Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-02480/USCOURTS-azd-2_12-cv-02480-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Michael Wassef and Angela Wassef, 

husband and wife, 

Plaintiffs, 

v. 

JPMorgan Chase Bank, N.A.; U.S. Bank 

National Association, as Trustee for J.P. 

Morgan Mortgage Acquisition Trust 2006-

CH2, Asset Backed Pass-Through 

Certificates, Series 2006-CH2, 

Defendants.

No. CV-12-02480-PHX-DGC

ORDER 

 Defendants JPMorgan Chase Bank, N.A. (“Chase”) and U.S. Bank National 

Association as Trustee for J.P. Morgan Mortgage Acquisition Trust 2006-CH2, Asset 

Backed Pass-Through Certificates, Series 2006-CH2 (“U.S. Bank”), filed a motion to 

dismiss Plaintiffs Michael and Angela Wassef’s amended complaint. Doc. 7. The 

motion has been fully briefed and neither party has requested oral argument. Docs. 15, 

17. For the reasons that follow, the Court will grant the motion and will dismiss the 

amended complaint with prejudice. 

I. Background. 

 In May 2006, Plaintiffs borrowed $556,400 subject to a promissory note (the 

“Note”) from Defendant Chase Bank, N.A. (“Chase”) to refinance a home in Litchfield 

Park, Arizona (the “Property”). Amended Complaint (“AC”), ¶¶ 6-7. Plaintiffs secured 

the Note with a deed of trust on the Property (“DOT”). Id., ¶ 7. Approximately three 

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years later, Chase assigned the DOT to U.S. Bank as Trustee for J.P. Morgan Mortgage 

Acquisition Trust 2006-CH2, Asset Backed Pass-Through Certificates, Series 2006-CH2. 

Id., ¶ 8. The Assignment was recorded in the Maricopa County Recorder’s Office on 

April 3, 2009. Id.

 On February 12, 2010, Plaintiff Michael Wassef entered into a Home Affordable 

Modification Agreement (“Modification Agreement”) with Chase. Id., ¶ 9. Plaintiffs 

made payments according to the terms of the new agreement until September, 2011, 

when they encountered financial difficulties and were unable to continue their payments. 

Id., ¶ 10. Plaintiffs allege that on March 12, 2012, Chase entered into a repayment plan 

with them (“Repayment Agreement”) in which they agreed to make a down payment on 

their arrearages of $12,800 by March 30, 2012, and resume monthly payments under the 

modification agreement of $4,562.89 per month plus continued arrearage payments of 

$1,923.49 a month. Id., ¶¶ 11-13. In exchange, Chase agreed not to take legal action and 

to reinstate the Modification Agreement as if no default had occurred. Id., ¶ 12. 

 Plaintiffs allege that on March 30, 2012, they made a timely down payment of 

$12,800 via Western Union as required under the Repayment Agreement, but Chase 

representatives began calling them to say that no payments had been received, and a 

representative informed them that Chase had no record of the alleged Repayment 

Agreement. Id., ¶¶ 14-15. 

 Plaintiffs allege that on April 29, 2012, they made a subsequent monthly payment 

plus arrearages of $6,486.38. Id., ¶16. Thereafter, in May, 2012, a Chase representative 

delivered a yellow envelope to their door stating they had not made payments for more 

than 45 days. Id., ¶ 17. Later, during an in-person meeting at the Chase Homeownership 

Center in Phoenix, Arizona, a Chase representative stated that Chase had “rejected” the 

March 30 and April 29 payments. Id., ¶ 18. 

