Sparlin et al v. Quicken Loans Incorporated et alMOTION to Dismiss CaseD. Ariz.June 29, 20111 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 M A Y N A R D C R O N IN E R IC K SO N C U R R A N & R E IT E R , P .L .C . A TT O R N EY S A T LA W 32 00 N O R TH C EN TR A L A V EN U E • S U IT E 18 00 • PH O EN IX , A R IZ O N A 8 50 12 TE LE PH O N E 60 2. 27 9. 85 00 • FA C SI M IL E 60 2. 26 3. 81 85 Jennifer A. Reiter, No. 017502 jreiter@mmcec.com MAYNARD CRONIN ERICKSON CURRAN & REITER, P.L.C. 3200 North Central Avenue, Ste. 1800 Phoenix, Arizona 85012 (602) 279-8500 Attorneys for Defendant Quicken Loans Inc. UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Michael Benson Sparlin and Sharon Jeanette Sparlin, husband and wife, Plaintiffs, v. Quicken Loans Inc.; Mortgage Electronic Registration Systems, Inc.; Chase Home Finance LLC; Mark S. Bosco, Esq.; Tiffany & Bosco, P.A.; Matthew A. Goldstein, Esq.; Gust Rosenfeld, PLC, Defendants. No. CV11-00372-RCC MOTION TO DISMISS Defendant Quicken Loans Inc. (“Quicken”) moves to dismiss Plaintiffs’ claims against Quicken under Rule 12(b)(6), Federal Rules of Civil Procedure, for failure to state a claim upon which relief can be granted as to Quicken. Plaintiffs’ claims are time-barred and/or do not involve Quicken, as Quicken has no interest in the subject property and played no role in the trustee’s sale process. MEMORANDUM OF POINTS AND AUTHORITIES I. Background Plaintiffs bring this action challenging the propriety of a trustee’s sale of one of their various properties which occurred on October 7, 2010. This is not the first lawsuit that Plaintiffs have filed regarding this trustee’s sale. In fact, Plaintiffs filed several separate suits in 2010 regarding similar issues. Three of those suits, which each concern a separate property Case 4:11-cv-00372-RCC Document 6 Filed 06/29/11 Page 1 of 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 1 Quicken was not named as a defendant in those cases. 2 “[T]he issues of likelihood of success and irreparable injury represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases.” Id. - 2 - owned by Plaintiffs for which Plaintiffs hoped to stop a trustee’s sale, were consolidated in this Court before the Honorable Frank Zapata: CV10-503-TUC-FRZ (491 S. Douglas Wash Road); CV10-507-FRZ, (7922 S. Clarkson Court); and CV10-508-TUC-FRZ, (9151 E. Showcase Lane, also at issue in this case) (these matters will be referred to herein as the “Consolidated Cases”).1 In the Consolidated Cases, Judge Zapata granted the defendants’ initial Motions to Dismiss and granted Plaintiffs leave to file an amended complaint. Consolidated Cases at Doc. No. 26. Plaintiffs then filed an amended complaint, and this too was dismissed pursuant to the Defendants’ motions. Consolidated Cases at Doc. No. 53. Plaintiffs have appealed that ruling to the Ninth Circuit. Consolidated Cases at Doc. No. 55. In connection with their appeal, Plaintiffs moved for a stay of the trustee’s sales of the Douglas Wash and Clarkson Court properties. Consolidated Cases, Doc. No. 59. The Court denied a stay, finding: “In deciding whether to issue a stay pending appeal, the court considers (1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.”2 Humane Society of U.S. v. Gutierrez, 523 F.3d 990, 991 (9th Cir. 2008) (internal quotes and citations omitted); see also California Pharmacists Ass’n v. Maxwell-Jolly, 563 F.3d 847, 850 (9th Cir. 2009)(same); Golden Gate Restaurant Ass’n v. City and County of San Francisco, 512 F.3d 1112, 1115-16 (9th Cir. 2008)(same). A review of Plaintiffs’ motion shows that Plaintiffs do not demonstrate that any of these factors weigh in their favor; as such, the motion is denied on this ground. Furthermore, the Court has previously denied injunctive relief on several occasions in this case; the standards for evaluating a motion to stay and a motion seeking injunctive relief are very similar. Plaintiffs have not submitted any substantive information showing that a weighing of the four factors entitles them to any relief. Furthermore, after allowing Plaintiffs to file an Amended Case 4:11-cv-00372-RCC Document 6 Filed 06/29/11 Page 2 of 