Daghlan v. TBI Mortgage Company et al

Filing 11

ORDER: 6 Defendants' Motion to Dismiss Plaintiffs Complaint is granted. FURTHER ORDERED that Plaintiff may file an amended complaint by 09/07/12. The Clerk is directed to terminate this case without further order if Plaintiff does not file an amended complaint by 09/07/12. See order for complete details. Signed by Judge Neil V. Wake on 8/22/12. (NKS)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Abraham Daghlan,

No. CV 12-01415-PHX-NVW
Plaintiff,

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vs.

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ORDER

TBI Mortgage Co., RBSGC Mortgage Loan
Trust Series 2007-B; Mortgage Electronic
Registration Systems Inc.; and Does 11000,

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Defendants.

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Before the Court is Defendants’ Motion to Dismiss Plaintiff’s Complaint (Doc. 6),

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which the Court will grant for the reasons stated below.

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I.

BACKGROUND

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On October 17, 2006, Plaintiff executed a promissory note and deed of trust in the

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amount of $764,150, secured by property located at 31904 North 19th Avenue, Phoenix,

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Arizona 85085. At some point, Plaintiff defaulted on the note, and a Notice of Trustee’s

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Sale of the property was recorded on April 2, 2012. The trustee’s sale of the property

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was scheduled for July 6, 2012.

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Plaintiff filed his original complaint in Maricopa County Superior Court on May

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31, 2012 (Doc. 1-1). Plaintiff’s original complaint listed two claims for relief: (1) Quiet

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Title A.R.S. § 12-1101, and (2) Recordings Containing False Statements in Violation of

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A.R.S. § 33-420 (id.). Defendants removed the action to this Court on June 29, 2012

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(Doc. 1).

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II.

LEGAL STANDARD

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On a motion to dismiss under Fed. R. Civ. P. 12(b)(6), all plausible allegations of

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material fact are assumed to be true and construed in the light most favorable to the

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nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Dismissal

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under Rule 12(b)(6) can be based on “the lack of a cognizable legal theory” or “the

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absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica

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Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). To avoid dismissal, a complaint need

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contain only “enough facts to state a claim for relief that is plausible on its face.” Bell

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Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The principle that a court accepts as

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true all of the allegations in a complaint does not apply to legal conclusions or conclusory

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factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Threadbare recitals of

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the elements of a cause of action, supported by mere conclusory statements, do not

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suffice.” Id. “A claim has facial plausibility when the plaintiff pleads factual content that

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allows the court to draw the reasonable inference that the defendant is liable for the

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misconduct alleged.” Id. “The plausibility standard is not akin to a ‘probability

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requirement,’ but it asks for more than a sheer possibility that a defendant has acted

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unlawfully.” Id. To show that the plaintiff is entitled to relief, the complaint must permit

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the court to infer more than the mere possibility of misconduct. Id.

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III.

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ANALYSIS
Plaintiff’s complaint lists three claims for relief: (1)

These claims are all

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premised on the discredited “show me the note theory” that has been repeatedly rejected

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by this Court and the Arizona Supreme Court. See Hogan v. Washington Mutual Bank,

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N.A., --- Ariz. ---, 277 P.3d 781, 782, 783 (2012) (holding “Arizona’s non-judicial

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foreclosure statutes do not require the beneficiary to prove its authority or ‘show the note’

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before the trustee may commence a non-judicial foreclosure” and noting Arizona’s trust

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deed statutes do not require compliance with the UCC before a trustee commences a non-2 

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judicial foreclosure); see also Geddes v. HSBC Bank USA, No. CV 12–0667–PHX–FJM,

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2012 WL 1977277, *1 (D. Ariz. 2012) (observing that Hogan confirmed what had long

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been the holding of the U.S. District Court for the District of Arizona and the Arizona

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Court of Appeals). Any claim raised by Plaintiff which relies upon the show me the note

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theory is unavailing.

