Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-02301/USCOURTS-azd-2_11-cv-02301-2/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

1

 At this point, it is undisputed that Bank of America, N.A., is the successor by

merger to BAC Home Loans Serving LP.

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Karoly Quintana, 

Plaintiff, 

vs.

Bank of America, Countrywide Home

Loans Inc., Countrywide Financial Corp.,

Mortgage Electronic Registration Systems,

Defendants. 

)

)

)

)

)

)

)

)

)

)

)

)

)

)

No. CV 11-2301-PHX-JAT

ORDER

This case arose when someone authorized a Trustee sale on Plaintiff’s residence.

Prior to this attempted Trustee sale, Plaintiff alleges as follows. In April 2009, Plaintiff

inquired with BAC Home Loans Servicing LP about applying to modify her loan.1

 The bank

representative advised Plaintiff that she was required to miss three months payments to

qualify for a loan modification. Plaintiff missed three months payments. Plaintiff applied

for a loan modification. 

While Plaintiff’s application was pending, the bank accelerated Plaintiff’s loan.

MERS filed a substitution of Trustee appointing Recontrust, N.A. as the Trustee on

Plaintiff’s Deed of Trust. On July 31, 2009, Recontrust, N.A. filed a notice of Trustee sale.

Case 2:11-cv-02301-JAT Document 50 Filed 02/24/14 Page 1 of 15
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

 Although the reply never defines this acronym, the Court is confident it means Bank

of America, N.A.

- 2 -

It is unclear who actually owned the note on Plaintiff’s home at the time she was

attempting to obtain the modification. However, in the reply to the motion to dismiss,

Defendants state: “Pleadings on file in this Court, including a declaration from a bank

employee, unequivocally demonstrate that BANA2

 remains the servicer of Plaintiff’s loan

with the authority to consider modification applications and to negotiate a settlement of the

case.” Doc. 38 at 3. The Reply further states that after April 2012 the beneficial interest in

the Deed of Trust was transferred by MERS to Deutsche Bank. Id. It is unclear whether

Deutsche Bank retains such interest as of today.

Plaintiff filed this lawsuit in October 2011. In March 2012, the parties stipulated to

dismiss this lawsuit while Plaintiff was considered for a new loan modification. Plaintiff

then submitted a loan modification application, which Plaintiff alleges was intentionally lost

by Bank of America, N.A., and never considered by Bank of America, N.A. 

In December 2012, Recontrust, N.A. sent a notice of Trustee sale to Plaintiff on behalf

of Deutsche Bank. In March 2013, Plaintiff moved to reopen this case and the Court granted

the motion. The Court later granted a preliminary injunction to stop the Trustee sale of the

residence. On April 2, 2013, Plaintiff filed an amended complaint. Now pending is

Defendants’ motion to dismiss the amended complaint and Defendants’ motion for

clarification.

I. Motion to Dismiss

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

Case 2:11-cv-02301-JAT Document 50 Filed 02/24/14 Page 2 of 15
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 -

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. n.3 (citing 5 C. Wright & A. Miller, Federal Practice

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

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).

Additionally, claims of fraud must be plead with particularity under Federal Rule of

Civil Procedure 9(b).

Pursuant to Fed.R.Civ.P. 9(b), “in order for a complaint to allege fraud with

the requisite particularity, ‘a plaintiff must set forth more than the neutral facts

necessary to identify the transaction. The plaintiff must set forth what is false

or misleading about a statement, and why it is false. In other words, the

plaintiff must set forth an explanation as to why the statement or omission

complained of was false or misleading.’” [footnote omitted] Yourish v. Cal.

Amplifier, 191 F.3d 983, 993 [9th Cir. 1999] (quoting In re GlenFed, 42 F.3d

at 1548 [9th Cir. 1994]).

Williamson v. Allstate Insurance Co., 204 F.R.D. 641, 644-45 (D. Ariz. 2001).

