Public Citizen-

About a year ago, Public Citizen petitioned for rehearing in a case in which a three-judge panel of the Ninth Circuit affirmed the dismissal of a First Amendment retaliation claim brought by a police officer who courageously spoke out after he witnessed the abuse of suspects within his department. In a welcome development this week, the Ninth Circuit, having agreed to rehear the case, ordered the claim reinstated in a thorough and thoughtful opinion that not only gets the law right but lays out helpful guideposts for future whistleblower claims under the First Amendment.

In particular, the court noted that an employee’s speech is likely to be protected where he has gone outside the chain of command, violated orders from his superiors in speaking, or is discussing “broad concerns about corruption or systemic abuse” (as opposed to making a “routine report”).

The court also overruled a previous decision that had practically foreclosed, as a categorical matter, a First Amendment retaliation claim brought by any California police officer.

[PUBIC CITIZEN]

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

ANGELO DAHLIA,
Plaintiff-Appellant,

v.

OMAR RODRIGUEZ, individually and
as a Lieutenant of the Burbank
Police Department; EDGAR
PENARANDA, individually and as a
Sergeant of the Burbank Police
Department; CITY OF BURBANK, a
municipal corporation; JOHN
MURPHY, individually and as a
Lieutenant of the Burbank Police
Department,
Defendants-Appellees,

and

TIM STEHR, individually,
Defendant.

AND we know this has been going on for a very long time…take a look at the default servicing companies and the “legal fees” they charge!

Biz Journal-

Colorado Attorney General John Suthers’ investigation into law firms allegedly overbilling for foreclosure filings — or billing for filings they never made — likely will turn into a national story, according to a Cato Institute fellow and national bloggers who are following the case.

The Denver Post has published a series of articles on the local investigation this summer, citing court documents on Suthers’ and other investigations.

“National mortgage and banking bloggers have taken the view that these practices are not just in Colorado,” said Walter Olson, Cato Institute fellow. “Colorado just happens to be the first place where the attorney general has launched an investigation. Underneath it all is a pattern you can easily see being replicated in other states.”

[BIZ JOURNAL]

SUPREME COURT OF THE STATE OF NEW YORK
NEW YORK COUNTY

—————————————~—————————-)(
U.S. BANK NATIONAL ASSOCIATION, as Trustee,
for HarborView Mortgage Loan Trust, Series 2005-10,
Plaintiff,

-against-

COUNTRYWIDE HOME LOANS, INC. (d/b/a BANK
OF AMERICA HOME LOANS), BANK OF AMERICA
CORPORATION, COUNTRYWIDE FINANCIAL
CORPORA TION, BANK OF AMERICA N.A., AND
NB HOLDINGS CORPORATION,
Defendants

Judge: Eileen Bransten
I. Background

This matter comes before the Court on the pre-answer motion to dismiss filed by
Defendants Countrywide Home Loans, Inc. (“CHL”), Countrywide Financial
Corporation, Bank of America Corporation, Bank of America N.A., and NB Holdings
Corporation (collectively “Defendants”) pursuant to CPLR 3211(a)(7).1 Plaintiff U.S.
Bank National Association, as Trustee for HarborView Mortgage Loan Trust, Series
2005-10 (“U.S. Bank” or “Trustee”) opposes. For the reasons that follow, Defendants’
motion is granted in part and denied in part.

This case arises from the pooling of 4,484 mortgage loans (“Loans”) into the
HarborView Mortgage Loan Trust 2005-10 (“Trust”).
The Trust was comprised of Loans originated by Defendant CHL. After
origination, CHL sold the Loans to non-party Greenwich Capital Financial Products, Inc.
(“GFCP”), the transaction Sponsor, pursuant to the Master Mortgage Loan Purchase and
Servicing Agreement (the “Servicing Agreement”). GFCP then sold the Loans to the
Depositor, non-party Greenwich Capital Acceptance, Inc., through the Mortgage Loan
Purchase Agreement (“MLPA”). Finally, pursuant to the Pooling Agreement, the
Depositor conveyed the Loans to the Trust, which issued approximately $1.75 billion in
certi fi cate s.

In addition to conveying the Loans the Trust, the Pooling Agreement granted the
Trustee, inter alia, the right to exercise all of GFCP’ s rights under the Servicing
Agreement against Countrywide. See Compl.3 Ex. C (“Pooling Agreement”), § 2.01(a).
Through this action, the Trustee seeks to assert these rights, claiming breach pf the
Servicing Agreement and the Pooling Agreement. Specifically, the Trustee asserts that
the Loans in the Trust breach the representations and warranties made by Countrywide4 in
Sections 7.01 and 7.02 of the Servicing Agreement.

[…]

C. Count Two – Breach of Contract Seeking Repurchase of Individual Loans
Defendants next seek dismissal of Count Two, deeming the Amended Complaint
conc1usory because it does not list and describe the breaches found in each of the 495
loans for which the Trustee seeks repurchase. While Defendants may have preferred a
more robust pleading, Count Two of the Amended Complaint as it stands is sufficient to
state a breach of contract claim.

CPLR 3016(b)’s particularity requirements do not apply to breach of contract
claims. See Shilkoff, Inc. v. 885 Third Avenue Corp., 299 A.D.2d 253, 254 (1st Dep’t
2002) (“Defendants’ contention that the breach of contract cause of action is
insufficiently pled would hold plaintiff to particularity in a contract pleading that is not
required … “); East Hampton Union Free Sch. Dist. v. Sandpebble Builders, Inc., 66
A.DJd 122, 125 (2d Dep’t 2009) (concluding that complaint asserting breach of contract
“is not required to meet any heightened level of particularity in its allegations.”).

Plaintiff pleads that Defendants breached Sections 7.01, 7.02, and 7.03 of the Servicing
Agreement and that as a result, it suffered damages. Under CPLR 3103, these allegations
are “sufficiently particular to give the court and parties notice of the transactions,
occurrences, or series of transactions or occurrences, intended to be proved and the
material elements of the breach of contract cause of action.” Mee Direct, LLC v.
Automatic Data Processing, Inc., 102 A.DJd 569,569 (1st Dep’t 2013) (citing CPLR
3013). Accordingly, the Court concludes that Plaintiff was not required to list and
provide particularized details as to the specific loans allegedly in breach. Since
Defendants present no additional arguments for dismissal of Count Two, Defendants’
motion to dismiss is denied.

[…]

TheRealNews

Instead of prosecuting banks for mortgage fraud, the Department of Justice is working with them.

.

HUFFPO-

Sen. Elizabeth Warren (D-Mass.) sent a letter to Attorney General Eric Holder Wednesday questioning whether a major government settlement with the nation’s largest mortgage companies is merely a way to absolve banks of malpractice under a “timid enforcement strategy.”

The letter follows months of criticism from Warren over weak penalties imposed on banks accused of defrauding consumers and investors. She has denounced settlement strategies that allow financial firms to set aside past violations without acknowledging wrongdoing.

Wednesday’s letter addresses a settlement among the U.S. Department of Justice, the Federal Housing Administration and 49 state attorneys general over charges that major banks submitted a torrent of false claims in pursuit of government benefits. In February 2012, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial agreed to pay $25 billion to settle allegations that they forged signatures, fabricated documents and engaged in other illegal practices during foreclosures.

[HUFFINGTON POST]

[ipaper docId=162364305 access_key=key-pso13e62gfrzcsh3yyh height=600 width=600 /]

Denver Post-

A pair of major financial companies — PNC Financial Services Group and MetLife Inc. — have received federal investigative subpoenas for information regarding lawyer expenses tied to foreclosures, according to public filings.

The disclosures, made last week in corporate filings with the U.S. Securities and Exchange Commission, are the first indication that investigations into alleged bill-padding by foreclosure lawyers aren’t limited to Colorado.

Both companies disclosed they had received investigative subpoenas from agencies delving into lawyer expenses tied to foreclosures, costs that were later submitted to federal agencies that insure mortgages, according to the filings.

[DENVER POST]

NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
Ariz. R. Crim. P. 31.24

IN THE COURT OF APPEALS
STATE OF ARIZONA
DIVISION ONE

BARBARA J. HUFF and CHRISS L. FEDER,
Plaintiffs/Appellants/
Cross-Appellees,

v.

