Flournoy et al v. BAC Home Loans Servicing LP et al

Filing 12

ORDER granting 10 Motion to Dismiss Amended Complaint. IT IS FURTHER ORDERED that the Clerk enter judgment dismissing this case with prejudice. The Clerk shall terminate this action. Signed by Judge Neil V Wake on 9/28/11. (See attached PDF for complete information.)(KAH)

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1 WO 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE DISTRICT OF ARIZONA 9 10 11 Marina Flournoy and Jason Flournoy, Plaintiffs, 12 13 ORDER vs. 14 No. CV-11-01234-PHX-NVW BAC Home Loan Servicing LP, et al., Defendants. 15 16 17 18 Before the Court is Defendants’ “Motion to Dismiss Amended Complaint” 19 (Doc. 10). Defendants filed their motion on August 22, 2011. This District’s local rules 20 required Plaintiffs to respond by September 8, 2011. LRCiv 7.2(c); see also Fed. R. Civ. 21 P. 6(d). 22 Defendants’ motion. LRCiv 7.2(i). However, as explained below, the Court will grant 23 Defendants’ motion on its merits. 24 I. Plaintiffs filed no response. On this basis alone, the Court could grant BACKGROUND 25 Plaintiffs Marina and Jason Flournoy owned a home in Laveen, Arizona. The loan 26 was funded by non-party Stone Creek Funding Corporation. As with many recent home 27 loans, Defendant MERS was the nominee named on recorded documents. Eventually, 28 1 the note ended up in the hands of Defendant Bank of New York Mellon. Defendants 2 BAC Home Loan Servicing and Bank of America acted as servicer. 3 For unspecified reasons, the Flournoys fell behind on their house payments. 4 Defendant Recontrust was appointed as trustee and took the necessary steps to sell the 5 Flournoys’ home through a trustee’s sale. The record does not make clear whether the 6 Flournoys have since moved out of, or been evicted from, the home. The Flournoys filed a complaint with this Court on June 23, 2011. Defendants 7 8 then moved to dismiss. 9 permitted by Fed. R. Civ. P. 15(a)(1)(B), and Defendants have again moved to dismiss. 10 II. The Flournoys responded with an amended complaint, as LEGAL STANDARD 11 To state a claim for relief under Fed. R. Civ. P. 8(a), a plaintiff must make “‘a 12 short and plain statement of the claim showing that the pleader is entitled to relief,’ in 13 order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon 14 which it rests.’” 15 omitted). This “short and plain statement” must also be “plausible on its face.” Ashcroft 16 v. Iqbal, 129 S. Ct. 1937, 1949 (2009). A claim is plausible if it contains “[f]actual 17 allegations [sufficient] to raise a right to relief above the speculative level,” Twombly, 18 550 U.S. at 555, and to permit a reasonable inference that the defendant is liable for the 19 conduct alleged, Iqbal, 129 S. Ct. at 1949. “Determining whether a complaint states a 20 plausible claim for relief . . . [is] a context-specific task that requires the reviewing court 21 to draw on its judicial experience and common sense.” Id. at 1950. A proper complaint 22 needs no “formulaic recitation of the elements of a cause of action,” see Twombly, 550 23 U.S. at 555, but the plaintiff must at least “allege sufficient facts to state the elements of 24 [the relevant] claim,” Johnson v. Riverside Healthcare Sys., LP, 534 F.3d 1116, 1122 (9th 25 Cir. 2008). Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations 26 If a plaintiff alleges a fraud-based cause of action, Fed. R. Civ. P. 9(b) requires the 27 plaintiff to “set forth more than the neutral facts necessary to identify the transaction. 28 The plaintiff must set forth what is false or misleading about a statement, and why it is -2  1 false.” In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994) (en banc). The 2 plaintiff can usually satisfy this requirement by alleging the identity of the person who 3 made the misrepresentation; the time, place, content, and manner of the 4 misrepresentation; the persons who heard, read, or otherwise received the 5 misrepresentation; and the injury caused by reliance on the misrepresentation. 2 James 6 Wm. Moore, Moore’s Federal Practice § 9.03[1][b] (3d ed. 2010). 