Case 2:11-cv-02301-JAT Document 50 Filed 02/24/14 Page 3 of 15
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 -

A. Count 1: Fraud

1. 2009 Fraud

Plaintiff claims Defendant Bank of America, N.A as successor through merger to

BAC Home Loans Servicing LP (hereinafter BofA) committed fraud against her in 2009

when it (through its agents) advised her to miss three months of payments on her home loan.

Plaintiff claims this was fraud because BofA never intended to consider her for a loan

modification, and instead induced her to default on her loan, which caused her harm,

including the acceleration of her debt to the point that she now cannot come current on the

loan.

To plead a claim for fraud, Plaintiff must claim that: defendant made a false, material

misrepresentation that he knew was false or was ignorant of its truth, with the intention that

plaintiff would act on it in a manner that was reasonably contemplated, that plaintiff was

ignorant of the representation’s falsity, rightfully relied on the truth of the representation, and

sustained consequent and proximate damage. Haisch v. Allstate Inc. Co., 5 P.3d 940, 944

(Ariz. Ct. App. 2000).

Here, Plaintiff claims that Defendant’s agent advised her to miss three months

payments on her house to be considered for a mortgage modification. She said that this

statement was false because Defendant never intended to consider her for a mortgage

modification. Further, Plaintiff was induced to miss the three months of payments, which

was foreseeable. Plaintiff did not know she would not be considered for the modification and

relied on the advice of Defendant’s agent.

Finally, Plaintiff claims she suffered the damage of not receiving a modification and

also not being able to come current on her house payments. Defendant argues that Plaintiff

was not damaged because, due to the size of her loan she was never eligible for a

modification. However, the Ninth Circuit Court of Appeals has instructed this Court that this

type of defense, “presents a factual dispute that cannot be resolved [at the motion to dismiss

stage].” Corvello v. Wells Fargo, 728 F.3d 878, 885 (9th Cir. 2013) (citation omitted).

Further, even if Plaintiff was ineligible for the modification, she has alleged that she received

Case 2:11-cv-02301-JAT Document 50 Filed 02/24/14 Page 4 of 15
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

- 5 -

notice that, as a consequence of her missing three payments, her note had been accelerated.

Therefore, she would have been responsible immediately for the full amount of the note plus

any late fees and penalties, and that she could not make such a payment. This is a sufficient

allegations of harm to survive a motion to dismiss. Finally, Plaintiff claims that her credit

rating was damaged by Defendant’s actions. The Court finds this too is a sufficient

allegation of injury to survive a motion to dismiss.

Accordingly, Defendant’s motion to dismiss the 2009 fraud allegation will be denied.

2. 2012 Fraud

Next Plaintiff claims that Defendant fraudulently induced her into settling this lawsuit

in 2012. More specifically, Plaintiff claims that Defendant, though counsel, agreed to

considering her for a loan modification if she dismissed her suit; but in reality Defendant

never intended to consider her modification request, and in fact did not consider it.

In Thompson, v. Paul, 657 F.Supp.2d 1113, 1118-23 (D. Ariz. 2009), the Court

discussed extensively the cause of action against opposing counsel when there is a fraudulent

inducement to settle. The Court finds the test against the client, on whose behalf the lawyer

is acting, would be the same.

For purposes of the motion to dismiss, Defendant BofA does not dispute that it agreed

to consider Plaintiff’s request for a modification but did not ever actually consider it.

Instead, Defendant argues that BofA was the correct party to consider the request, despite

Plaintiff’s allegations to the contrary, and that Plaintiff did not ultimately suffer any harm.

Plaintiff argues that she has had to incur attorneys’ fees to reopen this case. Defendant

persists that Plaintiff did not suffer harm because any attorneys’ fees incurred are not a

“harm” because attorneys’ fees for fraud causes of action are not recoverable.

Whether attorneys’ are recoverable in a tort action is a far more complex question than

Defendant suggests. See generally, Merchant Trans. Sys., Inc. v. Nelcela, Inc., 2010 WL

1336956 (D. Ariz. March 31, 2010).

