Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_13-cv-01641/USCOURTS-azd-2_13-cv-01641-1/pdf.json

Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 28:1441 Petition for Removal- Petition to Quiet Title

---

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

JAY N. GARDNER and RACHEL B. ) 

GARDNER, ) 

 Plaintiffs, ) 

) 

vs. ) 

) 

NATIONSTAR MORTGAGE, LLC, et al., ) 

) No. 2:13-cv-1641-HRH

 Defendants. ) [C o n s o lid ated with

__________________________________________) No. 2:13-cv-2478-HRH]

) 

JAY N. GARDNER and RACHEL B. ) 

GARDNER, ) 

 Plaintiffs, ) 

) 

vs. ) 

) 

NATIONSTAR MORTGAGE, LLC, et al., ) 

) 

 Defendants. ) 

__________________________________________) 

O R D E R

Motions to Dismiss

The AMSL defendantsmove todismiss

1plaintiffs’ FourthAmended Complaint. The

Nationstar defendants also move to dismiss2 plaintiffs’ Fourth Amended Complaint. Both

motions are opposed.3

 Oral argument was requested and has been heard. 

1Docket No. 87. 

2Docket No. 89. 

3Docket Nos. 94 and 93. 

Order – Motions to Dismiss -1-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 1 of 26
Background

Plaintiffs are Jay N. Gardner and Rachel B. Gardner. Defendants are Nationstar

Mortgage LLC; T.D. Service Company of Arizona; U.S. Bank, N.A.;4Starlet J. Japp; Clayton

A. Goff; AMSL Legal Group, LLC; and AMSL Legal Group, LLP.5

InApril 2007,plaintiffsborrowed$960,000 fromGreenPoint Mortgage Funding, Inc.,

to purchase “property located at 3601 East Mountain View Road, Phoenix, Arizona....”6

The Adjustable Rate Note that plaintiffs signed named GreenPoint as the “Lender” and

provided “that Lender may transfer this Note. Lender or anyone who takes this Note by

transfer and who is entitled to receive payments under this Note is called the ‘Note

Holder.’”7 The Note provided that if the borrower is 

in default, the Note Holder may send me [the borrower] a

written notice telling me that if I do not pay the overdue

amount by a certain date, the Note Holder may require me to

pay immediately the full amount of Principal that has not been

paid and all the interest that I owe on that amount. That date

must be at least 30 days after the date on which the notice is

mailed to me or delivered by other means.[8

] 

Plaintiffs, as trustors, also executed a Deed of Trust.9 The Deed of Trust named

GreenPoint as the “Lender” and Marin Conveyancing Corp. as the “Trustee.”10 The Deed

of Trust listed the Mortgage Electronic Registration Systems, Inc. (MERS), “as a nominee

4These three defendants are referred to collectively herein as the Nationstar

defendants. 

5These latter four defendants are referred to collectively herein as the AMSL

defendants. 

6

Fourth Amended Complaint at 1, ¶ 1, Docket No. 82. 

7Adjustable Rate Note at 1, ¶ 1, Exhibit 2, Fourth Amended Complaint, Docket

No. 82-2. 

8

Id. at 3, ¶ 7(C). 

9Deed of Trust, Exhibit 3, Fourth Amended Complaint, Docket No. 82-3. 

10

Id. at 1-2, ¶ (C) and (D). 

Order – Motions to Dismiss -2-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 2 of 26
for the Lender and Lender’s successors and assigns. MERS is the beneficiary under this

Security Interest.”11 The Deed of Trust provided that “[t]his Security Instrument secures

to Lender: (i) the repayment of the Loan, and all renewals, extensions and modifications

of the Note; and (ii) the performance of Borrower’s covenants and agreements under this

Security Interest and Note.”12“Forthis purpose, Borrowerirrevocably grants and conveys

to Trustee, in trust, with power of sale” the property at 3601 East Mountain View Road,

Phoenix, Arizona.13

The Deed of Trust further provided: 

Lender shall give notice to Borrower prior to acceleration

following Borrower’s breach of any covenant or agreement in

this Security Instrument (but not prior to acceleration under

Section 18 unless Applicable Law provides otherwise). The

notice shall specify: (a) the default; (b) the action required to

cure the default; (c) a date, not less than 30 days from the date

the notice is given to Borrower, by which the default must be

cured; and (d) that failure to cure the default on or before the

date specified in the notice may result in acceleration of the

sums secured by this Security Instrument and sale of the

Property. The notice shall furtherinform Borrower of the right

to reinstate after acceleration and the right to bring a court

action to assert the non-existence of a default or any other

defense of Borrower to acceleration and sale. If the default is

not cured on or before the date specified in the notice, Lender

at its option may require immediate payment in full of all sums

secured by this Security Instrument without further demand

and may invoke the power of sale and any other remedies

permitted by Applicable Law. Lender shall be entitled to

collect all expenses incurred in pursuing the remedies provided in this Section 22, including, but not limited to, reasonable attorneys’ fees and costs of title evidence. 

11

Id. at 2, ¶ (E). “Listing MERS as a nominal beneficiary in the deed of trust

facilitates a process common in the home lending industry today known as ‘securitization.’” Steinberger v. McVey ex rel. County of Maricopa, 318 P.3d 419, 427 n.9 (Ariz. Ct.

App. 2014). “Securitization describes the process by which large numbers of home loans

are ‘pooled into a trust and converted into mortgage-backed securities that can be bought

and sold by investors.’” Id. (quoting United States Bank Nat’l Ass’n v. Ibanez, 941 N.E.2d

40, 46 (Mass. 2011). 

12Deed of Trust at 3, Exhibit 3, Fourth Amended Complaint, Docket No. 82-3. 

13

Id. at 4, ¶ (R). 

