United States District Court, D. Arizona
Steven P. Logan, United States District Judge
American Title Insurance Company (“First
American”) has moved the Court to dismiss Plaintiff
Mickey Nelson Clayton's First Amended Complaint (Doc. 1-1
at 2-17). (Doc. 15.) Defendants Wells Fargo, N.A. and HSBC
Bank USA, National Association, as Trustee for Nomura
Asset-Backed Certificate Series, 2006-AF1 (collectively,
“Wells Fargo Defendants”), have also moved to
dismiss Plaintiff's First Amended Complaint. (Doc. 18.)
The motions are ready for resolution.
survive a motion to dismiss, a complaint must contain
“a short and plain statement of the claim showing that
the pleader is entitled to relief” such that the
defendant is given “fair notice of what the . . . claim
is and the grounds upon which it rests.” Bell Atl.
Corp. v. Twombly, 550 U.S. 554, 555 (2007) (quoting
Fed.R.Civ.P. 8(a)(2); Conley v. Gibson, 355 U.S. 41,
47 (1957)). The Court may dismiss a complaint for failure to
state a claim under Federal Rule 12(b)(6) for two reasons:
(1) lack of a cognizable legal theory, and (2) insufficient
facts alleged under a cognizable legal theory. Balistreri
v. Pacificia Police Dep't, 901 F.2d 696, 699 (9th
Cir. 1990). A complaint must “state a claim to relief
that is plausible on its face.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (internal citation
omitted). Facial plausibility requires the plaintiff to plead
“factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id. “Where a
complaint pleads facts that are ‘merely consistent
with' a defendant's liability, it ‘stops short
of the line between possibility and plausibility of
entitlement to relief.'” Id. (quoting
Twombly, 550 U.S. at 557). Although a complaint
“does not need detailed factual allegations, ” a
plaintiff must “raise a right to relief above the
speculative level.” Twombly, 550 U.S. at 555.
This requires “more than labels and conclusions, and a
formulaic recitation of the elements of a cause of
of Plaintiff's Amended Complaint fails to state a claim
for an invalid trustee's sale. Plaintiff alleges that the
Notice of Trustee's Sale recorded on April 15, 2010 is
invalid because it is “being held by a purported
beneficiary who does not rightfully have a beneficial
interest to foreclose.” (Doc. 1-1- at 10.) The public
record shows that MERS purported to appoint Defendant First
American as trustee in February 2009 (Doc. 1-1, Ex. E)-two
years after MERS assigned its interest as trustee to Wells
Fargo Defendants (Doc. 1-1, Ex. C). Yet Plaintiff does not, and
cannot, allege that he was harmed by this error because the
Notice of Trustee's Sale stemming from the erroneous
trustee substitution was cancelled. (Doc. 18-2, Ex. E.) Even
if the error had not been rectified-which it was-“an
error in the description of the beneficiary will not
invalidate an otherwise compliant Notice and sale.”
Mundinger v. Wells Fargo Bank, No.
CV-10-2774-PHX-FJM, 2011 WL 1559423, at *3 (citing Ariz. Rev.
Stat. § 33-808(E)). Moreover, Defendant First American
was appointed trustee by Wells Fargo Defendants in 2009.
(Doc. 18-2 at 8-9.) Plaintiff's claim for declaratory
judgment that the Notice of Trustee's Sale recorded on
April 15, 2010 is invalid fails to state a claim and is
II of Plaintiff's Amended Complaint fails to state a
claim for breach of contract. Plaintiff alleges that he
entered into a contract with Wells Fargo Defendants to modify
his loan and that Defendants breached that contract by (1)
requiring Plaintiff to obtain a signature from MERS regarding
the subordination agreement, and (2) failing to notify
Plaintiff that he did not qualify for the loan modification.
(Doc. 1-1 at 10-11.)
alleges that Defendants added this requirement after the
trial period was already underway and that “[it] was
unreasonable.” (Doc. 1-1 at 8.) Plaintiff directs the
Court to the “Trial Period Plan Notice” as the
contract which Defendants allegedly breached. (Doc. 1-1, Ex.
J.) Under a header entitled, “What you need to do,
” the Trial Period Plan Notice reads as follows:
Please note that your trial period may extend beyond the
dates provided. . . . Some reasons for the extension could be
tied to other liens you have on your property that may be
required to be cleared prior to final approval of your
modification. For example, we may need to receive a
subordination agreement from the other lenders so that we can
maintain our lien position.
(Doc. 1-1 at 82-83) (emphasis added).
Plaintiff failed to meet the condition precedent to the
formation of the contract- that is, obtaining a signature
from MERS-Defendants were not obligated to modify his loan.
