Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_09-cv-01423/USCOURTS-azd-2_09-cv-01423-2/pdf.json

Nature of Suit Code: 371
Nature of Suit: Truth in Lending
Cause of Action: 15:1601 Truth in Lending

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

William J. Eason; 

Erie Lee Eason, 

Plaintiffs, 

vs.

IndyMac Bank, FSB; 

MTC Financial, Inc. dba Trustee Corps.;

MERS, 

Defendants. 

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No. CV 09-1423-PHX-JAT

ORDER

Presently pending before the Court is Pro Se Plaintiff William J. Eason’s Application

for Entry of Default (Doc. #58) and Motion to Clarify Entry of Default (Doc. #61). Plaintiff

seeks default judgment against Homeplaceloans.com and IndyMac Bank, FSB. Finding an

evidentiary hearing unnecessary, the Court issues the following Order.

1. Background

This case is based on alleged violations of the Truth in Lending Act (“TILA”), and

also includes an action for quiet title based on a “produce the note” argument. Plaintiff

brought suit in Maricopa County Superior Court seeking injunctive relief. On July 8, 2009,

Defendant MTC Financial, Inc. (“MTC”) removed to this Court. On April 6, 2010, the Court

granted the motions of two defendants, MTC and Mortgage Electronic Registration System

(“MERS”), to dismiss for failure to state a claim. The remaining two defendants, IndyMac

Bank, FSB (“IndyMac”) and Homeplaceloans.com, have failed to plead or otherwise defend.

Case 2:09-cv-01423-JAT Document 62 Filed 05/14/10 Page 1 of 5
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The Clerk of the Court has entered default. (Doc. #60.) Plaintiff now requests that the Court

enter default judgment granting the equitable relief of quiet title. 

1. The Motion for Default Judgment

As default has been entered as to IndyMac and Homeplaceloans.com, the Court may

consider Plaintiff’s motion for default judgment (styled “Application for Entry of Default”).

Fed. R. Civ. Pro. 55(b). Under Rule 55(b)(2), a court may enter a final judgment in a case

following a defendant’s default. However, entry of a default judgment is not a matter of

right. Its entry is entirely within the court’s discretion and may be refused where the court

determines no justifiable claim has been alleged or that a default judgment is inappropriate

for other reasons. See Draper v. Coombs, 792 F.2d 915, 924 (9th Cir. 1986); Aldabe v.

Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980).

Where, as here, a default has been entered, the factual allegations of the complaint

together with other competent evidence submitted by the moving party are normally taken

as true. See TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir.1987); Danning

v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978). However, this Court still must review the

facts to insure that the Plaintiffs have properly stated claims for relief. See Cripps v. Life Ins.

Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (“necessary facts not contained in the

pleadings, and claims which are legally insufficient, are not established by default”); Apple

Computer Inc. v. Micro Team, No. C 98-20164 PVT, 2000 WL 1897354, at *3 n. 5 (N.D.Cal.

Dec. 21, 2000) (“Entry of default judgment is not mandatory upon Plaintiff’s request, and

the court has discretion to require some proof of the facts that must be established in order

to determine liability.”) (citing 10A Charles Alan Wright & Arthur R. Miller, Federal

Practice and Procedure § 2688 (3rd ed. 1998)).

In Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986), the Ninth Circuit enumerated seven

factors that a court may consider in determining whether to grant default judgment: (1) the

merits of the plaintiff’s substantive claim; (2) the sufficiency of the complaint; (3) the sum

of money at stake in the action; (4) the possibility of prejudice to the plaintiff; (5) the

possibility of a dispute concerning material facts; (6) whether the default was due to

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excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure

favoring decision on the merits. Id. at 1471-72. 

Plaintiff has submitted an affidavit—making no reference to the Eitel factors—

requesting quiet title as the sole form of relief. Upon consideration, the Court is not satisfied

that Plaintiff’s showing justifies this form of equitable relief. 

In assessing the first Eitel factor—the merits of Plaintiff’s claim—the Court notes that

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

in plaintiff. See Verde Water & Power Co. v. Salt River Valley Water Users’ Ass’n, 197 P.

227, 228 (Ariz 1921); see also A.R.S. § 12-1101, et seq. (2007). Further, if the complaint

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

control. Verde Water, 197 P. at 228.

Plaintiff’s specific factual allegations do not show that Plaintiff holds title. Under

Arizona law governing Deeds of Trust, A.R.S. § 33-801, et seq. (2007), 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. App.1981) (footnotes omitted), quoting

Note, The Deed of Trust: Arizona’s Alternative to the Real Property Mortgage, 15 Ariz. L.

Rev. 194, 196 (1973). 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

Busboy, 754 P.2d 1135, 1138 (Ariz. 1988). 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. (citations omitted); see A.R.S. § 33-804(B) (2007).

Here, according to the complaint, Plaintiff is a trustor under A.R.S. § 33-801(11)

(2007) who has entered into a loan agreement to purchase trust property. Until Plaintiff pays

off the loan, the trustee, or the successor trustee as named by the beneficiary, holds the title

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1 See also Farrell v. West, 114 P.2d 910, 911 (Ariz. 1941) (refusing to quiet title

unless plaintiff does equity by tendering the amount owed). 

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in trust. 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.1

 Instead, Plaintiff asks this Court to

invalidate the claims of the beneficiary of the deed of trust. The Court will not indulge this

inappropriate use of the action to quiet title. Therefore, under Eitel, the merits of Plaintiff’s

claim weigh against entering default judgment.

The Court considers the other Eitel factors. Regarding the sufficiency of the

complaint, the Court finds the Complaint insufficient due to the lack of specific facts alleged

therein. The complaint does not even make clear the amount of money at stake. Regarding

the possibility of prejudice to the plaintiff, the Court is not convinced Plaintiff will be

unfairly prejudice by not granting default judgment for the equitable remedy requested.

Regarding the possibility of a dispute concerning material facts, the Court finds it wholly

possible that the Defendant would dispute Plaintiff’s claim to title. Regarding whether the

default was due to excusable neglect, the Court is unable to evaluate the reasons for the

default. Finally, the strong policy underlying the Federal Rules of Civil Procedure favoring

decision on the merits weighs against granting Plaintiff default judgment. 

C. Conclusion

Having reviewed Plaintiff’s motion and considered the Eitel factors as a whole, the

Court concludes that Plaintiff is not entitled to default judgment. While denial of default

judgment would be appropriate, the Court will allow Plaintiff to file a supplemental motion

addressing the Eitel factors. If Plaintiff fails to file an amended motion within ten days, the

Court will deny the motion for default judgment with prejudice.

Accordingly,

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IT IS ORDERED denying Plaintiff's motion for default judgment (Doc. ##58, 61)

without prejudice and providing Plaintiff ten calendar days from the date of this Order to file

a supplemental motion for default judgment.

IT IS FURTHER ORDERED that if Plaintiff does not file a supplemental motion

within the allotted time, the Court will direct the Clerk of the Court to enter judgment against

Plaintiff with prejudice.

DATED this 14th day of May, 2010.

Case 2:09-cv-01423-JAT Document 62 Filed 05/14/10 Page 5 of 5