Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_09-cv-02501/USCOURTS-azd-2_09-cv-02501-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1441 Petition for Removal- Declaratory Judgement

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Mirella Tamayo Puga and Martin Puga,

Plaintiffs, 

vs.

One West Bank, et al., 

Defendants. 

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No. CV09-2501-PHX-NVW

ORDER

Before the Court is Defendant OneWest Bank, FSB’s Motion to Dismiss Plaintiffs’

Second Amended Complaint (doc. # 19). 

I. Background

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

true and construed in the light most favorable to them. See Cousins v. Lockyer, 568 F.3d

1063, 1067 (9th Cir. 2009). Stated here are the allegations of the Second Amended

Complaint, and the Court does not determine whether they are true.

As alleged, Defendant OneWest Bank (“OneWest”) is a national banking

institution authorized to do business in the State of Arizona. Defendant IndyMac Federal

Bank, FSB (“Defendant IndyMac”) is a banking institution chartered as a bridge between

the defunct IndyMac Bank, FSB (“IndyMac Bank”), and OneWest, the current owner of

the remnants of Defendant IndyMac. Defendant IndyMac is an insolvent banking

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institution under receivership. Defendant IMB REO, LLC (“IMB”) is an affiliate or

owned subsidiary of OneWest.

In June 2007, Plaintiff Mirella Tamayo Puga (“Mrs. Puga”) borrowed funds from

IndyMac Bank to build a six-bedroom home on a lot located on North 185th Avenue,

Waddell, Arizona 85355, which she and her husband had previously purchased for

$60,000 (the “Property”). In applying for the loan, Mrs. Puga submitted information

about her income of $15.00 per hour and no information about her husband. In return for

a loan of $820,000.00, Mrs. Puga signed an adjustable rate note (“Note”) promising to

repay the loan plus interest. She is the only obligor on the Note. Mr. and Mrs. Puga

signed a Deed of Trust as husband and wife, which appointed LandAmerica Transnation

Title as Trustee and “irrevocably grants and conveys to Trustee, in trust, with power of

sale,” the Property, including all improvements made or to be made on the Property. 

Mrs. Puga defaulted on the loan. The Notice of Trustee’s Sale, dated June 8, 2009,

identifies the successor trustee as Quality Loan Service Corporation and the current

beneficiary as IndyMac Bank. On October 6, 2009, the Property was sold for $352,500 at

a trustee’s sale to IMB, which is identified in the Trustee’s Deed Upon Sale as the

foreclosing beneficiary. The designated trustee was Quality Loan Service Corporation. 

The assignment of the Deed of Trust for the Property to OneWest from the Federal

Deposit Insurance Corporation (“FDIC”) as receiver for Defendant IndyMac is dated

February 17, 2010.

On October 14, 2009, Mrs. Puga filed a complaint against OneWest and Defendant

IndyMac in the Maricopa County Superior Court. On December 1, 2009, OneWest

removed the case to this Court. On December 8, 2009, OneWest moved to dismiss the

case. On December 29, 2009, Mrs. Puga filed her First Amended Complaint. On January

25, 2010, OneWest again moved to dismiss the case. The Court dismissed with prejudice

a count alleging violation of both the Real Estate Settlement Procedures Act and the Truth

in Lending Act and dismissed the remaining counts with leave to amend. 

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The Second Amended Complaint filed April 1, 2010, names Mr. Puga as a second 

plaintiff, but is verified by only Mrs. Puga. (Doc. # 20.) Mr. Puga did not sign the

Second Amended Complaint, and it does not appear from the face of the Second

Amended Complaint that Mr. Puga is represented by Mrs. Puga’s counsel. 

The Second Amended Complaint includes the following counts: (1) Breach of

Contract – Covenant of Good Faith and Fair Dealing, (2) Fraud, (3) Negligent

Misrepresentation, (4) Declaratory Judgment, (5) Quiet Title, and (6) Rescission. On

April 19, 2010, OneWest moved to dismiss the Second Amended Complaint. (Doc.

# 19.) On May 6, 2010, Mrs. Puga responded to OneWest’s motion to dismiss. (Doc.

# 20.) No response from Mr. Puga has been filed. On May 17, 2010, OneWest filed its

reply. (Doc. # 21.)

