King et al v. Bank of America NA et al

Filing 13

ORDER GRANTING defendant's motion to dismiss (doc. 8 ). FURTHER ORDERED DENYING plaintiffs' motion for hearing (doc. 11 ). Signed by Judge Frederick J Martone on 3/8/2012.(KMG)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Douglas King; Mandy King,
Plaintiffs,

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vs.

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Bank of America,
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Defendant.
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No. CV-11-2392-PHX-FJM
ORDER

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The court has before it defendant’s motion to dismiss (doc. 8), plaintiffs’ response

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(doc. 10), defendant’s reply (doc. 12), and plaintiffs’ motion for hearing (doc. 11). Because

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resolution of this motion would not be aided by a hearing, plaintiffs’ motion for hearing is

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denied (doc. 11).

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In 2005, plaintiffs borrowed $175,000 from defendant in order to purchase an

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undeveloped piece of real property in Payson, Arizona. They claim that since that time the

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value of the property securing the loan has diminished and is now worth far less than the

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amount they currently owe on the loan. Plaintiffs have remained current on their loan

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obligation.

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Plaintiffs filed this action asserting claims for (1) fraudulent misrepresentation, (2)

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unjust enrichment, and (3) quiet title, seeking an order compelling defendant to transfer legal

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title in the property to plaintiffs and a declaration that defendant has no title or interest in the

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property.

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In their claim for fraudulent misrepresentation, plaintiffs appear to claim that

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defendant failed to inform them that their loan would be sold and securitized, and that

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therefore they are entitled to have title in the property conveyed to them. This claims fails

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for several reasons. First, the claim for fraudulent misrepresentation fails to satisfy Rule

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9(b), Fed. R. Civ. P., which requires that fraud claims be pled with particularity. Second, as

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this court has previously noted, the securitization of mortgages is a permissible practice

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instituted by the federal government. See, e.g., Goodyke v. BNC Mortg., Inc., No. CV-09-

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0074-PHX-MHM, 2009 WL 2971086, at *2 (D. Ariz. Sept. 11, 2009) (rejecting plaintiff’s

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claim that the process of securitizing mortgages is fraudulent or illegal). Finally, plaintiffs

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expressly agreed in their deed of trust that the “Note or a partial interest in the Note (together

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with this Security Instrument) can be sold one or more times without prior notice to

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Borrower.” Compl., ex. A, ¶ 20. For all of these reasons, we conclude that plaintiffs have

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failed to state a claim for fraudulent misrepresentation.

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Plaintiffs also assert a claim for unjust enrichment. They appear to allege that their

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loan has already been “paid in full” by funds defendant may have received in the

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securitization process and therefore the defendant has been unjustly enriched. However,

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plaintiffs do not offer any support to show that they are entitled to an offset on their loan

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obligation because of this payment. Moreover, an action based on unjust enrichment is not

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available when an express, written contract, such as the deed of trust in the present case,

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governs the relationship of the parties. Brooks v. Valley Nat’l Bank, 113 Ariz. 169, 174, 548

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P.2d 1166, 1171 (1976). And finally, a person is not entitled to the remedy of unjust

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enrichment where he has received the benefit of the bargain–in this case the loan proceeds.

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Id. We conclude that plaintiffs have failed to state a claim for unjust enrichment.

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We also conclude that plaintiffs have failed to adequately state a quiet title claim. To

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quiet title, a plaintiff must allege that he possesses title to the property, that the defendant

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claims an adverse interest in the property, and that it would be inequitable to let the

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defendant’s interest stand. A.R.S. § 12-1102; Kennedy v. Morrow, 77 Ariz. 152, 156, 268
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P.2d 326, 329 (1954). When there is an unsatisfied balance due to a defendant-mortgagee,

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a party is not entitled to quiet title “until and unless he pays off such mortgage lien.” Farrell

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v. West, 57 Ariz. 490, 491, 114 P.2d 910, 911 (1941). Plaintiffs do not assert that they have

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paid off their mortgage and therefore quiet title is not an available remedy.

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IT IS ORDERED GRANTING defendant’s motion to dismiss (doc. 8).

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IT IS FURTHER ORDERED DENYING plaintiffs’ motion for hearing (doc. 11).

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DATED this 8th day of March, 2012.

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