Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_12-cv-08080/USCOURTS-azd-3_12-cv-08080-0/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1444 Petition for Removal- Foreclosure

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Raymond L. Doyle and Kathleen Doyle, 

husband and wife 

Plaintiffs, 

v. 

Federal National Mortgage Association 

Defendant. 

No. CV-12-8080-PCT DGC

ORDER 

 Defendant Federal National Mortgage Association (“Fannie Mae”) filed a motion 

to dismiss Plaintiffs’ complaint challenging the trustee sale of Plaintiffs’ vacation home. 

Doc. 7; see Doc. 1-1. The motion has been fully briefed and no party has requested oral 

argument. Docs. 12, 16. Plaintiffs also filed a motion for a temporary restraining order 

(“TRO”) and preliminary injunction which has been fully briefed. Doc. 8; Docs. 15, 17. 

For the reasons set forth below, the Court will grant Defendant’s motion to dismiss and 

deny Plaintiffs’ motion for a TRO and preliminary injunction. 

I. Background. 

 On February 16, 2007, Plaintiffs obtained a loan from American Brokers Conduit 

(“ABC”) in the amount of $204,000 for the purchase or refinance of a vacation home at 

1807 East Winterhaven Drive in Mohave Valley, Arizona. Doc. 1-1, ¶¶ 3, 6, 11; Doc 7-1 

at 3 (Promissory Note). Plaintiffs executed a Deed of Trust giving the lender a security 

interest in the property with a right of sale. Doc. 1-1, ¶ 6; see Doc. 7-1 at 8-29 (Deed of 

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Trust).1 ABC subsequently assigned the loan to Bank of America (“BAC”), and BAC 

appointed Reconstruct Company (“Reconstruct”) as trustee. Doc. 1-1, ¶ 7, Doc. 7 at 2. 

 Plaintiffs defaulted on their loan after Mr. Doyle became ill and lost his job. 

Doc. 1-1, ¶¶ 41-42. In July of 2010, Reconstruct recorded a notice of trustee sale on the 

property with the Mohave County Recorder’s Office. Doc. 7 at 3. The date for the 

trustee sale was set for October 15, 2010, but was later postponed. Id. 

 Beginning in September of 2010 and lasting through December of 2010, Plaintiffs 

attempted to enter into a loan modification agreement with BAC. Id., ¶¶ 43-51. During 

this time, Plaintiffs submitted payments of $5000 and $755.44. Id., ¶¶ 45-47. Plaintiffs 

were advised in December of 2010 that the latter payment was negotiated, but the $5000 

payment was not. Id., ¶ 50. Plaintiffs do not claim to have made any other payments. 

 Reconstruct held a trustee sale of the property on January 18, 2011. Defendant 

Fannie Mae purchased the property at the sale. Doc. 1-1, ¶¶ 8, 52, Doc. 7 at 3. Fannie 

Mae subsequently instituted a forcible entry and detainer (“FED”) action in Mohave 

County Superior Court, seeking to possess the property and to exclude Plaintiffs. Doc. 1-

1, ¶ 9; Doc. 7 at 3. The court granted judgment on the pleadings in favor of Fannie Mae, 

but Plaintiffs have not yet been evicted. Doc. 7 at 3-4, 4 n. 4. 

 On March 1, 2012, Plaintiffs filed this action in Mohave County Superior Court, 

alleging that they did not receive notice of default and notice of the trustee sale prior to 

the sale as required by law, that the foreclosure is therefore invalid, and that they are the 

true owners of the property. Doc. 1-1, ¶¶ 11, 14, 15. The complaint makes eight claims: 

wrongful foreclosure (Count I), declaratory judgment (Count II), fraud or waiver and 

 

1

 Generally, on a motion to dismiss, a court may only consider material that is properly presented to the court as part of the complaint. See Lee v. City of L.A., 250 F.3d 

668, 688-89 (9th Cir. 2001). Courts may, however, consider “documents ‘whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiff’s] pleading.’” In Re SiliconGraphics Secs. 

Litig., 183 F.3d 970, 986 (9th Cir. 1999) (quoting Branch v. Tunnell, 14 F.3d449, 454 

(9th Cir. 1994)); see also Knievel v. ESPN, 393 F.3d 1068, 1076-77 (9th Cir. 2005). The 

Court therefore may consider the Note and the Deed of Trust which are referenced in the 

Complaint. 

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estoppel (Count III), breach of contract (Count IV), statutory damages (Count V), 

trespass (Count VI), injunctive relief (Count VII), and quiet title (Count VIII). 

 Fannie Mae removed the action to federal court on diversity grounds (Doc. 1) and 

subsequently filed its motion to dismiss. Fannie Mae argues that Plaintiffs waived their 

right to challenge the trustee sale by failing to seek judicial relief before the sale took 

place, and that Plaintiffs nonetheless fail to state a claim under any of the theories alleged 

in the complaint. 

II. Legal Standard. 

 When analyzing a complaint for failure to state a claim under Rule 12(b)(6), “[a]ll 

allegations of material fact are taken as true and construed in the light most favorable to 

the non-moving party.” Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir. 1996). 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.’” Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 

1022 (9th Cir. 2008) (quoting 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 Weisbuch v. County of L.A., 119 F.3d 778, 

783, n.1 (9th Cir. 1997). 

