Opinion
No. 1 CA-CV 17-0066
12-28-2017
KEVIN E. THOMAS, Plaintiff/Appellant, v. ALLY BANK, et al., Defendants/Appellees.
COUNSEL Kevin E. Thomas, Phoenix Plaintiff/Appellant Wolfe & Wyman, LLP, Irvine, CA By Joshua C. Offenhartz Counsel for Defendants/Appellees Ally Bank and Cenlar Bryan Cave, LLP, Phoenix By Sean K. McElenney, Gregory B. Iannelli, Teresa P. Meece Counsel for Defendants/Appellees Ocwen
NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE. Appeal from the Superior Court in Maricopa County
No. CV2016-014100
The Honorable Douglas Gerlach, Judge
AFFIRMED
COUNSEL Kevin E. Thomas, Phoenix
Plaintiff/Appellant Wolfe & Wyman, LLP, Irvine, CA
By Joshua C. Offenhartz
Counsel for Defendants/Appellees Ally Bank and Cenlar Bryan Cave, LLP, Phoenix
By Sean K. McElenney, Gregory B. Iannelli, Teresa P. Meece
Counsel for Defendants/Appellees Ocwen
MEMORANDUM DECISION
Judge Kent E. Cattani delivered the decision of the Court, in which Presiding Judge James P. Beene and Judge Randall M. Howe joined. CATTANI, Judge:
¶1 Kevin Thomas appeals the superior court's dismissal of his claims against Ally Bank, FSB and Cenlar Central Loan Administration and Reporting (collectively, "Ally") and Ocwen Loan Servicing LLC ("Ocwen"). For reasons that follow, we affirm.
FACTS AND PROCEDURAL BACKGROUND
¶2 Thomas's daughter borrowed $94,100, securing the loan with a deed of trust on residential property in Phoenix. Ocwen serviced the loan. Thomas's daughter subsequently quitclaimed the property to Thomas.
¶3 The deed of trust listed Mortgage Electronic Registration Systems, Inc. ("MERS"), and its successors and assigns, as the beneficiary with the "right to foreclose and sell the Property." Through multiple assignments of MERS's interest, Ally became the beneficiary. After Thomas's daughter defaulted on the loan, Ally recorded a notice of trustee's sale and subsequently purchased the property at the sale.
¶4 Thomas then filed a complaint against Ally and Ocwen alleging breach of contract, lack of standing, wrongful foreclosure, fraudulent misrepresentation, promissory estoppel, theft, vicarious liability, violation of Arizona Revised Statutes ("A.R.S.") § 44-1522, violation of A.R.S. § 33-420, negligent infliction of emotional distress, quiet title, unjust enrichment, and violations of RICO.
¶5 Ally filed a motion to dismiss under Arizona Rule of Civil Procedure 12(b)(6), and Ocwen joined. Nearly one month later, Thomas filed a "Request for Judicial Notice," but did not substantively respond to the motion to dismiss. He instead raised issues relating to a separate forcible detainer case involving the same residential property. The superior court granted the motion to dismiss because (1) Thomas's response was untimely and (2) Thomas's claims failed as a matter of law. Thomas filed a motion for reconsideration and a motion for relief from judgment, both of which were denied.
¶6 Thomas timely appealed, and we have jurisdiction under A.R.S. § 12-2101(A)(1).
DISCUSSION
¶7 We affirm the superior court's dismissal because Thomas waived any arguments relating to the underlying case, and in any event, dismissal was proper.
I. Waiver.
¶8 In his opening brief, Thomas did not address the issues resolved by the superior court. He instead raises issues relating to the separate forcible detainer case, which has not been consolidated with this case. Accordingly, Thomas has waived any arguments relating to the superior court's dismissal of the underlying case. See Schabel v. Deer Valley Unified Sch. Dist. No. 97, 186 Ariz. 161, 167 (App. 1996).
II. Dismissal.
¶9 Waiver notwithstanding, Thomas's claims are unavailing. Dismissal under Rule 12(b)(6) is proper "if as a matter of law [ ] plaintiff[] would not be entitled to relief under any interpretation of the facts susceptible of proof." Coleman v. City of Mesa, 230 Ariz. 352, 356, ¶ 8 (2012) (first alteration in original and citation omitted). We review dismissal on this basis de novo. Id. at 355-56, ¶ 7. We consider the allegations of the complaint, documents attached to or referenced in the complaint, and related public records. Strategic Dev. & Constr., Inc. v. 7th & Roosevelt Partners, LLC, 224 Ariz. 60, 63-64, ¶¶ 10, 13 (App. 2010). We "assume the truth of all well-pleaded factual allegations and indulge all reasonable inferences from those facts, but mere conclusory statements are insufficient." Coleman, 230 Ariz. at 356, ¶ 9.
¶10 Several of Thomas's claims challenge the validity of the trustee's sale and fail as a matter of law. Under A.R.S. § 33-811(C), a trustor and its successors or assigns waive title claims and claims dependent on the trustee's sale unless they obtain an injunction halting the sale. See Morgan AZ Fin., L.L.C. v. Gotses, 235 Ariz. 21, 23-24, ¶ 7 (App. 2014); see also BT Capital, LLC v. TD Serv. Co. of Ariz., 229 Ariz. 299, 301, ¶ 10 (2012) ("Under [§ 33-811(C)], a person who has defenses or objections to a properly noticed trustee's sale has one avenue for challenging the sale: filing for injunctive relief."). As a matter of law, claims dependent on the validity of a trustee's sale cannot survive if they are waived under § 33-811(C), so dismissal of such claims is proper under Rule 12(b)(6). See Madison v. Groseth, 230 Ariz. 8, 13, ¶ 15 (App. 2012).
