NOTICE: NOT FOR OFFICIAL PUBLICATION.

UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL

AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

NATIONSTAR MORTGAGE LLC, Plaintiff/Appellant,

v.

MAGNUM FINANCIAL LLC, et al., Defendants/Appellees.

No. 1 CA-CV 18-0518 

Appeal from the Superior Court in Maricopa County

No. CV2017-002658

The Honorable Kerstin Lemaire, Judge

The Honorable Joseph C. Welty, Judge

AFFIRMED IN PART, VACATED IN PART, AND REMANDED

COUNSEL

McCarthy & Holthus, LLP, Scottsdale

By Devan E. Michael

Co-Counsel for Plaintiff/Appellant

Hall Griffin LLP, Santa Ana, California

By Valerie J. Schratz

Co-Counsel for Plaintiff/Appellant

FILED 12-5-2019
2

Lowis & Gellen LLP, Tempe

By Sean Donlan

Counsel for Defendant/Appellee Bank of America, N.A.

John N. Moore Attorney at Law, Peoria

By John Norman Moore

Counsel for Defendant/Appellee Magnum Financial, LLC

MEMORANDUM DECISION

Judge James B. Morse Jr. delivered the decision of the Court, in which 

Presiding Judge Kenton D. Jones and Judge Diane M. Johnsen joined.

M O R S E, Judge:

¶1 Nationstar Mortgage, LLC ("Nationstar") appeals the 

dismissal of its claims for breach of contract, unjust enrichment, breach of 

the covenant of good faith and fair dealing, conversion, and enforcement of 

a lost cashier's check pursuant to A.R.S. § 47-3309. For the reasons stated 

herein, we vacate the dismissal of Nationstar's claims for unjust enrichment 

and breach of the covenant of good faith and fair dealing against Magnum 

Financial, LLC ("Magnum"), affirm the dismissal of all the other claims, and 

remand for further proceedings.

FACTS AND PROCEDURAL BACKGROUND1

¶2 In April 2013, Magnum, Bank of America, N.A. ("Bank of 

America"), and ReconTrust Company, N.A. ("ReconTrust") entered into a 

settlement agreement to resolve a legal dispute. Pursuant to that 

agreement, Magnum agreed to pay ReconTrust $57,000.00. On March 26, 

2014, Magnum purchased a cashier's check payable "To The Order Of Bank 

of America" in that amount and delivered the check to ReconTrust and Bank 

 

1 In reviewing a ruling on a motion to dismiss, we "take as true all 

well-pleaded facts alleged within the complaint," Harper v. State, 241 Ariz. 

402, 404 (App. 2016) (citations omitted), and consider the four corners of the 

contract in question, and other documents attached to the complaint. See 

Dunn v. FastMed Urgent Care PC, 245 Ariz. 35, 38-39, ¶ 12 (App. 2018).
NATIONSTAR v. MAGNUM, et al.

Decision of the Court

3

of America. Nationstar acquired ReconTrust's rights under the settlement 

agreement, obtained the cashier's check, and then lost track of it.2 

¶3 In 2015, Nationstar twice contacted Magnum to request a 

replacement check, but Magnum refused. Nationstar then filed this action 

against Magnum in January 2017. A few months later, Nationstar sent a 

third request for a replacement check, which Magnum also rejected. 

¶4 In July 2017, Nationstar turned to Bank of America for 

assistance, sending a letter stating that Nationstar was owed funds on a lost 

cashier's check and enclosing an executed "Declaration of Loss." Bank of 

America did not respond by providing any funds or a replacement check to 

Nationstar, but instead contacted Magnum. Magnum then submitted its 

own "Declaration of Loss" to Bank of America, which gave it a replacement 

cashier's check, thereby refunding to Magnum the full amount of $57,000.00 

Magnum had originally paid to ReconTrust. Nationstar then amended its 

complaint to add Bank of America as a defendant. 

¶5 We must recount the procedural history of this case in some 

detail. Nationstar filed its original complaint on January 27, 2017, a first 

amended complaint on May 15, 2017, and a second amended complaint 

approximately seven months later, on December 27, 2017. Magnum filed 

its first motion to dismiss on January 4, 2018, in which it argued that 

delivery of the original cashier’s check rendered the breach of contract 

action meritless and that the statute of limitations had run on all of 

Nationstar's claims pertaining to the check. In its motion, Magnum 

admitted that it had received a refund from Bank of America, but argued 

that this could not give rise to any claim by Nationstar. Before the superior 

court ruled on Magnum's motion to dismiss, Nationstar filed a third 

amended complaint on March 1, 2018, which prompted Magnum to file a 

second motion to dismiss on March 20, 2018. 

