Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-00243/USCOURTS-azd-2_10-cv-00243-0/pdf.json

Nature of Suit Code: 480
Nature of Suit: Consumer Credit
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

Brian K. Dumesnil and Karen Dumesnil,

husband and wife, 

Plaintiff, 

vs.

Bank of America, N.A., et al. , 

Defendants. 

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No. CV10-0243-PHX-NVW

ORDER

[NOT FOR PUBLICATION]

Before the Court is the Defendants’ Motion to Dismiss (doc. # 8) by Defendants

Bank of America, N.A. (“B of A”), Mortgage Electronic Registration Systems (“MERS”),

Countrywide Home Loans, Inc. (“Countrywide”), and Recontrust Company, N.A.

(“Recontrust”) (collectively, “Defendants”), and Plaintiffs’ request for leave to amend the

Complaint to add “MASTR Adjustable Rate Mortgages Trust 2007-2, U.S. Bank N.A. as

Trustee, and BAC Home Loans” (doc. # 16).

I. Legal Standards

A. Fed. R. Civ. P. 8

Fed. R. Civ. P. 8(a)(2) requires only “‘a short and plain statement of the claim

showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of

what the . . . claim is and the grounds upon which it rests.’” Bell Atl. Corp. v. Twombly,

550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99

(1957)). A claim must be stated clearly enough to provide each defendant fair

Case 2:10-cv-00243-NVW Document 18 Filed 04/07/10 Page 1 of 17
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opportunity to frame a responsive pleading. McHenry v. Renne, 84 F.3d 1172, 1176 (9th

Cir. 1996). “Something labeled a complaint . . ., yet without simplicity, conciseness and

clarity as to whom plaintiffs are suing for what wrongs, fails to perform the essential

functions of a complaint.” Id. at 1180. 

B. Fed. R. Civ. P. 12(b)(6)

Dismissal under Rule 12(b)(6) can be based on “the lack of a cognizable legal

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

Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). To avoid dismissal,

a complaint must contain “only enough facts to state a claim for relief that is plausible on

its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff

pleads factual content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, __ U.S. __, 129 S. Ct.

1937, 1949 (2009). “The plausibility standard is not akin to a ‘probability requirement,’

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

First, allegations in the complaint that are not entitled to the assumption of truth

must be identified. Id. at 1949, 1951. The principle that all of the allegations in a

complaint are accepted as true does not apply to legal conclusions or conclusory factual

allegations. Id. at 1949, 1951. “Threadbare recitals of the elements of a cause of action,

supported by mere conclusory statements, do not suffice.” Id. at 1949. “A plaintiff’s

obligation to provide the grounds of his entitlement to relief requires more than labels and

conclusions, and a formulaic recitation of the elements of a cause of action will not do.” 

Twombly, 550 U.S. at 555. 

 Second, whether the factual allegations plausibly suggest an entitlement to relief

must be determined. Iqbal, 129 S. Ct. at 1950, 1951. This determination is “a contextspecific task that requires the reviewing court to draw on its judicial experience and

common sense.” Id. at 1950. To show that the plaintiff is entitled to relief, the complaint

must permit the court to infer more than the mere possibility of misconduct. Id.

Case 2:10-cv-00243-NVW Document 18 Filed 04/07/10 Page 2 of 17
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Generally, material beyond the pleadings may not be considered in deciding a Rule

12(b)(6) motion. However, material properly submitted as part of the complaint and

documents not physically attached to the complaint whose contents are alleged in a

complaint and whose authenticity no party questions may be considered. Branch v.

Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by Galbraith v.

County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002).

C. Fed. R. Civ. P. 9(b)

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

circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). Rule 9(b) requires

allegations of fraud to 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). “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). 

II. Facts Assumed True

For this motion to dismiss, Plaintiffs’ allegations of material fact are assumed to be

true and are construed in the light most favorable to them. See Cousins v. Lockyer, 568

F.3d 1063, 1067 (9th Cir. 2009). Stated here are just the allegations of the Complaint, and

the Court does not determine whether they are true.

