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FILED

JUN 20 2017

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. AZ-16-1005-LBJu

)

CHRISTINA M. RAVAGO, ) Bk. No. 13-16053-BMW

)

Debtor. ) Adv. No. 14-00066-BMW

______________________________)

)

CHRISTINA M. RAVAGO, )

)

Appellant, )

)

v. ) M E M O R A N D U M*

)

BANK OF AMERICA; RECONTRUST )

COMPANY; LANDSAFE APPRAISAL )

SERVICES; MICHAEL LEBSACK; )

NATIONSTAR MORTGAGE LLC; )

NATIONSTAR MORTGAGE HOLDINGS, )

INC., )

)

Appellees. )

______________________________)

Argued and Submitted on May 18, 2017

at Phoenix, Arizona

Filed - June 20, 2017

Appeal from the United States Bankruptcy Court

for the District of Arizona

Honorable Brenda Moody Whinery, Bankruptcy Judge, Presiding.

_________________________

Appearances: Jana Happel of Southern Arizona Legal Aid, Inc.

argued for Appellant Christina M. Ravago; Andrea

McDonald Hicks argued for Appellees Bank of

America, Landsafe Appraisal Services, Michael

Lebsack and ReconTrust Company; Melissa Louise

Cizmorris of Akerman LLP argued for Appellees

FILED

JUN 20 2017

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

*This disposition is not appropriate for publication.

Although it may be cited for whatever persuasive value it may

have (see Fed. R. App. P. 32.1), it has no precedential value. 

See 9th Cir. BAP Rule 8024-1.
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Nationstar Mortgage Holdings, Inc. and Nationstar

Mortgage LLC. 

_________________________

Before: LAFFERTY, BRAND, and JURY, Bankruptcy Judges.

INTRODUCTION

 During her chapter 131 bankruptcy, Debtor Christina M.

Ravago filed an adversary proceeding seeking damages against her

mortgage lender and related parties under various theories, all

of which were based on allegations that the defendants had

violated the terms of the National Mortgage Settlement (“NMS”)2

by proceeding with a prepetition trustee’s sale of her residence

while her application for a loan modification was under

consideration. The bankruptcy court dismissed all but one of

Debtor’s claims without leave to amend, concluding that the NMS

did not create a private right of action for individual borrowers

to enforce its terms. We AFFIRM.

1Unless specified otherwise, all chapter and section

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, all

“Rule” references are to the Federal Rules of Bankruptcy

Procedure, and all “Civil Rule” references are to the Federal

Rules of Civil Procedure. “ARS” references are to the Arizona

Revised Statutes.

2Under the NMS, which was finalized in 2012, five of the

country’s largest mortgage servicers/banks (Ally/GMAC, Bank of

America, Citi, JP Morgan Chase, and Wells Fargo) agreed to

provide $20 billion of mortgage-related relief to homeowners and

to abide by new servicing standards meant to address some of the

worst foreclosure abuses. Under the NMS, only state attorneys

general can sue for alleged noncompliance with its terms. 

Penermon v. Wells Fargo Bank, N.A., 47 F. Supp. 3d 982, 993 n.2

(N.D. Cal. 2014).

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FACTS

On July 17, 2013, Debtor’s Tucson residence (the “Property”)

was sold at a trustee’s sale. Although Debtor acknowledged she

was in default and had notice of the sale, she believed that the

trustee’s sale would be cancelled or postponed pending

consideration of her recently submitted loan modification

application.

On September 16, 2013, Debtor filed a chapter 13 petition.

Despite the fact that the Property had been sold and a trustee’s

deed recorded, Debtor listed on her schedules both the Property

and a debt to Nationstar Mortgage LLC (“Nationstar”) secured by

the Property. In her plan, which was confirmed December 31,

2015, Debtor proposed an ongoing monthly mortgage payment to

Nationstar and indicated that she intended to file an adversary

proceeding to challenge the trustee’s sale and to bring “claims

relating to breach of contract; violation of FHA regulations;

etc.” Debtor also listed on Schedule B a “[c]laim against Bank

of America, Nationstar, Recon[T]rust, House Appraisor [sic] for

wrongful foreclosure, violation of the National Mortgage

Settlement Agreement, breach of contract, etc. To be filed as

adversary proceeding.”

On October 4, 2013, Debtor filed a proof of claim on behalf

of Nationstar, asserting a secured claim of $90,000 and an

unsecured claim of $20,000.3 On January 21, 2014, Debtor filed a

complaint against Appellees Bank of America, N.A. dba Bank of 

3Debtor later filed an amended claim that reduced the

unsecured portion of the debt.

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America Home Loan Servicing (“B of A”), Nationstar Mortgage

Holdings, Inc., and Nationstar (collectively, “Nationstar

Defendants”), ReconTrust Company, N.A., Landsafe Appraisal

Services, Inc., and Michael Lebsack, an appraiser who conducted

an appraisal of the Property on behalf of B of A. The Complaint

pleaded seven causes of action: (1) an objection to the proof of

claim that Debtor had filed on behalf of Nationstar on grounds

that any debt owed to Nationstar was unenforceable; (2) violation

of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C.

