United States District Court, D. Arizona
ORDER
DOMINIC W. LANZA UNITED SLATES DISTRICT JUDGE.
This is
a pro se lawsuit brought by a married couple, Anna
and Darius Chabrowski (“Plaintiffs”), against
three defendants: the Bank of New York Mellon Trust Company,
N.A. f/k/a The Bank of New York Trust Company, N.A.
(“BONY”), Bayview Loan Servicing, LLC
(“Bayview”), and Zieve, Brodnax & Steele, LLP
(“ZBS”) (collectively, “Defendants”).
In a nutshell, Plaintiffs allege that, even though they paid
off the promissory note on their home in 2006, Defendants
began pursuing improper collection and foreclosure efforts
against them in 2016. As remedies, they seek (1) a
declaration that Defendants are barred, for
statute-of-limitations reasons, from foreclosing on their
home and (2) compensatory and punitive damages.
Pending
before the Court are four motions: (1) BONY and Bayview's
motion to dismiss Plaintiffs' first amended complaint
(Doc. 33), (2) BONY's unopposed “Request for
Judicial Notice in Support of Motion to Dismiss” (Doc.
35), (3) Plaintiffs' motion to disqualify ZBS from
serving as BONY's counsel in this matter (Doc. 41), and
(4) Plaintiffs' amended motion for leave to file a second
amended complaint (Doc. 58). As explained below, the Court
will dismiss ZBS as a party under Rule 21, because Plaintiffs
have not alleged diversity of citizenship as to ZBS. In
addition, the Court will grant the motion to dismiss, grant
the request for judicial notice, deny Plaintiffs' motion
to disqualify counsel, and deny Plaintiffs' amended
motion for leave to file a second amended
complaint.[1] These actions will dispose of all of
Plaintiffs' claims.
BACKGROUND
A.
Procedural History
Plaintiffs
are a married couple who reside in Arizona. (Doc. 32 ¶
6.) In September 2017, Plaintiffs filed a pro se
lawsuit against BONY in Arizona state court.[2] (Doc. 1 at 8.) In
October 2017, BONY removed this case to federal court based
on diversity jurisdiction. (Doc. 1 at 2.)
On June
7, 2018, Plaintiffs filed a first amended complaint
(“FAC”). (Doc. 32.) The FAC adds two new
defendants, Bayview and ZBS. (Doc. 32 at 3-4.) The FAC does
not, however, properly allege the existence of diversity
jurisdiction as to these two defendants. Among other things,
the FAC does not allege the citizenship of all of ZBS's
partners, owners, and members, [3] seems to suggest that ZBS is
based in Arizona, and mistakenly cites Arizona law as
providing a jurisdictional basis for this case to be in
federal court. (Doc. 32 at 3-4.)
The FAC
asserts a variety of claims arising from Defendants'
efforts, beginning in 2016, to pursue collection and
foreclosure efforts against Plaintiffs. The relief sought is
two-fold: (1) a declaration that Defendants are barred, for
statute-of-limitations reasons, from foreclosing on
Plaintiffs' home, which is located in Anthem, Arizona,
and (2) compensatory and punitive damages.
On June
21, 2018, BONY filed a motion to dismiss the FAC under Rule
12(b)(6) (see Doc. 33) and a request for judicial
notice pertaining to the motion to dismiss (see Doc.
35). Bayview subsequently filed a joinder. (Doc. 44.)
In July
2018, Plaintiffs filed an opposition to the motion to dismiss
(see Doc. 37) and a non-opposition to the request
for judicial notice (see Doc. 38). Afterward, BONY
timely filed a reply in support of the motion to dismiss.
(Doc. 39.)
In
August 2018, Plaintiffs filed a motion to disqualify ZBS from
representing BONY in this matter. (Doc. 41.) BONY filed a
timely response (see Doc. 42) and Plaintiffs filed a
timely reply (see Doc. 45).
On
October 9, 2018, Plaintiffs filed a motion for permission to
file a second amended complaint. (Doc. 47.) On October 17,
2018, BONY and Bayview filed an opposition, arguing the
motion should be denied because (1) Plaintiffs failed to
comply with Local Rule 15.1(a), (2) Plaintiffs' proposed
amendment (i.e., correcting BONY's true
corporate name) was unnecessary because BONY had already made
an appearance under its correct name and subjected itself to
the Court's jurisdiction, and (3) granting leave to amend
at such a late juncture (more than a year after the lawsuit
was initiated) would result in undue hardship and delay.
(Doc. 49.)
On
October 31, 2018, this case was reassigned to the undersigned
judge. (Doc. 53.)
