Snyder v. HSBC Bank, USA, N.A.

• Decision Date: 26 December 2012
• Docket Number: No. CV–12–0016–PHX–LOA.,CV–12–0016–PHX–LOA.
• Citation: 913 F.Supp.2d 755
• Parties: Susan M. SNYDER, a married woman, as her sole and separate property, Plaintiff, v. HSBC BANK, USA, N.A., as Trustee on behalf of ACE Securities Corp. Home Equity Loan Trust, Series 2006–HE1 for the registered holders of ACE Securities Corp. Home Equity Loan Trust, Series 2006–HE1, Asset Backed Pass–Through Certificates, a foreign corporation; and Ocwen Loan Servicing, LLC, a foreign limited liability company, Defendants.
• Court: U.S. District Court — District of Arizona

913 F.Supp.2d 755

Susan M. SNYDER, a married woman, as her sole and separate property, Plaintiff,

v.HSBC BANK, USA, N.A., as Trustee on behalf of ACE Securities Corp. Home Equity Loan Trust, Series 2006–HE1 for the registered holders of ACE Securities Corp. Home Equity Loan Trust, Series 2006–HE1, Asset Backed Pass–Through Certificates, a foreign corporation; and Ocwen Loan Servicing, LLC, a foreign limited liability company, Defendants.

No. CV–12–0016–PHX–LOA.

United States District Court,

D. Arizona.

Dec. 26, 2012.

George Alfred Tacker, Tacker & Associates PLLC, Goodyear, AZ, for Plaintiff.

Charles Anthony Piccuta, Christopher Robert Blevins, Houser & Allison, Irvine, CA, for Defendants.

ORDER

LAWRENCE O. ANDERSON, United States Magistrate Judge.

This action comes before the Court on Defendants' second Rule 12(b)(6), Federal Rules of Civil Procedure (“Fed.R.Civ.P.”), Motion to Dismiss Plaintiff's First Amended Complaint.¹ (Doc. 51) Defendants contend Plaintiff's Amended Verified Complaint (“AVC”), doc. 53, fails to state a claim upon which relief may be granted. (Doc. 51) On July 19, 2012, the Court granted Plaintiff's Motion for Leave to Amend Plaintiff's Complaint, which attached a copy of the proposed amended complaint as required by the Rules of Practice for the District Court of Arizona (“Local Rules” or “LRCiv”) (Docs. 41 and 41–1 at 1–25) Because oral argument would not aid the Court's decisional process, Defendants' request for oral argument will be denied. See, e.g., Mahon v. Credit Bur. of Placer Cnty., Inc., 171 F.3d 1197, 1200 (9th Cir.1999). After considering Plaintiff's Response, doc. 65, and Defendants' Reply, doc. 66, the Court will grant the motion and terminate this case.

I. Jurisdiction

Subject matter jurisdiction for this action is based upon 28 U.S.C. § 1332(a)(1) because the parties' citizenship is completely diverse and the amount in controversy exceeds the sum of $75,000.00, exclusive of interest and costs. (Doc. 1, ¶¶ 7, 14, Notice of Removal) Although Plaintiff has not pled federal question jurisdiction, by alleging a violation of the Fair Credit Reporting Act, this District Court also has subject matter jurisdiction under 28 U.S.C. § 1331. Federal district courts “have original jurisdiction [over] all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. Federal question jurisdiction exists when a complaint facially presents a federal question. Holman v. Laulo–Rowe Agency, 994 F.2d 666, 668 (9th Cir.1993).

The parties have consented to magistrate judge jurisdiction pursuant to 28 U.S.C. § 636(c). (Docs. 7, 12, 26)

I. BackgroundA. The Parties

Plaintiff Susan M. Snyder (“Plaintiff”), a single person in 2005, executed a deed of trust to secure payment on a June 2005 loan and promissory note on her former residence located on West Fishhook Court, Surprise, Arizona. ( Id., ¶ 5 at 3) The AVC alleges Defendant Ocwen Loan Servicing, LLC (“Ocwen”) was, at all material times in this action, the servicing agent for Defendant HSBC Bank, USA, N.A. (“Bank”), a federally chartered national banking association, on Plaintiff's promissory note and loan modification agreement. ( Id., ¶ 12 at 4; doc. 1, ¶ 9 at 3)

B. Procedural History

Generally, this lawsuit centers around whether the parties contractually agreed to a binding and enforceable loan modification agreement (“LMA”) in August 2010 regarding Plaintiff's residence, and, if they did, whether Plaintiff subsequently breached the LMA for non-payment of the monthly escrowed property taxes and insurance ($179.57 per month) prior to the trustee sale and foreclosure of Plaintiff's residence, or whether Defendants wrongfully breached the LMA or are otherwise liable for Plaintiff's damages. (Doc. 53)

On December 8, 2011, Plaintiff filed this action in the Maricopa County Superior Court, State of Arizona. (Doc. 1 at 15–25) On that same date without notice to the Bank or Ocwen, Plaintiff obtained a temporary restraining order (“TRO”) from a Superior Court judge pending an evidentiary hearing, pursuant to Arizona Rule of Civil Procedure (“Ariz.R.Civ.P.”) 65(d), enjoining Defendants from foreclosing on or selling Plaintiff's residence or removing her from her residence until notice and a full hearing was held. (Doc. 1 at 13–14) By its terms, the TRO expired at the conclusion of the order to show cause hearing scheduled for January 5, 2012. ( Id. at 10–11) The Bank and Ocwen, however, removed this action on January 3, 2012, three days before the show cause hearing. ( Id. at 1)