On December 29, 2006, Plaintiffs received a loan on the property at 15045 N. 81st

Avenue in Peoria, Arizona (“Property”) from Countrywide in the form of a promissory

note in the amount of $1,400,000.00 (“Note”) secured by a deed of trust that included an

adjustable rate addendum (“Deed of Trust”). The addendum sets an initial fixed interest

rate of 5.75% for five years and, beginning February 1, 2012, an adjustable interest rate

that could change every 12th month thereafter. The adjustable interest rate is calculated

by adding 2.250% to the average of interbank offered rates for one-year U.S. dollarCase 2:10-cv-00243-NVW Document 18 Filed 04/07/10 Page 3 of 17
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denominated deposits in the London market as published in The Wall Street Journal, with

a maximum interest rate of 10.750%. The Deed of Trust identifies Countrywide as the

lender, Fidelity National Title Insurance Co. as the trustee, and MERS as the beneficiary. 

It states that “MERS is a separate corporation that is acting solely as a nominee for

Lender and Lender’s successors and assigns.” It further states that Plaintiffs irrevocably

grant and convey to Trustee, in trust, the Property with power of sale and Lender may

remove Trustee for any reason or cause and appoint a successor trustee. 

Plaintiffs apparently made timely loan payments in 2007 and until early 2008,

when they “began experiencing financial difficulty and missed some house payments.” 

They notified B of A and sought a loan modification but did not receive one. A Notice of

Trustee’s Sale of the Property scheduled for October 19, 2009, was recorded on July 16,

2009. It identified MERS as the beneficiary and Recontrust as the current trustee. On

October 8, 2009, Plaintiffs sent to B of A notice of a dispute and request to verify the

debt. On October 16, 2009, Plaintiffs initiated this action in the Maricopa County

Superior Court. 

On January 11, 2010, counsel for BAC Home Loans Servicing, LP, a subsidiary of

B of A, f/k/a Countrywide Home Loans Servicing LP, responded to Plaintiffs’ counsel’s

October 8, 2009 letter to B of A. The response stated that the current owner of the Note

is U.S. Bank National Association, as Trustee of MASTR Adjustable Rate Mortgages

Trust 2007-2 Rate Mortgages Trust 2007-2, and BAC Home Loans is the current servicer

of the loan. The response provided Plaintiffs’ payment history, a copy of the Interest

Only Adjustable Rate Note dated December 29, 2006, in the principal sum of

$1,400,000.00, and a payoff demand statement. It also stated that the payoff amount of

the loan through January 19, 2010, was $1,526,726.93. It appears that a trustee’s sale has

not been held. On February 2, 2010, Defendants removed this case from the state court to

federal court.

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III. Analysis

A. Count One (UCC Defenses to Foreclosure) (All Defendants)

The Complaint alleges that all Defendants violated A.R.S. § 47-3101, et seq., by

selling the Property at a trustee’s sale without possession of the original Note or other

entitlement to enforce the Note. 

Under Arizona’s Deed of Trust Act, a “deed of trust,” or “trust deed” conveys trust

property to a qualified trustee to secure the performance of a contract or contracts. A.R.S.

§ 33-801(8). “Contract” includes, but is not limited to, a note, a promissory note, or

provisions of any trust deed. A.R.S. § 33-801(4). “[A] power of sale is conferred upon

the trustee of a trust deed under which the trust property may be sold . . . after a breach or

default in the performance of the contract or contracts, for which the trust property is

conveyed as security.” A.R.S. § 33-807(A). 

Although the Arizona Deed of Trust Act confers power of sale on the trustee upon

default or breach of the contract secured by the trust deed without reference to enforcing

or producing a note or other negotiable instrument, Plaintiffs contend that, before

exercising the power of sale, a trustee or beneficiary must show possession of the original

note memorializing the underlying debt or other proof of being the holder of the note

identified in the security instrument. They cite no authority, however, and the Court has

found none, supporting the assertion that exercising the power of sale granted by statute

and the Deed of Trust requires compliance with the Arizona Uniform Commercial

Code—Negotiable Instruments. 

No Arizona court or any federal appellate court has decided this issue, but many

district courts for the District of Arizona have rejected the “show me the note” argument. 

See Contreras v. U.S. Bank, No. CV09-0137-PHX-NVW, 2009 WL 4827016 (D. Ariz.

Dec. 15, 2009); Blau v. America’s Servicing Co., No. CV08-0773-PHX-MHM, 2009 WL

3174823 (D. Ariz. Sept. 29, 2009); Goodyke v. BNC Mortgage, Inc., No. CV09-0074-

PHX-MHM, 2009 WL 2971086 (D. Ariz. Sept. 11, 2009); Garcia v. GMAC Mortgage,

LLC, No. CV09-0891-PHX-GMS (D. Ariz. Aug. 31, 2009); Diessner v. Mortgage Elec.