Order – Motions to Dismiss -3-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 3 of 26
If Lender invokes the power of sale, Lender shall give written

notice to Trustee of the occurrence of an event of default and

of Lender’s election to cause the Property to be sold. Trustee

shall record a notice of sale in each county in which any part of

the Property is located and shall mail copies of the notice as

prescribed by Applicable Law to Borrower and to the other

persons prescribed by Applicable Law. Afterthe time required

by Applicable Law and after publication and posting of the

notice of sale, Trustee, without demand on Borrower, shall sell

the Property at public auction to the highest bidder for cash at

the time and place designated in the notice of sale. Trustee

may postpone sale of the Property by public announcement at

the time and place of any previously scheduled sale. Lender or

its designee may purchase the Property at any sale.[14]

The Deed of Trust also provided that “Lender may, for any reason or cause, from

time to time remove Trustee and appoint a successor trustee to any Trustee appointed

hereunder. Without conveyance of the Property, the successortrustee shall succeed to all

the title, power and duties conferred upon Trustee herein and by Applicable Law.”15

The Deed of Trust further provided that: 

[t]he Note or a partial interest in the Note (together with this

Security Instrument) can be sold one or more times without

prior notice to Borrower. A sale might result in a change in the

entity (known as the “Loan Servicer”) that collects Periodic

Payments due under the Note and this Security Instrument

and performs other mortgage loan servicing obligations under

the Note, this Security Instrument, and Applicable Law. There

also might be one or more changes of the Loan Servicer

unrelated to a sale of the Note. If there is a change of the Loan

Servicer, Borrower will be given written notice of the change

which will state the name and address of the new Loan

Servicer, the address to which payments should be made and

any other information RESPA requires in connection with a

notice of transfer of servicing.[16

] 

The Deed of Trust does not define “other mortgage loan servicing obligations” nor does

the Note define this term. 

14

Id. at 13, ¶ 22. 

15

Id. at ¶ 24. 

16

Id. at 11-12, ¶ 20. 

Order – Motions to Dismiss -4-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 4 of 26
At some point in time, Lehman Brothers Holdings Inc. came to own plaintiffs’ Note. 

In July 2007, a trust entitled Lehman XS Trust Mortgage Pass-Through Certificates Series,

2007-15N was created by Structured Asset Securities Corporation, Aurora Loan Services

LLC, and U.S. Bank National Association (the “Trust”).17

Structured Asset Securities

Corporation was the “depositor,” Aurora Loan Services LLC was the “master servicer,”

and U.S. Bank was the “trustee.”18 The pooled Trust Agreement provided that “[t]he

Depositor has acquired the Mortgage Loans from Lehman Brothers Holdings Inc. ... and

at the Closing Date is the owner of the Mortgage Loans....”19 The pooled Trust Agreement

provided that “[c]oncurrently with the execution and delivery of this Agreement, the

Depositor does hereby transfer, assign, set over, deposit with and otherwise convey to the

Trustee, without recourse, ... in trust, all the right, title and interest of the Depositor in and

to the Mortgage Loans.”20 The trustee holds the Trust Fund, which includes the Mortgage

Loans,21

“forthe benefit and use of the Holders of the related Certificates....”22 The pooled

Trust Agreement provided that: 

the Depositor does hereby deliver to, and deposit with, or

cause to be delivered to and deposited with, the Trustee and/or

a Custodian acting on the Trustee’s behalf, the following

documents orinstruments with respect to each Mortgage Loan

... so transferred and assigned: 

(i) with respect to each Mortgage Loan, the original Mortgage

Note endorsed without recourse in properform to the order of

the Trustee ... or in blank...; 

17Exhibit 6, Fourth Amended Complaint, Docket No. 82-6. 

18

Id. at 1. 

19

Id. 

20

Id. at 112, Section 2.01(a). 

21

Id. at 104. 

22

Id. at 112, Section 2.01(a). 

Order – Motions to Dismiss -5-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 5 of 26
(ii) if applicable, the original of any guarantee, security

agreement or pledge agreement executed in connection with

the Mortgage Note, assigned to the Trustee[.23] 

In other words, plaintiffs’ Note and the Deed of Trust were to be transferred to U.S. Bank,

as the trustee, which held them for the benefit and use of the Certificateholders, but the

Trust owned plaintiffs’ Note and held the Deed of Trust. 

The pooled Trust Agreement identifies a number of loan servicers, including

GreenPoint, GMACM, and Aurora

24

 and provided that: 

[t]he Master Servicer... and each Servicer shall have full power

and authority (to the extent provided in the applicable servicing agreement) to do any and all things necessary or desirable

in connection with the servicing and administration of the

Mortgage Loans, including but not limited to the power and

authority (i) to execute and deliver, on behalf of the

Certificateholders and the Trustee, customary consents or

waivers and other instruments and documents, (ii) to consent

to transfers of any Mortgaged Property and assumptions of the

Mortgage Notes and related Mortgages, (iii) to collect any

Insurance Proceeds and Liquidation Proceeds, and (iv) to

effectuate foreclosure or other conversion of the ownership of

the Mortgaged property securing any Mortgage Loan....[25

]

The pooled Trust Agreement also provides that: 

[t]he Master Serviceris further authorized and empowered by

the Trustee, on behalf of the Certificateholders and the Trustee,

in its own name or in the name of any Servicer ... when the

Master Servicer or a Servicer, as the case may be, believes it is

appropriate in its best judgment to register any Mortgage Loan

with MERS, or cause the removal from the registration of any

Mortgage Loan on the MERS system, to execute and deliver,

on behalf of the Trustee and the Certificateholders, or any of

them, any and all instruments of assignments and other

comparable instruments with respect to such assignment orre23

Id. at 113, Section 2.01(b). 

24

Id. at 102. 

25

Section 9.04(a),TrustAgreement, available athttp://www.sec.gov.Archives/edgar/

data/1406223/000114420407044356/v084952_ex4-1.htm (last visited on Dec. 3, 2015).

