Pettit et al v. Homeward Residential Incorporated et al

Filing 8

ORDER denying 4 Motion to Dismiss. See order for detais. Signed by Senior Judge Paul G Rosenblatt on 10/2/2013.(LMR)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Shelli L. Grotte Pettit, et al.,

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Plaintiffs,

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vs.

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Homeward Residential Incorporated,
et al.,

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Defendants.

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No. 13-CV-8170-PCT-PGR

ORDER

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Before the Court is Defendants’ motion to dismiss. (Doc. 4.) Plaintiff opposes the
motion. (Doc. 5.) For the reasons set forth herein, the motion is denied.
Background

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Plaintiff Shelli L. Grotte Pettit (“Plaintiff”) is the trustee for a trust that owned real

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property in Prescott, Arizona. Defendant Homeward Residential, Inc. (“Defendant”),

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serviced the loan when the property was secured by a deed of trust executed by David Grotte.

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Plaintiff listed the property for sale, and in June of 2012 accepted a purchase offer of

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$680,000. Plaintiff alleges that she and her escrow company, Yavapai Title Agency

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(“Yavapai”), contacted Defendant to seek a payoff statement on June 26, July 3, July 6, and

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July 10, 2012, but no statement was provided until July 17, 2012. On July 13, 2012, the buyer

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cancelled the purchase agreement.

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Plaintiff filed a complaint in Yavapai County Superior Court alleging negligence per

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se based on Defendant’s failure to produce a payoff statement within 14 days of the request

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as required by A.R.S. § 33-715. (Doc. 1, Ex. A.) She seeks damages for loss of interest

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income from the original purchase contract, expenses related to maintenance of the property,

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diminished sale price, and $500 for each of the alleged violations of § 33-715. Defendants

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removed the case on July 3, 2012. (Id.)

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In the pending motion Defendant argues that Plaintiff’s claim for negligence per se
is legally insufficient. The Court disagrees.
Discussion

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The Court may dismiss a complaint for failure to state a claim under Rule 12(b)(6) for

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lack of a cognizable legal theory or insufficient facts alleged under a cognizable legal theory.

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Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). To survive a motion

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to dismiss, a complaint must meet the requirements of Federal Rule of Civil Procedure

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8(a)(2), which requires a “short and plain statement of the claim showing that the pleader is
entitled to relief,” so that the defendant has “fair notice of what the . . . claim is and the
grounds upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
In deciding a motion to dismiss under Rule 12(b)(6), the Court must construe the facts
alleged in the complaint in the light most favorable to Plaintiff and accept all well-pleaded
factual allegations as true. See Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000).
However, the Court need not accept as true a legal conclusion couched as a factual
allegation. Papasan v. Allain, 478 U.S. 265, 286 (1986).
Section 33-715 provides that “[o]n the written demand of an entitled person or that

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person’s authorized agent, a secured lender shall prepare and deliver a payoff demand
statement to the person who has requested it within fourteen days after receipt of the
demand.” A.R.S. § 33-715(A). If a lender “willfully fails to prepare and deliver a payoff
demand statement for fourteen or more days after receipt of a written demand,” the lender
“is liable to the entitled person for all damages sustained for failure to deliver the statement.
The [lender] is also liable to the [borrower] for five hundred dollars whether or not actual

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damages are sustained.”A.R.S. § 33–715(F). “Willfully” means “without just cause or

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excuse.” Id. Each such failure “constitutes a separate cause of action.” Id.

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Plaintiff alleges that Defendant is liable for negligence per se based on its refusal to

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produce a payoff demand statement within 14 days of her request, in violation of § 33-715.

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“Violation of a statutory standard of care is usually held to be negligence per se.” Gunnell

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v. Arizona Public Serv. Co., 202 Ariz. 388, 392, 46 P.3d 399, 403 (2002); see Alaface v.

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National Inv. Co., 181 Ariz. 586, 596, 892 P.2d 1375, 1385 (App. 1994) (“A person who

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violates a statute enacted for the protection and safety of the public is guilty of negligence

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per se.”). Defendant does not dispute that negligence per se applies to a violation of § 33-

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715. It argues instead that it did not violate the statute and that Plaintiff failed to adequately

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allege proximate cause.

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Defendant first contends that there was no violation § 33-715. Defendant notes that
it serviced a mortgage loan that was secured by a deed of trust for David Grotte. Defendant
asserts that under A.R.S. § 33-715, Plaintiff was responsible for verifying that she was the
“entitled person” to make any demands concerning the loan and for verifying that Yavapai
was her authorized agent.1 According to Defendant, Plaintiff failed to produce the documents
to such prove authority until July 3, 2012, and Defendant provided the statement within 14
days of that date. (See Doc. 1, Ex. A, ¶¶ 9, 14.)
However, as set forth in the complaint, Yavapai first contacted Defendant to request
a payoff demand statement on June 26, 2012, faxing information concerning the trust to

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Defendant and phoning Defendant that same day, at the latter’s request. (Id., ¶ 7.) On June
28, Yavapai followed up on the request and was told by Defendant to submit trust documents
and the death certificates of Plaintiff’s parents. (Id., ¶ 8.) On July 3, Yavapai again checked

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Pursuant to A.R.S. 33-715(J)(2): “‘Entitled person’ means the trustor or
mortgagor of the mortgaged or trust property or any part of that property, any successor in
interest to the trustor or mortgagor, any person with a lien or encumbrance of record on the
mortgaged or trust property and an escrow agent that is licensed pursuant to title 6.”
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the status of the request, and was informed by Defendant that it had not received the

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requested documents. (Id., ¶ 9.) The documents were faxed again that day. (Id.)

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Accepting these allegations as true, Defendant received verification that Plaintiff was

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an authorized person on June 28, 2013, when the requested documents were originally faxed,

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but did not deliver the payoff demand until July 17, more than 14 days after the necessary

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documents were provided, in violation of § 33-715.

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Defendant next argues that Plaintiff fails to state facts to support the element of
proximate cause. The Court disagrees.

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The complaint states that “on July 13, 2012, still having no payoff amount, and having

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already extended the close of escrow twice, the buyer requested a return of his funds and

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exercised his right to cancel the purchase agreement.” (Doc.1, Ex. A, ¶ 13.) The complaint

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further alleges that, “As a direct and proximate result of Defendant[’s] . . . negligence per se,
Plaintiff suffered substantial damages.” (Id., ¶ 28.)
The Court finds that these allegations, taken as true, are sufficient to make a showing
that Defendant’s failure to provide a timely payoff amount caused the buyer to cancel the
purchase agreement.

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Conclusion
For the reasons set forth above, the complaint meets the requirements of Rule 8(a)(2).
It adequately sets forth a claim of negligence based on Defendant’s alleged violation of
A.R.S. § 33-715.

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Accordingly,
IT IS HEREBY ORDERED denying Defendant’s motion to dismiss (Doc. 4)
DATED this 30th day of September, 2013.

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