Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-02575/USCOURTS-azd-2_10-cv-02575-1/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

---

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

Cynthia Roche Yares, 

Plaintiff, 

vs.

Bear Stearns Residential Mortgage Corp.;

Ocwen Loan Servicing, LLC; LaSalle

Bank N.A., as Trustee for the Registered

Holders of Bear Stearns Asset Backed

Securities I Trust 2007-HE4; Mortgage

Electronic Registration Systems Inc., 

Defendant. 

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

No. CV 10-2575-PHX-JAT

ORDER

Pending before the Court is a Motion to Dismiss (Dkt. 10) filed by Defendant Bear

Stearns Residential Mortgage Corp. (“Bear Stearns”), and a Motion to Dismiss (Dkt. 12)

filed by Defendants Ocwen Loan Servicing (“Ocwen”), LaSalle Bank N.A., as Trustee for

the Registered Holders of Bear Stearns Asset Backed Securities I Trust 2007-HE4

(“LaSalle”), and Mortgage Electronic Registration Systems, Inc. (“MERS”). A hearing was

held on June 20, 2011, and the Court is now prepared to rule on the Motions to Dismiss.

I. BACKGROUND

On or about January 9, 2007, Plaintiff obtained a loan for $240,000 from Bear Stearns.

Case 2:10-cv-02575-JAT Document 31 Filed 06/24/11 Page 1 of 14
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

 The Court may take judicial notice of matters of public record without converting

the Motions to Dismiss into motions for summary judgment. Lee v. City of Los Angeles, 250

F.3d 668, 689 (9th Cir. 2001). Because the exhibits to Plaintiff’s Complaint are public

records, the Court may properly take judicial notice of the undisputable facts contained in

these documents. Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986).

- 2 -

(Dkt. 7, Ex. A.1

) The loan was secured by a Deed of Trust on the real property located at

4733 East Vernon Avenue, Phoenix, Arizona 85008 (the “Property”). (Id.) MERS, as

nominee for Bear Stearns, was named the beneficiary under the Deed of Trust. (Id.)

MERS, as nominee for Bear Stearns, assigned the Deed of Trust to LaSalle, care of

Ocwen. (Dkt. 7, Ex. B.) The Assignment of Deed of Trust was “made and entered into as

of the 01st of August, 2007,” executed on May 18, 2009, and recorded on June 1, 2009, in

the Official Records of Maricopa County, Arizona. (Id.)

On February 10, 2009, a Notice of Substitution of Trustee was recorded, in which

Ocwen, on behalf of LaSalle, appointed Christopher R. Perry (“Perry”) as the successor

trustee under the Deed of Trust. (Dkt. 7, Ex. C.) Immediately thereafter, Perry recorded a

Notice of Trustee’s Sale. (Dkt. 7, Ex. D.) The trustee’s sale of the Property was originally

scheduled for May 12, 2009. (Id.)

Plaintiff does not allege in the Complaint that her loan payments were current at the

time the power of sale provisions in the Deed of Trust were invoked by the beneficiary under

the Deed of Trust.

On October 12, 2010, Plaintiff filed a complaint in the Superior Court for Maricopa

County, Arizona. (Dkt. 7.) The Complaint sets forth four counts: injunctive relief,

declaratory relief, breach of contract, and payment/cancellation of mortgage loan. (Dkt. 7

at pp. 15–17, 22.) On October 13, 2010, Plaintiff recorded a lis pendens on the Property in

connection with the state court action. (Dkt. 22 at p. 3.)

On November 29, 2011, Defendants removed the state court action to federal court

on the basis of diversity jurisdiction, pursuant to 28 U.S.C. § 1332. (Dkt. 1.) The Court

subsequently denied Plaintiff’s motion to remand. (Dkt. 20.)

Case 2:10-cv-02575-JAT Document 31 Filed 06/24/11 Page 2 of 14
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

2

 According to a Trustee’s Deed Upon Sale, recorded as Maricopa County Recording

No. 2011-0010318, the successor trustee, Perry sold the Property at a trustee’s sale on

December 20, 2010, to Canadien Investors Associates LLC.

- 3 -

Following the trustee’s sale of the Property,2

 Plaintiff was named as a defendant in a

forcible entry and detainer action in a separate state court proceeding. (Dkt. 22 at p. 3.)

