IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
KATRINA PERKINS STEINBERGER, as Executor of the Estate of Charles A. Perkins, deceased, and individually, Petitioner,
v.
THE HONORABLE MICHAEL R. MCVEY, Judge of the SUPERIOR COURT OF THE STATE OF ARIZONA, in and for the County of Maricopa, Respondent Judge,
INDYMAC MORTGAGE SERVICES, a division of ONEWEST BANK, F.S.B., a Federally Chartered Savings Bank; DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee of the INDYMAC INDX MORTGAGE LOAN TRUST 2005-AR14; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., a Delaware Corporation; QUALITY LOAN SERVICE CORPORATION, a California Corporation, Real Parties in Interest
No. 1 CA-SA 12-0087
Petition for Special Action from the Superior Court in Maricopa County
No. CV2010-054539
The Honorable Michael R. McVey, Judge (Retired)
JURISDICTION ACCEPTED; RELIEF GRANTED IN PART AND DENIED IN PART
G O U L D, Judge:
¶1 Petitioner Katrina Perkins Steinberger (“Steinberger”) seeks special action relief from the trial court’s judgment granting a motion to dismiss filed by OneWest Bank, FSB (“OneWest”), Deutsche Bank National Trust Company (“DBNTC”) and Mortgage Electronic Registration Systems, Inc. (“MERS”) (collectively, “Respondents”). For the following reasons, we accept jurisdiction; grant relief in part, deny relief in part; and remand this case to the trial court for further proceedings consistent with this opinion.
¶2 This case involves an all-too familiar scenario taking place in Arizona and across America today; a homeowner defaults on her home loan, and the lender seeks to foreclose on the property. Here, Steinberger filed a complaint challenging Respondents’ authority to foreclose on her home. Steinberger also seeks damages for Respondents’ alleged misconduct in relation to the foreclosure proceeding.
¶3 At its core, this case presents three basic legal questions. First, are there any circumstances under which a person who is facing foreclosure may challenge the authority of the party seeking foreclosure? The second question is related to the first; if there are such circumstances, what are the requirements, if any, for the party seeking foreclosure to establish its authority? Third, if the lender or its agent offers to modify (lower) the payments to assist the homeowner, is the lender/agent required to act reasonably in processing the loan modification?
¶4 In considering these issues, we emphasize that this opinion is limited to the legal sufficiency of Steinberger’s complaint. The strength of the evidence supporting Steinberger’s case is not before us in this special action.
Factual and Procedural History1
¶5 In May 2005, Steinberger’s father, Charles Perkins, took out a loan from IndyMac Bank, FSB (“IndyMac”) to purchase a home. The original promissory note was signed on May 25, 2005, and identified the lender as IndyMac and the borrower as Charles Perkins. Contemporaneously with the note, Perkins also executed a deed of trust.
¶6 When Perkins passed away in December 2007, Steinberger inherited the property. Under the terms of the note, the monthly loan payments had nearly doubled by July 2008, and Steinberger was struggling to make her payments. In an effort to avoid defaulting on the loan, Steinberger contacted a representative at IndyMac to obtain a loan modification and lower the monthly payments. The representative told Steinberger that a loan modification was not available unless she was in default on the loan. Based on this phone call and subsequent conversations with IndyMac, Steinberger defaulted on her loan payments and applied for a loan modification.
¶7 By December 2008, Steinberger had completed the paperwork necessary for a loan modification and returned it to IndyMac Federal FSB (“IndyMac Federal”).2 Thereafter, Steinberger had a series of confusing communications with the various entities servicing her loan. During a telephone conversation in late December, an IndyMac Federal representative led Steinberger to believe that her loan would be modified. However, in February 2009, IndyMac Federal told Steinberger that because she was in default on the loan, a trustee’s sale of the property was scheduled for May 2009.
