Famili v. Wells Fargo Bank NA et al

Filing 33

ORDER Defendants' motion for summary judgment (Docs. 24 ) is granted. Plaintiff's request for leave to file an amended complaint is denied. Defendant's motion for summary adjudication (Doc. 26 ) is denied, and its motion to correct the Louvan declaration (Doc. 32 ) is granted. The Clerk shall terminate this action. Signed by Judge David G Campbell on 12/19/2013.(KMG)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Azadeh Famili, No. CV-13-00702-PHX-DGC Plaintiff, 10 11 v. 12 ORDER Wells Fargo Bank NA, et al., 13 Defendants. 14 15 Defendants U.S. Bank National Association and BSI Financial Services, Inc. have 16 filed a motion for summary judgment and a statement of facts in support of that motion. 17 Docs. 24, 25. Plaintiff Famili, who is represented by counsel, has responded to the 18 motion (Doc. 30) but has not filed a controverting statement of facts as required by Local 19 Rule 56.1(b). Defendants have filed a reply. Doc. 31. Neither party has requested oral 20 argument. 21 Plaintiff’s requests for leave to file an Amended Complaint will be denied. 22 I. For the reasons stated below, the Court will grant Defendants’ motion. Background. 23 On April 27, 2007, Plaintiff signed a Deed of Trust securing a Promissory Note in 24 the amount of $412,000. The Deed was recorded on May 4, 2007 on property owned by 25 Plaintiff at 409 E. Braeburn Drive in Phoenix, Arizona. Docs. 24 at 3, 30 at 2. In 26 February 2012, Quality Loan Service Corporation (“Quality”) was substituted as the 27 successor trustee of the Deed pursuant to a Substitution of Trustee, and that substitution 28 was recorded. Id. Quality recorded a Notice of Trustee’s Sale on March 1, 2012 (Doc. 1 24 at 3), and mailed a Statement of Breach of Non-Performance and the Notice of 2 Trustee’s Sale to Plaintiff’s mailing address at 254 Oakland Road, Glendora, California, 3 91741, on March 16, 2012 (id. at 4, Doc. 30 at 3).1 4 On March 27, 2013, Plaintiff filed her complaint in Maricopa County Superior 5 Court, alleging eight counts against Defendants. Doc. 1-1. Count one alleged that 6 neither the Mortgage Electronic Registration Systems (“MERS”) nor US Bank had 7 standing or authority to non-judicially foreclose on the property, to enforce the note, or to 8 appoint a successor. Id. at 11. Count two alleged breach of contract against US Bank for 9 failure to provide a “Lost Note Affidavit.” Id. at 14. Count three alleged breach of 10 contract/lack of authority of MERS to assign the Deed of Trust to US Bank. Id. at 15. 11 Count four alleged that neither Wells Fargo nor MERS lawfully transferred interest in the 12 Note or Deed of Trust and therefore had no power to foreclose on the property. Id. at 17. 13 Count five alleged breach of contract against US Bank for not having the authority to 14 appoint Quality as the successor trustee. Id. at 21. Count six alleged that US Bank must 15 be the true successor lender/beneficiary in order to foreclose on the property. Id. at 23. 16 Count seven alleged that MERS was not a beneficiary and lacked authority to take any 17 action on the note or Deed of Trust. Id. at 25. Count eight requested a Temporary 18 Restraining Order to halt the trustee’s sale of the property. Id. at 26. Plaintiff’s request for a TRO was granted on March 27, 2013, temporarily 19 20 21 22 23 24 25 26 27 28 1 Plaintiff asserts that the Statement was not mailed to her “residence address in Phoenix.” Doc. 30 at 3. This assertion is not supported by an affidavit or declaration. Defendant provided the declaration of Bounlet Louvan, the Foreclosure Legal Liaison and former Trustee Sales Officer for Quality who was in charge of the sale of Plaintiff’s property, stating that the documents “were mailed to the Property (the East Braeburn house in Phoenix) and 254 Oakland Road in Glendora, California 91741.” Doc. 25 at 6. Whether or not the notice and statement were received by Plaintiff at the Braeburn property, there is no dispute that Defendant noticed Plaintiff at the address set forth in the Deed of Trust as required by A.R.S. § 33-809(b) (“The copy of the notice sent pursuant to this paragraph shall be addressed to the person whose interest appears of record at the address set forth in the document.”) (emphasis added). Plaintiff’s mailing address on the Deed of Trust is 254 Oakland Road, Glendora, California 91741. Maricopa County Records, Document No. 2007-0523012. -2- 1 enjoining the trustee’s sale. The case was removed to federal court on April 5, 2013. 2 Doc. 1. Wells Fargo Bank NA was dismissed as a party on June 7, 2013. Doc. 23. 