Order – Motions to Dismiss -6-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 6 of 26
recording of a Mortgage in the name of MERS, solely as

nominee of the Trustee and its successors and assigns.[26] 

Plaintiffs allege that on July 13, 2007, GreenPoint advised them that the servicing of

theirloan was being transferred from GreenPoint to GMAC Mortgage, effective August 1,

2007.27 Plaintiffs further allege that on October 15, 2010, GMAC Mortgage advised them

that the servicing of their loan was being transferred to Aurora Loan Services, effective

November 1, 2010.28

On September 21, 2011, MERS “as nominee of GreenPoint ... and its successors

and/or assigns” assigned plaintiffs’ Deed of Trust to Aurora Bank FSB.

29 MERS purported

to assign “all its right, title, and interest in and to said Deed of Trust.”30 As set out above,

MERS was listed in the Deed of Trust as the “beneficiary under this Security Instrument”

and MERS was authorized to act “solely as a nominee for Lender and Lender’s successors

and assigns.”31 The assignment was executed by Stacy Sandoz, vice-president,32 who

plaintiffs allege works for Aurora Bank, not MERS.

33 Plaintiffs refer to this as the First

Assignment.34 Plaintiffs allege that the First Assignment is “invalid and void” because

26

Id.

27

Fourth Amended Complaint at 9, ¶ 40, Docket No. 82. 

28

Id. at ¶ 41. 

29Corporate Assignment of Deed of Trust at 1, Exhibit 7, Fourth Amended

Complaint, Docket No. 82-7. 

30

Id.

31Deed of Trust at 2, Exhibit 3, Fourth Amended Complaint, Docket No. 82-3. 

32Corporate Assignment of Deed of Trust at 1, Exhibit 7, Fourth Amended

Complaint, Docket No. 82. 

33

Fourth Amended Complaint at 9-10, ¶¶ 43-44, Docket No. 82. 

34

Id. at 9-10, ¶ 43. 

Order – Motions to Dismiss -7-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 7 of 26
Sandoz had no authority to act on behalf of MERS.

35 Plaintiffs also allege that because the

First Assignment purports to assign only the Deed of Trust, this assignment “separated the

Note from the Deed of Trust.”36 

On October 25, 2011, Aurora Bank FSB, as “the present Beneficiary under said Deed

of Trust,” substituted Quality Loan Service Corporation as the trustee of the Deed of

Trust.37 Plaintiffs referto this as the First Substitution and allege that this First Substitution

was void because “Aurora Bank FSB did not have the authority from the true beneficiary

or beneficiaries, to sign the First Substitution.”38

On November 9, 2011, Vanessa Sisk, an assistant secretary for Quality Loan Service

Corporation, signed a Notice of Trustee’s Sale.39 The Notice of Trustee’s Sale listed Aurora

Bank FSB as the current beneficiary of the Deed of Trust and Quality Loan Service

Corporation as the trustee.40 The trustee’s sale was scheduled for February 8, 2012.

41

Plaintiffs allege that “Aurora Bank FSB could not be the true beneficiary” because it was

not the note holder and/or the lender.

42

Sisk also sent a Statement of Breach or Non-Performance on behalf of Aurora Bank

FSB and Quality Loan Service Corporation, the “agent” of Aurora.43 Plaintiffs allege that

35

Id. at 10, ¶ 44. 

36

Id. at ¶ 46. 

37Exhibit 8, Fourth Amended Complaint, Docket No. 82-8. 

38

Fourth Amended Complaint at 11, ¶¶ 52-53, Docket No. 82. 

39Exhibit 9, Fourth Amended Complaint, Docket No. 82-9. 

40

Id. at 1. 

41

Id.

42

Fourth Amended Complaint at 11-12, ¶ 57, Docket No. 82. 

43Exhibit 10 at 1, Fourth Amended Complaint, Docket No. 82-10. 

Order – Motions to Dismiss -8-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 8 of 26
“[t]his Statement of Breach is void and invalid, because QLS was not the agent of the true

beneficiary, which must also be the Note Holder/Lender[.]”44 Quality Loan Service

Corporation also sent a Debt Validation Notice that stated that “[t]he debt/loan is currently

owed to: Aurora Bank FSB.”45 Plaintiffs allege that “Aurora Bank FSB was not then, or

ever, the true beneficiary or the Note Holder/Lender.”46

Plaintiffs allege that on June 28, 2012, Aurora Bank assigned its “purported” interest

in the Deed of Trust to Nationstar.

47 Plaintiffs refer to this as the Second Assignment. 

Plaintiffs allege that the Second Assignment was invalid and void because it was based on

the First Assignment which was invalid and void.48 Plaintiffs further allege that Nationstar

was not the note holder or the lender, but merely the servicer of the loan, and thus

Nationstar could not be a true beneficiary under the Deed of Trust.49 Plaintiffs also allege

that the Second Assignment was invalid “because a transfer of a deed of trust, without the

note, is a nullity.”50

On July 15, 2012, plaintiffs allege that Nationstar advised them that the servicing of

their loan was being transferred to Nationstar.

51 The letter advised plaintiffs that

Nationstar was servicing the loan “on behalf of U.S. Bank, Trustee, LXS Series 2007-15N.”52

44

Fourth Amended Complaint at 12, ¶ 58, Docket No. 82. 

45Exhibit 10 at 2, ¶ 1, Fourth Amended Complaint, Docket No. 82-10. 

46

Fourth Amended Complaint at 12, ¶ 59, Docket No. 82. 

47

Id. at 13, ¶ 64.

48

Id. at ¶ 68. 

49

Id. at ¶ 66. 

50

Id. at 14, ¶ 70. 

51

Id. at 9, ¶ 42. 

52Letter from Nationstar Mortgage to Gardners (July 15, 2012), Exhibit 5, Fourth

(continued...)

