Novotny v. Citibank, N.A.

          ORDER

          DAVID G. CAMPBELL, SENIOR UNITED STATES DISTRICT JUDGE

         Plaintiffs Edward Novotny and Lorna Schilling filed this action against LSF10 Master Participation Trust (“LSF10”), Caliber Home Loans, Inc. (“Caliber”), Citibank, N.A. (“Citibank”), JP Morgan Chase Bank, N.A. (“Chase”), and Mortgage Electronic Registration Systems (“MERS”), asserting state and federal claims. See Doc. 1-1. Defendants LSF10, Caliber, Citibank, and MERS move to dismiss. Docs. 7, 10, 14. For the following reasons, the Court will dismiss the complaint against LSF10, Caliber, Citibank, and MERS.

         I. Background.

         The Court takes the factual allegations of Plaintiff's complaint as true for purposes of the motions to dismiss. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In March 2007, Byron Elliot borrowed $195, 000 from Citibank to purchase the residence at 1531 E. Mahoney Avenue in Mesa, Arizona (“the property”). Doc. 1-1 at 3, 5. Elliot's loan was secured by a Deed of Trust against the property, which identified Citibank as the lender, MERS as the beneficiary, and Elliot as the borrower. Id. at 5; Doc. 7-1 at 2. Elliot passed away in May 2014, and his loan went into default. Doc. 1-1 at 6. In March 2018, Caliber sent a payoff quote and instructions for curing the default to a title agency, which was working to help Plaintiffs purchase the property. Id. Plaintiffs were also working with a mortgage company to get a loan, and with a Caliber employee to complete the purchase. Id. The property was eventually sold at a foreclosure sale, but not to Plaintiffs. Id. Plaintiffs assert claims for wrongful foreclosure, fraud, unjust enrichment, breach of the duty of good faith and fair dealing, and violations of the Real Estate Settlement Procedures Act (“RESPA”). Id. at 6-12.

         II. Rule 12(b)(6) 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 as long as it contains “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678 (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., 556 U.S. at 678 (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. Discussion.

         The moving Defendants assert common and unique arguments, including that Plaintiffs lack standing, have waived their claims, and have failed to state a claim. Docs. 7 (Caliber and LSF10); 14 (joining Caliber and LSF10 motion); 10 (Citibank). Plaintiffs failed to respond to MERS (see Doc. 28), and their three-page response to Caliber and LSF10, and four-page response to Citibank, fail entirely to engage Defendants' arguments (see Docs. 22, 23). Plaintiffs assert generally that Defendants improperly conducted the foreclosure sale and offered misleading information, allege numerous facts not included in their complaint, refer to no portion of their complaint, and cite only a single case. Id.

         A. Failure to State Claims under Arizona Law.

         1. Wrongful Foreclosure.

         Plaintiffs allege wrongful foreclosure. Doc. 1-1 at 6. Arizona recognizes no such cause of action. Zubia v. Shapiro, 408 F.3d 1248, 1253-54 (Ariz. 2018); Bermudez v. DHI Mortg. Co. Ltd., No. CV-17-02040-PHX-SPL, 2018 WL 2008998, at *2 (D. Ariz. Apr. 30, 2018). The Court will dismiss this claim with prejudice.^[1]

         2. Fraud.

         Plaintiffs allege fraud in the concealment (Count 2) and “fraudulent scheme - RICO” (Count 6). Doc. 1-1 at 8, 13. A plaintiff alleging fraud “must state with particularity the circumstances constituting fraud.” Fed. R. Civ. P 9(b). “To satisfy Rule 9(b), a pleading must identify ‘the who, what, when, where, and how of the misconduct charged,' as well as ‘what is false or misleading about [the purportedly fraudulent] statement, and why it is false.'” Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (brackets in original).

         The only specific allegation in Count 2 asserts that Defendants “concealed the fact that the property was not properly transferred including (1) Financial Incentives paid; (2) existence of Credit Enhancement Agreements; and (3) existence of Acquisition Provisions.” Doc. 1-1 at 8. Caliber and MERS assert, and Plaintiffs do not rebut, that this allegation is “simply a random list of things that might conceivably accompany a transfer of real property.” Doc. 7 at 8-9. This unexplained list is insufficient to state a claim that is plausible on ...