¶6 On April 2, 2018, the superior court ruled on Magnum's first 

motion to dismiss. The court held that, pursuant to A.R.S. § 47-3310, "once 

 

2 Bank of America argues that Nationstar has pled insufficient facts to 

substantiate Nationstar's assertion that it is ReconTrust's successor in 

interest or that Nationstar was assigned the right to enforce the check. 

However, we must "indulge all reasonable inferences" from the allegations 

in Nationstar's complaint. Cullen v. Auto-Owners Ins. Co., 218 Ariz. 417, 419, 

¶ 7 (2008). The complaint alleges that Nationstar is the successor in interest 

to ReconTrust and has the right, power and authority to assert its rights 

pursuant to the settlement agreement. 
NATIONSTAR v. MAGNUM, et al.

Decision of the Court

4

[Nationstar] took the cashier's check for the obligation, said obligation was 

discharged," and found that the situation was no different than if 

Nationstar had received payment in cash and subsequently lost track of the 

money. Therefore, the court reasoned, Nationstar's claim against Magnum 

essentially sought to force it to pay twice. The court determined that 

Nationstar's only recourse was to make a demand against Bank of America, 

but observed that "[t]he statute of limitations for [Nationstar] to make a 

claim against Bank of America for the cashier's check has pas[sed]." The 

superior court therefore granted the motion to dismiss, but allowed 

Nationstar until April 30, 2018 to file an amended complaint to "address the 

issues raised by the Motion to Dismiss." In its ruling, the superior court did 

not address the claim in the third amended complaint against Bank of 

America. 

¶7 Nationstar filed a fourth amended complaint (erroneously 

labeled as "Amended Complaint") within the time allotted by the court's 

ruling. This new pleading added new allegations that Magnum's 

declaration of loss was false and that Bank of America had issued a 

replacement check to Magnum.3 Approximately two weeks later, however,

the superior court issued a minute entry noting that Nationstar had not 

filed a response to the second motion to dismiss. The court then referred to 

its prior ruling on the first motion to dismiss and, on May 10, 2018, 

dismissed Nationstar's action in its entirety. 

¶8 Despite the May 10 dismissal, perhaps recognizing that the 

court earlier had granted Nationstar leave to amend, Magnum then filed a 

third motion to dismiss (aimed at the fourth amended complaint), and Bank 

of America filed its first motion to dismiss. This prompted the superior 

court to issue a subsequent minute entry, stating that because Nationstar 

"failed to respond to the Second [M]otion to Dismiss, the Court granted the 

Second Motion to Dismiss[.] This matter has been dismissed in its entirety. 

Thus[,] the Third Motion to Dismiss is moot."4 The superior court later 

entered a judgment dismissing the matter in its entirety and granting 

 

3 Nationstar's previous complaints attached Magnum's declaration of 

loss and alleged that Magnum "requested" a refund check, but did not 

allege that Bank of America gave a replacement check to Magnum.

4 This order did not mention Bank of America's motion to dismiss.
NATIONSTAR v. MAGNUM, et al.

Decision of the Court

5

Magnum its attorneys' fees and costs, totaling $11,226.10.5 Nationstar 

timely appealed. This Court has jurisdiction over this appeal pursuant to 

A.R.S. § 12-120.21.

DISCUSSION

¶9 We review de novo the dismissal of a complaint pursuant to

Arizona Rule of Civil Procedure 12(b). Coleman v. City of Mesa, 230 Ariz. 

352, 355, ¶ 7 (2012). Dismissal is only appropriate if "as a matter of law [ ]

plaintiffs would not be entitled to relief under any interpretation of the facts 

susceptible to proof." Id. at 356, ¶ 8 (quoting Fid. Sec. Life Ins. Co. v. State 

Dep't of Ins., 191 Ariz. 222, 224, ¶ 4 (1998)). "Contract interpretation is a 

question of law we review de novo." Dunn v. FastMed Urgent Care PC, 245 

Ariz. 35, 38, ¶ 10 (App. 2018). "We are bound to affirm if the superior court 

was 'correct in its ruling for any reason.'" Peterson v. Newton, 232 Ariz. 593, 

595, ¶ 4 (App. 2013) (quoting Phelps Dodge Corp. v. El Paso Corp., 213 Ariz. 

400, 404 n. 7, ¶ 17 (App. 2006)).

¶10 The superior court did not consider the fourth amended 

complaint. Because the court granted Nationstar leave to file the fourth 

amended complaint, and Nationstar timely filed that complaint, we review 

whether dismissal was proper based on the factual allegations within that 

pleading. For the reasons that follow, we hold that the fourth amended 

complaint's additional factual allegations were sufficient to state two claims 

for relief against Magnum.