3 Remaining Defendants filed this motion for summary judgment on August 23, 2013. 4 Doc. 24. Plaintiff did not respond. On October 29, 2013 Plaintiff made an ex parte 5 motion for leave to file a late response (Doc. 27), which this court granted on 6 November 4, 2013 (Doc. 29). 7 II. Legal Standard. 8 A party seeking summary judgment “bears the initial responsibility of informing 9 the district court of the basis for its motion, and identifying those portions of [the record] 10 which it believes demonstrate the absence of a genuine issue of material fact.” Celotex 11 Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment is appropriate if the 12 evidence, viewed in the light most favorable to the nonmoving party, shows “that there is 13 no genuine dispute as to any material fact and the movant is entitled to judgment as a 14 matter of law.” Fed. R. Civ. P. 56(a). Only disputes over facts that might affect the 15 outcome of the suit will preclude the entry of summary judgment, and the disputed 16 evidence must be “such that a reasonable jury could return a verdict for the nonmoving 17 party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 18 The Court is not obligated to “‘scour the record in search of a genuine issue of 19 triable fact.’” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996) (citation omitted). If 20 the nonmoving party’s opposition fails to cite specifically to materials either in the 21 Court’s record or not in the record, the Court is not required to search the entire record 22 for evidence establishing a genuine issue of material fact or obtain the missing materials. 23 See Carmen v. S.F. Unified Sch. Dist., 237 F.3d 1026, 1028-29 (9th Cir. 2001); Forsberg 24 v. Pac. N.W. Bell Tel. Co., 840 F.2d 1409, 1417-18 (9th Cir. 1988); Keenan, 91 F.3d at 25 1278-79 (noting that opposing papers, due to size and poor citation, “obfuscate[d] rather 26 than promote[d] an understanding of the facts,” and declining to scour papers or the rest 27 of the record to determine if genuine issue of material fact existed). Rather, the Court 28 relies on “‘the nonmoving party to identify with reasonable particularity the evidence that -3- 1 precludes summary judgment.’” Keenan, 91 F.3d at 1279. “As the Seventh Circuit 2 observed in its now familiar maxim, ‘judges are not like pigs, hunting for truffles buried 3 in briefs.’” Indep. Towers of Wash. v. Wash., 350 F.3d 925, 929 (9th Cir. 2003) (quoting 4 United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991)) (alteration omitted). 5 Any dispute raised must be genuine, that is, the evidence must be “such that a 6 reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 7 248. Furthermore, the party opposing summary judgment “may not rest upon the mere 8 allegations or denials of [the party’s] pleadings, but . . . must set forth specific facts 9 showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith 10 Radio Corp., 475 U.S. 574, 586 n.11 (1986); see Fed. R. Civ. P. 56(e); Brinson v. Linda 11 Rose Joint Venture, 53 F.3d 1044, 1049 (9th Cir. 1995); Taylor v. List, 880 F.2d 1040, 12 1045 (9th Cir. 1989); see also Rule 1.10(l)(1), Rules of Practice of the United States 13 District Court for the District of Arizona (“Any party opposing a motion for summary 14 judgment must . . . set[] forth the specific facts, which the opposing party asserts, 15 including those facts which establish a genuine issue of material fact precluding summary 16 judgment in favor of the moving party.”). 17 III. Disputed Issues of Fact. 18 Plaintiff claims that documents attached to Defendants motion contain false and 19 fraudulent statements regarding the authority of signators to execute documents. Doc. 30 20 at 5. Plaintiff appears to urge the Court to interpret her allegation that these are false 21 statements as raising issues of fact that would preclude summary judgment. 22 Plaintiff identifies two statements in the Declaration of Louvan as false. First, 23 Plaintiff says that the statement that Louvan “conducted the foreclosure of the real 24 property in question” is false because the trustee’s sale has not yet taken place. Docs. 30 25 at 13; 32. In response, Defendants filed a corrected Declaration clarifying that the sale 26 has not, as Plaintiff alleges, occurred yet. Doc. 32. Not only is this fact no longer in 27 dispute, but this statement is not material to any of Plaintiff’s claims of breach of contract 28 or lack of authority to notice and conduct the trustee’s sale. Only disputes over facts that -4- 1 might affect the outcome of the suit will preclude the entry of summary judgment. 2 Anderson, 477 U.S. at 248. 