§ 1692 et seq., against ReconTrust and the Nationstar Defendants;

(3) violation of the Arizona Consumer Fraud Act (“ACFA”), ARS

§ 44-1521 et seq., against the Nationstar Defendants; (4) common

law fraud against B of A and the Nationstar Defendants;

(5) negligent misrepresentation against Landsafe and Lebsack;

(6) tortious breach of the duty of good faith and fair dealing

against B of A and the Nationstar Defendants; and (7) filing

false documents under ARS § 33-420 against ReconTrust and the

Nationstar Defendants.4 Debtor sought monetary damages for each

cause of action except the claim objection. 

According to the general allegations of the complaint,

Debtor purchased the Property in September 2009. Debtor obtained

a loan for the purchase from KB Home Mortgages LLC; the note

representing the obligation was secured by a deed of trust

4Causes of action 1, 4, and 5 are not at issue in this

appeal. The bankruptcy court disallowed the Nationstar claim

filed by Debtor because Nationstar did not oppose the objection

and, on appeal, Debtor has not assigned error to the dismissal of

the negligent misrepresentation claim or the common law fraud

claim.

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against the Property. In January 2012 the note and deed of trust

were assigned to B of A. On April 30, 2012, B of A substituted

ReconTrust as the trustee under the deed of trust.

Debtor further alleged that nearly a year later, on

April 10, 2013, ReconTrust recorded a “Notice of Trustee’s Sale

Arizona” indicating that a trustee’s sale was scheduled for

July 17, 2013. Debtor contacted B of A to ask for help with her

payments and thereafter completed a loan modification application

and transmitted the application and supporting documentation to

B of A at a fax number provided by B of A. B of A sent Debtor a

letter dated May 21, 2013, informing her that her loan

modification application had been denied because B of A had not

received proper documentation within the required time frame. 

The letter did not explain what documentation was missing but

stated that Debtor had 30 days to appeal.

The allegations continue: On May 30, 2013, before

expiration of the appeal period, Nationstar wrote to Debtor

informing her that, effective June 4, 2013, Nationstar “received

transfer of the loan.” The letter also informed Debtor that any

pending loan modifications “will pick up where they left off and

will have all of your documentation” and provided information on

how to contact Nationstar. B of A did not notify Debtor of the

transfer. Debtor alleged on information and belief that

Nationstar “either did not inform ReconTrust of the change of

Beneficiary on the Deed of Trust, nor ratified without

notification of all other concerned parties, the Trustee’s sale

date, thereby misleading RAVAGO that B of A no longer had the

right to continue with the Trustee’s sale.” Complaint, ¶ 24c. 

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Because B of A did not inform Debtor that the trustee’s sale

would proceed even after B of A sold its beneficial interest in

the deed of trust to Nationstar, Debtor believed the trustee’s

sale had been cancelled or stayed.

According to the complaint, a few days after she received

the May 30 letter from Nationstar, Debtor consulted a nonprofit

housing counseling service and, with their help, submitted a loan

modification application to Nationstar on June 10, 2013. Three

days later, Nationstar acknowledged receipt of the application

and assigned a Single Point of Contact to Debtor. The Single

Point of Contact person was changed twice thereafter by letters

dated June 15 and July 31, 2013 (after the trustee’s sale). On

June 17, 2013, Nationstar sent a letter to Debtor informing her

that Nationstar would review and determine eligibility within

20-60 days (the “June 17 Letter”). Based on this representation,

Debtor believed Nationstar was considering her loan modification

application in lieu of proceeding with the trustee’s sale. On

June 18, 2013, Nationstar requested additional documentation with

a deadline of July 19, 2013 (two days after the scheduled

trustee’s sale). Debtor submitted the documentation prior to the

date of the scheduled trustee’s sale.

Debtor further alleged that on June 18, 2013, B of A

executed an assignment of its deed of trust to Nationstar; that

document was recorded July 16, 2013. No copy of the assignment

was provided to Debtor.

On July 17, 2013, the Property was sold at a trustee’s sale

to Carboneros Corporation for $92,000. ReconTrust executed a

Trustee’s Deed upon Sale granting the Property to Carboneros;

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that document was recorded July 26, 2013; a corrected deed of

trust (correcting the grantee’s name) was recorded August 20,

2013.

After the trustee’s sale, on July 31, 2013, Nationstar sent

a letter to Debtor informing her that her Single Point of Contact

had changed again and informing her of a website she could

“contact” to obtain more information on workout solutions.

Debtor further alleged that the NMS entered into on

February 9, 2012 by the United States, 49 states, including

Arizona, and several mortgage lenders, including B of A, placed

restrictions on “dual tracking,” the practice of a mortgage

servicer to continue foreclosure proceedings while a loan

modification application is pending. Other provisions of the NMS

address the treatment of pending loan modification applications

when servicing rights are transferred from a signatory to the NMS

to another servicer, i.e., the successor servicer is required to

accept and continue processing pending loan modification

requests. Debtor alleged, on information and belief, that B of A

had not informed Nationstar of the status of Debtor’s loan

modification application; alternatively, she alleged that

Nationstar ignored any such communication from B of A.

