Opinion
No. CV 10-2459-PHX-DGC.
February 8, 2011
ORDER
On September 21, 2006, Plaintiffs refinanced their home located in Surprise, Arizona. Plaintiffs borrowed $150,000.00 from Fremont Investment Loan Corporation ("Fremont"). Fremont provided Plaintiffs with an adjustable rate mortgage with a maximum interest rate of 12.541%. Mortgage Electronic Registration Systems, Inc. ("MERS") was the beneficiary on the deed of trust. When Fremont went bankrupt, Deutsche Bank National Trust ("Deutsche Bank") purchased Plaintiffs' loan.
A few years later, Plaintiffs began having difficulty making their mortgage payments. In July 2009, Defendants sent Plaintiffs a letter stating that they would initiate foreclosure proceedings on or after September 11, 2009 if payment was not received. On December 10, 2009, Plaintiffs filed a complaint for declaratory and injunctive relief to stop the foreclosure of their property. Doc. 1, Phillips v. Fremont Investment Loan, No. 09-2585-GMS (D. Ariz., 2009). Plaintiffs voluntarily dismissed that action on June 18, 2010. Doc. 50, Id.
Plaintiffs filed this action on August 17, 2010. The complaint contains four counts: intentional misrepresentation, consumer fraud, accounting, and quiet title.
Defendants have filed a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Doc. 4. The motion is fully briefed. Docs. 8, 9. For reasons stated below, the motion will be granted.
Plaintiffs' request for oral argument is denied because the issues have been fully briefed and oral argument will not aid the Court's decision. See Fed.R.Civ.P. 78(b); Partridge v. Reich, 141 F.3d 920,926 (9th Cir. 1998).
I. Counts One and Two: Intentional Misrepresentation and Consumer Fraud.
While it is generally true that dismissal on statute of limitations grounds should not be granted on a Rule 12(b)(6) motion, it may be granted where the untimeliness of the claim is apparent on the face of the complaint. Jablan v. Dean Witter Co., 614 F.2d 677, 682 (9th Cir. 1980). The face of the complaint in this case makes clear that the intentional misrepresentation and consumer fraud claims are barred by the applicable statutes of limitations.
A claim for intentional misrepresentation must be brought within three years after the statute of limitations begins to run. A.R.S. § 12-543. The statute of limitations for intentional misrepresentation begins to run "when the plaintiff knew or by reasonable diligence should have known of the misrepresentation." Bank of the W. v. Estate of Leo, 231 F.R.D. 386, 390 (2005); see also Coronado Dev. Corp. v. Super. Court, 139 Ariz. 350, 352, 678 P.2d 535, 537 (App. 1984).
A claim brought under the Arizona Consumer Fraud Act, A.R.S. § 44-1522, must be brought within one year after the statute of limitations begins to run. See A.R.S. § 12-541(5) 2003. The statute of limitations begins to run "when the defrauded party discovers or with reasonable diligence could have discovered the fraud." Alaface v. Nat'l Inv. Co., 181 Ariz. 586, 892 P.2d 1375, 1379 (App. 1994) (quoting Mister Donut of Am., Inc. V. Harris, 150 Ariz. 321, 723 P.2d 670, 672 (1986)).
Plaintiffs signed the loan documents on September 21, 2006. The three-year statute of limitations period for the intentional misrepresentation claim therefore expired on September 22, 2009. The one-year statute of limitations period for the consumer fraud claim expired on September 22, 2007. Plaintiffs did not bring their intentional misrepresentation and consumer fraud claims until June of 2010, long after both periods expired.
Plaintiffs contend that the statute of limitations did not begin running until April 16, 2010 when they received a forensic review of their loan documents. Doc. 1-1 at 7, ¶ 40. They state that they "were in no position to discover the aforementioned concealed and/or false information until a forensic review of their loan documents was conducted," and the statute of limitations therefore did not begin running when they signed the loan documents on September 21, 2006. Id. Plaintiffs later specifically allege, however, that "the defects are on the face of the loan documents and documents are missing that indicate that concealment has taken place." Doc. 1-1 at 8, ¶ 41. Because Plaintiffs admit that the alleged concealment was apparent from the face of the loan documents, they reasonably should have known of the alleged misrepresentation and fraud on September 21, 2006. Therefore, the statute of limitations period began running on that date and has expired for both claims. Count one and count two will be dismissed as time barred.
II. Count Three: Accounting.
"The burden of showing that an accounting is necessary is on the party requesting the accounting." Assoc. Fin. Co. v. Walters, 12 Ariz. App. 369, 375, 470 P.2d 689. Defendants correctly argue that Plaintiffs have failed to establish any status relationship between the parties that would justify an accounting. Further, accounting is an equitable remedy and Plaintiffs have not proved any independent legal claim against MERS or Deutsche Bank. Because the counts on which this claim depends — counts one and two — have been dismissed, count three will also be dismissed for failure to state a claim upon which relief can be granted.
III. Count Four: Quiet Title.
Plaintiffs argue that the defendants MERS and Deutsche Bank have no standing to claim a valid interest in their property. Doc. 1-1 at 11, ¶ 58. Additionally, Plaintiffs argue that Deutsche Bank "has failed to provide or record a valid assignment of either the promissory note or deed of trust." Doc. 1-1 at 12, ¶ 58. This "show me the note" argument has been uniformly rejected by Arizona district courts. See Dumesnil v. Bank of Am., N.A., No. 10-0243, 2010 WL 1408889 (D. Ariz., 2010) (citing cases). Therefore, count four will also be dismissed for failure to state a claim upon which relief can be granted.
IV. Leave to Amend.
IT IS ORDERED:
15Leadsinger, Inc. V. BMG Music Publ'g 512 F.3d 522532 Ahlmeyer v. Nev. Sys. of Higher Educ.555 F.3d 10511055
1. The motion to dismiss the amended complaint filed by Defendants Mortgage Electronic Registration Systems, Inc. and Deutsche Bank National Trust Company (Doc. 4) is granted.
2. Plaintiffs' request for leave to amend is denied.
3. The Clerk is directed to enter judgment accordingly.
Defendants' request for an award of fees and costs based on the dismissal of this action is denied without prejudice. Defendants may file a proper request for attorney's fees pursuant to Local Rule of Civil Procedure 54.2.
DATED this 8th day of February, 2011.