Rule 8. That rule provides that a complaint should contain “a short and plain 

statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 

8(a)(2). “Each allegation must be simple, concise, and direct.” Fed. R. Civ. P. 8(d)(1). 

A complaint that fails to comply with these requirements may be dismissed. See 

McHenry v. Renne, 84 F.3d 1172, 1179-80 (9th Cir. 1996). 

 Plaintiff fails to concisely allege specific facts to support how each Defendant 

violated the particular right at issue in a given count. Plaintiff scatters facts throughout 

the complaint and includes allegations that seem irrelevant. The Court will therefore 

dismiss the Complaint with leave to file a first amended complaint. In a first amended 

complaint, Plaintiff should follow the directions set forth later in this order. 

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III. Claims with no Cognizable Legal Theory. 

 A number of claims referenced or implied in the Complaint have no cognizable 

legal basis. In the interest of efficiency, the Court will briefly address them. 

 A. “Show me the Note.” 

 In the Complaint, Plaintiff argues that “Defendants are not the true creditors” and 

“have no legal, equitable, or pecuniary right if any debt obligation exists.” Doc. 1-1 at 

28. Plaintiff appears to suggest that Defendants had no authority to foreclose on their 

home because Defendants were not holders in due course of the original promissory note. 

Doc. 1 at 22-28 (“if proper negotiation of the Mortgage Note was not followed as 

required, the trusts that these trustees represent do not hold sufficient legal rights to 

enforce the terms in the Mortgage Notes, much less enforce the terms in a nullified 

Security Instruments [sic].”). 

 This theory, often referred to as “show me the note,” has been rejected by the 

District of Arizona. Diessner v. Mortgage Elec. Registration Sys., 618 F.Supp.2d 1184, 

1187 (D. Ariz. 2009), aff’d, 384 Fed.Appx. 609 (9th Cir. 2010) (“[D]istrict courts have 

routinely held that Plaintiff's ‘show me the note’ argument lacks merit.”); see also, e.g., 

Mansour v. Cal-Western Reconveyance Corp., 618 F.Supp.2d 1178, 1181 (D. Ariz. 2006) 

(“Dismissal is appropriate where the complaint lacks . . . a cognizable legal theory . . . .”); 

Vollmer v. Present, 2011 WL 11415 at *4 (D. Ariz. Jan. 4, 2011). Given that it is not a 

cognizable legal theory, Plaintiff’s “show me the note” claim is dismissed with prejudice. 

 B. Quasi Contract or Unjust Enrichment. 

Plaintiff alleges a claim for quasi contract which he states “is synonymous with 

one for unjust enrichment.” Doc. 1-1 at 32. A claim for unjust enrichment cannot lie 

where, as here, a contract exists between the parties. Trustmark Ins. Co. v. Bank One, 

Ariz. N.A., 48 P.3d 485, 492 (Ariz. Ct. App. 2002) (“if there is a specific contract which 

governs the relationship of the parties, the doctrine of unjust enrichment has no 

application.”); Nickolas v. Structured Asset Mortg. Inv. II Trust 2006-AR8, No. CV-12-

01922-PHX-ROS, 2013 WL 11826532, at *2 n.2 (D. Ariz. July 18, 2013) (“a quasiCase 2:16-cv-02441-DGC Document 42 Filed 12/12/16 Page 3 of 9
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contract is not a contract at all, but a duty imposed in equity upon a party to repay another 

to prevent his own unjust enrichment”) (quoting Pyeatte v. Pyeatte, 661 P.2d 196, 203 

(Ariz. Ct. App. 1983)). 

 Parties appear to agree that a contract exists between them. See Doc. 1-1 at 32 

(Plaintiff states that “[t]he Deed of Trust is an express binding agreement that defines the 

parties’ rights”); Doc. 26 at 9. In other places throughout the Complaint, however, 

Plaintiff appears to allege no relationship with Defendants based on a failure to properly 

assign rights. See, e.g., id. at 28-29. Plaintiff will clarify his allegations in the first 

amended complaint, but to the extent he alleges a contractual agreement between the 

parties, a claim for unjust enrichment cannot lie. 

 C. FDCPA. 

 Plaintiff also alleges that Defendants’ conduct violated the Fair Debt Collection 

Practices Act (“FDCPA”). See Doc. 1-1 at 33-34. The FDCPA applies only to debt 

collectors who engage in practices prohibited by the FDCPA in an attempt to collect a 

consumer debt. See Fischer v. SunTrust Mortg. Inc., No. CV-15-02075-PHX-JJT, 2016 

WL 2746978, at *5 (D. Ariz. May 10, 2016); Mansour, 618 F. Supp. 2d at 1182. Under 

the FDCPA, a “debt collector” includes “any person who uses any instrumentality of 

interstate commerce or the mails in any business the principal purpose of which is the 

collection of any debts, or who regularly collects or attempts to collect, directly or 

indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. 

