Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-00201/USCOURTS-azd-2_11-cv-00201-2/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1441 Petition for Removal- Petition to Quiet Title

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Vance V. Frame, 

Plaintiff, 

vs.

Cal-Western Reconveyance Corporation;

US Bank, NA as Trustee Relating to the

Chevy Chase Funding LLC Mortgage

Backed Certificates, Series 2004-A;

Capital One, NA; and Chevy Chase Bank

FSB, 

Defendants. 

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No. CV-11-0201-PHX-JAT

ORDER

Pending before the Court is a Motion to Dismiss Plaintiff’s First Amended Complaint

filed by Defendants U.S. Bank, N.A. as Trustee Relating to the Chevy Chase Funding LLC

Mortgage Backed Certificates, Series 2004-A (“U.S. Bank”) and Capital One, N.A., for itself

and as successor-by-merger to Chevy Chase Bank, F.S.B. (“Capital One”) (Dkt. 26), and a

Motion to Dismiss Plaintiff’s First Amended Complaint filed by Defendant Cal-Western

Reconveyance Corporation (“Cal-Western”) (Dkt. 27). A hearing on the motions to dismiss

was held on August 31, 2011, and the Court now rules as follows.

I. BACKGROUND

Plaintiff’s lawsuit against Defendants arises in connection with a loan in the amount

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 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 the First Amended Complaint are

public records, the Court may properly take judicial notice of the undisputed facts contained

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

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of $181,900.00 that Plaintiff obtained from Chevy Chase Bank, F.S.B. (“Chevy Chase”) on

or about March 19, 2004. (Dkt. 22 at ¶ 8.) Plaintiff executed a promissory note in the

amount of the loan, and the loan was secured by the real property located at 1191 North

Melody Lane Circle, Chandler, Arizona 85225 (the “Property”). (Id.) The Deed of Trust

names Plaintiff as the borrower, Chevy Chase as the lender and trustee, and Mortgage

Electronic Registration Systems, Inc. (“MERS”), acting solely as a nominee for the lender

and lender’s successors and assigns, as the beneficiary. (Dkt. 22-1, Ex. A.)1

 Attached to the

Deed of Trust is an adjustable rate rider, which was executed by Plaintiff. (Id.)

Pursuant to an Assignment of Deed of Trust, dated October 8, 2010, MERS as

nominee for Chevy Chase, assigned its interest in the Deed of Trust to U.S. Bank. (Dkt. 27-

2, Ex. B.) The Assignment of Deed of Trust was executed by “Joe Krasovic, Asst. Sec.,” on

behalf of MERS, and recorded on November 24, 2010 as Maricopa County Recorder No.

20101030362. (Id.)

A Notice of Substitution of Trustee was executed by “Monica Hadley, AVP,” on

behalf of U.S. Bank, as beneficiary, on October 13, 2010. (Dkt. 22-1, Ex. C; Dkt. 27-3, Ex.

C.) The Notice of Substitution of Trustee was recorded on October 19, 2010, as Maricopa

County Recorder No. 20100913072, and appointed Cal-Western as the successor trustee.

(Id.)

Also on October 19, 2010, a Notice of Trustee’s Sale was recorded against the

Property naming U.S. Bank as the current beneficiary, and Cal-Western as the current trustee.

(Dkt. 22-1, Ex. B; Dkt. 27-4, Ex. D.) The Notice of Trustee’s Sale was executed by “Yvonne

Wheeler, AVP,” on behalf of Cal-Western, and recorded as Maricopa County Recorder No.

20100913073. (Id.) The trustee’s sale was originally scheduled for January 19, 2011. (Id.)

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Plaintiff applied for a loan modification, and his application was pending when the

Notice of Trustee’s Sale was sent to Plaintiff. (Id. at ¶ 49.) Plaintiff does not allege that he

was current on his loan payments when non-judicial foreclosure proceedings were initiated

against the Property. (Dkt. 22 at ¶ 48.) Nor does Plaintiff allege that at any time he

attempted to pay the outstanding balance of the loan.

The original complaint was filed in the Superior Court of Maricopa County, Arizona

on January 18, 2011. (Dkt. 1-1, Ex. A.) Also on January 18, 2011, the Superior Court

granted Plaintiff’ request for a temporary restraining order to prevent the trustee’s sale of the

Property. (Dkt. 8-2.)

Following removal of this action on January 31, 2011 (Dkt. 1), Defendants filed two

motions to dismiss (Dkt. 12, 14). After the first round of motions to dismiss were fully

briefed, Plaintiff filed the First Amended Complaint on March 11, 2011 without leave of the

Court. (Dkt. 22.) Notwithstanding the untimely filing, the Court subsequently permitted the

amendment, and denied the motions to dismiss without prejudice. (Dkt. 24.) In the First

Amended Complaint, Plaintiff asserts claims for intentional misrepresentation and consumer

fraud, requests an accounting of the loan, and seeks to quiet title to the Property by having

the promissory note rescinded and the deed of trust securing the Property released. (Dkt. 22

at ¶¶ 88–89.) Defendants filed the pending motions to dismiss all claims with prejudice.