MATTHEW H. MASON, as Successor Trustee; FLAGSTAR BANK, F.S.B.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; and MERSCORP, INC.,
Defendants/Appellees/
Cross-Appellants.

Appeal from the Superior Court in Maricopa County

Cause No. CV2011-052504

The Honorable Linda H. Miles

AFFIRMED IN PART, REVERSED IN PART AND REMANDED

Law Offices of Beth K. Findsen, PLLC Scottsdale
By Beth K. Findsen
Attorneys for Plaintiffs/Appellants/Cross-Appellees

Wilenchik & Bartness, P.C. Phoenix
By Dennis I. Wilenchik
Kathleen E. Martoncik
Attorneys for Defendants/Appellees/Cross-Appellants

P O R T L E Y, Judge
¶1 Barbara Huff and Chriss Feder appeal the dismissal of their first amended complaint. Mortgage Electronic Registration Systems and Merscorp, Inc. (collectively “MERS”), Mason, and Flagstar Bank, F.S.B., cross-appeal the denial of an award of attorneys’ fees to Flagstar and MERS. For the following reasons, we affirm in part, reverse in part and remand.

FACTUAL AND PROCEDURAL BACKGROUND

¶2 Huff purchased a house in Surprise in 2008.1 She borrowed money from Primary Lending, Inc., to buy the house, signed a promissory note (“Note”) and a Deed of Trust (“DOT”) securing the Note with the Property. She acknowledges that the recorded DOT is valid and enforceable.

¶3 In her original complaint, Huff alleged, among other things, that in an attempt to foreclose on the house, Flagstar and MERS recorded several documents purporting to claim an interest in the house, which contained false claims and misstatements in violation of Arizona Revised Statutes (“A.R.S.”) section 33-420 (West 2013). The Defendants filed a motion to dismiss under Arizona Rules of Civil Procedure (“Rule”) 12(b)(6) or, alternatively, a motion for summary judgment. Huff then amended her complaint, eliminated several causes of action, and added clarifying details to support her claim for false recording under A.R.S. § 33-420 and her quiet title claim.

¶4 The trial court denied Defendants’ motion to dismiss the original complaint because they presented items outside the pleadings and the alternative motion for summary judgment failed to comply with Rule 56. The Defendants then filed a similar motion to dismiss the first amended complaint, but subsequently withdrew their alternative motion for summary judgment. The court granted Defendants’ motion to dismiss and awarded them attorneys’ fees pursuant to A.R.S. §§ 12-341.01 and 33-807(E) (West 2013). The court reconsidered the award of attorneys’ fees and ruled that the Defendants were not entitled to fees, but Defendant Mason was entitled to fees pursuant to A.R.S. § 33-807(E). After judgment was entered, Huff filed her appeal and Defendants filed their cross-appeal.
DISCUSSION

¶5 Huff maintains that her first amended complaint was well-pled and should not have been dismissed. We review a dismissal of a complaint under Rule 12(b)(6) de novo, Coleman v. City of Mesa, 230 Ariz. 352, 355, ¶ 7, 284 P.3d 863, 866 (2012); Stauffer v. US Bank National Ass’n, 1 CA-CV 12-0073, 1 CA-CV 12-0123, slip op. at *6, ¶ 7 (Ariz. App. Aug. 20, 2013), accepting as true the facts alleged in the complaint and affirming the dismissal only if the plaintiff would not be entitled to relief under any interpretation of the facts susceptible of proof. Fidelity Sec. Life Ins. Co. v. State, 191 Ariz. 222, 224, ¶ 4, 954 P.2d 580, 582 (1998); Stauffer, 1 CA-CV 12-0073, 1 CA-CV 12-0123, slip op. at *6, ¶ 7.

A. False Recordings Under A.R.S. § 33-420(A)

¶6 Huff alleges that documents were falsely recorded. She contends that the DOT identifies Primary Lending, Inc., as the Lender; Flagstar, as the Trustee; and, MERS as the nominee for the Lender (and Lender’s successors and assigns) and as the Beneficiary. MERS, as the Lender’s nominee, has the right to appoint a successor trustee under paragraph twenty-four of the DOT.2 MERS, purporting to act on Flagstar’s behalf, however, recorded a Notice of Substitution of Trustee (“Notice”), which appointed Mason as the successor trustee. Huff contends that the recorded document is a false representation because MERS only has the authority to act on behalf of the Lender, Primary Lending, and not Flagstar, the Trustee.

¶7 Defendants, however, argue that Flagstar is the successor Lender because the Note was endorsed over to Flagstar. Huff counters by arguing that the person who purported to endorse the note over to Flagstar was an employee of Flagstar, not of Primary Lending. We assume the truth of the well-pled factual allegations and indulge all reasonable inferences therefrom. Cullen v. Auto-Owners Ins. Co., 218 Ariz. 417, 419, ¶ 7, 189 P.3d 344, 346 (2008).

¶8 We note that the endorsement is undated. It identifies Rosalyn Pippen as a Loan Operations Associate, but does not identify her employer. Under the endorsement is another stamped endorsement which provides:

PAY TO THE ORDER OF
FLAGSTAR BANK, FSB
WITHOUT RECOURSE
PRIMARY LENDING INC
BY: ________________________________
PRINTED NAME: ______________________
ITS: _______________________________

Stamped over the top of the latter endorsement is a stamp that reads: “NOTE ENDORSEMENT VOID” and appears to be initialed “RP,” presumably Rosalyn Pippen. If Pippen was an employee of Primary Lending, Inc., when she signed the endorsement, it seems reasonable that she would have only completed the second endorsement on behalf of Primary Lending.

¶9 Both endorsements are stamped on the Note’s signature page bearing Huff’s signature. There is a fourth page3 with yet another endorsement to Flagstar Bank FSB, executed by Jean R. Garrick, Senior Vice President and John P. Mareckl — the spelling of which is unclear — First Vice President. Again, the endorsement does not identify the employer of the two named individuals. Defendants attached the Note and the endorsements as an exhibit to their original motion to dismiss/motion for summary judgment. They do not identify whether Pippen, Garrick or Mareckl were employees of Primary Lending. Nor do they represent that the three individuals are not Flagstar employees. Because there is a question about whether Primary Lending or Flagstar endorsed the note, we accept Huff’s allegations, as we must at this stage, that Primary Lending did not endorse the Note over to Flagstar.

¶10 Similarly, if a Flagstar employee signed the endorsement without authority, Flagstar would have known the endorsement was invalid. Thus, as Huff argues, recording the Notice with the knowledge that MERS had no authority to appoint a successor trustee on behalf of Flagstar would be a violation of A.R.S. § 33-420. Moreover, the subsequent documents recorded by Mason providing notice of the trustee’s sale of the Property would be invalid or contain material misrepresentations because Flagstar and MERS knew that Mason had no right or authority to foreclose on the house because he was not a properly appointed successor trustee.

¶11 Because the court was required to accept as true all of Huff’s well-pled facts, and given the questions surrounding the endorsements, the court must have concluded that the Notice of Substitution of Trustee, and the several Notices of Trustee’s Sale do not fall within A.R.S § 33-420. Huff argues that one may be liable under the false recording statute for filing a notice of substitution of trustee, or a notice of trustee sale which is forged, groundless, contains a material misstatement or false claim or is otherwise invalid. We agree.

¶12 Section 33-420(A) provides that:

A person purporting to claim an interest in, or a lien or encumbrance against, real property, who causes a document asserting such claim to be recorded in the office of the county recorder, knowing or having reason to know that the document is forged, groundless, contains a material misstatement or false claim or is otherwise invalid is liable to the owner or beneficial title holder of the real property for the sum of not less than five thousand dollars, or for treble the actual damages caused by the recording, whichever is greater, and reasonable attorney fees and costs of the action.
(Emphasis added.)

¶13 When interpreting statutes, our objective is to “give effect to the intent of the legislature.” In re Estate of Winn, 214 Ariz. 149, 151, ¶ 8, 150 P.3d 236, 238 (2007); Stauffer, 1 CA-CV 12-0073, 1 CA-CV 12-0123, slip op. at *6-7, ¶ 9. “When the plain text of a statute is clear and unambiguous there is no need to resort to other methods of statutory interpretation to determine the legislature’s intent because its intent is readily discernible from the face of the statute.” Estate of Braden ex rel. Gabaldon v. State, 228 Ariz. 323, 325, ¶ 8, 266 P.3d 349, 351 (2011) (quoting State v. Christian, 205 Ariz. 64, 66, ¶ 6, 66 P.3d 1241, 1243 (2003)).