 Plaintiffs allege that on May 29, 2012, they made their second monthly payment 

plus arrearages through Western Union as required by the Repayment Agreement. Id., 

¶ 19. The three payments they made under the agreement to that point totaled 

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$25,772.76. Id., ¶ 20. Chase informed Plaintiffs in June of 2012 that they should make 

no further payments under the Repayment Agreement and that their previous payments 

would be refunded by Western Union. Id., ¶¶ 21-22. Plaintiffs made repeated calls to 

Western Union and did not receive their refunded payments until August 17, 2012. Id., 

¶¶ 22-23. At that time, Chase informed Plaintiffs that their Repayment Agreement had 

been cancelled because it did not meet “investor repayment guidelines,” and stated that 

resumption of the Modification Agreement would require a down payment of $25,000 to 

$30,000 and monthly payments of $11,000 through August of 2013. Id., ¶ 24. Plaintiffs 

stated that they could not meet these requirements. Id. 

 On September 11, 2012, Plaintiffs sent a letter to Chase demanding that it reinstate 

the Repayment Agreement with an extension of the repayment schedule to account for its 

failure to credit Plaintiff’s payments. Id., ¶ 26. Chase did not respond, and on 

September 20, 2012, California Reconveyance Company, successor Trustee on the DOT, 

recorded a Notice of Trustee’s Sale for a sale of the Property scheduled to take place 

December 20, 2012. Id., ¶ 27. To date, no trustee sale has been held. Doc. 7 at 2. 

 Plaintiffs, who are represented by counsel, filed an amended complaint in which 

they alleged nine claims for relief: (1) breach of contract/implied covenant of good faith 

and fair dealing against Chase, (2) unjust enrichment against Chase, (3) consumer fraud 

against Chase, (4) promissory estoppel against Chase, (5) specific performance/equitable 

reformation against Chase, (6) declaratory judgment against Chase, (7) punitive damages 

against Chase, (8) violation of the Fair Debt Collection Practices Act against Chase, and 

(9) violation of A.R.S. § 33-420 against U.S. Bank. A.C. ¶¶ 28-75. 

II. Legal Standard. 

 When analyzing a complaint for failure to state a claim to relief under Rule 

12(b)(6), the well-pled factual allegations are taken as true and construed in the light 

most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th 

Cir. 2009). Legal conclusions couched as factual allegations are not entitled to the 

assumption of truth, Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009), and therefore are 

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insufficient to defeat a motion to dismiss for failure to state a claim, In re Cutera Sec. 

Litig., 610 F.3d 1103, 1108 (9th Cir. 2010). To avoid a Rule 12(b)(6) dismissal, the 

complaint must plead enough facts to state a claim to relief that is plausible on its face. 

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Dismissal is appropriate where the 

complaint lacks a cognizable legal theory, lacks sufficient facts alleged under a 

cognizable legal theory, or contains allegations disclosing some absolute defense or bar 

to recovery. See Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988); 

Weisbuch v. County of L.A., 119 F.3d 778, 783, n.1 (9th Cir. 1997). 

III. Defendants’ Motion to Dismiss. 

A. Count One: Breach of Contract/Implied Covenant of Good Faith. 

 Plaintiffs’ first claim for relief rests on allegations that Chase breached the 

Repayment Agreement under which it allegedly agreed to forgo legal enforcement of the 

DOT and to reinstate the Modification Agreement as if no default had occurred. A.C. 

¶ 29. Chase asserts that the Repayment Agreement is not an enforceable contract because 

Plaintiffs merely agreed to meet obligations they already had, something that does not 

constitute adequate consideration for a valid contract. Doc. 7 at 5-6. The Court agrees. 

 For a valid contract to exist, “there must be an offer, an acceptance, consideration, 

and sufficient specification of terms so that the obligations involved can be ascertained.” 

Norman v. State Farm Mut. Auto. Ins. Co., 33 P.3d 530, 532(Ariz. Ct. App. 2001). “A 

promise lacks consideration if the promisee is under a preexisting duty to counterperform.” Travelers Ins. Co. v. Breese, 675 P.2d 1327, 1330 (Ariz. Ct. App. 1983); see 

also Hisel v. Upchurch, 797 F. Supp. 1509, 1521 (D. Ariz. 1992) (“A well-established 

principle of consideration is that ‘giving a party something to which he or she has an 

absolute right is not consideration to support that party’s contractual promise.’”) (internal 

citation omitted). 

