Snyder v. HSBC Bank, USA, N.A.
2012 U.S. Dist. LEXIS 79579
| D. Ariz. | 2012Background
- Plaintiff disputes whether a September 2010 loan modification agreement (LMA) was reached between Plaintiff and Defendants and whether a default exists on her Arizona property secured by a deed of trust.
- Plaintiff alleges Ocwen (loan servicer) approved and she executed an LMA; a nine-page document is attached but signed only by Plaintiff.
- Plaintiff paid ten installments; the tenth payment was returned and Plaintiff was told she was in default, while nine subsequent payments under the LMA were accepted.
- Foreclosure proceedings were started but a state TRO restraining foreclosure was issued on December 8, 2011; Defendants removed the case to federal court on January 3, 2012.
- Plaintiff asserts four counts (declaratory relief, conversion/slander of title, breach of the covenant of good faith and fair dealing, and intentional misrepresentation); Zieve is named as trustee. Escrow/third-party roles and jurisdiction issues are contested.
- Court grants HSBC/Ocwen’s 12(b)(6) motions to dismiss without prejudice, grants Zieve’s dismissal with prejudice, and allows leave to amend; motions for supplemental pleading and oral argument are resolved accordingly.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid LMA was formed and enforceable against HSBC/Ocwen | Plaintiff claims LMA was executed and modified the loan terms | Defendants say no binding LMA was executed or pled | LMA not sufficiently pled; leave to amend possible |
| Whether Plaintiff states a claim for breach of contract against HSBC/Ocwen | Plaintiff alleges breach of the LMA and modified terms | No pleaded contract breach or binding modification | Count insufficient; fault found in lack of plausible contract claim; amended pleading allowed |
| Whether Statute of Frauds bars the LMA-based claims | Part performance possibly exempts the writing requirement | LMA not reduced to writing; modification falls under Statute of Frauds | Statute of Frauds applies; amending possible to address part-performance theory |
| Whether Plaintiff states a valid fraud/misrepresentation claim under Rule 9(b) | All nine elements of fraud are present | Complaint lacks specific facts supporting fraud | Fraud claim insufficient but amendment allowed to plead specific facts |
| Whether Zieve as trustee is properly named or subject to joinder | Declaratory relief requires joining all affected parties | Trustee not liable absent breach of trustee obligations; misjoinder improper | Zieve is dismissed with prejudice; trustee liability not stated; costs awarded to Zieve |
Key Cases Cited
- Balistreri v. Pacifica Police Dept., 901 F.2d 696 (9th Cir.1990) (pleading standards and Rule 12(b)(6) scrutiny under Twombly/Iqbal)
- Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for pleadings under Rule 8(a))
- Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility review; non-conclusory factual pleading required)
- Owens v. M.E. Schepp Ltd. Partnership, 218 Ariz. 222, 182 P.3d 664 (Ariz. 2008) (rejected later; part-performance and Statute of Frauds context in ARizona law)
- Bike Fashion Corp., 202 Ariz. 424, 46 P.3d 435 (Ariz. 2002) (implied covenant of good faith can be breached by discretionary actions)
- In re Krohn, 203 Ariz. 205, 52 P.3d 774 (Ariz. 2002) (Arizona foreclosure and contract interplay; writing requirements)
- Hogan v. Washington Mut. Bank, N.A., 277 P.3d 781 (Az. 2012) (trustee duties; foreclosure context; no default claim without proper basis)