¶14 Defendants argue that liability under the statute exists only for recorded documents that purport to create an interest in real property. They cite Schayes v. Orion Financial Group, Inc., CV-10-02658-PHX-NVW, 2011 WL 3156303 (D. Ariz. July 27, 2011), which held that a notice of trustee’s sale is not covered by the false recording statute because “Arizona courts interpret subsection A’s ‘document assert[ing] an . . . interest” as the same sort of “document which purports to create an interest’ described in subsection C.” Id. at *6.

¶15 The District Court’s analysis of A.R.S. § 33-420(A), however, ignores the statute’s plain and unambiguous language. Had the legislature intended to limit the application of A.R.S. § 33-420(A) to recorded instruments that “create” an interest in real property, it could easily have said so in subsection A, just as it did in subsection C. See Padilla v. Indus. Comm’n, 113 Ariz. 104, 106, 546 P.2d 1135, 1137 (1976) (a fundamental rule of statutory construction is the presumption that what the legislature means, it will say). Consequently, the Defendants’ reliance on Schayes is misplaced, and we are not bound by it given the plain language of the statute. See Dube v. Likins, 216 Ariz. 406, 417, ¶ 37, 167 P.3d 93, 104 (App. 2007) (stating that we are not bound by federal decisions deciding state law issues).

¶16 Even if the statute only applied to documents creating an interest in real property, a notice of substitution of trustee arguably creates such an interest. Stauffer, 1 CA-CV 12-0073, 1 CA-CV 12-0123, slip op. at *8-9, ¶ 12. Without a notice of substitution of trustee, the successor trustee has no power of sale under A.R.S. § 33-807(A), has no authority to notice the trustee’s sale under A.R.S. § 33-808, has no right to conduct the sale under A.R.S. § 33-810, or to collect the funds and issue a trustee’s deed under A.R.S. § 33-811. The notice of substitution of trustee and notice of trustee’s sale must create an interest in real property or those identified therein could not non-judicially foreclose on a borrower’s property. Id. Because a successor trustee has such sweeping power over such an important interest as one’s ownership interest in a home, A.R.S. § 33-420 necessarily applies to notices of substitution of trustee and notices of trustee’s sale to provide a remedy for the recording of false instruments.

¶17 Because A.R.S. § 33-420 applies to the recorded notice of successive trustee as alleged in the amended complaint, Huff stated a claim upon which relief might be granted. Consequently, her false recording claims should not have dismissed pursuant to Rule 12(b)(6). See Stauffer, 1 CA-CV 12-0073, 1 CA-CV 12-0123, slip op. at *8-9, *11, ¶¶ 12, 15.

B. Quiet Title

¶18 Huff also argues that the court improperly dismissed her quiet title cause of action because she did not tender payment in full of the outstanding amount owed under the Note, secured by the DOT. We must affirm the ruling if it can be sustained on any theory framed by the pleadings and supported by the evidence. Coronado Co., Inc. v. Jacome’s Dept. Store, Inc., 129 Ariz. 137, 139, 629 P.2d 553, 555 (App. 1981).

¶19 Dismissal was appropriate here because Huff failed to properly plead a quiet title claim pursuant to A.R.S. § 12-1102. The statute provides that the complaint shall: (1) be under oath; (2) generally set forth the nature and extent of plaintiff’s estate; (3) describe the property; (4) state that the plaintiff is credibly informed and believes defendant makes some claim adverse to plaintiff; and (5) request that the court establish plaintiff’s estate and that it bar and forever estop defendant from having or claiming any right or title to the premises adverse to plaintiff. A.R.S. § 12-1102.

¶20 Huff only sought to invalidate the interest the Defendants claim as a result of the falsely recorded documents. Her quiet title claim is directed at “parties claiming rights to title under challenged documents containing material misstatements under A.R.S. § 33-420.” In her request for relief, she sought “an order quieting title in favor of Plaintiffs as to each Defendant claiming under each false document.” In other words, she did not ask the court to bar and forever estop each Defendant from claiming any right or title to her house, just as to any right that Defendants claim arising out of the challenged false recordings.

¶21 Alternatively, if we construe Huff’s first amended complaint as requesting that the court bar and forever estop each Defendant from having or claiming any right or title to Huff’s Property, her suit would still be subject to dismissal. Huff concedes the validity of the DOT. Assuming the truth of Huff’s allegation that Primary Lending did not endorse the Note over to Flagstar, then MERS is a valid beneficiary and the Lender’s nominee under the DOT, and Flagstar is the trustee under the DOT. As the trustee, Flagstar has the power of sale (on behalf of Primary Lending) if Huff is in default under the Note. As a result, Huff has failed to state a claim that she is entitled to quiet title as to MERS or Flagstar.

C. Attorneys’ Fees Award to the Successor Trustee

¶22 Huff argues that Mason was not entitled to an award of attorneys’ fees. We disagree.

¶23 Section 33-807(E) provides that a plaintiff need only join a trustee as a party in legal actions pertaining to a breach of the trustee’s obligation under this chapter or under the DOT. “If the trustee is joined as a party in any other action, the trustee is entitled to be immediately dismissed and to recover costs and reasonable attorney fees from the person joining the trustee.” A.R.S. § 33-807(E).

¶24 Section 33–807(E) applies as to any particular claim if a trustee establishes three elements: (1) that the trustee has been named as a defendant in the claim; (2) that the claim relates to the authority of the trustee to act under the deed of trust or Arizona’s statutes regulating trust deeds; and (3) that the claims do not allege that the trustee breached any of his obligations arising under either the trust deed or Arizona’s statutes regulating deeds of trust. Puzz v. Chase Home Fin., LLC, 763 F. Supp. 2d 1116, 1125 (D. Ariz. 2011).
¶25 Here, because the trustee was named as a defendant in the first amended complaint, the first element is satisfied. The second element is also satisfied because Huff states in her first amended complaint that “Mason is not sued as a trustee or for damages but to quiet title to him as an individual recording documents claiming to create a bare legal title interest in Plaintiffs’ real property.” She also alleges that Mason is not a valid trustee because he was not substituted “by a true beneficiary via legally compliant documents pursuant to A.R.S. § 33-804.”

¶26 For the first time on appeal, Huff argues that Mason “breach[ed] the deed of trust by taking orders from a false beneficiary despite notice, and by actively misrepresenting the beneficiary’s status.” We will not, however, consider arguments raised for the first time on appeal. Scottsdale Princess P’ship v. Maricopa Cnty., 185 Ariz. 368, 378, 916 P.2d 1084, 1094 (App. 1995). Moreover, we note that, under Arizona law, a trustee has the “absolute right to rely upon any written direction or information furnished to him by the beneficiary.” A.R.S. § 33–820(A). Accordingly, we affirm the court’s award of attorneys’ fees to Mason under A.R.S. § 33-807(E).

D. Cross-appeal

¶27 Because we are reversing and remanding the dismissal of Huff’s false recording claim, it is premature to consider the cross-appeal on the attorneys’ fee issue as to all other Defendants, except for Mason.

CONCLUSION

¶28 For the foregoing reasons, including the analysis in Stauffer, we reverse the ruling on Huff’s false recording claim, affirm the dismissal of Huff’s quiet title claim, affirm the dismissal of Mason and his award of attorneys’ fees, and remand this case for further proceedings. We do not address the cross-appeal issue because of our remand.

/s/
_____________________________
MAURICE PORTLEY, Judge
CONCURRING:

/s/
___________________________________
MARGARET H. DOWNIE, Presiding Judge

/s/
___________________________________
PHILIP HALL, Judge4

footnotes:
1 Huff later quitclaimed the property to herself and her daughter, Chriss Feder.

2 Although Huff asserts that the use of the word Lender in paragraph twenty-four means that the right to appoint a successor trustee is reserved only to the Lender and cannot be exercised by the Lender’s nominee, successor or assign, we need not resolve her argument in light of the plain language of the paragraph.

