Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-00016/USCOURTS-azd-2_12-cv-00016-4/pdf.json

Nature of Suit Code: 430
Nature of Suit: Banks and Banking
Cause of Action: 28:1441 Petition for Removal- Injunctive/Declaratory Relief

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1

 The Court summarily rejects Plaintiff’s argument that Defendants’ dismissal motion

“is void as it was filed prematurely” before the amended complaint was filed. (Doc. 65 at 1-

2) Plaintiff cites no authority for her argument. The record reflects the amended complaint

is substantively the same as the one pre-approved by the Court prior to the filing of the

dismissal motion, the amended complaint was filed a mere 53 minutes before the dismissal

motion was filed, and service of the amended complaint on Defendants was made

electronically per Rule 5(b)(2)(E), Fed.R.Civ.P., which obviated the need to serve it by a

process server on Defendants’ statutory agents as Plaintiff did.

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Susan M. Snyder, a married woman, as

her sole and separate property,

Plaintiff, 

vs.

HSBC Bank, USA, N.A., as Trustee on

behalf of ACE Securities Corp. Home

Equity Loan Trust, Series 2006-HE1 for

the registered holders of ACE Securities

Corp. Home Equity Loan Trust, Series

2006-HE1, Asset Backed Pass-Through

Certificates, a foreign corporation; and

Ocwen Loan Servicing, LLC, a foreign

limited liability company, 

Defendants. 

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No. CV-12-0016-PHX-LOA

ORDER

This action comes before the Court on Defendants’ second Rule 12(b)(6), Federal

Rules of Civil Procedure (“Fed.R.Civ.P.”), Motion to Dismiss Plaintiff’s First Amended

Complaint.1

 (Doc. 51) Defendants contend Plaintiff’s Amended Verified Complaint

(“AVC”), doc. 53, fails to state a claim upon which relief may be granted. (Doc. 51) On July

19, 2012, the Court granted Plaintiff’s Motion for Leave to Amend Plaintiff’s Complaint,

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which attached a copy of the proposed amended complaint as required by the Rules of

Practice for the District Court of Arizona (“Local Rules” or “LRCiv”) (Docs. 41 and 41-1

at 1-25) Because oral argument would not aid the Court’s decisional process, Defendants’

request for oral argument will be denied. See, e.g., Mahon v. Credit Bur. of Placer Cnty.,

Inc., 171 F.3d 1197,1200 (9th Cir. 1999). After considering Plaintiff’s Response, doc. 65,

and Defendants’ Reply, doc. 66, the Court will grant the motion and terminate this case.

I. Jurisdiction

Subject matter jurisdiction for this action is based upon 28 U.S.C. § 1332(a)(1)

because the parties’ citizenship is completely diverse and the amount in controversy ex-ceeds

the sum of $75,000.00, exclusive of interest and costs. (Doc. 1, ¶¶ 7, 14, Notice of Removal)

Although Plaintiff has not pled federal question jurisdiction, by alleging a violation of the

Fair Credit Reporting Act, this District Court also has subject matter jurisdiction under 28

U.S.C. § 1331. Federal district courts “have original jurisdiction [over] all civil actions

arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331.

Federal question jurisdiction exists when a complaint facially presents a federal question.

Holman v. Laulo-Rowe Agency, 994 F.2d 666, 668 (9th Cir. 1993).

The parties have consented to magistrate-judge jurisdiction pursuant to 28 U.S.C. §

636(c). (Docs. 7, 12, 26)

II. Background

A. The Parties

Plaintiff Susan M. Snyder (“Plaintiff”), a single person in 2005, executed a deed of

trust to secure payment on a June 2005 loan and promissory note on her former residence

located on West Fishhook Court, Surprise, Arizona. (Id., ¶ 5 at 3) The AVC alleges

Defendant Ocwen Loan Servicing, LLC (“Ocwen”) was, at all material times in this action,

the servicing agent for Defendant HSBC Bank, USA, N.A. (“Bank”), a federally chartered

national banking association, on Plaintiff’s promissory note and loan modifi-cation

agreement. (Id., ¶ 12 at 4; doc. 1, ¶ 9 at 3) 

B. Procedural History

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2

 Local Rule civil 3.7(c) provides “[i]f a motion is pending and undecided in the state

court at the time of removal, the Court need not consider the motion unless and until a party

files and serves a notice of pending motion . . . .”). 

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Generally, this lawsuit centers around whether the parties contractually agreed to a

binding and enforceable loan modification agreement (“LMA”) in August 2010 regarding

Plaintiff’s residence, and, if they did, whether Plaintiff subsequently breached the LMA for

non-payment of the monthly escrowed property taxes and insurance ($179.57 per month)

prior to the trustee sale and foreclosure of Plaintiff’s residence, or whether Defendants

wrongfully breached the LMA or are otherwise liable for Plaintiff’s damages. (Doc. 53) 

On December 8, 2011, Plaintiff filed this action in the Maricopa County Superior

Court, State of Arizona. (Doc. 1 at 15-25) On that same date without notice to the Bank or

Ocwen, Plaintiff obtained a temporary restraining order (“TRO”) from a Superior Court

judge pending an evidentiary hearing, pursuant to Arizona Rule of Civil Procedure

(“Ariz.R.Civ.P.”) 65(d), enjoining Defendants from foreclosing on or selling Plaintiff’s

residence or removing her from her residence until notice and a full hearing was held. (Doc.

1 at 13-14) By its terms, the TRO expired at the conclusion of the order to show cause

hearing scheduled for January 5, 2012. (Id. at 10-11) The Bank and Ocwen, how-ever,

removed this action on January 3, 2012, three days before the show cause hearing. (Id. at 1)

On June 5, 2012, over five months after removal, Plaintiff filed a Notice of Pending

Motion required by LRCiv 3.7(c), requesting a hearing on her Application for Temporary

Restraining Order and Order to Show Cause why Preliminary Injunction Should not Issue.2

(Doc. 30) According to Plaintiff’s Notice, the parties disputed whether the December 8,

2011 TRO remained a valid order nearly six months after removal when Defendants notified

Plaintiff they intended to sell her residence at a trustee sale on June 20, 2012. (Id. at 2) As

requested by Plaintiff, the Court promptly set a conference for the purpose of discussing the

status of the TRO and Plaintiff’s erroneous belief that the State-court TRO remained a valid

order, prohibiting Defendants from foreclosing on Plaintiff’s property. (Doc. 32) At the

conference in open court on June 14, 2012, and in an order entered on June 18, 2012, the

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 Because the Bank has not yet answered the AVC, the record is not clear of its

relationship to this property or Ownit Mortgage Solutions, Inc., if any.

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Court informed Plaintiff that the State-court TRO expired by operation of law and was no

longer valid, citing, inter alia, Granny Goose Foods, Inc. v. Teamsters, 415 U.S. 423, 439-40

(1974) and Pantoja v. Countrywde Home Loans, Inc., 640 F.Supp.2d 1177, 1183 n. 5 (N.D.

Cal. 2009) (“[U]nless a [state] TRO is extended, it expires no later than 10 days after the date

of removal. Fed.R.Civ.P. 65(b)(2); Granny Goose Foods, Inc., 415 U.S. at 440 n. 15 . . . .”).

(Doc. 40 at 4) The Court sustained Defendants’ objection to Plaintiff’s claim that the State

TRO remained a valid and enforceable order because it expired months previously and was

not extended by Plaintiff upon a showing of good cause. (Id.) The Court concluded

“Plaintiff’s TRO expired no later than January 5, 2012. See Granny Goose Foods, 415 U.S.

at 440 n. 15 (‘[W]here the state court issues a temporary restraining order of 15 days’

duration on Day 1 and the case is removed to federal court on Day 13, the order will expire

on Day 15 in federal court just as it would have expired on Day 15 in state court. . . .’).” (Id.

at 1-2, 6) 

Taking judicial notice of publicly-filed documents not subject to reasonable dispute,

e.g., the Trustee’s Deed Upon Sale regarding the subject residence and the State’s and

District Court’s files, there was no “[c]ourt order granting [Plaintiff] relief pursuant to rule

65, Arizona rules of civil procedure, entered . . . before the [June 20, 2012 trustee] sale.” See

Arizona Revised Statute (“A.R.S.”) § 33-811(C). It is undisputed that when Plaintiff failed

to cure her default on the LMA, Plaintiff’s residence was sold on June 20, 2012 at a trustee

sale to a non-party, Skyline Vista Equities, LLC., for $126,500.00. (Doc. 52-2 at 1-3) The

Trustee’s Deed Upon Sale was signed on July 2, 2012 by Les Zieve, trustee, and recorded

on July 12, 2012 with the Maricopa County Recorder. (Id. at 1) Under Arizona law, the

Trustee’s Deed Upon Sale establishes: (1) Plaintiff was the trustor who signed a deed of trust

on June 7, 2005, which was recorded on June 10, 2005, with the Maricopa County Recorder;

(2) the lender was Ownit Mort-gage Solutions, Inc., a California corporation; and (3) the

beneficiary was Mortgage Electronic Registration Systems, Inc. (“MERS”).3

 (Id.) 