 Plaintiffs argue that the Repayment Agreement was supported by consideration 

because the express language of the agreement states that it is “in consideration of the 

Recitals above, the mutual promises contained herein and the benefits accruing to the 

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parties hereunder.” Doc. 15 at 4. Absent allegations of any obligations in addition to or 

separate from their pre-existing duty to perform under the original DOT and the 

Modification Agreement, however, Plaintiffs’ mere reliance on the formalistic language 

of the Repayment Agreement is unavailing. 

 Plaintiffs argue that Chase received consideration for the Repayment Agreement 

because it had more rights under that agreement than it would have had through 

immediate foreclosure – had Chase proceeded with foreclosure, Plaintiffs would no 

longer have been obligated to make payments, and, under A.R.S. § 33-814 (G), Chase 

would not have been able to recoup any deficiency. Doc. 15 at 4-5. The Court is not 

persuaded. When Plaintiffs signed the Repayment Agreement, Chase had not initiated 

foreclosure and Plaintiffs remained contractually obligated under the Note and the 

Modification Agreement to cure their default. As this district found under similar facts in 

Salgado v. Am.’s Servicing Co., No. CV-10-1909-PHX-GMS, 2011 WL 3903072, at *2 

(D. Ariz. Sept. 6, 2011), Plaintiffs could not have given up any rights under Arizona’s 

anti-deficiency statute, which applies only in the event of foreclosure, when foreclosure 

proceedings had not yet begun. As in Salgado, Plaintiffs’ pre-foreclosure obligation to 

pay arrearages greater than the partial payments agreed to under the Repayment 

Agreement renders that agreement unenforceable for lack of consideration. See id.

(“[B]y asserting that he paid less than the note obliged him to pay, Plaintiff has made no 

plausible allegation that the agreement was supported by consideration.”). Because 

Plaintiffs have failed to allege facts showing that the Repayment Agreement was 

supported by consideration and that it was, therefore, a legally enforceable contract, 

Plaintiffs’ breach of contract claim fails. 

 The lack of an enforceable contract is also fatal to Plaintiffs’ breach of the 

covenant of good faith and fair dealing claim. See Norman v. State Farm Mut. Auto. Ins. 

Co., 33 P.3d 530, 532 (Ariz. Ct. App. 2001) (“[W]e reiterate the well-settled principle 

that a contract must exist before there can be a breach of the covenants of good faith and 

fair dealing implied in every contract.”). The Court will dismiss count one. 

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B. Count Two: Unjust Enrichment. 

 Plaintiffs allege that Chase has been unjustly enriched at their expense. A.C. ¶ 37. 

Unjust enrichment is a claim in equity that Plaintiffs put forth as an alternative to their 

breach of contract claims. Doc. 15 at 5. “In Arizona, five elements must be proved to 

make a case of unjust enrichment: (1) an enrichment; (2) an impoverishment; (3) a 

connection between the enrichment and the impoverishment; (4) absence of justification 

for the enrichment and the impoverishment; and (5) an absence of a remedy provided by 

law.” Community Guardian Bank v. Hamlin, 898 P.2d 1005, 1008 (Ariz. Ct. App. 1995) 

(citations omitted). 

 Chase argues, and the Court agrees, that Plaintiffs have failed to allege facts to 

support the necessary elements of this claim. Doc. 7 at 7. Specifically, they have failed 

to allege that Chase was enriched, that they were impoverished, or that these results, to 

the extent Plaintiffs have attempted to allege them, were unjust. See id. 