As a general rule, attorney’s fees are not permitted in cases arising out of tort.

An exception exists, however, where the tort claim arises out of a contract. The

“test to be applied in determining whether the ‘arising out of contract’

Case 2:11-cv-02301-JAT Document 50 Filed 02/24/14 Page 5 of 15
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 -

language of A.R.S. § 12–341.01 is applicable is whether the ‘action in tort

could not exist but for the breach of the contract.’” Cauble v. Osselaer, 150

Ariz. 256, 260, 722 P.2d 983 (App.1986) (quoting Sparks v. Republic Nat'l

Life Ins. Co., 132 Ariz. 529, 543, 647 P.2d 1127 (1982)). 

Id. at *1.

Thus, while generally under Arizona law, attorneys’ fees are not shifted to the

prevailing party in tort actions, they can be recovered if the tort claim arises out of contract.

Here, the parties’ settlement agreement could arguably be characterized as a contract. Thus,

Plaintiff’s tort claim for fraud in either the inducement to enter that contract or in the

execution of that contract could arise out of contract.

Alternatively, in U.S. Fidelity & Guaranty Company v. Frohmiller, the Arizona

Supreme Court stated,

It is generally held that where the wrongful act of the defendant has involved

the plaintiff in litigation with others or placed him in such relation with others

as makes it necessary to incur expense to protect his interest, such costs and

expenses, including attorneys’ fees, should be treated as the legal

consequences of the original wrongful act and may be recovered as damages.

227 P.2d 1007, 1009 (Ariz. 1951) (internal quotation and citation omitted).

Here, like Frohmiller, Plaintiff is not seeking fee shifting of her attorneys’ fees posttrial by the Court. Instead, she is alleging that the attorneys’ fee incurred are her damages

that she will prove to the jury. Further, Plaintiff has alleged that Defendant BofA’s actions

in failing to consider her loan modification have compelled Plaintiff into litigation with the

owner of the note and the Trustee conducting the sale. As a result, for purposes of the

motion to dismiss for failure to state a claim, the Court finds this to be a sufficient allegation

of damages such that the Court cannot conclude that the claim is not plausible.

Accordingly, Defendant’s motion to dismiss the 2012 fraud allegation will be denied.

B. Count 2 - Covenant of Good Faith and Fair Dealing

The parties agree that the covenant of good faith and fair dealing is implied in every

contract. See Rawlings v. Apodaca, 726 P.2d 565, 569 (Ariz. 1986). Defendant further

points out that there must be a contract between the parties before there can be a breach of

the covenant of good faith and fair dealing. See Norman v. State Farm Mutual Auto. Inc.

Case 2:11-cv-02301-JAT Document 50 Filed 02/24/14 Page 6 of 15
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 -

Co., 33 P.3d 530, 537 ¶ 25 (Ariz. App. 2001).

Here, Defendant BofA argues that the Deed of Trust imposes no obligation on BofA

with respect to loan modification. Doc. 33 at 7. The Court is unclear if this argument is

premised on the theory that the Deed of Trust has no duties on anyone as to modifications,

or if this argument is that BofA is not a party to the Deed of Trust so there would be no duties

on BofA specifically.

This argument dovetails with another argument made by the Defendants. Specifically,

Defendants argue that the amended complaint makes no individual allegations against

MERS, Countrywide Home Loans, Inc., Countrywide Financial Corp., and Deutsche Bank;

thus, those Defendants should be dismissed under Twombly.

Regarding which Defendant is directly responsible for which act, Defendant BofA has

asserted that it has the authority to modify the loan. Doc. 38 at 3. BofA also states that

MERS transferred the beneficial interest in Plaintiff’s Deed of Trust to Deutsche Bank in

April 2012. BofA does not indicate who owns the note that the Deed of Trust secures. Thus,

taking BofA’s statements are true, BofA is an agent of whoever owns the note for purposes

of note modification. However, on this record, the Court does not know for whom BofA is

acting as an agent. BofA goes on to argue that this failure in allegation is Plaintiff’s failure

and justifies dismissal of these Defendants.

