Bridgeman v. CitiMortgage Incorporated et al

Filing 14

ORDER - IT IS ORDERED: 1. The motion to dismiss (Doc. 8) is granted as stated above. 2. The motion for attorney fees (Doc. 8) is denied. (See document for full details). Signed by Judge David G Campbell on 9/1/11.(LAD)

1

WO

2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8
9

Curtis Bridgeman,
Plaintiff,

10
11
12

No. CV11-1106-PHX DGC
ORDER

vs.
CitiMortgage Inc., et al.,
Defendants.

13
14
15

All defendants except Provident Funding Associates LP move to dismiss. Doc. 8,

16

The Court will refer to moving defendants as Defendants or Moving Defendants for

17

purposes of this order. Plaintiff opposes through counsel (Doc. 11), and Defendants have

18

filed a reply (Doc. 13). The Court will grant the motion as stated below.

19

I.

Background.

20

This civil action challenging foreclosure, filed by Plaintiff in Arizona Superior

21

Court for Maricopa County (Doc. 1-2), was removed to this Court by Defendants on

22

grounds of diversity jurisdiction (Doc. 1 at 3). Although Defendant Shelley Boek is a

23

resident of Arizona, Defendants assert that she was fraudulently joined. Id. at 4-6.

24

Defendant Provident Funding Associates LP did not join in the removal, but Plaintiff did

25

not seek remand on this ground.

26

The complaint pleads ten counts: (1) declaratory judgment; (2) injunctive relief;

27

(3) breach of the covenant of good faith and fair dealing, alleged against Defendants

28

1

CitiMortgage, CitiGroup, and MERS; (4) breach of contract, alleged against Defendant

2

CitiMortgage and an unnamed trustee; (5) breach of contract, violation of statute, and

3

lack of agency authority, alleged against all defendants; (6) breach of contract and lack of

4

authority, alleged against MERS; (7) breach of contract, alleged against all defendants;

5

(8) wrongful foreclosure, alleged against MERS, CitiMortgage, and an unnamed trustee;

6

(9) challenge to A.R.S. § 33-811(B) as violating the Arizona Constitution’s separation of

7

powers doctrine, alleged against all defendants; and (10) breach of contract, alleged

8

against all defendants. Doc. 1-2.

9

II.

Discussion.

10

A.

Summary of Defendants’ Arguments.

11

Defendants move to dismiss on several grounds, some overarching and some

12

specific. Defendants argue that the complaint violates Rule 8’s fair notice requirement

13

because it is disorganized, and also argue that all claims are barred by A.R.S. § 33-

14

811(C). Doc. 8 at 4-6. Defendants further assert that all claims must be dismissed

15

because: (1) Defendants are not required to present the note before they may proceed

16

with a trustee sale; (2) securitization was permitted by the deed of trust and, in any case,

17

does not affect Plaintiff’s obligations; (3) MERS is a valid beneficiary under the deed of

18

trust; and (4) the consent order alleged in Count 3 does not create a private right of

19

action. Id. at 7-11. In the alternative, Defendants argue that the claims against Citigroup

20

and MERSCORP should be dismissed because parent companies are not liable for

21

subsidiaries’ acts absent involvement, and that Shelley Boek must be dismissed as a party

22

because no facts were alleged showing Boek is personally liable under an alleged cause

23

of action. Id. at 11-12.

24

Defendants further assert that specific counts fail because: (1) Count 3 has not

25

alleged Plaintiff was deprived of a benefit flowing from the note and deed of trust;

26

(2) Counts 4, 5, 6, 7 and 10 fail because no breach has been alleged, no damages have

27

been alleged, and the foreclosure sale has not yet occurred; (3) Count 5 fails because

28
‐ 2 ‐ 

1

MERS assigned its rights as beneficiary to CitiMortgage, CitiMortgage was the only

2

beneficiary, and CitiMortgage signed the substitution of trustee; (4) Counts 8 and 9 are

3

not ripe because the foreclosure sale has not yet occurred; and (5) Counts 1 and 2 fail

4

because Plaintiff lacks standing to obtain equitable remedies of declaratory and injunctive

5

relief, and declaratory relief is not proper where the complaint fails to state a claim. Id. at

6

13-17.