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 It is undisputed that pursuant to the August 2010 LMA, the initial payment was

$992.41, not $922.41 as alleged by Plaintiff. (Docs. 53, ¶ 20; 53-1, Exh. 1 at 4) 

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C. The Plaintiff’s Contentions

Sometime in or before 2009, Plaintiff stopped making the monthly payment on the

residence’s promissory note which was secured by a deed of trust. The AVC alleges that

“due to financial issues[,]” Plaintiff negotiated two loan modifications with Ocwen, the

servicer on the note. (Doc. 53, ¶ 6 at 3) She contends Defendants approved Plaintiff for a

LMA in November 2009; however, after she executed and returned the first LMA in

November 2009, she was informed she failed to timely return it to Ocwen and “Defen-dants

refused to honor that agreement.” (Id., ¶¶ 7-10) Though Plaintiff denies she did not timely

return this LMA to Ocwen, Plaintiff alleges she “[w]as forced to negotiate the August 2010

loan modification agreement[,]” which she received in September 2010. (Id., ¶¶ 9, 11, 13)

On or about September 9, 2010, a Ocwen representative called and left Plaintiff a voice

message, confirming the August 2010 LMA had been approved and “the written contract was

being mailed to her.” (Id., ¶ 14) Plaintiff claims the August 2010 LMA, however, was also

not received by Plaintiff until several days after Ocwen’s deadline for accepting and

remitting payment to Ocwen. (Id., ¶ 16) On or about September 14, 2010, Plaintiff’s attorney

contacted and advised Ocwen that he had just received the second loan modification

paperwork and Plaintiff would be “[e]xecuting the document and returning it with the Initial

payment of $922.414

 and the monthly trial payment of $742.84.” (Id., ¶ 15) Plaintiff alleges

she signed the August 2010 LMA and mailed it back to Ocwen along with “the payments

required by the written contract.” (Id., ¶ 18) She alleges, however, Ocwen never signed and

returned an executed copy of the August 2010 LMA to Plaintiff despite her claim she made

numerous payments in accordance with the terms of the parties’ written agreement. (Id., ¶

22) A copy of the August 2010 LMA is attached to the AVC. (Doc. 53-1, Exhibit (“Exh.”)

1 at 4-15)

Plaintiff alleges she made ten payments in the amounts specified in the August 2010

LMA, when Ocwen returned the tenth payment to her, advising this payment “[w]as not the

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full balance due under the Note/Deed of trust/Notice of default.” (Doc. 53, ¶ 23)

Specifically, Plaintiff alleges that on or about July 25, 2011, she mailed her August 2011

LMA payment, check no. 1092, in the amount of $742.84 to Ocwen. (Id., ¶ 27) After the

parties exchanged several communications and the $742.84 check, Plaintiff received a letter,

dated September 2, 2011, from Ocwen, confirming Plaintiff’s “loan was approved for a

modification on August 26, 2010 and the modification on the loan was completed on

December 6, 2010.” The letter advised Plaintiff that (1) Ocwen had researched her claim

concerning her monthly payment and concluded $742.84 was an incorrect amount; (2) the

amount she paid ($742.84 per month) was an insufficient amount to cure the past-due balance

on her loan; and, (3) Plaintiff was required to pay $922.41 ($742.84 + $179.57) per month.

(Id., ¶¶ 28-30, 33-35; doc. 53-2 at 1-2, Exh. 2 attached to the AVC) Plaintiff alleges that

before she received Ocwen’s September 2, 2011 letter, she was never been informed that her

loan modification payment was supposed to be $922.41 per month; and the only notice she

received concerning a monthly payment of $922.41 was the initial $922.41 payment in the

LMA and then she was pay $742.84 on October 1, 2010 and every month thereafter, inferring

she did not know she was required to pay the monthly amount of $179.57 for taxes and

insurance. (Id., ¶¶ 35-36) 

When Defendants initiated non-judicial foreclosure proceedings and provided Plaintiff

notice a trustee sale was scheduled for December 9, 2011, Plaintiff filed this action in the

Superior Court on December 8, 2011 and obtained the TRO. (Doc. 1 at 29) It is undisputed

Plaintiff received notice of the December 9, 2011 trustee sale. 

Plaintiff’S AVC pleads seven causes of action: (1) Declaratory Relief, Count One; (2)

Slander of Title and Trespass to Real Property, Count Two; (3) Breach of Implied Covenant

of Good Faith and Fair Dealing, Count Three; (4) Material Misrepresentation, Count Four;

(5) Negligence or Gross Negligence, Count Five; (6) Violation of the Fair Credit Report Act

and Slander of Credit, Count Six; and (7) Breach of Contract. (Doc. 53) The AVC’s

wherefore clause requests, inter alia, damages in an amount to be proven at trial; punitive

damages in an amount not less than $1,500,000.00; an order transferring title to Plaintiff’s

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5

 Defendants’ Reply calls it a “loan modification offer.” (Doc. 66 at 2)

6

 The actual paragraphs in the AVC are 13 and 18.

7

 The actual paragraphs in the AVC are 15 and 18.

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former residence back to Plaintiff; pre-judgment and post-judgment interest; and an award

of attorneys’ fees and costs. (Id. at 19-20)

D. Defendants’ Arguments for Dismissal 

Based on the AVC’s allegations and its attached exhibits, Defendants concede the

following facts for purposes of their dismissal motion. Plaintiff received a document from

Ocwen entitled Loan Modification Agreement5

 in late 2010. (Doc. 66 at 2) (citing AVC, doc.

53 at ¶ 226

) The August 2010 LMA required Plaintiff to make an initial payment of $992.41

on or before September 10, 2010 “[a]nd one trial period payment of principal and interest

in the amount of $742.84 on or before October 1, 2010.” (Id.) (citing Exh.1, ¶ 2; doc. 53-1

at 4) (emphasis in original) The August 2010 LMA required Plaintiff to also make monthly

escrow payments, in addition to the principal and interest payments, if the loan was

“escrowed” for property taxes and insurance at the time of the LMA. (Id.) (citing Exh.1, ¶

12; doc. 53-1 at 8) Plaintiff’s obligation to pay Ocwen funds for “Escrow Items,” defined

in the August 2010 LMA to include the residence’s property taxes and insurance, “[c]ould

only be waived in writing.” (Id.) Plaintiff made the initial payment of $922.41 and first trial

period payment of $742.84. (Id.) (citing Exh. 1’s check no. 1069, dated 9-8-10, in the amount

of $922.41, and the AVC, ¶¶ 24-257

) Plaintiff does not allege Defendants waived the

monthly escrow payments.

Citing the AVC’s allegations, Defendants note that when Ocwen received Plaintiff’s

August 2011 payment in the amount of $742.84, the check was returned with a letter,

advising Plaintiff the check “was insufficient to pay the past due balance on her loan.” (Id.

at 2-3) (citing doc. 53, ¶ 28) Plaintiff then sent a letter back to Ocwen, en-closing check no.

1092 in the amount of $742.84, and advising Ocwen “she had been sending that amount in

under the terms of the [LMA] she had previously executed in September 2010 and would

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continue to send such amount.” (Id. at 3) (citing doc. 53, ¶ 29) Defendants point out

that the AVC alleges that, on September 2, 2011, Plaintiff received Ocwen’s responsive

letter, advising Plaintiff her monthly payment of $742.84 “[w]as in error and she was

required to pay $922.41 per month.” (Id. at 3) (citing doc. 53, ¶ 3[3] and doc. 53-2, Exh. 2

to the AVC) Defendants point out Ocwen’s letter indicated, inter alia, that (1) the account

statements sent to Plaintiff on a regular basis reflected the amount due on Plaintiff’s loan, and

(2) any payments remitted toward the loan should be in the full reinstatement amount, and

(3) partial payments would not be accepted. (Id.) (citing Exh. 2) Defendants note Plaintiff

did not alleged that her loan was not escrowed, that she did not owe $179.57 per month for

taxes and insurance, that she did not receive notice of the monthly escrow amount until she

received Ocwen’s September 2, 2011 letter, or that she tendered the amount needed to cure

the escrow arrearage prior to the trustee sale. (Id.)

Defendants contend Plaintiff “waived any claims related to the foreclosure by

failing to formally raise them and obtain injunctive relief during the [six] months between

the issuance of the state court [TRO] and the June 20, 2012 trustee’s sale.” (Doc. 51 at 6)

They argue Plaintiff’s foreclosure-related claims should be dismissed as barred by A.R.S. 33-

811(C) and the other causes of action should be dismissed as a matter of law. Id. at 5-6. 

E. Loan Modification Agreement

Significant to Plaintiff’s allegations and Defendants’ dismissal motion are two

undisputed documents attached as exhibits to Plaintiff’s amended complaint. First, Plaintiff

attached a copy of the partially-executed, 14-page August 2010 LMA to the AVC. (Doc. 53-

1, Exh.1 at 4-15) Titled Loan Modification Agreement, Exhibit 1’s written introduction

indicates that Ocwen, the servicer, “is offering [Plaintiff] this Loan Modification Agreement

. . . , dated 8/26/2010, which modifies the terms of [Plaintiff’s] home loan obligations as

described below. . . Pursuant to our mutual agreement to modify [Plaintiff’s] Note and

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 The LMA collectively defines a mortgage, deed of trust, or security deed on loans

Ocwen services as “the Mortgage.” (Doc. 53-1, ¶ A at 4)

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Mortgage8

 and in consideration of the promises, conditions, and terms set forth below, the

parties agree as follows: 

1. You understand that the Note and Mortgage will not be modified unless and

until (i) you receive from the Servicer a copy of this Agreement signed by the

Servicer, (ii) you successfully complete the Trial Period (as defined below),

and (iii) the Servicer Receives assurance from the title insurance company

insuring the lien of the Mortgage or otherwise confirms to the Servicer’s

satisfaction that the Mortgage (as modified by this Agreement) continues to

enjoy lien priority for the full amount of the Note.

2. In order for the terms of this Agreement to become effective, you promise

to make an initial payment of $992.41 on or before 9/10/2010 and one (1) Trial

Payment of principal and interest in the amount of $742.84 to Servicer on or

before 10/1/2010 (Trial Period).

3. If you successfully complete the Trial Period, your loan will be modified

pursuant to the terms of this Agreement. However, if you fail to send any

payment on or before the respective due date, the Servicer’s modification offer

will be null and void and this Agreement will not become effective and you

understand and acknowledge that the Servicer may commence or resume

foreclosure or other activities related to the delinquency of you loan under its

original terms. Acceptance and application of late payments during the Trial

Period will not constitute payment in accordance with Section 2 above.