Order – Motions to Dismiss -9-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 9 of 26
The letter further advised that “[t]he debt is owed to U.S. Bank, Trustee, LXS Series 2007-

15N, but is being serviced by Nationstar.”53 

Plaintiffs allege that on October 9, 2012, Quality Loan Service Corporation cancelled

the First Notice of Trustee’s Sale.54

On March 4, 2013, Nationstar sent plaintiffs a default letter, in which Nationstar

advised plaintiffs that it 

intends to enforce the provisions of the Note and Security

Instrument. ...If you do not pay the full amount of the default,

we may accelerate the entire sum of both principal and interest

due and payable, and invoke any remedies provided forin the

Note and Security Instrument, including but not limited to the

foreclosure sale of the property.[55

]

In the letter, Nationstar identified itself as the “Servicer” and indicated that it was acting

“on behalf of ‘U.S. Bank National Association as trustee for Lehman XS Trust Mortgage

Pass-Through Certificates, Series 2007-15N’, the Creditor to whom the debt is owed[.]”56

Plaintiffs allege that Nationstar had no right to declare a default, accelerate the balance of

the Note, and elect to foreclose, because under the Deed of Trust only the lender can

declare a default, accelerate the balance of the Note, and elect to foreclose.57 Plaintiffs

contend that Nationstar could not act as the lender’s agent. 

52

(...continued)

Amended Complaint, Docket No. 82-5. 

53

Id. Plaintiffs make much of the fact that U.S. Bank was not the “owner” of the debt,

but these allegations have little to do with whether plaintiffs have stated plausible claims. 

54

Fourth Amended Complaint at 14, ¶ 73, Docket No. 82. 

55Exhibit 12, Fourth Amended Complaint, Docket No. 82-12. 

56

Id. 

57Fourth Amended Complaint at 14-15, ¶ 76, Docket No. 82. 

Order – Motions to Dismiss -10-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 10 of 26
On April 19, 2013, Nationstar, as the purported beneficiary of the Deed of Trust,

substituted T.D. Service Company as the trustee.58 Plaintiffs refer to this as the Second

Substitution.59 Plaintiffs allege that the Second Substitution is void because Nationstar was

not a true beneficiary and did not have the authority from the true beneficiary to sign the

Second Substitution.60 Plaintiffs also allege that the Second Substitution is void “because

it depends on the void and invalid First and Second Assignments for its own validity.”61

On April 30, 2013, T.D. Service Company recorded a Notice of Trustee’s Sale.62 The

Notice listed Nationstar as the beneficiary of the Deed of Trust and T.D. Service Company

as the current trustee.63 The trustee’s sale was set for August 1, 2013.64 Plaintiffs allege that

the second Notice of Trustee’s Sale was void because Nationstar was not a true beneficiary

and could not declare a default.65

On July 20, 2013, Nationstar responded to a letter from plaintiffs.66

In the letter,

Nationstar advised that “[o]ur records indicate U.S. Bank as Trustee for LLXS Series 2007-

15N is the current owner of the Note.”67 Nationstar further advised that it was “the

58Exhibit 13, Fourth Amended Complaint, Docket No. 82-13. 

59

Fourth Amended Complaint at 15, ¶ 78, Docket No. 82. 

60

Id.

61

Id.

62Exhibit 14, Fourth Amended Complaint, Docket No. 82-14. 

63

Id. at ¶ 1. 

64

Id.

65

Fourth Amended Complaint at 17, ¶¶ 90-91, Docket No. 82. 

66Exhibit 15, Fourth Amended Complaint, Docket No. 82-15. 

67

Id. at 1. 

Order – Motions to Dismiss -11-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 11 of 26
servicer of the loan” and that “[s]ervicing matters include ... [f]oreclosure proceedings[.]”68

On September 18, 2013, U.S. Bank responded to an email from plaintiffs about their

loan.69 The email advised that plaintiffs’ “loan is owned by the Trust and US Bank serves

as Trustee for that Trust. However, as Trustee, we do not own your loan....”70

 The email

further advised that Nationstar was the servicer and that “[w]hile the Servicer does not

own the loan either (again it is the Trust), they have all of the decision making authority

for any action deemed necessary on your loan.”71 

On September 5, 2014, AMSL Legal Group, LLC, as “attorney in fact for Nationstar

Mortgage LLC” substituted Starlet J. Japp as the trustee.72 Plaintiffs refer to this as the

Third Substitution.73 Plaintiffs allege that the Third Substitution is void because “[i]t

depends for its validity on the void First and Second Assignments which resulted in the

assignment of the DOT to Nationstar.”74 Plaintiffs further allege that the ThirdSubstitution

is void “because AMSL, LLC does not exist and therefore cannot be attorney-in-fact for

another[.]”75

 

On September 29, 2014, AMSL Legal Group, LLC, again acting “as attorney in fact

for Nationstar Mortgage LLC”, appointed Clayton A. Goff, as trustee.76 Plaintiffs refer to

68

Id. 

69Exhibit 16, Fourth Amended Complaint, Docket No. 82-16. 

70

Id. at 1. 

71

Id. at 2. 

72Exhibit 17, Fourth Amended Complaint, Docket No. 82-17. 

73

Fourth Amended Complaint at 19, ¶ 104, Docket No. 82. 

74

Id. at ¶ 105. 

75

Id. 

76Exhibit 18, Fourth Amended Complaint, Docket No. 82-18. 