¶11 Nationstar argues that because it never received the money to 

which it was entitled as ReconTrust's successor in interest, one of the 

defendants should pay the $57,000.00 that was owed. Specifically as to 

Magnum, Nationstar argues that "Magnum may have paid the $57,000.00, 

but then it took the money back." In response, Magnum argues that, 

pursuant to A.R.S. § 47-3310, once the cashier's check was delivered to 

ReconTrust the debt owed by Magnum was paid and the contract was fully 

executed. Further, Magnum asserts (i) its receipt of the refund on the 

cashier's check cannot give rise to any action, and (ii) the three-year statute 

of limitations on actions to enforce cashier's checks in A.R.S. § 47-3118 bars 

any claims. Bank of America argues that once it refunded the funds to 

Magnum, it was relieved of any obligations arising from the cashier's check. 

 

5 We briefly stayed the appeal to allow the superior court to amend its 

judgment to certify it as final under Arizona Rule of Civil Procedure 54(c).
NATIONSTAR v. MAGNUM, et al.

Decision of the Court

6

¶12 Here, we have a debtor (Magnum), an obligated bank (Bank 

of America), and a successor in interest to a creditor (Nationstar). The 

debtor purchased a cashier's check and transferred it to the creditor in full 

payment of an outstanding obligation. This matter requires an analysis of 

the statutes contained within Arizona's codification of the Uniform 

Commercial Code ("U.C.C."). The subsection of the U.C.C. relevant to 

Nationstar's breach of contract claim against Magnum provides:

Unless otherwise agreed, if a [...] cashier's check [...] is taken 

for an obligation, the obligation is discharged to the same 

extent discharge would result if an amount of money equal to 

the amount of the instrument were taken in payment of the 

obligation. Discharge of the obligation does not affect any 

liability that the obligor may have as an indorser of the 

instrument.

A.R.S. § 47-3310(A). In other words, delivery of a cashier's check is "the 

equivalent of payment in cash." First Nat. Bank of Arizona v. Cont'l Bank, 138 

Ariz. 194, 198 (App. 1983) (citing Citizens & Southern National Bank v. 

Youngblood, 219 S.E.2d 172 (Ga. Ct. App. 1975)). Therefore, once Magnum 

gave the cashier's check to ReconTrust, Magnum's payment obligation 

under the settlement agreement was satisfied. We accordingly affirm the 

superior court's dismissal of Nationstar's breach of contract claim against 

Magnum. We also affirm the dismissal of Nationstar's conversion claim 

because the complaint does not allege Magnum exercised "dominion or 

control over a chattel" owned by Nationstar. See Miller v. Hehlen, 209 Ariz. 

462, 472, ¶ 34 (App. 2005). 

¶13 We also affirm the dismissal of Nationstar's claim against 

Bank of America, which sought enforcement of a lost cashier's check under 

A.R.S. § 47-3309. As alleged in the complaint, ReconTrust assigned its rights 

to enforce the cashier's check to Nationstar and transferred the check to 

Nationstar, which then lost it. Once the cashier's check was known to be 

missing, both Nationstar and Magnum asserted rights as claimants under 

A.R.S. § 47-3312. That provision allows a claimant to receive the amount of 

the check from the obligated bank so long as more than ninety days have 

elapsed since the check has been issued and the claimant provides a 

"declaration of loss." A.R.S. § 47-3312(C). This "declaration of loss" must be 

a written statement made under penalty of perjury that asserts that:

(a) The declarer lost possession of a check
NATIONSTAR v. MAGNUM, et al.

Decision of the Court

7

(b) The declarer is the [...] remitter or payee of the check, in 

the case of a cashier's check or teller's check.

(c) The loss of possession was not the result of a transfer by 

the declarer or a lawful seizure.

(d) The declarer cannot reasonably obtain possession of the 

check because the check was destroyed, its whereabouts 

cannot be determined or it is in the wrongful possession 

of an unknown person or a person that cannot be found or 

is not amenable to service or process.

A.R.S. § 47-3312(A)(3).