¶8 Throughout the winter and spring of 2009, Steinberger repeatedly contacted representatives of IndyMac Federal, and later IndyMac Mortgage Services (“IndyMac Mortgage”),3 in an effort to vacate the trustee’s sale and obtain a loan modification. The trustee’s sale was rescheduled to August 2009, and Steinberger continued to discuss obtaining a loan modification with representatives of Quality Loan Service Corporation (“QLS”), an entity assisting IndyMac Mortgage in servicing Steinberger’s loan.
¶9 During the summer of 2009, the status of Steinberger’s loan remained unresolved. Then, in late July, Steinberger was advised by a representative from IndyMac Mortgage that she had been granted a “loan forbearance” agreement. Under this agreement, Steinberger was allowed to make lower monthly payments until she qualified for a loan modification. The loan forbearance agreement was later extended to March 2010.
¶10 On January 11, 2010, a representative from IndyMac Mortgage advised Steinberger that it had received her loan modification paperwork and her monthly payment for the loan forbearance agreement. However, a few days later Steinberger was advised by a different representative from IndyMac Mortgage that a trustee’s sale was set for January 21 because Steinberger had failed to send her modification paperwork and her loan forbearance payment. Confident that she had sent the paperwork and the payment, Steinberger contacted several representatives at IndyMac Mortgage in an effort to vacate the trustee’s sale; however, she was advised by one representative that there would be no loan modification, and that it was “over.” Steinberger then redoubled her efforts, and was eventually able to persuade the lender to cancel the sale. In addition, the loan forbearance agreement remained in place while her loan modification application was being processed.
¶11 In March 2010, IndyMac Mortgage advised Steinberger that her loan modification application had been approved for a ninety-day trial period. Steinberger sent her March payment to IndyMac Mortgage, which accepted the payment. However, in April, IndyMac Mortgage rejected Steinberger’s payment on the ground she had failed to submit the proper paperwork. Thereafter, throughout the spring and summer of 2010,
Steinberger continued to submit payments to IndyMac Mortgage, only to be told her payments could not be accepted because she had not submitted the proper paperwork. Then, in August, IndyMac Mortgage told Steinberger she had breached the ninety-day trial agreement because she had failed to submit her payments.
¶12 In late August and early September of 2010, Steinberger tried to maintain the ninety-day trial agreement, but by mid-September she was told the agreement was no longer valid because her loan modification request had been denied. A trustee’s sale was set for November, only to be continued again on the grounds a loan modification was “in the system” and still being processed. However, the loan modification agreement never came to fruition, and a trustee’s sale was eventually set for January 10, 2011.
¶13 Steinberger sought to prevent the trustee’s sale by filing a complaint in superior court in November 2010, and an amended complaint in December 2010. Steinberger’s amended complaint alleged eleven causes of action: (1) a claim to vacate/set aside the substitution of trustee, the assignments of the deed of trust, and notice of the trustee’s sale; (2) a temporary restraining order, preliminary injunction, and permanent injunction prohibiting the trustee’s sale from going forward; (3) quiet title; (4) breach of contract; (5) negligent performance of an undertaking (“Good Samaritan Doctrine”); (6) fraudulent concealment; (7) common law fraud; (8) consumer fraud; (9) negligence per se; (10) unconscionable contract; and (11) discharge/payment of a debt.
¶14 The main remedy Steinberger sought in her complaint is a declaratory judgment that Respondents lack the authority to foreclose on her home, and that the notice of trustee’s sale is null and void. Steinberger also sought payment of her attorneys’ fees and punitive damages.
¶15 Steinberger obtained a temporary restraining order (“TRO”) on January 6, 20114 prohibiting Respondents from going forward with the trustee’s sale. The TRO required her to post a $7,000 bond with the court.
¶16 Respondents moved to dismiss Steinberger’s complaint, and the trial court granted their motion “for the reasons set forth in the moving Defendants’ [Respondents’] Motion to Dismiss and Reply.” Steinberger then filed this special action, and after hearing oral argument, we accepted jurisdiction and ordered the TRO to remain in place during the pendency of this special action.
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