Order – Motions to Dismiss -12-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 12 of 26
this as the Fourth Substitution.77 Plaintiffs allege that the Fourth Substitution was void

because “[i]t depends for its validity on the void First and Second Assignments which

resulted in the assignment of the DOT to Nationstar.”78 Plaintiffs further allege that the

Fourth Substitution was void “because AMSL, LLC does not exist and therefore cannot be

attorney-in-fact for anyone, and cannot sign legal documents, which are recorded,

appointing a trustee.”79 

On October 26, 2014, plaintiffs sent a letter to Goff “demand[ing] that [he]

immediately record a document voiding, releasing and nullifying” the Fourth

Substitution.80 Plaintiffs allege that “[t]o date, Goff has not recorded such a

release/resignation.”81 

Plaintiffs commenced this action in state court on July 30, 2013. On August 12, 2013,

it was removed to this court. Defendants moved to dismiss plaintiffs’ complaint and on

September 26, 2013, the court granted the motion to dismiss after plaintiffs failed to

respond to the motion.82

Judgment was entered dismissing plaintiffs’ complaint.83 This

judgment was subsequently vacated and plaintiffs were given leave to file an amended

complaint.84 Plaintiffs filed theirfirst amendedcomplaint on September 9, 2013.85 Pursuant

77

Fourth Amended Complaint at 20, ¶ 109, Docket No. 82. 

78

Id. at ¶ 111. 

79

Id.

80Exhibit 19, Fourth Amended Complaint, Docket No. 82-19. 

81

Fourth Amended Complaint at 21, ¶ 113, Docket No. 82. 

82Docket No. 14. 

83Docket No. 15. 

84Docket No. 27. 

85Docket No. 30. 

Order – Motions to Dismiss -13-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 13 of 26
to stipulations, plaintiffs filed a second and third amended complaint.86 On March 20, 2015,

pursuant to a stipulation, this case was consolidated with Case No. 2:13-cv-2478.87 On

May 11, 2015, plaintiffs filed their Fourth Amended Complaint in this consolidated action.88

In their Fourth Amended Complaint, plaintiffs assert eight counts. Count One is a

declaratory judgment claim asserted against all defendants. Specifically, plaintiffs seek a

declaratory judgment: (1) “that pursuant to the Note and Deed of Trust, only the Note

Holder/Lender and true beneficiary maypursue foreclosure, and that the Defendants must

therefore prove their status as Note Holder/Lender and true beneficiary, before they may

be allowed to proceed to Trustee’s Sale[;]”89(2) “that the First and Second Assignments, the

First, Second, Third and Fourth Substitutions andthe First and Second [Notices of Trustee’s

Sales] are void and unenforceable, and that these recorded documents must be cancelled

and title cleared by recordings at the Maricopa County Recorder’s Office[;]”90

(3) “that no

party may notice orre-notice a trustee’s sale without proving status as Note Holder/Lender

and true beneficiary underthe Note and Deed of Trust, and otherwise complying with the

contracts, and applicable law[;]”91

(4) “that the Note and DOT require that only the Note

Holder/Lender may enforce the terms of the Note and accelerate the balance, that only the

Note Holder/Lender is protected by the Deed of Trust as Security, and only the Note

86Docket Nos. 38 and 44. 

87Docket No. 71. Case No. 2:13-cv-2478 was brought by plaintiffs against Nationstar

and U.S. Bank, and the complaint in that case originally asserted one claim alleging that

plaintiff’s mortgage loan was never transferred to the Trust. 

88Docket No. 82. 

89

Fourth Amended Complaint at 29-30, ¶ 142, Docket No. 82. 

90

Id. at 32, ¶ 161. 

91

Id. at ¶ 162. 

Order – Motions to Dismiss -14-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 14 of 26
Holder/Lender may initiate foreclosure of the Deed of Trust[;]”92

(5) that Nationstar and its

alleged attorney-in-fact AMSL, LLC or any other agent, cannot sign or record any further

substitutions of trustee or assignments of the DOT, as Nationstar is not the Lender, Note

Holder or true beneficiary of the DOT[;]”93

and (6) that “no Defendant is the Note

Holder/Lender and true beneficiary, that the DOT has been rendered a nullity, and that

until an entity can prove its status as Note Holder/Lender, no entity may seek to enforce

the Note[.]”94

Count Two is a breach of contract claim asserted against all defendants in which

plaintiffs allege that in pursuing the trustee’s sales in violation of the deed of trust statutes,

the Deed of Trust, the Note, and other applicable law, defendants have breached the Deed

of Trust and the Note.95

 

Count Three is a breach of the duty of good faith and fair dealing claim against all

defendants in which plaintiffs allege that defendants breached their duty of good faith and

fair dealing by: (1) hiding from plaintiffs the identify of the true beneficiary and

misrepresenting that Aurora Bank and then Nationstar were true beneficiaries;96

(2) hiding

the identity of the true Note Holder/Lender by misrepresenting the owner of the loan as

U.S. Bank;97

(3) allowing someone other than the note holder/lender to write to plaintiffs

declaring a default;98

(4) initiating foreclosure without requiring that the lender notify the

92

Id. at ¶ 163. 

93

Id. at ¶ 164. 

94

Id. at 33, ¶ 166. 

95

Id. at 34, ¶¶ 172-173. 

96

Id. at 35, ¶ 184(a). 

97

Id. at 36, ¶ 184(b). 

98

Id. at ¶ 184(c). 

Order – Motions to Dismiss -15-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 15 of 26
trustee in writing that the Note was in default and of an election to foreclose;99

(5) seeking

to proceed to a trustee’s sale on clearly invalid documents;100(6) “knowingly and

purposefully separating the Note from the DOT thereby rendering the Note

unsecured[;]”101

(7) “falsely listing the servicer of the Loan as Aurora Commercial Corp.,

on the MERS database;”102(8) “having a non-existent entity sign the Third Substitution on

September 5, 2104, but not recording it until after Plaintiffs’ First Amended Complaint was

filed and never disclosing same to Plaintiffs[;]”103(9) “having a non-existent entity sign the

Fourth Substitution on September 9, 2014, and recording it on October 2, 2014 without

disclosing same to Plaintiffs in spite of this pending litigation[;]”104and (10) “clouding

Plaintiffs’ title to such an extent that Plaintiffs will be hampered in their ability to alienate

their property, and resulting in a decrease in its market value.”105

 

In Count Four, plaintiffs assert quiet title and slander of title claims under A.R.S.