3 According to Defendants, this fourth page is the back of page three, the signature page, of the Note.

4 Judge Philip Hall was a sitting member of this court when the matter was assigned to this panel of the court. He retired effective May 31, 2013. In accordance with the authority granted by Article 6, Section 3, of the Arizona Constitution and pursuant to A.R.S. § 12-145, the Chief Justice of the Arizona Supreme Court has designated Judge Hall as a judge pro tempore in the Court of Appeals, Division One, for the purpose of participating in the resolution of cases assigned to this panel during his term in office.

Filed 5/1/13 Certified for publication 5/29/13 (order attached)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT

(Butte)
—-

MICHAEL FULLER et al.,
Plaintiffs and Appellants,

v.

FIRST FRANKLIN FINANCIAL CORPORATION et al.,
Defendants and Respondents.

home in June 2006, and Bank of America is First Franklin’s successor in interest on the loan.2 In their fourth effort at stating a cause of action, under direction from the trial court “to provide further allegations of late discovery of the [actionable] facts,” plaintiffs alleged defendants First Franklin and SFM, pursuant to a scheme of predatory lending, made material misrepresentations and fraudulent concealments of circumstances in the appraisal of the residence and in the terms of the loan in order to maximize their profit, which the plaintiffs did not discover until late 2009. Plaintiffs listed several counts (inexactly denominated “causes of action” (see Cullen v. Corwin (2012) 206 Cal.App.4th 1074, 1076, fn. 1)) that included theories of deceit, negligence, unfair business practices, and SFM’s breach of its fiduciary duty to them, and civil conspiracy (which is not an independent cause of action in any event but only a theory for establishing vicarious liability (3 Witkin, Cal. Procedure (5th ed. 2008) Actions, § 557(1), p. 706 (Witkin)).

First Franklin and SFM separately demurred. Basing its January 2012 rulings on the statute of limitations, the trial court issued an order of dismissal in favor of First Franklin, and an order sustaining SFM’s demurrer as to all causes of action without leave to amend.

Plaintiffs filed notices of appeal from the two orders. SFM subsequently moved for judgment on the pleadings on the count of negligence.3 The trial court granted the motion for lack of opposition, and entered a judgment of dismissal as to SFM in June 2012. We deem the premature notice of appeal from the trial court’s order sustaining SFM’s demurrer to have been filed immediately after the subsequently entered judgment for SFM. (Cal. Rules of Court, rule 8.308(c); see In re Gray (2009) 179 Cal.App.4th 1189, 1197 [this court discusses equities in favor of deeming notice to be “premature” once record prepared and briefing completed after entry of judgment].)

Plaintiffs argue that they had sufficiently alleged delayed discovery of facts that defendants had purposely withheld from them in order to induce them to enter into the now defaulted loans. We agree. We shall thus reverse the judgments of dismissal with directions to overrule the demurrers.

Take a real good look at this blog. Do we need anymore watch dogs telling us the system is still a fraud? I don’t think so and so do they as they are daily readers!

Enough is enough! Do something already as this has gone far too long.

HuffPO-

The Consumer Financial Protection Bureau on Wednesday issued a report detailing a host of failures in basic mortgage payment processing at U.S. financial institutions.

While the report does not specifically name any companies, the agency’s oversight authority includes all of the largest mortgage companies in the country, as well as smaller specialty operators.

In February 2012, the five largest mortgage servicing companies inked a $25 billion settlement with state and federal law enforcement agencies over persistent problems with mortgage documentation in the foreclosure process.

[HUFFINGTONPOST]

Show Me The Note!

.

William K. Akina, Brooklyn Law School
David J. Reiss, Brooklyn Law School
Bradley T. Borden, Brooklyn Law School

Abstract

News outlets and foreclosure defense blogs have focused attention on the defense commonly referred to as “show me the note.” This defense seeks to forestall or prevent foreclosure by requiring the foreclosing party to produce the mortgage and the associated promissory note as proof of its right to initiate foreclosure.

The defense arose in two recent state supreme-court cases and is also being raised in lower courts throughout the country. It is not only important to individuals facing foreclosure but also for the mortgage industry and investors in mortgage-backed securities. In the aggregate, the body of law that develops as a result of the foreclosure epidemic will probably shape mortgage law for a long time to come. Courts across the country seemingly interpret the validity of the “show me the note” defense incongruously. Indeed, states appear to be divided on its application. However, an analysis of the situations in which this defense is raised provides a framework that can help consumers and the mortgage industry to better predict how individual states will rule on this issue and can help courts as they continue to grapple with this matter.

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

No. 12-41273

JAMES R. MILLER; ALLENE S. MILLER,
Plaintiffs-Appellants,

v.

BAC HOME LOANS SERVICING, L.P.; NATIONAL DEFAULT
EXCHANGE, L.P.,
Defendants-Appellees.

Appeal from the United States District Court
for the Eastern District of Texas

Before STEWART, Chief Judge, and DAVIS and WIENER, Circuit Judges.
CARL E. STEWART, Chief Judge:

This case pertains to the foreclosure sale of the property located at 810
Corey Drive in Whitehouse, Texas, by Defendants-Appellees, BAC Home Loans
Servicing (“BAC”) and National Default Exchange (“NDE”). Plaintiffs-
Appellants, James and Allene Miller, appeal the district court’s dismissal with
prejudice of their claims against BAC and NDE under the Texas Debt Collection
Act (“TDCA”), Tex. Fin. Code § 392.304(a), the Texas Deceptive Trade Practices
Act (“DTPA”), Tex. Bus. & Com. Code § 17.41 et seq., and Texas common law.
For the reasons provided herein, we AFFIRM the district court’s dismissal
of the Millers’ DTPA and Texas common law claims. We also AFFIRM the
district court’s dismissal of the Millers’ TDCA claims under §§ 392.304(a)(8),
(18), and (19). We REVERSE the district court’s dismissal of the Millers’ TDCA
claims under § 392.304(a)(14) as well as the district court’s denial of the Millers’
request for an accounting from NDE. We REMAND for further proceedings
consistent with this opinion.

I.

In December 2001, the Millers obtained a purchase money mortgage for
the Corey Drive property from Nexstar Financial Corp (“Nexstar”). The
mortgage note was secured by a deed of trust lien. Effective April 7, 2010,
Nexstar assigned the note and lien to BAC, which proceeded to act as the loan
servicer.

The Millers fell behind on their mortgage payments. Notwithstanding the
effective assignment date of April 7, 2010, the Millers first received notice that
their loan was in default from BAC on March 10, 2010.1 The written notice
warned the Millers that they faced loan acceleration and sale of the property at
foreclosure auction unless they cured the default by April 9, 2010.
The Millers allege that between March 10, 2010 and May 3, 2010, they
called BAC at least three times, and that each call resulted in an unfulfilled
promise from a BAC call center representative to send them a loan modification
application. Further, the Millers allege that at least one of the call center
representatives assured them that there would be no need to make a premodification
payment to cure the default.

On May 3, 2010, the Millers received a letter from BAC’s foreclosure law
firm stating that a foreclosure sale of the property would occur on June 1, 2010.

The Millers allege that sometime between May 3, 2010, and May 18, 2010, a
BAC foreclosure specialist named Victoria Masters informed them that she
would make sure a loan modification application arrived, and that the
foreclosure sale would be postponed while they attempted to modify their loan.
The loan modification application arrived on May 18, 2010.

The Millers returned their completed application by mail on May 28, 2010.
That same day, they were contacted by an agent of BAC who informed them that
the foreclosure auction would proceed on June 1, 2010. On May 31, 2010, the
Millers again spoke with Ms. Masters, the BAC foreclosure specialist. She
informed them that no postponement had yet been approved, but that she would
attempt to obtain such approval from Fannie Mae. Later that day, the Millers
allege Ms. Masters represented to them that she had obtained approval from
Fannie Mae for foreclosure postponement pending disposition of their loan
modification application.

Notwithstanding this alleged representation of postponement, the
foreclosure sale proceeded as scheduled on June 1, 2010. An individual named
Carol Hampton acted as substitute trustee. The Millers allege that Ms.
Hampton was an agent of NDE, acting at the behest of BAC.2 The Corey Drive
property sold at public auction. Sometime the following month, the Millers
voluntarily vacated the property at the request of the purchaser.

II.