On February 21, 2014, Defendants jointly moved to dismiss

the adversary proceeding under Civil Rule 12(b)(1) (applicable

via Rule 7012) for lack of subject matter jurisdiction and/or

because Defendants did not consent to the bankruptcy court’s

entry of a final judgment; because Debtor waived claims relating

to the trustee’s sale; and for failure to state a claim under

Civil Rule 12(b)(6). Debtor filed an opposition, and Defendants

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filed replies. After several continuances, the hearing on the

motion to dismiss occurred on November 6, 2014. At that hearing,

the bankruptcy court took the matter under advisement; the court

issued its oral ruling at a hearing on June 11, 2015 and issued

an order December 29, 2015 denying the motion to dismiss the

first cause of action (objection to proof of claim no. 1),

disallowing claim no. 1, and granting the motion to dismiss

causes of action 2-7 with prejudice. Debtor timely appealed.

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

§§ 1334 and 157(b)(2)(B) and (O). We have jurisdiction under

28 U.S.C. § 158.

ISSUES

1. Did the Nationstar Defendants waive their objection to

the bankruptcy court’s entry of a final judgment in the adversary

proceeding?

2. Did the bankruptcy court err in dismissing Debtor’s

second cause of action for violation of the Fair Debt Collection

Practices Act?

3. Did the bankruptcy court err in dismissing Debtor’s

third cause of action for violation of the AFCA?

4. Did the bankruptcy court err in dismissing Debtor’s

sixth cause of action for tortious breach of the duty of good

faith and fair dealing?

5. Did the bankruptcy court err in dismissing Debtor’s

seventh cause of action for filing false documents under

ARS § 33-420?

6. Did Debtor waive any argument that the bankruptcy court

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abused its discretion in dismissing Debtor’s Complaint with

prejudice?

STANDARD OF REVIEW

We review de novo whether the bankruptcy court had authority

to enter a final judgment. Hasse v. Rainsdon (In re Pringle),

495 B.R. 447, 455 (9th Cir. BAP 2013). We also review de novo

the bankruptcy court’s order granting a motion to dismiss for

failure to state a claim under Civil Rule 12(b)(6). Movsesian v.

Victoria Versicherung AG, 670 F.3d 1067, 1071 (9th Cir. 2012)

(en banc). Under de novo review, we look at the matter anew, as

if it had not been heard before, and as if no decision had been

rendered previously, giving no deference to the bankruptcy

court’s determinations. Freeman v. DirecTV, Inc., 457 F.3d 1001,

1004 (9th Cir. 2006).

The bankruptcy court’s dismissal of a complaint without

leave to amend is reviewed for abuse of discretion. Tracht Gut,

LLC v. County of Los Angeles Treasurer & Tax Collector

(In re Tracht Gut, LLC), 503 B.R. 804, 810 (9th Cir. BAP 2014). 

A bankruptcy court abused its discretion if it applied the wrong

legal standard or its findings were illogical, implausible or

without support in the record. TrafficSchool.com, Inc. v.

Edriver Inc., 653 F.3d 820, 832 (9th Cir. 2011).

DISCUSSION

A. The Nationstar Defendants impliedly consented to the

bankruptcy court’s entry of a final judgment.

The Nationstar Defendants assert on appeal that the

bankruptcy court lacked authority to enter a judgment in the

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adversary proceeding because it was not a core proceeding.5 In

the bankruptcy court, the Nationstar Defendants expressly

objected to the bankruptcy court’s entry of a final judgment but

simultaneously moved to dismiss the complaint, i.e., for entry of

a final judgment in favor of Defendants. Although these

conflicting assertions do not necessarily add up to a waiver of

the Nationstar Defendants’ objection to the bankruptcy court’s

authority to enter a final judgment, the Nationstar Defendants

did not cross-appeal the bankruptcy court’s entry of a final

judgment, nor did they elect to appeal to an Article III court,

opting instead to submit to the jurisdiction of this Panel. 

Under these circumstances, the Nationstar Defendants impliedly

consented to entry of a final judgment by the bankruptcy court. 

See In re Pringle, 495 B.R. at 458-60 (once the tribunal’s

authority to enter a final judgment is put at issue, further

purposeful proceeding in the forum indicates consent), citing

Exec. Benefits Ins. Agency v. Arkison (In re Bellingham Ins.

Agency, Inc.), 702 F.3d 553, 569 (9th Cir. 2012), aff’d, Exec.

Benefits Ins. Agency v. Arkison, ___ U.S. ___, 134 S. Ct. 2165

(2014). See also Wellness Int’l Network, Ltd. v. Sharif, ___

U.S. ___, 135 S. Ct. 1932, 1947-48 (2015) (holding that consent

5The caption to the jurisdiction discussion in the

Nationstar Defendants’ brief is “This Court Does Not Have Subject

Matter Jurisdiction Over These Claims Because the Property was

Sold Prior to the Bankruptcy and was Not Part of the Estate.” 

However, the body of the discussion focuses on the court’s

authority to enter a final judgment and does not address subject

matter jurisdiction. As we have previously noted, subject matter

jurisdiction and authority to enter a final judgment are distinct

matters. In re Pringle, 495 B.R. 455.

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to bankruptcy court adjudication of non-core claims may be

implied, so long as it is knowing and voluntary). 

