Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-00095/USCOURTS-azd-2_11-cv-00095-0/pdf.json

Nature of Suit Code: 450
Nature of Suit: Interstate Commerce
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

Laurie F. Wright, 

Plaintiff, 

vs.

Chase Home Finance LLC, et. al., 

Defendants. 

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No. CV-11-0095-PHX-FJM

ORDER

The court has before it defendants' motion to dismiss (doc. 5), plaintiff's response and

motion for leave to file second amended complaint (docs. 8, 9), and defendants' reply in

support of motion to dismiss and response to the motion for leave to amend (doc. 10).

Plaintiff did not file a reply.

Plaintiff entered into a mortgage loan transaction, secured by a deed of trust, with

Chase to purchase property in Gilbert, Arizona. Sometime prior to June 1, 2009 plaintiff fell

behind on her mortgage. Plaintiff sought a mortgage modification from Chase pursuant to

the Home Affordable Mortgage Program ("HAMP"). In September 2009, Chase enrolled

plaintiff in the HAMP Trial Period Plan. Under this plan, plaintiff's monthly mortgage

payments were reduced temporarily while she was evaluated for a permanent loan

modification. Plaintiff successfully made the required payments for at least seven months.

In July 2010, Chase sent plaintiff a proposed loan modification. Plaintiff claims that the

modification was worse than her original loan terms because it increased the overall loan

amount, increased her monthly payments, shortened the payment period, and did not credit

Case 2:11-cv-00095-FJM Document 12 Filed 06/02/11 Page 1 of 5
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plaintiff for any payments made during the trial plan period. Plaintiff contacted Chase to ask

why the terms were worse and why her prior payments were not credited. Plaintiff alleges

that Chase instructed her to return the modification agreement unsigned so that it could look

into it. Plaintiff then claims that Chase unreasonably construed this as a rejection. In August

2010, plaintiff filed Chapter 7 bankruptcy. On October 18, 2010, defendant Tiffany & Bosco

filed a motion to lift the automatic stay in plaintiff's bankruptcy so that defendants could

initiate foreclosure. The Bankruptcy Court lifted the stay. Finally, on October 20, 2010,

Chase rejected plaintiff's application for a loan modification because she failed to accept the

modification within the required time. Neither party mentions the current status of the

property.

Plaintiff originally filed this action in the Superior Court of Arizona in Maricopa

County. Defendants removed the action on the basis of diversity and federal question

jurisdiction. Plaintiff's First Amended Complaint ("FAC") seeks damages, declaratory, and

injunctive relief for alleged wrongdoing with regard to a mortgage loan under the following

theories: (1) violation of HAMP; (2) breach of contract; and (3) breach of the covenant of

good faith and fair dealing. Plaintiff also seeks an accounting. Defendants move to dismiss

for failure to state a claim. In February, we extended the time in which the parties had to file

a response or reply because they were negotiating a resolution (doc. 7). On April 5, 2011,

however, plaintiff filed a response and her motion for leave to file a second amended

complaint. Neither party mentions why a negotiated resolution was not reached. 

Defendants first move to dismiss counts one, two, three, and four because HAMP does

not create a private right of action. Defendants argue that even though plaintiff labels her

claims as breach of contract, breach of the covenant of good faith and fair dealing, and

declaratory judgment, she is really alleging violations of HAMP. Plaintiff asserts that HAMP

amended her note and deed of trust to impose additional duties on defendants. By failing to

consider plaintiff for a loan modification, plaintiff claims that defendants violated HAMP and

in turn, the note and deed of trust. 

Plaintiff lacks standing to assert any claims premised on a violation of HAMP.

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HAMP is not a contract between plaintiff and defendants, did not amend plaintiff's loan

contracts, and does not contain a private right of action. See Puzz v. Chase Home Finance,

__ F. Supp. 2d. __, 2011 WL 395423, *4 (D. Ariz. 2011). HAMP grants Fannie Mae, not

individual borrowers, the right to sue to ensure compliance. Nor is plaintiff a third party

beneficiary of HAMP, entitling her to sue for breach of contract. As the Supreme Court

recently stated, "[t]he absence of a private right to enforce the statutory [ ] obligations. . .

would be rendered meaningless if [ ]entities could overcome that obstacle by suing to

enforce the contract. . .instead. " Astra USA, Inc. v. Santa Clara Cnty., __ U.S. __, 131 S.Ct.

1342, 1348 (2011). A party cannot circumvent the lack of a private right of action by filing

a breach of contract claim as a third party beneficiary when the statute does not demonstrate

any intent to allow beneficiaries to enforce those terms. Id. at 1348-49. To the extent claims

one, two, three, and four allege violations of HAMP, we dismiss them.

We next turn more specifically to plaintiff's breach of contract claims. Claim one is

asserted against Chase and claim two is asserted against all defendants. Both claims allege

the same thing, except that the second also includes a claim for injunctive relief to prevent

foreclosure. Plaintiff alleges that defendants violated the note and deed of trust, as well as

the Trial Payment Plan agreement. Defendants argue that plaintiff fails to identify what

provisions of the contracts were breached. Plaintiff again relies on her argument that

defendants violated the note and deed of trust, as amended by HAMP.