II. LEGAL STANDARD

Defendants have moved to dismiss the First Amended Complaint (Dkt. 26 & 27) 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, and for failure to plead fraud with particularity pursuant

to Rule 9(b) of the Federal Rules of Civil Procedure.

1. Rule 12(b)(6) Standard

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.

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2

 Plaintiff takes issue with Defendants’ purported heavy reliance on the Supreme

Court’s decisions, Twombly and Iqbal, concerning the Rule 12(b)(6) standard. (Dkt. 49 at

pp. 8–9.) The Court does not find that Defendants are advocating for an extension of the

pleading standard set forth in these cases; rather, the Court finds that Plaintiff advocates for

a pleading standard that pre-dates the Supreme Court’s most recent opinions on the matter.

Accordingly, the Court will apply the standard set forth Twombly and Iqbal as discussed in

this Order.

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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).2

 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

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

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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.

2. Rule 9(b) Standard

Rule 9(b) governs the pleading standard with respect to allegations of fraud. “In

alleging fraud or mistake, a party must state with particularity the circumstances constituting

fraud or mistake.” Fed. R. Civ. P. 9(b). Rule 9(b) requires allegations of fraud to be

“specific enough to give defendants notice of the particular misconduct which is alleged to

constitute the fraud charged so that they can defend against the charge and not just deny that

they have done anything wrong.” Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir.

2001). “While statements of the time, place and nature of the alleged fraudulent activities

are sufficient, mere conclusory allegations of fraud are insufficient.” Moore v. Kayport

Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989).

III. ANALYSIS

Defendants move to dismiss Plaintiff’s First Amended Complaint on the grounds that

Plaintiff has failed to state a claim upon which relief can be granted, and that Plaintiff has

failed to plead fraud with the requisite particularity. Further, U.S. Bank and Capital One

argue that, despite the benefit and existence of fully-briefed motions to dismiss, Plaintiff’s

First Amended Complaint fails to cure the deficiencies noticed in Defendants’ prior motions.

In addition to Rules 12(b)(6) and 9(b), Cal-Western also argues that Plaintiff’s claims against

Cal-Western are barred by A.R.S. § 33-807(E). For the reasons that follow, the Court will

grant Defendants’ motions to dismiss with prejudice.

1. First Claim for Relief - Intentional Misrepresentation

Count One of Plaintiff’s First Amended Complaint attempts to set forth a claim for

intentional misrepresentation against Chevy Chase. As an initial matter, Capital One, the

successor-by-merger to Chevy Chase, argues that Plaintiff’s claim should be dismissed,

because Plaintiff has failed to plead fraud with the requisite particularity. Plaintiff argues in

his response that the First Amended Complaint is not subject to Rule 9(b), because he has

not made an allegation of fraud; nonetheless, Plaintiff also argues that he has satisfied the

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 (Compare Dkt. 49 at p. 10 with Dkt. 22 at ¶¶ 60, 61, 70.) “Fraud can be averred by

specifically alleging fraud, or by alleging facts that necessarily constitute fraud (even if the

word ‘fraud’ is not used).” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir.

2003).

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pleading requirements to state a claim for fraud. Setting aside Plaintiff’s patently false

statement that he has not used the term “fraud” in the First Amended Complaint,3

 a claim for

intentional misrepresentation is a claim of fraud under Arizona law. Knoell v. CerkvenikAnderson Travel, Inc., 891 P.2d 861, 869 (Ariz. Ct. App. 1994), vacated and remanded on

other grounds, 917 P.3d 689 (Ariz. 1996) (setting forth the nine elements need to establish

an intentional misrepresentation or fraud claim); Formento v. Encanto Bus. Park, 744 P.2d

22, 28 (Ariz. Ct. App. 1987) (discussing the distinction between fraudulent, affirmative

misrepresentation and fraudulent concealment); Bank of the West v. Estate of Leo, 231

F.R.D. 386, 390 (D. Ariz. 2005) (applying the three-year statute of limitations for fraud to

a claim for intentional misrepresentation); see Restatement (Second) of Torts §§ 525–26

(1977).

Plaintiff’s claim of intentional misrepresentation is predicated on his belief that Chevy

Chase ignored the income figure provided by Plaintiff, and submitted the loan to Chevy

Chase’s underwriting department with a fabricated income figure in order to qualify Plaintiff

for a higher rate of interest. Plaintiff claims that he was misled by unnamed authorized

agents of Chevy Chase that his loan was approved based on Plaintiff’s disclosed income.