B. Standard on Motion to Dismiss

A motion to dismiss under Civil Rule 12(b)(6) challenges the

sufficiency of the allegations set forth in a complaint and may

be based on either a lack of a cognizable legal theory or

sufficient facts alleged under a cognizable legal theory. 

Johnson v. Riverside Healthcare Sys., LP, 534 F.3d 1116, 1121

(9th Cir. 2008). The court’s review is limited to the

allegations of material facts set forth in the complaint, which

must be read in the light most favorable to the non-moving party

and, together with all reasonable inferences therefrom, must be

taken as true. Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th Cir.

1998). 

The factual allegations in the complaint must state a claim

for relief that is facially plausible. Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009); see also Bell Atl. Corp. v. Twombly,

550 U.S. 544 (2007). “[D]etermining whether a complaint states a

plausible claim is context-specific, requiring the reviewing

court to draw on its experience and common sense.” Iqbal,

556 U.S. at 679. The Court need not “accept as true a legal

conclusion couched as a factual allegation.” Iqbal, 556 U.S. 662

at 678.

“[W]here a complaint includes allegations of fraud, Federal

Rule of Civil Procedure 9(b) requires more specificity including

an account of the time, place, and specific content of the false

representations as well as the identities of the parties to the

misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th

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Cir. 2007) (citation and internal quotations omitted).

C. The bankruptcy court did not err in dismissing the second

cause of action for violation of the FDCPA.

Under the FDCPA, “[a] debt collector may not use any false,

deceptive, or misleading representation or means in connection

with the collection of any debt.” 15 U.S.C. § 1692e. A “debt

collector” is defined as any person (1) “who uses any

instrumentality of interstate commerce or the mails in any

business the principal purpose of which is the collection of any

debts,” or (2) “who regularly collects or attempts to collect,

directly or indirectly, debts owed or due or asserted to be owed

or due another.” 15 U.S.C. § 1692a(6).

Thus, to state a claim under the FDCPA, a plaintiff must

allege facts showing that the defendant fits one of the

definitions of “debt collector” and that the defendant used

false, deceptive, or misleading representations in connection

with the collection of a debt. Here, Debtor alleged: 

60. Defendants NATIONSTAR, NATIONSTAR, LLC, and

RECONTRUST, and each of them, are debt collectors as

defined by the FDCPA, collecting debts owed for the

owners of the note as a regular and normal part of

their business.

61. Defendants, and each of them, use various

modes of interstate commerce to effectuate such debt

collection activities.

62. Defendants, and each of them, have used the

mails to directly communicate with Plaintiff with

regard to collection of the mortgage note and of the

security interest thereon.

63. By communicating with RAVAGO by mail before

the document recording the transfer of the Deed of

Trust and mortgage note by BoA on June 18, 2013,

NATIONSTAR and/or NATIONSTAR, LLC misrepresented the

nature and amount of the debt owed, as no document had

been recorded nor any assignment communicated to RAVAGO

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to show that NATIONSTAR or NATIONSTAR, LLC had any

right to collect the note, thereby misrepresenting the

nature and amount of the debt owed.

64. By communicating via the mails and telephone

from April through July, 2013, regarding the trustee

sale, NATIONSTAR, NATIONSTAR LLC., and RECONTRUST, and

each of them, communicated about an action that they

were not legally entitled to take, as the trustee sale

was not legally allowed to be taken pursuant to the

Attorney General’s Settlement [NMSA] and Arizona Law.

1. The Nationstar Defendants were not debt collectors

under FDCPA.

Although the Complaint alleged that both ReconTrust and the

Nationstar Defendants were liable for violations of the FDCPA, on

appeal, Debtor challenges the dismissal only as it pertains to

the Nationstar Defendants. Thus, we limit our analysis to those

defendants. 

The allegation that the Nationstar Defendants collect “debts

owed for the owners of the note as a regular and normal part of

their business” is insufficient to permit an inference that the

Nationstar Defendants are debt collectors as defined by the FDCPA

or that they were acting as such when they were communicating

with the Debtor. Paragraph 24 of the Complaint alleged that

Nationstar wrote to the Debtor informing her that it had

“received transfer of the loan” effective June 4, 2013 and that

Debtor thereafter began working with Nationstar to obtain a loan

modification. The Complaint further alleged, at paragraph 35,

that B of A formally assigned the deed of trust to Nationstar on

June 18, 2013. 

These allegations lead to the inference that as of June 4,

2013, Nationstar was acting on its own behalf in its efforts to

collect on the note and deed of trust. Accordingly, Nationstar

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was acting as a creditor and not a debt collector. See Henson v.

Santander Consumer USA Inc., ___ S. Ct. ___, 2017 WL 2507342, at

*3 (Jun. 12, 2017) (entities that purchase debts originated by

others and then seek to collect those debts on their own behalf

are not “debt collectors” under the FDCPA). See also Schlegel v.

Wells Fargo Bank, NA, 720 F.3d 1204, 1208-10 (9th Cir. 2013). 

Debtor contends that Nationstar was a debt collector under the

FDCPA because her loan was in default when it was assigned to

Nationstar. Debtor references 15 U.S.C. § 1692a(6)(F), which

excepts from the definition of debt collector “any person

collecting or attempting to collect any debt owed or due or

asserted to be owed or due another to the extent such activity

. . . (iii) concerns a debt which was not in default at the time

it was obtained by such person[.]” (emphasis added). Debtor also

cites Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir.