On this record, BofA is asserting that it is it the servicing agent for whomever owns

this note (and perhaps that is Deutsche Bank consistent with the April 2012 beneficiary

transfer on the Deed of Trust). Plaintiff does not know, apparently, who owns this note.

Generally, the Court agrees with Defendant that a Plaintiff must plead particular claims

against particular Defendants and cannot, consistent with Twombly, make global allegations

against all Defendants as a group. 

However, the application of this general rule in this case produces an untenable result.

Specifically, the parties who currently have or have previously had an interest in this note,

in a principal or agent capacity, have made several transfers outside of Arizona’s recording

system. Previously, this Court has held that MERS can act as a nominee beneficiary in some

Case 2:11-cv-02301-JAT Document 50 Filed 02/24/14 Page 7 of 15
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

 The result is bolstered by the Arizona Court of Appeals recent holding in

Steinberger v. McVey ex rel. County of Maricopa, 2014 WL 333575, *7-8 ¶¶ 37-41 (Ariz.

Ct. App. January 30, 2014), in which the Court recognized a “cause of action to avoid a

trustee’s sale” and held that a borrower could bring this cause of action if the borrower was

in default and possessed a good faith basis to dispute the authority of an entity to conduct a

trustee’s sale.

- 8 -

capacities. In re Mortgage Elec. Reg. Sys., 2011 WL 251453, *5 (D. Ariz. 2011) (applying

Nevada law). However, the Court did not hold that all parties to the note and their agents

could escape liability so long as the Plaintiff could not ascertain, as a result of Defendants’

actions, who was responsible party. Thus, BofA’s argument that it has no duties under the

note, and Plaintiff’s inability to obtain information other than through discovery regarding

who did have duties under the note, means that Plaintiff has stated a plausible claim against

all Defendants.3

 This ruling is without prejudice to any Defendant re-raising on summary

judgment that such Defendant does not have any duties under this note.

Next, the Court returns to whether Plaintiff has sufficiently alleged a breach of the

duty of good faith and fair dealing. In Southwest Sav. And Loan Ass’n v. SunAmp Sys., 838

P.2d 1314, 1320 (Ariz. Ct. App. 1992), the Court stated:

In this case, therefore, inquiry does not end with recognition that Southwest

had contractual authority to freeze, and ultimately terminate, SunAmp’s credit

line. The question is whether the jury might reasonably have found that

Southwest wrongfully exercised this power “for a reason beyond the risks”

that SunAmp assumed in its loan agreement, [citation omitted] or for a reason

inconsistent with SunAmp’s “justified expectations,”[citation omitted]

Similarly, summarizing Southwest, the Arizona Court of Appeals in Bike Fashion

Corp. v. Kramer, 46 P.3d 431, 435 ¶ 17 (Ariz. Ct. App. 2002) stated:

...a party may breach the implied covenant of good faith and fair dealing even

if the express terms of the contract speak to a related subject. In SunAmp

Systems, 172 Ariz. at 559, 838 P.2d at 1320, the court examined whether

Southwest Savings wrongfully exercised its contractual authority to freeze

SunAmp’s credit line for a “reason inconsistent with SunAmp’s ‘justified

expectations’” under the contract. Although the court determined that

“SunAmp had no justifiable expectation that a reasonable lender would [have]

act[ed] differently,” id. at 561, 838 P.2d at 1322, the court nevertheless

examined whether Southwest Savings had breached the covenant of good faith

and fair dealing despite the existence of a contract term granting Southwest

Savings discretion to freeze SunAmp’s credit line.

