Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-02696/USCOURTS-azd-2_10-cv-02696-2/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1444 Petition for Removal- Foreclosure

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Dannielle Owens; et al., 

Plaintiffs, 

vs.

Recontrust Company, NA, 

BAC Home Loans Servicing LP,

Bank of America, NA,

Mortgage Electronic Registration Systems,

Inc.,

Defendants. 

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

No. CV 10-2696-PHX-JAT

ORDER

Currently pending before the Court are Defendants’ Motion to Dismiss (Doc. 7) and

Plaintiff’s Motion to Strike Reply in Support of Motion to Dismiss (Doc. 17). The Court

now rules on the Motions. 

BACKGROUND

On August 23, 2006, Plaintiff Dannielle Owens borrowed $594,600 from First

Magnus Financial Corporation (the “Loan”) to purchase residential property in Litchfield

Park, Arizona (the “Property”). Defendant Bank of America Home Loans Servicing LLP

(“BACHLS”) services the Loan. Plaintiff executed a Deed of Trust that evidences and

secures the Loan. 

Plaintiff defaulted on the Loan in October of 2006. She filed a Chapter 13 Petition

in the United States Bankruptcy Court for the District of Arizona on December 13, 2007.

Case 2:10-cv-02696-JAT Document 40 Filed 08/23/11 Page 1 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

A Trustee Sale noticed for 2007 had been cancelled. 

2

Plaintiff filed a Complaint (Special Action - Declaratory Judgment) and a Complaint

to Quiet Title Action on the same day under the same case number. The Court will treat the

Complaint (Special Action -Declaratory Judgment), the more exhaustive pleading, as the

operative Complaint in this case. 

- 2 -

(2:07-bk-06793-CGC). Her bankruptcy was converted to a Chapter 7 proceeding on April

8, 2008. Plaintiff admitted her default on the Loan during the bankruptcy proceedings.

Attempts to foreclose on the Property were forestalled until Plaintiff’s discharge from

bankruptcy on January 13, 2009.

On September 2, 2009, Defendant Mortgage Electronic Registration Systems, Inc.

(“MERS”), the beneficiary of the Deed of Trust, assigned its interest in the Deed of Trust to

BACHLS. That same day, BACHLS appointed Defendant Recon Trust Company, N.A.

(“Recon”) as successor trustee under the Deed of Trust. Recon filed a Notice of Trustee Sale

set for December 8, 2009.1

 It appears from the record available to the Court that, to date, no

Trustee Sale of the Property has been held. 

Plaintiff filed her Complaint in Arizona state court on November 23, 2010.2

Defendants removed to this Court on December 15, 2010. Before Defendants removed, the

state court, after an ex parte hearing, granted a Temporary Restraining Order (“TRO”) to

Plaintiff prohibiting the sale of the Property. (Doc. 1-1 at 2.) This Court adopted the TRO

entered by the state court until the Court could rule on the emergency motion filed in the case

on January 21, 2011. (Doc. 19.) 

Plaintiff filed an “Emergency Motion to Sequester the Genuine Original Note Until

Final Adjudication of this Matter” on January 21, 2011 (Doc. 16), which the Court treated

as a motion to enjoin the Trustee Sale. (Doc. 19.) The Court denied Plaintiff’s Emergency

Motion to Sequester the Genuine Original Note on February 17, 2011, finding that Plaintiff

had not demonstrated a likelihood of success on the merits. (Doc. 33.)

Defendants filed the pending Motion to Dismiss on December 22, 2010. (Doc. 7.)

Case 2:10-cv-02696-JAT Document 40 Filed 08/23/11 Page 2 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 - 3 -

Plaintiff responded on January 3, 2011. (Doc. 8.) Defendants filed their Reply in Support

on January 13, 2011. (Doc. 11.) Plaintiff moved to strike Defendants’ Reply on January 24,

2011. (Doc. 17.)

LEGAL STANDARD

The Court may dismiss a complaint for failure to state a claim under 12(b)(6) for two

reasons: 1) lack of a cognizable legal theory and 2) insufficient facts alleged under a

cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir.

1990). 

To survive a 12(b)(6) motion for failure to state a claim, a complaint must meet the

requirements of Federal Rule of Civil Procedure 8(a)(2). Rule 8(a)(2) requires a “short and

plain statement of the claim showing that the pleader is entitled to relief,” so that the

defendant has “fair notice of what the . . . claim is and the grounds upon which it rests.” Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)(quoting Conley v. Gibson, 355 U.S. 41,

47 (1957)). 

