Adrian et al v. Federal National Mortgage Association et al

Filing 20

ORDER granting 6 MTC Financial Inc's Motion to Dismiss Party; granting 9 Fannie Mae's Motion to Dismiss for Failure to State a Claim. Signed by Judge Frederick J Martone on 3/29/12.(DMT)

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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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Federal National Mortgage Association;)
MTC Financial Inc. dba Trustee Corps, )
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Defendants.
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No. CV 12-00189-PHX-FJM

Anthony Adrian and Maria M. Adrian,

ORDER

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We have before us defendant MTC Financial Inc.'s motion to dismiss (doc. 6), to

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which plaintiffs did not respond. We also have before us defendant Federal National

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Mortgage Association's ("Fannie Mae") motion to dismiss with prejudice pursuant to Rule

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12(b)(6) (doc. 9), plaintiffs' response (doc. 13), and defendant's reply (doc. 15).

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I

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Under LRCiv 7.2(i), "non-compliance may be deemed a consent to the denial or

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granting of the motion and the Court may dispose of the motion summarily." Because

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plaintiffs failed to respond to defendant MTC Financial Inc.'s motion to dismiss, we dispose

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of this motion summarily and grant MTC Financial Inc.'s motion.

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II

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Plaintiffs' first amended complaint alleges wrongful foreclosure, intentional infliction

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of emotional distress, and fraud. "Arizona state courts have not yet recognized a wrongful

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foreclosure cause of action." Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034,

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1043 (9th Cir. 2011). In states that do recognize such claims, they are typically "premised

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on allegations that the borrower was not in default, or on procedural issues that resulted in

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damages to the borrower." Id.; see also Schrock v. Fed. Nat. Mortg. Ass'n, No. CV 11-0567-

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PHX-JAT, 2011 WL 3348227, at *8 (D. Ariz. Aug. 3, 2011) (plaintiffs stated a claim under

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Georgia and Nevada standards because, inter alia, they claimed they made timely payments

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on a modified loan and so were not in default before sale); Herring v. Countrywide Home

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Loans, Inc., No. CV 06-2622-PHX-PGR, 2007 WL 2051394, at *6 (D. Ariz. July 13, 2007)

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(granting summary judgment to plaintiff who cured default before trustee's sale). However,

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the plaintiffs do not dispute that they defaulted on their mortgage payments before their

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house was sold. As a result, even if we were to recognize such a claim, plaintiffs have not

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stated a claim for wrongful foreclosure.
III

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Plaintiffs appear to allege that breach of the covenant of good faith and fair dealing

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and promissory estoppel are bases for the tort of wrongful foreclosure, rather than separate

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causes of action. If they were meant to be claims on their own, plaintiffs fail to state a claim

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upon which relief can be granted.

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The duty of good faith and fair dealing arises out of a contract. Without a contract,

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parties are not subject to this duty. Plaintiffs' complaint is full of vague and conclusory

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allegations, fails to allege which contract forms the basis of this claim, and fails to allege any

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facts related to defendant Fannie Mae. The specific actions purportedly underlying this claim

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are simply attributed to Defendants. And in plaintiffs' response, they claim to "have

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established in their complaint that Defendant OneWest Bank breached this implied

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covenant." (Doc. 13 at 8). There is no allegation that defendant Fannie Mae breached its

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covenant of good faith and fair dealing. Simply acquiring the property at the trustee's sale

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does not make Fannie Mae automatically liable for any breach committed by OneWest.

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Plaintiffs' allegations relating to promissory estoppel suffer from the same flaw.

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Defendant OneWest is specifically named in this subpart but Fannie Mae never is. (Doc. 17
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¶¶ 49-53). Acquiring the property does not make Fannie Mae liable for a promise made by

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OneWest. Without a promise, plaintiffs have no claim for promissory estoppel against

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Fannie Mae.

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IV

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Plaintiffs' next claim for relief alleges intentional infliction of emotional distress. To

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prevail on this claim, the conduct complained of must be "extreme and outrageous." Watts

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v. Golden Age Nursing Home, 127 Ariz. 255, 258, 619 P.2d 1032, 1035 (1980). Liability

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only attaches to conduct "so outrageous in character, and so extreme in degree, as to go

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beyond all possible bounds of decency, and to be regarded as atrocious, and utterly

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intolerable in a civilized community." Id. (quoting Restatement (Second) of Torts § 46 cmt.

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d (1965)). On a motion to dismiss, we may determine whether the alleged actions rise to this

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level. Cervantes, 656 F.3d at 1046. Once again, plaintiffs' complaint fails to allege any

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specific actions by defendant Fannie Mae which support this claim. The conduct complained

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of here – delay of a loan modification and forcing plaintiffs to default to begin the

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modification process – does not rise to the level of extreme and outrageous. See id.

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(targeting vulnerable homeowner plaintiffs for loans that defendants knew plaintiffs could

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not afford was not extreme and outrageous).
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Finally, plaintiffs contend that defendants committed fraud. This claim suffers from

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the deficiency noted in the previous three claims: no allegations are made regarding

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defendant Fannie Mae. Additionally, a claim for fraud must be pled with particularity. Rule

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9(b), Fed. R. Civ. P. Particularity means "the pleader must state the time, place, and specific

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content of the false representations as well as the identities of the parties to the

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misrepresentation." Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401

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(9th Cir. 1986). Plaintiffs' complaint does not contain any particular allegations regarding

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the circumstances of the alleged fraud.

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VI
IT IS ORDERED GRANTING defendant MTC Financial Inc.'s motion to dismiss
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(doc. 6).
IT IS FURTHER ORDERED GRANTING defendant Fannie Mae's motion to
dismiss (doc. 9).
DATED this 29th day of March, 2012.

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