§ 1692a (6); Diessner, 618 F. Supp. 2d at 1188. This definition does not include “any 

officer or employee of a creditor while, in the name of the creditor, collecting debts for 

such creditor.” § 1692a (6)(A). 

 The Ninth Circuit has not explicitly addressed whether mortgagees and their 

assignees are “debt collectors” and whether non-judicial foreclosure actions constitute 

debt collection under the FDCPA. See Diessner, 618 F. Supp. 2d at 1188. Other circuits 

have held that mortgagees and their beneficiaries are not debt collectors subject to the 

FDCPA. See id.; Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985). 

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District courts have also held that “the activity of foreclosing on [a] property pursuant to 

a deed of trust is not collection of a debt within the meaning of the FDCPA.” See 

Diessner, 618 F. Supp. 2d at 1189 (citing e.g., Mansour, 2009 WL 1066155 at *2). 

 Accordingly, Plaintiff can make no FDCPA claim that arises from the non-judicial 

foreclosure proceeding because such a proceeding is not the collection of a debt for 

purposes of the FDCPA. See Pryzblyski v. Stumpf, No. 10-CV-8073-PCT-GMS, 2011 

WL 31194, at *5 (D. Ariz. Jan 5, 2011) (citing Mansour, 618 F. Supp. 2d at 1182). 

D. Waiver of Claims under A.R.S. § 33-811(C). 

 To the extent Plaintiff asserts any claims to title of the property or claims that are 

dependent on showing the invalidity of the trustee sale, such as wrongful foreclosure, 

these claims are barred by A.R.S. § 33-811(C). Under this statute: 

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). Thus, “a trustor who fails to enjoin a trustee’s sale waives his 

claims to title of the property upon the sale’s completion, and also waives any claims that 

are dependent on the sale.” Morgan AZ Fin., L.L.C. v. Gotses, 326 P.3d 288, 290-91 

(Ariz. Ct. App. 2014) (citing BT Capital, LLC v. TD Serv. Co. of Ariz., 275 P.3d 598, 600 

(Ariz. 2012); Madison v. Groseth, 279 P.3d 633, 638 (Ariz. Ct. App.2012)). 

 Plaintiff obtained a loan secured by a deed of trust on his property. Doc. 1-1 at 23. 

Plaintiff had notice Defendants planned to conduct a trustee sale of the property under the 

deed of trust. Doc. 1 at 12. Plaintiff did not secure a court order preventing the sale, and 

the sale was completed on July 22, 2016. Doc. 6; Doc. 26-1 at 2-5. As a result, claims 

that “depend on . . . objections to the validity of the trustee’s sale,” Madison, 279 P.3d at 

638, have been waived under § 33-811(C). 

 

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 E. Time-Bar. 

 “The purpose of the statute of limitations is to ‘protect defendants and courts from 

stale claims where plaintiffs have slept on their rights.’” Doe v. Roe, 955 P.2d 951, 960 

(Ariz. 1998) (quoting Gust, Rosenfeld & Henderson v. Prudential Ins. Co. of Am., 898 

P.2d 964, 968 (Ariz. 1995)). “As a general matter, a cause of action accrues, and the 

statute of limitations commences, when one party is able to sue another.” Gust, 898 P.2d 

at 966 (citing Sato v. Van Denburgh, 599 P.2d 181, 183 (Ariz. 1979)). Thus, “the period 

of limitations begins to run when the act upon which legal action is based took place, 

even though the plaintiff may be unaware of the facts underlying his or her claim.” Id. 

To mitigate the harshness that the traditional rule sometimes imposes, courts have 

developed the “discovery rule” exception. Id. Under the discovery rule, “a cause of 

action does not accrue until the plaintiff knows or with reasonable diligence should know 

the facts underlying the cause.” Doe, 955 P.2d at 960. “The rationale behind the 

discovery rule is that it is unjust to deprive a plaintiff of a cause of action before the 

plaintiff has a reasonable basis for believing that a claim exists.” Gust, 898 P.2d at 967. 

 “The defense of statute of limitations is never favored by the courts, and if there is 

doubt as to which of two limitations periods should apply, courts generally apply the 

longer.” Id. at 968. Because the statute of limitations is an affirmative defense, the 

burden of proof lies with the defendant. Estate of Page v. Litzenburg, 865 P.2d 128, 135 

(Ariz. Ct. App. 1993). The burden of proving that the statute of limitations has been 

tolled, however, rests with the claimant. Engle Bros. v. Superior Court In & For Pima 

Cty., 533 P.2d 714, 716 (Ariz. Ct. App. 1975). Similarly, “[t]he burden of establishing 

that the discovery rule applies to delay the statute of limitations rest[s] on plaintiff.” 