(Dkt. 22 at ¶ 55) (“Plaintiff believed that it was safe to assume the financial obligation

because he was misled into believing that he . . . received the best interest rate.”). After

attempting to set forth the elements for a claim of fraud, Plaintiff alleges that he is entitled

to equitable tolling, because he was in no position to discover the false statements until he

obtained a forensic review of his loan documents on December 29, 2010. (Id. at ¶ 66.)

In order to state a claim for intentional misrepresentation under Arizona law, a

plaintiff must set forth:

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

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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; (9) the hearer’s consequent and proximate injury.

Comerica Bank v. Mahmoodi, 229 P.3d 1031, 1033–34 (Ariz. Ct. App. 2010); see Frazer v.

Millennium Bank, N.A., CV 10-1509-PHX-JWS, 2010 WL 4579799, at *3 (D. Ariz. Oct. 29,

2010). Rule 9(b) requires a plaintiff to “state the time, place, and specific content of the false

representations as well as the identities of the parties to the misrepresentation.” Schreiber

Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986) (citing Semegen

v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985)).

Plaintiff’s allegations fail to plead fraud with the requisite particularity. Many of

Plaintiff’s allegations involve statements that were purportedly made by authorized agents

of Chevy Chase to its underwriting department, not to Plaintiff. Further, Plaintiff’s

allegations are conclusory. Plaintiff does not plead the identity of the parties making the

alleged misrepresentations, when such representations were made, or the specific content of

the representations. Further, Plaintiff only alleges that “he assumed” and “he believed” that

his actual income was used. These allegations are insufficient to satisfy Rule 9(b). Even if

the alleged representations were made to him (i.e., that he was receiving the best interest rate

for the loan he qualified for), Plaintiff has not alleged any facts showing that these

representations were false, or that he had the right to rely on the representations.

Accordingly, Plaintiff’s claim fails for failure to comply with Rule 9(b).

Prior to his first claim for relief, Plaintiff alleges that he did not receive notice

regarding the variable interest rate, maximum interest rate, or prepayment penalties on his

loan. These allegations appear in the First Amended Complaint before Count One, but seem

to constitute additional grounds for an intentional misrepresentation claim. With respect to

the variable interest rate and maximum interest rate allegations, Plaintiff attached to the First

Amended Complaint a copy of the “Adjustable Rate Rider” that Plaintiff executed in

connection with the Deed of Trust on or about March 19, 2004. (Dkt. 22-1, Ex. A.) Clearly,

Plaintiff had notice of these terms, and he has not alleged that Chevy Chase attempted to

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enforce terms that are different from the terms set forth in the Adjustable Rate Rider executed

by Plaintiff. With respect to Plaintiff’s allegations concerning Chevy Chase’s failure to

disclose a prepayment penalty, Plaintiff has not alleged any facts indicating that he offered

to pay the balance of the loan in full and was assessed an undisclosed penalty. There are no

allegations that Plaintiff suffered any damages from this alleged failure to disclose.

Even if Plaintiff could amend his complaint a second time to comply with Rule 9(b),

Plaintiff’s claim is barred by the three-year statute of limitations. A.R.S. § 12-543(3). “The

statute of limitations in a fraud case begins to run when the plaintiff by reasonable diligence

could have learned of the fraud, whether or not he actually learned of it.” Coronado Dev.

Corp. v. Superior Court, 678 P.2d 535, 537 (Ariz. Ct. App. 1984) (citing Guerin v. Am.

Smelting & Refining Co., 236 P. 684, 686 (1925)). Recognizing that the alleged fraudulent

conduct occurred more than seven years ago, well outside the three-year statute of

limitations, Plaintiff alleges that he “is entitled to equitable tolling,” because he “was in no

position to discover” the misrepresentations. (Dkt. 22 at ¶ 66.) Plaintiff allegedly discovered

the intentional misrepresentations after a forensic review of the loan documents was

conducted on December 29, 2010. The alleged misrepresentations occurred at the time

Plaintiff entered into the loan, and Plaintiff has failed to plead any facts showing why

Plaintiff, with reasonable diligence, could not have learned of the fraud earlier. That Plaintiff

hired a forensic examiner to investigate Plaintiff’s loan only after Defendants initiated nonjudicial foreclosure proceedings does not warrant the tolling of the statute of limitations.

There are no allegations that Defendants attempted to conceal the alleged misrepresentations,

or that Plaintiff only recently came into possession of the evidence of the intentional

misrepresentations. Therefore, the Court finds that Plaintiff’s claims of intentional

misrepresentation are barred by the three-year statute of limitations.

Finally, in Count One, Plaintiff also alleges that U.S. Bank was not a bona fide

purchaser for value of Plaintiff’s loan with Chevy Chase. (Dkt. 22 at ¶ 68.) Plaintiff’s

allegations concern Defendants’ failure to notify Plaintiff of the assignment to U.S. Bank.