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Registration Sys., 618 F. Supp. 2d 1184 (D. Ariz. 2009); Mansour v. Cal-Western

Reconveyance Corp., 618 F. Supp. 2d 1178 (D. Ariz. 2009); but see Castro v. Executive

Trustee Servs., LLC, No. CV08-2156-PHX-LOA, 2009 WL 438683 at *5 (D. Ariz. Feb.

23, 2009). “Where the state’s highest court has not decided an issue, the task of the

federal courts is to predict how the state high court would resolve it.” Dimidowich v. Bell

& Howell, 803 F.2d 1473, 1482 (9th Cir. 1986), modified at 810 F.2d 1517 (9th Cir.

1987).

Under A.R.S. § 47-3104(B), “instrument” means a “negotiable instrument.” 

“Negotiable instrument” means:

. . . an unconditional promise or order to pay a fixed amount of money, if it:

1. Is payable to bearer or to order at the time it is issued or first comes

into possession of a holder;

2. Is payable on demand or at a definite time; and

3. Does not state any other undertaking or instruction by the person

promising or ordering payment to do any act in addition to the

payment of money, but the promise or order may contain:

(a) An undertaking or power to give, maintain or protect collateral

to secure payment;

(b) An authorization or power to the holder to confess judgment or

realize on or dispose of collateral; or

(c) A waiver of the benefit of any law intended for the advantage

or protection of an obligor.

A.R.S. § 47-3104(A). The Deed of Trust is not an unconditional promise to pay a fixed

amount of money, is not payable to bearer or to order, is not payable on demand or at a

definite time, and states numerous acts that Plaintiffs promised to do in addition to paying

money. The Deed of Trust, therefore, is not an “instrument” under the Arizona Uniform

Commercial Code—Negotiable Instruments. 

It is not necessary to decide whether the Note is an “instrument” under A.R.S.

§ 47-3104(A) because the trustee’s sale that Plaintiffs seek to avoid would be conducted

pursuant to the trustee’s power of sale, not as an action to enforce the Note. 

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Therefore, Count One of the Complaint will be dismissed under Fed. R. Civ. P.

12(b)(6) for “lack of a cognizable legal theory.” See Balistreri, 901 F.2d at 699. 

B. Counts Two (Declaratory Relief) and Three (Injunction)

Counts Two and Three do not state independent causes of action but rather seek

relief based on theories pled in other counts. Because the counts on which they depend

will be dismissed, Counts Two and Three also will be dismissed for failure to state a claim

upon which relief can be granted.

C. Count Four (Violation of the Fair Debt Collection Practices Act, 15

U.S.C. §§ 1692, et seq. (“FDCPA”))

The purpose of the FDCPA is “to eliminate abusive debt collection practices by

debt collectors, to insure that those debt collectors who refrain from using abusive debt

collection practices are not competitively disadvantaged, and to promote consistent State

action to protect consumers against debt collection abuses.” 15 U.S.C. § 1692(e). Section

1692e prohibits debt collectors from making false, deceptive, or misleading

representations in connection with debt collection. Section 1692f prohibits debt collectors

from using unfair or unconscionable means to collect or attempt to collect any debt. 

Section 1692g requires debt collectors to provide consumers with certain written

information in connection with debt collection.

The FDCPA defines a “debt collector” as “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). It includes “any person who uses any instrumentality of interstate commerce

or the mails in any business the principal purpose of which is the enforcement of security

interests.” Id. However, “a debt collector does not include the consumer’s creditors, a

mortgage servicing company, or an assignee of a debt, as long as the debt was not in

default at the time it was assigned.” Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th

Cir. 1985), modified on other grounds, 761 F.2d 237 (5th Cir. 1985). A creditor is defined

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as “any person who offers or extends credit creating a debt or to whom a debt is owed, but

such term does not include any person to the extent that he receives an assignment or

transfer of a debt in default solely for the purpose of facilitating collection of such debt for

another.” 15 U.S.C. § 1692a(4). 

None of Defendants are in the business of collecting debts for others; none is a

“debt collector” as defined by the FDCPA. Therefore, Count Four will be dismissed for

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

D. Count Five (Violation of the Truth in Lending Act, 15 U.S.C. §§ 1601, et

seq. (“TILA”) and Regulation Z, 12 C.F.R. §§ 201, et seq.)