Final argument in that state court proceeding occurred on April 26, 2011. (Id.) According

to Plaintiff, she was evicted from the Property on May 10, 2011. Plaintiff was unsure if an

appeal had been filed on her behalf in the state court proceeding.

II. LEGAL STANDARD

Defendants have moved to dismiss the Complaint (Dkt. 7) for failure to state a claim

upon which relief can be granted pursuant to Rule 12(b)(6) of the Federal Rules of Civil

Procedure. To survive a Rule 12(b)(6) motion for failure to state a claim, a complaint must

meet the requirements of Rule 8. 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 Atl. 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.” Id. (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). The factual

allegations of the complaint must be sufficient to raise a right to relief above a speculative

level. Id.

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

(2009) (citing Twombly, 550 U.S. at 555). A complaint that offers nothing more than blanket

assertions will 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

Case 2:10-cv-02575-JAT Document 31 Filed 06/24/11 Page 3 of 14
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

 It appears that Plaintiff’s response attempts to add parties, such as Perry, and claims,

such as fraud and theft. (See e.g. Dkt. 22 at p. 3) (“Plaintiff hereby accuses the Law Firm of

Perry & Shapiro, the Canadian Investors Association, and PAJ LLC of fraud and theft of her

property.”). These attempted additions are improper, and the Court will not consider claims

and parties not properly included in the Complaint.

- 4 -

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. (quoting

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 a complaint in the light most favorable to the drafter of the complaint, and the

Court must accept all well-pleaded factual allegations as true. 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, 478 U.S. at 286, or an allegation that

contradicts facts that may be judicially noticed by the Court, Shwarz, 234 F.3d at 435.

III. ANALYSIS

Defendants have moved to dismiss the Complaint, because Plaintiff has failed to state

a claim upon which relief can be granted. (Dkt. 10, 12.) Plaintiff’s Response to the Motions

to Dismiss contains the same arguments set forth in the Complaint, and also includes

allegations against Perry and other parties for fraud and theft.3

 (Dkt. 22.)

As an initial matter, the Court finds the Complaint fails to meet the pleading standard

set forth in Rule 8 of the Federal Rules of Civil Procedure. Rule 8 requires a plaintiff to

“plead a short and plain statement of the elements of his or her claim, identifying the

transaction or occurrence giving rise to the claim and the elements of the prima facie case.”

Bautista v. Los Angeles County, 216 F.3d 837, 840 (9th Cir. 2000). Rule 8 requires each

allegation of a complaint to be “simple, concise, and direct.” Fed.R.Civ.P. 8(d)(1). This

Case 2:10-cv-02575-JAT Document 31 Filed 06/24/11 Page 4 of 14
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

 The Eleventh Circuit explained:

[A]ny motion or suit for a traditional injunction must be predicated upon a

cause of action, such as nuisance, trespass, the First Amendment, etc.,

regarding which a plaintiff must show a likelihood or actuality of success on

the merits. There is no such thing as a suit for a traditional injunction in the

abstract. For a traditional injunction to be even theoretically available, a

plaintiff must be able to articulate a basis for relief that would withstand

scrutiny under Fed.R.Civ.P. 12(b)(6) (failure to state a claim).

- 5 -

requirement “applies to good claims as well as bad, and is the basis for dismissal independent

of Rule 12(b)(6).” McHenry v. Renne, 84 F.3d 1172, 1179 (9th Cir. 1996). “Something

labeled a complaint but written more as a press release, prolix in evidentiary detail, 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. “Prolix, confusing

complaints . . . impose unfair burdens on litigants and judges.” Id. at 1179. Here, the

Complaint fails to meet the Rule 8 pleading requirements. The Complaint is filled with

speculative legal conclusions, repetitive arguments, and lengthy, compound allegations. The

Complaint does not contain a short and plain statement of each claim showing that Plaintiff

is entitled to relief, and the Complaint lacks the simple, concise and direct allegations

required by Rule 8.

1. Motion to Dismiss Filed By LaSalle, Ocwen & MERS

Defendants LaSalle, Ocwen and MERS have moved to dismiss the Complaint on the

grounds that Plaintiff fails to state a claim upon which relief can be granted. The Court will

grant the Motion to Dismiss. The Complaint consists of claims and arguments that have

repeatedly been considered and rejected by courts in the District of Arizona.