§ 33-420 against all defendants. These claims are based on allegations that defendants have

recorded documents that “are groundless, containmaterialmisstatements, and[make]false

claims against” plaintiffs’ property.106

 

In Count Five, plaintiffs assert negligence per se claims against Nationstar, T.D.

Service Company and the AMSL defendants. Plaintiffs allege that these defendants

99

Id. at ¶ 184(d). 

100

Id. at ¶ 184(e). 

101

Id. at ¶ 184(f). 

102

Id. at ¶ 184(g). 

103

Id. at ¶ 184(h). 

104

Id. at ¶ 184(i). 

105

Id. at 37, ¶ 184(j). 

106

Id. at 40-41, ¶ 210. 

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Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 16 of 26
violated A.R.S. § 39-161,107

that Nationstar, T.D. Service Company, and AMSL Legal Group

LLP violated A.R.S. § 33-420,108that Japp and Goff violated A.R.S. § 33-420(C),109and that

all of these defendants violated A.R.S. §§ 33-503, 41-311, 41-312, and 41-313.110

In Count Six, plaintiffs assert a Fair Debt Collection Practices Act claim against T.D.

Service Company, Japp, and Goff. Plaintiffs allege that these defendants used false,

deceptive, and misleading representations or means in connection with collection of a

debt.111

In Count Seven, plaintiffs assert a cancellation of trustee’s sale claim against

Nationstar, T.D. Service Company, Japp, and Goff. Plaintiffs allege that these defendants

had an obligation to cancel the second Notice of Trustee’s Sale because they knew their

substitutions as trustee were not valid.112

In Count Eight, plaintiffs assert an intentionalinterferencewith contractual relations

claim against all defendants. Plaintiffs allege that defendants have interfered with

plaintiffs’ contracts with their lender.

113

Pursuant to Rules 8 and 12(b)(6), Federal Rules of Civil Procedure, defendants now

move to dismiss all of plaintiffs’ claims. 

107

Id. at 42, ¶¶ 219 and 224. 

108

Id. at 42-43, ¶ 225. 

109

Id. at 43, ¶¶ 227 and 229. 

110

Id. at ¶ 231. 

111

Id. at 45, ¶ 243. 

112

Id. at 48, ¶ 265. 

113

Id. at 51, ¶ 292. 

Order – Motions to Dismiss -17-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 17 of 26
Discussion

“Rule 12(b)(6) is read in conjunction with Rule 8(a)[.]” Zixiang Li v. Kerry, 710 F.3d

995, 998 (9th Cir. 2013). “Rule 8 requires a complaint to include ‘a short and plain

statement of the claim showing that the pleader is entitled to relief.’” Eclectic Properties

East, LLC v. Marcus & Millichap Co., 751 F.3d 990, 995 (9th Cir. 2014) (quoting Fed. R. Civ.

P. 8(a)). “To meet this requirement, the Supreme Court has held that an ‘entitlement to

relief’ requires ‘more than labels and conclusions.... Factual allegations must be enough to

raise a right to relief above a speculative level.’” Id. (quoting Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 555 (2007)). “Although a well-pleaded complaint may proceed

even if it strikes a savvy judge that actual proof is improbable, plaintiffs must include

sufficient factual enhancement’ to cross the line between possibility and plausibility.” Id.

(internal citations and quotation marks omitted). “This standard represents a balance

between Rule 8's roots in relatively liberal notice pleading and the need to prevent ‘a

plaintiff with a largely groundless claim’ from tak[ing] up the time of a number of other

people, with the right to do so representing an in terrorem increment of settlement value.’” 

Id. (quoting Twombly, 550 U.S. at 557–58). “Establishing the plausibility of a complaint’s

allegations is a two-step process that is ‘context-specific’ and ‘requires the reviewing court

to draw on its judicial experience and common sense.’” Id. at 995-96 (quoting Ashcroft v.

Iqbal, 556 U.S. 662, 679 (2009)). “First, a court should ‘identif[y] pleadings that, because

they are no more than conclusions, are not entitled to the assumption of truth.’” Id.

(quoting Iqbal, 556 U.S. at 679). “Then, a court should ‘assume the[] veracity’ of ‘well

pleaded factual allegations’ and ‘determine whether they plausibly give rise to an

entitlement to relief.’” Id. at 996 (quoting Iqbal, 556 U.S. at 679). The court is “not,

however, required to accept as true conclusory allegations that are contradicted by

documents referred to in the complaint, and [the court does] not necessarily assume the

truth of legal conclusions merely because they are cast in the form of factual allegations.” 

Order – Motions to Dismiss -18-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 18 of 26
Paulsen v. CNF Inc., 559 F.3d 1061, 1071 (9th Cir. 2009). “‘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.’” Eclectic Properties, 751 F.3d at 996

(quoting Iqbal, 556 U.S. at 678). 

In reaching the following conclusions on issues presented by the motions to dismiss,

the court has considered the parties’ arguments and authorities and has applied the

foregoingprinciples for evaluating the adequacy of plaintiffs’ FourthAmendedComplaint. 

Allegations that Defendants are not

 the Lender or Note Holder 

Plaintiffs have alleged that the person who signed the First Assignment was not

authorized to do so. Plaintiffs have pled a plausible claim that the First Assignment was

invalid. It appears to the court that plaintiffs are challenging more than the MERS system. 

They are challenging the authority of the people who were actually signing documents for

MERS. The court concludes for purposes of the motions to dismiss that plaintiffs have

stated a plausible claim that defendants lacked authority to conduct the trustee’s sale

(presently noticed but held in abeyance) because the First Assignment was not valid. 