(Countrywide, B of A)

The purpose of TILA is to “assure a meaningful disclosure of credit terms so that

the consumer will be able to compare more readily the various credit terms available to

him and avoid the uninformed use of credit, and to protect the consumer against inaccurate

and unfair credit billing and credit card practices.” 15 U.S.C. § 1601(a). Any action under

TILA must be brought within one year from the date of the occurrence of the alleged

violation. 15 U.S.C. § 1640(e). The limitations period in § 1640(e) generally runs from

the date of consummation of the transaction, which was December 29, 2006, and therefore

expired on December 29, 2007, almost two years before Plaintiffs initiated this action in

state court. See King v. California, 784 F.2d 910, 915 (9th Cir. 1986). 

The Complaint does not allege a factual basis for equitable tolling of the limitations

period, but rather alleges only the legal conclusion that Countrywide and B of A

“fraudulently misrepresented and concealed the true facts related to the items subject to

disclosure to Plaintiffs and he [sic] did not discover the Defendant’s failure to make such

disclosures pursuant to 15 U.S.C. [§]1638 until one (1) year within the filing of this

Complaint.” See id. The Complaint alleges that Countrywide failed to disclose one or

more of nine items without identifying which of the nine were not disclosed and without

alleging how Countrywide concealed from Plaintiffs that they did not receive the TILA

disclosure, two copies of the Right to Cancel notice, or a notice of right to rescind. 

Moreover, in their response to the motion to dismiss, Plaintiffs do not challenge the

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authenticity of the TILA disclosure documents with Plaintiffs’ signatures, which were

referenced in the Complaint and attached to the motion to dismiss.

Therefore, Count Five will be dismissed for failure to state a claim upon which

relief can be granted.

E. Count Six (Violation of Real Estate Settlement Procedures Act, 12

U.S.C. §§ 2601, et seq. (“RESPA”)) (Countrywide, B of A)

The Complaint alleges that Countrywide violated RESPA by failing to provide

Plaintiffs with the required disclosures within the required time periods. It does not allege

any factual basis for claiming B of A violated RESPA. Nor does it plead “factual content

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

misconduct alleged.” See Iqbal, 129 S. Ct. at 1949. The Complaint references 12 U.S.C.

§§ 2601, 2604, 2607, and 2608, but fails to state a claim upon which relief can be granted

under any of those sections or § 2605.

Private rights of action are created only for §§ 2605, 2607, and 2608. See 12

U.S.C. § 2614. Section 2601 states only congressional findings and purpose. There is no

private civil action for a violation of § 2604. Collins v. FMHA-USDA, 105 F.3d 1366,

1368 (11th Cir. 1997) (per curiam). 

Section 2605 requires lenders to provide borrowers, at the time of loan application,

information regarding whether loan servicing may be transferred and to notify borrowers

at least 15 days before any transfer is made. The Complaint does not expressly allege that 

§ 2605 was violated, the loan servicing was transferred, or the transfer and violation

occurred within three years before the Complaint was filed on October 16, 2009. See 12

U.S.C. § 2614. With respect to a claim under § 2605, the Complaint does not allege “more

than labels and conclusions, and a formulaic recitation of the elements of a cause of

action.” See Twombly, 550 U.S. at 555. Moreover, Plaintiffs do not dispute that they

signed the Deed of Trust, which provides that loan servicing may be transferred.

Section 2607 of RESPA prohibits giving or accepting referral fees related to a real

estate settlement service and splitting charges made or received for the rendering of a real

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estate settlement service other than for services actually performed. The Complaint does

not include any factual allegations to support a claim under § 2607. Moreover, any action

brought under § 2607 must be brought within one year of a violation. 12 U.S.C. § 2614. 

Because the limitations period expired on December 29, 2007, almost two years before

Plaintiffs initiated this action, the Complaint fails to state a claim upon which relief can be

granted under § 2607.

Section 2608(a) provides that a seller of property may not require the buyer to

purchase title insurance from any particular title company if the purchase is assisted with a

federally related mortgage loan. Although the Complaint alleges entitlement to damages

under § 2608, Plaintiffs have not alleged any claims against the seller of the Property. 

