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Hummel v. Rushmore Loan Managaement, LLC

United States District Court, D. Arizona

June 8, 2017

Bryan W. Hummel and Sandra M. Dahl Living Trust, Plaintiff,
v.
Rushmore Loan Management, LLC, et al., Defendants.

          ORDER

          David G. Campbell United States District Judge

         Plaintiff 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.

         I. Background.

         Plaintiff is a living trust organized under the laws of Arizona. Doc. 1, ¶ 2.[1] 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.

         On June 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.

         On 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.

         On 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.

         In 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.

         In 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).

         On 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.

         II. Legal Standard.

         A 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).

         III. Motion to Dismiss.

         The 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 ...


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