MacKenzie v. Federal National Mortgage Association et al
Filing
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ORDER granting 11 Defendants' Motion to Dismiss. This case is dismissed in its entirety. Signed by Judge James A Teilborg on 10/2/12.(DMT)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE DISTRICT OF ARIZONA
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No. CV 12-8092-PCT-JAT
Bernice MacKenzie
Plaintiff,
ORDER
v.
Federal National Mortgage Association;
Wells Fargo Home Mortgage, Inc.; Tiffany
& Bosco; MERS
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Defendants.
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Currently pending before the Court is the Motion to Dismiss of Defendants
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Federal National Mortgage Association (“Federal”), Wells Fargo Bank, N.A. (“Wells
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Fargo”), and Mortgage Electronic Registration Systems, Inc. (“MERS”). (Doc. 11.) The
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Court now rules on the Motion.
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I.
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Plaintiff Bernice MacKenzie purchased property located at 1030 South Foothills
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Drive, Dewey, Arizona (the “Property”) on November 14, 2006 with a loan in the amount
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of $361,000 (the “Loan”) secured by a Deed of Trust (the “DOT”).1 The DOT names the
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lender as nonparty Crestar Mortgage and the Trustee as Michael A. Bosco, Jr. The DOT
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provides that, in the event of default, the Lender, or its successors and assigns, may
BACKGROUND
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The Court can consider publicly recorded documents, like the Deed of Trust,
without converting this motion to dismiss into a motion for summary judgment. Lee v.
City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001).
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invoke the DOT’s power of sale and sell the Property at public auction to the highest
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bidder.
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On March 24, 2010, Mr. Bosco, as Trustee, recorded a Notice of Trustee’s Sale.
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Plaintiff neither reinstated her loan nor had the sale enjoined, so the Trustee’s Sale took
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place on April 11, 2011. Mr. Bosco recorded a Trustee’s Deed upon Sale conveying the
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Property to Fannie Mae on April 15, 2011. On May 31, 2011, Fannie Mae obtained a
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forcible entry and detainer judgment against Plaintiff requiring Plaintiff to surrender the
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Property by June 13, 2011.
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Plaintiff filed the pending case on May 14, 2012. (Doc. 1.)2 Plaintiff’s Complaint
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does specifically delineate her claims, but the Complaint appears to contain claims
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frequently found in mortgage foreclosure litigation. Defendants Federal, Wells Fargo,
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and MERS filed the pending Rule 12(b)(6) Motion to Dismiss on June 26, 2012, arguing
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that Plaintiff has failed to state a claim.
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II.
LEGAL STANDARD
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The Court may dismiss a complaint for failure to state a claim under Federal Rule
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of Civil Procedure 12(b)(6) for two reasons: 1) lack of a cognizable legal theory and 2)
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insufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police
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Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).
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To survive a 12(b)(6) motion for failure to state a claim, a complaint must meet
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the requirements of Federal Rule of Civil Procedure 8(a)(2). Rule 8(a)(2) requires a
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“short and plaint statement of the claim showing that the pleader is entitled to relief,” so
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that the defendant has “fair notice of what the . . . claim is and the grounds upon which it
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rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)(quoting Conley v.
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Gibson, 355 U.S. 41, 47 (1957)).
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Although a complaint attacked for failure to state a claim does not need detailed
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Plaintiff previously filed a very similar complaint in this Court, which eventually
was dismissed when Plaintiff failed to respond to a motion to dismiss. MacKenzie v.
Wells Fargo Bank, N.A., et al., Case No. CV11-8114-PCT-DGC.
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factual allegations, the pleader’s obligation to provide the grounds for relief requires
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“more than labels and conclusions, and a formulaic recitation of the elements of a cause
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of action will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). The factual
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allegations of the complaint must be sufficient to raise a right to relief above a
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speculative level. Id. Rule 8(a)(2) “requires a ‘showing,’ rather than a blanket assertion,
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of entitlement to relief. Without some factual allegation in the complaint, it is hard to see
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how a claimant could satisfy the requirement of providing not only ‘fair notice’ of the
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nature of the claim, but also ‘grounds’ on which the claim rests.” Id. (citing 5 C. Wright
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& A. Miller, Federal Practice and Procedure §1202, pp. 94-95 (3d ed. 2004)).
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Rule 8’s pleading standard demands more than “an unadorned, the defendant-
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unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(citing
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Twombly, 550 U.S. at 555). A complaint that offers nothing more than naked assertions
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will not suffice. To survive a motion to dismiss, a complaint must contain sufficient
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factual matter, which, if accepted as true, states a claim to relief that is “plausible on its
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face.” Iqbal, 556 U.S. at 678. Facial plausibility exists if the pleader pleads factual
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content that allows the court to draw the reasonable inference that the defendant is liable
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for the misconduct alleged. Id. Plausibility does not equal “probability,” but plausibility
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requires more than a sheer possibility that a defendant acted unlawfully. Id. “Where a
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complaint pleads facts that are ‘merely consistent’ with a defendant’s liability, it ‘stops
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short of the line between possibility and plausibility of entitlement to relief.’” Id. (citing
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Twombly, 550 U.S. at 557).