 To the extent that Plaintiffs’ claim rests on the alleged payments they made to 

Chase pursuant to the Repayment Agreement, Plaintiffs do not dispute that Chase was 

entitled to these payments as partial compensation for Plaintiffs’ failure to meet its 

monthly payment obligations under the original Note and Modification Agreement. See

A.C. ¶¶ 9-13. This fact negates any assertion that either the “enrichment” Chase received 

or the corresponding “impoverishment” Plaintiffs incurred was unjust. Moreover, even 

accepting Plaintiffs’ theory that the payments made under the Repayment Agreement 

were somehow unjust because they were induced by misrepresentation on the part of 

Chase, it is undisputed that Chase returned the payments, thereby obviating any 

remaining ground for unjust enrichment. See A.C. ¶¶ 22-24; Doc. 15 at 2, 5. 

 To the extent that Plaintiffs’ unjust enrichment claim rests on the noticed 

foreclosure sale of the Property, this also is not an adequate basis for showing either that 

Chase was unjustly enriched or that Plaintiffs were unjustly impoverished. First, 

Plaintiffs have alleged no facts showing that Chase gained financially by initiating 

foreclosure or that Plaintiffs suffered impoverishment as a result. To the contrary, Chase 

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asserts, and Plaintiffs do not dispute, that no foreclosure sale has taken place and 

Plaintiffs have continued to reside in the Property for months despite their default. 

Docs. 7 at 2; 17 at 4. Second, even if Plaintiffs could show an enrichment to Chase and a 

corresponding impoverishment to themselves should the foreclosure sale proceed, 

Plaintiffs acknowledge that they defaulted on the Modification Agreement and that the 

payments they proffered under the Repayment Agreement, even if credited, only partially 

covered their past arrearages. The Court cannot conclude that foreclosure under these 

circumstances would be unjust. The Court will dismiss count two. 

C. Claim Three: Consumer Fraud. 

 To state a claim for consumer fraud under A.R.S. § 44-1522, a Plaintiff must 

allege “a false promise or misrepresentation made in connection with the sale or 

advertisement of merchandise and consequent and proximate injury resulting from the 

promise.” Kuehn v. Stanley, 91 P.3d 346, 351 (Ariz. Ct. App. 2004). Plaintiffs allege 

both that Chase made false promises and misrepresentations in connection with the 

Repayment Agreement and that Plaintiffs suffered damages as a result. A.C. ¶¶ 40, 42. 

 Chase argues that Plaintiffs’ consumer fraud claim fails because Plaintiffs fail to 

plead with particularity the time, place, and parties to the alleged misrepresentations as 

required under Federal Rule of Civil Procedure 9(b). Doc. 7 at 7-8; see Fed. R. Civ. P. 

9(b) (“a party must allege with particularity the circumstances constituting fraud or 

mistake.”); Lancaster Community Hosp. v. Antelope Valley Hosp. Dist., 940 F.2d 397, 

405 (9th Cir. 1991) (averments of fraud must be accompanied by the who, what, when, 

where, and how of the misconduct charged); A.G. Edwards & Sons, Inc. v. Smith, 736 F. 

Supp. 1030, 1033 (D. Ariz. 1989) (same). Chase also argues that Plaintiffs have suffered 

no injury as the basis for this claim. Doc. 17 at 5. 

 It is questionable whether A.R.S. § 44-1522, which applies to misrepresentations 

“in connection with the sale or advertisement of any merchandise,” applies to Chase’s 

alleged misrepresentations in the Repayment Agreement given that that agreement did 

not involve the sale or advertisement of merchandise and even the DOT to which it 

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relates involved only a refinancing of Plaintiffs’ home. The Court need not reach this 

question or the question of whether Plaintiffs have met the particularity requirements of 

Rule 9(b). Instead, the Court finds that the lack of actual damages, as noted with respect 

to Plaintiffs’ first two claims, is fatal to any consumer fraud claim. Plaintiffs have not 

alleged that they made any payments under the Repayment Agreement that they were not 

already obligated to make, nor that Chase’s alleged fraudulent misrepresentations with 

respect to the Repayment Agreement have left Plaintiffs worse off than before Chase 

allegedly proffered that agreement. The lack of “consequent and proximate injury 

resulting from the [false] promise” to forgo foreclosure is fatal to Plaintiffs’ consumer 

fraud claim. Kuehn, 91 P.3d at 351. The Court will dismiss count three. 