A. Injunctive & Declaratory Relief

In Counts One and Two of the Complaint, Plaintiff attempts to state claims for

injunctive and declaratory relief; however, injunctive and declaratory relief are remedies for

underlying causes of action, and not independent causes of action. Plaintiff must base her

request for injunctive and declaratory relief on a cognizable legal theory.4

 For the reasons

Case 2:10-cv-02575-JAT Document 31 Filed 06/24/11 Page 5 of 14
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 Klay v. United Healthgroup, Inc., 376 F.3d 1092, 1097 (11th Cir. 2004).

- 6 -

discussed below, Plaintiff has failed to sufficiently plead any underlying cause of action that

would entitle her to either of these equitable remedies.

B. “Show Me the Note” Theory

While the Complaint is often verbose and confusing, most of Plaintiff’s allegations

seem to be premised on variations of the “show me the note” theory. In her response to the

Motions to Dismiss, Plaintiff denies asserting an action premised on the “show me the note”

theory; however, the Complaint is replete with variations of this line of argument. Plaintiff

argues that “[n]one of the parties and entities seeking to non-judicially foreclose the Deed

of Trust . . . is the lawful assignee of record of the original lenders’ Bear Stearns[] beneficial

interest in the Deed of Trust or Note,” and “none of the parties and entities seeking to enforce

the Note is the transferee by valid endorsement or allonge of that Note with the power or

authority to enforce the Note.” (Dkt. 22 at p. 2.)

In the “General Allegations” section of the Complaint, as well as in Counts One, Two

and Three, Plaintiff repeatedly asserts that, because Defendants have not presented evidence

of the chain of title to the promissory note and/or the Deed of Trust, no Defendant has

authority to conduct a trustee’s sale of the Property. (See e.g. Dkt. 7, ¶ 13) (“That because

Defendant Ocwen . . . had never lawfully been assigned either the beneficial interest in the

Deed of Trust . . . or the Original Promissory Note . . . , it lacks authority to enforce the

instrument.”).

Plaintiffs have offered the Court no relevant, controlling authority to support any of

these claims. Rather, non-judicial trustee’s sales are controlled by the rules enumerated in

A.R.S. §§ 33–801 to -821, and do not require production of the promissory note and/or the

deed of trust. See Warren v. Sierra Pac. Mortgage Servs. Inc. FN, No. CV 10-2095, 2011

WL 1526957, at *5 (D. Ariz. April 22, 2011); Kane v. Bosco, No. CV 10-1787, 2010 WL

4879177, at *11 (D. Ariz. Nov. 23, 2010). Under Arizona law, and “[u]nlike their judicial

foreclosure cousins that involve the court, deed of trust sales are conducted on a contract

Case 2:10-cv-02575-JAT Document 31 Filed 06/24/11 Page 6 of 14
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 -

theory under the power of sale authority of the trustee.” In re Krohn, 52 P.3d 774, 777 (Ariz.

2002). “[A] power of sale is conferred upon the trustee of a trust deed under which the trust

property may be sold . . . after a breach or default in performance of the contract or contracts,

for which the trust property is conveyed as security.” A.R.S. § 33–807(A).

The Arizona statutes governing the sale of foreclosed property through trustee’s sale

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

promissary note. Accordingly, the courts within the District of Arizona have routinely

rejected the “show me the note” theory and related arguments. Diessner v. Mortgage Elec.

Registration Sys., 618 F. Supp. 2d 1184, 1187–88 (D. Ariz. 2009); Mansour v. Cal–Western

Reconveyance Corp., 618 F. Supp. 2d 1178, 1181 (D. Ariz. 2009). Given that Plaintiff has

offered no contrary authority and has expressly consented to the non-judicial foreclosure in

the Deed of Trust, the Court rejects the claims premised on the “show me the note” theory.

C. “Broken Chain of Title” Allegations

The Complaint also includes allegations concerning the purported “broken chain of

title.” These “broke chain of title” allegations are strewn throughout the Complaint, which

makes addressing each count or cause of action in a linear fashion difficult. The allegations

arise in connection with the assignment of the beneficiary’s interest in the Deed of Trust.