The Millers filed suit on January 14, 2011, and amended their complaint
on September 22, 2011, ultimately raising claims under the Fair Debt Collection
Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., the TDCA, the DTPA, and
Texas common law. On October 17, 2011, BAC moved to dismiss the amended
complaint under Federal Rule of Civil Procedure (“Rule”) 12(b)(6). The
magistrate judge filed her report on March 23, 2012, in which she recommended
that the district court dismiss all claims against both defendants.3
After the Millers timely objected to the magistrate judge’s report, the
district court proceeded to adopt the report upon de novo review. The district
court entered final judgment against the Millers on April 11, 2012.

On May 8, 2012, the Millers moved to alter or amend the judgment
pursuant to Rule 59(e). Among other things, the Millers argued that it was not
fair for the district court to have dismissed their claims against NDE. The
Millers emphasized that BAC’s motion to dismiss had not addressed their
request for an accounting of the foreclosure sale from NDE or for a distribution
of excess profits from the sale.4 The Millers contended that they had not had a
prior meaningful opportunity to justify those claims and, in their Rule 59(e)
motion, provided legal arguments as to why those claims should survive scrutiny
under Rule 12(b)(6).

In a second report, dated September 24, 2012, the magistrate judge
addressed the Millers’ Rule 59(e) motion. The magistrate judge recommended
denial of the motion, explaining that the Millers’ written objections to her first
report had not encompassed the request for an accounting and distribution, even
though the Millers could have objected to her prior failure to address the
request. The magistrate judge further concluded that the Millers had not stated
a claim for an accounting independent of their claims for wrongful foreclosure,
which she already had addressed in her first report and the district court
already had dismissed.

The Millers timely objected to this second report. Nevertheless, the
district court proceeded to adopt it upon de novo review, thereby denying the
motion to alter or amend the judgment. The Millers timely appealed. However,
they only pursue some of their claims on appeal, namely their: (i) TDCA claims
against BAC; (ii) DTPA claims against BAC; (iii) promissory estoppel claims
against BAC; (iv) wrongful foreclosure claims against both BAC and NDE; and
(v) request for an accounting from NDE and distribution of any excess profits.

III.

“We review de novo the grant of a 12(b)(6) motion to dismiss.” Gregson v.
Zurich Am. Ins. Co., 322 F.3d 883, 885 (5th Cir. 2003). “We generally review a
decision on a motion to alter or amend judgment under Rule 59(e) for abuse of
discretion.” Pioneer Natural Res. USA, Inc. v. Paper, Allied Indus., Chem. &
Energy Workers Int’l Union Loc. 4-487, 328 F.3d 818, 820 (5th Cir. 2003)
(citations omitted). “To the extent that a ruling was a reconsideration of a
question of law, however, the standard of review is de novo.” Id. (citations
omitted).

IV.

A. TDCA Claims Against BAC

We acknowledge at the outset that the Millers do not appeal the district
court’s dismissal of their FDCPA claims. With respect to those claims, the
magistrate judge rightly explained that the FDCPA distinguishes between
“creditors” and “debt collectors.” Compare 15 U.S.C. § 1692a(4) (creditors), with
15 U.S.C. § 1692a(6) (debt collectors). She then observed that the FDCPA
generally applies to debt collectors, but not to creditors, except “to the extent
that [a creditor] receives an assignment or transfer of a debt in default solely for
the purpose of facilitating collection of such debt for another.” 15 U.S.C. §
1692a(4).5 The magistrate judge finally noted that we previously have held that
“mortgage servicing companies” and “debt assignees” are not debt collectors, and
therefore are not regulated by the FDCPA, “as long as the [mortgage] was not
in default at the time it was assigned” by the originator. Perry v. Stewart Title
Co., 756 F.2d 1197, 1208 (5th Cir. 1985) (citations omitted). Applying these
principles, the magistrate judge concluded that BAC was not a debt collector,
and thus was not subject to the FDCPA because, on the Millers’ pleadings, BAC
already had acquired the mortgage when the Millers defaulted on it.6

We recount the magistrate judge’s FDCPA analysis because, immediately
thereafter, the magistrate judge analyzed the Millers’ comparable claims under
the TDCA. The TDCA similarly distinguishes between creditors and debt
collectors. Compare Tex. Fin. Code § 392.001(3) (creditors), with Tex. Fin. Code
§ 392.001(6) (debt collectors). Its prohibitions apply only to debt collectors. See
Catherman v. First State Bank of Smithville, 796 S.W.2d 299, 302 (Tex. App.
1990). The TDCA, however, also breaks out a third class of lien-holders, which
it calls “third-party debt collectors.” See Tex. Fin. Code § 392.001(7). It defines
third-party debt collectors by expressly referencing the FDCPA definition of debt
collectors found in 15 U.S.C. § 1692a(6).

In light of this reference, the magistrate judge concluded that the Millers’
TDCA claims must fail for the same reasons that their FDCPA claims do. We
reject this conclusion, which erroneously affords the lone third-party debt
collectors reference talismanic significance despite the fact that the FDCPA is
a “distinguishable, federal statute.” See Monroe v. Frank, 936 S.W.2d 654, 660
(Tex. App. 1996) (citation and footnote omitted) (listing differences between the
two statutes). The TDCA’s definition of debt collector is broader than the
FDCPA’s definition. See Perry, 756 F.2d at 1208 (citation omitted). Unlike the
TDCA, the FDCPA expressly excludes from its definition of debt collector: “any
person collecting or attempting to collect any debt owed or due or asserted to be
owed or due another to the extent such activity . . . concerns a debt which was
not in default at the time it was obtained by such person.” 15 U.S.C.
§ 1692a(6)(F)(iii).

As noted above, we held in Perry that this FDCPA exclusion encompasses
mortgage servicing companies and debt assignees “as long as the [mortgage] was
not in default at the time it was assigned” by the originator. 756 F.2d at 1208
(citations omitted). However, we also held in Perry that servicers and assignees
are debt collectors, and therefore are covered, under the TDCA. See id. (citation
omitted). In light of Perry, we conclude that BAC qualifies as a debt collector
under the broader TDCA, irrespective of whether the Millers’ mortgage was
already in default at the time of its assignment.

The Millers’ TDCA claims allege violations of Tex. Fin. Code §§
392.304(a)(8), (14), (18), and (19). Those provisions prohibit the following:

(8) misrepresenting the character, extent, or amount
of a consumer debt, or misrepresenting the
consumer debt’s status in a judicial or governmental
proceeding; . . .

(14) representing falsely the status or nature of the
services rendered by the debt collector or the debt
collector’s business; . . .

(18) representing that a consumer debt is being
collected by an independent, bona fide organization
engaged in the business of collecting past due
accounts when the debt is being collected by a
subterfuge organization under the control and
direction of the person who is owed the debt; or

(19) using any other false representation or
deceptive means to collect a debt or obtain
information concerning a consumer.

The Millers allege that BAC repeatedly promised to send them a loan
modification application and to delay foreclosure. They further allege that,
notwithstanding its promises, BAC never responded to their submitted
application once it arrived and proceeded to foreclose upon their property.
Accepting these allegations as true at the Rule 12(b)(6) stage, we conclude that
the Millers have stated a claim upon which relief may be granted under §
392.304(a)(14).

1. Section 392.304(a)(8)
The Millers’ allegations do not demonstrate that BAC misrepresented the
character, extent, or amount of the Millers’ debt in violation of § 392.304(a)(8).
This is because the Millers always were aware (i) that they had a mortgage debt;
(ii) of the specific amount that they owed; (iii) and that they had defaulted.
Nothing in the Millers’ allegations suggests the BAC led them to think
differently with respect to the character, extent, amount, or status of their
debt—only that BAC promised to send them a loan modification application and
to delay foreclosure. Accordingly, the Millers have not stated a claim upon
which relief may be granted under § 392.304(a)(8).

2. Section 392.304(a)(14)
As for § 392.304(a)(14), however, the Millers’ allegations demonstrate that
BAC may have misrepresented the status or nature of the services it rendered.
The Millers allege that BAC “informed [Mr. Miller] that the terms of his loan
could be modified to cure the default and avoid foreclosure if he qualified for the
available options.” They further allege that BAC agents repeatedly promised to
send them an application for a loan modification, but never did until May 18,
2010. On the one hand, these allegations, at most, show that BAC promised to
send the Millers an application, which BAC ultimately did. The Millers do not
allege that BAC promised to grant the application.