¶14 Nationstar alleges that the declaration of loss that Bank of 

America accepted from Magnum was false. Under A.R.S. § 47-3312(C)(4), 

however, an obligated bank's "payment to [a] claimant discharges all 

liability of the obligated bank with respect to the check." Bank of America 

refunded the amount of the check to a claimant and thereby relieved itself 

of all obligations under the cashier's check. See A.R.S. § 47-3312(C)(4). Even 

"if the claimant falsely alleges a loss that in fact did not occur, the bank, 

subject to [exceptions not relevant here], may rely on the declaration of 

loss." U.C.C. § 3-312, cmt. 3.6 Because Nationstar's only claim against Bank 

of America sought to enforce the lost cashier's check under § 47-3309 the 

superior court correctly dismissed the fourth amended complaint as to 

Bank of America. 7

 

6 "While the comments to the U.C.C. were not adopted by the 

legislature as comments to the Arizona version of the U.C.C., we look to 

cases arising under the uniform act and the U.C.C. commentary for 

guidance because the relevant provisions of the state act mirror the U.C.C." 

Koss Corp. v. American Express, Co., 233 Ariz. 74, 80, ¶ 17 n. 7 (App. 2013) 

(citations omitted).

7 Although Nationstar also had submitted a declaration of loss, the 

commentary to U.C.C. § 3-312 (codified as A.R.S. § 47-3312) states that "[a]n 

indorsee of a [cashier's] check is not covered because the indorsee is not an 

original party to the check or remitter." U.C.C. § 3-312, cmt. 2. An 

indorsee's remedy is to seek enforcement of the cashier's check under 

U.C.C. § 3-309 (codified as A.R.S. § 47-3309). U.C.C. § 3-312, cmt. 2.
NATIONSTAR v. MAGNUM, et al.

Decision of the Court

8

¶15 This leaves Nationstar's remaining claims against Magnum–

unjust enrichment and breach of the implied covenant of good faith and fair 

dealing. Magnum argues that because its obligation under the settlement 

agreement was satisfied when it delivered the cashier's check to 

ReconTrust, all of Nationstar's claims must fail.8 This is incorrect. As noted 

in the comments to the U.C.C., while the underlying debt is discharged "any 

right of recourse on the instrument is preserved." U.C.C. § 3-310, cmt 2.

¶16 Magnum argues that Nationstar's claims are barred by the 

statute of limitations in A.R.S. § 47-3118(G)(3). This is incorrect. 

Nationstar's causes of action for unjust enrichment and breach of the 

covenant of good faith and fair dealing did not accrue until Magnum's 

alleged actions prevented Nationstar from invoking A.R.S. § 47-3309. See 

Gust, Rosenfeld & Henderson v. Prudential Life Ins. Co. of America, 182 Ariz. 

586, 590 (1995) (applying the discovery rule to the accrual of a claim for 

breach of contract). Nationstar alleges Magnum reclaimed the funds 

through a false declaration of loss in August 2017, while this lawsuit was 

pending before the superior court. Even if the three-year statute of 

limitations in A.R.S. § 47-3118(G)(3) was applicable, Nationstar brought its 

claims before the statute had run. 

¶17 Magnum correctly describes the status of the law regarding 

the initial delivery of the cashier's check, but its argument ignores its 

subsequent actions and the legal significance of the fourth amended 

complaint's additional allegations regarding the falsity of Magnum's 

declaration of loss and receipt of the refund. The complaint alleges that the 

false declaration of loss Magnum submitted to Bank of America foreclosed 

Nationstar's ability to enforce the lost cashier's check pursuant to A.R.S. § 

47-3309. 

¶18 Magnum's declaration of loss was attached as an exhibit to 

Nationstar's fourth amended complaint, and therefore we may consider it 

in reviewing the dismissal of Nationstar's claims. Dunn, 245 Ariz. at 38-39, 

¶ 12. Magnum's declaration of loss to Bank of America constituted "a 

warranty of the truth of the statements made in the declaration." U.C.C. § 

 

8 Magnum also relies on the commentary to the U.C.C., which states 

that if an instrument is lost, "the debtor is not obliged to issue a new check." 

U.C.C. § 3-310, cmt. 4. However, that comment refers to U.C.C. § 3-

310(b)(4), which only involves notes or uncertified checks. The 

consequences of taking a cashier's check for an obligation are solely 

controlled by U.C.C. § 3-310(a) (codified as A.R.S. § 47-3310(a)). 
NATIONSTAR v. MAGNUM, et al.

Decision of the Court

9

3-312, cmt. 2. In that declaration, Magnum asserted under penalty of 

perjury that the cashier's check was "lost, stolen, or destroyed" and that its 

loss of possession of the check "was not the result of a transfer by [Magnum] 

or a lawful seizure of the item." Under the facts alleged in the complaint, 

Magnum did not lose the check, nor was the check stolen from it or 

destroyed while in its possession. Assuming, as we must, that Nationstar 

had the right to enforce the check, Magnum lost possession of the check by 

way of its purposeful tender of the check in satisfaction of the settlement 

agreement, and Magnum's false declaration of loss ultimately prevented 

Nationstar from enforcing its rights under U.C.C. § 3-309.

