Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-02459/USCOURTS-azd-2_10-cv-02459-0/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1441 Petition for Removal- Injunctive/Declaratory Relief

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Neil and Yvonne Phillips, Husband and

Wife, 

Plaintiffs, 

vs.

Mortgage Electronic Registration

Systems, Inc.; and Deutsche Bank

National Trust Company, as Trustee

under the pooling and service agreement,

dated as of February 1, 2007, GSAMP

Trust 2007-FM2,

Defendants. 

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No. CV10-2459-PHX-DGC

ORDER

On September 21, 2006, Plaintiffs refinanced their home located in Surprise, Arizona.

Plaintiffs borrowed $150,000.00 from Fremont Investment & Loan Corporation (“Fremont”).

Fremont provided Plaintiffs with an adjustable rate mortgage with a maximum interest rate

of 12.541%. Mortgage Electronic Registration Systems, Inc. (“MERS”) was the beneficiary

on the deed of trust. When Fremont went bankrupt, Deutsche Bank National Trust (“Deutsche

Bank”) purchased Plaintiffs’ loan.

A few years later, Plaintiffs began having difficulty making their mortgage payments.

In July 2009, Defendants sent Plaintiffs a letter stating that they would initiate foreclosure

proceedings on or after September 11, 2009 if payment was not received. On December 10,

2009, Plaintiffs filed a complaint for declaratory and injunctive relief to stop the foreclosure

of their property. Doc. 1, Phillips v. Fremont Investment Loan, No. 09-2585-GMS (D. Ariz.,

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Plaintiffs’ request for oral argument is denied because the issues have been fully

briefed and oral argument will not aid the Court’s decision. See Fed. R. Civ. P. 78(b);

Partridge v. Reich, 141 F.3d 920,926 (9th Cir. 1998).

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2009). Plaintiffs voluntarily dismissed that action on June 18, 2010. Doc. 50, Id. 

Plaintiffs filed this action on August 17, 2010. The complaint contains four counts:

intentional misrepresentation, consumer fraud, accounting, and quiet title.

Defendants have filed a motion to dismiss pursuant to Rule 12(b)(6) of the Federal

Rules of Civil Procedure. Doc. 4. The motion is fully briefed. Docs. 8, 9. For reasons

stated below, the motion will be granted.1

I. Counts One and Two: Intentional Misrepresentation and Consumer Fraud.

While it is generally true that dismissal on statute of limitations grounds should not be

granted on a Rule 12(b)(6) motion, it may be granted where the untimeliness of the claim is

apparent on the face of the complaint. Jablan v. Dean Witter & Co., 614 F.2d 677, 682 (9th

Cir. 1980). The face of the complaint in this case makes clear that the intentional

misrepresentation and consumer fraud claims are barred by the applicable statutes of

limitations.

A claim for intentional misrepresentation must be brought within three years after the

statute of limitations begins to run. A.R.S. § 12-543. The statute of limitations for

intentional misrepresentation begins to run “when the plaintiff knew or by reasonable

diligence should have known of the misrepresentation.” Bank of the W. v. Estate of Leo, 231

F.R.D. 386, 390 (2005); see also Coronado Dev. Corp. v. Super. Court, 139 Ariz. 350, 352,

678 P.2d 535, 537 (App. 1984). 

A claim brought under the Arizona Consumer Fraud Act, A.R.S. § 44-1522, must be

brought within one year after the statute of limitations begins to run. See A.R.S. §12-541 (5)

2003. The statute of limitations begins to run “when the defrauded party discovers or with

reasonable diligence could have discovered the fraud.” Alaface v. Nat’l Inv. Co., 181 Ariz.

586, 892 P.2d 1375, 1379 (App. 1994) (quoting Mister Donut of Am., Inc. V. Harris, 150

Ariz. 321, 723 P.2d 670, 672 (1986)).

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Plaintiffs signed the loan documents on September 21, 2006. The three-year statute of

limitations period for the intentional misrepresentation claim therefore expired on September

22, 2009. The one-year statute of limitations period for the consumer fraud claim expired

on September 22, 2007. Plaintiffs did not bring their intentional misrepresentation and

consumer fraud claims until June of 2010, long after both periods expired. 