Plaintiff alleges that the trustee’s sale is unauthorized, because the Assignment of Deed of

Trust was recorded after the documents relating to the trustee’s sale (i.e., the Notice

Substitution of Trustee and the Notice of Trustee’s Sale). (Dkt. 7, ¶¶ 13, 14, 64.) Plaintiff

also alleges that Ocwen was not properly assigned any interest in the Deed of Trust or the

promissory note, and, thus, had no authority to appoint Perry as the successor trustee to

non-judicially foreclose the Deed of Trust.

Contrary to Plaintiff’s allegations and arguments, the Assignment of Deed of Trust

was effective and valid on August 1, 2007, even though it was not recorded until June 1,

2009. Courts have rejected claims for wrongful foreclosure on the basis of backdating, and

instead have utilized the effective date of assignment. See Nichols v. Bosco, No. CV 10-

1872, 2011 WL 814916, at *4 (D. Ariz. Mar. 4, 2011); Mitchell v. EMC Mortgage Corp., No.

Case 2:10-cv-02575-JAT Document 31 Filed 06/24/11 Page 7 of 14
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 -

CV 09-1362, 2009 WL 3274407, at *5 (D. Ariz. Oct. 13, 2009); Quintero Family Tr. v.

OneWest Bank, F.S.B., No. CV 09-1561, 2010 WL 392312, at *7 n.6 (S.D. Cal. 2001); see

also 6A C.J.S. Assignments § 88 (2011). Further, Arizona law does not require an

assignment to be recorded in order for it to become effective. Recordation serves to put

parties on notice, not to effectuate the assignment. Accordingly, the Court rejects Plaintiff’s

allegations that LaSalle, through its agent Ocwen, lacked standing to conduct foreclosure

proceedings due the recordation date of the Assignment of Deed of Trust.

Plaintiff also appears to allege throughout the Complaint that a trustee’s sale is not

valid until Bear Stearns, as the original lender, produces an assignment of the beneficial

interest to Plaintiff. (Dkt. 7, ¶ 60.) However, the Assignment of Deed of Trust, attached to

the Complaint, effectuates the exact transfer of the original lender’s beneficial interest that

Plaintiff alleges has not been produced. (See Dkt. 7, Ex. B.) Accordingly, the trustee’s sale

cannot be invalid on this ground.

Based on the foregoing, all causes of action arising in connection with the “show me

the note” theory and the “broken chain of title” allegations will be dismissed for failure to

state a claim upon which relief can be granted.

D. Breach of Contract Claim

Plaintiff alleges that Defendants committed an anticipatory breach of the Deed of

Trust “by threatening to conduct an unlawful and unauthorized non-judicial Trustee’s Sale

of the Plaintiff borrowers’ property.” (Dkt. 7, ¶ 63.) Defendants argue, correctly, that with

respect to Count Three, Plaintiff has failed to state a claim upon which relief can be granted.

In order to state a claim for breach of contract, a plaintiff must allege the existence of

a contract between the plaintiff and the defendant, a breach of the contract by the defendant,

and resulting damage to the plaintiff. Chartone, Inc. v. Bernini, 83 P.3d 1103, 1111 (Ariz.

App. 2004). Additionally, in order to state a claim for anticipatory breach of contract, “there

must be a positive and unequivocal manifestation on the part of the party allegedly

repudiating [the contract] that he will not render promised performance when the time fixed

for performance arrives.” Esplendido Apartments v. Olsson, 697 P.2d 1105, 1110 (Ariz.

Case 2:10-cv-02575-JAT Document 31 Filed 06/24/11 Page 8 of 14
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 -

App. 1984).

As set forth above, Plaintiff’s allegation that the Notice of Trustee’s Sale is invalid

due to purported discrepancies in the chain of title is unavailing. The Assignment of Deed

of Trust effectively conveyed Bear Stearns’s beneficial interest in the Deed of Trust to

LaSalle, and thereafter, LaSalle’s agent Ocwen initiated foreclosure proceedings on behalf

of LaSalle. Regardless of the merits of the chain of title allegations, the Complaint fails to

connect these allegations to the elements of an anticipatory breach of contract claim. With

respect to anticipatory breach of contract, Plaintiff has not alleged any “positive and

unequivocal manifestation” of Defendants’ intent not to render a promised performance.

