Cardin v. Wilmington Finance Incorporated et al

Filing 13

ORDER, Defendants' motion to dismiss 8 is granted; Defendants' motion for summary disposition 9 is found to be moot; this case is dismissed with prejudice; the Clerk is directed to enter judgment accordingly. Signed by Judge David G Campbell on 3/18/13.(REW)

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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-12-08251-PCT-DGC

Len Cardin,
Plaintiff,

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v.

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Wilmington Finance, Inc., et al.,

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ORDER

Defendants.

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Pro se Plaintiff Len Cardin filed a complaint alleging various causes of action

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against Defendants relating to the alleged foreclosure and trustee sale of property located

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at 2225 East Lockett Road, Flagstaff, Arizona 86004.

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Wilmington Finance, Inc., Wells Fargo Bank, N.A., and Mortgage Electronic

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Registration System (“MERS”) removed the action to federal court (Doc. 1) and have

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filed a motion to dismiss (Doc. 8). In response, Plaintiff appears to have filed the report

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of a forensic loan auditing firm. Doc. 10. Defendants filed a reply. Doc. 11. For the

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reasons that follow, the Court will grant Defendants’ motion to dismiss.

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I.

Doc. 1-1 at 4.

Defendants

Background.

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In the summer of 2007, Plaintiff Len Cardin borrowed $280,000 from Wilmington

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secured by a Deed of Trust (“DOT”) that Plaintiff executed on property located at 2225

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East Lockett Road, Flagstaff, Arizona 86004. Doc. 8 at 2. The DOT contained a

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provision in which Plaintiff consented to a non-judicial foreclosure on the property if he

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defaulted on the loan. Id. It also contained language anticipating that the loan could be

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sold multiple times without notice to Plaintiff. Id.

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On or about June 23, 2009, Ronald M. Horwitz, who had been appointed

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successor trustee, executed a Notice of Trustee’s Sale (which was later cancelled).

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Doc. 8 at 3.

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current cause of action contesting various ways in which the DOT and Note were

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transferred and assigned. Doc. 1-1 at 4-39.

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II.

Plaintiff does not appear to contest that he is in default, but he brought the

Legal Standard.

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When analyzing a complaint for failure to state a claim to relief under Rule

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12(b)(6), the well-pled factual allegations are taken as true and construed in the light

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most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th

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Cir. 2009). Legal conclusions couched as factual allegations are not entitled to the

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assumption of truth, Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009), and they are insufficient

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to defeat a motion to dismiss for failure to state a claim, In re Cutera Sec. Litig., 610 F.3d

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1103, 1108 (9th Cir. 2010). To avoid a Rule 12(b)(6) dismissal, the complaint must

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plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp.

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v. Twombly, 550 U.S. 544, 570 (2007). The Court must construe the complaint liberally

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since Plaintiff is proceeding pro se. See Hughes v. Rowe, 449 U.S. 5, 9 (1980).

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III.

Analysis.

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1.

Failure to Respond.

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In their motion, Defendants present several detailed arguments as to how they

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believe each of Plaintiff’s claims fails to state a claim for relief. Doc. 8. Plaintiff’s

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response is a photocopy of a forensic loan audit. Doc. 10. Local Rule of Civil Procedure

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7.2(i) states that “if the unrepresented party or counsel does not serve and file the

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required answering memoranda . . . such non-compliance may be deemed a consent to the

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denial or granting of the motion and the Court may dispose of the motion summarily.”

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Here, Plaintiff did nothing more than file an exhibit without comment. The exhibit does

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not provide the Court with any additional legal arguments or reasons to deny the motion

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to dismiss. When ruling on a motion to dismiss “the Court [is] not obligated to search for

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legal theories not clearly laid on in Plaintiff’s response to the motion or his amended

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complaint. Mansour v. Cal-Western Reconveyance Corp., No. CV-09-37-PHX-DGC,

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2009 WL 2132695 at *3 (D. Ariz. Jul. 15, 2009). Accordingly, Plaintiff’s failure to

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respond provides sufficient reason for the Court to grant Defendants’ motion to dismiss.