Case 2:11-cv-02301-JAT Document 50 Filed 02/24/14 Page 8 of 15
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

 In its reply, BofA suggests that Plaintiff’s good faith and fair dealing claim stems

from the 2012 dismissal of this lawsuit. Doc. 38 at 4. Indeed Plaintiff’s response states,

“Plaintiff bases her good faith and fair dealing claim on the conduct allegations that BANA

misled her and her Counsel to believe that BANA desired to re-start the loan modification

process when BANA asked her to dismiss her suit without prejudice.” Doc. 37 at 8.

However, the amended complaint does not include such an allegation in the good faith and

fair dealing count of the amended complaint. Thus, the Court does not find that a claim

regarding good faith and fair dealing was pleaded in the amended complaint with regard to

the 2012 settlement being a third contract to which the duty of good faith and fair dealing

would have attached.

5

 Further, even if this Court did not allow this claim to proceed under a covenant of

good faith and fair dealing theory, the facts as alleged would still state a claim under the tort

theory of a breach of the Good Samaritan rule. See Steinberger v. McVey ex rel. County of

Maricopa, 2014 WL 333575, *9 ¶¶ 47-48 (Ariz. Ct. App. January 30, 2014) (holding that

the Good Samaritan doctrine allows a person in Plaintiff’s position to sue the bank if through

the modification process: “1) [the bank] undertook to render services to [plaintiff] that [it]

should have recognized were necessary for the protection of [plaintiff’s] property, (2) [the

bank’s] failure to exercise reasonable care while doing so increased the risk of harm to

[plaintiff], and (3) [plaintiff] was in fact harmed because of [the bank’s] actions.”)

- 9 -

Here, Plaintiff seems to have two contract theories. See Doc. 24 at 15-16. The first

is the contract of the note that secures her Deed of Trust. The second is a verbal forbearance

agreement on that note during her original modification request.4

Beginning with the contract that is represented by the note and Deed of Trust, based

on BofA’s representations in the reply, it appears BofA, as the agent for the obligee of the

note, retained the authority to modify the note. Further, Plaintiff has alleged that employees

of BofA told her that she would be considered for a modification. Given that it is undisputed

that the note and Deed of Trust allowed for modifications, and given Plaintiff’s allegations

that the employees represented that Plaintiff would be considered for a modification, and the

further allegation that BofA did not consider Plaintiff for a modification, the Court finds that

Plaintiff has sufficiently alleged that BofA exercised its discretion under the contract (by

refusing to consider Plaintiff for a modification) in a way that was inconsistent with

Plaintiff’s reasonable expectations. Accordingly, Plaintiff has made a sufficient allegation

to survive a motion to dismiss on this claim.5

Case 2:11-cv-02301-JAT Document 50 Filed 02/24/14 Page 9 of 15
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 -

Next, the Court will consider Plaintiff’s alleged second contract theory, which is a

verbal agreement to forbear foreclosure on the house while the bank considered Plaintiff for

a modification. BofA argues this theory of a breach of the duty of good faith and fair dealing

should be dismissed because, assuming such a promise to forebear was made, it violates the

statute of frauds.

Plaintiff’s third cause of action is for promissory estoppel. Promissory estoppel, if

enforced against Defendant, is an exception to the statute of frauds in certain circumstances.

See Mullins v. S. Pac. Transp. Co., 851 P.2d 839, 841 (Ariz. Ct. App. 1992) (promissory

estoppel can overcome a statute of frauds defense, if “the party asserting the Statute of

Frauds defense has misrepresented that the statute’s requirements have been met or promises

to put the agreement in writing”). To state a claim for promissory estoppel, Plaintiff must

show: (1) Defendant made a promise to Plaintiff; (2) Defendant should have reasonably

foreseen that Plaintiff would rely on that promise; (3) Plaintiff actually relied on that promise

to her detriment; and (4) Plaintiff’s reliance on the promise was justified. Higginbottom v.

State, 51 P.3d 972, 977, ¶ 18 (Ariz. Ct. App. 2002).