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 3 - Consolidated Complaint, the Court dismissed this case with prejudice as Plaintiffs’ claims were without merit; judgment was entered closing this case in March of 2011. Upon review of the record in this case and weighing the four factors at issue, the Court finds that a stay is not warranted and therefore Plaintiffs’ “emergency motion for stay of trustee sales” is denied. Consolidated Cases at Doc. No. 61. In that Order, Judge Zapata further noted that “between August of 2010 and the present, Plaintiffs have filed at least fourteen separate lawsuits which are in the District of Arizona; at least eight judges in the District of Arizona have a lawsuit initiated by the Sparlins.” Consolidated Cases at Doc. No. 61, footnote 1. Plaintiffs have now filed this new suit, again seeking to undo the trustee’s sale of the Showcase Lane Property. There is substantial overlap between the claims raised in the Consolidated Cases, which have been conclusively rejected by the Court, and the claims brought here. The crux of Plaintiffs’ current Complaint (at least as to Quicken) is their claim for an alleged Truth-in-Lending-Act (“TILA”) violation based on Plaintiffs’ attempt to “cancel” their loan transaction in March 2010, more than 13 months after it was consummated. This claim is blatantly untimely, and Judge Zapata’s rulings in the Consolidated Cases would bar any effort by Plaintiffs to avoid the untimeliness by asserting an equitable tolling theory. Even if Plaintiffs’ claims were timely, they would be subject to dismissal for failure to allege required elements that could bring Quicken within the purview of the statutory sections cited. II. Standards for Dismissal Rule 12(b)(6) provides for dismissal of a complaint that fails to state a claim upon which relief can be granted. In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955 (2007), the Supreme Court explained: “[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555, 127 S. Ct. at 1964-65 (citations omitted). The complaint’s “[f]actual allegations must be enough to raise Case 4:11-cv-00372-RCC Document 6 Filed 06/29/11 Page 3 of 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 4 - a right to relief above the speculative level.” Id. at 555 and n.3, 127 S. Ct. at 1965 and n.3 (“Without some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirement of providing not only ‘fair notice’ of the nature of the claim, but also ‘grounds’ on which the claim rests.”). Conclusory allegations and unwarranted inferences are insufficient to defeat a motion to dismiss. Id. at 555, 127 S. Ct. at 1965. The Supreme Court recently elaborated on Twombly in Ashcroft v. Iqbal, as follows: Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” As the Court held in Twombly, 550 U.S. 544, 127 S. Ct. 1955, 167 L. Ed. 2d 929, the pleading standard Rule 8 announces does not require “detailed factual allegations,” but it demands more than an unadorned, the- defendant -unlawfully -harmed -me accusation. Id., at 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S. Ct. 2932, 92 L. Ed. 2d 209 (1986)). A pleading that offers “labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” 550 U.S., at 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929. Nor does a complaint suffice if it tenders “naked assertion[s]” devoid of “further factual enhancement.” Id., at 557, 127 S. Ct. 1955, 167 L. Ed. 2d 929. To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Id., at 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id., at 556, 127 S. Ct. 1955, 167 L. Ed. 2d 929. The plausibility standard is not akin to a “probability requirement,” but it asks for more than a sheer possibility that a defendant has acted unlawfully. Ibid. Where a complaint pleads facts that are “merely consistent with” a defendant’s liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.’” Id., at 557, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (brackets omitted). * * * Rule 8 marks a notable and generous departure from the hyper- technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. Ashcroft v. Iqbal, -- U.S. -, 129 S. Ct. 1937, 1949-50 (2009). Case 4:11-cv-00372-RCC Document 6 Filed 06/29/11 Page 