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In light of Plaintiff’s status as a pro se litigant, however, the Court will consider the

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merits of Defendants’ motion despite the fact that Plaintiff’s response has provided no

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additional argument.

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2.

Merits of the Complaint.

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Plaintiff’s first cause of action is for “lack of standing” to execute a trustee sale.

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Doc. 1-1 at 17. He claims that Defendants cannot foreclose either because they do not

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hold the note or because there were improprieties in the assignment of the note. Id.

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Plaintiff’s arguments appear to be premised on the theory that in order to foreclose a

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party must show possession of the original note and on the theory that Defendant MERS

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does not have the authority to assign a deed of trust.

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Defendants cite federal and Arizona case law rejecting the theory that custody of

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the note is necessary for nonjudicial foreclosure. Hogan v. Wash. Mut. Bank, N.A., 277

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P.3d 781, 783 (Ariz. 2012); Ruelas v. Sun Am. Mortg. Co., No. CV 12-01160-PHX-

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NVW, 2012 WL 3277175 (D. Ariz. Aug. 9, 2012). Plaintiffs fail to show how their

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claims regarding the inseparability of the note and DOT and MERS’s lack of capacity to

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assign a note are distinct from cases that have rejected those theories. See Silving v.

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Wells Fargo Bank, N.A., 800 F. Supp. 2d 1055 (D. Ariz. Jul. 7, 2011); Blau v. Am.’s

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Servicing Co., No. CV-08-773-PHX-MHM, 2009 WL 3174823 (D. Ariz. Sept. 29, 2009).

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Accordingly, the Court finds that the first claim must be dismissed.

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Plaintiff’s second claim alleges fraudulent concealment. Doc. 1-1 at 21-22. He

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claims that Defendants concealed the fact that the note could be transferred into a pool

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with other notes. In Arizona, fraudulent concealment claims are subject to a three-year

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statute of limitations under A.R.S. § 12-543(3). The last date of any transfer of the note

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was July 24, 2009, more than three years before this suit was filed. Doc. 8 at 7.

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Accordingly, the claim is barred by the statute of limitations.

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Plaintiff’s third claim alleges that Defendants misrepresented that they “were

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entitled to exercise the power of sale provision contained in the Deed of Trust” and

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“misrepresented that they are the ‘holder and owner’ of the note and the beneficiary of

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the Deed of Trust.” Doc. 1-1 at 22-24. Plaintiff’s basis for asserting that Defendants do

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not have power to do these things is another version of the show-me-the-note theory that

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has been widely rejected. Additionally, a claim for fraud in the inducement must meet

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the heightened pleading standards of Rule 9(b), and Plaintiff has not detailed the specific

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statements upon which he relied. This claim must also be dismissed.
The fourth claim asserts intentional infliction of emotional distress. Doc. 1-1 at

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24-26.

Plaintiff claims that he was emotionally harmed by a wrongful attempt to

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foreclose on the property. Id. In Arizona, intentional inflection of emotional distress

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requires an allegation of “extreme and outrageous conduct,” Watts v. Golden Age Nursing

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Home, 619 P.2d 1032. 1035 (1980), and “it is for the court to determine, in the first

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instance, whether the defendant’s conduct may reasonably be regarded as so extreme and

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outrageous as to permit recovery, or whether it is necessarily so.” Lucchesi v. Frederic

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N. Stimmell, M.D., Ltd., 716 P.2d 1013, 1016 (1986) (quoting Restatement (Second) of

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Torts § 46 (1965)). The conduct alleged in this case does not satisfy this standard.

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Plaintiff’s fifth cause of action asserts slander based on the publication of

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documents like the notice of default and the notice of the trustee’s sale. Doc. 1-1 at 26-

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28. Plaintiff cannot allege a statutory claim for slander under A.R.S. § 33-420 because a

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Notice of Trustee’s sale is not covered by the statute. Nor can he state a claim for

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common law slander because he has not adequately alleged that any of the information in

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the postings was false.

