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Kendrick v. World Savings Bank

United States District Court, D. Arizona

March 31, 2016

Jacqueline Kendrick, Plaintiff,
World Savings Bank, et al., Defendants.


JOHN J. TUCHI, District Judge.

At issue is Defendant Wells Fargo & Company's Motion to Dismiss Plaintiff's Complaint (Doc. 5, MTD), to which pro se Plaintiff Jacqueline Kendrick filed a Response (Doc. 6, Resp.) and Defendant filed a Reply (Doc. 7, Reply). The Court has reviewed the parties' briefs and finds that the Complaint (Doc. 1-1 at 7-17, Compl.) fails to state a claim against Defendant. For the reasons that follow, the Court will grant Defendant's Motion to Dismiss but grant Plaintiff leave to amend Counts Two, Four, and Five of her Complaint.


Plaintiff initiated this lawsuit in Arizona state court on August 17, 2015. (Compl. at 1.) Defendant removed this case from state court on September 23, 2015. (Doc. 1-1, Ex. 2.) In the Complaint, Plaintiff alleges the following facts, which the Court takes as true for the purpose of resolving Defendant's Motion to Dismiss. See Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir. 1996).

On April 20, 2007, Plaintiff obtained a loan from World Savings Bank, F.S.B. for $232, 375 secured by a Deed of Trust for property located at 42742 W. Misty Morning Lane, Maricopa, Arizona 85138 (the "Property"). (Compl. at 7-8.) The Deed of Trust named World Savings Bank as the beneficiary (the lender), Plaintiff as the trustor (the borrower), and a third party as the trustee (the holder of the legal title to the Property). (Doc. 1-1, Ex. 3.)[1] World Savings Bank later transferred its beneficial interest in the Deed of Trust into a Real Estate Mortgage Interest Conduit ("REMIC") Trust. (Compl. at 8.) Plaintiff notes that Wells Fargo & Company acquired World Savings Bank in 2008 (Compl. at 1), but the Complaint does not identify any specific acts taken by Defendant Wells Fargo & Company (Compl.). Instead, Plaintiff only alleges actions using the title "Defendants" generally.

In the Complaint, [2] Plaintiff refers to making payments on the loan in a timely manner. For example, Plaintiff alleges that "[a]fter signing the Deed of Trust and Note on April 20, 2007, Plaintiff did all, or substantially all of the significant things that the contract required her to do." (Compl. at 9.) Then, in more concrete language, Plaintiff asserts that "[a]ll conditions required by the contract on the part of the Plaintiff had occurred." (Compl. at 9.)

Plaintiff's primary claim is that Defendant did not have a right to foreclose on her property. (Compl. at 10.) She argues broadly that at some point during the transfer of her Note from beneficiary to beneficiary, Defendant "divested itself of the Note and Deed of Trust but did not comply with the covenants of the Deed of Trust, specifically, Covenant 28."[3] (Compl. at 9.) Plaintiff also alleges that Defendant could not foreclose on the Property because Defendant did not have the original Note at the foreclosure sale. (Compl. at 10.) Plaintiff asserts that even if Defendant argues that it is the successor beneficiary entitled to foreclose, "[it] does not have the original Note to prove that [it is] in fact the party authorized to conduct the foreclosure." (Compl. at 10.)

Plaintiff brings the following five Counts against Defendant: (1) wrongful foreclosure (Compl. at 9); (2) breach of the implied covenant of good faith and fair dealing (Compl. at 10-12); (3) breach of contract (Compl. at 12-13); (4) slander of title (Compl. at 13); and (5) quiet title (Compl. at 13-14). In one additional Count, Plaintiff requests a temporary restraining order and injunctive relief. (Compl. at 14-15.) Defendant now moves to dismiss all claims against it.


When analyzing a complaint for failure to state a claim for relief under Federal Rule of Civil Procedure 12(b)(6), the well-pled factual allegations are taken as true and construed in the light most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Legal conclusions couched as factual allegations are not entitled to the assumption of truth, Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009), and therefore are insufficient to defeat a motion to dismiss for failure to state a claim. In re Cutera Sec. Litig., 610 F.3d 1103, 1108 (9th Cir. 2010). Generally, on a Rule 12(b)(6) motion to dismiss, Federal Rule of Civil Procedure 8(a) governs and requires that a plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

Generally, when deciding a Rule 12(b)(6) motion, a district court may not consider material outside the pleadings. Lee, 250 F.3d at 688. To do otherwise would convert a motion to dismiss into a motion for summary judgment. Id .; see Fed.R.Civ.P. 12(b)(6). But there are two exceptions to this general rule: (1) a court may consider material properly submitted as part of the complaint, and (2) a court may take judicial notice of, and properly consider, matters of public record. Lee, 250 F.3d at 688.


As a threshold matter, Defendant claims that by not objecting to the foreclosure sale before it occurred, Plaintiff has waived any right to object to the Trustee's Sale under Arizona Revised Statute § 33-811(C). (MTD at 4-5.) The statute provides that when a trustor fails to object to a foreclosure before it occurs, "[t]he trustor... and all persons to whom the trustee mails a notice of a sale under a trust deed pursuant to section 33-809 shall waive all defenses and objections to the sale." A.R.S. § 33-811(C). Interpreting the statute, the Arizona Court of Appeals held that it "does not require the trustee to comply with the mailing requirements of § 33-809 for the waiver provision to apply later to the trustor." Madison v. Groseth, 279 P.3d 633, 637 (Ariz.Ct.App. 2012). After noting that the plaintiff had in fact received sufficient notice, Madison recognized the concern that, in other circumstances, its interpretation of Section 33-811(C) might "deprive a trustor of due process if that trustor is not given sufficient notice of the trustee's sale to obtain an injunction to the sale." Id.

Here, Plaintiff filed this action after the April 2015 Trustee's Sale, and it is unclear whether Plaintiff received notice or that the trustee mailed or recorded notice for the sale. The facts before the Court are distinguishable from Madison because here, there is a potential deprivation of Plaintiff's due process where Kendrick may not have received sufficient notice. See Hamilton v. Tiffany & Bosco, P.A., No. CV-14-00708-PHX-GMS, 2014 WL 4162362, at *5 (D. Ariz. Aug. 20, 2014). The Court need not decide Defendant's Motion to ...

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