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In re Mortgage Electronic Registration Systems Mers Litigation

United States District Court, D. Arizona

August 4, 2015

IN RE MORTGAGE ELECTRONIC REGISTRATION SYSTEMS MERS LITIGATION THIS DOCUMENT RELATES TO
v.
Aurora Loan Services, LLC, et al. CV 10-01547-PHX-JAT

ORDER

James A. Teilbrorg Senior United States District Judge

Under the Rule of Mandate, this Court previously denied Defendant Aurora Loan Services, LLC’s (“Aurora”) motion for judgment on the pleadings (Doc. 1833 in MDL 09-2119). Doc. 38 in CV 10-1547. Aurora moves for reconsideration arguing that because its theories are not ones ruled on by the Ninth Circuit Court of Appeals (presumably because Aurora did not argue any such theories to the Court of Appeals), Aurora is free to raise them via a motion for judgment on the pleadings without running afoul of the Rule of Mandate.[1]

More specifically, Aurora argues that Plaintiff’s A.R.S. § 33-420 count fails to state a claim (and therefore Aurora is entitled to judgment on the pleadings) because Plaintiff did not plead all the required elements of the claim. Aurora never states what it argues the actual elements are. But at a minimum, Aurora seems to argue that Plaintiff must allege: 1) the documents were forged (in this case via robosigning); 2) that defendant (Aurora) was “involved” in recording the documents; 3) that defendant (Aurora) knew that the alleged false statement was in the documents; 4) that Plaintiff owned the property at the time of recording; and 5) that the alleged false statement was material. Doc. 39 in CV 10-1547 at 5-6. The Court has not endeavored to do Aurora’s research for it to determine whether these are in fact the elements of this claim.

Nonetheless, assuming these are the elements of the claim, and assuming Aurora is permitted to raise some of its failure to state a claim theories via a 12(b)(6) motion, and upon losing that motion, raise its remaining failure to state a claim theories via a 12(c) motion, there is no doubt that the Court of Appeals found that Plaintiff stated a claim as to element 1.

With respect to elements 2 and 3, Aurora does not attack whether Plaintiff made these allegations with respect to the documents at issue, but instead whether Plaintiff made these allegations with respect to Aurora particularly. As this Court quoted in its last Order, the Court of Appeals stated,

Fourth, the MDL Court held that appellants had not pleaded their robosigning claims with sufficient particularity to satisfy Federal Rule of Civil Procedure 8(a). We disagree. … [T]he CAC also alleges that Jim Montes, who purportedly signed the substitution of trustee for the property for Milan Stejic had, on the same day, “signed and recorded, with differing signatures, numerous Substitutions of Trustee in the Maricopa County Recorder’s Office….Many of the signatures appear visibly different than one another.” These and similar allegations of the CAC “plausibly suggest an entitlement to relief, ” Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009) and provide defendants fair notice as to the nature of appellants’ claims against them, Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).”

Doc. 1797-1 in MDL 09-2119 at 24-25. The Court of Appeals held these were sufficient allegations of knowledge and involvement in recording against “defendants.” This Court finds this holding does not leave open the possibility that by “defendants” the Court of Appeals really meant only one or some Defendants. If Aurora wanted to be specially separated from the other Defendants, it needed to make that argument before the Court of Appeals. Thus, Aurora’s arguments for judgment on the pleadings on elements 2 and 3 are barred by the Rule of Mandate.

With respect to element 4, the Court of Appeals found that Plaintiff stated a claim with respect to the recording of the Substitution of Trustee. Aurora now argues it should be dismissed because Plaintiff did not own the property at the time the Deed was recorded. Basically, Aurora appears to be arguing that this Court should take Plaintiff’s A.R.S. § 33-420 count and divide it into multiple counts on a document by document basis. Then this Court should assess whether Plaintiff states a claim as to each document independently.

If Aurora believed Plaintiff had to state a claim as to each document separately, that is an argument it was required to be make at the Court of Appeals. The Court of Appeals held, “These and similar allegations of the CAC ‘plausibly suggest an entitlement to relief, ’ Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009).” Doc. 1797-1 in MDL 09-2119 at 24-25. The Court of Appeals held this with respect to the entire A.R.S. § 33-420 claim. Thus, this Court finds the Rule of Mandate precludes this Court from finding that the Court of Appeals really meant that the claim only survived as to some of the documents.

With respect to element 5, A.R.S. § 33-420(A) states that an actionable document must contain a “material misstatement” or a “false claim” or be “otherwise invalid.” Aurora argues that even if notarization of the documents and the identities of the signatories are inaccurate, those inaccuracies are not material. Doc. 22 at 10. Assuming for purposes of this Order only that Aurora is correct that the statements are not material, forged documents (as alleged here) might be “otherwise invalid” or contain a “false claim, ” therefore the Court disagrees that Plaintiff must allege materiality.

Based on all of the foregoing, the Court finds no basis for reconsideration as to whether Plaintiff states a claim on the elements of the A.R.S. § 33-420 count.

Finally, Aurora moves for reconsideration/judgment on the pleadings arguing that A.R.S. § 33-811(C) bars Plaintiff’s A.R.S. § 33-420(B) claim. Although Aurora does not explain the result of this argument, the Court assumes that Aurora concedes that even if the Court were to dismiss the § 33-420(B) argument under § 33-811(C), Plaintiff’s § 33-420(A) claim would still survive. This result is consistent with Sitton v. Deutsche Bank Nat. Trust Co., 311 P.3d 237, 240 ¶13 (Ariz.Ct.App. 2013), which holds “…failure to enjoin a trustee’s sale does not waive claims for monetary awards under § 33–420(A).”

With regard to § 33-420(B), Aurora cites Sitton for the following statement: “If a trustor fails to obtain injunctive relief and a trustee’s sale is completed, she waives all claims to title of the property.” 311 P.3d at 240. While it is true that this is a quote from Sitton, the Sitton court never undertook to discuss § 33-420(B). However, the Court did say that any “title” claims that Sitton might have had under § 33-420(A) or (D) were waived under § 33-811(C) by Sitton’s failure to obtain an injunction before the sale. Sitton, 311 P.3d at 240, ¶14.

Here, Plaintiff specifically argues that his quiet title claim is based on § 33-811(D). Doc. 1840 at 3. Sitton specifically holds that a § 33-420(D) claim is waived by the failure to obtain an injunction under § 33-811(C). However, Steinberger v. McVey ex rel. County of Maricopa, stated that a claim of lack of notice of the sale survives the A.R.S. § 33-811(C) waiver. 318 P.3d 419, 430 ΒΆ 42 (Ariz.Ct.App. 2014). Here, Plaintiff claims lack of notice. Doc. 1840 in MDL 09-2119 at 3-5. The Court must accept this factual ...


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