¶11 Because Thomas had notice of the trustee's sale and did not seek a pre-sale injunction, all of his claims contesting the validity of the trustee's sale are waived under § 33-811(C). See id. His claims for lack of standing, wrongful foreclosure, negligent infliction of emotional distress, quiet title, and unjust enrichment fall into this category. Similarly, Thomas's claims for breach of contract, fraudulent misrepresentation, and promissory estoppel are waived because they are premised on Thomas's assertion that he was entitled to a loan modification, which is a claim that could have been asserted as a basis for challenging the trustee's sale.
B. Theft.
¶12 Thomas attempts to state a claim for "theft"—in effect a conversion claim—based on an allegation that Ocwen wrongfully exercised dominion or control over his personal property (a check) in a manner inconsistent with his right to the property. See Koss Corp. v. Am. Express Co., 233 Ariz. 74, 90, ¶¶ 52-53 (App. 2013). To maintain an action for conversion, Thomas must show he had an immediate right to the property at the time of the conversion. Id. at ¶ 52. Here, Thomas alleges that Ocwen cashed a check to which Thomas was entitled. But because the check was made payable to Ocwen, on behalf of Thomas's daughter, Thomas did not show that he had a right to the check or its funds. Accordingly, this claim fails.
C. A.R.S. § 44-1522.
¶13 Thomas also claims Ally and Ocwen violated Arizona's consumer fraud statute, A.R.S. § 44-1522. A claim under this statute, which applies to loans and to real estate, is established by showing (1) "a false promise or misrepresentation made in connection with the sale or advertisement of merchandise" and (2) a "consequent and proximate injury." Kuehn v. Stanley, 208 Ariz. 124, 129, ¶ 16 (App. 2004); Villegas v. Transamerica Fin. Servs., Inc., 147 Ariz. 100, 102 (App. 1985) (loans); A.R.S. § 44-1521(5) (real estate). And, here, Thomas did not allege fraud in connection with a sale or advertisement of merchandise, but rather in modifying the payment schedule of an existing loan. Accordingly, Thomas's allegations did not state a claim under § 44-1522(A).
D. A.R.S. § 33-420.
¶14 Thomas next claims that Ally and Ocwen violated A.R.S. § 33-420(A), which provides an owner of real property may recover damages from a person claiming an interest in the property "who causes a document asserting such claim to be recorded . . . knowing or having reason to know that the document is forged, groundless, contains a material misstatement or false claim or is otherwise invalid."
¶15 Thomas alleged the deed of trust, corporate deed assignment, and substitution of trustee assignment were groundless and fraudulent, creating liability under § 33-420. He appears to assert that the assignment documents were invalid because the deed of trust was void, an argument that is waived under A.R.S. § 33-811(C). See BT Capital, 229 Ariz. at 301, ¶ 10. He also asserts that the deed of trust was fraudulent because the lender on the deed of trust was actually the broker. But regardless who the deed of trust identified as the lender, it identified MERS as the nominee and beneficiary, with the right to assert the lender's interests. See Sitton v. Deutsche Bank Nat'l Tr. Co., 233 Ariz. 215, 220-21, ¶¶ 27-28 (App. 2013) (rejecting the argument that listing an entity as the lender that was not the original lender can establish a claim under § 33-420). Accordingly, Thomas's claim under § 33-420 fails.
E. Violations of RICO.
¶16 Thomas asserts that Ally and Ocwen violated the federal racketeering statute, 18 U.S.C. § 1962 ("RICO"). To establish a RICO claim, a plaintiff must establish "a pattern of racketeering activity," which "requires at least two acts of racketeering activity." Salinas v. United States, 522 U.S. 52, 62 (1997). Moreover, a RICO plaintiff must plead facts sufficient to state a claim for the underlying racketeering activity, including pleading any underlying allegation of fraud "with particularity." See Sanford v. MemberWorks, Inc., 625 F.3d 550, 557-58 (9th Cir. 2010); see also Ariz. R. Civ. P. 9(b).
¶17 Here, Thomas alleged wire fraud and mail fraud as the underlying racketeering activity. Thus, he was required to present sufficient facts to support the three elements of wire or mail fraud: "(1) formation of a scheme or artifice to defraud; (2) use of the United States mails or wires . . . in furtherance of the scheme; and (3) specific intent to deceive or defraud." Id. at 557. But, Thomas asserted only that Ally and Ocwen changed loan numbers on documents that assign the beneficial interest in the loan, a claim that, even if true, would not establish mail fraud or wire fraud. Because Thomas did not allege any facts to demonstrate a scheme or artifice to defraud or a specific intent to defraud, he failed to state a claim for RICO violations.
F. Vicarious Liability.
¶18 To hold a principal vicariously liable for the actions of an agent, there must be a claim for which the agent can be held liable. See Jamerson v. Quintero, 233 Ariz. 389, 392, ¶ 14 (App. 2013) (noting that when the agent is not liable, any vicarious liability of the principal "necessarily falls away"). Because none of Thomas's claims are viable, no liability can be extended by vicarious liability.
CONCLUSION
¶19 For the foregoing reasons, we affirm.