However, the Deed of Trust provides that the “Note or a partial interest in the Note (together

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with this Security Instrument) can be sold one or more times without prior notice to

Borrower.” (Dkt. 22-1, Ex. A, § 20.) There is no requirement under Arizona law that an

assignment of a deed of trust must be recorded to be valid, and Plaintiff has not cited any

authority to the contrary. Further, to the extent that the First Amended Complaint concerns

the alleged sale of the loan on the secondary market (Dkt. 22 at ¶ 39), Arizona law does not

require a lender to notify a borrower of the transfer of a loan into the secondary mortgage

market, nor does Arizona law require a lender to provide a borrower with copies of servicing

and pooling agreements entered into by a lender. With respect to these allegations, Plaintiff

has failed to state a claim upon which relief can be granted.

Based on the foregoing, the Court finds that Count One of Plaintiff’s First Amended

Complaint must be dismissed with prejudice.

2. Second Claim for Relief - Consumer Fraud

In Count Two of the First Amended Complaint, Plaintiff attempts to set forth a cause

of action for consumer fraud, A.R.S. § 44-1521 et seq., against Chevy Chase. Plaintiff

alleges that Chevy Chase intentionally deflated Plaintiff’s income and intentionally failed to

provide all relevant disclosures in violation of Arizona’s consumer fraud act. (Dkt. 22 at ¶

72.) Plaintiff, recognizing that the statute of limitations for a claim of consumer fraud has

run, alleges that he is entitled to equitable tolling. Defendants argue that Plaintiff’s consumer

fraud claim does not meet the statutory definition of consumer fraud, is not pled with the

requisite particularity under Rule 9(b), and, in any event, is time-barred.

First, Defendants argue that Plaintiff has failed to identify how Chevy Chase’s

allegedly fraudulent conduct occurred “in connection with the sale or advertisement of any

merchandise.” A.R.S. § 44-1522(A). The Court disagrees. Arizona courts have found that

money constitutes “merchandise”; that a loan constitutes a “sale”; and that negotiations

surrounding a loan constitute an “advertisement” under the consumer fraud statute. Villegas

v. Transamerica Fin. Servs., Inc., 708 P.2d 781, 783 (Ariz. Ct. App. 1985) (“Because

‘merchandise,’ ‘sale,’ and ‘advertisement’ all have special definitions in the statute, not

comporting with ordinary usage, we hold that the lending of money is subject to the

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provisions of the Arizona Consumer Fraud Act.”). In light of the fact that money constitutes

merchandise and a loan constitutes a sale, Plaintiff could state a plausible claim for relief

under Rule 12(b)(6) by alleging that Defendant committed deceptive practices in connection

with Chevy Chase’s loan practices. However, dismissal of Count Two of the First Amended

Complaint is appropriate, because Plaintiff has failed to plead fraud with the requisite

particularity, and, regardless of the pleading standard, Plaintiff’s claim for consumer fraud

is barred by the one-year statute of limitations.

A claim for consumer fraud requires a showing of the “misrepresentation, or

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

such concealment, suppression or omission.” A.R.S. § 44-1522(A). As discussed above,

there are no facts in the First Amended Complaint setting forth the time, place, and specific

content of the alleged misrepresentations; nor are there any facts identifying the parties

making the alleged misrepresentation. Schreiber, 806 F.2d at 1401. Plaintiff’s conclusory

allegations are insufficient. Accordingly, the Court finds that Plaintiff’s consumer fraud

claim in the First Amended Complaint fails to meet the pleading standards set forth in the

Federal Rules of Civil Procedure, and must be dismissed. Plaintiff does not identify the

disclosures that were allegedly not provided, and Plaintiff fails to plead facts indicating that

the representations were false.

Additionally, actions commenced pursuant to A.R.S. § 44-1522 must be brought

within one year. A.R.S. § 12-541(5) (2003) (“There shall be commenced and prosecuted

within one year after the cause of action accrues, and not afterward, the following actions:

. . . Upon a liability created by statute, other than a penalty or forfeiture.”). An action for

consumer fraud accrues “when the defrauded party discovers or with reasonable diligence

could have discovered the fraud.” Alaface v. Nat’l Inv. Co., 892 P.2d 1375, 1379 (Ariz. Ct.

App. 1994) (quoting Mister Donut of Am., Inc. v. Harris, 723 P.2d 670, 672 (Ariz. 1986)).

In other words, a cause of action “accrues when ‘the plaintiff knows or should have known

of both the what and who elements of causation.’” Id. (quoting Lawhon v. L.B.J. Institutional

Supply, Inc.,765 P.2d 1003, 1007 (Ariz. Ct. App. 1988)).