Although a complaint attacked for failure to state a claim does not need detailed

factual allegations, the pleader’s obligation to provide the grounds for 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 (internal citations omitted). The factual allegations

of the complaint must be sufficient to raise a right to relief above a speculative level. Id.

Rule 8(a)(2) “requires a ‘showing,’ rather than a blanket assertion, of entitlement to relief.

Without some factual allegation in the complaint, it is hard to see how a claimant could

satisfy the requirement of providing not only ‘fair notice’ of the nature of the claim, but also

‘grounds’ on which the claim rests.” Id. (citing 5 C. Wright & A. Miller, Federal Practice

and Procedure §1202, pp. 94, 95(3d ed. 2004)).

Rule 8’s pleading standard demands more than “an unadorned, the-defendantunlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)(citing

Twombly, 550 U.S. at 555). A complaint that offers nothing more than naked assertions will

Case 2:10-cv-02696-JAT Document 40 Filed 08/23/11 Page 3 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 - 4 -

not suffice. To survive a motion to dismiss, a complaint must contain sufficient factual

matter, which, if accepted as true, states a claim to relief that is “plausible on its face.” Iqbal,

129 S.Ct. at 1949. Facial plausibility exists if the pleader pleads factual content that allows

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

alleged. Id. Plausibility does not equal “probability,” but plausibility requires more than a

sheer possibility that a defendant has acted unlawfully. Id. “Where a complaint pleads facts

that are ‘merely consistent’ with a defendant’s liability, it ‘stops short of the line between

possibility and plausibility of entitlement to relief.’” Id. (citing Twombly, 550 U.S. at 557).

In deciding a motion to dismiss under Rule 12(b)(6), the Court must construe the facts

alleged in the complaint in the light most favorable to the drafter of the complaint and the

Court must accept all well-pleaded factual allegations as true. See Shwarz v. United States,

234 F.3d 428, 435 (9th Cir. 2000). Nonetheless, the Court does not have to accept as true

a legal conclusion couched as a factual allegation. Papasan v. Allain, 478 U.S. 265, 286

(1986).

ANALYSIS AND CONCLUSION

A. Count 1

Plaintiff alleges in Count I that the Deed of Trust and Promissory Note she executed

in conjunction with the Loan are invalid, unenforceable, and void. Plaintiffs makes a few

different arguments in support of this contention. 

Plaintiff argues that the Deed of Trust and Promissory Note are dated August 23,

2006, so she must have signed them on August 23, 2006, but that the Deed of Trust was not

notarized until August 24, 2006. Plaintiff indicates wrongdoing on the part of the notary

because, according to Plaintiff’s research, a notary cannot notarize a document without the

signer being in the notary’s presence. 

Plaintiff does not state that she defnitely signed the closing documents on August 23;

just that she thinks she “must have.” It would not be unusual for a document to have a date

different than the date it was actually signed. Nor is it impossible that Plaintiff signed on

Case 2:10-cv-02696-JAT Document 40 Filed 08/23/11 Page 4 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

A.R.S. §41-311 defines acknowledgment as “a notarial act in which a notary certifies

that a signer, whose identity is proven by satisfactory evidence, appeared before the notary

and acknowledged that the signer signed the document.” 

- 5 -

August 23, then attested to her signature before the notary on August 24. As Defendants

point out, a signer can acknowledge her signature in the presence of a notary, even if the

signer did not sign in the presence of a notary.3

Importantly, Plaintiff does not deny that she did sign the Deed of Trust. By signing

the Deed of Trust, she granted a security interest in the Property. Plaintiff has acknowledged

the Loan and her responsibility for it in her prior bankruptcy proceeding. Her argument here

seems directed toward alleged improprieties by the notary – failure to write the date the

notary commission expired and discrepancies with the dates. But she does not cite any

authority for the proposition that alleged wrongdoing by a notary somehow defeats a Deed

of Trust and unwinds a mortgage transaction. Plaintiff cites nothing supporting the

contention that alleged notarization improprieties somehow entitle her to relief. The Court

finds that Plaintiff’s notary arguments fail to state a claim.

Plaintiff alternatively argues that if she signed the Deed of Trust on August 24, 2006,

then it was not “together” with the Promissory Note that is dated August 23, 2006, which

impermissibly “separates” the Deed of Trust and the Note “pursuant to Carpenter v.