1985), in which the court noted that “[t]he legislative history

of section 1692a(6) indicates conclusively that a debt collector

does not include the consumer’s creditors, a mortgage servicing

company, or an assignee of a debt, as long as the debt was not in

default at the time it was assigned.” (emphasis added). Debtor

reads these authorities as supporting the conclusion that if a

debt is in default when it is assigned, the assignee is a debt

collector.

However, the FDCPA defines a “creditor” as “any person who

offers or extends credit creating a debt or to whom a debt is

owed, but such term does not include any person to the extent

that he receives an assignment or transfer of a debt in default

solely for the purpose of facilitating collection of such debt

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for another.” 15 U.S.C. § 1692a(4) (emphasis added). Given the

allegation that Nationstar informed Debtor that it had “received

transfer of the loan” effective June 4, 2013, the only inference

to be drawn is that Nationstar acted on its own behalf, i.e., as

a creditor, in its subsequent collection efforts, despite the

facts that the loan was in default and the deed of trust was not

formally assigned until June 18, 2013 and recorded on July 16,

2013.

Even if Nationstar was acting as a servicer before B of A

formally assigned the deed of trust, mortgage servicers are not

“debt collectors” under the FDCPA. Mansour v. Cal-Western

Reconveyance Corp., 618 F. Supp. 2d 1178, 1182 (D. Ariz. 2009)

(citing Perry, 756 F.2d at 1208; Hulse v. Ocwen Fed. Bank, 195 F.

Supp. 2d 1188, 1204 (D. Or. 2002).6

2. The allegations of the Complaint do not support an

inference that the Nationstar Defendants made false,

deceptive, or misleading representations.

According to the Complaint, Nationstar Defendants’ deceptive

conduct consisted of misrepresenting “the nature and amount of

the debt owed” by communicating with Debtor before B of A had

assigned the deed of trust to Nationstar because, until the

assignment, Nationstar had no right to collect on the note and

6The Ninth Circuit Court of Appeals has recently held that

an entity is not a “debt collector” for purposes of the FDCPA if

its only role in the debt collection process is the enforcement

of a security interest, i.e., a nonjudicial foreclosure. Ho v.

ReconTrust Co., NA, No. 10-56884, 2016 WL 9019610, at *4 (9th

Cir. May 22, 2017). The Circuit noted, however, that if an

entity that enforces a security interest engages in activities

that constitute debt collection, it is a debt collector. Id.

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because the trustee’s sale was not legally allowed to go forward

pursuant to the NMS and “Arizona law.”

The NMS does not create a private right of action for

enforcement of its terms. See, e.g., Jurewitz v. Bank of

America, 938 F. Supp. 2d 994, 997-98 (S.D. Cal. 2013); Rehbein v.

CitiMortgage, Inc., 937 F. Supp. 2d 753, 760-62 (E.D. Va. 2013). 

Debtor does not dispute this, but seems to contend that the NMS

created a duty to disclose that the foreclosure was still going

forward despite the fact that a loan modification was in process. 

However, nothing in the allegations of the Complaint suggest that

Nationstar LLC made any affirmative misrepresentations or failed

to disclose material facts in violation of federal or state law. 

At oral argument, Debtor’s counsel asserted that even if the NMS

did not create a duty to disclose, the June 17 Letter to Debtor

informing her that Nationstar would determine her eligibility for

a loan modification within 20-60 days was misleading because the

trustee’s sale was set to occur in less than 60 days. However,

the Complaint did not allege that the June 17 Letter was the

basis for the FDCPA claim. While it is unfortunate that Debtor

made the assumption that the foreclosure sale was stayed or

cancelled, the Complaint does not plausibly allege that

Nationstar had an actionable legal duty to clarify that subject

with Debtor.

D. The bankruptcy court did not err in dismissing the third

cause of action for violation of the ACFA.

Under the ACFA:

The act, use or employment by any person of any

deception, deceptive or unfair act or practice, fraud,

false pretense, false promise, misrepresentation, or

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concealment, suppression or omission of any material

fact with intent that others rely on such concealment,

suppression or omission, in connection with the sale or

advertisement of any merchandise whether or not any

person has in fact been misled, deceived or damaged

thereby, is declared to be an unlawful practice.

ARS § 14-1522. 

To state a claim under the ACFA, a plaintiff must allege

(1) a false promise or representation; (2) made in connection

with the sale of merchandise; and (3) resulting and proximate

injury. Loomis v. U.S. Bank Home Mortg., 912 F. Supp. 2d 848,

856 (D. Ariz. 2012). The claim must be pleaded with

particularity. Id.; Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097,

1103 (9th Cir. 2003) (noting that Rule 9(b)’s particularity

requirement applies to state law causes of action brought in

federal court). Loan transactions constitute a sale within the

meaning of the ACFA, Loomis, 912 F. Supp. 2d at 856, and

“merchandise” includes services, ARS 44-1521(5); Haisch v.