Further, even if Plaintiff had alleged a claim for breach of contract, Plaintiff has not

denied that she defaulted on her obligations under the Deed of Trust. Absent curative action

by Plaintiff, Defendants may lawfully sell the Property at a trustee’s sale pursuant to the

power of sale provisions in the Deed of Trust. Based on the foregoing, Plaintiff has failed

to state a breach of contract claim, and Count Three of the Complaint must be dismissed.

E. Credit Default Swap and Quiet Title Claim

In Court Four of the Complaint for “Payment/Cancellation of Mortgage Loan,”

Plaintiff alleges that:

On information and belief, the original Lender BSRMC, and/or its purported

successor LaSalle Bank collected the proceeds on the Credit Default Swap

insurance it purchased thereby paying the Promissory Note in question in full

and requiring the recipient of the proceeds of the Credit Default Swap

insurance to record a Satisfaction of Mortgage acknowledging that the Note

has been paid off in full.

(Dkt. 7, ¶ 78.) First, this claim is based entirely on speculation. Plaintiff admits that she does

not know if either Bear Stearns or LaSalle purchased a credit default swap. (Id. ¶¶ 75–76,

78.) Second, Plaintiff misunderstands the nature and purpose of a credit default swap.

A credit default swap is a financial instrument, similar to insurance, used by

corporations to transfer credit risk from one party to another. To the extent a credit default

swap pays money owed to a lender when a borrower defaults on a loan, the benefit does not

accrue to the borrower, as Plaintiff suggests in Court Four of the Complaint. See Dumont v.

Case 2:10-cv-02575-JAT Document 31 Filed 06/24/11 Page 9 of 14
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

- 10 -

HSBC Mortgage Corp., USA, No. CV 10-1106, 2010 WL 3023885, at *6 (D. Ariz. Aug. 2,

2010) (citing PBS.org, Frontline: Inside the Meltdown: Individual Borrowing Lesson:

Glossary of Financial Terms: Credit Default Swap, http://www.pbs.org/wgbh/pages/frontline

/teach/meltdown/glossary.html (last visited June 20, 2011)). Therefore, even if one of the

Defendants received proceeds from a credit default swap when Plaintiff defaulted on her

loan, Plaintiff is not entitled to the cancellation of the loan or quiet title to the Property.

Further, to the extent that Plaintiff seeks to quiet title to the Property, Plaintiff has

failed to allege that she has satisfied her loan obligations and, therefore, is entitled to the

release of the Deed of Trust. Additionally, Plaintiff has not indicated that she is ready,

willing and able to tender the full amount owed on the loan. Thus, Plaintiff’s purported use

of the action to quiet title is inappropriate. Accordingly, Court Four fails to state a claim

upon which relief can be granted, and must be dismissed.

F. Unconstitutionality of A.R.S. § 33-811(B)

Although not enumerated as a cause of action in the Complaint, Plaintiff seeks to

challenge the constitutionality of the “conclusive presumption” in A.R.S. § 33-811(B), which

provides, in relevant part:

The trustee’s deed shall raise the presumption of compliance with the

requirements of the deed of trust and this chapter relating to the exercise of the

power of sale and the sale of the trust property, including recording, mailing,

publishing and posting of notice of sale and the conduct of the sale. A

trustee’s deed shall constitute conclusive evidence of the meeting of those

requirements in favor of purchasers or encumbrancers for value and without

actual notice. Knowledge of the trustee shall not be imputed to the

beneficiary.

A.R.S. § 33-811(B). Plaintiff alleges that the conclusive presumption violates

constitutionally-mandated separation of powers and is an unlawful encroachment on the

rulemaking power of the Arizona Supreme Court. (Dkt. 7, ¶ 32.) Plaintiff requests the right

to prospectively challenge the validity of the trustee’s deed, because Defendants will not

have in their possession certain loan documents at the time of a prospective trustee’s sale of

the Property. (Id., ¶ 33.)