* * * *

7. You will commence payments of principal and interest in the amount of

$742.84 beginning on - and continuing on the same day of each succeeding

month until principal and interest are paid in full. The final maturity date of

your Note will remain the same. You may have to make a balloon payment as

provided in Section 8 below. if you continue to continue to pay on your loan

until the final maturity date of your Note.

* * * *

12. If this loan is currently escrowed for either taxes or insurance or both taxes

and insurance, then Servicer will continue to collect the applicable escrow

amount in addition to your monthly principal and interest payment. You agree

to pay Servicer on the day payments are due under the Note and Mortgage as

amended by this Agreement, until the loan is paid in full, a sum (the “Funds”)

to provide for payment of amounts due for (a) taxes and assessments and other

items which can attain priority over the Mortgage as a lien or encumbrance on

the Property; (b) . . . (c) premiums for any and all insurance required by

Servicer under the Note and Mortgage; (d) . . . These items are called “Escrow

Items.” You shall promptly furnish to Servicer all notices of amounts to be

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paid under this Section 12. You shall pay Servicer the Funds for Escrow Items

unless Servicer waives any obligation to pay the Funds for any or all Escrow

Items.

Servicer may waive my obligation to pay to Servicer Funds for any or all

Escrow Items at any time. Any such waiver may only be in writing. In the

event of such waiver, you shall pay directly, when and where payable, the

amounts due for any Escrow Items for which payment of Funds has been

waived by Servicer and, if Servicer requires, shall furnish to Servicer receipts

evidencing such payments and within such time period as Servicer may

require. Your obligation to make such payments and to provide receipts shall

be for all purposes be deemed a covenant and agreement contained in the Note

and Mortgage, as the phrase “covenant and agreement” is used herein. If you

are obligated to pay Escrow Items directly, pursuant to a waiver, and you fail

to pay the amount due for an Escrow Item, Servicer may exercise its rights

under the Note and Mortgage and this Agreement and pay such amount and

you shall then be obligated to repay to Servicer any such amount. . . . 

(Id. at 4-5) (emphasis added)

The other undisputed document is Ocwen’s September 2, 2011 letter to Plaintiff. The

body of the letter reads:

Dear Ms. Snyder:

Ocwen would like to take this opportunity to thank you for your recent

communication regarding the above reference loan. We appreciate the time

and effort on your part to bring your concern to our attention. Pursuant to your

concern, we have reviewed the loan and below is the recap of our response to

the concern raised:

Concern#1 You expressed concern regarding the payment being returned on

the loan and stated that you have been remitting payment as per

the modification agreement. Therefore, you requested us to

review the loan and process necessary corrections in this regard.

Response Our records indicate your loan was approved for a modification

on August 26, 2010 and the modification on the loan was

completed on December 6, 2010. Your loan was modified to an

interest rate of 4.42000% and your new monthly mortgage

payment was in the amount of $922.41, of which $742.84 will

be for principal and interest portion and $179.57 will go into

your escrow account.

Any payment received will be applied to the respective loan

within twenty-four hours from its receipt. In order for a

monthly payment to be satisfied on the loan, it is required that

the entire payment amount (principal and interest portion and

also the escrow portion) be remitted to us. If the customer s

payment is short, the funds may be placed in the suspense

(partial payment–credit) account or it may be returned to the

remitter.

Please be advised that you were required to remit monthly

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mortgage payment in the amount of $922.41 after the

modification. However, you remitted only $742.84, which

resulted in the delinquent status of the loan, as the payment

received was lesser than the contractual payment amount.

Please note that account statements were sent to your attention

on a regular basis reflecting the amount due on the loan.

If the loan is delinquent, we do not accept partial payments and

the funds remitted towards the loan should be in the

reinstatement amount, unless the loan is approved for an

alternative payment option. In the event you remit a partial or

uncertified payment, the same would be returned to the remitter.

Our records indicate that we received two (2) payments on

August 11, 2011 and September 2, 2011 in the amount of

$742.84. However, these payments were returned to the

remitter since they were insufficient to cure the default on the

loan. We have submitted a request for our Payment

Reconciliation History to be sent to your attention which reflects

all credits and disbursements made to the loan by Ocwen and the

resulting loan status. You will receive this under a separate

cover.

We are obligated to service your loan according to the terms and

conditions of your original Mortgage and Note. As per the Note,

the monthly payments on your loan are due on the first (1st) day

of every month. When a payment is not received within thirty

(30) days from the due date, the loan is reported as delinquent

to the credit bureau.

Please note that payments were delinquent and that the credit

reporting submitted correctly reflected the delinquent status.

Ocwen is obligated to report true and accurate information to the

credit bureaus and therefore the credit reporting cannot be

changed. If you still believe the reporting is incorrect and you

have evidence that the payment(s) was received on time, please

provide us with this evidence so that we may research this

matter further.

When the loan is past due for eighty (80) days, foreclosure

proceedings may be initiated, depending upon the state the

property is located. A review of our records indicates that on

August 22, 2011, foreclosure proceedings were initiated on the

loan, since your loan was past due for the June 1, 2010 payment,

as of that date. 

* * * *

As of the date of this letter, the loan is past due for the June 1,

2011 payment. For any questions or concerns regarding your

loan, you may contact our Customer Care Center at (800) 746-

2936.

(Doc. 53-2, Exh. 2 at 1-2 attached to the AVC) (emphasis added)

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Mindful of the foregoing facts and arguments, the Court discusses the relevant issues

of law raised by the parties.

II. Legal Standard

An amended complaint will survive a motion to dismiss if it contains “sufficient

factual matter . . . to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007);

see also Rule 8(a)(2), Fed.R.Civ.P. A district court’s “inquiry is limited to the allegations

in the complaint, which are accepted as true and construed in the light most favorable to the

plaintiff.” Lazy Y Ranch LTD. v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008) (citation

omitted). A district court need not, however, accept as true an amended complaint’s “legal

conclusions[,]” Iqbal, 556 U.S. at 678, or “allegations contradicting documents that are

referenced in [an amended] complaint or that are properly subject to judicial notice.”

Behrens, 546 F.3d at 588. 

“Threadbare recitals of the elements of a cause of action, supported by mere

conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678 (citation omitted) “While legal

conclusions can provide the framework of [an amended] complaint, they must be supported

by factual allegations.” Id. at 679. Thus, a district court may begin “by identifying pleadings

that, because they are no more than conclusions, are not entitled to the assumption of truth.”

Id. Courts must then determine whether the factual allegations in the amended complaint

“plausibly give rise to an entitlement of relief.” Id. Though the plausibility inquiry “is not

akin to a probability requirement,” an amended complaint will not survive a motion to

dismiss if its factual allegations “do not permit the court to infer more than the mere

possibility of misconduct . . . .” Id. at 678-79 (internal quotation marks omitted). That is to

say, a plaintiff’s amended complaint must “nudge[ her] claims across the line from

conceivable to plausible.” Twombly, 550 U.S. at 570.

III. Overly Long Responsive Brief

Despite numerous orders directing counsel to comply with the District Court’s Local

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9

 See orders at docket number 6, 14, 16, 32, 45, 49, and 67.

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Rules,9

 Plaintiff’s Response to Defendants’ Motion to Dismiss, doc. 65, substantially

exceeded the 17-page limitation mandated by LRCiv 7.2(e)(1) without prior court approval.

See LRCiv 7.2(e)(1) (“Unless otherwise permitted by the Court, a motion including its

supporting memorandum, and the response including its supporting memorandum, may not

exceed seventeen (17) pages, exclusive of attachments and any required statement of facts.”).

Plaintiff did not seek the Court’s leave prior to filing an overly long responsive brief as

required by LRCiv 7.2(e)(1). 

“Judicial economy and concise argument are purposes of the page limit.”Aircraft

Technical Publishers v. Avantext, Inc., 2009 WL 3833573, at *1 (N.D. Cal. Nov. 16, 2009)

(citation omitted). A district court’s enforcement of local rules assures one party does not

have a briefing advantage over an adverse party who complies with the page limitation. AZ

Holding, L.L.C. v. Frederick, 2010 WL 500443, at *2, n. 4 (D. Ariz. Feb. 10, 2010). “The

district court has considerable latitude in managing the parties’ motion practice and enforcing

local rules that place parameters on briefing.” Christian v. Mattel, Inc., 286 F.3d 1118, 1129

(9th Cir. 2002). “At some point, enough is enough.” Id. (citing Ashton-Tate Corp. v. Ross,

916 F.2d 516, 520 (9th Cir. 1990); see also Iota Xi Chapter Of Sigma Chi Fraternity v.

Patterson, 566 F.3d 138, 150 (4th Cir. 2009) (“[d]istrict court acted well within its discretion

in fashioning a sanction for the defendants’ failure to comply with [local rule page

limitation].”)

District courts have imposed various sanctions for improperly filing overly long

briefs. Phillippi v. Stryker Corp., 2010 WL 2650596, at *3-4 (E.D. Cal. July 1, 2010)

($500.00 sanction imposed on counsel for filing brief exceeding local rule limit); Swanson

v. U.S. Forest Serv., 87 F.3d 339, 345 (9th Cir. 1996) (upholding district court’s discretion

to disregard briefs filed in circumvention of page limits); Expedia, Inc. v.

Reservationsystem.com, Inc., 2007 WL 201069, at *2 (W.D. Wash. Jan. 23, 2007) (striking

entire overly long brief sua sponte); King Cnty. v. Rasmussen, 143 F.Supp.2d 1225 (W.D.