Logerquist v. Danforth, 932 P.2d 281, 284 (Ariz. Ct. App. 1996). 

 Defendants assert Plaintiff’s following claims are time-barred: 

 Negligence – two year statute of limitations (A.R.S. § 12-542); 

 RESPA – three-year statute of limitations for violations of § 2605 and a one-year 

statute of limitations for violations of §§ 2607 or 2608 (12 U.S.C. § 2614); 

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 “Business and Professions Code § Title 32” – one-year statute of limitations 

(A.R.S. § 12-541); 

 Breach of Contract – six-year statute of limitations (A.R.S. § 12-548); 

 Good Faith and Fair Dealing – two-year statute of limitations (A.R.S. § 12-542(3); 

Salcido v. JPMorgan Chase Bank, N.A., 2015 WL 1242799, at *4 (D. Ariz. Mar. 

18, 2015)). 

See Doc. 26 at 11-12, n.8. Plaintiff concedes that the deed of trust was executed on 

December 19, 2008, and recorded on December 26, 2008. Doc. 1-1 at 23. And it is 

undisputed that Plaintiff commenced this action on July 21, 2016, nearly eight years later. 

But Plaintiff has alleged insufficient facts to establish many of these claims, much less to 

show when these claims arose, or were discovered, or if the limitations period was tolled. 

In the first amended complaint, Plaintiff must provide sufficient facts to establish his 

claims, which in turn will aid both the Defendants and the Court in deciding when each 

claim’s limitations period commenced. For now, the Court declines to dismiss any of 

Plaintiff’s claims with prejudice as time barred. 

IV. Defendant Sherman’s Motion to Dismiss. 

 Defendant Sherman independently moves to dismiss Plaintiff’s claims against him 

under A.R.S. § 33-807(E). Doc. 27. This statute limits trustee liability to causes of 

action for “a breach of the trustee’s obligation under this chapter or under the deed of 

trust.” Because Plaintiff does not allege that Defendant Sherman breached such 

obligations, his claims against Defendant Sherman will be dismissed. 

V. Leave to Amend. 

 “A pro se litigant must be given leave to amend his or her complaint unless it is 

absolutely clear that the deficiencies of the complaint could not be cured by amendment.” 

Karim-Panahi v. L.A. Police Dep’t, 839 F.2d 621, 623 (9th Cir. 1988) (quotation marks 

omitted). But “[a] district court does not err in denying leave to amend where the 

amendment would be futile.” Gardner v. Martino, 563 F.3d 981, 990 (9th Cir. 2009) 

(citing Thinket Ink Info. Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 1053, 1061 (9th 

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Cir. 2004)). As discussed above, the Court will dismiss the Complaint with leave for 

Plaintiff to file a first amended complaint. 

 The Court is required to give guidance to a pro se plaintiff regarding the 

deficiencies of dismissed claims. Karim–Panahi v. L.A. Police Dep’t, 839 F.2d 621, 625 

(9th Cir. 1988) (“We do not . . . require the district court to act as legal advisor to the 

plaintiff. . . . However, the court must do more than simply advise the pro se plaintiff that 

his complaint needs to [comply with Rule 8]. . . . The district court is required to draft ‘a 

few sentences explaining the deficiencies.’ ”) (citations omitted). 

 For purposes of the amended complaint, Plaintiff is directed to Rule 8 of the 

Federal Rules of Civil Procedure. Rule 8(a) provides that a complaint “shall contain (1) a 

short and plain statement of the grounds upon which the court's jurisdiction depends, . . . 

(2) a short and plain statement of the claim showing that the pleader is entitled to relief, 

and (3) a demand for judgment for the relief the pleader seeks.” Fed. R. Civ. P. 8(a). 

These pleading requirements should be set forth in separate numbered paragraphs. Each 

paragraph must be “simple, concise, and direct.” Fed. R. Civ. P. 8(d)(1). 

 The amended complaint must also provide the factual basis for each claim against 

each Defendant, giving Defendants “fair notice of what [Plaintiff's] claim is and the 

grounds upon which it is based.” Holgate v. Baldwin, 425 F.3d 671, 676 (9th Cir. 2005). 

This includes the specific legal theory supporting the claim. “Threadbare recitals of the 

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

Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). 

 IT IS ORDERED: 

1. Defendants’ motion to dismiss (Docs. 26, 27) is granted. 

2. Plaintiff is granted leave to file a first amended complaint. 

 3. Plaintiff shall file an amended complaint on or before December 30, 2016. 

 

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 4. The Clerk is directed to terminate this action without further order of the 

Court if Plaintiff does not file an amended complaint by 

December 30, 2016. 

 Dated this 12th day of December, 2016. 

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