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Here, as described in the prior section of this Order, Plaintiff obtained the loans in

March 2004, and brought this present action in January 2011. Plaintiff alleges that he “was

in no position to discover the aforementioned concealed and/or false information until a

forensic review of his loan documents was conducted on December 29, 2010.” (Dkt. 22 at

¶ 73.) Thus, Plaintiff alleges that his cause of action accrued within one year of the filing of

the original complaint, because he did not know the what element of the consumer fraud

claim.

However, the test for when a cause of action accrues is not only what the plaintiff

actually knew, but also what he should have known or could have discovered with reasonable

diligence. Alaface, 892 P.2d at 1379. Plaintiff’s allegations, even when assumed to be true,

are all related to facts that were discoverable at the time Plaintiff entered into the loan. The

allegations revolve around the very terms of the loans, such as interest rate, payments to be

made under the loan, and disclosures that allegedly should have been provided prior to the

consummation of the loan. Plaintiff does not allege that the terms that Defendants seek to

enforce are different or somehow an alteration from the promissory note that Plaintiff signed.

Rather, Plaintiff’s allegations amount to a claim that the terms contained in the promissory

note are material deviations from the terms Plaintiff should have received prior to entering

into the loan transaction. Even assuming there are material deviations to support a claim

under Arizona’s consumer fraud statute, the “what element of causation” was apparent at the

time Plaintiff entered into the loan transactions—Plaintiff could have discovered the

deviations from the documents he signed in 2004. Contrary to Plaintiff’s allegations seeking

equitable tolling, Plaintiff’s consumer fraud claim under A.R.S. § 44-1522 accrued upon

entering into the loan transaction. Therefore, Plaintiff’s cause of action is time-barred under

A.R.S. § 12-541(5).

For the reasons set forth above, the Court will dismiss Count Two of Plaintiff’s First

Amended Complaint with prejudice.

3. Third Claim for Relief - Accounting

In Count Three of the First Amended Complaint, Plaintiff requests an accounting of:

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information on whether or not the loan was in lawful compliance with all laws

regarding disclosure, the identity of all holders of the note secured by the Deed

of Trust, the current party claiming a beneficial interest in the note, the

calculation of the principal and interest, information on the appointment of the

trustee and all substitute trustees, documentation of all assignments, transfers

or sale of the note, copies of all checks or other evidence of payments made by

the Plaintiff, all debits and credits to the Plaintiff’s accounts, documentation

of all mortgage assignments, accounting of all attorney fees, costs and

foreclosure fees, and all late charges assessed to the balance of the loan, an

accounting of all monies applied to suspended or forbearance accounts, an

accounting of all impounds including taxes and insurance and the fees, charges

and commissions paid to all services of the account.

(Dkt. 22 at ¶ 78.) Plaintiff seeks this accounting, in part, because he believes that the

promissory note may have been paid in full by an unknown third party. (Id.) Defendants

argue that in the absence of any statutory requirement to provide this accounting, Plaintiff’s

request fails to state a claim upon which relief can be granted. The Court agrees.

Pursuant to A.R.S. § 33-813, upon request, the trustee is required to provide the

trustor with “a good faith estimate of the sums which appear necessary to reinstate the trust

deed, separately specifying costs, fees, accrued interest, unpaid principal balance and any

other amounts which are required to be paid as a condition to reinstatement of the trust deed.”

A.R.S. § 33-813(D). There are no allegations in the First Amended Complaint that Plaintiff

requested Cal-Western, as trustee, provide him with the good faith estimate described in

A.R.S. § 33-813, and there are no allegations that, if requested by Plaintiff, the trustee failed

to provide the good faith estimate to Plaintiff.

Under Arizona law, “[t]here is no statutory requirement that the trustor be supplied

with a complete accounting.” Kelly v. NationsBanc Mortgage Corp., 17 P.3d 790, 792–93

(Ariz. Ct. App. 2000). And, Plaintiff has not offered any authority that requires such an

accounting be provided to Plaintiff. In a similar case before the District Court, the plaintiff

requested an accounting identical to the accounting requested by Plaintiff. In that case, the

District Court found that the complaint failed to allege a claim for an accounting upon which

relief may be granted. Frazer, 2010 WL 4579799, at *4–5. Because there does not appear

to be any authority supporting Plaintiff’s broad accounting request, the Court will dismiss

Count Three of the First Amended Complaint with prejudice.

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4. Fourth Claim for Relief - Quiet Title

Plaintiff’s First Amended Complaint alleges a quiet title claim pursuant to A.R.S. §

12-1101 et seq., against Defendants U.S. Bank, Cal-Western and Capital One. Defendants

move to dismiss Plaintiff’s claim for failure to state a claim upon which relief may be

granted. Specifically, Defendants argue that Plaintiff’s quiet title claim is barred by his

failure to tender the amount of the outstanding loan balance.