D. Claim Four: Promissory Estoppel. 

 Plaintiffs’ claim of promissory estoppel, like their unjust enrichment claim, is a 

claim for equitable relief predicated on the allegation that Chase promised to forgo 

enforcing the terms of the DOT and to reinstate Plaintiffs’ Modification Agreement in 

exchange for specified payments, and that Plaintiffs justifiably relied on this promise to 

their detriment. A.C. ¶¶ 45-47. Plaintiffs allege, in particular, that Chase’s promise 

induced them to make the March, April, and May payments and not to make the 

subsequent June payments. Id., ¶ 46. This claim also fails because Plaintiffs have failed 

to allege facts showing that their actions in reliance on Chase’s alleged promise caused 

them injury. 

 As set forth in the amended complaint, Plaintiffs’ March, April, and May 

payments consisted of partial payments of amounts already owed to Chase under the 

DOT and Modification Agreement. Again, Plaintiffs cannot claim damages for paying 

what they already owed. Plaintiffs’ non-payment in June following Chase’s instruction 

that they make no further payments under the Repayment Agreement also does not show 

injury. To the extent that Plaintiffs imply that they were injured because they were 

unwittingly led to believe that they no longer had to make any payments, this assertion is 

belied by Plaintiffs’ own allegations that Chase informed them that the Repayment 

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Agreement did not meet “investor repayment guidelines” and that reinstatement of the 

Modification Agreement would require adherence to new payment terms. A.C. ¶ 24. 

 Plaintiffs no doubt suffered inconvenience and frustration in making a number of 

payments in the expectation of curing their default, only to have those payments rejected 

and reimbursed after considerable delay. But Plaintiffs have not alleged facts plausibly 

showing that they were made materially worse off by the actions they took in reliance on 

Chase’s promises such that equity can only be served if those promises are enforced. See

Restatement (Second) of Contracts § 90(1) (requiring for purposes of promissory 

estoppel that “injustice can be avoided only by enforcement of the promise”); quoted in 

Double AA Builders, Ltd. v. Grand State Const. L.L.C., 114 P.3d 835, 839 (Ariz. Ct. App. 

2005). Plaintiffs are in at least the same or better position than they were before they 

relied on Chase’s promises because the payments they made were smaller than the 

amounts they owed, the payments have nonetheless been fully refunded, and Plaintiffs 

have been able to remain in the Property despite default. The Court has no basis in equity 

to enforce an otherwise non-binding promise, reliance on which did not leave Plaintiffs 

materially worse off than if the promise had not been made. 

E. Claim Five: Specific Performance/Equitable Reformation. 

 Plaintiffs’ specific performance claim is predicated on the assertion that the 

Repayment Agreement constitutes an enforceable contract. This claim fails for the 

reasons already discussed with respect to Plaintiffs’ breach of contract claim. Plaintiffs 

additionally seek “equitable reformation of the Repayment Agreement to the extent 

necessary to effect specific performance.” A.C. ¶ 54. To the extent that Plaintiffs 

attempt to assert an additional claim in equity, this claim fails for the reasons discussed 

with respect to counts two and four. 

F. Count Six: Declaratory Judgment. 

 Plaintiffs seek a judgment “declaring that the Repayment Agreement is fully 

enforceable against Chase” and had been breached. A.C. ¶¶ 59-60. A request for 

declaratory judgment is a remedy, not a separate cause of action. See Silvas v. GMAC 

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Mortgage, L.L.C., No. CV-09-265-PHX-GMS, 2009 WL 4573234, at *7 (D. Ariz. 