3 Second, Plaintiff disputes the validity of the following statement in Louvan’s 4 Declaration: “the Statement of Breach was signed by Mauro Guzman and is a true and 5 correct copy of the Statement of Breach that was mailed.” Doc. 30 at 14. Plaintiff 6 alleges that this is hearsay and that Louvan has no personal knowledge that Guzman 7 obtained authority to mail the documents from an entity that had authority as holder of 8 the note. Plaintiff’s hearsay objection is unfounded. The Louvan declaration establishes 9 that the Statement of Breach is a business record of Quality’s under Federal Rule of 10 Evidence 803(6), and the actual Statement of Breach is attached to the declaration. Doc. 11 25 at 6, 9. In addition, whether Guzman had authority to sign and mail the document is a 12 legal question, which the Court resolves here, and not a disputed fact. 13 Apart from these two statements, the Court cannot glean from Plaintiff’s response 14 any specific disputed issues of fact. Rather, the remainder of Plaintiff’s response appears 15 to focus on the legal argument that Defendant must show its authority to notice and 16 conduct the trustee’s sale. In addition, as noted above, Plaintiff has failed to file a 17 contravening statement of facts as required by Local Rule 56.1(b). When a party fails to 18 file such a statement, the Court may take the following actions: (1) give the party an 19 opportunity to properly do so; (2) consider the fact undisputed for purposes of the 20 motion; (3) grant summary judgment if the motion and supporting materials show that the 21 movant is so entitled; or (4) issue any other appropriate order. Fed. R. Civ. P. 56(c), (e). 22 Because Plaintiff’s counsel had more than two months to file a controverting statement of 23 facts and did not do so, the Court will not grant additional time to respond. The Court 24 finds that summary judgment is appropriate. 25 III. Analysis. 26 All counts alleged in Plaintiff’s complaint center on her assertion that whenever 27 the promissory note was transferred or a change was made to the beneficiary of the Deed 28 of Trust, the holder or beneficiary was required to demonstrate authority for the transfer -5- 1 or substitution. Each claim of breach of contract and lack of authority by Plaintiff is an 2 iteration of the “show-me-the-note” argument resolved by the Arizona Supreme Court in 3 Hogan v. Wash. Mut. Bank, N.A., 277 P.3d 781, 782 (Ariz. 2012), as amended (July 11, 4 2012). As a matter of Arizona law, the Court finds Plaintiff’s argument without merit. 5 A. Authority to conduct trustee’s sale. 6 Plaintiff asserts that Defendant had no standing or authority to conduct a non- 7 judicial trustee’s sale because Plaintiff was presented with no evidence of ownership of 8 the note and therefore Defendant had no authority to enforce the note. Doc. 1-1 at 13 9 (Count One: “there is a significant unexplained five-year GAP in the ‘chain of 10 custody’”); at 14 (Count Two: “Failure to Provide the ‘Lost Note Affidavit’ Required 11 under” Arizona law precludes Defendant’s right to foreclose); at 15 (Count Three: MERS 12 had no authority to assign the Deed of Trust to US Bank); at 17 (Count Four: without 13 evidence of the transfer of interest, Quality Loan Services had no power to foreclose); at 14 21 (Count Five: US Bank had no authority to appoint Quality as a successor with power 15 to foreclose); at 23 (Count Six: US Bank must have authority to appoint a successor); at 16 25 (Count Seven: MERS lacked authority to take any action). 17 “Arizona’s non-judicial foreclosure statutes do not require the beneficiary to prove 18 its authority or ‘show the note’ before the trustee may commence a non-judicial 19 foreclosure.” Hogan, 277 P.3d at 782. Rather, “the only proof of authority the trustee’s 20 sales statutes require is a statement indicating the basis for the trustee’s authority.” 21 Hogan, 230 277 P.3d at 783; see A.R.S. § 33-808(C)(5) (requiring the notice to set forth 22 “the basis for the trustee’s qualification pursuant to § 33–803, subsection A”); see also 23 A.R.S. § 33-807(A) (granting the trustee the “power of sale”). Where a sale is “noticed 24 by a trustee who had recorded an instrument demonstrating that it was a successor in 25 interest to the original trustee,” a party has complied with the statutes. Id. 26 The notice of sale in this case was filed by Quality. Doc. 1-1 at 116. The notice 27 contains a statement asserting that “the successor trustee qualifies to act as a trustee under 28 A.R.S. § 33-803(A)(1).” Id. Defendant provides evidence that Quality had “recorded an -6- 1 instrument demonstrating that it was a successor in interest,” by providing the notice of 2 the recorded substitution of February 15, 2012, at Document 2012-0151818. See also 3 Doc. 1-1 at 112. 