Under Arizona law, a complaint for an action to quiet title must include an allegation

of title in the plaintiff. Verde Water & Power Co. v. Salt River Valley Water Users’ Ass’n,

197 P. 227, 228 (Ariz. 1921); see A.R.S. § 12-1101 et seq. Further, if the complaint avers

title, but proceeds to set forth facts that do not show title, then the specific facts pleaded

control. Verde Water, 197 P. at 228. Plaintiff’s specific factual allegations do not show that

Plaintiff holds title to the Property. Under the Arizona statutes governing deeds of trust,

A.R.S. § 33-801 et seq., the trustee holds legal title:

The Arizona Act defines a trust deed as a deed conveying legal title to real

property to a trustee to secure the performance of a contract. This definition

suggests that the trust deed, unlike the Arizona mortgage, will convey title

rather than create a lien. Nonetheless, the trustee is generally held to have bare

legal title sufficient only to permit him to convey the property at the out of

court sale. All other incidents of title remain in the trustor.

Brant v. Hargrove, 632 P.2d 978, 983 n.6 (Ariz. Ct. App. 1981) (citation omitted). A deed

of trust conveys title to the trustee, but “the trustor remains free to transfer the property and

continues to enjoy all other incidents of ownership.” In re Bisbee, 754 P.2d 1135, 1138

(Ariz. 1988) (citing A.R.S. § 33-806.01(A)). The “bare legal title held by the trustee is very

tenuous, and may at any time prior to sale be terminated by unilateral action of the

beneficiary.” Id. (citing A.R.S. § 33-804(B) and Brant, 632 P.2d at 984).

Here, Plaintiff’s factual allegations do not demonstrate why Cal-Western, as successor

trustee, does not hold bare legal title to the Property. The First Amended Complaint alleges

that Plaintiff “executed a Promissory Note for the amount borrowed from Chevy Chase,

which was secured by the Deed of Trust.” (Dkt. 22 at ¶ 8; see Dkt. 22-1, Ex. A.) Until

Plaintiff pays off the loan, the trustee holds the title in trust as provided for in Arizona’s deed

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4

 Plaintiff dedicates four pages of his response to a general condemnation of the

mortgage industry. (Dkt. 22 at pp. 4–8.) Plaintiff’s irrelevant diatribe is not tied to the facts

of this case, and fails to respond in a meaningful way to any of the arguments raised by

Defendants in the motions to dismiss.

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of trust statutes. Thus, quiet title is not a remedy available to the trustor until the debt is paid

or tendered. Plaintiff has not paid the loan amount, nor has Plaintiff alleged that he is ready,

willing and able to tender the full amount owed. See Farrell v. West, 114 P.2d 910, 911

(Ariz. 1941) (refusing to quiet title until and unless the plaintiff tenders the amount owed,

as required in equity). Instead, Plaintiff asks this Court to invalidate the claims of the

beneficiary under the deed of trust. The Court will not indulge this inappropriate use of an

action to quiet title.

Plaintiff’s argument that the assignment to U.S. Bank was void, and that U.S. Bank

and MERS are not beneficiaries fails to support Plaintiff’s claim for quiet title. As discussed

above, an assignment of a deed of trust does not need to be recorded in order to be valid, and

under the terms of the Deed of Trust, Plaintiff was not entitled to notice of any such

assignment. Further, Plaintiff fails to present actual authority4

 that the Deed of Trust is

invalid, because MERS, acting solely as a nominee for the lender and lender’s successors and

assigns, was the named beneficiary under the Deed of Trust. Even if the Assignment of Deed

of Trust was void, the Court fails to see how the equitable remedy of quiet title would be

appropriate. Plaintiff has not pled any facts indicating that he has satisfied his obligation to

repay the loan. Plaintiff is not entitled to a windfall under Arizona law; therefore, the Court

will dismiss Plaintiff’s claim for quiet title with prejudice.

5. Claims Against the Successor Trustee

Defendant Cal-Western argues that all claims asserted by Plaintiff against CalWestern are barred by A.R.S. § 33-807, which provides: “The trustee need only be joined

as a party in legal actions pertaining to a breach of the trustee’s obligation under this chapter

or under the deed of trust. . . . If the trustee is joined as a party in any other action, the trustee

is entitled to be immediately dismissed and to recover costs and reasonable attorney fees

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5

 In order to give a defendant fair notice of the claims asserted against it, Rule 8

requires each allegation in a complaint to be “simple, concise, and direct.” Fed. R. Civ. P.

8(d)(1). Additionally, Rule 10 provides that to promote clarity, “each claim founded on a

separate transaction or occurrence . . . must be stated in a separate count.” Id. 10(b). As CalWestern points out, despite only containing four counts, the First Amended Complaint

implicates claims in the “Statement of Facts” that do not appear elsewhere in the First

Amended Complaint. The Court has attempted to address all of those potential claims in this

Order.