Longan(1872)”. (Doc. 1-2, p.11.) This Court previously has rejected foreclosure plaintiffs’

attempts to rely on Carpenter v. Longan, 83 U.S. 271, 274 (1872) for their “impermissible

separation” theory. See, e.g., Maxa v. Countrywide Loans, Inc., 2010 WL 2836958 *4 (July

19, 2010). Plaintiff’s separation of the Deed of Trust and Promissory Note theory therefore

fails to state a claim for relief. 

Plaintiff also argues that because the Deed of Trust and Promissory Note signature

lines had the word “seal” by them, then a seal had to be affixed for them to be valid. Plaintiff

alleges, “In American law, Signed, sealed and delivered is still a requirement.” (Doc. 1-2,

p.12.) Plaintiff has cited no support for her argument that the Deed of Trust statutes require

Case 2:10-cv-02696-JAT Document 40 Filed 08/23/11 Page 5 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 - 6 -

the affixation of a seal for validity. The Court therefore rejects this argument.

Because Plaintiff has failed to state a claim for invalidity, unenforceability, or

voidness, the Court grants Defendants’ Motion to Dismiss Count I.

B. Count 2

Plaintiff alleges in Count 2 of her Complaint that she never actually received a loan

from First Magnus Financial Corporation. This argument seems to combine an “alias”

theory, mentioning that the loan documents refer to Plaintiff as “Dannielle G. Owens an

unmarried woman,” rather than plain Dannielle G. Owens, and a theory of liability courts

have referred to as the “vapor money theory.” 

Plaintiff cites no authority for her “alias” theory, which is not surprising, because the

argument is nonsensical. Nor does she cite any case law supporting her vapor money theory,

which the undersigned previously has rejected as a viable legal theory. De Leon v.

Reconstruct Co., 2010 WL 4739954, *2 (D.Ariz. November 16, 2010); see also Frances

Kenny Family Trust v. World Savings Bank, 2005 WL 106792, *5 (N.D.Cal. Jan.19,

2005)(holding vapor money claims challenging the legitimacy of a loan have “no basis in

law. [They have] been squarely addressed and rejected by various courts throughout the

country for over twenty years.”). The Court therefore grants Defendants Motion to Dismiss

Count 2 for failure to state a claim.

C. Count 3

In Count 3, Plaintiff alleges that Defendants received proceeds from miscellaneous

third-party sources sufficient to discharge her debt. Plaintiff does not argue that a person or

an entity has given money to Defendants specifically to pay down her Loan. Rather, Plaintiff

argues that Defendants have received sums through bailouts, mortgage insurance, Credit

Default Swap payments, and credit enhancements sufficient to cover the entire amount of the

Loan. Because Plaintiff has not alleged that she, or anyone else on her behalf, has paid back

the Loan, as secured by the Deed of Trust, the Court finds this claim fails as a matter of law.

The Court therefore grants Defendants’ Motion to Dismiss Count 3. 

Case 2:10-cv-02696-JAT Document 40 Filed 08/23/11 Page 6 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 - 7 -

D. Count 4

Plaintiff alleges in Count 4 that Defendants did not adhere to all the requirements of

the Deed of Trust statutes regarding the Notice of Trustee Sale and time to cure default.

Plaintiff claims that she did not receive a 30-day notice of her right to cure default before the

Trustee Sale was noticed. But at the time Plaintiff filed suit and when Defendants filed their

Motion to Dismiss, no Trustee Sale had occurred. No cause of action exists for violation of

the Deed of Trust statutes until after a Trustee Sale has been held because a plaintiff suffers

no harm until that point. See Patton v. First Federal Sav. and Loan Ass’n of Phoenix, 578

P.2d 152, 155 (Ariz. 1978)(“The Deed of Trust statutes neither state nor imply that appellants

could obtain any relief other than a voiding of the sale and possibly an award of damages

resulting from the void sale, and appellants have offered no authority to support a claim for

damages when the Deed of Trust statutes have been violated but the trustee’s sale was not

held.”). Further, by this point in the proceedings, Plaintiff has received more than adequate

time to cure her default, but has not done so. The Court therefore grants Defendants’ Motion

to Dismiss Count 4.