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In addition, Plaintiff’s claim to quiet title to the subject property also fails. To

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state a quiet title claim, a plaintiff must allege that he has satisfied his loan obligation and

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is accordingly entitled to the release of the deed of trust. See Farrell v. West, 57 Ariz.

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490, 491, 114 P.2d 910, 911 (1941) (noting that where there is “an unsatisfied balance

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due to a defendant-mortgagee, or his assignee, the court will not quiet the title until and

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unless [plaintiff] pays off such mortgage lien”). Here, Plaintiff has not indicated that he

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is able or willing to tender the full amount owed on the loan or that he is otherwise

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equitably entitled to quiet title relief. This alone warrants dismissal of Plaintiff’s claim

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for quiet title. Plaintiff’s arguments related to the show me the note theory do not

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otherwise provide a basis for the Court to grant Plaintiff quiet title to the subject property.

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Count One will therefore be dismissed.

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Plaintiff has also failed to state a claim for relief under A.R.S. § 33–420. A.R.S. §

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33–420 prohibits a party from recording “an interest in, or a lien or encumbrance against,

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real property” when that party “knows[s] or ha [s] reason to know that the document is

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forged, groundless, contains a material misstatement or false claim or is otherwise

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invalid[.]” Plaintiff alleges that Defendants violated A.R.S. § 33–420 because, when the

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deed of trust was separated from the promissory note, any lien on Plaintiff's property was

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extinguished. Therefore, Plaintiff argues, Defendants do not have a real interest in any of

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Plaintiff's loan documents, but nonetheless “falsely identified itself as the beneficiary

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under the Deed of Trust in the (i) Assignment; (ii) Substitution of Trustee; and (iii)

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Notice of Trustee's Sale [.]” (Doc. 18 at 17.)

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Plaintiff's reliance on the same meritless allegations under the show me the note

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theory about the invalidity of the securitization process and any resulting transfers of the
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deed of trust, rejected above, to support his claim that Defendants had no interest in

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Plaintiff's property and thus wrongly recorded loan documents in violation of A.R.S. §

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33–420 are unavailing. Plaintiffs arguments under the show me the note theory do not

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establish that Defendants did not have any interest in the subject property. Plaintiff has

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offered no other evidence to show Defendants knowingly recorded false documents in

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violation of A.R.S. § 33–420, nor has he established that this statute applies to

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assignments of a deed of trust or that he has standing to bring a claim under the statute.

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Plaintiff has not given any persuasive basis to reconsider this Court’s order in Schayes v.

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Orion Financial Group, Inc., 2011 WL 3156303 (D. Ariz. 2011)), which effectively

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forecloses Plaintiff’s arguments. Accordingly, Count Two also fails to state a plausible

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claim for relief.

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IV.

LEAVE TO AMEND

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Leave to amend should be freely given “when justice so requires.” Fed. R. Civ. P.

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15(a)(2). Plaintiff will be given an opportunity to amend his complaint to make clear his

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allegations in short, plain statements that state a plausible claim for relief. Any amended

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complaint must conform to the requirements of the Federal Rules of Civil Procedure.

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Plaintiff is warned that if he elects to file an amended complaint and fails to comply with

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the Federal Rules of Civil Procedure, his case will be dismissed. See Fed. R. Civ. P. Rule

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41(b); McHenry v. Renne, 84 F.3d 1172, 1177 (9th Cir. 1996) (affirming dismissal with

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prejudice of amended complaint that did not comply with Rule 8(a)); Nevijel v. North

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Coast Life Ins. Co., 651 F.2d 671, 673–74 (9th Cir. 1981) (affirming dismissal of

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amended complaint that was “equally as verbose, confusing, and conclusory as the initial

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complaint”).

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IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss Plaintiff’s
Complaint (Doc. 6) is granted.

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IT IS FURTHER ORDERED that Plaintiff may file an amended complaint by

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September 7, 2012. The Clerk is directed to terminate this case without further order if

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Plaintiff does not file an amended complaint by September 7, 2012.

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Dated this 22nd day of August, 2012.

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