Dec. 1, 2009). For this reason, and because the Court has already dismissed Plaintiffs’ 

breach of contract claim, the Court will dismiss count six. 

G. Count Seven: Punitive Damages. 

 Plaintiffs allege that they are entitled to punitive damages because Chase’s 

conduct “was malicious, shows spite or ill will, and demonstrates a reckless indifference 

to Plaintiffs’ interests.” A.C. ¶ 64. Chase argues, and the Court agrees, that because 

Plaintiffs have failed to show actual damages, they lack sufficient grounds to assert a 

claim for punitive damages. See Medasys Acquisition Corp. v. SDMS, P.C., 55 P.3d 763, 

766 (Ariz. 2002) (“The traditional rule requires an award of actual damages before 

punitive damages may be awarded, and we adhere to that rule.”). 

H. Count Eight: Violation of the Fair Debt Collection Practices Act. 

 Plaintiffs allege that Chase’s conduct violated several provisions of the Fair Debt 

Collection Practices Act (“FDCPA”), including that a “debt collector” may not engage in 

conduct “the natural consequence of which is to harass, oppress, or abuse any person in 

connection with the collection of a debt” (15 U.S.C. § 1692d), “may not use any false, 

deceptive, or misleading representation or means in connection with the collection of any 

debt” (Id. at § 1692d), and “may not use unfair or unconscionable means to collect or 

attempt to collect any debt” (Id. at § 1692e). See A.C. ¶ 70. 

 Under the FDCPA, a “debt collector” is “any person who uses any instrumentality 

of interstate commerce or the mails in any business the principal purpose of which is the 

collection of any debts, or who regularly collects or attempts to collect, directly or 

indirectly, debts owed or due or asserted to be owed or due another. 15 U.S.C. 

§ 1692a(6). This definition does not include “any officer or employee of a creditor while, 

in the name of the creditor, collecting debts for such creditor.” Id. at 1692a(6)(A). 

 Plaintiffs do not allege that Chase is a business “the principal purpose of which is 

the collection of any debts.” Nor do they allege that Chase regularly collects or was 

attempting to collect any debts “owed or due or asserted to be owed or due another.” 

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Rather, the allegations respecting Chase’s collection activities all pertain to the mortgagerelated debt Plaintiffs acknowledge owing to Chase itself. See A.C. ¶ 7. As the abovecited definition makes clear, the FDCPA has no application to Chase’s alleged 

misconduct in attempting to collect a debt in its own name. 

 The legislative history of the Act further supports that it was proposed to address 

“serious and widespread abuses” by “third party debt collectors” and was not intended to 

apply to “the collection of debts, such as mortgages and student loans, by persons who 

originated such loans.” S. Rep. No. 95-382 (1977), reprinted in 1977 U.S.C.C.A.N. 

1695, at 1696-98, 1977 WL 16047. Courts have routinely found that the Act does not 

apply to mortgagees, their beneficiaries, or mortgage service companies. See Perry v. 

Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985) (finding that neither mortgage 

servicing company nor pre-default assignee on promissory note were debt collectors); 

Mansour v. Cal-Western Reconveyance Corp., 618 F. Supp. 2d 1178, 1182 (D. Ariz. 

2009) (an assignee, a servicing company, and a fiduciary were not debt collectors under 

the FDCPA); Bergdale v. Countrywide Bank FSB, No. CV-12-8057-PCT-GMS. 2012 

WL 4120482 at *8 (D. Ariz. Sept. 18, 2012) (mortgagees and their beneficiaries are not 

debt collectors under the FDCPA). 

 Plaintiffs argue that Chase is subject to the FDCPA because it identified itself as a 

“debt collector” in its own correspondence. Doc. 15 at 7. Chase acknowledges that it 

identified itself as the “lender” or “servicer” of Plaintiffs’ debt, and that it routinely uses 

boiler-plate language in its correspondence to indicate that it is collecting a debt, but it 

argues that this does not mean it is a “debt collector” for purposes of the FDCPA when 

the definition under that Act does not otherwise apply. Doc. 17 at 6; 6 nn. 2 & 3. For the 

reasons stated above, the Court agrees. The Court will dismiss count eight. 