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The sixth cause of action is to quiet title. Doc. 1-1 at 27-28. It is well established

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in Arizona that “a plaintiff cannot bring a quiet title action unless she has paid off her

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mortgage in full.” Bergdale v. Countrywide Bank FSB, No. CV 12–8057, 2012 WL

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4120482, at *6 (D. Ariz. Sept.18, 2012) (citing Farrell v. West, 57 Ariz. 490, 491, 114

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P.2d 910, 911 (Ariz. 1941)) (“[I]f it appears there is an unsatisfied balance due a

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defendant-mortgagee, or his assignee, the court will not quiet the title until and unless

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[the plaintiff-mortgagor] pays off such mortgage lien.”); Eason v. Indymac Bank,

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FSB, No. CV 09–1423, 2010 WL 1962309, at *2 (D. Ariz. May 14, 2010) (action to

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“[q]uiet title is not a remedy available to the trustor until the debt is paid or

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tendered.”); Frazer v. Millennium Bank, No. CV 10–01509, 2010 WL 4579799, at *4 (D.

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Ariz. Oct.29, 2010) (same). Plaintiff has not alleged that he has paid the amounts due

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under the loan; therefore, the Court will dismiss this claim.

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Plaintiff’s seventh claim is for “declaratory relief” and appears to re-plead the

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quiet title claim. Doc. 1-1 at 28-29. As there is no independent cause of action for

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“declaratory relief,” and the Court has already ruled with regard to quiet title, this claim

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must also be dismissed.

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Plaintiff’s eighth claim alleges a violation of the Truth in Lending Act (“TILA”),

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15 U.S.C. § 1601, et. seq. Doc. 1-1 at 29-30. The one-year statute of limitations found at

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15 U.S.C. § 1640(e) applies to violations of TILA. The limitations period begins at the

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consummation of the transaction. King v. California, 784 F.2d 910, 915 (9th Cir. 1986).

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Plaintiff’s loan closed in the summer of 2007, and this case is therefore time-barred.

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Plaintiff claims that time limit should be tolled, but his argument is not supported by any

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legal theory or case law.

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violation of the terms of TILA.

Additionally, Plaintiff does not plead a specific or clear

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Similarly, Plaintiff’s ninth cause of action, alleging violation of the Real Estate

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Settlement Procedures Act (“RESPA”), 1 U.S.C. § 2601 et. seq., is barred by the relevant

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statute of limitations. Doc. 1-1 at 30-31. RESPA violations under § 2605 are subject to a

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three-year statute of limitations and violations under § 2607 or § 2608 are subject to a

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one-year statute of limitations. Both statutes begin to run when the violation occurs,

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which in this case was when the loan closed. Under either time period, the statute of

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limitations had run before Plaintiff initiated the present suit.

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Finally, Plaintiff alleges a tenth cause of action for rescission. Doc. 1-1 at 31-32.

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This cause of action is predicated on the merits of several of the other claims that have

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already been addressed. There is also an additional argument that the public interest

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demands rescission. Plaintiff provides no support for this claim and the Court does not

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agree with his bald assertion. The cause of action for rescission will be dismissed.

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IV.

Leave to Amend.

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The Court has considered whether Plaintiff should be granted leave to amend, but

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concludes that any amendment would be futile. Plaintiff’s claims fail because they are

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contrary to well established law (rejecting the show-me-the-note theory), are barred by

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the relevant statute of limitations (fraudulent concealment, TILA, RESPA), cannot satisfy

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the high threshold under Arizona law (intentional infliction of emotional distress), or

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cannot be asserted when Plaintiff is in fact in default on his loan (slander and quiet title).

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Because these legal obstacles cannot be overcome through re-pleading, the Court will

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dismiss Plaintiff’s claims without leave to amend.

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IT IS ORDERED:

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1.

Defendants’ motion to dismiss (Doc. 8) is granted.

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2.

Defendants’ motion for summary disposition (Doc. 9) is found to be moot.

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3.

This case is dismissed with prejudice. The Clerk is directed to enter

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judgment accordingly.
Dated this 18th day of March, 2013.

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