Here, Plaintiff alleges that she was told to miss three payments on her note and then

she would be considered for a modification. Plaintiff further claims that she was promised

that the bank would forebear on foreclosure of her house until it resolved her modification

request. Such allegation was a promise from Defendant on which reliance was foreseeable

and actually occurred. Finally, Plaintiff was justified in such reliance. Thus, Plaintiff states

a claim for promissory estoppel. 

Next, in her amended complaint, Plaintiff alleges that Defendant agree to “process”

her loan modification application. Doc. 24 at 17. Plaintiff implies that Defendant did not

assert that the Statute of Frauds would bar any such application or modification. While this

does not rise to the level of the affirmative second promise envisioned by Mullins, at the

same time the Court cannot dismiss this claim because Plaintiff at least suggests that she was

lead to believe that everything required for a successful modification would be completed.

Accordingly, the Court will not dismiss this claim.

Case 2:11-cv-02301-JAT Document 50 Filed 02/24/14 Page 10 of 15
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

 BofA argues that this Court should dismiss all theories pleaded in the amended

complaint regarding the duty of good faith and fair dealing because, BofA argues (citing

Arizona Local Rule Civil 7.2(i)), Plaintiff did not adequately respond to BofA’s arguments

in her response to the motion to dismiss. The Court cannot grant a motion to dismiss under

Local Rule 7.2(i) unless the Court weighs several factors: “‘(1) the public’s interest in

expeditious resolution of litigation; (2) the court’s need to manage its docket; (3) the risk of

prejudice to the defendants; (4) the public policy favoring disposition of cases of their merits;

and (5) the availability of less drastic sanctions.’ Henderson v. Duncan, 779 F.2d 1421, 1423

(9th Cir.1986).” Ghazali v. Moran, 46 F.3d 52, 53 (9th Cir. 1995). Here, neither party has

addressed these factors and the Court declines to do so sua sponte. Accordingly, assuming

BofA is correct that Plaintiff did not respond to certain portions of the motion to dismiss, the

Court will not grant portions of the motion to dismiss as a sanction for Plaintiff not

responding.

- 11 -

Further such claim overcomes Defendant’s argument that Plaintiff’s second theory of

a breach of the covenant of good faith and fair dealing is barred by the statute of frauds.

Accordingly, the motion to dismiss either of Plaintiff’s theories of a breach of the covenant

of good faith an fair dealing will be denied.6

C. Count 3 - Promissory Estoppel

For the reasons stated in the foregoing section, the Court will not dismiss the

promissory estoppel count of the amended complaint. The Court notes that in response to

the motion to dismiss, in addition to the above issues, Plaintiff also discusses Defendants’

alleged promises which caused her to dismiss this suit previously. However, these facts are

not alleged in her amended complaint in the section on promissory estoppel; therefore, the

Court has not considered them as the factual predicate of this claim.

D. Count 4 - Arizona Consumer Fraud Act

Defendant argues that Plaintiff’s Arizona Consumer Fraud Act claim must be

dismissed because it is barred by the statute of limitations. Citing A.R.S. § 12-541(5),

Defendant argues the statute of limitations is one year. Citing A.R.S. § 12-543, Plaintiff

argues the statute of limitations is three years. 

“A consumer fraud claim must be filed within one year after the cause of action

accrues.” Steinberger v. McVey ex rel. County of Maricopa, 2014 WL 333575, *16 ¶ 78

Case 2:11-cv-02301-JAT Document 50 Filed 02/24/14 Page 11 of 15
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 -

(Ariz. Ct. App. January 30, 2014). In her amended complaint, Plaintiff alleges that the fraud

that forms the basis for this claim was the bank employee’s statements that she could qualify

for HAMP and that she had to be 90 days delinquent on her payments. Doc. 24 at 18.

Plaintiff further alleges that these statements were made in April 2009. Id. at 6. The

complaint in this case was filed October 21, 2011. Doc. 1-1 at 8. Accordingly, this claim

is barred by the one-year statute of limitations and the motion to dismiss will be granted.