I. Count Nine: Violation of A.R.S. § 33-420. 

 Plaintiffs allege that U.S. Bank caused a Notice of Trustee’s Sale to be recorded 

with the Maricopa County Recorder’s Office “knowing or having reason to know that the 

document is forged, groundless, contains a material misstatement or false claim or is 

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otherwise invalid” in violation of A.R.S. § 33-420. A.C. ¶ 74. Plaintiffs acknowledge 

that their assertion that the Notice of Trustee’s Sale is groundless rests entirely on their 

allegations that Chase breached the Repayment Agreement or, in the alternative, should 

be equitably estopped from rescinding that agreement. Doc. 15 at 7. As previously 

discussed, Plaintiffs have failed to allege facts showing that the Repayment Agreement 

was a legally-binding contract or that they otherwise are entitled to equitable relief. 

Plaintiffs have also failed to allege facts showing that U.S. Bank knew or should have 

known of Plaintiffs’ attempts to cure their default. Finally, courts in this district have 

routinely found that A.R.S. § 33-420, which pertains to recording documents “purporting 

to claim an interest in, or a lien or encumbrance against, real property,” does not apply to 

a Notice of Trustee sale. See Bergdale, 2012 WL 4120482, at *4 (citing cases and 

concluding that “notices of trustee's sale do not ‘create an interest’ in property such that 

A.R.S. § 33–420 applies.”). Plaintiffs fail to state a claim under A.R.S. § 33–420. 

IV. Plaintiffs’ Request for Leave to Amend. 

 Plaintiffs ask the Court to grant leave to amend. Doc. 15 at 9. Rule 15 of the 

Federal Rules of Civil Procedure declares that courts should “freely give leave [to 

amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). While “this mandate is to be 

heeded,” leave to amend may be denied if the amendment would be futile. Foman v. 

Davis, 371 U.S. 178, 182 (1962). 

 The Court has dismissed Plaintiffs’ breach of contract and breach of the implied 

covenant of good faith and fair dealing claims because Plaintiffs’ allegations fail to show 

that the Repayment Agreement was a binding contract supported by consideration. 

Plaintiffs, with full knowledge of the facts of that agreement, have failed to identify any 

contractual obligations that required them to do more than they were already obligated to 

do. Thus, leave to amend those claims would be futile. Plaintiffs’ consumer fraud, 

punitive damages, FDCPA, and A.R.S. § 33-420 claims similarly fail as a matter of law 

because, as fully discussed above, the facts upon which Plaintiffs rely fail to support 

necessary elements of those claims. Because it does not appear from Plaintiffs’ amended 

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complaint or the arguments put forth in response to the motion to dismiss that any new 

facts could avoid the fatal deficiencies of those claims, leave to amend those claims 

would be futile. Finally, granting Plaintiffs leave to amend its remaining claims in equity 

would be futile because Plaintiffs acknowledge that they were in default on the 

Modification Agreement for an amount greater than they proffered under any subsequent 

payment plan, and this prevents the Court from finding either the collection of partial 

payments from Plaintiffs (subsequently returned) or the noticed trustee’s sale under the 

terms of the DOT unjust. In sum, the Court denies leave to amend because it finds that 

amendment would be futile with respect to all claims. 

IT IS ORDERED: 

 1. Defendants’ motion to dismiss (Doc. 7) is granted. 

 2. Plaintiffs’ amended complaint is dismissed with prejudice. 

 3. The Clerk of the Court is directed to terminate this matter. 

 Dated this 15th day of March, 2013. 

Case 2:12-cv-02480-DGC Document 22 Filed 03/18/13 Page 13 of 13