II. Legal Standard

On a motion to dismiss under Fed. R. Civ. P. 12(b)(6), all allegations of material

fact are assumed to be true and construed in the light most favorable to the nonmoving

party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). 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.” Bell Atl. Corp.

v. Twombly, 550 U.S. 544, 570 (2007). “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, the Court must identify allegations in the complaint that are not entitled to

the assumption of truth. Id. at 1949, 1951. The principle that a court accepts as true all of

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the allegations in a complaint does not apply to legal conclusions or conclusory factual

allegations. Id. at 1949, 1951. 

 Second, the Court must determine whether the factual allegations plausibly

suggest an entitlement to relief. Id. 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. 

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).

III. Analysis

A. Count I: Breach of Contract – Covenant of Good Faith and Fair

Dealing

“The law implies a covenant of good faith and fair dealing in every contract,”

which requires that “neither party will act to impair the right of the other to receive the

benefits which flow from their agreement or contractual relationship.” Rawlings v.

Apodaca, 151 Ariz. 149, 153, 726 P.2d 565, 569 (1986). Count I of the Second Amended

Complaint does not allege that Mrs. Puga did not receive the loan she was promised or

that she was prevented from using the loan proceeds to build a house as she had intended. 

It does not allege that any of the Defendants did something after the contract was

executed that prevented her from obtaining the benefits that were expected to flow from

the contract. It does allege that Mrs. Puga defaulted on the loan.

Count I alleges that Mrs. Puga intended to have monthly payments of $4,000 or

less, the maximum interest rate on the loan was 12.95%, she did not know the amount of

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her monthly payment when she signed the Note, and the initial loan payment, including

principal, interest, taxes, and insurance, was approximately $5,300. It further alleges that

Defendant IndyMac “knowingly set the payment amount at an amount that would injure

Plaintiff’s right to receive the benefit of her bargain and did not disclose the payment

amount to her in advance of signing the note.” 

Although Defendant IndyMac is the entity that Mrs. Puga alleges knew or should

have known that she could not afford the payment determined under the terms of the

Note, Mrs. Puga alleges that because OneWest is the entity that foreclosed on the

Property, OneWest holds Defendant IndyMac’s obligations under the Note. Mrs. Puga

also alleges that although there is no pre-sale assignment of the Note and Deed of Trust

from IndyMac Bank to OneWest, IMB, or any other entity, “IMB (a OneWest company)

appears to be identical to IndyMac, or in possession of IndyMac’s assets and obligations,

since only the beneficiary may foreclose on real property.” Nevertheless, the

relationships and transfers of assets and liabilities among the various entities need not be

determined to decide that Mrs. Puga has not stated a claim for breach of the implied

covenant of good faith and fair dealing by any of the Defendants.

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

can be granted.

B. Count II: Fraud

Count II alleges that “IndyMac fraudulently induced Plaintiff into entering into the

loan at issue by implicitly and explicitly representing that she qualified for and could pay

for the loan at issue” and “Defendants knew or should have known that Plaintiff could not

afford the loan, and yet made the loan.” Count II alleges that Mrs. Puga “relied on

IndyMac to give her a loan that she could afford, and believed that the lender would tell

her if she didn’t qualify for an affordable term.” It further alleges she “had a right to rely

on the fact that Indy Mac should not make a loan that she could not repay.” Mrs. Puga

offers no authority to support her legal theory that a lender commits fraud, without

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making any false statements, by making a loan to an applicant without advising her not to

accept the loan she seeks. 

Although no specific language is required in pleading fraud, elements constituting

fraud must be found considering the pleading as a whole. Spudnuts, Inc. v Lane, 131

Ariz. 424, 426, 641 P.2d 912, 914 (Ct. App. 1982). Arizona law requires proof of nine

elements of fraud: (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker’s

knowledge of its falsity or ignorance of its truth; (5) the speaker’s intent that it be acted

upon by the recipient in the manner reasonably contemplated; (6) the hearer’s ignorance

of its falsity; (7) the hearer’s reliance on its truth; (8) the hearer’s right to rely on it; and

(9) the hearer’s consequent and proximate injury. Marcus v. Fox, 150 Ariz. 341, 344, 723

P.2d 691, 693 (Ct. App. 1985), vacated in part by 150 Ariz. 333, 723 P.2d 682 (1986). In

essence, Mrs. Puga contends the elements of fraud are satisfied by alleging IndyMac gave

her an $820,000 loan but failed to tell her that if she had no assets or income other than

her $15.00/hour job, she could not afford an $820,000 loan, and if IndyMac gave her a

loan for $820,000 based on the income information she supplied, then she had the right to

rely on the loan offer as communicating that she would be able to repay the loan under its

stated terms—which constituted an implied false representation. But a lender’s

willingness to provide a loan does not assure a borrower that she will be able to satisfy

the loan’s repayment terms; it represents only that the borrower meets the lender’s

conditions for the loan, however minimal they may be. She had no right to rely on any

representation implied by IndyMac’s loan offer to her.

