913 F. Supp. 2d 755
D. Ariz.2012Background
- Plaintiff Susan Snyder filed suit in Maricopa County Superior Court; the matter was removed to federal court; Defendants HSBC Bank USA, N.A. and Ocwen moved to dismiss under Rule 12(b)(6).
- Plaintiff and defendants dispute whether an August 2010 loan modification (LMA) was enforceable and whether escrow taxes/insurance were owed; trustee sale occurred June 20, 2012 after a state TRO expired.
- Court considered two undisputed attached exhibits: (i) August 2010 LMA terms requiring escrow for taxes/insurance and a full payment amount of $922.41; (ii) Ocwen’s September 2, 2011 clarification letter detailing the modification and escrow requirements.
- Court took judicial notice of the Trustee’s Deed Upon Sale; the trustee sale foreclosed the property; the deed shows MERS as beneficiary and Ownit Mortgage Sols as lender.
- Court applied Arizona substantive law and Federal Rules after removal; dismissed the AVC with prejudice for failure to state plausible claims under Iqbal/Twombly and Rule 9(b).
- Court barred oral argument and struck portions of plaintiff’s response for exceeding page limits; several counts were found deficient and non-viable under Arizona law and federal pleading standards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Declaratory relief moot | Snyder seeks declaratory relief as a remedy. | Relief moot; not a standalone claim. | Count One dismissed as moot/remedial, not a separate claim. |
| Slander of title/trespass to real property | Defendants’ actions constituted slander of title and trespass. | No malice; no intentional entry onto property; waived objections by not enjoining sale. | Counts Two dismissed; failure to state plausible claims and waiver under A.R.S. § 33-811(C). |
| Bad faith (implied covenant) | Defendants breached the implied covenant by mismanaging modification process. | No plausible factual basis; terms of LMA controlled; no breach of implied duty. | Count Three dismissed for lack of plausible bad-faith claim. |
| Material misrepresentation (fraud) | Defendants misrepresented monthly payment amounts. | No specific misrepresentation identified; failure to meet Rule 9(b) heightened pleading. | Count Four dismissed for failure to plead with particularity. |
| Negligence and gross negligence | Defendants owed a duty to provide accurate information about payments. | No duty established; no causation shown; economic losses governed by contract. | Count Five dismissed; no actionable duty shown under pleaded facts. |
Key Cases Cited
- Granny Goose Foods, Inc. v. Teamsters, 415 U.S. 423 (1974) (TRO expiration guidance; state TROs expire without extension after removal in federal court)
- Pantoja v. Countrywide Home Loans, Inc., 640 F. Supp. 2d 1177 (N.D. Cal. 2009) (TRO extension and waiver principles in foreclosure context)
- Wells Fargo Credit Corp. v. Smith, 166 Ariz. 489 (Ariz. Ct. App. 1990) (duty to disclose monthly payment amounts; lender-borrower relationship)
- Southwest Savings & Loan Ass’n v. SunAmp Sys., Inc., 172 Ariz. 553 (Ariz. Ct. App. 1992) (narrow duty to disclose; no broad negligence in lending)
- Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003) (fraud pleading requirements; Rule 9(b) standards)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleading factual allegations)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state plausible claims; not just possibilities)