On
December 7, 2018, the Court issued an order denying
Plaintiffs' motion for leave to file a second amended
complaint based on non-compliance with Local Rule 15.1(a).
(Doc. 55.)
On
December 21, 2018, Plaintiffs filed an amended motion for
leave to file a second amended complaint. (Doc. 58.) This
time, they complied with Local Rule 15.1(a) by providing a
redlined copy of their proposed new complaint. (Doc. 59.) It
appears the only proposed changes would be (1) to insert the
phrase “f.k.a Bank of New York Trust Company”
after “Bank of New York Mellon Trust Company, ”
(2) to assert a new allegation concerning BONY's
registration to do business in Arizona, (3) to assert that
the address of BONY's parent company is in California,
not Arizona, (4) to include new allegations about ZBS's
activities in Arizona and California, and (5) to replace the
acronym BONY with “BNY Trust.” There are no
changes to Plaintiffs' legal theories or claims for
relief.
B.
Factual Assertions in the FAC
Below,
the Court has attempted to summarize, in chronological order,
the allegations in the FAC relevant to Plaintiffs'
asserted claims:
In 2005, Plaintiffs hired a builder to construct a home for
them in Anthem, Arizona. (Doc. 32 ¶¶ 18-20.) They
paid $150, 000 to the builder and borrowed the remaining
balance, $185, 000, from a company called Preferred Home
Mortgage Company (“Preferred Home”), which was
“a financing arm” of the builder. (Id.)
The promissory note was executed in April 2006.
(Id.)
On a
date not specified in the FAC, but “before the house
was even built, and before [Plaintiffs] closed on the loan,
” Preferred Home sold the $185, 000 mortgage to Bank of
America. (Id. ¶ 21.)
In
mid-to-late 2006, “Plaintiffs paid of[f] the mortgage
with Preferred Home” by using their own savings and
money they had obtained from an equity line of credit from
ETRADE Financial. (Id. ¶ 22.) Plaintiffs then
carried that line of credit as their first mortgage.
(Id.)
In
2007, Preferred Home went bankrupt. (Id. ¶ 50.)
Plaintiffs allege that Preferred Home “failed to fully
satisfy [the loan] . . . before Preferred Home Mortgage went
bankrupt, ” thus making the mortgage
“defunct.” (Id.)
In
2009, despite the fact that Plaintiffs had already paid off
the promissory note, Bank of America accelerated the loan and
scheduled a foreclosure. (Id. ¶ 23.) Bank of
America then cancelled the foreclosure effort, “after
discovering it an error, ” and paid $2, 000 to
Plaintiffs in consequential damages. (Id.)
“[S]ometime
in 2009, ” BONY acquired an interest in Plaintiffs'
mortgage from Preferred Home pursuant to an Assignment of
Deed of Trust. (Id. ¶¶ 30, 46.) The
Assignment was signed by “Aida Duenas.”
(Id. ¶ 46.) Plaintiffs allege that “Aida
Duenas” is a robo-signer who lacked authority to assign
any interest to BONY because Preferred Home went bankrupt in
2007 and “Aida Duenas” is a false name that has
reappeared in litigation concerning robo-signing efforts by
other banks. (Id. ¶¶ 48-50.) Therefore,
BONY knew or had reason to know the Assignment of Deed of
Trust was invalid. (Id. ¶ 51.) Regardless, BONY
recorded the Assignment of Deed of Trust. (Id.)
On
February 16, 2016, Plaintiffs began receiving mail from
Bayview, which was attempting to collect mortgage payments on
behalf of Bank of America. (Id. ¶ 24.) Bayview
then corrected itself and attempted to collect the payments
on behalf of BONY. (Id.) Bayview had purchased
servicing rights to Plaintiffs' mortgage loan knowing the
loan was defunct. (Id. ¶ 25.) In the
correspondence received by Plaintiffs, Defendants represented
themselves as debt collectors, giving notices such as
“WE ARE ATTEMPTING TO COLLECT DEBT, AND ANY INFORMATION
WILL BE USED FOR THAT PURPOSE.” (Id. ¶
56.) Moreover, Defendants sent Plaintiffs a Statement of
Breach and Non-Performance that stated: “the monthly
installment of principal and interest became due on 4/1/2009,
including late charges and all subsequent monthly
installments of principal and interest.” (Id.
¶ 38.) Plaintiffs refused to pay, so Bayview threatened
Plaintiffs with a non-judicial foreclosure. (Id.
¶ 25.)
On July
13, 2017, BONY sent Plaintiffs a “notice of
acceleration” of their loan. (Id. ΒΆ 40.)
The notice from BONY was invalid because the loan had never
been decelerated or reinstated ...