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from the person joining the trustee.” A.R.S. § 33-807(E).

Although not set forth as an independent cause of action,5

 Plaintiff appears to assert

a claim against Cal-Western for failing to mail Plaintiff a copy of the Notice of Trustee’s

Sale, in violation of A.R.S. § 33-809(C). (Dkt. 22 at ¶ 17) (“Plaintiff never received a copy

of the Notice of Trustee Sale as required by statute.”). However, Plaintiff contradicts himself

by later stating that his application for a loan modification was pending “when the Notice of

Trustee Sale was sent.” (Id. at ¶ 49.) Plaintiff does not attempt to reconcile this

contradiction in his response, and, accordingly, the Court finds Plaintiff’s contention is moot

based on his own allegations in the First Amended Complaint. Regardless, the trustee’s sale

was not held as scheduled and subsequently rescinded, which further moots Plaintiff’s

allegation of noncompliance. See Patton v. First Fed. Sav. & Loan Ass’n of Phoenix, 578

P.2d 152, 155 (Ariz. 1978) (“Since the subject property has not been sold, it would appear

that appellants have not been damaged by the trustee’s breach of fiduciary duties.”).

Plaintiff does not allege that Cal-Western failed to comply with any other obligations

under Arizona’s deed of trust statutes. In fact, the only count explicitly asserted against CalWestern is Plaintiff’s request for quiet title, which does not arise in connection with any

alleged breach of Cal-Western’s obligations as trustee. Therefore, pursuant to A.R.S. § 33-

807(E), Cal-Western is entitled to immediate dismissal, and to its recover reasonable

attorneys’ fees and costs from Plaintiff.

6. Additional Allegations in First Amended Complaint

In addition to the four counts set forth in the First Amended Complaint, Plaintiff

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appears to assert additional claims (or theories to quiet title) against Defendants, which the

Court also finds should be dismissed with prejudice for the following reasons.

First, Plaintiff alleges that “Defendants are currently attempting to execute an invalid

and fraudulent Trustee’s Sale on the Property,” because the individual executing the Notice

of Substitution of Trustee on behalf of U.S. Bank was allegedly an employee of Capital One.

(Dkt. 22 at ¶¶ 20, 86.) Plaintiff similarly alleges that the individual executing the

Assignment of Deed of Trust on behalf of MERS was allegedly an employee of Cal-Western.

(Id. at ¶ 21.) There are no facts alleged in the First Amended Complaint, other than

Plaintiff’s bald contentions, that the individuals are employees of entities other than those

indicated on the face of the documents themselves. Regardless of the true nature of their

employment, the individuals executing the documents were permitted to sign as agents of the

entities designated on the face of the documents. See Eardley v. Greenberg, 792 P.2d 724,

727 (Ariz. 1990) (“[W]e find nothing in the language of § 33-804(C) or the overall statutory

scheme that would preclude a beneficiary from authorizing an agent to execute a notice of

substitution of trustee.”). Accordingly, even if the individuals executing on behalf of U.S.

Bank and MERS were in fact employees of Capital One and Cal-Western, respectively, the

Court does not find the Notice of Substitution of Trustee and Assignment of Deed of Trust

are invalid and fraudulent based upon this fact.

Second, Plaintiff takes issue throughout the First Amended Complaint with MERS’s

involvement in the chain of title. (Dkt. 22 at ¶¶ 9–10, 23–24, 37, 85.) Plaintiff contends that

MERS had no interest to convey; therefore, the “recorded documents are incongruous” and

invalid. Courts in this district have repeatedly rejected similar attacks on MERS, and

Plaintiff has not directed the Court to any Arizona case that finds MERS does not have

capacity to act as nominee on behalf of lenders or to assign deeds of trust on behalf of such

lenders. Plaintiff was aware of MERS involvement in the loan when Plaintiff executed the

Deed of Trust, which named MERS, acting solely as a nominee for the lender and lender’s

successors and assigns, as the beneficiary. (Dkt. 22-1, Ex. A.) The Court fails to see what

effect, if any, the inclusion of MERS in the chain of title had upon Plaintiff’s obligations as

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a borrower.

Third, and as noted above, Plaintiff takes issue with the recording date of the

Assignment of Deed of Trust, which occurred after the recording of the Notice of Trustee’s

Sale. (Dkt. 22 at ¶ 21.) There is no requirement under Arizona law that an assignment must

be recorded, and Plaintiff has not cited any authority to the contrary. Additionally, the Deed

of Trust expressly provides that the beneficiary may assign its interest without prior notice

to the trustor. (Dkt. 22-1, Ex. A, § 20.) Accordingly, Plaintiff fails to state a claim with

respect to his allegations concerning the recordation of the Assignment of Deed of Trust.