Further, the Complaint does not allege that Plaintiffs were required to purchase title

insurance from a particular title company or that he incurred charges for such title

insurance. Moreover, any action alleging a violation of § 2608 must be brought within

one year of the alleged violation, in this case, by December 29, 2007. 12 U.S.C. § 2614. 

And the Complaint does not allege facts to support equitable tolling of the limitations

period.

Therefore, Count Six will be dismissed for failure to state a claim upon which relief

can be granted.

F. Count Seven (Violation of Home Ownership and Equity Protection Act,

15 U.S.C. §§ 1602(aa), 1610, and 1639) (“HOEPA”)) (Countrywide, B of

A)

The Complaint alleges that Countrywide violated HOEPA; it does not allege any

factual basis for claiming B of A violated HOEPA. HOEPA is an amendment to TILA “to

define a class of non-purchase, non-construction, closed-end loans with high interest rates

or upfront fees as ‘High Cost Mortgages,’” require creditors making High Cost Mortgages

to provide special disclosures three days before consummation of the transaction,” and

prohibit High Cost Mortgages from including certain terms such as prepayment penalties

and balloon payments. S. Rep. 103-169, at 21 (1993). HOEPA applies only to “closedCase 2:10-cv-00243-NVW Document 18 Filed 04/07/10 Page 10 of 17
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end loans that are not used for acquisition or construction and that have up-front fees or

interest rates above the ‘triggers’ in the bill.” Id. at 23. The “triggers” are:

(A) the annual percentage rate at consummation of the transaction will

exceed by more than 10 percentage points the yield on Treasury securities

. . .; or

(B) the total points and fees payable by the consumer at or before closing

will exceed the greater of–

(i) 8 percent of the total loan amount; or

(ii) $400.

15 U.S.C. § 1602(aa)(1). The Complaint does not include factual allegations that, if true,

would establish that Plaintiffs’ loan transaction here meets § 1602(aa)(1)’s criteria. 

Moreover, any HOEPA action must be brought within one year from the date of the

occurrence of the violation, which, in this case, expired December 29, 2007. 15 U.S.C.

§ 1640(e). The Complaint does not allege facts to support equitable tolling of the

limitations period. 

Finally, Plaintiffs appear to have abandoned any HOEPA claim by failing to defend

it in their response to the motion to dismiss. Therefore, Count Seven will be dismissed as

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

G. Count Nine (Arizona Consumer Fraud Act, A.R.S. §§ 44-1521, et seq.)

(Countrywide, B of A)

A.R.S. §44-1522(A) declares the use of “any deception, . . ., misrepresentation, or

concealment, suppression or omission of any material fact with intent that others rely upon

such concealment, suppression or omission, in connection with the sale or advertisement

of any merchandise” to be an unlawful practice. “The elements of a private cause of

action under the [Consumer Fraud Act] are a false promise or misrepresentation made in

connection with the sale or advertisement of merchandise and the hearer’s consequent and

proximate injury.” Dunlap v. Jimmy GMC of Tucson, Inc., 136 Ariz. 338, 342, 666 P.2d

83, 87 (Ct. App. 1983) (citations omitted). Count Nine of the Complaint alleges that

Countrywide misrepresented the terms of the loan offered to Plaintiffs, including “the true

cost of the loan, the true parties to the loan, the interest rate, the payments to be made

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under the loan, Plaintiff’s [sic] ability to qualify for the loan, and Plaintiff’s [sic] ability to

refinance the loan in the future.” It further alleges that Countrywide “made a loan to

Plaintiffs without making a commercially reasonable determination of Plaintiff’s [sic]

ability to repay the loan” and “knew, or should have known, that Plaintiffs would be

incapable of making loan payments as required by the terms of the loan based on

Plaintiff’s [sic] income.” Further, Count Nine alleges that Plaintiffs relied on

Countrywide’s representations. Count Nine includes no allegations of any misconduct by

B of A or basis for imposing liability on B of A for Countrywide’s actions.

In their response to the motion to dismiss, Plaintiffs state:

Plaintiff’s [sic] Complaint, taken as a whole, pleads the circumstances

constituting fraud with particularity. Pleading the circumstances constituting

fraud means the time, the place, and the substance of the false

misrepresentation, the facts misrepresented and the identification of the party

making the representation, and what was obtained thereby.