4 Plaintiff’s argument and claims seek to require clarification of the chain of title, 5 and assert that she was entitled to notification of and authority for the transfer of the note 6 and any substitution of trustees at each link in that chain. But there is no basis for this 7 argument under Arizona law. Hogan clearly eliminated any obligation on the part of 8 trustees to “show the note” prior to a sale. 9 Plaintiff’s legal citations, it appears she relies on law from New York, Kansas, Oregon, 10 To the extent the Court can decipher and Idaho, and a law review article. These authorities clearly are not controlling. 11 Additionally, courts repeatedly have held that MERS has authority to act as a 12 lender’s agent and take action on its behalf, and have rejected the premise that MERS is a 13 “sham beneficiary.” Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034 (9th 14 Cir. 2011) (rejecting argument that MERS is a sham beneficiary where MERS did not 15 initiate foreclosure). See also In re Mortgage Elec. Registration Sys. (MERS) Litig., 16 MDL 09-2119-PHX-JAT, 2012 WL 1912133 (D. Ariz. May 25, 2012) (rejecting 17 argument that MERS cannot act as a lender’s agent); Bean v. BAC Home Loans 18 Servicing, L.P., No CV 11-553-PHX-GMS, 2012 WL 171435, at * 1-2 (D. Ariz. Jan. 20, 19 2012) (same). 20 B. Applicability of the UCC and Pooling Services Agreement. 21 Plaintiff argues that the notice of trustee sale violated provisions of the Uniform 22 Commercial Code (“UCC”) and a Pooling Services Agreement (“PSA”). Doc. 30 at 7. 23 These arguments also lack merit. 24 Hogan resolved any question that non-judicial sales of real property had to comply 25 with the UCC. 277 P.3d at 783 (“The trust deed statutes do not require compliance with 26 the UCC before a trustee commences a non-judicial foreclosure.”). Additionally, it is 27 well established that mortgagees generally cannot cite violations of PSAs, or defects in 28 the securitization process, to support a wrongful foreclosure claim because mortgagees -7- 1 are not parties to the agreements and have no standing to claim noncompliance with the 2 agreements. See, e.g., In re Cook, 457 F.3d 561, 567-68 (6th Cir. 2006) (ruling that the 3 failure to record an assignment of a mortgage as required by contract impacted the 4 relationship of the parties to the contract, but did not impede the ability to enforce the 5 mortgage against third parties); In re Correia, 452 B.R. 319, 324 (1st Cir. B.A.P. 2011) 6 (“[T]he Debtors lacked standing to challenge the mortgage’s chain of title under the 7 PSA . . . . The Debtors cannot show they were a party to the contract . . . .”); Bittinger v. 8 Wells Fargo Bank N.A., 744 F. Supp. 2d 619, 625-26 (S.D. Tex 2010) (rejecting 9 mortgagor’s claim of wrongful foreclosure because mortgagor was not a party or 10 beneficiary under the PSA and thus had “no ability under Texas law to sue for breach of 11 contract.”); In re Washington v. Deutsche Bank Nat’l. Trust Co., 2011 WL 6010247, at 12 *5 (Bankr. W.D. Mo. 2011). 13 Even if Plaintiff did have standing to challenge Defendants’ actions under the 14 PSA, Plaintiff has not made a colorable claim that the requirements of the PSA were 15 breached, or that such a breach impacted Defendants’ right to conduct a trustee’s sale. 16 C. Request for leave to amend Complaint. 17 In the event summary judgment is granted, Plaintiff requests that she be permitted 18 to file an amended complaint “based upon rapidly evolving foreclosure law in Arizona 19 and elsewhere.” Doc. 30 at 2. This request is denied. Leave to amend is appropriate 20 “unless the court determines that the pleading could not possibly be cured by the 21 allegations of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (quoting 22 Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)). Plaintiff’s claims depend on 23 legal theories that have repeatedly been rejected by this Court and others, and her 24 assertion that this area of foreclosure law is rapidly evolving is without merit. 25 IT IS ORDERED: 26 1. Defendants’ motion for summary judgment (Docs. 24) is granted. 27 2. Plaintiff’s request for leave to file an amended complaint is denied. 28 3. Defendant’s motion for summary adjudication (Doc. 26) is denied, and its -8- motion to correct the Louvan declaration (Doc. 32) is granted. 1 2 4. The Clerk shall terminate this action. 3 Dated this 19th day of December, 2013. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -9-

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