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Wash. 2001) (striking only the portion of the filing that exceeded local rule page limitation),

aff’d, 299 F.3d 1077 (9th Cir. 2002); Electronic Frontier Foundation v. C.I.A., 2012 WL

1123529, at *1 (N.D. Cal. April 3, 2012) (striking overlength briefs and affording the parties

the opportunity to re-file briefs that conform to the local rules page limit) (citing Fleming v.

County of Kane, State of Ill., 855 F.2d 496, 497 (7th Cir. 1988) (“Overly long briefs,

however, may actually hurt a party’s case, making it ‘far more likely that meritorious

arguments will be lost amid the mass of detail.’”). The court in Electronic Frontier

Foundation observed that “[i]t is typically the shorter briefs that are the most helpful, perhaps

because the discipline of compression forces the parties to explain clearly and succinctly

what has happened, the precise legal issue, and just why they believe the law supports them.”

Id. (quoting In re M.S.V., Inc., 892 F.2d 5, 6 (1st Cir. 1989)).

In the exercise of its wide discretion, the Court strikes from consideration pages 18

through 22 of Plaintiff’s Response to Defendants’ Motion to Dismiss, doc. 65, due to

Plaintiff’s violation of LRCiv 7.2(e)(1)’s page limit.

IV. Governing Law

A. Arizona Substantive Law; Federal Procedural Law

“[F]ederal courts sitting in diversity jurisdiction apply state substantive law and

federal procedural law.” Zamani v. Carnes, 491 F.3d 990, 995 (9th Cir. 2007) (quoting

Freund v. Nycomed Amersham, 347 F.3d 752, 761 (9th Cir. 2003) (quoting Gasperini v. Ctr.

for Humanities, Inc. 518 U.S. 415, 427 (1996)). Because jurisdiction in this case is based, in

part, on complete diversity and the amount in controversy exceeds $75,000, exclusive of

interest and costs, Arizona substantive law applies to the state-law claims. Tucker v. First

Md. Sav. & Loan, Inc., 942 F.2d 1401, 1406 (9th Cir. 1991). The Federal Rules of Civil

Procedure, however, govern the procedural aspects of this action after removal. Rule

81(c)(1), Fed.R.Civ.P. (“These rules apply to a civil action after it is removed from a state

court.”). See Kaufman v. Jesser, 2012 WL 2952398, at *3 (D. Ariz. July 19, 2012).

In analyzing a motion to dismiss, “all well-pleaded allegations of material fact are

taken as true and construed in a light most favorable to the nonmoving party.” Wyler Summit

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Partnership v. Turner Broad. Sys. Inc., 135 F.3d 658, 661 (9th Cir. 1998); see also NL

Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). Factual allegations can be

disregarded, however, if the allegations are contradicted by the facts established by reference

to documents attached as exhibits to the complaint. Castle v. Eurofresh, Inc., 2010 WL

797138, at *3 (D. Ariz. March 8, 2010) (“And a court may disregard allegations of the

complaint that are contradicted by attached exhibits.”) (citing Steckman v. Hart Brewing,

Inc., 143 F.3d 1293, 1295 (9th Cir. 1998); Durning v. First Boston Corp., 815 F.2d 1265,

1267 (9th Cir. 1987). A district 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), and “the tenet that a court must

accept as true all of the allegations contained in a complaint is inapplicable to legal

conclusions.” Iqbal, 556 U.S. at 678.

The two exhibits attached to Plaintiff’s AVC provide relevant and undisputed facts

material to Defendants’ dismissal motion which the Court may properly consider. Under the

doctrine of “incorporation by reference,” a district court may consider documents that are

referenced extensively in a complaint and are accepted by all parties as authentic. Van

Buskirk v. CNN, 284 F.3d 977, 980 (9th Cir. 2002); Lee v. City of Los Angeles, 250 F.3d 668,

688 (9th Cir. 2001). Pursuant to Rule 10(c), Fed.R.Civ.P., an exhibit to a complaint or other

“pleading is a part of the pleading for all purposes.” Thus, under the incorporation-byreference doctrine, a district court may look beyond the pleadings without converting a Rule

12(b)(6) motion into one for summary judgment.

B. Judicial Notice

“As a general rule, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion[]” without converting the motion into one for

summary judgment. Lee, 250 F.3d at 688 (citation and internal quotation marks omitted).

There are two exceptions to this rule: (1) a court may take judicial notice of material which

is either submitted as part of the complaint or necessarily relied upon by the complaint; or

(2) a court may take judicial notice of matters of public record. Id., at 688-89; Coto

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Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 2010). A district court may take

judicial notice “at any stage of the proceeding” and “must take judicial notice if a party

requests it and the court is supplied with the necessary information.” Fed.R.Evid. 201(c)(2)

and (d). Taking judicial notice, however, does not convert a motion to dismiss into one for

summary judgment. United States v. 14.02 Acres of Land More or Less in Fresno Cnty., 547

F.3d 943, 955 (9th Cir. 2008); MGIC Idem. Corp. v. Weisan, 803 F.2d 500, 504 (9th Cir.

1986). 

Here, Defendants request the Court take judicial notice of the Trustee’s Deed Upon

Sale as a publicly-recorded document and provide the Court with a complete copy of it,

citing Rule 201, Fed.R.Evid. (Docs 52; 52-2 at 1-3) Plaintiff has not objected to Defendants’

judicial notice request.

A district court may properly take judicial notice of publicly-filed documents. A

matter may be judicially noticed if it is either “generally known within the territorial

jurisdiction of the trial court” or “capable of accurate and ready determination by resort to

sources whose accuracy cannot reasonably be questioned.” Rule 201(b), Fed.R.Evid. If a

trustee deed is a publicly-recorded document, it may be judicially noticed as the accuracy of

such a record is not subject to reasonable dispute. See Armacost v. HSBC Bank USA, 2011

WL 825151, at *1 n. 1 (D. Idaho Feb. 9, 2011) (taking judicial notice of documents filed in

a county’s public record, including deeds of trust); Pantoja, 640 F.Supp.2d at 1189 n. 12; W.

Fed. Sav. & Loan Ass’n v. Heflin Corp., 797 F.Supp. 790, 792 (N.D. Cal. 1992). The Court

will grant Defendants’ request and take judicial notice of the publicly-filed Trustee’s Deed

Upon Sale in ruling on Defendants’ dismissal motion. (Doc. 52-2 at 1-3) 

C. Non-Judicial Foreclosure

In Arizona, “[d]eed of trust sales are held without the prior judicial authorization

required in a mortgage foreclosure.” Contreras v. U.S. Bank as Trustee for CSMC Mortg.

Backed Pass-through Certificates etc., 2009 WL 4827016, at *4 (D. Ariz. Dec. 15, 2009)

(citing In re Krohn, 203 Ariz. 205, 208, 52 P.3d 774, 777 (Ariz. 2002)). “Arizona’s deed of

trust statutes were enacted in 1971 to bypass time-consuming and expensive judicial

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10 Arizona Revised Statute § 33-817 provides “[t]he transfer of any contract or

contracts secured by a trust deed shall operate as a transfer of the security for such contract

or contracts.”

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foreclosure by using the power of sale authority to sell property securing a delinquent loan

after complying with statutory procedural requirements.” Id. Unlike a mortgage, “[a] deed

of trust is a three-party instrument where the trustor (borrower) transfers legal title in real

property to the trustee (legal title holder) as security for the performance by the trustor or a

third party of obligations to the beneficiary (lender).” Maxa v. Countrywide Loans, Inc., 2010

WL 2836958, at *4 (D. Ariz. July 19, 2010) (citations omitted). In Arizona, though a

promissory note and trust deed are generally construed together, A.R.S. § 33-817,10 “the note

and the deed of trust are nonetheless distinct instruments that serve different purposes. The

note is a contract that evidences the loan and the obligor’s duty to repay.” Hogan v.

Washington Mut. Bank, N.A., ___ Ariz. ___, ___, 277 P.3d 781, 782-83 (Ariz. 2012),

vacating 227 Ariz. 561, 261 P.3d 445 (Az. Ct. App. 2011) (citing A.R.S. § 33-801(4)). “The

trust deed transfers an interest in real property, securing the repayment of the money owed

under the note.” Id. (citing A.R.S. §§ 33-801(4), -801(8), -801(9), -805, -807(A)). 

Arizona law requires that a homeowner receive 90 days’ notice of a trustee sale upon

a homeowner’s default on a note secured by a trust deed. A.R.S. §§ 33-808(C),-809(C). “The

intent of this notice requirement is to afford homeowners ample time to protect their

interests.” Coleman v. American Home Mortg. Servicing, Inc., 2010 WL 1268141, at *4 (D.

Ariz. March 30, 2010). There are, however, significant adverse legal consequences if a

homeowner delinquent on loan payments fails to seek judicial intervention and enjoin a

trustee sale. A.R.S. § 33-811(C) provides in pertinent part:

The trustor . . . 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

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scheduled date of sale.

The Arizona courts and this District Court require the complaining party to obtain a

preliminary injunction prior to a trustee sale to avoid the preclusive effect on certain claims

that may be alleged after a trustee sale. For example, in U.S. Bank v. Beck, 2012 WL

2003348, at *2 (Az. Ct. App. June 5, 2012), the homeowners defaulted on their promissory

note, the deed of trust on their residence was assigned to U.S. Bank, and the substituted

trustee was directed to initiate foreclosure proceedings. In affirming judgment in favor of

U.S. Bank on its forcible entry and detainer action against the homeowners, the Arizona court

made clear that because the TRO the homeowners obtained in a separate action had lapsed

when they failed to post the bond for the TRO and because they failed to obtain a preliminary

injunction preventing the trustee sale, “[t]hey therefore waived any objections and defenses

they could have asserted against the title that U.S. Bank acquired by trustee’s deed[,]” citing

A.R.S. § 33-811(C) and BT Capital, LLC v. TD Serv. Co. of Ariz., 229 Ariz. 299, 301, 275

P.3d 598, 600 (Ariz. 2012) (“Under §§ 33-811(C) and (E), BT thus waived ‘all defenses and

objections to the [2010] sale, and the resulting trustee’s deed conveyed the property to PCF

‘clear of all . . . claims or interests that have a priority subordinate to the deed of trust.”); see

also Jewell v. Countrywide Home Loans, Inc., 2012 WL 170942, at *2 (D. Ariz. Jan. 20,

2012) (“A trustor, such as Plaintiff, who received notice of a trustee sale pursuant to A.R.S.

