Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-01916/USCOURTS-azd-2_11-cv-01916-0/pdf.json

Nature of Suit Code: 220
Nature of Suit: Foreclosure
Cause of Action: 28:1444 Petition for Removal- Foreclosure

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Julie Vawter, 

Plaintiff, 

vs.

ReconTrust Company, N.A.; Bank of New

York, 

Defendants. 

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No. 11-CV-1916-PHX-GMS

ORDER

Pending before the Court is Defendants’ Motion to Dismiss (Doc. 7). For the reasons

stated below, Defendants’ Motion is granted. 

BACKGROUND

On February 14, 2006, Plaintiff Julie Vawter borrowed $164,500 from Countrywide

Home Loans, Inc. to purchase property in Queen Creek, Arizona. In connection with this

loan, Plaintiff executed a Promissory Note and a Deed of Trust. The Deed of Trust states that

Mortgage Electronic Registration Systems, Inc. (“MERS”) is the “beneficiary” for

Countrywide and for Countrywide’s successors and assigns. As beneficiary, MERS received

legal title to the interests granted by Plaintiff in the Deed of Trust, including “the right to

foreclose and sell the Property.” (Doc. 7, Ex. A).

On June 1, 2011, MERS recorded a Corporation Assignment of Deed of Trust in

which it assigned its interest as beneficiary to The Bank of New York Mellon Corporation

Case 2:11-cv-01916-GMS Document 13 Filed 01/04/12 Page 1 of 7
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(“BNYM”). On the same day, BNYM recorded a Substitution of Trustee in which

ReconTrust Company, N.A. succeeded Fidelity National Title as trustee. Also on June 1,

ReconTrust recorded a Notice of Trustee’s Sale against the property. The trustee’s sale has

not yet occurred.

On August 22, 2011, Plaintiff filed her Complaint in this action in the Maricopa

County Superior Court. On September 28, 2011, the action was removed to this Court.

Defendants now move to dismiss Plaintiff’s Complaint for failure to state a claim. (Doc. 7).

DISCUSSION

I. Legal Standard

To survive dismissal for failure to state a claim pursuant to Federal Rule of Civil

Procedure 12(b)(6), a complaint must contain more than “labels and conclusions” or a

“formulaic recitation of the elements of a cause of action”; it must contain factual allegations

sufficient to “raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly,

550 U.S. 544, 555 (2007). While “a complaint need not contain detailed factual allegations

. . . it must plead ‘enough facts to state a claim to relief that is plausible on its face.’”

Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1022 (9th Cir. 2008) (quoting Twombly,

550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content

that allows the court to draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citing Twombly, 550

U.S. at 556). The plausibility standard “asks for more than a sheer possibility that a defendant

has acted unlawfully. 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. (internal citations omitted) (quoting Twombly, 550 U.S. at 557).

II. Legal Analysis

Plaintiff brings three causes of action against Defendants: 1) lack of standing to

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1

 In her Response to Defendants’ Motion to Dismiss, Plaintiff attempts to assert an

additional cause of action, namely that Defendants’ do not have a “valid recorded and

perfected” creditors lien on Plaintiff’s property. (Doc. 9 at 6–9) Plaintiff did not raise this

cause of action in her Complaint, however (See Doc. 1, Ex. 1), and therefore the Court need

not address her “invalid creditors lien” claim.

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foreclose; 2) fraud and intentional misrepresentation; and 3) negligence per se.1

 The Court

will address each in turn.

1. Lack of Standing

Plaintiff first alleges that the Court should “forever enjoin Defendants from

foreclosing and selling” the property because they “lack standing to foreclose.” (Doc. 1, Ex.

1 at 4). Although Plaintiff has entitled this count “Injunctive Relief,” in Arizona injunctive

relief is a remedy, not an independent cause of action. See City of Tucson v. Clear Channel

Outdoor, Inc., 218 Ariz. 172, 187, 181 P.3d 219, 234 (App. 2008). The Court will therefore

analyze the “lack of standing” theory upon which Plaintiff bases her request for equitable

relief to determine whether she has stated a valid claim.