4 of 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 5 - The Court further reiterated: “[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Id., at 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (Although for the purposes of a motion to dismiss we must take all of the factual allegations in the complaint as true, we ‘are not bound to accept as true a legal conclusion couched as a factual allegation’ (internal quotation marks omitted)).” Id. Here, Plaintiffs fail to provide factual matter that, taken as true, would “state a claim to relief that is plausible on its face.” At most, Plaintiffs provide legal conclusions couched as factual allegations. In Twombly, “the Supreme Court specifically rejected an interpretation of Rule 12(b)(6), Fed.R.Civ.P., that would allow ‘a wholly conclusory statement of claim . . . [to] survive a motion to dismiss whenever the pleadings left open the possibility that a plaintiff might later establish some ‘set of [undisclosed] facts’ to support recovery.’” Id. (citing Twombly). Similarly, here, Plaintiffs have not disclosed facts that would establish any claim against Quicken. III. Allegations Involving Quicken There are three counts in the Complaint that are brought against Quicken: declaratory relief based on TILA’s right of rescission (Count I), violation of the Helping Families Save Their Home Act of 2009 (which is part of TILA as well) (Count II) based on the alleged failure to notify Plaintiffs of “the location of the place where the transfer of ownership of the debt is recorded,” and quiet title (Count III), again based on the alleged failure of Quicken to rescind Plaintiffs’ mortgage under TILA. The TILA and quiet title counts both hinge on Plaintiffs’ claim that they attempted to rescind their loan by sending a “Notice of Right to Cancel” to Quicken and to Chase in March 2010. The remaining count asserts that Plaintiffs were not provided with verification of “the place where the transfer of ownership of the debt is recorded” under 15 U.S.C. § 1641(g). Each of these claims is time-barred, based upon faulty Case 4:11-cv-00372-RCC Document 6 Filed 06/29/11 Page 5 of 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 6 - premises, and/or barred as a result of rulings entered in the Consolidated Cases. The sum and substance of the allegations against Quicken is as follows. Plaintiffs allege that their personal residence and the address of the property at issue is 9151 E. Showcase Lane, Tucson, Arizona 85749 (the “Property”). Complaint, para. 7. A Deed of Trust was recorded in the records of Pima County on February 9, 2009 that relates to the Property. Complaint, para. 19. The “Lender” listed on the Deed of Trust is Quicken, and Plaintiffs’ “Promissory Note and Deed of Trust reflect MERS as the nominee.” Complaint, paras. 20, 22. At some point, Chase Home Finance LLC (“Chase”) became Plaintiffs’ mortgage loan service provider. Complaint, para. 21. Plaintiffs allege that they sent “a Notice of Default, Notice of Right to Cancel and Notice of Revocation of Power of Attorney” to Quicken and that these items were delivered to Quicken on March 25, 2010. Complaint, paras. 40, 41. They further claim that they sent a “Notice of Removal of Trustee” to Quicken “removing Title security Agency as Trustee and naming North American Trust Title as the new Trustee . . .” Complaint, para. 44. Plaintiffs additionally make a series of allegations regarding collection letters that they allegedly received from Defendant Tiffany & Bosco, P.A., the servicing of their loan payments by Defendant Chase, and the ultimate trustee’s sale of the Property carried out by Tiffany & Bosco. These aspects of the case do not involve Quicken. IV. Each Claim Against Quicken is Time-Barred and/or Lacks Required Elements A. Counts I and III Are Barred by Statute and the Court’s Ruling in the Prior Case Plaintiffs’ claims involving TILA rescission and for quiet title against Quicken depend on the validity of Plaintiffs’ theory that Plaintiffs sent Quicken a valid request for rescission of their loan pursuant to TILA and that Quicken improperly failed to act on it. However, Plaintiffs’ ability to rescind their loan under TILA expired three days after their loan closed in February 2009. 