§ 33–809 waives all defenses and objections to the trustee sale not raised in an action

resulting in injunctive relief awarded at least one business day before the trustee sale.”);

Spielman v. Katz, 2010 WL 4038838, at *3 (D. Ariz. Oct. 14, 2010) (“While Plaintiffs filed

an action for relief before the trustee’s sale, the record shows that they failed to secure any

Rule 65 relief to enjoin such sale. By failing to fulfill the requirements of A.R.S. § 33-

811(C), Plaintiffs waived their claims for relief against Defendant Transnation.”); Cettolin

v. GMAC, 2010 WL 3834628, at *3 (D. Ariz. Sept. 24, 2010) (“Because Plaintiffs did not

receive an order enjoining the sale of the Property, they waived all claims that would have

provided defenses or objections to the sale.”). Thus, a homeowner delinquent on her

residential loan payments who does not enjoin a trustee sale of the property waives all claims

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or objections the homeowner has regarding the sale. Section 33–811(C), however, does not

prevent Plaintiff from asserting claims for relief independent of voiding the trustee sale. See

Woods v. BAC Home Loans Servicing LP, 2011 WL 2746310 at *2 (D. Ariz. July 15, 2011).

V. Plaintiff’s Causes of Action

A. Declaratory Relief (Count One)

Count One of the AVC alleges that, “[p]ursuant A.R.S. § 12-1831 et. seq., the Court

has the authority to declare the rights, status and other legal relations of the parties as it

pertains to the Real Property at issue in this matter.” (Doc. 53 at 9) Plaintiff must base her

request for declaratory relief on a cognizable legal theory. Oraha, 2012 WL 70834, at *3.

Defendants argue Plaintiff’s claim for declaratory relief fails because it is moot. (Doc. 51 at

6-7) 

A declaratory judgment action is a remedy for an underlying cause of action; it is not

a separate cause of action as Plaintiff alleges. See Steers v. CitiMortgage, Inc., 2011 WL

6258219, at *3 (D. Ariz. Dec. 15, 2011) (citation omitted); McMann v. City of Tucson, 202

Ariz. 468, 473, 47 P.3d 672, 678 (Az. Ct. App. 2002) (noting that a declaratory judgment

“remedy” is available “to declare the rights, status, and other legal relations”) (quoting

A.R.S. § 12-1831 and omitting internal quotation marks); Land Dept. v. O’Toole, 154 Ariz.

43, 47, 739 P.2d 1360, 1364 (Az. Ct. App. 1987) (“The declaratory judgment procedure is

not designed to furnish an additional remedy where an adequate one exists.”); Yares v. Bear

Stearns Residential Mortg. Corp., 2011 WL 2531090, at *3 (D. Ariz. June 24, 2011) (holding

that claims for declaratory and injunctive relief must be based on “a cognizable legal

theory.”). Because Plaintiff’s first count is not a cause of action; but rather, a remedy that is

dependent upon the success of her other causes of action, the Court will not analyze Count

One under Rule 12(b)(6). See Schrock v. Federal Nat. Mortg. Ass’n, 2011 WL 3348227, at

*3 (D. Ariz. Aug. 3, 2011).

B. Slander of Title and Trespass to Real Property (Count Two)

Count Two alleges causes of action for slander of title and trespass to real property,

which Defendants contend fail to state plausible claims as a matter of law. (Docs. 51 at 7-8;

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53 at 10-12)

 “Under Arizona law, elements of slander of title are the uttering and publication of

the slanderous words by the defendant, the falsity of the words, malice and special damages.”

Zandonatti v. MERS, 2011 WL 7553523, at *7 (D. Ariz. Dec. 16, 2011) (citing City of Tempe

v. Pilot Properties, Inc., 22 Ariz. App. 356, 363, 527 P.2d 515 (Az. Ct. App. 1974) (citing

50 Am. Jur. 2d, Libel and Slander § 541, p. 1060 (1970)); see also In re Mortgage Electronic

Registration Systems (MERS) Litigation, 2011 WL 4550189 at *9 (D. Ariz. Oct. 3, 2011).

“Of these elements, malice has been said to be the gist of the action.” Id. (citation omitted).

Malice, a required element of a slander-of-title claim, means acting “[f]rom improper motives

or without reasonable belief in the efficacy of the claim.” SWC Baseline & Crismon

Investors, LLC v. Augusta Ranch Ltd. Partnership, 228 Ariz. 271, 287, 265 P.3d 1070, 1086

(Az. Ct. App. 2011) (citation and internal quotation marks omitted).

“A ‘trespasser’ is one who does an unlawful act or a lawful act in an unlawful manner

to the injury of the person or property of another.” Yslava v. Hughes Aircraft Co., 1998 WL

35298580, at *13 (D. Ariz. June 29, 1998) (citing MacNeil v. Perkins, 324 P.2d 211, 216

(Ariz. 1958)). “With respect to trespass to real property, ‘[a] physical entry on the land is an

essential element of a trespass.’” Id. (quoting Brenteson Wholesale, Inc. v. Arizona Pub.

Serv. Co., 166 Ariz. 519, 523, 803 P.2d 930, 934 (Az. Ct. App.1990) (citation omitted). 

Arizona law imposes “liability to another for trespass, irrespective of whether he

thereby causes harm to any legally protected interest of the other, if he intentionally (a) enters

land in the possession of the other, or causes a thing or a third person to do so” Taft v. Ball,

Ball & Brosamer, Inc., 169 Ariz. 173, 176, 818 P.2d 158, 161 (Az. Ct. App. 1991) (quoting

Restatement (Second) of Torts § 158 (1965)); see also Restatement (Second) of Torts § 163

(“One who intentionally enters land in the possession of another is subject to liability to the

possessor for a trespass, although his presence on the land causes no harm to the land, its

possessor, or to any thing or person in whose security the possessor has a legally protected

interest.”). 

Count Two does not allege Defendants’ actions were malicious, an essential element

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of a slander-of-title claim, or Defendants knew they had “no right to enforce the Deed of

Trust or Note,” doc. 53 at 10. See Grady v. Bank of Elmwood, 2012 WL 1132528, at *5 (D.

Ariz. April 4, 2012); In re MERS Litigation, 2011 WL 4550189 at *9. Count Two also fails

to allege Defendants intentionally and wrongfully entered onto Plaintiff’s property, or caused

a thing or a third person to do so. Count Two does not state a claim for slander of title and

trespass to real property pursuant to the federal pleading standard after Twombly and Iqbal.

Under Arizona law, Plaintiff’s failure to enjoin the trustee sale also bars Plaintiff’s

causes of action for slander of title and trespass to real property. A.R.S. § 33-807(C); see

also, e.g., Jewell, 2012 WL 170942, at *2 (D. Ariz. Jan. 20, 2012); Madison v. Groseth, 230

Ariz. 8, 279 P.3d 633, 637-38 (Az. Ct. App. 2012) (“In sum, because [plaintiff’s] tort claims

depend on her objections to the validity of the trustee’s sale, and she has waived those

objections, her tort claims cannot survive as a matter of law. The trial court therefore

properly dismissed [plaintiff’s] complaint pursuant to Rule 12(b)(6). . . .”).

C. Contractual Bad Faith (Count Three)

Count Three of the AVC alleges “the actions of the Defendants concerning the loan

modification process, the written contracts at issue in this matter, the failure to accept

payments of the Plaintiff, the failure to return a signed and executed copy of the September

2010 loan modification agreement and the failure to provide notice concerning the amount

of payments in this matter are a violation [sic] of the obligation of good faith and fair

dealing.” (Doc. 53 at 12-13) 

Defendants contend Plaintiff’s bad faith claim “[f]ails because Plaintiff fails to allege

sufficient facts to show that Ocwen prevented Plaintiff from obtaining the benefits of the

2010 modification.” (Doc. 51 at 8-9) Plaintiff responds, claiming “[D]efendants failed to

provide notice to the Plaintiff concerning the 2010 loan modification amount required under

the written loan modification agreement. It specified that additional sums may be due for the

escrow account for taxes and insurance and then the Defendants failed for more than ten

months to provide that amount due to the Plaintiff and then declared the Plaintiff in violation

of the written loan modification agreement based upon the Defendants’ failure to notify her

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11 Plaintiff also claims Defendants breached the implied covenant of good faith and

fair dealing arising out of the November 2009 LMA when Defendants provided Plaintiff with

the 2009 LMA after the due date for returning it back to the Defendants. Because this

specific ground was not factually alleged in the AVC as part of Count Three’s bad faith

claim, it is not considered by the Court.

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of the amount due.” (Doc. 65 at 16) Plaintiff argues she did not get her reasonable expected

benefits of the bargain and, as such, Defendants violated the implied covenant of good faith

and fair dealing.11 (Id.)

In Arizona, the covenant of good faith and fair dealing is implied in every contract,

and the “duty arises by virtue of a contractual relationship.” Rawlings v. Apodaca, 151 Ariz.

149, 726 P.2d 565, 569 (1986) (citations omitted). “The essence of that duty is that neither

party will act to impair the right of the other to receive the benefits which flow from their

agreement or contractual relationship.” Id. “[B]ecause a party may be injured when the other

party to a contract manipulates bargaining power to its own advantage, a party may

nevertheless breach its duty of good faith without actually breaching an express covenant in

the contract.” Wells Fargo Bank v. Arizona Laborers, Teamsters and Cement Masons Local

No. 395 Pension Trust Fund, 201 Ariz. 474, 38 P.3d 12, 29 (Ariz. 2002) (citing Deese v.

