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Matthew L. Puzz, A Single Man v. Chase Home Finance

February 4, 2011



Pending before this Court are: (1) Motion to Dismiss filed by Chase Home Finance, LLC, (Doc. 10); (2) Motion to Dismiss Plaintiff's First Amended Verified Complaint and Request for Costs and Attorneys' Fees by the Bosco Defendants (Doc. 11); (3) Motion for Summary Disposition on Motion to Dismiss Plaintiff's First Amended Verified Complaint and Request for Costs and Attorneys' Fees by the Bosco Defendants (Doc. 27); (4) Motion for Sanctions and Response to Motion for Ruling/ Summary Disposition by Plaintiff (Doc. 29); and (5) Chase's Request for Summary Ruling (Doc. 33). For the reasons stated below, the Defendants' Motions to Dismiss are granted in part and denied in part; Plaintiff's Motion for Sanctions is denied; and Defendants' Motions for Summary Ruling are denied as moot.*fn1 BACKGROUND According to the First Amended Verified Complaint ("FAC"), on November 6, 2006, Plaintiff borrowed money to purchase the subject real property at 1243 West Kiva Avenue in Mesa. (Doc. 1, Ex. 4 at ¶¶ 2, 15). To borrow the money he gave a promissory note and deed of trust. Plaintiff's obligation on the note was apparently transferred to Defendant Chase which also apparently became the beneficiary on the deed of trust. (Id.). Plaintiff missed his first mortgage payment on October 1, 2009. (Id. at ¶ 22). 9 On its website, Chase stated that it would consider whether debtors in default were eligible to receive loan modifications, and if not, would consider other workout options. Plaintiff had his attorney request a loan modification application from Chase. Chase sent some correspondence to Plaintiff, and Plaintiff submitted a Freddie Mac "Request for Modification" application to Chase on February 12, 2010. (Id. at ¶ 30). Chase received the application on February 16, 2010. ( Id. at ¶ 32). Plaintiff alleges that Chase never intended to evaluate him for a loan modification or other workout solution, but instead determined that it would foreclose on the deed of trust.

On or about February 1, 2010, however, Chase had referred Plaintiff's file to the Bosco Defendants to conduct the non-judicial foreclosure.*fn2 (Id. at ¶ 43). On February 26, 2010, the Bosco Defendants recorded a substitution of trustee and noticed a trustee sale of the subject property. (Id. at ¶¶ 48--49). In early March, the Bosco Defendants sent correspondence directly to Plaintiff informing him of the foreclosure. (Id. at ¶ 51). The Defendants placed a sign on the subject property on April 30, 2010. (Id. at ¶ 53). In mid-May, Plaintiff initiated this legal proceeding in Maricopa County Superior Court. Plaintiff received an order from Superior Court that temporarily restrained the non- judicial foreclosure. (Id. at ¶ 57). The Bosco Defendants thereafter postponed but did not terminate the trustee's sale. (Id. at ¶¶ 59--60). Plaintiff alleges that as of the date of the FAC, Defendant Chase "refuses to provide Puzz with a Non-Approval Notice/Borrower's Notice or consider Puzz for all other loss mitigation/foreclosure prevention options." (Id. at ¶ 63). Plaintiff further alleges that the Defendants' "sole motivation" in not evaluating him for a 9 loan modification "is to illegally foreclose against Puzz's Property and collect insurance money from Freddie Mac and the United States Treasury." (Id. at ¶ 64).

Plaintiff's FAC alleges causes of action against all Defendants for fraud (count 1), defamation (count 8), failure to follow trustee procedures (count 10), wrongful foreclosure (count 11), and unjust enrichment (count 12). It alleges causes of action against only Chase for misrepresentation (count 2), promissory estoppel (count 3), breach of fiduciary duty (count 4), violation of the Arizona Consumer Fraud Act (count 5), breach of the covenant of good faith and fair dealing (count 6), negligence (count 7), and intentional infliction of emotional distress (count 9). Finally, the FAC alleges causes of action against only the Bosco Defendants for a violation of the Fair Debt Collection Practices Act ("FDCPA") (count 13), negligence per se (count 14), and negligence (count 15).*fn3

Chase and the Bosco Defendants filed separate motions to dismiss which detailed arguments as to why each of the above counts failed to adequately state a claim. The Bosco Defendants' motion also included a request for costs and attorneys' fees pursuant to A.R.S. § 33-807(E) (2007).

Plaintiff has never responded to either Motion to Dismiss. Instead Plaintiff filed three separate stipulations to extend the deadline by which he was required to respond. After the third stipulated motion for extension was denied by the Court, Plaintiff still failed to timely file a response to either Motion. The Bosco Defendants then filed a Motion for Summary Disposition. Plaintiff filed a Response to the Bosco Defendants' Motion for Summary Disposition together with a Motion for Sanctions, but Plaintiff still has filed no response to either Motion to Dismiss.