Plaintiff asserts that Defendants lack standing to foreclose because ReconTrust is not

a valid trustee and BNYM is not a valid beneficiary. (Doc. 1, Ex. 1 at 3–4). As best the Court

can tell, Plaintiff bases this assertion on the alleged facts that Defendants are not the original

beneficiary and trustee and that Plaintiff “is not in the possession of any documents” which

show that Defendants have succeeded the original beneficiary and trustee and are thus

entitled to foreclose. (Id.). Defendants, however, have attached to their Motion to Dismiss

a “Corporation Assignment of Deed of Trust” dated May 31, 2011, in which MERS assigns

its interest in the Deed of Trust to BNYM, and a “Substitution of Trustee,” also dated May

31, 2011, in which BNYM appoints ReconTrust as successor trustee to the Deed of Trust.

(Doc. 7, Exs. B, C). Defendants state that on June 1, 2011, both the Assignment and

Substitution of Trustee were recorded in the Maricopa County Recorder’s Office, a fact

which Plaintiff does not dispute. (Docs. 7, 9, 12). Accordingly, the Court may “look beyond

the complaint to [these] matters of public record.” Mack v. South Bay Beer Distributors,

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Inc., 798 F.2d 1279, 1282 (9th Cir. 1986), overruled on other grounds by Astoria Fed. Sav.

& Loan Ass’n. v. Solimino, 501 U.S. 104 (1991). These documents show that BNYM and

ReconTrust hold the interests in the Deed of Trust priorly held by MERS and Fidelity. (Doc.

7, Exs. B, C). 

In her Complaint, Plaintiff states that she “contests the existence and validity of any

assignment. . . . [or] Substitution of Trustee.” (Doc. 1, Ex. 1 at 4). She does not provide

factual allegations in her complaint, however, which support her labeling of the Assignment

or Notice of Substitution as “invalid.” “[A] plaintiff’s obligation to provide the ‘grounds’

of [her] ‘entitle[ment] to relief’ requires more than labels and conclusions.” Bell Atlantic

Corp. v. Twombly, 550 U.S. 544, 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)).

Therefore, Plainntiff’s “invalidity” label, without more, does not suffice to revive her lack

of standing claim.

Plaintiff alleges for the first time in her Response to Defendants’ Motion to Dismiss

that the 2011 assignment must be invalid because “the trust to which BNYM is an alleged

trustee closed in 2006.” (Doc. 9 at 3). Plaintiff contends that BNYM “could not have

acquired Plaintiff’s Deed or Note in 2011—five years after the closing date of the trust.”

(Id.). As best the Court can tell, Plaintiff is contending that the trust and/or its trustee BNYM

acquired its interest in Plaintiff’s mortgage in 2005 and therefore that the 2011 Assignment

must be a fraudulent replacement assignment. That the trust may have acquired an equitable

interest in Plaintiff’s loan in 2006, however, does not mean that BNYM would have at the

same time also acquired MERS’s status as beneficiary and the right to foreclose that such

status provides. The Deed of Trust states that MERS had the right to foreclose on the loan

not only for the lender Countrywide, but for Countrywide’s “successors and assigns.” (Doc.

7, Ex. A). Countrywide therefore could assign the equitable interest in Plaintiff’s loan to the

trust without MERS losing its right to foreclose. See Cervantes, 656 F.3d at 1044 (rejecting

the notion that the designation of MERS as a “nominal holde[r] of the deed” irreparably splits

the notes and deed). Indeed, MERS retained its right to foreclose until May 31, 2011 when

it assigned this right to BNYM. (Doc. 7, Ex. B). Accordingly, even if Plaintiff were to amend

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2

 In her Complaint, Plaintiff entitles this claim “negligence and negligence per se.”

Beyond listing the elements of common law negligence, however, Plaintiff does not make

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her Complaint to include these trust allegations, they would not make it plausible that the

Assignment is invalid.