Notwithstanding the above, the Millers also allege that BAC “informed Mr.
Miller that he did not need to make payments on the loan because delinquent
payments would be subsumed into the modified loan when it was concluded.”
Moreover, the Millers allege “[t]hey were informed that the completed
application must be submitted by June 17, 2010.” Finally, the Millers allege
that Ms. Masters “informed Mr. Miller that she had obtained approval to
postpone the [June 1] foreclosure sale.” These allegations, at the least, show
that BAC promised to consider the application before foreclosing on June 1,
which the Millers allege that BAC did not do.

In light of this showing, we conclude that BAC may have harmed the
Millers by causing them, for example, to decline to liquidate property or seek
alternative financing before the June 1 foreclosure date—pending BAC’s
disposition of their application. Accordingly, the Millers have alleged sufficient
facts to state a claim against BAC, pursuant to § 392.304(a)(14), for
misrepresenting the status or nature of the services that it rendered. We
reverse the district court’s dismissal of the Millers’ TDCA claims as to that basis,
and remand for further proceedings consistent with this opinion.

3. Section 392.304(a)(18)
With respect to § 392.304(a)(18), the Millers contended before the district
court that BAC had misrepresented it was an independent organization
responsible for collecting the Millers’ debt when, in fact, Bank of America, N.A.
owned the Millers’ mortgage by assignment, and BAC was merely Bank of
America’s servicer. Irrespective of this contention’s possible validity, the Millers’
amended complaint contained no allegation about any representation by BAC
that it was an independent debt collector. Because the Millers have not alleged
any facts stating that BAC was a subterfuge organization for Bank of America,
they have not stated a claim upon which relief may be granted under §
392.304(a)(18).

4. Section 392.304(a)(19)
Finally, even though § 392.304(a)(19) appears to be a catch-all, or residual,
provision for proceeding under the TDCA, the Millers did not allege any specific
deceptive acts or practices by BAC that could constitute a violation of the
provision. Instead, their amended complaint refers vaguely to BAC “using a
false representation or deceptive means to collect a debt.” See Am. Compl. ¶
41(d). Such a pleading is not sufficient to overcome dismissal under Rule
12(b)(6). See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555-56 (2007) (citations omitted). The Millers, thus,
have not stated a claim upon which relief may be granted under § 392.304(a)(19).

B. DTPA Claims Against BAC
The magistrate judge rejected the Millers’ claims under the DTPA,
explaining that the statute protects “consumers” and that mortgagors (loan
borrowers) are not consumers within the meaning of the statute. We agree that
this is the general rule, but restate the test slightly differently to account for a
necessary nuance.

“The DTPA protects consumers; therefore, consumer status is an essential
element of a DTPA cause of action.” Mendoza v. Am. Nat’l Ins. Co., 932 S.W.2d
605, 608 (Tex. App. 1996) (citation omitted). “In order to qualify as a consumer
under the DTPA, two requirements must be established. First, the person must
seek or acquire goods or services by purchase or lease. Second, the goods or
services purchased or leased must form the basis of the complaint.” Id. (citations
omitted); see also Tex. Bus. & Com. Code § 17.45(4) (providing the statutory
definition of consumer).

“Generally, a pure loan transaction lies outside the DTPA because money
is considered to be neither a good nor a service. However, subsequent cases have
limited [this] doctrine.” Ford v. City State Bank of Palacios, 44 S.W.3d 121, 133
(Tex. App. 2001) (citations omitted). A loan sometimes may constitute a basis
for consumer status under the DTPA. See, e.g., Walker v. F.D.I.C., 970 F.2d 114,
123 (5th Cir. 1992) (collecting citations in which Texas courts have departed
from the “facially simple statement” that a “pure loan transaction lies outside
the DTPA”); Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705, 706-08
(Tex. 1983) (rejecting the argument that plaintiffs could not qualify as
consumers because their transaction with the defendant bank was a lending
transaction, where the loan was used to finance the construction of a house).

A mortgagor qualifies as a consumer under the DTPA if his or her primary
objective in obtaining the loan was to acquire a good or service, and that good or
service forms the basis of the complaint. Compare Flenniken, 661 S.W.2d at 708
(“[T]he Flennikens make no complaint as to the Bank’s lending activities.
Unlike Lewis, the Flennikens did not seek to borrow money; they sought to
acquire a house. The house thus forms the basis of their complaint.”), with
Riverside Nat’l Bank v. Lewis, 603 S.W.2d 169, 175 (Tex. 1980) (“Lewis
approached Riverside Bank with one objective; he sought to acquire money.”).

Here, the Millers have alleged that their mortgage was a purchase money
loan, meaning they obtained it to acquire their property on Corey Drive.
However, the purchase money loan does not form the basis of the Millers’
complaint; rather, the Millers’ DTPA claim against BAC is based entirely on
their attempted modification of that loan. Such modification is akin to
refinancing in that it is not sought for the acquisition of a good or service, but
rather to finance an existing loan on previously acquired property. See Ayers v.
Aurora Loan Servs., LLC, 787 F. Supp. 2d 451, 455 (E.D. Tex. 2011) (“[A]
modification of an existing loan . . . is analogous to refinancing services.
Refinancing is simply an extension of credit that does not qualify Plaintiff as a
consumer.” (citations omitted)); Fix v. Flagstar Bank, FSB, 242 S.W.3d 147, 160
(Tex. App. 2007) (holding that “the refinance cannot qualify as a good or service
under the DTPA” because the plaintiffs “had already purchased their house [and
thus the] refinance merely extended credit” (citation omitted)).

As in Ayers, “[h]ere, the alleged loan modification was not a part of the
financing scheme to acquire a house. It is an entirely separate and distinct
transaction, sought after the purchase of the house was complete.” 787 F. Supp.
2d at 455. The Millers’ complaint is therefore based on “a pure loan
transaction,” meaning the Millers do not qualify as consumers under the DTPA.
See Ford, 44 S.W.3d at 133 (citations omitted). Accordingly, we affirm the
district court’s dismissal of the Millers’ DTPA claims.

C. Promissory Estoppel Claims Against BAC
The Millers allege that they would have borrowed other funds, or
liquidated property, to cure their default but for their detrimental reliance on
repeated assurances from BAC’s agents that (i) a loan modification application
was forthcoming; (ii) it would not be necessary to cure their default in the
interim; and (iii) the foreclosure sale would be delayed pending disposition of
their application. Adopting the magistrate judge’s recommendation, the district
court dismissed these claims for common law promissory estoppel as barred by
Texas’s statute of frauds.

On appeal, the Millers focus their challenge on a question of civil
procedure. They contend that the district court erred in ruling on the statute of
frauds because the statute of frauds is an affirmative defense that BAC never
pled in an answer but, rather, raised only in its Rule 12(b)(6) motion.7 We
conclude that the district court’s dismissal was not error.

“[W]hen a successful affirmative defense appears on the face of the
pleadings, dismissal under Rule 12(b)(6) may be appropriate.” Kansa Reins. Co.
v. Cong. Mortg. Corp. of Tex., 20 F.3d 1362, 1366 (5th Cir. 1994) (citation
omitted); see also Fisher v. Halliburton, 667 F.3d 602, 608-09 (5th Cir. 2012)
(citing Kansa, 20 F.3d at 1366, and noting that a claim may properly be subject
to a Rule 12(b)(6) motion where the complaint itself establishes the applicability
of an affirmative defense). It is well-settled in Texas that agreements pertaining
to loans in excess of $50,000 must be in writing, including modifications of those
agreements. See Tex. Bus. & Com. Code § 26.02.

Here, the entirety of the Millers’ allegations against BAC concern oral
promises by either Ms. Masters or unnamed call center representatives.
Importantly, the Millers do not allege that BAC promised to sign a prepared
document that comports with Texas’s statute of frauds, which would have
memorialized those promises. This omission is fatal to the Millers’ promissory
estoppel claims. See Martins v. BAC Home Loans Servicing, L.P., ___ F.3d ___,
2013 WL 3213633, at *5 (5th Cir. June 26, 2013) (collecting citations and holding
that promissory estoppel only overcomes Texas’s statute of frauds where the
alleged oral agreement to modify a loan is accompanied by the lender’s or its
agent’s promise to sign a written agreement validating the oral agreement that
itself satisfies the statute of frauds).8

For these reasons, BAC was permitted to raise the statute of frauds as a
defense in its Rule 12(b)(6) motion. The district court did not err in dismissing
the Millers’ promissory estoppel claims on that basis.