On June 5, 2012, over five months after removal, Plaintiff filed a Notice of Pending Motion required by LRCiv 3.7(c), requesting a hearing on her Application for Temporary Restraining Order and Order to Show Cause why Preliminary Injunction Should not Issue.² (Doc. 30) According to Plaintiff's Notice, the parties disputed whether the December 8, 2011 TRO remained a valid order nearly six months after removal when Defendants notified Plaintiff they intended to sell her residence at a trustee sale on June 20, 2012. ( Id. at 2) As requested by Plaintiff, the Court promptly set a conference for the purpose of discussing the status of the TRO and Plaintiff's erroneous belief that the State-court TRO remained a valid order, prohibiting Defendants from foreclosing on Plaintiff's property. (Doc. 32) At the conference in open court on June 14, 2012, and in an order entered on June 18, 2012, 2012 WL 2299486, the Court informed Plaintiff that the State-court TRO expired by operation of law and was no longer valid, citing, inter alia, Granny Goose Foods, Inc. v. Teamsters, 415 U.S. 423, 439–40, 94 S.Ct. 1113, 39 L.Ed.2d 435 (1974) and Pantoja v. Countrywide Home Loans, Inc., 640 F.Supp.2d 1177, 1183 n. 5 (N.D.Cal.2009) (“[U]nless a [state] TRO is extended, it expires no later than 10 days after the date of removal. Fed.R.Civ.P. 65(b)(2); Granny Goose Foods, Inc., 415 U.S. at 440 n. 15, 94 S.Ct. 1113....”). ( Doc. 40 at 4) The Court sustained Defendants' objection to Plaintiff's claim that the State TRO remained a valid and enforceable order because it expired months previously and was not extended by Plaintiff upon a showing of good cause. ( Id.) The Court concluded “Plaintiff's TRO expired no later than January 5, 2012. See Granny Goose Foods, 415 U.S. at 440 n. 15 (‘[W]here the state court issues a temporary restraining order of 15 days' duration on Day 1 and the case is removed to federal court on Day 13, the order will expire on Day 15 in federal court just as it would have expired on Day 15 in state court....’).” ( Id. at 1–2, 6)

Taking judicial notice of publicly-filed documents not subject to reasonable dispute, e.g., the Trustee's Deed Upon Sale regarding the subject residence and the State's and District Court's files, there was no “[c]ourt order granting [Plaintiff] relief pursuant to rule 65, Arizona rules of civil procedure, entered ... before the [June 20, 2012 trustee] sale.” SeeArizona Revised Statute (“A.R.S.”) § 33–811(C). It is undisputed that when Plaintiff failed to cure her default on the LMA, Plaintiff's residence was sold on June 20, 2012 at a trustee sale to a non-party, Skyline Vista Equities, LLC., for $126,500.00. (Doc. 52–2 at 1–3) The Trustee's Deed Upon Sale was signed on July 2, 2012 by Les Zieve, trustee, and recorded on July 12, 2012 with the Maricopa County Recorder. ( Id. at 1) Under Arizona law, the Trustee's Deed Upon Sale establishes: (1) Plaintiff was the trustor who signed a deed of trust on June 7, 2005, which was recorded on June 10, 2005, with the Maricopa County Recorder; (2) the lender was Ownit Mortgage Solutions, Inc., a California corporation; and (3) the beneficiary was Mortgage Electronic Registration Systems, Inc. (“MERS”).³ ( Id.)

C. The Plaintiff's Contentions

Sometime in or before 2009, Plaintiff stopped making the monthly payment on the residence's promissory note which was secured by a deed of trust. The AVC alleges that “due to financial issues[,]” Plaintiff negotiated two loan modifications with Ocwen, the servicer on the note. (Doc. 53, ¶ 6 at 3) She contends Defendants approved Plaintiff for a LMA in November 2009; however, after she executed and returned the first LMA in November 2009, she was informed she failed to timely return it to Ocwen and “Defendants refused to honor that agreement.” ( M., ¶¶ 7–10) Though Plaintiff denies she did not timely return this LMA to Ocwen, Plaintiff alleges she “[w]as forced to negotiate the August 2010 loan modification agreement[,]” which she received in September 2010. ( M., ¶¶ 9, 11, 13) On or about September 9, 2010, a Ocwen representative called and left Plaintiff a voice message, confirming the August 2010 LMA had been approved and “the written contract was being mailed to her.” ( M., ¶ 14) Plaintiff claims the August 2010 LMA, however, was also not received by Plaintiff until several days after Ocwen's deadline for accepting and remitting payment to Ocwen. ( M., ¶ 16) On or about September 14, 2010, Plaintiff's attorney contacted and advised Ocwen that he had just received the second loan modification paperwork and Plaintiff would be “[e]xecuting the document and returning it with the Initial payment of $922.41 ⁴ and the monthly trial payment of $742.84.” ( M., ¶ 15) Plaintiff alleges she signed the August 2010 LMA and mailed it back to Ocwen along with “the payments required by the written contract.” ( M., ¶ 18) She alleges, however, Ocwen never signed and returned an executed copy of the August 2010 LMA to Plaintiff despite her claim she made numerous payments in accordance with the terms of the parties' written agreement. ( M., ¶ 22) A copy of the August 2010 LMA is attached to the AVC. (Doc. 53–1, Exhibit (“Exh.”) 1 at 4–15)

Plaintiff alleges she made ten payments in the amounts specified in the August 2010 LMA, when Ocwen returned the tenth payment to her, advising this payment “[w]as not the full balance due under the...