Fourth, Plaintiff claims that U.S. Bank was not the lender according to the Deed of

Trust; therefore, U.S. Bank could not appoint Cal-Western as the successor trustee. (Dkt. 22

at ¶ 18.) However, the recorded documents attached to the First Amended Complaint

contradict Plaintiff’s allegations. The Assignment of Deed of Trust, dated October 8, 2010,

shows that U.S. Bank was assigned all beneficial interest in the Deed of Trust. (Dkt. 22-1,

Ex. D.) The Notice of Substitution of Trustee, dated October 13, 2008, correctly describes

U.S. Bank as the beneficiary. (Dkt. 22-1, Ex. C.) Plaintiff’s allegations do not comport with

the recorded documents attached to the Amended Complaint. Accordingly, the Court finds

Plaintiff fails to state a claim upon which relief can be granted concerning U.S. Bank’s right

to appoint a successor trustee.

Fifth, Plaintiff repeatedly alleges that the promissory note was “intentionally

destroyed,” and that the alleged destruction of the promissory note and the securitization of

the loan nullifies his contractual obligations under the promissory note and deed of trust.

(Dkt. 22 at ¶¶ 9, 27–31, 33–34, 39, 54.) Plaintiff’s allegations of promissory note destruction

and securitization are speculative and unsupported. Plaintiff has cited no authority for his

assertions that securitization has any impact on his obligations under the loan, or that the

existence of the original promissory note must be acknowledged by the lender; rather, these

generalized arguments have repeatedly been rejected in this district. See, e.g., Singer v. BAC

Home Loan Servicing, LP, No. CV 11-1279-PHX-NVW, 2011 WL 2940733, at *2 (D. Ariz.

July 21, 2011); Silvas v. GMAC Mortgage LLC, No. CV 09-0265-PHX-GMS, 2009 WL

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4573234 (D. Ariz. Dec. 1, 2009); Cervantes v. Countrywide Home Loans, Inc., No. CV 09-

517-PHX-JAT, 2009 WL 3157160 (D. Ariz. Sept. 24, 2009).

Sixth and finally, Plaintiff’s show-me-the-note theory lacks merit. In his response,

Plaintiff disingenuously asserts that he has not set forth a claim based on the show-me-thenote theory. Even though that phrase does not appear in the First Amended Complaint, many

of the allegations concerning Defendants’ ability to exercise the power of sale under the

Deed of Trust pertain to the location of the original promissory note. (E.g., Dkt. 22 ¶¶ 9,

25–26, 28, 30, 34–35, 37, 79–80, 85.) Courts in this district have repeatedly rejected

arguments based on the show-me-the-note theory. More recently, the Arizona Court of

Appeals 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)

(quoting Diessner v. Mortgage Electronic Registration Sys., 618 F. Supp. 2d 1184, 1187 (D.

Ariz. 2009) and citing Mansour v. Cal–W. Reconveyance Corp., 618 F. Supp. 2d 1178, 1181

(D. Ariz. 2009)). Therefore, to the extent that any of the claims in the First Amended

Complaint are based on Defendants’ failure to produce the promissory note prior to initiating

non-judicial foreclosure proceedings, those claims fail to state a claim upon which relief can

be granted.

IV. LEAVE TO AMEND

Plaintiff has already amended his complaint once as a matter of course, and even

though Plaintiff does not seek leave to amend the First Amended Complaint, 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)). “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).

In this case, the Court finds that Plaintiff will not be able to cure the deficiencies of

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his First Amended Complaint. Plaintiff unsuccessfully argued for a tolling of the statute of

limitations, and many of Plaintiff’s allegations are not supported by the text of the relevant

documents. Thus, granting leave to amend to plead additional facts would be futile.

V. CONCLUSION

Plaintiff has not sought leave to amend his complaint a second time, nor does the

Court find amendment would resolve the issues identified in this Order. Therefore, for the

reasons set forth above, the Court will grant Defendants’ motions to dismiss with prejudice.

Accordingly,

IT IS HEREBY ORDERED that the Motion to Dismiss Plaintiff’s First Amended

Complaint for Damages, Injunction, Declaratory and Other Equitable Relief (Dkt. 26) is

GRANTED with prejudice.

IT IS FURTHER ORDERED that Defendant Cal-Western Reconveyance

Corporation’s Motion to Dismiss Plaintiff’s First Amended Complaint with Prejudice (Dkt.

27) is GRANTED with prejudice. Within 14 days of this Order, Defendant Cal-Western

Reconveyance Corporation may file an application for attorneys’ fees pursuant to A.R.S. §

33-807 and Local Rule 54.2.

DATED this 2nd day of September, 2011.

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