¶19 "An unjust enrichment claim requires proof of five elements: 

'(1) an enrichment, (2) an impoverishment, (3) a connection between the 

enrichment and impoverishment, (4) the absence of justification for the 

enrichment and impoverishment, and (5) the absence of a remedy provided 

by law.'" Wang Elec., Inc. v. Smoke Tree Resort, LLC, 230 Ariz. 314, 318, ¶ 10 

(App. 2012) (quoting Freeman v. Sorchych, 226 Ariz. 242, 251, ¶ 27 (App. 

2011)). Magnum argues that no cause of action for unjust enrichment can 

be brought when there is "a specific contract which governs the relationship 

between the parties." Brooks v. Valley Nat'l Bank, 113 Ariz. 169, 174 (1976). 

While Nationstar could not simultaneously recover the same damages 

under an unjust-enrichment theory and under a contract-based theory, we 

have made clear that a plaintiff is "entitled to seek equitable relief as an 

alternative." Summers v. Gloor, 239 Ariz. 222, 226, ¶ 17 (App. 2016) (citing 

Adelman v. Christy, 90 F.Supp.2d 1034, 1045-46 (D. Ariz. 2000) (permitting 

plaintiff to pursue an unjust enrichment claim as an alternative to his breach 

of contract claim, subject to a single recovery, where he would have no 

other remedy to recover payment for services rendered if the contract was 

found invalid)). Accordingly, we examine the fourth amended complaint 

to determine whether it supports a claim for unjust enrichment. 

¶20 Nationstar has alleged that Magnum obtained $57,000.00, to 

the detriment of Nationstar, by and through Magnum's false statements in 

its declaration of loss. Nationstar has also expressly alleged that it "may be 

without a remedy provided by law." These facts provide a sufficient basis 

for Nationstar's claim for unjust enrichment, and we vacate the superior 

court's dismissal of that claim.

¶21 Nationstar has also alleged sufficient facts to support its claim 

of breach of the implied covenant of good faith and fair dealing. Arizona 

law implies a covenant of good faith and fair dealing in every contract. 

Wells Fargo Bank v. Ariz. Laborers, Teamsters & Cement Masons Local No. 395 

Pension Tr. Fund, 201 Ariz. 474, 490, ¶ 59 (2002). This covenant prohibits the 
NATIONSTAR v. MAGNUM, et al.

Decision of the Court

10

parties from taking any "act to impair the right of the other to receive the 

benefits which flow from their agreement or the contractual relationship." 

Beaudry v. Ins. Co. of the West, 203 Ariz. 86, 91, ¶ 18 (App. 2002). "A party 

breaches the covenant 'by exercising express discretion in a way 

inconsistent with a party's reasonable expectations and by acting in ways 

not expressly excluded by the contract's terms but which nevertheless bear 

adversely on the party's reasonably expected benefits of the bargain.'" Keg 

Restaurants Arizona, Inc. v. Jones, 240 Ariz. 64, 77, ¶ 45 (App. 2016) (quoting 

Bike Fashion Corp v. Kramer, 202 Ariz. 420, 424, ¶ 14 (App. 2002)).

¶22 Under the facts contained in the fourth amended complaint, 

Magnum denied Nationstar the benefit of its bargain. Magnum argues that 

because it satisfied its express obligations under the contract, the covenant 

of good faith and fair dealing cannot apply. This ignores the fact that the 

duty of good faith "extends beyond the written words of the contract." Wells 

Fargo Bank, 201 Ariz. at 491, ¶ 63. Nationstar alleges that Magnum 

wrongfully acted to prevent Nationstar from receiving the funds it was 

entitled to under the contract. The passage of time and the original transfer 

of the cashier's check as a cash equivalent are irrelevant. If Magnum had 

paid in cash and later reclaimed that money through wrongful acts, the 

results would be the same. A contracting party may not take any wrongful 

action to deprive the other party of the benefits of the contract. We, 

therefore, vacate the superior court's dismissal of Nationstar's claim for 

breach of the covenant of good faith and fair dealing.

CONCLUSION

¶23 For the foregoing reasons, we hold that Nationstar's fourth 

amended complaint contains sufficient factual allegations to state claims for 

unjust enrichment and breach of the covenant of good faith and fair dealing. 

We therefore vacate the superior court's dismissal of those claims against 

Magnum. Because we vacate the dismissal of these claims, we also vacate 

the superior court's award of Magnum's attorney's fees and deny 

Magnum's request for attorney's fees on appeal under A.R.S. §§ 12-341.01, 

-342, and -348. The judgment is affirmed in all other respects.