Allstate Ins. Co., 5 P.3d 940, 944 (Ariz. Ct. App. 2000)

An omission of a material fact made with the intent that the

plaintiff rely on the omission is an unlawful practice under the

ACFA, Horne v. AutoZone, Inc., 275 P.3d 1278, 1281 (Ariz. 2012)

(en banc), but a failure to disclose may be fraudulent only if

the defendant had a duty to disclose. Loomis, 912 F. Supp. 2d at

856-67. The ACFA imposes an actionable duty “to refrain from a

deceptive act or practice or an omission of any material fact

with intent that others rely thereon.” AutoZone, 275 P.3d at

1281 (citing ARS § 44-1522(A); internal quotations omitted). 

Debtor alleged in the Complaint that:

68. Pursuant to the NMSA, Defendants were required

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to stop foreclosure proceedings while a loan

modification application was pending.

69. Defendant BoA acknowledges and advertises on

their website . . . that they are required to suspend

foreclosure activities under certain circumstances

which would be similar to RAVAGO’[sic] circumstances.

70. NATIONSTAR has stated to the Attorney Generals

of Arizona and of California that they would comply

with the National Mortgage Settlement Standards for any

loans transferred to them by BoA.

71. Defendants intentionally made a

misrepresentation in concealing the fact to RAVAGO that

foreclosure proceedings would not be suspended pending

a loan modification application.

72. Defendants’ actions were done by evil hands

guided by evil minds.

73. Defendants intended that others, including

RAVAGO, rely upon such misrepresentation and

concealment of the fact that NATIONSTAR and/or

NATIONSTAR, LLC would comply with the NMSA standards.

74. RAVAGO suffered damages as a result of the

reliance on Defendants’ misrepresentation and

concealment, in that she lost her home to foreclosure,

and was required to expend time and funds in moving,

and other purposes[.]

75. RAVAGO has suffered other damages in an amount

to be proven at trial.

The bankruptcy court dismissed this claim because the NMS

does not provide for a private right of action and thus does not

confer a duty to disclose, and because Debtor had alleged no

other source of a duty to disclose. Debtor argues on appeal that

the ACFA itself imposes the duty, but the duty to refrain from

deceptive practices still requires a defendant to have breached a

duty to disclose in the first instance. Here, Debtor conceded

she was in default and had notice of the trustee’s sale. She did

not allege that she was promised that the foreclosure sale would

be stayed or cancelled. Nor did she allege that she was aware of

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the NMS or the representations on B of A’s website before the

trustee’s sale, and her counsel conceded as much at oral

argument. Such allegations would be necessary to establish that

the cited representations and concealment of the fact that the

foreclosure was not suspended were the proximate cause of her

damages.

Finally, Debtor did not plead this claim with particularity,

which requires that she allege all of the circumstances of the

alleged fraud, “including the who, what, when, where and how of

the misconduct charged.” Vess, 317 F.3d at 1106. With respect

to B of A, Debtor alleged only that B of A has misleading

information on its website. With respect to the Nationstar

Defendants, she alleged only that they represented to the

attorneys general of Arizona and California that they would

comply with the NMS for any loans transferred to them by B of A;

other than that, the allegations establish only that Nationstar

personnel were working with her on a loan modification without

mentioning the fact that the trustee’s sale was still going

forward.7

E. The bankruptcy court did not err in dismissing the sixth

cause of action for tortious breach of duty of good faith

and fair dealing.

In Arizona, an implied covenant of good faith and fair

7On appeal, Debtor notes that lenders and servicers are now

prohibited under RESPA from continuing foreclosure proceedings

while a loan modification is under consideration (with some

exceptions). 12 C.F.R. 1024.41(g). Even if this regulation

would have applied to Debtor’s circumstances, it did not become

effective until January 10, 2014.

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dealing is part of every contract. Wells Fargo Bank v. Arizona

Laborers, Teamsters & Cement Masons Local No. 395 Pension Trust

Fund, 38 P.3d 12, 28 (Ariz. 2002) (en banc), as corrected

(Apr. 9, 2002). “The implied covenant of good faith and fair

dealing prohibits a party from doing anything to prevent other

parties to the contract from receiving the benefits and

entitlements of the agreement.” Id. A party may breach its duty

of good faith and fair dealing without breaching an express term

of the contract. Snyder v. HSBC Bank, USA, N.A., 913 F. Supp. 2d

755, 772 (D. Ariz. 2012).

“A party may bring an action in tort claiming damages for

breach of the implied covenant of good faith, but only where

there is a special relationship between the parties arising from

elements of public interest, adhesion, and fiduciary

responsibility.” Id. (citations and internal quotations

omitted). Such relationships include common carrier and

passenger, innkeeper and guest, physician and patient, attorney

and client, and insurer and insured. Rawlings v. Apodaca,

726 P.2d 565, 575 (Ariz. 1986) (en banc).

With respect to this cause of action, the Complaint alleged:

95. RAVAGO is, and at all times relevant to this

complaint, a citizen of the State of Arizona, one of

the States those Defendants made promises through the

NMSA to.

. . . .

97. Defendant BoA, as a signatory to the NMSA, has

placed the actions of servicing and owning mortgages

and foreclosures in the public interest, in that they

made a public promise to refrain from certain practices

with 49 Attorneys General suing BoA on behalf of the

people of those states.