7
8

B.

Plaintiff’s Arguments, and Discussion.
1.

Preliminary Matters.

9

Plaintiff responds seeking leave to amend, but does not attach a copy of the

10

proposed amended complaint as required by Local Rule 15.1. Leave to amend will

11

therefore be denied without prejudice, and Plaintiff may file a proper motion for leave to

12

amend in due course. The Court will rule on such motion once it has been fully briefed.

13

Plaintiff fails to address the argument that Shelley Boek was fraudulently joined to

14

avoid federal diversity jurisdiction. The Court will therefore dismiss the claims against

15

Ms. Boek without prejudice and retain diversity jurisdiction.

16

2.

In re Veal.

17

Plaintiff asserts as a general matter that In re Veal, 450 B.R. 897 (9th Cir. BAP

18

2011), recently held that the Uniform Commercial Code (“UCC”) applies to non-judicial

19

foreclosures, that the deed of trust follows the note, and that the right to enforce the note

20

is critical to foreclosure. Doc. 11 at 2-3. Plaintiff reads Veal out of context. Veal

21

concerned the issues of standing to assert proofs of claim in a bankruptcy proceeding and

22

standing to seek leave from a bankruptcy stay. 450 B.R. and 902. The burden in each

23

case was on the creditor and movant, respectively, and the court held the burden was not

24

met. Id. at 922. The court assumed without deciding, as a result of assumptions made by

25

the parties, that the UCC governed the note at issue. Id. at 908-09 (“Here, the parties

26

assume that the Uniform Commercial Code (‘UCC’) applies to the note.”). Moreover,

27

although Arizona law governed the analysis of real parties in interest as to the note, id. at

28
‐ 3 ‐ 

1

920-21, Illinois law governed the analysis on mortgage enforcement, id. at 916. (The real

2

property at issue in Veal was located in Illinois. 450 B.R. at 902.).

3

By contrast, this case involves non-judicial foreclosure of property under the

4

power-of-sale clause in a deed of trust governed by Arizona law. Plaintiff fails to explain

5

why this Court should consider Illinois law when adjudicating rights under an Arizona

6

deed of trust, or why Veal is controlling in this case.

7

distinguishable, the Court concludes that it does not control.

8

regarding the enforceability of the note as related to foreclosure (Doc. 11 at 3-7, 11-12) is

9

equally inapposite because he has not shown foreclosure was attempted or made here

10

pursuant to the note rather than the deed of trust. Although the security is incident to the

11

debt under Arizona law, Plaintiff conflates the concepts of “note” and “debt,” which are

12

distinct under Arizona law. Silving v. Wells Fargo Bank, NA, ___ F. Supp. 2d ___, 2011

13

WL 2669246, *9 (D. Ariz. July 7, 2011).
3.

14

Because Veal is materially
Plaintiff’s response

Remaining Matters.

15

Plaintiff also argues that CitiMortgage cannot foreclose on the deed of trust

16

because it does not appear in the chain of title and the original lender did not record the

17

substitution of trustee.

18

Defendants’ argument regarding MERS’s ability to assign the original lender’s interest to

19

CitiMortgage (e.g., Doc. 8 at 9-10), and Plaintiff’s citations to non-Arizona law are

20

unavailing (Doc. 11 at 13-14).

Doc. 11 at 8-11.

Plaintiff fails to persuasively address

21

Plaintiff fails to address the other arguments made by Defendants. Although the

22

Court does not conclude that all of Defendants’ arguments are sound law, Plaintiff

23

waived opposition for purposes of this motion on arguments to which responses were not

24

given.

25

III.

Conclusion.

26

For the reasons above, the claims against Moving Defendants shall be dismissed

27

without prejudice. The motion for attorney fees is denied because Defendants have not

28
‐ 4 ‐ 

1

yet shown they are the successful parties in the contract claims, and have not argued why

2

the Court should exercise its discretion to award fees under A.R.S. § 12-341.01.

3

IT IS ORDERED:

4

1.

The motion to dismiss (Doc. 8) is granted as stated above.

5

2.

The motion for attorney fees (Doc. 8) is denied.

6

Dated this 1st day of September, 2011.

7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
‐ 5 ‐