2. Fraud and Intentional Misrepresentation

Plaintiff next alleges that Defendants knowingly made the following false and

fraudulent statements intending to induce reliance: 1) that ReconTrust is the current trustee;

2) that BNYM is the current beneficiary; and 3) that they “are entitled to assert certain rights

under the Deed.” (Doc. 1, Ex. 1 at 4). Plaintiff contends that these statements are fraudulent

because “neither of Defendants’ name [sic] is found in the Deed” and because there is “no

evidence” that ReconTrust is a valid trustee or that BNYM is a valid beneficiary. (Id.). As

discussed above, however, the May 31, 2011 Assignment and Notice of Substitution, both

of which are public records, evidence that the original beneficiary transferred its interest in

the Deed of Trust to BNYM, who then appointed ReconTrust as successor trustee. Plaintiff

has therefore provided no basis for its assertion that the statements are fraudulent. 

Plaintiff also contends that “there is no evidence regarding the [Notice of Trustee’s

Sale’s] signer [Darla Sproles] or [her] relation to RECONTRUST—or Sproles’ specific

authority.” (Id. at 5). The mere fact, however, that Plaintiff does not know whether Sproles

had authority to sign the Notice does not raise Plaintiff’s “right to relief above the speculative

level.” Twombly, 550 U.S. 544, 555 (2007). Moreover, even if Sproles lacked the authority

to sign the Notice, ReconTrust does not contest her actions and thereby ratifies them. Brown

v. Bank of Am., 2011 WL 2633150, at *1 (D. Nev. July 5, 2011) (“Plaintiff argues that the

employees who signed various documents might not have had authority to do so . . . but the

fact that Defendants desire to proceed with foreclosure is proof of ratification of these

employees’ actions.”). Plaintiff has therefore failed to state a claim for fraud.

3. Negligence Per Se2

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28 a negligence claim that is distinguishable from her negligence per se claim. 

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Plaintiff lastly alleges that if Defendants are not the valid trustee and beneficiary, they

have violated several of the mortgage provisions of the Arizona Revised Statutes (“A.R.S.”),

namely sections 33-804, 33-807 and 33-808, and are therefore liable for negligence per se.

(Doc. 1, Ex. 1 at 6–7). Under Arizona law, a person is liable for negligence per se where he

“violates a statute enacted for the protection and safety of the public.” Alaface v. National

Inv. Co., 181 Ariz. 586, 596, 892 P.2d 1375, 1385 (App. 1994). See also J.H. Welch & Son

Contracting Co. v. Gardner, 96 Ariz. 95, 99, 392 P.2d 567, 570 (1964) (“It is well settled

that a violation of a safety statute constitutes negligence per se.”). Sections 33-804, 33-807,

and 33-808 do not appear to be safety statutes. The Court need not reach this issue, however,

because, as discussed above, the Assignment and Notice of Substitution of Trustee show that

BNYM and ReconTrust have replaced MERS and Fidelity as beneficiary and trustee for the

Deed of Trust. (Doc. 7, Exs. B, C). Accordingly Plaintiff’s negligence per se violation, which

relies on the invalidity of BNYM and ReconTrust’s statuses as beneficiary and trustee, fails

as a matter of law. 

CONCLUSION

Plaintiff has failed to state any claims for which relief can be granted.

IT IS THEREFORE ORDERED:

1. Defendants’ Motion to Dismiss (Doc. 7) is GRANTED. 

2. All claims in Plaintiff’s existing complaint are dismissed with prejudice.

Should Plaintiff desire to file a motion for leave to file an amended complaint, she shall do

so no later than 30 days from the date of this Order. The proposed amended complaint shall

be attached to the motion for leave to amend and comply with Federal Rules of Civil

Procedure 15 and Local Rules of Civil Procedure 15.1. The Court will not permit the filing

of any proposed amended complaint that does not comply with the requirements of this

Order, or that seeks to reassert claims that have been dismissed.

3. If Plaintiff does not file a motion requesting leave to file an amended complaint

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by February 3, 2012, the Clerk of the Court is directed to terminate this action.

DATED this 4th day of January, 2012.

Case 2:11-cv-01916-GMS Document 13 Filed 01/04/12 Page 7 of 7