7 Specifically with regard to allegations of identity, “there is no absolute 8 requirement that where several defendants are sued in connection with an alleged 9 fraudulent scheme, the complaint must identify false statements made by each and every 10 defendant.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007). However, 11 Rule 9(b) does not allow a complaint to merely lump multiple defendants together but requires plaintiffs to differentiate their allegations when suing more than one defendant and inform each defendant separately of the allegations surrounding his alleged participation in the fraud. . . . [A] plaintiff must, at a minimum, identify the role of each defendant in the alleged fraudulent scheme. 12 13 14 15 Id. at 764–65 (alterations incorporated; citations and internal quotation marks omitted). 16 In evaluating a motion to dismiss, courts accept all of the plaintiff’s plausible 17 factual allegations as true and construe the pleadings in a light most favorable to the 18 plaintiff. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). 19 III. ANALYSIS 20 A. The Complaint Generally Fails to Satisfy Rules 8(a) and 9(b) 21 The Flournoys’ complaint is an awkward collage of accusations against the home 22 loan industry. Such disjointed and rambling claims — many asserted against non-parties 23 — do not satisfy Rule 8(a)’s “fair notice” requirement, and the amended complaint fails 24 on that basis alone. To the extent the Flournoys intended to accuse Defendants of fraud 25 or fraud-like wrongdoing, the complaint a fortiori does not satisfy the stricter Rule 9(b) 26 standard. The amended complaint will therefore be dismissed. 27 28 -3  1 B. 2 Each of the Flournoys’ discrete causes of action also fails on its own merits, as 3 The Flournoys’ Individual Causes of Action Fail As a Matter of Law discussed below. 4 1. First Cause of Action: “Estoppel/Declaratory Judgment” 5 The Flournoys title their first cause of action “estoppel/declaratory judgment,” but 6 the cause of action is really a claim that Bank of America, as servicer, has some sort of 7 duty to disclose to the Flournoys the entities for whom it is acting as agent. Bank of 8 America’s failure to do so, the Flournoys argue, should estop Bank of America from 9 foreclosing. 10 Bank of America did not foreclose on the Flournoys’ home — the trustee did, on 11 behalf of the beneficiary. 12 something that already happened. But even construing the Flournoys’ request as general 13 one to unwind the trustee’s sale, their claim fails. No legal principle requires the servicer 14 to disclose the entity for whom it acts as agent on pain of losing the authority to 15 foreclose. Accordingly, the Flournoys’ first cause of action fails. 16 2. And Bank of America cannot be estopped from doing Second Cause of Action: Untitled 17 The Flournoys give no name to their second cause of action, which generally 18 accuses all Defendants of lacking authority to foreclose. The Flournoys do not clearly 19 state how the Defendants lost (or failed to acquire) the proper authority, but the 20 Flournoys imply that the securitization process and the MERS system were involved. 21 They also appear to assert the “show me the note” theory. 22 “Show me the note” states no claim in Arizona, see Mansour v. Cal-Western 23 Reconveyance Corp., 618 F. Supp. 2d 1178, 1181 (D. Ariz. 2009), nor does the MERS 24 arrangement or securitization necessarily invalidate any interests or authority, see 25 generally Cervantes v. Countrywide Home Loans, Inc., __ F.3d __, 2011 WL 3911031 26 (9th Cir. Sept. 7, 2011). Therefore, the Flournoys’ second cause of action fails. 27 28 -4  1 3. Third Cause of Action: Quiet Title 2 The Flournoys next ask the Court to quiet title in their former home, but quiet title 3 is not an available remedy these circumstances. If the Flournoys want to quiet title in 4 their home, they must pay off the loan they used to buy the home. Eason v. IndyMac 5 Bank, FSB, CV09-1423-PHX-JAT, 2010 WL 1962309, at *2 (D. Ariz. May 14, 2010); 6 Farrell v. West, 57 Ariz. 490, 491, 114 P.2d 910, 911 (1941). Their Complaint contains 7 no allegation that they are prepared to pay off the loan. The Court will therefore dismiss 8 the quiet title cause of action. 