Broerman et al v. California Reconveyance Company et al

Filing 22

ORDER granting Defendants' 19 Motion to Dismiss; denying Plaintiffs' 20 Motion to Amend; we will allow plaintiffs another opportunity to file a motion to amend their complaint in order to assert a claim upon which relief can be granted; Plaintiffs' motion to amend the complaint must be filed no later than 14 days after the filing of this order, or this action will be dismissed with prejudice. Signed by Judge Frederick J Martone on 3/8/12.(REW)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Plaintiffs,
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vs.
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California Reconveyance Company, et al,)
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Defendants.
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Kevin Karl Broerman, et al.,

No. CV-11-1819-PHX-FJM
ORDER

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Before the court is defendants’ motion to dismiss the amended complaint (doc. 19),
plaintiffs’ response and motion to amend (doc. 20), and defendants’ reply (doc. 21).

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We first reject plaintiffs’ suggestion that this motion to dismiss should be converted

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to a motion for summary judgment under Rule 12(d), Fed. R. Civ. P., because defendants

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referred to public records in their motion to dismiss. In considering a motion to dismiss, we

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may take judicial notice of matters of public record outside the pleadings, MGIC Indem.

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Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986), as well as those documents referred

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to in the complaint, whose authenticity no party questions. United States v. Corinthian

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Colleges, 655 F.3d 984, 999 (9th Cir. 2011).

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We also note that plaintiffs’ response to the motion to dismiss was filed 7 days late

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without explanation or request for an extension of time. Plaintiffs are admonished that they

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must comply with the federal and local rules of civil procedure, notwithstanding their pro se

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status.

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On November 23, 2005, plaintiffs borrowed $491,603 from Pulte Mortgage LLC to

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purchase real estate located in Anthem, Arizona. A deed of trust secures payment of the

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loan. Motion, ex. A. The deed of trust names MERS as beneficiary and as nominee for Pulte.

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After the closing, the loan was transferred to the Real Estate Mortgage Investment Conduit

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Washington Mutual Mortgage Pass-Through Certificates, and Washington Mutual Bank

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(“WaMu”) became the loan servicer. Motion, ex. B. Subsequently, JPMorgan Chase Bank

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acquired certain assets and assumed certain liabilities of WaMu from the Federal Deposit

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Insurance Corporation acting as receiver, at which time Chase became the loan servicer as

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successor in interest to WaMu.

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At an undisclosed time, Chase initiated foreclosure proceedings. On June 14, 2011,

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MERS assigned its beneficial interest in the deed of trust to U.S. Bank, and U.S. Bank filed

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a Notice of Substitution of Trustee, appointing CRC as the successor trustee (“Notice of

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Substitution”). Motion, ex. D. On the same day, defendant California Reconveyance

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Company (“CRC”) recorded a Notice of Trustee’s Sale. Thereafter, on August 12, 2011,

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CRC recorded a Cancellation of Notice of Sale, which cancelled the sale notice. It appears

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that, to date, CRC has not recorded a new Notice of Trustee’s Sale.

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Plaintiffs assert one count in their amended complaint–a claim to quiet title. They

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allege that CRC improperly initiated non-judicial foreclosure proceedings because it has not

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established that it has “the requisite legal standing to institute foreclosure,” has “failed to

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provide evidence or even take the position that it is the holder of all rights under the Note,”

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has “failed to demonstrate that it . . . is the party with the true ownership interest in the

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Mortgage,” and has not “demonstrated that it has suffered actual or threatened injury as a

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consequence of any default.” Amended Complaint ¶¶ 7-10.

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Plaintiffs’ theory that CRC, or the other defendants, must demonstrate that they hold

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rights under the Note before initiating foreclosure proceedings has been consistently rejected

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by Arizona courts. See, e.g., Hogan v. Washington Mut. Bank, 227 Ariz. 561, ___, 261 P.3d

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445, 448 (Ct. App. 2011) (rejecting the “show me the note” theory and holding that
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Arizona’s non-judicial foreclosure statute does not require presentation of the original note

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before commencing foreclosure proceedings).

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Moreover, to quiet title, a plaintiff must allege that he possesses title to the subject

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property, that the defendant claims an interest adverse to his, and that it would be inequitable

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to let defendant’s interest stand. It is well established that quiet title is not a remedy available

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to a plaintiff until the underlying debt is paid or tendered. Farrell v. West, 57 Ariz. 490, 491,

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114 P.2d 910, 911 (1941). Plaintiffs do not allege that they have tendered, or are able to

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tender, the outstanding balance on the Loan. Therefore, the remedy of quiet title is not

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available, and plaintiffs’ amended complaint fails to state a claim upon which relief can be

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granted.

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Plaintiffs request that in the event we find pleading deficiencies that they be allowed

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to file an amended complaint. But plaintiffs wholly fail to comply with LRCiv 15.1, which

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requires, among other things, that a party seeking to amend a pleading attach a copy of the

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proposed amended pleading as an exhibit to the motion. Therefore, the motion to amend is

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denied (doc. 20).

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IT IS ORDERED GRANTING defendants’ motion to dismiss (doc. 19).

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IT IS FURTHER ORDERED DENYING plaintiffs’ motion to amend (doc. 20).

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Plaintiffs have already filed an amended complaint, which continues to be deficient.

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Nevertheless, we will allow plaintiffs another opportunity to file a motion to amend their

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complaint in order to assert a claim upon which relief can be granted. We caution plaintiffs

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that any filings with this court must comply with Rule 11(b), Fed. R. Civ. P., or risk being

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subject to sanctions. Plaintiffs’ motion to amend the complaint must be filed no later than

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14 days after the filing of this order, or this action will be dismissed with prejudice.

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DATED this 8th day of March, 2012.

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