At the time the Complaint was filed, the trustee’s sale had not occurred and the

Case 2:10-cv-02575-JAT Document 31 Filed 06/24/11 Page 10 of 14
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

- 11 -

issuance of a trustee’s deed was only speculative in nature. (Id., ¶¶ 30, 31.) “A claim is not

ripe for adjudication if it rests upon contingent future events that may not occur as

anticipated, or indeed may not occur at all.” Bova v. City of Medford, 564 F.3d 1093, 1096

(9th Cir. 2009) (quoting Texas v. United States, 523 U.S. 296, 300 (1998)).

The “conclusive presumption” that Plaintiff argues is unconstitutional was not even

applicable at the time the Complaint was filed. When she filed the Complaint, Plaintiff could

have, but did not, challenge the subject matter of A.R.S. § 33-811(B). Specifically, Plaintiff

could have directly challenged Defendants’ compliance with either the Deed of Trust’s

power of sale provisions, or the Arizona statutes governing trustee’s sales, but she did not.

Notwithstanding the prospective nature of Plaintiff’s allegations in the Complaint

(Dkt. 7, ¶ 33), the Court has rejected Plaintiff’s “show me the note” and “chain of title”

arguments, which provide the foundation for Plaintiff’s unconstitutionality argument.

Accordingly, the Court will dismiss Plaintiff’s claim that the “conclusive presumption” in

A.R.S. § 33-811(B) is unconstitutional.

G. Removal of Lis Pendens

In addition to dismissal of the Complaint, LaSalle, Ocwen and MERS also seek an

order quashing the lis pendens filed by Plaintiff against the Property. (Dkt. 12 at p. 8.) A

lis pendens remains in effect until trial if there is “some basis” for the claim. Evergreen

West, Inc. v. Boyd, 810 P.2d 612, 619 (Ariz. App. 1991). Because the Court will give

Plaintiff leave to amend the Complaint, the Court will not remove the lien caused by the lis

pendens at this time. However, in the event that Plaintiff does not file an amended complaint

in accordance with this Order, the lis pendens will be quashed.

2. Motion to Dismiss Filed By Bear Stearns

Bear Stearns argues that the Complaint fails to allege a cognizable claim against it.

And, for the most part, the allegations in the Complaint do not involve Bear Stearns.

Plaintiff, in her response, argues that Bear Stearns has clouded title to the Property “by

failing to disclose whether a beneficial interest in Plaintiffs’ home mortgage loan was ever

in fact conveyed to [LaSalle].” (Dkt. 22 at p. 3.) Plaintiff argues that by failing to disclose

Case 2:10-cv-02575-JAT Document 31 Filed 06/24/11 Page 11 of 14
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

- 12 -

certain loan documents, Bear Stearns is still the lender, and, as a result, is liable for “the

fraudulent attempt to steal the Plaintiffs’ home.” (Id. at p. 7.)

As discussed above, Bear Stearns was not required to show Plaintiff the original

promissory note, an endorsement or allonge of the original promissory note, or a recorded

assignment from Bear Stearns to LaSalle, prior to the current beneficiary’s initiation of

foreclosure proceedings. The “show me the note” theory in the Complaint, to the extent that

it implicates Bear Stearns, fails to state a claim upon which relief can be granted.

With respect to the breach of contract claim, Plaintiff alleges:

That by threatening to conduct an unlawful and unauthorized non-judicial

Trustee’s Sale of the Plaintiff borrowers’ property, the Defendant BSRMC

original lender, its alleged assignee, and the purported servicer of the Loan

have committed an anticipatory breach of the terms and conditions of the

contract between Plaintiff borrower and her original lender.

(Dkt. 7, ¶ 63.)

As discussed above, as of August 1, 2007, the Assignment of Deed of Trust assigned

Bear Stearns’s interest in the Deed of Trust to LaSalle. (Dkt. 7, Ex. B.) Bear Stearns is not

a foreclosing entity, and no longer has any interest in the Deed of Trust or the Property. Bear

Stearns cannot breach a contract to which it is not a party. Therefore, Plaintiff fails to state

a claim against Bear Stearns for the allegedly unlawful foreclosure proceedings conducted

by other parties after Bear Stearns assigned its beneficial interest in the Deed of Trust.