See Biltmore Bank of Ariz. v. First Nat'l Mortg.
Sources, L.L.C., No. CV-07-936-PHX-LOA, 2008 WL 564833,
at *7 (D. Ariz. Feb. 26, 2008). Because there was no contract
between Plaintiff and Defendants regarding modification of
his loan, Plaintiff has failed to state a claim for breach of
Arizona, all contracts contain an implied covenant of good
faith and fair dealing. Coulter v. Grant Thornton,
LLP, 241 Ariz. 440, ¶ 30, 388 P.3d 834, 842 (App.
2017) (internal citation omitted). This implied covenant can
be breached when a party exercises “express discretion
in a way inconsistent with a party's reasonable
expectations and by acting in ways not expressly excluded by
the contract's terms but which nevertheless bear
adversely on the party's reasonably expected benefits of
the bargain.” Cavan, 182 F.Supp.3d at 961
(citing Bike Fashion Corp. v. Kramer, 202 Ariz. 420,
424, 46 P.3d 431, 435 (App. 2002)). Again, the condition
precedent necessary to the formation of the loan modification
contract between Plaintiff and Defendants was never
satisfied. In the absence of an underlying contract upon
which a claim for breach of covenant of good faith and fair
dealing could be based, Plaintiff has failed to state a
Count IV of Plaintiff's First Amended Complaint,
Plaintiff alleges that Defendant First American breached its
fiduciary duty to Plaintiff by (1) relying on MERS'
erroneous Notice of Substitution of Trustee, and (2) signing
a Notice of Trustee's Sale based on the erroneous
documentation from MERS. (Doc. 1-1 at 13.) Defendant First
American, however, “was under no obligation to
independently verify the accuracy of the mortgage documents
provided to it or the validity of its appointment as
Trustee.” Vawter v. Bank of Am. NA, 108
F.Supp.3d 719, 725 (D. Ariz. 2015) (citing Cervantes v.
Countrywide Home Loans, Inc. 656 F.3d 1034, 1045 (9th
Cir. 2011)). Accordingly, Plaintiff has failed to state a
claim against Defendant First American for breach of
of Plaintiff's Amended Complaint is for a mandatory
injunction against Defendants for all future actions against
Plaintiff or the property pending resolution of this
litigation. (Doc. 1-1 at 15.) Injunctive relief is a remedy,
not an independent cause of action. Lorona v. Ariz.
Summit Law Sch., 151 F.Supp.3d 978, 997 (D. Ariz. 2015).
Moreover, a mandatory injunction “goes well beyond
simply maintaining the status quo pendent lite [and] is
particularly disfavored.” Garcia v. Google, Inc., 786
F.3d 733, 740 (9th Cir. 2015) (internal citations omitted).
The Court will not issue a mandatory injunction “unless
the facts and law clearly favor the moving
party.” Id. (quoting Anderson v. United
States, 612 F.2d 1112, 1114 (9th Cir. 1979)).
Court finds that Plaintiff's estoppel argument fails and
will grant Defendants' motion to dismiss Count VI.
Plaintiff alleges that Defendants “made a clear and
unambiguous promise to Plaintiff that it would modify is
[sic] loan.” (Doc. 1-1 at 15.) In order to state a
claim for promissory estoppel, Plaintiff must show that: (1)
Defendant made a promise to Plaintiff; (2) Defendant should
have reasonably foreseen that Plaintiff would rely on that
promise; (3) Plaintiff actually relied on that promise to his
detriment; and (4) Plaintiff's reliance on the promise
was justified. Schrock v. Fed. Nat'l Mortg.
Ass'n, No. CV-11-0567-PHX-JAT, 2011 WL 3348227, at
*7 (D. Ariz. Aug. 3, 2011). The Court agrees with Wells Fargo
Defendants that Plaintiff's own exhibits undermine this
claim. (Doc. 18 at 12-13.) The “Trial Period Plan
Notice” from America's Servicing Company makes it
clear that the Notice was only the first step in
Plaintiff's loan modification process and that it would
not be finalized unless certain conditions were met. (Doc.
1-1 at 82-87.) Ultimately, the Trial Period Plan Notice upon
which Plaintiff's claim is based was-by no means-an
unambiguous promise to modify the loan and any reliance by
Plaintiff was unjustified.
VII of Plaintiff's First Amended Complaint is a claim for
respondeat superior liability against HSBC Bank USA for the
actions of its agent, Defendant Wells Fargo. (Doc. 1-1 at
16.) Because Plaintiff has failed to state a claim against
Defendant Wells Fargo, Plaintiff's claim for derivative
liability also fails. Wiper v. Downtown Dev. Corp. of
Tucson, 152 ...