9 4. Fourth Cause of Action: Accounting 10 The Flournoys ask for an “accounting,” which they interpret as a full record of 11 “the illegal transfers of their promissory note and the Securitization of their promissory 12 note.” (Doc. 4 at 31.) The Flournoys admit receiving “[u]nsubstantiated computer 13 records” from Bank of America. “But,” they say, “whether prior payments have being 14 [sic] allocated and transmitted properly to the Creditor or whether third parties made 15 some payments either . . . remain obscured by these defendants[.]” (Id. at 32.) 16 Actions for an accounting are usually reserved for situations in which one party 17 entrusts property to another in a fiduciary relationship. Dooley v. O’Brien, 226 Ariz. 149, 18 ¶ 21, 244 P.3d 586, 591–92 (Ct. App. 2010). Absent a special agreement, a debtor- 19 creditor relationship in Arizona is not a fiduciary relationship. See McAlister v. Citibank, 20 171 Ariz. 207, 212, 829 P.2d 1253, 1258 (Ct. App. 1992) (bank owed no fiduciary duty 21 to borrower); cf. Stewart v. Phoenix Nat’l Bank, 49 Ariz. 34, 44, 64 P.2d 101, 106 (1937) 22 (special relationship between debtor and creditor existed only because bank officers and 23 directors had been debtor’s financial advisors for 23 years). “There is no statutory 24 requirement that the [homeowner/borrower] be supplied with a complete accounting,” 25 Kelly v. NationsBanc Mortg. Corp., 199 Ariz. 284, 286–87, 17 P.3d 790, 792–93 (Ct. 26 App. 2000), nor is there any Arizona authority otherwise establishing anything like a 27 right to an accounting in these circumstances. 28 entitled to an accounting. -5  Accordingly, the Flournoys are not 1 If some third party has, in fact, made payments of the Flournoys’ loan, they might 2 have a valid claim, but this allegation is not “plausible on its face” and therefore fails the 3 requirements of Rule 8(a). According to judicial experience and common sense, see 4 Iqbal, 129 S. Ct. at 1950, third parties rarely pay off a private borrower’s mortgage debt 5 gratuitously. And if the Flournoys here refer to the securitization process, they mistake 6 its effect. A third party may have purchased the Flournoy note from the original lender, 7 but that does not excuse the Flournoys from making payments on the note. It simply 8 changes the party to whom those payments are owed. The fact that a servicer handles 9 such payments makes no difference. The Flournoys therefore state no claim by asserting 10 that a third party has paid off their loan. 5. 11 Fifth Cause of Action: “Refund Fees and Costs” 12 The Flournoys’ final cause of action is actually an accusation that Defendants have 13 violated Fed. R. Civ. P. 11 by representing to this Court that they possessed authority to 14 foreclose. 15 reimbursing unspecified fees and costs. Therefore, the Flournoys argue, Defendants should be sanctioned by 16 This is not an appropriate method of presenting a Rule 11 objection, and no basis 17 for sanctions appears on this record in any event. Thus, the Flournoys’ fifth cause of 18 action states no claim. 19 C. Leave to Amend 20 Although leave to amend should be freely given “when justice so requires,” Fed. 21 R. Civ. P. 15(a)(2), the Flournoys do not merit leave to amend at this stage. Leave to 22 amend need not be granted where there exist circumstances “such as undue delay, bad 23 faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by 24 amendments previously allowed, undue prejudice to the opposing party by virtue of 25 allowance of the amendment, [and] futility of amendment.” Foman v. Davis, 371 U.S. 26 178, 182 (1962). Here, the Flournoys’ refusal to defend against Defendants’ motion to 27 dismiss displays a dilatory motive, and is effectively the same as failing to cure 28 -6  1 deficiencies in a previously complaint. Accordingly, the Flournoys will not receive leave 2 to amend. 3 4 5 IT IS THEREFORE ORDERED that Defendants’ “Motion to Dismiss Amended Complaint” (Doc. 10) is GRANTED. IT IS FURTHER ORDERED that the Clerk enter judgment dismissing this case 6 with prejudice. The Clerk shall terminate this action. 7 Dated this 28th day of September, 2011. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -7 

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