15 U.S.C. § 1635(A). They did not send their “right to cancel” to Chase and Case 4:11-cv-00372-RCC Document 6 Filed 06/29/11 Page 6 of 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 7 - Quicken until March 2010. Complaint, paras. 40, 42. Furthermore, although the three-day time limit may be extended once foreclosure proceedings begin, up to three years after the consummation date of the transaction, if the creditor fails to provide proper written notice of the right to rescind (15 U.S.C. § 1635(f),(I)), here, there are no allegations that could possibly so toll this period. The Court in the Consolidated Cases has already found that there are no grounds to extend the time frame here. See Order granting Motions to Dismiss Amended Complaint in Consolidated Cases at Doc. No. 53, p. 8; Amended Complaint in Consolidated Cases (Doc. No. 28). (“Furthermore, as Defendants correctly argue, even if TILA was applicable, Plaintiffs’ claims are time-barred and their conclusory statements are insufficient to trigger equitable tolling of their TILA claims.” (citing authorities)). The TILA claims are thus barred under the doctrines of res judicata and/or collateral estoppel. Furthermore, to the extent Plaintiffs seek damages for this alleged TILA violation, their claim is time-barred by the one-year statute of limitations for damages claims, as this current suit was brought more than one year after the date of the alleged violation in March or April 2010. 15 U.S.C. § 1640(e). Finally, in order to exercise their right of rescission under TILA, Plaintiffs must be able to tender their loan proceeds back to their lender. 15 U.S.C. § 1635(B); Yamamoto v. Bank of New York, 329 F.3d 1167, 1171-73 (9th Cir. 2003)(grant of summary judgment in favor of lender affirmed where borrowers could not provide evidence that they could tender loan proceeds back to lender). Here, Plaintiffs have failed to allege that they can tender the proceeds back, merely alleging that they are “able to discuss a tender offer.” Complaint, para. 88. This is insufficient under TILA. For all of these reasons, Counts I and III must be dismissed as to Quicken. Case 4:11-cv-00372-RCC Document 6 Filed 06/29/11 Page 7 of 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 8 - B. There is No Title Controversy Involving Quicken A further basis for dismissal of the quiet title claim (Count III) as to Quicken is that Plaintiffs fail to make any allegations that suggest that there is any title controversy involving Quicken. A party suing for quiet title must allege that the defendant has asserted an interest in the subject property. Here, Plaintiffs do not allege that Quicken has had any involvement in the servicing of Plaintiffs’ loan or the trustee’s sale of the Property. Because Quicken has no current interest in the property, there is no quiet title claim that can be brought against Quicken. Further, the quiet title claim is dependent upon Plaintiffs’ other claims for some sort of relief based upon the loan application process. Because all of those claims are time-barred and otherwise deficient, there is no resulting title controversy for the Court to resolve. C. Count II Does Not Pertain to Quicken In Count II, Plaintiffs invoke a portion of TILA at 15 U.S.C. § 1641 and allege: (90) Section 404(a) of the Helping Families Save Their Home Act of 2009 amended section 131 of the Truth in Lending Act (15 U.S.C. 1641) as follows: a. Notice of New Creditor “In addition to other disclosure required by this title, not later than 30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the credit that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer, including 1. the identify [sic], address, telephone number of the new creditor; 2. the date of the transfer; 3. how to reach an agent or party having authority to act on behalf of the new creditor; 4. the location of the place where transfer ownership of the debt is recorded; and Case 4:11-cv-00372-RCC Document 6 Filed 06/29/11 Page 8 of 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 9 - 5. any other relevant information regarding the new creditor.” (91) Defendants did not provide this Plaintiff with written verification within the thirty (30) days of the location of the place where the transfer of ownership of the debt is recorded as required in paragraph 94(a)(4) above. Therefore, Defendants are in direct violation of the Helping Families Save Their Home Act of 2009. (15 U.S.C. 1641(g)) Complaint, pars. 90-91. By the face of Plaintiffs’ allegations, this claim cannot pertain to Quicken. Plaintiffs allege (correctly) that Quicken is their original lender and that Chase at some point “became the mortgage loan service provider.” Complaint, paras. 