State Farm Mut. Auto. Ins. Co., 172 Ariz. 504, 838 P.2d 1265, 1270 (Ariz. 1992) and

Rawlings, 726 P.2d at 573-76). “[A]rizona law recognizes that a party can breach the implied

covenant of good faith and fair dealing both by exercising express discretion in a way

inconsistent with a party’s reasonable expectations and by acting in way not expressly

excluded by the contract’s terms but which nevertheless bear adversely on the party’s

reasonably expected benefits of the bargain.” Bike Fashion Corp. v. Kramer, 202 Ariz. 420,

424, 46 P.3d 431, 435 (Az. Ct. App. 2002) (citing Wells Fargo Bank, 201 Ariz. at 492, 38

P.3d at 30); see also Nolan v. Starlight Pines Homeowners Ass’n, 216 Ariz. 482, 488-89, 167

P.3d 1277, 1283-84 (Az. Ct. App. 2007).

In Sw. Sav. & Loan Ass’n v. SunAmp Sys., Inc., 172 Ariz. 553, 558, 838 P.2d 1314,

1319 (Az. Ct. App. 1992), the Arizona court clarified that “the duty to act in good faith does

not alter the specific obligations of the parties under the contract . . . Acts in accord with the

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terms of one’s contract cannot without more be equated with bad faith.” See also Mountain

Funding, L.L.C. v. Evergreen Communities, LLC, 2009 WL 4547921 (Az. Ct. App. Dec. 3,

2009)

Clearly, Count Three’s broad, factually-deficient allegations that “the actions of the

Defendants concerning the loan modification process [and] the written contracts at issue in

this matter” do not state plausible bad faith claims under the Iqbal and Twombly standard.

Also the allegation that Defendants’ failed “to return a signed and executed copy of the

September 2010 loan modification agreement” to Plaintiff or her attorney does not establish

a plausible bad faith claim because (1) according to the express terms of the LMA, Ocwen

reserved the right not deliver a signed copy to Plaintiff, i.e., “the Note and Mortgage will not

be modified unless and until (i) [Plaintiff] receive[d] from the Servicer a copy of this

Agreement signed by the Servicer . . . [and] if you fail to send any payment on or before the

respective due date, the Servicer’s modification offer will be null and void and this

Agreement will not become effective[,]” doc. 53-1 at 4; and (2) even though Plaintiff

acknowledges she possessed a copy to the August 2010 LMA, albeit unsigned by either

Ocwen or the Bank, Ocwen’s September 2, 2011 letter confirmed Plaintiff’s “loan was

approved for a modification on August 26, 2010 and the modification on the loan was

completed on December 6, 2010,” Count Three fails to allege why Defendants are liable for

bad faith or how Plaintiff was damaged without Plaintiff possessing a fully-signed copy of

the LMA. 

Finally, Count Three alleges Defendants are liable to Plaintiff for bad faith due to

Defendants’ “[f]ailure to provide notice concerning the amount of payments in this matter[,]”

which is presumably a reference to the monthly escrow payment of $179.57. (Doc. 53, ¶ 69

at 13) Count Three does not allege that Plaintiff’s promissory note was not escrowed for

monthly tax and insurance payments, that Plaintiff did not owe $179.57 per month for taxes

and insurance prior to the August 2010 LMA, that Plaintiff did not know the monthly escrow

payment was $179.57 until after the trustee sale, or that Plaintiff tendered the past-due

escrow amount to cure the impound account arrearage and Ocwen wrongfully refused to

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accept it. Contrary to the AVC’s allegations, the documents attached by Plaintiff to her

amended complaint, the August 2010 LMA and Ocwen’s September 2, 2011 letter, confirm

Plaintiff was required to make monthly escrow payments, in addition to the principal and

interest payments of $742.84 after the initial payment of $992.41 because Plaintiff’s loan was

escrowed at the time of the LMA. (Id.) (citing Exh.1, ¶ 12; doc. 53-1 at 8) Plaintiff was

obligated to make monthly payments to Ocwen for “Escrow Items,” defined in the LMA as

the residence’s property taxes and insurance. 

The Court agrees Plaintiff’s bad faith claim fails to state a bad faith claim because

Plaintiff has not alleged sufficient facts to plausibly show that Ocwen prevented Plaintiff

from obtaining the benefits of the August 2010 LMA. 

D. Material Misrepresentation (Count Four)

Count Four is titled “Material Misrepresentation” and alleges some of the same

allegations made in the bad faith count, e.g., Defendants “never executed or returned a copy

of an executed loan modification agreement[,]” (Doc. 53, ¶¶ 91 at 16) Regarding any

misrepresentations, however, Count Four only alleges Defendants “caused their automated

voice system to misrepresent the monthly amount owed by the Plaintiff under the loan

modification agreement.” (Id., ¶ 93) (emphasis added). No other misrepresentation in alleged

in Count Four. Defendants contend Plaintiff’s material misrepresentation claim is one for

intentional misrepresentation or fraud and does not state a plausible claim because the AVC

does not meet the heightened pleading standard required by Rule 9(b) and has alleged

insufficient facts to satisfy the requisite fraud elements. (Doc. 51, at 10-11)

“[A] claim for intentional misrepresentation is a claim of fraud under Arizona law.”

Frame v. Cal-Western Reconveyance Corp., 2011 WL 3876012 (D. Ariz. Sept. 2, 2011)

(citing Knoell v. Cerkvenik–Anderson Travel, Inc., 181 Ariz. 394, 891 P.2d 861, 869 (Az. Ct.

App. 1994), vacated and remanded on other grounds, 917 P.3d 689 (Ariz. 1996)); see also

Frazer v. Millennium Bank, N.A., 2010 WL 4579799, at *3 (D. Ariz. Oct. 29, 2010) (citing

Comerica Bank v. Mahmoodi, 224 Ariz. 289, 229 P.3d 1031, 1033-1034 (Az. Ct. App. 2010)

(listing the nine elements necessary to establish intentional misrepresentation or fraud claim

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under Arizona law). Federal Rule of Civil Procedure 9(b) governs the pleading standard for

fraud in federal courts regardless whether the claim is based on federal or state law. Vess v.

Ciba-Geigy Corp. USA, 317 F.3d 1097, 1102 (9th Cir. 2003). 

“In alleging fraud or mistake, a party must state with particularity the circumstances

constituting fraud or mistake.” Rule 9(b), Fed.R.Civ.P. Rule 9(b)’s heightened pleading

standard requires allegations of fraud be “specific enough to give defendants notice of the

particular misconduct which is alleged to constitute the fraud charged so that they can defend

against the charge and not just deny that they have done anything wrong.” Bly-Magee v.

California, 236 F.3d 1014, 1019 (9th Cir. 2001); see also Semegen v. Weidner, 780 F.2d 727,

731 (9th Cir. 1985). “While statements of the time, place and nature of the alleged fraudulent

activities are sufficient, mere conclusory allegations of fraud are insufficient.” Moore v.

Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989). “The plaintiff must set

forth what is false or misleading about a statement, and why it is false.” Decker v. GlenFed,

Inc., 42 F.3d 1541, 1548 (9th Cir. 1994). As to fraud claims against multiple defendants,

[R]ule 9(b) does not allow a complaint to merely lump multiple defendants together

but requires plaintiffs to differentiate their allegations when suing more than one

defendant and inform each defendant separately of the allegations surrounding his

alleged participation in the fraud. In the context of a fraud suit involving multiple

defendants, a plaintiff must, at a minimum, identify the role of each defendant in the

alleged fraudulent scheme.

Henkels v. J.P. Morgan Chase, 2011 WL 2357874 (D. Ariz. June 14, 2011) (citing Swartz

v. KPMG LLP, 476 F.3d 756, 764-65 (9th Cir. 2007)) (quotations and citations omitted). A

complaint of fraud must specify “the who, what, when, where, and how” of the alleged

misconduct and the injury caused by a plaintiff’s reliance on the misrepresentation. Vess,

317 F.3d at 1106; Gerber v. Wells Fargo Bank, N.A., 2011 WL 5007921, at *6 (D. Ariz. Oct.

20, 2011).

Count Four does not allege “the who, . . . when, where, and how” of the alleged

automated voice misrepresentation and the specific injury caused to Plaintiff by her reliance

on the misrepresentation. Vess, 317 F.3d at 1106. While it alleges Defendants’ automated

voice system “[m]isrepresented the monthly amount owed by the Plaintiff under the loan

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modification agreement[,]” Count Four does not allege the identity of the person or the

defendant whose employee made the alleged misrepresentation (the “who”); when the

misrepresentation occurred (the “when”); how the misrepresentation was false (the “how”);

and the specific injury caused by Plaintiff’s reliance on the alleged misrepresentation. 

A claim for fraudulent misrepresentation must demonstrate the speaker’s knowledge

of the statement’s falsity. Dawson v. Withycombe, 216 Ariz. 84, 97, 163 P.3d 1034, 1047

(Az. Ct. App. 2007) (“To maintain a claim for fraudulent misrepresentation, the claimant

must demonstrate the speaker's knowledge of the falsity of the statement.”) (citation omitted).

There is no such allegation in the Count Four. Certainly, the vague allegation that “Plaintiff

has suffered and continues to suffer damages in an amount to be determined at trial,” doc.

