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Earle v. Bank of America, N.A.

United States District Court, D. Arizona

May 1, 2014

Fred G. Earle, husband; and Mary C. Earle, wife, Plaintiffs,
v.
Bank of America, NA; Mortgage Electronic Registration Systems, Incorporated; First American Title Company; ReconTrust Company, NA; Government National Mortgage Association aka Ginnie Mae; Ginnie Mae II Pool G2 2010 Trust, et al., Defendants.

ORDER

G. MURRAY SNOW, District Judge.

Pending before the Court is Defendants Bank of America, N.A.; Mortgage Electronic Registration System; ReconTrust Company, N.A.; and Ginnie Mae's (collectively "Defendants") Motion to Dismiss. (Doc. 19.) For the following reasons, the Motion is granted.

BACKGROUND

This case arises from a loan secured by Plaintiffs from Defendant Bank of America, N.A., to purchase real property in Yuma, Arizona (the "Property"). (Doc. 1-1 (Compl.) ¶ 11.) Plaintiffs evidenced the Loan by executing a promissory note ("Note") and secured the loan with a Deed of Trust ("Deed"). (Compl. ¶ 12.) The Deed names Defendant Mortgage Electronic Registration System, Inc. ("MERS") as the beneficiary and Defendant ReconTrust Company, N.A., as the trustee. (Doc. 19, Ex. D.) Plaintiffs defaulted on the loan. (Compl. ¶ 82.) On August 28, 2012, MERS recorded an assignment of the Deed to Defendant Bank of America, N.A. (Doc. 19, Ex. E.) On April 9, 2013, Defendant ReconTrust recorded a Notice of Trustee Sale, setting a sale date of July 15, 2013. ( Id., Ex. F.) The sale has not yet occurred.

On February 21, 2013, Plaintiffs filed the present action in Yuma County Superior Court. (Doc. 1-1.) Their Complaint alleges ten counts: (1) lack of standing to foreclose; (2) fraud in the concealment; (3) fraud in the inducement; (4) intentional infliction of emotional distress; (5) quiet title; (6) slander of title; (7) declaratory relief; (8) violations of the Truth in Lending Act (TILA); (9) violations of the Real Estate Settlement Procedure Act (RESPA); and (10) rescission under TILA. ( Id. ) Plaintiffs seek a declaratory judgment, injunctive relief, equitable relief, and damages. ( Id. ) One June 28, 2013, Defendants removed the action to this Court. (Doc. 1.) Defendants now move to dismiss Plaintiffs' Complaint on the grounds that they fail to state any claim upon which relief may be granted. (Doc. 19.)

DISCUSSION

I. Legal Standard

Rule 12(b)(6) is designed to "test the legal sufficiency of a claim." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). 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, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). Plausibility requires "more than a sheer possibility that a defendant has acted unlawfully." Twombly, 550 U.S. at 555. Accordingly, a plaintiff must do more than employ "labels, " "conclusions, " or a "formulaic recitation of the elements of a cause of action." Id.

When analyzing a complaint for failure to state a claim under Rule 12(b)(6), "[a]ll allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party." Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir. 1996). However, 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).

II. Application

Defendants move to dismiss all of Plaintiffs' claims on the grounds that each fails to state a claim upon which relief may be granted.

A. Lack of Standing (Claim One)

Plaintiffs first argue that Defendants lack standing to foreclose on the Property because they are not "holders" of the Note. Trustee's sales in Arizona are governed by Arizona law. Ariz. Rev. Stat. §§ 33-801 to -821. Pursuant to statute, "[b]y virtue of his position, a power of sale is conferred upon the trustee of a trust deed under which the trust property may be sold, in the manner provided in this chapter, after a breach or default in performance of the contract or contracts, for which the trust property is conveyed as security, or a breach or default of the trust dead." Ariz. Rev. Stat. § 33-807(A). Here, Plaintiffs offer no valid arguments or authority to suggest that, despite this statute, trustee ReconTrust nonetheless lacks authority to foreclose ...


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