D. Wrongful Foreclosure Claims Against BAC and NDE
The Millers argue that the district court erred in dismissing their common
law wrongful foreclosure claims against BAC and NDE. Under Texas law, a
wrongful foreclosure claim ordinarily requires a showing of (i) “a defect in the
foreclosure sale proceedings”; (ii) “a grossly inadequate selling price”; and (iii) “a
causal connection between the defect and the grossly inadequate selling price.”
Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135, 139 (Tex. App. 2008) (citing
Charter Nat’l Bank—Hous. v. Stevens, 781 S.W.2d 368, 371 (Tex. App. 1989)).
The district court adopted the magistrate judge’s finding that the Millers had
satisfied the first element of a wrongful foreclosure claim, but had not alleged
facts satisfying the second and third elements. On appeal, the Millers do not
dispute the magistrate judge’s finding. Instead, the Millers argue that they are
entitled to a less stringent standard because they are not attacking the validity
of the foreclosure sale but, rather, are seeking only compensatory damages
arising from the sale.

The Millers are correct that the above three-part standard—in particular
the requirement to show a grossly inadequate selling price—does not apply to
all wrongful foreclosure claims under Texas law. However, the cases on which
the Millers rely establish only a particularized exception whereby the plaintiffmortgagor
may avoid showing a grossly inadequate selling price if he or she
alleges that the defendant-mortgagee (lender) deliberately “chilled” the bidding
at the foreclosure sale. See, e.g., Charter Nat’l Bank, 781 S.W.2d at 371 (holding
that a mortgagor is not required “to prove a grossly inadequate selling price in
a situation where the bidding at a non-judicial foreclosure sale was deliberately
‘chilled’ by the affirmative acts of a mortgagee and the injured mortgagor seeks
a recovery of damages rather than a setting aside of the sale itself” (emphasis
omitted)). The cases do not stand for the Millers’ broader proposition that
mortgagors are entitled to a less stringent standard simply by pleading that they
confirm the foreclosure sale and seek only damages arising from that sale.

Here, the Millers never alleged that BAC and NDE interfered with the
bidding process of the foreclosure sale. The only defects they alleged were vague
failures to comply with Texas statutory requirements in effecting the sale, and
that BAC had agreed to postpone foreclosure. See, e.g., Am. Compl. ¶¶ 32-33, 65-
68. Thus, the “chilled bidding” exception does not apply. Because the exception
does not apply, and because the Millers do not dispute their failure to have
alleged a grossly inadequate selling price, we affirm the district court’s dismissal
of their wrongful foreclosure claims.

E. Request for an Accounting and Distribution from NDE
Finally, the Millers argue on appeal that the district court erred in
denying their motion to alter or amend the judgment pursuant to Rule 59(e). In
that motion, the Millers had contended to the district court that its Rule 12(b)(6)
dismissal of their claims had not contained any discussion of their request for an
accounting from NDE, and that NDE had not moved to dismiss their claims on
any basis.

In light of our holding reversing the district court’s dismissal of the
Millers’ TDCA claims under § 392.304(a)(14), we also reverse the district court’s
dismissal of the Millers’ request for an accounting from NDE.

V.

For the foregoing reasons, we AFFIRM the district court’s dismissal of the
Millers’ DTPA and Texas common law claims. We also AFFIRM the district
court’s dismissal of the Millers’ TDCA claims under Tex. Fin. Code §§
392.304(a)(8), (18), and (19). We REVERSE the district court’s dismissal of the
Millers’ TDCA claims under § 392.304(a)(14) as well as the district court’s denial
of the Millers’ request for an accounting from NDE. We REMAND for further
proceedings consistent with this opinion.

footnotes

1 It is not clear on the face of the Millers’ amended complaint why BAC would have
contacted the Millers about the default on March 10, 2010, when Nexstar’s assignment to it
did not become effective until April 7, 2010. See Am. Compl. ¶¶ 6, 9. It also is not clear
whether the mortgage already was in default at the time of the assignment.

2 We assume this allegation is true for purposes of reviewing the district court’s
dismissal of the Millers’ claims. That said, NDE disputes the Millers’ allegation that Ms.
Hampton was its agent. In its opening brief, NDE characterizes itself as merely an “affiliated”
service provider to the foreclosure law firm retained by BAC. It is not clear what NDE means
by “affiliated,” and whether Ms. Hampton instead would have been an agent of BAC or the
foreclosure law firm.

3 NDE did not move to dismiss the amended complaint. Nevertheless, the magistrate
judge recommended dismissal as to both defendants, and the district court adopted that
recommendation. On appeal, the Millers challenge the district court’s dismissal of their claims
as to NDE on the grounds that NDE did not move to dismiss and, indeed, filed answers to both
the initial complaint and the amended complaint. We address this issue infra.

4 Nor had the magistrate judge addressed the request in her March 23, 2012 report.

5 The magistrate judge relied on Pollice v. National Tax Funding, L.P., 225 F.3d 379,
403 (3d Cir. 2000) (citations omitted), in making this observation. We expressly adopt this
precedent from the Third Circuit.

6 As discussed supra, in note 1, this is not apparent from the Millers’ pleadings. See
Am. Compl. ¶¶ 6, 9. However, the Millers have not challenged the district court’s dismissal
of their FDCPA claims on appeal. Accordingly, the district court’s disposition of those claims
remains undisturbed and any challenge to that disposition is waived. See Swindle v.
Livingston Parish Sch. Bd., 655 F.3d 386, 392 & n.6 (5th Cir. 2011) (citations omitted).

7 Unlike NDE, BAC did not file an answer to either of the Millers’ complaints.

8 Garcia v. Karam, 276 S.W.2d 255 (Tex. 1955), which the Millers cite in their opening
brief, did not implicate promissory estoppel and did not arise in the home loan modification
context. Garcia therefore is not inconsistent with Martins.

Timing is EVERYTHING.

The statute of limitations will be long gone by then….

HuffPO-

U.S. Attorney General Eric Holder is preparing to announce new cases related to the economic meltdown in the coming months as the Justice Department nears decisions on a number of probes involving large financial firms, the Wall Street Journal reported.

“Anybody who’s inflicted damage on our financial markets should not be of the belief that they are out of the woods because of the passage of time,” Holder said in an interview with the Journal on Tuesday. ()

He declined to discuss specific cases or say when the cases would be announced, the report said, but added that he wouldn’t leave the job before making major charging decisions on cases stemming from the 2008 financial collapse.

There has been widespread speculation that Holder would not serve through the end of the Obama administration.

Holder’s comments come as the U.S. government takes steps to hold companies responsible for breaking the law in financing the housing bubble that led to the financial crisis.

[HUFFINGTON POST]

FindsenLaw-

Stauffer v. First American Title, Co., et. al. was the first case to go up to the Arizona Court of Appeals on the issue of whether Arizona’s false recording statute, A.R.S. 33-420 applies to the types of documents recorded in the typical non-judicial foreclosure, the Assignment of Beneficial Status in the Deed of Trust, the Notice of Trustee’s Sale, and the Substitution of Trustee. The court held that these documents are encompassed by part A of the statute, which provides damages for the reocrding of a document containing false statements that “purport to create an interest or lien or encumbrance” in real property.

The court also held that the homeowner has standing as an “owner or beneficial title holder of the real property” to bring the claim.

[FINDSEN LAW]

IN THE COURT OF APPEALS
STATE OF ARIZONA
DIVISION ONE

KARL and FABIANA STAUFFER,
Plaintiffs/Appellants,

v.

US BANK NATIONAL ASSOCIATION, a
national banking association, as
Trustee for CSMC Mortgage-Backed
Pass-Through Certificates,
Series 2006-3,
Defendant/Appellee.

__________________________________
KARL and FABIANA STAUFFER,
Plaintiffs/Appellants,

v.

FIRST AMERICAN TITLE INSURANCE
COMPANY, a Texas corporation;
and FIRST AMERICAN TRUSTEE
SERVICING SOLUTIONS, LLC, a
Texas limited liability company,
Defendants/Appellees.
__________________________________
Appeal from the Superior Court in Maricopa County

 PRESS RELEASE:

WILLIAMSON COUNTY, TEXAS ANNOUNCES IT’S RETAINED COUNSEL TO JOIN THE NUECES COUNTY, TEXAS LAWSUIT AGAINST MERSCORP HOLDINGS, INC. AND BANK OF AMERICA ET AL!