98. Defendant NATIONSTAR AND NATIONSTAR, LLC have

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placed the actions of servicing and owning mortgages in

the public interest, as they have publically [sic]

declared that they would comply with the NMSA for any

loans transferred to it from BoA and are required to

comply with the NMSA as a result of RAVAGO’s loan

modification application status at the time of its

acquisition of RAVAGO’s DOT.

99. By ignoring the NMSA Article IV.B.6,

preventing “dual tracking” by continuing with the

Trustee’s sale after RAVAGO submitted her application

to BoA and NATIONSTAR and/or NATIONSTAR, LLC,

Defendants, and each of them, acted to impair the right

of RAVAGO to receive the benefits of a fair loan

modification application process.

100. Defendant BoA had the power to suspend and

cease foreclosure activities and did not do so while

processing RAVAGO’s loan modification application.

101. Defendant NATIONSTAR/NATIONSTAR, LLC had the

power to suspend and cease foreclosure activities and

did not do so while processing RAVAGO’s loan

modification application.

102. BoA and NATIONSTAR and/or NATIONSTAR

intentionally ignored the duties required by the NMSA,

and intentionally continued to pursue a Trustee’s sale

on PROPERTY.

103. BoA and NATIONSTAR and/or NATIONSTAR never

intended to offer RAVAGO a loan modification at any

time.

104. Defendants’ actions were done by evil hands

guided by evil minds.

105. As a result of Defendants, and each of their,

actions, RAVAGO suffered damages in an amount to be

proven at trial.

It is not clear from the Complaint what contract was at

issue. In her opening brief, Debtor clarified that the relevant

contract was the agreement to consider a loan modification. The

bankruptcy court dismissed this claim because Debtor did not

allege that Defendants had a contractual duty to offer or

consider a loan modification or that she had a right to a loan

modification pursuant to the deed of trust or other loan

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documents. On appeal, Debtor attempts to clarify her

allegations, stating that she did not claim she was entitled to a

loan modification, but that “the implied duty of good faith

entitled her to fair treatment when Defendants agreed to consider

her application.” However, in the absence of an enforceable

contract to offer or consider a loan modification, there can be

no implied duty of good faith and fair dealing. And because the

NMS did not create a private right of action for a failure to

stay foreclosure proceedings while a loan modification was being

considered, there is simply no legal basis for Debtor’s claim.

Moreover, to recover tort damages for a breach of the

implied covenant of good faith and fair dealing, there must be a

“special relationship” between the parties to the contract. The

Complaint does not allege facts supporting a plausible inference

that there was a special relationship “arising from elements of

public interest, adhesion, and fiduciary responsibility.” As a

matter of law, a lender and borrower are not fiduciaries (unless

the lender also provides financial advice upon which the borrower

relies). McAlister v. Citibank (Ariz.), a Subsidiary of

Citicorp, 829 P.2d 1253, 1258 (Ariz. Ct. App. 1992). Nor does a

difference in bargaining power alone establish a special

relationship for purposes of the implied convenant of good faith

and fair dealing. Id. 

The Complaint alleged that the public interest is implicated

because in the NMS the Defendants publicly promised that they

would not dual track. However, because the NMS does not create a

private right of action, it cannot form the basis for a “special

relationship” between a lender and an individual borrower for

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purposes of the implied covenant of good faith and fair dealing.

Debtor cites Quintana v. Bank of Am., No. CV 11-2301-PHX,

2014 WL 690906, at *6 (D. Ariz. Feb. 24, 2014), in which the

U.S. District Court for the District of Arizona ruled that a

plaintiff’s allegations that B of A represented that it would

consider her for a modification but did not was sufficient to

survive a motion to dismiss. However, in that case, the question

of whether a special relationship existed between the parties was

not raised by the parties or analyzed by the court. The court in

Quintana found the allegations of the complaint sufficient

because the note and deed of trust at issue allowed for

modifications, and plaintiff had alleged that B of A’s employees

represented to plaintiff that B of A would consider her

application for a loan modification, but B of A did not do so. 

Accordingly, Quintana does not help Debtor.

F. The bankruptcy court did not err in dismissing the seventh

cause of action for recording false documents under

ARS § 33-420.

Under ARS § 33-420(A), 

A person purporting to claim an interest in, or a lien

or encumbrance against, real property, who causes a

document asserting such claim to be recorded in the

office of the county recorder, knowing or having reason

to know that the document is forged, groundless,

contains a material misstatement or false claim or is

otherwise invalid is liable to the owner or beneficial

title holder of the real property for the sum of not

less than five thousand dollars, or for treble the

actual damages caused by the recording, whichever is

greater, and reasonable attorney fees and costs of the

action.

To state a claim under this provision, the plaintiff must

allege (1) that the document is forged, groundless, contains a

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misstatement or false claim or is otherwise invalid and (2) that

the misstatement or false claim was material to her. See Sitton

v. Deutsche Bank Nat'l Trust Co., 311 P.3d 237, 243 (Ariz. Ct.

App. 2013).