53, ¶ 96 at 16, does not meet Rule 9(b)’s heightened pleading standard regarding the specific

injury caused to Plaintiff by her reliance on this misrepresentation. If Plaintiff intended Count

Four to include other misrepresentations made by employees of the Bank or Ocwen, the other

allegations in Count Four are not identified as “misrepresentations” and, most clearly, do not

meet Rule 9(b)’s heightened pleading standard or provide Defendants with fair notice of

“[t]he fraud charged so that they can defend against the charge and not just deny that they

have done anything wrong.” Bly-Magee, 236 F.3d at 1019; see also Silving v. Wells Fargo

Bank, NA, 800 F.Supp.2d 1055, 1074-75 (D. Ariz. 2011) (dismissing fraud claim for failure

to meet Rule 9(b)’s heightened pleading standard in action against bank after trustee sale and

trustee deed was issued and recorded on plaintiff’s former residence). Even construing the

AVC in the light most favorable to Plaintiff, it is not possible to ascertain with sufficient

particularity the specific misconduct that the Bank, or Ocwen, or both, committed. Count

Four fails to state a plausible claim for intentional misrepresentation against either

Defendant. 

E. Negligence and Gross Negligence (Count Five)

Count Five, entitled “Negligence/Gross Negligence,” alleges Defendants had a duty

to Plaintiff to provide her with accurate information concerning her monthly payments under

the LMA, which were “imposed contractually upon the Defendants under the [LMA],

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pursuant to the Note and/or Deed of Trust,” Defendants violated their duty to the Plaintiff by

failing to provide her with accurate information concerning the monthly amount she would

owe under the LMA, and failing to provide that amount in the monthly statements sent by

the Defendants to the Plaintiff. (Doc. 53, ¶¶ 100-102 at 17) Her gross negligence cause of

action claims “Defendants knew the monthly amount that would be due under the written

loan modification agreement and in the monthly account statements, but they failed to

provide that amount to the Plaintiff.” (Id., ¶ 104) Count Five alleges that “[a]s a result of

Defendants actions, Plaintiff has suffered and continues to suffer damages in an amount to

be determined at trial.” (Id., ¶ 105) 

Defendants argue Plaintiff’s negligence claims fail because she has not sufficiently

alleged that Defendants’ alleged actions proximately caused her damages.” (Doc. 51 at 11)

“Specifically, Plaintiff has failed to plead that any alleged failure of Defendants, to clarify

the escrow payment portion of her payments, caused the foreclosure.” (Id.) 

“To establish a claim for negligence, a plaintiff must prove four elements: ‘(1) a duty

requiring the defendant to conform to a certain standard of care; (2) a breach by the

defendant of that standard; (3) a causal connection between the defendant's conduct and the

resulting injury; and (4) actual damages.’” Narramore v. HSBC Bank USA, N.A., 2010 WL

2732815, at *8 (D. Ariz. July 7, 2010) (quoting Gipson v. Kasey, 214 Ariz. 141, 143, 150

P.3d 228, 230 (Ariz. 2007) (citing Ontiveros v. Borak, 136 Ariz. 500, 504, 667 P.2d 200, 204

(Ariz. 1983)). “Generally, the element of duty is one for the court to decide, whereas the

others are factual issues usually decided by the jury.” Id.

“In order to determine whether a duty of care existed, the court decides ‘whether the

relationship of the parties was such that the defendant was under an obligation to use some

care to avoid or prevent injury to the plaintiff.’” Id. (quoting Markowitz v. Arizona Parks Bd.,

146 Ariz. 352, 356, 706 P.2d 364, 368 (Ariz. 1985)). “No duty exists unless the relationship

imposes a legal obligation for the benefit of one party on the other.” Id. (citing Ontiveros,

136 Ariz. at 508, 667 P.2d at 208).

Arizona law on the scope of a lender’s duty to care to a borrower is not well-settled.

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In the absence of Arizona Supreme Court precedent, “federal courts exercising diversity

jurisdiction may look to other state court decisions, well-reasoned decisions from other

jurisdictions, and any other available authority to determine how the state court would

resolve the issue.” Santana v. Zilog, Inc., 95 F.3d 780, 783 (9th Cir. 1996) (quoting Burns

v. Int’l Ins. Co., 929 F.2d 1422, 1424 (9th Cir. 1991)). 

Based on different fact scenarios, judges in the District Court of Arizona disagree

whether lenders and loan servicers have a non-contractual duty towards borrowers which

may give rise to a negligence claim. See e.g., McIntosh v. IndyMac Bank, FSB, 2012 WL

176316, at *3-4 (D. Ariz. Jan. 23, 2012); Escobar v. Wells Fargo Bank, N.A., 2011 WL

6794032, at *3 (D. Ariz. Nov. 9, 2011) (“[A]t least in some traditional lender-borrower

relationships, a duty to disclose exists which could create a material question of fact to

survive pleadings.”); Silving, 2011 WL 2669246, at *14 (rejecting defendants’ claim that

“mortgage lenders do not generally have legal duties to borrowers from which negligence

claims may arise”); Narramore v. HSBC Bank USA, 2010 WL 2732815, at *8 (D. Ariz. July

7, 2010) (holding that a loan servicer has a duty of care “which [can] create a material

question of fact to survive pleadings”); but see Wilson v. GMAC Mortg., LLC, 2011 WL

4101668, at *3-4 (D. Ariz. Sept. 14, 2011) (finding plaintiff’s negligence claims barred under

Arizona law as “negligently failing to honor a contract is still breach of contract. . . [and]

because plaintiff d[id] not allege physical injury to person or property as the result of

defendants’ failure to provide a loan modification in accordance with the settlement

agreement, the economic loss doctrine bars this portion of plaintiff's claim.”) (citing Flagstaff

Affordable Hous. Ltd. P’ship v. Design Alliance, Inc., 223 Ariz. 320, 323, 223 P.3d 664, 667

(Ariz. 2010)). In Wilson, the district judge explained that Arizona’s “[e]conomic loss

doctrine, when applicable, acts to limit a party to contractual remedies for economic losses

absent physical injury to people or other property.” Id. at *2.

In Narramore, the plaintiff asserted the defendants had a duty to notify plaintiff if a

continuation of trustee sale was not going to take place. Though the district judge denied the

bank and servicer’s Rule 12(b) (6) motion to dismiss plaintiff’s negligence claim, he wrote

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the bank and servicer’s duty of care “is very narrow” and “limited only to the duty to

disclose,” citing an Arizona Court of Appeals case holding that lenders owe a duty to

disclose to borrowers the correct amount of monthly payments due under their loan

agreement. Narramore, 2010 WL 2732815, at *8 (citing Wells Fargo Credit Corp. v. Smith,

166 Ariz. 489, 803 P.2d 900 (Az. Ct. App. 1990)). Like the facts in Wells Fargo, the court

in Narramore concluded that the defendants had a duty to notify plaintiff if a continuation

of trustee sale was not going to take place. No such claim has been alleged in the case sub

judice.

In Wilson, the district court noted that “[u]nless a ‘special relationship’ arises from

extensive involvement in a lender’s business, a lender of money owes no duty of care to a

borrower when the lender’s participation in the loan is limited to a ‘mere lender of money’

. . . Some traditional borrower-lender relationships may include a duty to disclose. This duty,

however, is “very narrow” and is limited ‘only to the duty to disclose.’” Id. (citing

Narramore, 2010 WL 2732815, at *8). 

The Court concludes that the undisputed facts established by the exhibits attached to

Plaintiff’s amended complaint, which contradict the amended complaint’s allegations, do not

establish Defendants had a duty of care to Plaintiff to support negligence claims against

Defendants. It is undisputed that Defendants did not provide inaccurate information to

Plaintiff regarding her monthly payments under the LMA. Ocwen’s September 2, 2011 letter

to Plaintiff confirmed the payments Plaintiff remitted pursuant to the LMA must be in the

“entire payment amount (principal and interest portion and also the escrow portion) . . . you

were required to remit monthly mortgage payment in the amount of $922.41 after the

modification. However, you remitted only $742.84, which resulted in the delinquent status

of the loan[.]” (Doc. 53-2, Exh. 2 at 1). “If the loan is delinquent, we do not accept partial

payments[.]” Id. Plaintiff did not allege her loan was not escrowed for taxes and insurance

or that she did not owe $179.57 per month for taxes and insurance. Plaintiff did not allege

she tendered the full amount to cure the escrow arrearage, but Defendants refused, or

Defendants waived the escrow payments in writing. Moreover, it is undisputed the August

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2010 LMA’s terms conclusively establish that “[i]f [Plaintiff’s] loan is currently escrowed

for either taxes or insurance or both taxes and insurance, then Servicer will continue to

collect the applicable escrow amount in addition to your monthly principal and interest

payment. You agree to pay Servicer on the day payments are due under the Note and

Mortgage as amended by this Agreement. . . .” (Doc. 53-1, Exh.1 at 8) Plaintiff has not

alleged sufficient facts to survive a Rule 12(b)(6) dismissal motion on her negligence claims.

Accordingly, Defendants’ Motion to Dismiss the claim of negligence is granted. 

F. Fair Credit Reporting Act and Slander of Credit (Count Six)

Count Six of Plaintiff’s amended complaint alleges violations of the federal Fair

Credit Reporting Act (“FCRA”) and a cause of action for slander of credit pursuant to

Arizona law. (Doc. 53 at 17-18) Plaintiff’s FCRA claim is based upon Defendants’ “[f]iling

false and misleading information [regarding Plaintiff] to credit reporting agencies and/or

credit reporting bureaus. . . [and] fail[ing] to accurately maintain [Plaintiff’s] information,

intentionally releas[ing] this information to credit reporting agencies [knowing] this

information they were providing was inaccurate.” (Id., ¶¶ 108, 110) Plaintiff’s slander-ofcredit claim is apparently based upon the same acts and failures of Defendants which

allegedly violate the FCRA. (Id., ¶¶ 111, 113) 

Defendants contend Plaintiff’s FCRA allegations do not state a plausible claim

“because Plaintiff fails to specify which provision of the FCRA was allegedly violated. . .