E. Count 5 - Fair Debt Collection Practices Act (“FDCPA”)

Defendant argues the FDCPA claim must be dismissed because it is barred by the one

year statute of limitations. Doc. 38 at 2 (citing 15 U.S.C. § 1692k(d)). In her response,

Plaintiff argues that her FDCPA claim is timely, but does not offer any reason why. Doc. 37

at 4. Plaintiff suggests her FDCPA claim is part of her state law fraud claim; however, the

Court disagrees because an FDCPA claim is a distinct federal cause of action.

In her amended complaint, Plaintiff alleges two FDCPA violations. First, Plaintiff

asserts that her FDCPA claim is based on the same misleading statements as her Arizona

Consumer Fraud Act claim, which occurred in April of 2009. Doc. 24 at 20, ¶ 145. For the

same reason as the preceding section, a claim based on these statements is barred by the oneyear statute of limitations.

Second, Plaintiff asserts a violation of the FDCPA because the Defendants in this case

who are attempting to collect on her note by foreclosing the property that secures the note

are not the correct parties to foreclose. Doc. 24 at 20 ¶ 146. Such an allegation would span

the life of the collection efforts, which continue through today. Therefore, this theory of a

violation of the FDCPA is not barred by the statute of limitations. 

Alternatively, Defendant BofA argues that it should be dismissed because it does not

fall within the meaning of a debt collector under the FDCPA. Doc. 33 at 9. In support of this

argument, Defendant cites two Arizona district court cases. See Mansour v. Cal-Western

Reconveyance Corp., 618 F.Supp.2d 1178, 1182 (D. Ariz. 2009); Diessner v. Mort. Elec.

Reg. Sys., 618 F.Supp.2d 1184, 1188 (D. Ariz. 2009).

However, the Eleventh Circuit has held otherwise. See Reese v. Ellis, Painter,

Case 2:11-cv-02301-JAT Document 50 Filed 02/24/14 Page 12 of 15
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 -

Ratterree & Adams, LLP, 678 F.3d 1211, 1217-18 (11th Cir. 2012). The most recent Ninth

Circuit Court of Appeals case on this point that the Court could locate is in accord with the

Eleventh Circuit; however, in that case the bank conceded that it was a debt collector. See

Corvello v. Wells Fargo Bank, N.A., 728 F.3d 878, 885 (9th Cir. 2013).

Specifically, BofA argues that under 15 U.S.C. § 1692a(6)(F)(ii) and (iii), it is exempt

from the definition of a debt collector because it is either the successor in interest to the loan

originator (ii) or it “obtained” this debt at a time the debt was not in default (iii). On this

record, the Court cannot determine whether BofA actually qualifies for either of these

exemptions. 

Specifically, BofA argues that it is the successor in interest to Countrywide, and is

therefore the loan originator. Doc. 33, at 9, line 22-23. However, BofA also alleges that the

original beneficiary on the Deed of Trust was MERS, not Countrywide. Doc. 38 at 3, lines

23-24; Doc. 33, page 10, lines 15-16. Plaintiff alleges that BofA (as successor to

Countrywide) was a servicer for Harborview 2006-Trust, not a holder of the note. Doc. 24

at 8, ¶ 53. At oral argument on April 1, 2013, counsel for BofA stated that the original loan

was made by American Wholesalers (which may be a division of Countrywide). Moreover,

as of April 2012, BofA argues it has no interest in this note, and is merely a servicer, because

the beneficial interest in the Deed of Trust was transferred to Deutsche Bank. Doc. 38 at 3,

line 22-24. Therefore, the Court cannot conclude on this record that BofA is the successor

in interest to the loan originator. Thus, it is possible that 15 U.S.C. § 1692a(6)(F)(ii) does

not apply and the Court cannot grant a motion to dismiss on this basis.