To plead a breach of contract claim, plaintiff must allege the formation of a contract,

its breach, and damages. Frank Lloyd Wright Found v. Kroeter, 697 F. Supp. 2d 1118, 1125

(D. Ariz. 2010). Here, plaintiff does not identify what specific provisions were breached.

We already stated that plaintiff does not have standing to assert violations of HAMP, even

as a breach of contract claim incorporating its terms. A liberal reading of the complaint

suggests that plaintiff may be trying to allege that defendants violated the deed of trust by

initiating foreclosure proceedings when plaintiff was not actually in default, or by failing to

provide proper notice, or that defendants violated the Trial Plan Agreement. As pled,

however, the FAC merely pleads conclusory statements and no more than "unadorned, theCase 2:11-cv-00095-FJM Document 12 Filed 06/02/11 Page 3 of 5
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defendant-unlawfully-harmed-me accusation[s]." Ashcroft v. Iqbal, __ U.S. __, 129 S.Ct.

1937, 1949 (2009). We therefore, grant defendants' motion to dismiss claims one and two.

Plaintiff's third claim for relief alleges a violation of the covenant of good faith and

fair dealing arising from the note and deed of trust. By refusing to consider plaintiff for a

loan modification the second time and noticing a trustee's sale, plaintiff alleges that

defendants breached the covenant. Defendants argue that plaintiff cannot claim that anyone

prevented her from receiving the benefit of the bargain. 

"The law implies a covenant of good faith and fair dealing in every contract," which

requires that "neither party will act to impair the right of the other to receive the benefits

which flow from their agreement." Rawlings v. Apodaca, 151 Ariz. 149, 153, 726 P.2d 565,

569 (1986). Count three alleges that plaintiff was not considered for and did not receive a

permanent loan modification. The note and deed of trust do not require defendants to modify

the loan. Defendants could not have acted to impair the rights afforded to plaintiff in the note

and deed of trust on this basis. We grant defendants' motion to dismiss count three.

Plaintiff also seeks an accounting. Plaintiff does not allege whether she seeks an

accounting pursuant to federal or state law. Defendants argue that the Real Estate Settlement

Procedures Act, 12 U.S.C. § 2601, et. seq. ("RESPA"), governs a borrower's right to an

accounting. Because plaintiff fails to even mention RESPA, defendants contend that plaintiff

fails to plead a plausible claim for relief.

Plaintiff seeks an accounting because defendants failed to credit payments plaintiff

made during the trial period. However, plaintiff fails to identify any legal theory underlying

her claim. In Arizona, actions for an accounting are usually reserved to parties in a fiduciary

relationship. See Mollohan v. Christy, 80 Ariz. 141, 143-44, 294 P.2d 375, 376-77 (1956).

Absent a special agreement, a debtor-creditor relationship is not a fiduciary relationship.

Moreover, there is "no statutory requirement that the [homeowner] be supplied with a

complete accounting." Kelly v. NationsBanc Mortg. Corp., 199 Ariz. 284, 286-87, 17 P.3d

790, 792-93 (Ct. App. 2000); but see A.R.S. § 33-813(c) (imposing certain narrower

accounting requirements). Because plaintiff fails to identify any claim under which she is

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entitled to an accounting, we dismiss her request for an accounting. 

Finally, plaintiff seeks a declaration that defendants violated HAMP and cannot

foreclose until they prove she is in default. The Declaratory Judgment Act ("DJA") is

"procedural only." Atena Life Ins. Co. v. Haworth, 300 U.S. 227, 240, 57 S.Ct. 461, 463

(1937). Declaratory relief is not a theory of recovery, but merely offers an additional

remedy. Because plaintiff fails to plead any claim entitling her to relief, her request for a

declaratory judgment fails as a matter of law. 

Plaintiff requests leave to amend to cure any deficiencies in the FAC. Since plaintiff

already amended her complaint once as a matter of right in state court she must seek leave

to amend. Rule 15(a), Fed. R. Civ. P.; see also Butner v. Neustadterm, 324 F.2d 783, 785

(9th Cir. 1963) (stating that a district court "takes the case as it finds it on removal and treats

everything that occurred in the state court as if it had taken place in federal court"). Plaintiff

fails to properly seek leave to amend because she does not attach a copy of the proposed

amended pleading as an exhibit to the motion. See LRCiv. 15.1. Absent that, we cannot

evaluate whether amendment would be futile. However, certain alleged facts, such as

allegations that plaintiff was not in default, that defendants did not credit certain payments,

and that defendants denied plaintiff a modification, despite her compliance with the trial plan,

may entitle plaintiff to relief. We thus leave open the possibility for amendment. We urge

plaintiff to seek the advice of counsel. If she does not have a lawyer, she may wish to call

the Lawyer Referral Service of the Maricopa Bar Association at 602-257-4434. 

 Therefore, IT IS ORDERED GRANTING defendants' motion to dismiss without

prejudice (doc. 5). It is FURTHER ORDERED DENYING plaintiff's motion for leave to

amend (docs. 8, 9). Plaintiff shall have thirty (30) days from the date this order is entered

to file a motion for leave to amend in compliance with LRCiv. 15.1. Otherwise the clerk

shall enter judgment of dismissal.

DATED this 1st day of June, 2011.

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