However, the Complaint, even taken as a whole, does not plead any of those elements with

particularity. Moreover, Plaintiffs’ claim under the Arizona Consumer Fraud Act consists

of no more than “threadbare recitals of the elements of a cause of action, supported by

mere conclusory statements.” See Iqbal, 129 S. Ct. at 1949.

Further, the few factual allegations that are made related to Count Nine do not

plausibly suggest an entitlement to relief. The Deed of Trust and the Note provided for an

initial interest rate of 5.75% until at least February 1, 2012. Plaintiffs did not begin

missing loan payments until early 2008, before the interest rate adjusted and after

apparently making timely payments for more than a year. It is implausible that

Countrywide knew or should have known at the time of the 2006 loan transaction that

Plaintiffs would become incapable of making loan payments in 2008.

Therefore, Count Nine will be dismissed for failure to state a claim upon which

relief can be granted. 

/ / /

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H. Counts Eight (Conspiracy to Commit Fraud and Conversion), Thirteen

(Fraud–Misrepresentation), Fourteen (Fraud–Concealment), and

Seventeen (Fraud–Concealment) (All Defendants)

Fed. R. Civ. P. 9(b) requires allegations of fraud to be “specific enough to give

defendants notice of the particular misconduct which is alleged to constitute the fraud

charged,” such as “the time, place and nature of the alleged fraudulent activities.” BlyMagee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001); Moore v. Kayport Package

Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989). However, “mere conclusory allegations

of fraud are insufficient.” Moore, 885 F.2d at 540. Counts Thirteen, Fourteen, and

Seventeen will be dismissed under Fed. R. Civ. P. 9(b) and 12(b)(6) because they consist

of no more than “mere conclusory allegations of fraud” and a “formulaic recitation of the

elements of a cause of action.” See id.; Twombly, 550 U.S. at 555. Also, in their response

to the motion to dismiss, Plaintiffs state: “Plaintiffs move to dismiss count seventeen (17)

as errata.”

Facts alleged to support Count Eight are:

• Defendants conspired to deprive Plaintiffs of their property “through fraud

and misrepresentation which would result in Plaintiffs entering a loan for

which Plaintiffs was [sic] not qualified.”

• “Defendants intended that the loan would be packaged and sold, resulting in

a substantial profit to Defendants.”

• “Defendants knew prior to their origination and subsequent transfer of the

loan, that Plaintiffs were not qualified for the loan. Furthermore, the

Defendants knew, or should have known, that Plaintiffs would rely, and did

rely, on Defendants’ representations as alleged herein related to Plaintiff’s

[sic] ability to repay the loan or to refinance the loan.”

• “Defendants’ legal objective of assigning and selling the loan was

accomplished by illegal means in procuring the loan because of Defendants’

violation of [TILA, RESPA, and HOEPA] as alleged herein.”

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• “Upon information and belief, as an alternative to packaging and selling

Plaintiffs’ loan, Defendants knew that the loan would be subject to

foreclosure as a result of Plaintiff’s [sic] inability to make payments on the

Note as the payment escalated during the term of the loan resulting in

Plaintiffs[’] inability to qualify for a refinance at a later date.”

• “Defendant intended that Plaintiffs would default on the loan and

Defendants would be in the position of seizing the Residence in a

foreclosure action, depriving Plaintiffs of their residence.”

First, Count Eight does not identify which Defendant allegedly committed which wrongful

acts, including what, when, and by whom misrepresentations were made. A complaint

should consist of “clear and concise averments stating which defendants are liable to

plaintiffs for which wrongs, based on the evidence.” See McHenry v. Renne, 84 F.3d

1172, 1178 (9th Cir. 1996). 

Second, none of the allegedly wrongful actions are alleged to have been committed

by B of A. Because B of A did not participate in the loan transaction and was neither the

agent nor principal for any of those participating in the loan transaction, it is implausible

that before B of A acquired Countrywide’s assets, which included Plaintiffs’ debt, B of A

conspired with Countrywide and other Defendants to offer Plaintiffs a loan with the

intention that Plaintiffs would someday default on the loan. 

Third, the factual allegations do not plausibly suggest an entitlement to relief. See

Iqbal, 129 S. Ct. at 1950, 1951. The fact that Plaintiffs made timely loan payments for

more than a year refutes the allegation that they were not qualified for the loan at the time

of the loan transaction. The fact that they began missing payments before the loan’s

interest rate adjusted rebuts any inference that their default was caused by an undisclosed

exorbitant rate adjustment or oppressive loan terms. Moreover, their loan had a 5.75%

fixed annual interest rate for a five-year period and during the subsequent years could not

exceed 10.750%. The fact that Plaintiffs were able to make timely payments for more than

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a year contradicts the allegation that they relied on Countrywide’s representations

regarding their ability to repay the loan. 