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In deciding a motion to dismiss under Rule 12(b)(6), a court must construe the
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facts alleged in the complaint in the light most favorable to the drafter of the complaint
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and the court must accept all well-pleaded factual allegations as true. See Shwarz v.
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United States, 234 F.3d 428, 435 (9th Cir. 2000). Nonetheless, courts do not have to
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accept as true a legal conclusion couched as a factual allegation. Papasan v. Allain, 478
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U.S. 265, 286 (1986).
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III.
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Plaintiff’s Complaint lists several federal statutes, but does not allege how
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Defendants violated those statutes. Her actual allegations boil down to the following
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arguments: Defendants did not have “standing” to foreclose her home and were not “real
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parties in interest” because Defendants are not the holders of the note evidencing the
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Loan; the Deed and Note were impermissibly “separated;” the Note was illegally
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securitized; and MERS cannot have a real interest in a mortgage. Plaintiff also implicitly
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alleges a claim for wrongful foreclosure.
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ANALYSIS AND CONCLUSION
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A.R.S. §33-811(C)
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This Court previously has rejected all the legal theories asserted by Plaintiff.
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Arizona courts and this Court repeatedly have held that a party does not have to produce
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the original note before the party can foreclose in Arizona, which is a statutory deed of
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trust state. See, e.g., Hogan v. Washington Mut. Bank, N.A., 277 P.3d 781, 783-84 (Ariz.
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2012). Courts also have rejected foreclosure plaintiffs’ “impermissible separation of the
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deed and note” theory of liability. See, e.g., Owens v. Reconstruct Co., 2011 WL
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3684473 at *3 (D. Ariz. August 23, 2011). Nor have courts recognized a cause of action
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for the sale of loans into the secondary market or “securitization.” See, e.g., Harding v.
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U.S. Bank, N.A., 2012 WL 3871506 at *3 (D. Ariz. Sept. 6, 2012). Finally, courts have
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rejected the argument that MERS is a “sham” beneficiary because it has no actual interest
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in the loan. Cervantes v. Countrywide Home Loans, Inc., 2009 WL 3157160 at *10 (D.
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Ariz. Sept. 24, 2009).
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But even if any of those legal theories were viable, Plaintiff waived them because
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she did not obtain an injunction at least one day before the Trustee’s Sale of the Property.
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Section 33-811(C) of the Arizona Revised Statutes reads in pertinent part:
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The trustor . . . and all persons to whom the trustee mails a
notice of a sale under a trust deed pursuant to §33-809 shall
waive all defenses and objections to the sale not raised in an
action that results in the issuance of a court order granting
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relief pursuant to Rule 65, Arizona rules of civil procedure,
entered before 5:00 p.m. mountain standard time on the last
business day before the scheduled date of sale.
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Plaintiff indisputably did not obtain injunctive relief before the Trustee Sale of the
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Property.
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A trustor, like Plaintiff, waives all defenses and objections to the trustee sale not
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raised in an action resulting in injunctive relief awarded at least one business day before
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the trustee sale. Because Plaintiff did not obtain an order enjoining the Trustee Sale of
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the Property, she waived all claims that would have provided defenses or objections to
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the sale. Madison v. Groseth, 279 P.3d 633, 637-38 (Ariz. Ct. App. 2012). The Court
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finds Plaintiff could have raised all the arguments she makes in her Complaint, except for
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the wrongful foreclosure claim, in a motion to enjoin the Trustee Sale. Because all those
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arguments could have provided defenses or objections to the Trustee Sale, Plaintiff has
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waived them.
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B.
Wrongful Foreclosure
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Plaintiff asserts throughout the Complaint that Defendants had no right to
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foreclose on the Property, which the Court will construe as an attempt to state a claim for
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wrongful foreclosure. Although Arizona state courts have not yet explicitly recognized a
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cause of action for wrongful foreclosure, this Court has. See, e.g., Schrock v. Federal
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Nat’l Mortg. Assoc., 2011 WL 3348227 at *6 (D. Ariz. August 3, 2011). The Court has
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held that the tort of wrongful foreclosure is not waived by A.R.S. section 33-811(C)
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because it is only ripe once a foreclosure sale has occurred. Id.
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To establish a claim for wrongful foreclosure, Plaintiff must prove that either she
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was not in default at the time of the foreclosure or that the foreclosing party caused her
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default. See, e.g., Holt v. Countrywide Home Loans, Inc., 2012 WL 369591 at *4 (D.
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Ariz. Feb. 6, 2012); Jada v. Wells Fargo Bank, N.A., 2011 WL 3267330 at *3 (D. Ariz.
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July 29, 2011). Plaintiff never alleges that she was not in default on the Loan at the time
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of the foreclosure or that the foreclosing party caused her failure to make Loan payments.
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Rather, her allegations center on Defendants not being the appropriate parties, for various
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reasons, to foreclose on the Property. Because Plaintiff does not allege that she was
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current on the Loan at the time of the Trustee Sale, she cannot state a claim for wrongful
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foreclosure.
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Accordingly,
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IT IS ORDERED GRANTING Defendants’ Motion to Dismiss (Doc. 11). This
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case is dismissed in its entirety.
Dated this 2nd day of October, 2012.
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