With respect to Court Four of the Complaint, Plaintiff attempts to assert a claim

against Bear Stearns or another purported assignee under Arizona insurance law. (Dkt. 7,

¶¶ 40–41.) However, Plaintiff’s allegations are insufficient to state a cognizable claim. 

Plaintiff’s allegations that Bear Stearns or the other Defendants engaged in credit default

swaps are speculative and conclusory in nature, and Plaintiff does not allege how the credit

default swaps were in violation of Arizona insurance law.

Plaintiff, in her response, also attempts to raise issues with the “legal status” of Bear

Stearns as an entity. (Dkt. 22 at pp. 7, 9.) These purported issues are irrelevant to Bear

Stearns’s Motion to Dismiss on the grounds that Plaintiff has failed to state a claim against

Bear Stearns.

Case 2:10-cv-02575-JAT Document 31 Filed 06/24/11 Page 12 of 14
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

- 13 -

The Court finds that as a result of Bear Stearns’s assignment of its interest in the Deed

of Trust prior to the initiation of foreclosure proceedings, Bear Stearns cannot be liable for

the wrongdoing alleged in the Complaint. Plaintiff’s claims arise in connection with the

foreclosure of the Deed of Trust on the Property, and the remedies sought by Plaintiff pertain

to the halting or undoing of the trustee’s sale of the Property. Bear Stearns has no interest

in the Property, and Plaintiff does not allege that Bear Stearns has engaged in any activity

with respect to the trustee’s sale. Therefore, Plaintiff’s claims against Bear Stearns must be

dismissed.

3. Leave to Amend the Complaint

In this case, Plaintiff has not amended the Complaint as a matter of right pursuant to

Rule 15 of the Federal Rules of Civil Procedure. Defendants LaSalle, Ocwen and MERS

filed the last motion to dismiss on December 6, 2010. (Dkt. 12.) Because the 21-day time

frame to file an amendment following a motion to dismiss has expired, Plaintiff has lost the

right to amend the Complaint once as a matter of course. Fed.R.Civ.P. 15(a)(1). Defendants

have requested the Court to grant their Motions to Dismiss with prejudice. However, the

Ninth Circuit has instructed district courts to grant leave to amend, sua sponte, when

dismissing a case for failure to state a claim, “unless the court determines that the pleading

could not possibly be cured by the allegations of other facts.” Lopez v. Smith, 203 F.3d 1122,

1127 (9th Cir. 2000) (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)). There

is a “longstanding rule that ‘[l]eave to amend should be granted if it appears at all possible

that the plaintiff can correct the defect.’” Id. at 1129 (quoting Balistreri v. Pac. Police Dep’t,

901 F.2d 696, 701 (9th Cir. 1990)).

Plaintiff will be given a reasonable opportunity, if she so chooses, to amend the

Complaint to cure the deficiencies identified in this Order, and to make clear her allegations

in short plain statements in the manner required in Rule 8 of the Federal Rules of Civil

Procedure. Plaintiff is cautioned not to simply re-allege the failed claims in an amended

complaint. In addition to the issues discussed throughout this Order, the Court also notes,

that Plaintiff has peppered the Complaint with repetitive requests for relief. If Plaintiff

Case 2:10-cv-02575-JAT Document 31 Filed 06/24/11 Page 13 of 14
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

- 14 -

amends the Complaint, then she is advised to set forth her demand for relief in one place at

the end of the amended complaint as required by Rule 8(a)(3).

IV. CONCLUSION

For the reasons set forth above, the Court will grant the pending Motions to Dismiss

without prejudice, and will permit Plaintiff to file an amended complaint.

Accordingly,

IT IS HEREBY ORDERED that the Motion to Dismiss (Dkt. 10) is GRANTED

without prejudice.

IT IS FURTHER ORDERED that Defendants’ Motion to Dismiss Plaintiff’s

Complaint (Dkt. 12) is GRANTED without prejudice.

IT IS FURTHER ORDERED that Plaintiff may file an amended complaint no later

than 21 days from the date of this Order. If Plaintiff does not file an amended complaint

within 21 days, then the Clerk of the Court shall, without further Court order, dismiss this

case with prejudice, and the lis pendens recorded against the Property shall be quashed.

Dated this 24th day of June, 2011.

Case 2:10-cv-02575-JAT Document 31 Filed 06/24/11 Page 14 of 14