United States District Court, D. Arizona
Bryan W. Hummel and Sandra M. Dahl Living Trust, Plaintiff,
Rushmore Loan Management, LLC, et al., Defendants.
G. Campbell United States District Judge
Brian W. Hummel and Sandra M. Dahl Living Trust (the
“Trust” or “Plaintiff”) filed a
complaint against Defendants Rushmore Loan Management, LLC
and Ditech Financial, LLC. Doc. 1. Defendant Rushmore has
filed a motion to dismiss pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure. Doc. 13. The Trust
responded to the motion, and filed a motion to amend its
complaint. Doc. 14. The motion is fully briefed (Docs. 13,
14, 15, 16), and no party requests oral argument. For the
reasons that follow, the Court will grant Defendant's
motion to dismiss in part, with leave to amend.
is a living trust organized under the laws of Arizona. Doc.
1, ¶ 2. The Trust was created on September 19,
2007, and a certificate of trust was recorded with the Mohave
County, Arizona Recorder on October 22, 2007. Id.
Plaintiff's counsel Peter Dahl serves as successor
trustee of the Trust. Id., ¶ 1. Mr. Dahl acts
as trustee of a Trust-owned property located at 2692 Avenida
Grande, Bullhead City, Arizona (the “Property”).
Id. Defendants Ditech and Rushmore are both foreign
LLCs registered in the state of Delaware with offices in
Maricopa County, Arizona. Id., ¶¶ 4-5.
26, 2004, Bryan Hummel and Sandra Dahl (collectively
“Borrowers”) entered into a “mortgage/deed
of trust/security deed/note” on the Property.
Id., ¶ 7. That deed of trust
(“DOT-1”) listed First National Bank of Arizona
as the mortgage lender and Mortgage Electronic Registration
Systems, Inc. (“MERS”) as DOT-1's
beneficiary. Id. On August 17, 2005, Borrowers
entered into a second deed of trust (“DOT-2”)
with Countrywide Bank. Id., ¶ 9. On August 25,
2005, DOT-2 was recorded with the Mohave County, Arizona
Recorder's Office (“Mohave County”).
Id. On September 8, 2005, Borrowers paid off all
debts secured by DOT-1 and obtained a “deed of release
and reconveyance” from MERS, and it was recorded with
Mohave County. Id., ¶ 8.
February 26, 2007, Borrowers entered into a third deed of
trust (“DOT-3”) with MERS as the beneficiary.
Id., ¶ 11. On March 30, 2007, DOT-3 was
recorded with Mohave County. Id. On March 14, 2007,
Borrowers paid off all debts secured by DOT-2 and obtained a
“deed of release and reconveyance” from
Countrywide Bank, which was recorded with Mohave County.
Id., ¶ 10.
September 19, 2007, Borrowers executed a warranty deed
conveying the Property to the Trust “for
consideration.” Id., ¶ 13. On October 22,
2007, this conveyance was recorded with Mohave County.
Id. On February 21, 2008, Borrowers, “in their
individual capacity and as husband and wife” entered
into another mortgage and deed of trust agreement
(“DOT-4”) with Countrywide. Id., ¶
15. On March 4, 2008, DOT-4 “was recorded with the
Maricopa County Recorder.” Id.
(emphasis in original). On March 17, 2008, Borrowers paid off
all debts secured by DOT-3, and secured a deed of release and
reconveyance from MERS, which was recorded with Mohave
County. Id., ¶ 12.
January 2009, Borrowers “in their individual capacity
defaulted on their obligations under [DOT-4.]”
Id., ¶ 17. On February 17, 2009, Countrywide
invoked the acceleration clause contained in the mortgage
contract that accompanied DOT-4. Id. On May 25, 2011
- three years after entering into DOT-4 with Borrowers, and
nearly four years after the Property was conveyed to the
Trust - Countrywide recorded DOT-4 with Mohave County.
Id., ¶ 16.
2012, “Countrywide and its successor Bank of America,
then assigned [DOT-4] to Ocwen Loan Servicing, LLC[, ]”
(id., ¶ 18), who thereafter assigned DOT-4 to
Residential Credit Solutions (id., ¶ 19). In
September 2016, Residential Credit Solutions assigned DOT-4
to Defendant Ditech. Id., ¶ 20. In 2017, Ditech
assigned DOT-4 to Defendant Rushmore. Id., ¶
21. Currently, Rushmore “hold[s] [DOT-4] on the subject
property and claims that it is owed $404, 918.11.”
Id., ¶ 22. Soon thereafter, Rushmore noticed a
trustee's sale scheduled for January 17, 2017, to be held
at the Mohave County Courthouse in Kingman, Arizona.
Id., ¶ 24. The parties agreed among themselves
to postpone the trustee's sale on at least three
occasions - first until February 27, 2017 (id.,
¶ 25), then until April 10, 2017 (Doc. 7), and finally
until June 5, 2017 (Doc. 18).
February 23, 2017, the Trust initiated this action seeking
declaratory relief that the Trust is the Property's
lawful owner and that Defendants' are precluded from
foreclosing on the Property because the statute of
limitations for doing so has expired. See Doc. 1. at
4-6. Additionally, the Trust seeks monetary relief in the
form of damages incurred from Defendants' slander of
title and trespass to the Property. See Id. On June
1, 2017, while the motion at bar was pending, the Trust filed
a motion for temporary restraining order (“TRO”)
seeking to enjoin Rushmore from executing the trustee's
sale on June 5, 2017. Doc. 18. The Court granted the request
and issued a TRO. Doc. 19.
successful motion to dismiss under Rule 12(b)(6) must show
either that the complaint lacks a cognizable legal theory or
fails to allege facts sufficient to support its theory.
Balistreri v. Pacifica Police Dep't, 901 F.2d
696, 699 (9th Cir. 1990). A complaint that sets forth a
cognizable legal theory will survive a motion to dismiss if
it contains “sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (citing Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). 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.” Id.
(citing Twombly, 550 U.S. at 556). “The
plausibility standard is not akin to a ‘probability
requirement, ' but it asks for more than a sheer
possibility that a defendant has acted unlawfully.”
Id. (citing Twombly, 550 U.S. at 556).
Motion to Dismiss.
Trust's complaint contains four counts: (1) statute of
limitations, (2) declaratory relief, (3) slander of title and
trespass to real property, and (4) common law fraud. Doc. 1
at 4-6, ¶¶ 1-26. Rushmore argues that each of the
Trust's claims fails as a matter of law. See
Doc. 13. Specifically, Rushmore contends that: (1) the Trust
lacks standing to assert a statute of limitations defense;
(2) the Trust's slander of title and trespass claim fails
as a matter of law because the Trust does not allege
Defendant acted with malice, a required element of the claim;
(3) the Trust has failed to allege ...