In Plaintiff's Motion for Sanctions, Plaintiff asserts that settlement should occur in this litigation because "as a result of this lawsuit" Chase took what Plaintiff asserts are the necessary steps prior to foreclosure that "allows Plaintiff to be properly and thoroughly reviewed for all loss mitigation and foreclosure prevention options." (Doc. 29 at 7). Further,"Defendants ceased directly contacting Plaintiff, cancelled the illegal trustee's sale and ceased informing third parties of a foreclosure date barred by the TRO." (Id. at 6). Settlement nevertheless has not occurred because the Bosco Defendants have declined Plaintiff's "walk away" proposal and do not wish to drop their request for the reimbursement and attorneys' fees and costs under A.R.S. § 33-807(E). Plaintiff asserts that the Bosco Defendants should be fined for their refusal to settle, pursuant to A.R.S. § 12-349 (2003) and/or Rule 11 of the Federal Rules of Civil Procedure.


I. The Motions To Dismiss

Plaintiff did not respond to either of the Defendants' Motions to Dismiss. In the absence of any response, both Defendants have moved for the summary granting of their motions pursuant to Local Rule of Civil Procedure 7.2(i), which provides, in pertinent part:

[I]f the opposing party does not serve and file the required answering memoranda . . . such non-compliance may be deemed a consent to the . . . granting of the motion and the Court may dispose of the motion summarily.

The Court, thus, may deem Plaintiff's failure to timely respond a consent to the granting of the Defendants' Motions to Dismiss. See Ghazali v. Moran, 46 F.3d 52, 53--54 (9th Cir. 1995) (holding that district court did not abuse its discretion in summarily granting defendants' motion to dismiss pursuant to local rule where pro se plaintiff had time to respond to motion but failed to do so); United States v. $22,474 in U.S. Currency, 55 F. Supp. 2d 1007, 1011 (D. Ariz. 1999) (citing former Rule 1.10(i) and stating that failure to comply with Local Rules "would be grounds upon which to summarily grant the Government's motion to dismiss"). Nevertheless, the Bosco Defendants request that we grant them their attorneys' fees pursuant to A.R.S. § 33-807(E) requires an evaluation to some 5 extent of the nature of Plaintiff's claims. The Court will, therefore, evaluate the merits of the defense motions. The Defendants' motions for summary entry of judgment on their motions to dismiss therefore, are denied. A. Legal Standard To survive dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint must contain more than "labels and conclusions" or a "formulaic recitation of the elements of a cause of action," it must contain factual allegations sufficient to "raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While "a complaint need not contain detailed factual allegations . . . it must plead 'enough facts to state a claim to relief that is plausible on its face.'" Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1022 (9th Cir. 2008) (quoting Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). The plausibility standard "asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.'" Id. (quoting Twombly, 550 U.S. at 555) (internal citations omitted). Similarly, legal conclusions couched as factual allegations are not given a presumption of truthfulness, and "conclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion to dismiss." Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998).

B. Analysis

Plaintiff's complaint fails in many respects to meet the above standard. The gravamen of Plaintiff's counts one through seven and nine through twelve is the allegation that Chase promised him, with the Bosco Defendants' knowledge, to evaluate loan modification options or other foreclosure alternatives before foreclosing on his deed of trust. Plaintiff also apparently alleges that Chase was obligated to evaluate loan modification options for the Plaintiff pursuant to federal law. While Defendants have admittedly not foreclosed, they nevertheless did notice and re-notice a deed of trust sale prior to canceling such notices after the initiation of the lawsuit. The FAC asserts that Plaintiff was damaged by submitting a Freddie Mac loan 9 modification application to Chase on February 12, 2010. (Doc. 1, Ex. 4 at ¶ 72). However, such an allegation, without more, fails to allege sufficient facts to make it plausible that this submission in some way injured the Plaintiff. The FAC does allege that Chase wanted Plaintiff to apply for a loan modification so that it could deny the application, yet still foreclose on the property and receive insurance proceeds from Freddie Mac. (Id. at ¶ 105). Nevertheless, to the extent that Plaintiff seeks to assert the legal conclusion that Chase was required to have a loan modification application from Plaintiff before being able to receive Freddie Mac benefits on his foreclosure, the Court need not accept such legal conclusions as being sufficient to state a claim when they are wholly unsupported by existing law.

Even assuming that the Home Affordable Modification Act ("HAMP") guidelines suggest that lenders provide foreclosure alternatives to their debtors, there is no authority for the proposition that HAMP or its regulations or guidelines create a private right of action against lenders who begin foreclosure without providing such alternatives. See, e.g., Berenice Thoreau de la Salle v. America's Wholesale Lender, 2010 U.S. Dist. LEXIS 36319, at *3--4 (E.D. Cal. 2010). Nor does Plaintiff provide any authority suggesting that Freddie Mac can withhold ...

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