E. Count 5

Plaintiff makes several scattered arguments in Count 5, which rambles on for ten

pages. While not totally clear, Plaintiff’s Count 5 seems to center around MERS not being

eligible as beneficiary of the Deed of Trust. The undersigned previously has rejected

arguments that MERS cannot be a beneficiary under a deed of trust because MERS never

acquires a true beneficial interest. Cervantes v. Countrywide Home Loans, Inc., 2009 WL

3157160, *10 (D.Ariz. September 24, 2009)(“Plaintiffs’ argument that MERS is a ‘sham’

beneficiary is unconvincing . . . The fact that MERS does not obtain such rights as to collect

mortgage payments or obtain legal title to the property in the event of non-payment does not

transform MERS’ status into a ‘sham.’”). To the extent Plaintiff’s Count 5 attempts to make

a MERS strawman argument, that argument fails to state a claim. The Court therefore grants

Defendants’ Motion to Dismiss Count 5.

Case 2:10-cv-02696-JAT Document 40 Filed 08/23/11 Page 7 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 - 8 -

F. Count 6

The Court has trouble discerning the precise allegations contained in Count 6.

Plaintiff seems to make a show-me-the-note/UCC holder in due course argument. In

Arizona, and “[u]nlike their judicial foreclosure cousins that involve the court, deed of trust

sales are conducted on a contract theory under the power of sale authority of the trustee.”

In re Krohn, 52 P.3d 774, 777 (Ariz. 2002). See also A.R.S. § 33-807(A) (providing power

of sale authority to trustee after default). Plaintiff does not cite, nor is the Court aware of,

any controlling Arizona authority requiring the production of the original note before the

commencement of a Trustee Sale. To the contrary, courts within the District of Arizona

“have routinely held that [the] ‘show me the note’ argument lacks merit.” Diessner v.

Mortgage Elec. Registration Sys., 618 F.Supp.2d 1184, 1187-88 (D. Ariz. 2009) (quoting

Mansour v. Cal-W. Reconveyance Corp., 618 F.Supp.2d 1178, 1181 (D. Ariz. 2009)). And

the Arizona Court of Appeals, citing precedent from this Court, recently confirmed that

“Arizona’s non-judicial foreclosure statute does not require presentation of the original note

before commencing foreclosure proceedings.” Hogan v. Wash. Mut. Bank, N.A., __ P.3d__,

2011 WL 3108343, at *2 (Ariz.Ct.App. July 26, 2011).

Plaintiff mentions RESPA in Count 6. (Doc. 1-2, p.35.) Plaintiff alleges, “Please

note, to date, the defendants continue to violate plaintiff’s consumer rights by failing to

comply with Section 6 of RESPA (12 U.S.C.A. 2605). A complaint has been filed with the

Office of RESPA & Interstate Land Sales, US Department of Housing & Urban

Development.” (Id.) This allegation is more of an aside, and Plaintiff seems to be pursuing

her RESPA claim through other avenues. To the extent she does attempt to allege a RESPA

violation here, that claim fails because Plaintiff has not alleged facts sufficient to allow the

Court to draw the reasonable inference that Defendants are liable for the misconduct alleged.

Iqbal, 129 S.Ct. at 1949. Plaintiff makes nothing more than a naked assertion that

Defendants violated RESPA. 

Because Plaintiff’s show-me-the-note and RESPA arguments fail to state a claim

Case 2:10-cv-02696-JAT Document 40 Filed 08/23/11 Page 8 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 - 9 -

entitling her to relief, the Court grants Defendants’ Motion to Dismiss Count 6. Plaintiff

failed to state a claim for relief in the Complaint, the Court therefore will grant Defendants’

Motion to Dismiss as to all Counts.

The Court notes that the state court TRO adopted by the undersigned on January 25,

2011 expired at the hearing on February 17, 2011. Even if the TRO had not expired, the

Court’s granting of Defendants’ Motion to Dismiss would vacate the TRO.

Plaintiff filed a Motion to Strike Defendants’ Reply in Support of Motion to Dismiss.

Plaintiff claims that the Reply is untimely. The Court finds that Defendants timely filed their

Reply. The Court therefore denies the Motion to Strike. The Court further denies Plaintiff’s

request to file a Sur-Reply. Nothing in Defendants’ Reply necessitates further argument

from Plaintiff. 

Accordingly,

IT IS ORDERED GRANTING Defendants’ Motion to Dismiss (Doc. 7). The Clerk

shall enter judgment for Defendants.

IT IS FURTHER ORDERED DENYING Plaintiff’s Motion to Strike Reply in

Support of Motion to Dismiss (Doc. 17). 

DATED this 22nd day of August, 2011.

Case 2:10-cv-02696-JAT Document 40 Filed 08/23/11 Page 9 of 9