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Stauffer v. Premier Service Mortgage, LLC

Court of Appeals of Arizona, First Division

September 20, 2016

KARL and FABIANA STAUFFER, Plaintiffs/Appellants,
v.
PREMIER SERVICE MORTGAGE, LLC, et al., Defendants/Appellees.

         Appeal from the Superior Court in Maricopa County No. CV2011-005567 The Honorable Katherine Cooper, Judge.

          Ronald Warnicke PLC, Phoenix By Ronald E. Warnicke Co-Counsel for Plaintiffs/Appellants

          Warnicke Law PLC, Phoenix By Robert C. Warnicke Co-Counsel for Plaintiffs/Appellants

          Snell & Wilmer L.L.P., Tucson By Andrew M. Jacobs, Robert A. Bernheim Counsel for Defendant/Appellee U.S. Bank National Association

          Wright, Finlay & Zak, LLP, Phoenix By Kim R. Lepore, Jamin S. Neil Counsel for Defendants/Appellees First American Title Insurance Company and First American Servicing Trustee Solutions, LLC

          Judge Lawrence F. Winthrop delivered the decision of the Court, in which Presiding Judge Peter B. Swann and Judge Donn Kessler joined.

          OPINION

          WINTHROP, JUDGE

         ¶1 Karl Stauffer and Fabiana Stauffer (the "Stauffers") appeal the trial court's order granting a Rule 12(b)(6) motion to dismiss their complaint for failure to state a claim. For the following reasons, we affirm.

         FACTS AND PROCEDURAL HISTORY

         ¶2 In 2005, the Stauffers executed a promissory note secured by a deed of trust on their residential property (the "Property") in Scottsdale, Arizona. The deed of trust listed Premier Service Mortgage, LLC ("Premier") as the lender; Stewart Title and Trust of Phoenix, Inc. ("Stewart Title") as the trustee; and Mortgage Electronic Registration Systems, Inc. ("MERS") as "acting solely as a nominee for Lender" and as "the beneficiary under this Security Instrument." On the same day, Premier executed an Endorsement Allonge to the promissory note, endorsing the note to Ohio Savings Bank.

         ¶3 The Stauffers defaulted on the note. In September and October of 2010, First American Title Insurance Company ("First American Title") recorded three documents - Notice of Trustee Sale, Notice of Substitution of Trustee, and Assignment of Deed of Trust (collectively "Recorded Documents")-with the Maricopa County Recorder. The Recorded Documents gave notice that First American intended to hold a trustee's sale of the Property under the terms specified in the deed of trust, and that, as the named beneficiary under the deed of trust, MERS had appointed First American as a substitute trustee, and assigned the note and the deed of trust to U.S. Bank National Association ("U.S. Bank").[1]

         ¶4 In 2011, the Stauffers filed a complaint against First American Title and First American Trustee Servicing Solutions, LLC (collectively "First American"), Premier, and U.S. Bank. In the complaint, the Stauffers alleged all defendants, except Premier, caused the recording of the Recorded Documents, and that those documents contained false statements. The Stauffers claimed that the recording violated Arizona Revised Statutes ("A.R.S.") § 33-420, [2] which prohibits any person from recording false or fraudulent documents that assert an interest in, or a lien or encumbrance against, real property. The Stauffers also sought an order quieting title in the Property.

         ¶5 U.S. Bank and First American moved to dismiss, arguing that the complaint failed to state a claim upon which relief could be granted. In granting that motion, the court found that (1) the Recorded Documents did not constitute documents that asserted an interest in, or a lien or encumbrance against, real property, as required under A.R.S. § 33-420(A); (2) the Stauffers could not clear title under § 33-420(B) because that subsection can be used only when false or fraudulent liens have been recorded, which the Stauffers had not alleged; and (3) the Stauffers lacked standing to seek to clear title because they were neither owners nor beneficial title holders under § 33-420(B). The Stauffers appealed, and in Stauffer v. U.S. Bank Nat'l Ass'n, 233 Ariz. 22, 26-29, ¶¶ 15, 19, 22, 27, 308 P.3d 1173, 1177-80 (App. 2013), this court reversed the trial court, holding that the Recorded Documents did assert an interest in the Property, that the Stauffers thus could seek to clear title under § 33-420(B), and the Stauffers had standing to clear title as owners of the Property.

         ¶6 While this case was on remand to the superior court, this court issued another opinion, Sitton v. Deutsche Bank Nat'l Trust Co.,233 Ariz. 215, 311 P.3d 237 (App. 2013), where it held certain misstatements in three recorded documents (notice of trustee's sale, notice of substitution of trustee, and assignment of note and deed of trust) - similar to the Recorded Documents here-did not constitute material misstatements. Id. at 222, ¶ 34, 311 P.3d at 244. Relying on Sitton, U.S. Bank again moved to dismiss under Rule 12(b)(6) for failure to state a claim. First American joined the motion with an additional argument that the case should be dismissed as to First American as the trustee of the deed of trust under A.R.S. ยง 33-807(E); the ...


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