20, 21. Clearly, then, Quicken is not the “new owner or assignee of this debt” so as to bring it within the purview of Count II. Thus, there is not even any allegation that Quicken had any obligation to Plaintiffs under this provision. Finally, Plaintiffs have failed to allege any damages as a result of any violation of this section. D. There Is No Basis Pled for the Punitive Damages Sought Plaintiffs appear to seek punitive damages; however, they have brought only federal statutory claims under TILA, and a quiet title claim, against Quicken. They have not asserted any claims that could entitle them to seek punitive damages even if they were successful on their allegations. Further, punitive damages cannot be awarded absent clear and convincing evidence that the defendant’s wrongful conduct was motivated by spite, actual malice, or intent to defraud, or the conscious and deliberate disregard of the interests and rights of others. Volk v. Coleman Co., 155 Ariz. 567, 570, 748 P.2d 1191, 1194 (1987). Plaintiffs have failed to plead sufficient facts to put the defendants on notice of any grounds for a punitive damages claim. Again, under the Twombly standard, as well as under well-settled Arizona law, bald requests for punitive damages do not sufficiently state the claim. Any punitive damages claim must be dismissed. Case 4:11-cv-00372-RCC Document 6 Filed 06/29/11 Page 9 of 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 10 - V. Conclusion The Complaint fails to state any claim against Quicken upon which relief can be granted. The claims lack merit for numerous reasons and are time-barred. For these reasons, Quicken asks this Court to dismiss the Complaint as to Quicken. Where any amendment would be futile, the Court need not grant leave to amend. E.g., Mt. Hood Polaris, Inc. v. Martino, 563 F.3d 981, 990 (9th Cir. 2009). Here, any such amendment would be futile, as Plaintiffs will never be able to overcome the obvious time bars and other legal deficiencies to their claims. Thus, leave to amend should not be granted. RESPECTFULLY SUBMITTED this 29th day of June, 2011. MAYNARD CRONIN ERICKSON CURRAN & REITER, P.L.C. By /s/Jennifer A. Reiter Jennifer A. Reiter 3200 North Central Avenue Phoenix, Arizona 85012-2443 Attorneys for Defendant Quicken Loans Inc. ORIGINAL of the foregoing e-filed this 29th day of June, 2011, with: Clerk of the Court United States District Court Sandra Day O’Connor U.S. Courthouse 401 West Washington Street Phoenix, AZ 85003-2153 COPY of the foregoing electronically delivered this 29th day of June, 2011, to: Honorable Raner C. Collins United States District Court Sandra Day O’Connor U.S. Courthouse 401 West Washington Street Phoenix, AZ 85003-2153 Gerard O’Meara, Esq. Gust Rosenfeld PLC One S. Church Ave., Suite 1900 Tucson, AZ 85701-1627 Attorneys for Defendants Matthew A. Goldstein and Gust Rosenfeld, PLC Case 4:11-cv-00372-RCC Document 6 Filed 06/29/11 Page 10 of 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 - 11 - Douglas C. Erickson Maynard Cronin Erickson Curran & Reiter, PLC 3200 N. Central, Ste. 1800 Phoenix, AZ 85012 602-279-8500 Attorneys for Defendant JPMorgan Chase Bank, N.A., successor by merger to Chase Home Finance LLC Paul D. Cardon Tiffany & Bosco, P.A. Third Floor Camelback Esplanade II 2525 East Camelback Road Phoenix, AZ 85016-9240 Attorneys for Defendants Tiffany & Bosco, P.A. and Mark S. Bosco COPY of the foregoing mailed this 29th day of June, 2011, to: Michael and Sharon Sparlin 9151 E. Showcase Lane Tucson, AZ 85749 Plaintiffs Pro per By /s/Stacey Tanner Case 4:11-cv-00372-RCC Document 6 Filed 06/29/11 Page 11 of 11