Allegations Based on Plaintiffs’ Challenges

 to the Assignments of the Deed of Trust 

Defendants contend that all of plaintiffs’ claims, directly or indirectly, rely on

plaintiffs’ allegations that the Deed of Trust was not properly assigned to MERS as

beneficiary in the first instance, and thus any subsequent assignments (to Aurora and to

Nationstar) were invalid. Plaintiffs contend that MERS could have transferred its nominee

status under the Deed of Trust, but that did not mean it could transfer any beneficiary

rights under the Deed of Trust. 

Plaintiffs have stated a plausible claim that the person who signed the First

Assignment was not authorized to do so on behalf of MERS. 

Order – Motions to Dismiss -19-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 19 of 26
Securitization and Split Note / Deed of Trust Arguments

Defendants believe that plaintiffs are alleging that because their Note was sold as

part of a securitization mortgage trust shortly after the Deed of Trust was recorded, they

somehow have the right to stop the foreclosure sale. Plaintiffs disagree. Plaintiffs contend

that they have alleged that the securitization of theirloan means that the Certificateholders

are the lender and note holder. Based upon that contention, plaintiffs assert that only the

Certificateholders can declare default on the Note, accelerate it, and tell the trustee to

initiate foreclosure. 

The respective roles of the various entities involved in the multiple transactions

affectingplaintiffs’ Deed of Trust are not entirely clear. Some relevant documents evidence

at least uncertainty as to the parties’ roles. It is plausible that MERS had the authority to

transferthe lender’s beneficial interest in the Deed of Trust. But the issue remains: did the

person who signed the First Assignment have the authority to act on behalf of MERS. 

Count One – Declaratory Action

Plaintiffs’ Count One seeking declaratory relief states a plausible cause of action. 

The court will exercise its discretion to entertain plaintiffs’ Count One. As suggested by

the foregoing, a primary issue which must be addressed by the parties and the court is the

validity of the First Assignment. The validity of the First Assignment will depend upon

two factors: (1) who – under the Deed of Trust, the pooled Trust Agreement, and other

relevant documents – had the authority to assign or otherwise change beneficiary status

under the Deed of Trust, and (2) was that authority validly exercised? If the First

Assignment was valid, then it will become necessary to evaluate proceedings that took

place following the First Assignment. However, if the First Assignment were invalid, then

much of what followed will also fail. 

Order – Motions to Dismiss -20-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 20 of 26
Count Two – Breach of Contract

Plaintiffs have plausibly alleged a breach of the Deed of Trust based upon their

contention that the First Assignment was invalid – which, if established, would renderthe

Second Assignment invalid. 

Count Three – Breach of Duty

of Good Faith and Fair Dealing

Because plaintiffs have stated a plausible breach of contract claim (Count Two), then

it follows that their breach of implied covenant claims are also plausible. 

Count Four – Quiet Title and Slander of Title

Plaintiffs contend, based upon A.R.S. § 33-420.A, that one or more of the defendants

caused a forged, groundless, or false statement of claim as to the real property in question

to be recorded. Defendants argue that none of the recordings made by them contain false

statements or misrepresentations or, in the alternative, that any misstatements were not

material to the plaintiffs. 

If, as plaintiffs contend, the First and Second Assignments of the Deed of Trust are

invalid, then plaintiffs’ claim that a purported lien holder has caused the recording of a

knowingly groundless orfalse claim against the real estate inquestion is plausible. Because

of the significant rights that go with beneficiary status, the recording of a groundless or

false assignment of a deed of trust is material to the plaintiffs, for beneficiary status carries

with it the right to accelerate the loan, to declare a default, and to proceed with foreclosure. 

Count Five – Negligence per se Claims

Plaintiffs have pled a plausible negligence per se claim based upon A.R.S. § 39-161

because plaintiffs allege that defendants recorded the First Assignment that is alleged to

have been signed by someone without authority to do so. Plaintiffs have also stated a

plausible negligence per se claim based upon A.R.S. § 33-420 and the recording of

documents containing material false statements as discussed above. At this stage of

Order – Motions to Dismiss -21-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 21 of 26
proceedings, the court is unpersuaded that plaintiffs have pleaded this claim with

insufficient particularity. 

Count Six – Fair Debt Collection Practices Act Claim

Count Six of plaintiffs’ Fourth Amended Complaint alleges a Fair Debt Collection

Practices Act Claim against T.D. Service Company, Japp, and Goff. Each of these

defendants were substituted as trustees under the Deed of Trust. “‘[A] non-judicial

foreclosure proceeding is not the collection of a “debt” for purposes of the FDCPA.’” Zinni

v. Jackson White, P.C., No. CV 11–02143–PHX–FJM, 2012 WL 869008, at *2 (D. Ariz.

March 14, 2012) (quoting Mansour v. Cal-Western Reconveyance Corp., 618 F. Supp. 2d

1178, 1182 (D. Ariz. 2009)). “Moreover, ‘mortgagees and their assignees, servicing

companies, and trustee fiduciaries are not included in the definition of “debt collector.”’” 

Id. (quoting Mansour, 618 F. Supp. 2d at 1182). Because trustees in non-judicial foreclosure

proceedings are not debt collectors, plaintiffs’ Count Six is dismissed. 

Count Seven – Cancellation of Trustee’s Sale Claim

This claim is asserted against Nationstar, T.D. Service Company, Japp, and Goff. 

Plaintiffs argue that Japp and Goff were obligated to cancel the trustee’s sale set by T.D.

Service Company. 

A.R.S. § 33-813 requires that a trustee cancel a pending sale if a trustor has reinstated

the deed of trust through payment of amounts due. Here, there has been no such

reinstatement. Plaintiffs’ Count Seven does not state a plausible claim. Indeed, it appears

to the court that plaintiffs’ Count Seven merely states a potential remedy that might be

imposed if plaintiffs prevail on their declaratory action (Count One). 