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

can be granted.

C. Count III: Negligent Misrepresentation

For Count III, the Second Amended Complaint alleges only the following: “To the

extent that any acts by Defendants in Count II above constitute negligence rather than

intention[al] conduct; said conduct as set forth constitutes Negligent Misrepresentation.” 

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For reasons stated regarding Count II, Count III also will be dismissed for failure to state

a claim upon which relief can be granted. 

D. Count IV: Declaratory Judgment, Count V: Quiet Title, and Count

VI: Rescission

Counts IV (Declaratory Judgment), V (Quiet Title), and VI (Rescission) seek relief

based on Plaintiff prevailing on one or more of the other claims. As pled, both the

contract and the fraud claims must be dismissed, and the Second Amended Complaint

does not include any other substantive basis for granting Mrs. Puga the relief sought in

Counts IV, V, and VI.

The Second Amended Complaint does not allege a cause of action based on the

failure to record documents regarding the transfer of beneficial interest in the Note before

the trustee’s sale. Instead, in Count V (Quiet Title), it alleges that either (a) one of the

Defendants, whichever was the appropriate beneficiary at the time of the trustee’s sale, is

subject to Mrs. Puga’s claims, or (b) the trustee’s sale was invalid:

51. IMB has represented itself as the beneficiary of the note. 

Either IMB (and therefore OneWest Bank) was the appropriate beneficiary

at the time of the sale (and therefore shares the identity of IndyMac Bank,

FSB and is subject to the claims set forth herein); or it was not the

beneficiary, in which case the purported sale is invalid.

. . . .

53. In [the Corporate Assignment of Deed of Trust], IndyMac

Federal Bank, FSB purports to be the holder of the Deed of Trust and to

transfer its interest to Defendant OneWest. If the purported Trustee’s Deed

is valid, the attempted assignment is a nullity, as the sale extinguished all

rights under the Deed of Trust. A.R.S. § 33-811(E). If however, IndyMac

Federal Bank, FSB remained the holder at all relevant times, then the

purported transfer by Trustee’s sale to IMB REO, LLC is invalid, the sale

was improper and should be reversed, with title restored to Plaintiffs.

(Doc. # 18.) Both parties’ briefs discuss matters beyond the record concerning these

allegations. Count V on quiet title does not state any claim upon which relief can be

granted, but Plaintiff will be given one last chance to amend Count V to attempt to state a

claim. 

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Therefore, Counts IV, V, and VI 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, “[l]eave need not be granted where the amendment of the complaint would

cause the opposing party undue prejudice . . . or creates undue delay.” Ascon

Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989). The district court’s

discretion to deny leave to amend a complaint is “especially broad” where the plaintiff

already has had one or more opportunities to amend his complaint. Id. at 1161. “Leave

to amend need not be given if a complaint, as amended, is subject to dismissal.” Moore,

885 F.2d at 538. “Futility 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). 

Mrs. Puga has unsuccessfully amended her complaint twice. There is no basis for

concluding that further amendment likely will correct the Second Amended Complaint’s

deficiencies, except for Count V. The Second Amended Complaint therefore will be

dismissed without leave to amend, except for Count V.

IT IS THEREFORE ORDERED that Defendant OneWest Bank, FSB’s Motion to

Dismiss Plaintiffs’ Second Amended Complaint (doc. # 19) is granted. 

IT IS FURTHER ORDERED that the Second Amended Complaint (doc. # 18) is

dismissed with prejudice for failure to state a claim upon which relief can be granted,

except for Count V, as to which Plaintiff may file an amended complaint by June 16. If

no further amended complaint is filed by June 16, 2010, the Clerk shall then enter

judgment dismissing this action with prejudice and shall terminate this case.

DATED this 2nd day of June, 2010.

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