.

TRAVIS COUNTY, TEXAS SIMULTANEOUSLY FILES MOTION FOR LEAVE TO INTERVENE INTO THE SAME CASE!

By Dave Krieger, Clouded Titles.com

Williamson County, Texas Commissioners have voted to join the on-going Nueces County, Texas lawsuit against MERSCORP Holdings, Inc., Bank of America, N.A. et al.  On Monday, Williamson County Clerk Nancy Rister sent the author a set of the retainer agreements with Malouf & Nockels, the same law firm that is representing Dallas County, Texas in its suit against the same two firms and others which is now in mediation.

No sooner did the ink dry on the Williamson County contract, Travis County, Texas decided to file a Rule 24 motion for leave to intervene to join the same suit in the U.S. District Court for the Southern District of Texas in Corpus Christi, Texas.

 All three pieces of litigation are included to bring everyone up to speed on the late-breaking news.

Much of the suit centers around a Texas statute in the Texas Local Government Code at Section 192.007, wherein the law states that when a deed of trust is recorded, all documents affecting that deed of trust MUST also be recorded.  With the MERSCORP-run database (“the shell corporation known as “MERS”), controlled by MERSCORP members (who have contracts with MERSCORP). MERSCORP members (consisting of most of the banking institutions and Fannie Mae and Freddie Mac) can choose NOT to record anything in the land records (other than the original Deeds of Trust and Mortgages) in order to save money in recording fees, which has been the subject of numerous lawsuits around the country, many of which were unsuccessful largely due to the way the suits were plead.

 MERSCORP members are responsible for recording the assignments, not MERSCORP Holdings, Inc. (fka MERSCORP, Inc.).  Generally, MERSCORP members will put on the “MERS Hat” when they want to direct their employees (minions) to sign their names to documents to be filed in conjunction with foreclosure actions, attempting to convey non-performing loans into allegedly-performing trusts on Wall Street. 

nueces-county-v-mers_travis-county-intervenes_8-13.pdf

Nueces-County-Texas-v.-MERSCORP-Holdings-Inc.-et-al-2.pdf

MALOUF-AGREEMENT-MERS-8.13.2013-1.pdf

This is a must see.

filing Boloney for record activity…………just file a “restaurant menu” …….

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RAKOFF/SCHACK 2016!!

Yahoo-

A federal judge has endorsed a broad interpretation of a savings-and-loan era law that the Justice Department is trying to use in cases against Wall Street banks.

U.S. District Judge Jed Rakoff in Manhattan said Monday that a “straightforward application of the plain words” of the Financial Institutional Reform, Recovery and Enforcement Act (FIRREA) allowed the interpretation sought by the government.

The law has a low burden of proof, strong subpoena power and a 10-year statute of limitations, twice as long as the typical limit for fraud cases. Rarely asserted until recently, it has become the basis of three lawsuits by lawyers under Manhattan U.S. Attorney Preet Bharara against banks including Bank of America Corp, Wells Fargo & Co and Bank of New York Mellon Corp.

[YAHOO]

RT-

An unpaid credit card bill worth 1,000 pounds is now enough for a UK lender to go to court, forcing debtors to sell their property. A recent regulation puts tens of thousands of British homeowners at risk of losing their houses.

Frankie Waller, an owner of a modest London dwelling, might well soon lose the place holding memories of the last 20 years of his life. September court hearings will decide if he can keep his home or will have to sell it to repay 6,000 pounds of credit card debts he has run up.

“Nobody asked me or twisted my arm to take out the credit. That’s my doing entirely”, Waller confessed to RT’s Polly Boyko. “But the word ‘unsecured’ was attached to it.”

That key word – unsecured – is supposed to mean the loan is not attached to any of your assets. However, as of October 2012 the rules of the lending game have been changed by a government regulation, making it easier to turn unsecured debt into secured. That means failure to pay it off puts borrowers at risk of losing their homes.

[RT]

New Economic Perspectives-

Three Bloomberg reporters have done the Nation a service by ferreting out a scandal of moderate magnitude but emblematic importance. Dakin Campbell, Jody Shenn and Phil Mattingly broke the story on August 14, 2013 that Adam Glassner, recently described, but not named, in the Department of Justice’s (DOJ) fraud suit against Bank of America (B of A), and named as a defendant by Fannie Mae’s in its fraud suit against B of A and several officers, was hired by two companies (Ally and Fannie) bailed out by Treasury.

Here is DOJ’s key allegation about Glassner.

23. The “BOA-Securities Managing Director” was a Managing Director at BOASecurities and a Senior Vice President of BOA-Bank who, at all times relevant to the allegations of this Complaint, was in charge of the Mortgage Finance Group at BOA-Securities – the group that had responsibility for underwriting the BOAMS 2008-A securitization – and the Investor Relations Group at BOA-Bank – the group that had responsibility for selecting the mortgages to be securitized and determining the price at which BOA-Bank would sell those mortgages. The BOA-Securities Managing Director ultimately had responsibility for structuring the BOAMS 2008-A securitization and preparing the Offering Documents. At all times relevant to the allegations in this Complaint, the BOA-Securities Managing Director also served as President and Chief Executive Officer of BOA-Mortgage. The BOA-Securities Managing Director’s annual bonus was largely dependent on Defendants continuing to profitably securitize mortgages originated by BOA-Bank. Thus, he had a strong financial motive to withhold negative information concerning the value of the Certificates from investors.

Fannie Mae was the second of these corporate bailout recipients, purportedly run by the government, to hire Glassner. Fannie hired Glassner after it sued him. The suit was nominally brought by the Federal Housing Finance Administration (FHFA), the federal agency acting as conservator for Fannie, but Fannie is the real party in interest in the lawsuit.

[NEW ECONOMIC PERSPECTIVES]

If you’d like, you can fast forward to listen to Clouded Titles author Dave Krieger starting at 1:51:00

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The Deal Book-

Jed S. Rakoff, a judge for the Federal District Court for the Southern District of Manhattan, has rejected the proposed $285 million settlement between the Securities and Exchange Commission and Citigroup related to the sale of mortgage securities.

An application of judicial power that does not rest on facts is worse than mindless, it is inherently dangerous. The injunctive power of the judiciary is not a free-roving remedy to be invoked at the whim of a regulatory agency, even with the consent of the regulated. If its deployment does not rest on facts — cold, hard, solid facts, established either by admissions of by trials — it serves no lawful or moral purpose and is simply an engine of oppression.

Finally, in any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth. In much of the world, propaganda reigns, and truth is confined to secretive, fearful whispers. Even in our nation, apologists for suppressing or obscuring the truth may always be found. But the S.E.C., of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if it fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency’s contrivances.”

[THE DEALBOOK]

[ipaper docId=74051381 access_key=key-m6t2d523yqvm9rpgfs2 height=600 width=600 /]

New Economic Perspectives-

This is the second in my series of articles based on the FBI’s most (2010) “Mortgage Fraud Report.”

In my first column I began the explanation of how many analytical conclusions one can draw from a close reading of what is left out of the FBI report.

In particular, I emphasized the death of criminal referrals by the SEC and the banking regulatory agencies. The FBI report implicitly confirms the investigative reporting of David Heath that first quantified the death of criminal referrals by the banking regulatory agencies.

Because banks will not make criminal referrals against their own CEOs, this means that criminal referrals have virtually vanished against the “accounting control frauds” that drive our recurrent, intensifying financial crises. As George Akerlof and Paul Romer explained in their famous 1993 article (“Looting: The Economic Underworld of Bankruptcy for Profit”) the death of prosecutions of the controlling officers of banks will lead to accounting control fraud becoming a “sure thing.”

[M]any economists still seem not to understand that a combination of circumstances in the 1980s made it very easy to loot a financial institution with little risk of prosecution. Once this is clear, it becomes obvious that high-risk strategies that would pay off only in some states of the world were only for the timid. Why abuse the system to pursue a gamble that might pay off when you can exploit a sure thing with little risk of prosecution? (1993: 4-5).

[NEW ECONOMIC PERSPECTIVE]