Plaintiffs’ Count Seven is dismissed. 

Order – Motions to Dismiss -22-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 22 of 26
Count Eight – Intentional Interference with Contractual Relations

The elements of a cause of action for intentional interference

with contract are a contract between the plaintiff and a third

party; knowledge of the defendant that the contract exists;

intentional interference by the defendant which causes the

third party to breach the contract; a showing that the defendant acted improperly; and a showing that damage resulted to

the plaintiff.

Barrow v. Arizona Bd. of Regents, 761 P.2d 145, 152 (Ariz. Ct. App. 1988). Plaintiffs allege

that “[e]ach defendanthas intentionally interfered with the contracts between the Gardners

and GreenPoint, thereby causing one or more breaches of those contracts.”114 

Plaintiffs contend that they have adequately alleged that defendants interfered with

their contract with the true lender. Plaintiffs contend that the Certificateholders, the note

holder, and the lender on the loan are the only ones who can be true beneficiaries of the

Deed of Trust. Plaintiffs contend that defendants interfered with plaintiffs’ contract with

the Certificateholders. Defendants argue that plaintiffs are not parties to the pooled Trust

Agreement and have no standing to assert rights thereunder. 

As stated above, the court has concluded that plaintiffs’ Count One for declaratory

relief states a plausible cause of action. It is the court’s perception that in the course of

ruling on Count One, the court will necessarily confront and decide who is and who is not

a beneficiary under the Deed of Trust for purposes of enforcing the Deed of Trust if the

Note is not paid. Plaintiffs’ Count Eight is plausible if, as plaintiffs contend, only the

lender/note holder can be the beneficiary. The court declines to address that proposition

at this time. 

Statute of Limitations

Defendants contend that all of plaintiffs’ claims rely on a theory that MERS could

not have been a true beneficiary and that all assignments and substitutions flowing from

114Fourth Amended Complaint at 50, ¶ 287, Docket No. 82. 

Order – Motions to Dismiss -23-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 23 of 26
its appointment were invalid. Defendants also argue that all claims that depend upon a

purported defect in acknowledgment of a recorded document are time-barred. 

The court declines to take up the parties’ statute of limitations arguments until

plaintiffs’ claims (especially those in connection with Count One for declaratory relief) are

better defined. 

Claims against T.D. Service Company, Japp, and Goff

T.D. Service Company, Japp, and Goff argue that all claims against them should be

dismissed pursuant to A.R.S. § 33-807(E). That statute provides in pertinent part that a

trustee should not be joined in a legal action except for breach of the trustee’s obligations

under the statute or the deed of trust in question. 

Plaintiffs contend that there were multiple breaches of obligation by the trustees in

question, including their knowledge that Nationstar was not the true beneficiary for

purposes of initiating foreclosure proceedings. 

Taking the allegations of plaintiffs’ complaint as true, plaintiffs have stated 

plausible claims against T.D. Service Company, Japp, and Goff. 

Plaintiffs’ Standing

Nationstar argues that plaintiffs have no standing to challenge the validity of the

Third Substitution, which plaintiffs contend was void because AMSL Legal Group LLC

does not exist. This quarrel has to do with use of the company named AMSL Legal Group

LLC, as opposed to AMSL Legal Group LLP.

Plaintiffs have standing to inquire into the validity of the various documents

underlying the Notice of Sale recorded for purposes of enforcing plaintiffs’ Deed of Trust. 

Declaratory Relief

Defendants argue that plaintiffs’ request for declaratory injunctive relief should be

denied because they are remedies for underlying causes of action and not independent

causes of action.

Order – Motions to Dismiss -24-

Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 24 of 26
Plaintiffs have stated a plausible cause of action for declaratory relief, and the

remedies for which they pray remain viable. 

Allegations Not Contained

in Proposed Fourth Amended Complaint

The AMSL defendants argue that plaintiffs have improperly included allegations

in their Fourth Amended Complaint that were not contained in the proposed Fourth

Amended Complaint. 

The court has already rejected that argument when it ruled upon the Nationstar

defendants’ motion to strike.115

Conclusion

The motions to dismiss116

are granted in part and denied in part. Count Six as to

T.D. Service Company of Arizona, Japp, and Goff is dismissed. Count Seven as to

Nationstar Mortgage, T.D. Service Company of Arizona, Japp, and Goff is dismissed. 

Count Six and Seven are dismissed with prejudice as plaintiffs have had multiple

opportunities to plead the claims asserted in these counts. The motions to dismiss are

denied as to all other counts and contentions. 

The court reminds the parties of its conviction that plaintiffs owe a debt that is

secured by a Deed of Trust. Laying aside the technicalities of the voluminous records over

which the parties disagree, the money which the plaintiffs owe (or the proceeds of the

security forthe Deed of Trust) ultimately belongs to the LEHMAN XS TRUST, Series 2007-

15N, Certificateholders,for whomU.S.Bank National Association acts as the trustee. There

is no doubt but that someone on behalf of the Certificateholders and the trustee for the

Certificateholders is entitled to collect payments, declare a default if payments are not

made, and, if the default is not cured, demand foreclosure. The parties would save

115Docket No. 102. 

116Docket Nos. 87 and 89. 

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Case 2:13-cv-01641-HRH Document 114 Filed 12/07/15 Page 25 of 26
themselves a great deal of effort and money if they were to reach an agreement identifying

the entity presently entitled to demand payment of plaintiffs’ debt, the entity entitled to

declare a default if payment is not made, and the trustee entitled to foreclose if full

payment of plaintiffs’ debt is not made. 

The court urges the parties to seriously consider engaging a private mediator or

requesting the designation of a United States magistrate judge to assist them with a

settlement conference. 

DATED at Anchorage, Alaska, this 7th day of December, 2015. 

/s/ H. Russel Holland 

United States District Judge

Order – Motions to Dismiss -26-

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