Plaintiffs contend that the statute of limitations did not begin running until April 16,

2010 when they received a forensic review of their loan documents. Doc. 1-1 at 7, ¶ 40.

They state that they “were in no position to discover the aforementioned concealed and/or

false information until a forensic review of their loan documents was conducted,” and the

statute of limitations therefore did not begin running when they signed the loan documents

on September 21, 2006. Id. Plaintiffs later specifically allege, however, that “the defects

are on the face of the loan documents and documents are missing that indicate that

concealment has taken place.” Doc. 1-1 at 8, ¶ 41. Because Plaintiffs admit that the alleged

concealment was apparent from the face of the loan documents, they reasonably should have

known of the alleged misrepresentation and fraud on September 21, 2006. Therefore, the

statute of limitations period began running on that date and has expired for both claims.

Count one and count two will be dismissed as time barred.

II. Count Three: Accounting.

“The burden of showing that an accounting is necessary is on the party requesting the

accounting.” Assoc. Fin. Co. v. Walters, 12 Ariz. App. 369, 375, 470 P.2d 689. Defendants

correctly argue that Plaintiffs have failed to establish any status relationship between the

parties that would justify an accounting. Further, accounting is an equitable remedy and

Plaintiffs have not proved any independent legal claim against MERS or Deutsche Bank.

Because the counts on which this claim depends – counts one and two – have been dismissed,

count three will also be dismissed for failure to state a claim upon which relief can be

granted. 

III. Count Four: Quiet Title.

Plaintiffs argue that the defendants MERS and Deutsche Bank have no standing to

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Defendants’ request for an award of fees and costs based on the dismissal of this

action is denied without prejudice. Defendants may file a proper request for attorney’s fees

pursuant to Local Rule of Civil Procedure 54.2.

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claim a valid interest in their property. Doc. 1-1 at 11, ¶ 58. Additionally, Plaintiffs argue

that Deutsche Bank “has failed to provide or record a valid assignment of either the

promissory note or deed of trust.” Doc. 1-1 at 12, ¶ 58. This “show me the note” argument

has been uniformly rejected by Arizona district courts. See Dumesnil v. Bank of Am., N.A.,

No. 10-0243, 2010 WL 1408889 (D. Ariz., 2010) (citing cases). Therefore, count four will

also be dismissed for failure to state a claim upon which relief can be granted.

IV. Leave to Amend.

Plaintiffs request leave to amend to cure any deficiencies in the complaint. Doc. 8 at

11. The Court recognizes that leave to amend should be freely given when justice so

requires. Fed. R. Civ. P. 15(a)(2). It is clear from the face of the amended complaint,

however, that Plaintiffs’ claims for intentional misrepresentation and consumer fraud are time

barred. Plaintiffs have not shown, and it does not otherwise appear to the Court, that any

amendment could change that fact. Additionally, as explained above, the accounting claim

is not an independent cause of action, and relies on counts one and two, which are time

barred. Finally, the “show me the note” claim has been universally rejected by Arizona

district courts and cannot be cured through amendment. The Court will therefore deny leave

to amend as futile. See Leadsinger, Inc. V. BMG Music Publ’g, 512 F.3d 522, 532 (9th Cir.

2008) (affirming denial of leave to amend where the complaint could not be saved by any

amendment); Ahlmeyer v. Nev. Sys. of Higher Educ., 555 F.3d 1051, 1055 (9th Cir. 2009)

(“futility of amendment alone can justify denial of a motion [to amend]”).2

IT IS ORDERED:

1. The motion to dismiss the amended complaint filed by Defendants Mortgage

Electronic Registration Systems, Inc. and Deutsche Bank National Trust

Company (Doc. 4) is granted.

2. Plaintiffs’ request for leave to amend is denied.

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3. The Clerk is directed to enter judgment accordingly. 

DATED this 8th day of February, 2011.

 

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