The Complaint alleged, with respect to this cause of action:

2. Defendants RECONTRUST, NATIONSTAR and/or

NATIONSTAR LLC, and each of them, knew that they had no

authority to record the Trustee’s Deed sequence number

20132070170 at the Pima County Recorder, as they had

not instituted the Trustee’s sale, had no authority

under the NMSA, nor had any authority under Arizona

agency law to complete the Trustee’s sale.

3. More than twenty days before the filing of this

complaint RAVAGO has requested several times in writing

that RECONTRUST, NATIONSTAR and/or NATIONSTAR LLC

correct its actions in allowing the Trustee’s Deed to

be effective by vacating its sale and the Trustee’s

Deed. Defendants refused to take corrective action.

4. As a result, RAVAGO has lost her home to a

false Trustee’s sale.

The bankruptcy court dismissed this claim because Debtor had

not alleged that the trustee’s sale was not conducted in

accordance with the procedures established under Arizona law for

trustee’s sales, ARS §§ 33-801 through 821. Under those

statutes, any defense or objection to the sale is waived unless

raised before the sale occurs. ARS § 33-811(C); BT Capital, LLC

v. TD Service Co. of Arizona, 275 P.3d 598, 600 (Ariz. 2012)

(en banc). ARS § 33-811(C) provides:

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. A copy of the order, the

application for the order and the complaint shall be

delivered to the trustee within twenty-four hours after

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entering the order.

On appeal, Debtor correctly points out that an action for

damages under ARS § 33-420 is not necessarily waived by failure

to object to the sale before it occurs. “[F]ailure to enjoin a

trustee’s sale does not waive claims for monetary awards under

§ 33–420(A). Section 33–811(C) contemplates the waiver of

‘defenses and objections to the sale’ only, and nothing in

§ 33–420(A) provides a defense to a sale or makes recovery

contingent upon a sale.” Sitton, 311 P.3d at 240. However,

where the plaintiff’s claim necessarily depends upon a

determination that the sale was improper, as it does here, the

trustee’s deed cannot be a false document. Glava v. JPMorgan

Chase Bank, N.A., No. 1 CA-CV 13-0719, 2015 WL 849685, at *3

(Ariz. Ct. App. Feb. 26, 2015); see also Madison v. Groseth,

279 P.3d 633, 638 (Ariz. Ct. App. 2012) (holding that tort claims

based on an improper trustee’s sale were waived under

ARS § 33-811(C)). The court in Glava distinguished Sitton:

Unlike Sitton, where the false recording claims were

based upon alleged misstatements and other defects in

documents that existed irrespective of the subsequent

trustee’s sale . . . , the complained of document in

this case only becomes false if the trustee's sale was

improper. Therefore, the trial court properly found

that claim had been waived.

Glava, 2015 WL 849685, at *3. 

As in Glava, Debtor’s underlying theory, as set forth in

paragraph 2 of the allegations relating to this cause of action,

and conceded in the bankruptcy court, is that the trustee’s sale

itself was invalid. Accordingly, the bankruptcy court did not

err in dismissing this claim.

Debtor argues that the bankruptcy court erred because it

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assumed that Debtor could have filed an objection to the sale

before it was scheduled. Debtor contends that she could not have

known that Nationstar was the beneficiary under the deed of trust

until the day before the sale when the assignment was recorded. 

The logic of this argument is difficult to discern and is

inconsistent with allegations that ReconTrust had noticed the

trustee’s sale in April 2013 and that Nationstar had notified

Debtor that B of A had transferred the loan to it effective

June 4, 2013. Debtor also argues that if B of A had initially

authorized the trustee’s sale, the sale was invalid because at

the time of the sale B of A had no interest in the Property. 

However, this argument is simply another attack on the validity

of the sale. As such, it has been waived. 

G. Debtor has waived any argument that the bankruptcy court

abused its discretion in dismissing the Complaint with

prejudice.

In her pleadings in the bankruptcy court, Debtor asked the

court to permit her to amend the Complaint if Defendants’ motion

to dismiss was granted. However, her counsel did not pursue that

argument at the hearing on the motion to dismiss, and the

bankruptcy court thereafter dismissed the second through seventh

causes of action with prejudice. Although the bankruptcy court

did not make specific findings as to its reasons for denying

leave to amend, it did find that there was no authority to

support the proposition that the NMS could be a basis for a duty

of care. Given that all of the dismissed causes of action were

premised upon alleged breaches of duties created by the NMS, it

appears that the bankruptcy court concluded that amendment would

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be futile.

On appeal, Debtor did not assign error to the bankruptcy

court’s denial of leave to amend or propound any argument as to

how the Complaint could be amended to state a cause of action. 

Therefore, the issue is waived. See Meehan v. County of Los

Angeles, 856 F.2d 102, 105 n.1 (9th Cir. 1988) (issue not briefed

by a party is deemed waived); see also Jodoin v. Samayoa

(In re Jodoin), 209 B.R. 132, 143 (9th Cir. BAP 1997) (Panel does

not normally consider matters not specifically and distinctly

argued in appellant’s opening brief). 

CONCLUSION

For the reasons set forth above, the bankruptcy court had

authority to enter a final judgment in the adversary proceeding

and did not err in dismissing Debtor’s second, third, sixth and

seventh causes of action with prejudice.

Accordingly, we AFFIRM.

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