[as] Defendants are unable to defend against the allegations without specificity as to what

section of the FCRA was allegedly violated.” (Doc. 51 at 12) 

In 1970, Congress enacted the FCRA, 15 U.S.C. §§ 1681-1681x,“to ensure fair and

accurate credit reporting, promote efficiency in the banking system, and protect consumer

privacy.” Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009)

(quoting Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 52 (2007)) (footnote omitted). In

addition to establishing responsibilities on consumer reporting agencies (“CRAs”), “[t]he

FCRA imposes some duties on the sources that provide credit information to CRAs, called

‘furnishers’ in the statute[,]” which include lenders. Id. (footnote omitted). “Section 1681s-2

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sets forth ‘[r]esponsibilities of furnishers of information to consumer reporting agencies,’

delineating two categories of responsibilities.” Id. at 1154 (footnote omitted). “Subsection

(a) details the duty ‘to provide accurate information,’ and includes the [duty to provide notice

of dispute].” Id. “Section 1681s-2(b) imposes a second category of duties on furnishers of

information [which] are triggered “upon notice of dispute” - that is, when a person who

furnished information to a CRA receives notice from the CRA that the consumer disputes the

information.” Id. (citing § 1681i(a)(2) (requiring CRAs promptly to provide such notification

containing all relevant information about the consumer’s dispute). 

Under the FCRA, furnishers of credit information are not liable to a consumer for the

information they initially furnish to CRAs regarding the consumer, regardless of its truth or

accuracy. Blau v. America’s Servicing Co., 2009 WL 3174823, at *11 (D. Ariz. Sept. 29,

2009) (citing, inter alia, 15 U.S.C. § 1681s-2(c) and (d); Nelson v. Chase Manhattan

Mortgage Corp., 282 F.3d 1057 (9th Cir. 2002); Washington v. CSC Credit Services, Inc.,

199 F.3d 263 (5th Cir. 2000)). “Rather, furnishers can only be liable to consumers for

violating the ‘reinvestigation’ procedures set forth in 15 U.S.C. § 1681s-2(b).” Id. “A

furnisher’s obligation to conduct a reinvestigation is only triggered if the consumer submits

a notice of dispute to the credit reporting agency as contemplated by 15 U.S.C. § 1681i.” Id.

(citing Young v. Equifax, 294 F.3d 631 (5th Cir. 2002)). 

Plaintiff has not provided any authority that Arizona recognizes a cause of action

entitled “slander of credit.” Assuming such a cause of action exists in Arizona and it is

subsumed in a defamation claim, the elements are: (1) the “defendant made a false

defamatory statement about plaintiff, (2) defendant published the statement to a third party,

and (3) defendant knew the statement was false, acted in reckless disregard of whether the

statement was true or false, or negligently failed to ascertain the truth or falsity of the

statement.” Farrell v. Hitchin’ Post Trailer Ranch, 2011 WL 6057930, at *2 (Az. Ct. App.

Dec. 6, 2011) (citation omitted). Count Six does not identify the statement Defendants

allegedly made, the persons or entities to whom the statement was made, why the statement

was false, the evidence to support Defendants’ knowledge the statement(s) was false, or the

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damage that directly resulted to Plaintiff’s credit from Defendants’ false statement. While

detailed factual allegations are not necessary, Count Six must provide more than labels and

conclusions. Twombly, 550 U.S. at 555-56.

Count Six’s allegations are too vague to raise the right to relief above the speculative

level. See Twombly, Iqbal, and Oraha, 2012 WL 70834, at *5. Count Six alleges only

conclusions, failing to describe with particularity the “false and misleading information” or

other information Defendants purportedly provided CRAs about Plaintiff that Defendants

knew was inaccurate. There is no allegation regarding malice, much less sufficient factual

detail to raise a plausible claim of maliciousness. Like the FCRA pleading deficiencies in

Blau, there is no factual allegation that Plaintiff ever submitted a Section 1681i notice to any

CRA. Thus, Defendants’ FCRA duties were never triggered as a matter of law. See Blau,

2009 WL 3174823, at *11; 15 U.S.C. § 1681s-2(b)(1) (“After receiving notice pursuant to

section 1681i(a)(2) of this title of a dispute with regard to the completeness or accuracy of

any information provided by a person to a consumer reporting agency, the person shall . . .

.” ); Charov v. Bank of America, 2010 WL 2629419, at *2 (D. Ariz. June 30, 2010) (lender’s

Rule 12(b)(6) motion granted on FCRA claim because “plaintiff d[id] not allege that [lender]

received a notice of dispute from a credit reporting agency, which is necessary to plead a

private cause of action under the Fair Credit Reporting Act, 15 U.S.C. § 1681.”). Based on

the foregoing, Count Six fails to state a plausible FCRA or slander-of-credit claim under Rule

8(a)(2), Fed.R.Civ.P.

G. Breach of Contract (Count Seven)

The AVC’s last count is a claim for breach of contract. Count Seven alleges Plaintiff

entered into written contracts with “the Defendant” for loan modifications on her mortgage

in November 2009 and September 2010 and thereafter Defendants failed to 1) execute the

November 2009 document in accordance with its terms; 2) remit an executed copy of the

September 2010 written contract despite being required to under the terms of the contract;

and 3) accept payments under the terms of the September 2010 written contract. (Doc. 53 at

19) Defendants thereby “materially breached the written contract by failing to provide

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monthly written statements accurately advising the Plaintiff of the amounts due under the

loan modification agreement[,]” resulting in Plaintiff’s damages. (Id.)

Defendants argue Plaintiff’s breach-of-contract claim fails to state a claim because

“Defendants rejected her payment because her loan was declared in default for failing to pay

the escrowed portion of her loan.” (Doc. 51 at 14)

“In order to state a claim for breach of contract, a plaintiff must allege the existence

of a contract between the plaintiff and defendant, a breach of the contract by the defendant,

and resulting damage to the plaintiff.” Warren v. Sierra Pacific Mortg. Srvcs Inc., 2011 WL

1526957, at *3 (D. Ariz. April 22, 2011) (citing Chartone, Inc. v. Bernini, 207 Ariz. 162,

170, 83 P.3d 1103, 1111 (Az. Ct. App. 2004)); see also Commercial Cornice & Millwork,

Inc. v. Camel Constr. Servs. Corp., 154 Ariz. 34, 38, 739 P.2d 1351, 1355 (Az. Ct. App.

1987) (“To state a claim in contract the complaint must allege an agreement, the right to seek

relief, and breach by the defendant.”). 

There is authority that Plaintiff’s count for breach of contract has been waived

pursuant to A.R.S. § 33–811(C) by Plaintiff’s failure to enjoin the trustee sale. Schrock v.

Federal Nat. Mortg. Ass’n, 2011 WL 3348227, at *6 (D. Ariz. Aug. 3, 2011); Spielman v.

Katz, 2010 WL 4038838, at *3 (D. Ariz. Oct. 14, 2010). “In effect, section 33-811 requires

Plaintiff[] to assert any objections to and obtain injunctive relief from the trustee’s sale prior

to such sale or risk losing their rights to object.” Id. Even if the breach-of-contract claim has

not been waived, Plaintiff has failed to state a plausible claim for breach of contract.

Based on the two exhibits attached to the AVC as discussed throughout this Order,

it can not reasonably be disputed that the August 2010 LMA required the amount ($179.57)

for Plaintiff’s monthly escrow payments be paid to Ocwen in addition to Plaintiff’s monthly

principal and interest payment of $742.84. Plaintiff “[a]gree[d] to pay Servicer on the day

payments are due under the Note and Mortgage as amended by this Agreement, . . . (a) taxes

and assessments and other items which can attain priority over the Mortgage as a lien or

encumbrance on the Property; . . . [and] (c) premiums for any and all insurance required by

Servicer under the Note and Mortgage. . . called ‘Escrow Items’ . . . .” (Doc. 53-1, Exh.1 at

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8) Plaintiff’s full monthly payment ($922.41) was re-affirmed in Ocwen’s September 2,

2011 letter to Plaintiff in sufficient time for Plaintiff to cure the default and avoid the trustee

sale. (Doc. 53-2, Exh.2 at 4-15) (“[i]t is required that the entire payment amount (principal

and interest portion and also the escrow portion) be remitted to us. . . .”) Plaintiff breached

the August 2010 LMA by failing to pay the monthly escrowed portion of her payment as

required and elected to litigate the issue rather than pay the deficiency prior to the trustee

sale. With respect to Plaintiff’s allegations that Defendants breached the first or November

2009 LMA, the allegations are too vague to raise the right to relief above the speculative

level. See Twombly and Iqbal. Plaintiff’s breach-of-contract claims fail as a matter of law.

VI. Conclusion

The Court finds that Plaintiff’s Amended Verified Complaint fails to state a claim

upon which relief may be granted. Having provided Plaintiff, through her counsel, with an

opportunity to amend the defects in her initial complaint, Plaintiff’s action is dismissed with

prejudice without leave to amend.

Accordingly,

IT IS ORDERED that Defendants HSBC and Ocwen’s Motion to Dismiss, doc. 51,

is GRANTED. This action is dismissed with prejudice for failure to state plausible claims

upon which relief may be granted. The Clerk of Court is kindly directed to terminate this

action.

IT IS FURTHER ORDERED that Defendants HSBC and Ocwen’s Request for

Judicial Notice, doc. 52, is GRANTED. 

IT IS FURTHER ORDERED that, because the briefing is adequate and oral

argument would not aid the Court, Defendants’ request for oral argument is DENIED. 

IT IS FURTHER ORDERED that pages 18 through 22 of Plaintiff’s Response to

Defendants’ Motion to Dismiss, doc. 65, are STRICKEN from consideration due to 

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Plaintiff’s violation of LRCiv 7.2(e)(1).

 DATED this 26th day of December, 2012.

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