Next, BofA argues that it “obtained” this note in April of 2009 before it was in

default. Doc. 33 at 9-10, lines 23-1. Again, while that may have be true, as of April 2012,

it a appears Deutsche Bank held the beneficial interest in the Deed of Trust (the Court cannot

determine if the interest in the note was also transferred), and that BofA is just the servicer.

Doc. 28 at 3, lines 23-24. This transfer would have occurred after the loan was in default,

potentially precluding the application of 15 U.S.C. § 1692a(6)(F)(iii).

Finally, BofA argues that Plaintiff has failed to alleged that BofA’s actions involved

Case 2:11-cv-02301-JAT Document 50 Filed 02/24/14 Page 13 of 15
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

 BofA filed the motion to dismiss this claim only on its own behalf and emphasized

that it did not notice the Trustee sale; ReconTrust Company N.A. did. Doc. 33, at 10, lines

20-23. Another Court in this District has held that the Trust company might be liable as a

debt collector under the FDCPA. See O’Quin v. Bank of America, N.A., CV-12-744-PHXROS, 4-7 (D. Ariz. Sept. 10, 2012). Accordingly, the Court will not dismiss any Defendants

from this claim because the Court cannot deduce the full relationship of the parties.

8

 BofA requested oral argument on this motion. Because both parties argued it on

April 1, 2013, the Court has not set a second oral argument.

- 14 -

the collection of a debt or actual damage. Here, the Court agrees with the Eleventh Circuit

that trying to collect the note that secures the deed of trust qualifies as the collection of a

debt. Further, Plaintiff alleges that her credit report has been adversely impacted and that her

note has been accelerated, both of which could be actual damage. Accordingly, the Court

will not dismiss the FDCPA claim for failure to state a claim.7

II. Motion for Clarification8

On March 27, 2013, this Court issued an Order reopening this case. Doc. 17. In that

Order, the Court stated:

...Defendants have made no argument on the merits opposing relief under Rule

60(b). Thus, the Court will grant the motion as unopposed under Local Rule

Civil 7.2(i), but the Court will require service under Rule 4.

Alternatively, because Defendants did not respond on the merits, Plaintiff’s

facts are now undisputed for purposes of this motion. On this record, the

Court finds that defense counsel agreeing to a settlement to reopen a

modification process on a loan that no longer belonged to his client would be

a fraud, misrepresentation, or misconduct by an opposing party that justifies

Rule 60(b) relief.

Doc. 17 at 2-3.

In the Motion for Clarification, Defendants state:

Defendants respectfully request that the Court clarify or modify its Order

regarding the suggestion that counsel or Defendants admitted that they

actually committed any fraud or misrepresentation by suggesting that Plaintiff

dismiss this case while being considered for a loan modification. This order,

respectfully, misconstrues the allegations in the Plaintiff’s Opening Brief and

is not supported in the law or evidence, and, with due respect, seems to exceed

authority granted to this Court under Local Rule 7.2(i).

Doc. 20 at 2 (emphasis added).

Case 2:11-cv-02301-JAT Document 50 Filed 02/24/14 Page 14 of 15
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

- 15 -

To the extent Defendants argue that this Court may not reach an alternative holding

when the Court issues a ruling under Local Rule Civil 7.2(i), the Court denies “clarification”

on this point as the Order speaks for itself. Next, to the extent Defendants seek clarification

that Defendants did not admit that they committed fraud, again the Court believes the Order

speaks for itself. Nonetheless, the Court clarifies that the Court did not find that Defendants

or their Counsel admitted to any fraud.

III. Conclusion

IT IS ORDERED that the motion to dismiss (Doc. 33) is granted in part and denied

in part. The motion to dismiss count 4 (the Arizona Consumer Fraud Act claim) is granted.

The motion is denied in all other respects.

IT IS FURTHER ORDERED that the motion for clarification (Doc. 20) is granted

in part and denied in part as specified above.

DATED this 24th day of February, 2014.

Case 2:11-cv-02301-JAT Document 50 Filed 02/24/14 Page 15 of 15