III. Discussion. 

A. Waiver of Claims under A.R.S. § 33-811(C). 

 Fannie Mae seeks dismissal of all claims premised on the invalidity of the trustee 

sale because defenses to a foreclosure sale not raised in an action for injunctive relief 

brought before the sale are waived. Doc. 7 at 5. Fannie Mae relies on the following 

Arizona statute: 

The trustor, its successors or assigns, and all persons to whom the trustee mails a notice of a sale under a trust deed pursuant to § 33-809 shall waive all defenses and objections to the sale 

not raised in an action that results in the issuance of a court 

order granting relief pursuant to rule 65, Arizona rules of civil 

procedure, entered before 5:00 p. m. mountain standard time on the last business day before the scheduled date of the sale. 

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A.R.S. § 33-811(C). 

 Plaintiffs respond that they have not waived their claims because § 33-811(C) 

applies only to those who are provided notice of sale, and Plaintiffs allege that they were 

not provided notice of default or notice of sale. Doc. 12 at 6, 11; see Doc. 1-1, ¶¶ 11, 14, 

19-22, 37, 53, 71. 

 The Arizona Court of Appeals recently addressed this issue and concluded, under 

the plain language of § 33-811(C), that waiver applies to the trustor regardless of whether 

the trustee has complied with the notice-mailing requirements of § 33–809(C). Madison 

v. Groseth, 279 P.3d 633, 637 (Ariz. Ct. App. 2012). This is because the persons who 

must receive notice for purposes of waiver are listed separately in § 33-811(C) from the 

trustor. Id. The Court of Appeals explained that “[a]lthough § 33–809(C) mandates 

service on trustors, we decline to interpret the reference to § 33–809 in § 33–811(C) as 

requiring service on trustors as a prerequisite to application of the waiver provision; this 

interpretation would render the separate reference to the ‘trustor’ in § 33–811(C) 

superfluous.” Id. 

Madison is dispositive of the waiver issue in this case. Plaintiffs do not claim that 

they filed for an injunction before the trustee sale. Any defenses or objections they have 

to the validity of the sale are therefore waived under § 33-811(C). As the court found in 

Madison, the fact that Plaintiffs allege not to have been provided notice does not change 

this outcome. The Court finds that Counts One, Two, Five, Six, Seven, and Eight all rest 

on Plaintiff’s objections to the validity of the trustee sale and are waived.2

 

B. Plaintiffs’ Remaining Claims. 

 Claim Three asserts fraud and rests on Plaintiffs’ allegation that during their 

 

2

 To the extent Plaintiffs attempt to make a separate due process claim under the United States and Arizona Constitutions related to their alleged lack of notice (see

Doc. 1-1, ¶ 26), this claim fails because the sale was held and the notice given (or not given) by the non-party trustee, not by Fannie Mae. Moreover, Plaintiffs have not 

alleged state action as required for a due process claim. See Kenly v. Miracle Properties, 412 F. Supp. 1072, 1074 (D. Ariz. 1976). 

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attempted loan modification “Defendant” made material misrepresentations of fact. 

Doc. 1-1, ¶¶ 39-67. To the extent Plaintiffs appear to rely on statements made by BAC 

and its agents, the allegations are insufficient because BAC is not a party to this action 

and Plaintiffs allege no facts showing that Defendant Fannie Mae was involved in any 

events prior to the trustee sale. Plaintiffs’ alternative claims for waiver and estoppel fail 

for the additional reason that they seek to invalidate the trustee sale and – as explained 

above – Plaintiffs have waived any defenses or challenges to that sale. 

 Claim Four asserts breach of contract and rests on the allegation that “Defendant” 

breached a contract “not to foreclose” and an agreement to modify Plaintiff’s loan that 

constituted “a novation of the original agreement between Plaintiffs and Defendant.” 

Doc. 1-1, ¶¶ 70-71; 72-76. Again, such allegations pertain only to BAC, not Fannie Mae. 

Because BAC is not named in this action and Plaintiff has alleged no facts showing that 

Fannie Mae was in any way involved in Plaintiff’s loan modification discussions, these 

allegations fail to support a claim for breach of contract. 

C. Plaintiffs’ Motion for a TRO. 

 Plaintiffs filed a motion for a TRO and preliminary injunction seeking to bar 

Fannie Mae from entering, taking possession, or interfering with Plaintiffs’ use and 

enjoyment of the property. Doc. 8 at 1. To obtain a preliminary injunction, a plaintiff 

must show that he is likely to succeed on the merits, that he is likely to suffer irreparable 

harm in the absence of preliminary relief, that the balance of equities tips in his favor, and 

that an injunction is in the public interest. Winter v. Natural Res. Def. Council, 555 U.S. 

7, 129 S. Ct. 365, 374 (2008). For the reasons already discussed, the Court finds that 

Plaintiffs’ have no chance of success on the merits their claims. The Court will deny 

Plaintiffs’ motion. 

IT IS ORDERED: 

 1. Defendant Fannie Mae’s motion to dismiss (Doc. 7) is granted. 

 2. Plaintiffs’ motion for a TRO and preliminary injunction (Doc. 8) is denied. 

 

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 3. The Clerk is directed to terminate this action. 

 Dated this 6th day of August, 2012. 

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