In their response to the motion to dismiss, Plaintiffs contend only that “Plaintiffs

have properly pled that the Defendant Conspirators developed a system that committed

fraud, and violated numerous federal lending laws.” Plaintiffs have not, however, properly

pled claims under FDCPA, TILA, RESPA, or HOEPA or factual allegations to support a

claim that B of A “developed a system that committed fraud.” 

Therefore, Counts Eight, Thirteen, Fourteen, and Seventeen will be dismissed for

failure to state a claim upon which relief can be granted and failure to plead fraud with

particularity.

I. Counts Ten (Estoppel), Eleven (Fiduciary Duty of Care), Twelve

(Respondeat Superior), Fifteen (Implied Duty of Good Faith and Fair

Dealing), Sixteen (Breach of Contract–Damages), and Eighteen

(Punitive Damages)

Plaintiffs’ response to the motion to dismiss does not defend their claims of

estoppel, fiduciary duty of care, implied duty of good faith and fair dealing, respondeat

superior, and breach of contract and therefore abandons them. Moreover, the Complaint

pleads these claims with no more than “threadbare recitals of the elements of a cause of

action, supported by mere conclusory statements,” and in some instances even less, e.g.,

references to “counter-claimants” and “counter-defendants” where there is no

counterclaim. Therefore, Counts Ten, Eleven, Twelve, Fifteen, Sixteen, and Eighteen will

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

IV. Leave to Amend

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

15(a)(2). But, “[f]utility of amendment can, by itself, justify the denial of a motion for

leave to amend.” Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995). 

Amendment of most of Plaintiffs’ claims would be futile. Counts One, Two, and

Three depend on the “show me the note” theory that is rejected as a matter of law. Count

Four, claiming violation of the FDCPA, would apply only to debt collectors, which

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Defendants are not. Count Five, claiming violation of TILA, applies only to the initial

creditor, Countrywide, and is time-barred. Count Six, claiming violation of RESPA, also

is time-barred. Count Seven, claiming violation of HOEPA, does not apply to the loan

transaction here, is time-barred, and is abandoned. Count Nine, claiming violation of the

Arizona Consumer Fraud Act, does not apply to B of A, which did not participate in the

loan transaction, but may apply to Countrywide if pled with particularity. Counts Eight,

Thirteen, and Fourteen not appear to apply to B of A, but are pled in such a conclusory

fashion that it is difficult to determine whether amendment would be entirely futile. 

Plaintiffs seek to voluntarily dismiss Count Seventeen. Plaintiffs have abandoned Counts

Ten through Twelve, Fifteen, Sixteen, and Eighteen. Therefore, Counts One through

Seven, Ten through Twelve, Fifteen, Sixteen, Seventeen, and Eighteen will be dismissed

with prejudice. Count Nine will be dismissed without prejudice as to Countrywide and

with prejudice as to the other Defendants. Plaintiffs will be granted leave to amend

Counts Eight, Nine, Thirteen, and Fourteen.

IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss (doc. # 8) by

Defendants Bank of America, N.A., Countrywide Home Loans, Inc., Mortgage Electronic

Registrations Systems, and Recontrust Company, N.A., is granted.

IT IS FURTHER ORDERED that Counts One through Seven, Ten through Twelve,

Fifteen, Sixteen, Seventeen, and Eighteen of the Complaint are dismissed with prejudice

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

IT IS FURTHER ORDERED that Count Nine of the Complaint as against Bank of

America, N.A., Mortgage Electronic Registrations Systems, and Recontrust Company,

N.A. is dismissed with prejudice, and Count Nine as against Countrywide Home Loans,

Inc., is dismissed with leave to amend by April 20, 2010.

IT IS FURTHER ORDERED that Counts Eight, Thirteen, and Fourteen are

dismissed for failure to plead fraud with particularity and failure to state a claim upon

which relief can be granted with leave to file an amended complaint by April 20, 2010.

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

with prejudice after April 20, 2010, if Plaintiffs do not file an amended complaint by April

20, 2010.

DATED this 6th day of April, 2010.

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