Rodriguez v. Quality Loan Service Corp. et al, No. 2:2009cv01853 - Document 64 (D. Ariz. 2010)
Court Description: ORDER GRANTING Midfirst Bank and Midland Mortgage's motion for summary judgment on count 1 (doc. 53). IT IS FURTHER ORDERED GRANTING Wells Fargo's motion for judgment on the pleadings (doc. 55) and DENYING Wells Fargo's motion for summary disposition (doc. 59). The clerk is instructed to enter final judgment in favor of all defendants. Signed by Judge Frederick J Martone on 9/1/10(KMG)
Download PDF
<![CDATA[
Rodriguez v. Quality Loan Service Corp. et al 1 Doc. 64 WO 2 3 4 5 NOT FOR PUBLICATION 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Martha Rodriguez, 10 11 Plaintiff, vs. 12 Quality Loan Service Corp., et al., 13 Defendants. 14 ) ) ) ) ) ) ) ) ) ) ) ) No. CV-09-1853-PHX-FJM ORDER 15 16 17 We have before us defendants Midfirst Bank and Midland Mortgage Company’s 18 motion for summary judgment on count 1 of the amended complaint (doc. 53) and plaintiff’s 19 response (doc. 57). We also have defendant Wells Fargo Bank’s motion for judgment on the 20 pleadings (doc. 55), Wells Fargo’s request for summary disposition (doc. 59), plaintiff’s 21 belated response (doc. 60), and Wells Fargo’s reply (doc. 61). 22 Plaintiff owned real property which she used as her primary residence in Phoenix. 23 When she defaulted on her loan, she contacted Wells Fargo to negotiate “reverse mortgage” 24 financing. She alleges that she “complied with all requests of Wells Fargo to obtain the 25 reverse mortgage.” First Amended Complaint (“FAC”) ¶ 13. She was “assured” by Wells 26 Fargo that she qualified for the loan and “that Wells Fargo would make payment to Midland 27 for the delinquent payments from proceeds of the reverse mortgage.” FAC ¶¶ 14-15. 28 Despite “Wells Fargo’s promise to save her house from trustee’s sale or foreclosure,” FAC Dockets.Justia.com 1 ¶ 35, on June 30, 2009, the property was sold at a trustee’s sale to an unrelated third party. 2 I. Midfirst Bank and Midland Mortgage 3 Defendants Midfirst Bank and Midland Mortgage argue that count 1 of the amended 4 complaint–the only count remaining against these defendants–should be dismissed. Count 1, 5 entitled “Lack of Standing by Midland,” alleges that Midland was not the holder of the 6 underlying note secured by the deed of trust and therefore did not have standing to conduct 7 the trustee’s sale. 8 Courts have consistently rejected the “show me the Note” argument as a means to 9 avoid foreclosure. See Mansour v. Cal-Western Reconveyance Corp., 618 F. Supp. 2d 1178, 10 1181 (D. Ariz. 2009) and cases cited therein. Plaintiff acknowledges that the law does not 11 require presentation of the original note in order to commence foreclosure. Response at 4. 12 We reject her attempt to circumvent this rule by arguing that defendants must present the 13 Note post-foreclosure in order to prove the propriety of the sale and avoid a claim for 14 damages. Arizona’s non-judicial foreclosure statute does not require presentation of the 15 original Note in order to conduct a non-judicial foreclosure. A.R.S. § 33-807. Accordingly, 16 count 1 of plaintiff’s complaint fails to state a claim upon which relief can be granted. II. Wells Fargo 17 18 Plaintiff alleges that after she defaulted on her loan, she contacted Wells Fargo and 19 discussed the possibility of obtaining a reverse mortgage. She apparently completed a loan 20 application and claims that she was told that she qualified for the loan, and that some of the 21 funds from the reverse mortgage would be used to pay Midland Mortgage in order to cure 22 the default. Plaintiff does not allege that the loan application was approved or that the loan 23 was ever funded. She was later evicted from her house after a trustee’s sale by Midland. 24 Plaintiff now asserts claims of negligence (count 5), promissory estoppel (count 6), and 25 negligent misrepresentation (count 7) against Wells Fargo. Wells Fargo moves for judgment 26 on the pleadings with respect to each of the three counts pursuant to Rule 12(c), Fed. R. 27 Civ. P. 28 -2- 1 A 2 Wells Fargo first moves to dismiss plaintiff’s negligence claim, contending that it 3 owed no duty to plaintiff and further that the negligence claim is foreclosed by the economic 4 loss rule. Plaintiff alleges in count 5 of the complaint that she “contracted with Wells Fargo 5 to obtain a reverse mortgage” and as a result “Wells Fargo owed a duty to Plaintiff to act in 6 good faith to secure funding for the reverse mortgage and disburse funds.” FAC ¶ 31. She 7 alleges that “Wells Fargo acted negligently, carelessly and in bad faith in processing the 8 reverse mortgage.” FAC ¶ 32. Wells Fargo disputes that a contract existed between the 9 parties, asserting instead that plaintiff only submitted a loan application. Regardless of 10 whether a contract existed, however, we conclude that plaintiff’s negligence claim fails. 11 Under the economic loss rule, in certain circumstances, a contracting party is limited 12 to “contractual remedies for the recovery of economic losses unaccompanied by physical 13 injury to persons or other property.” Flagstaff Affordable Hous. Ltd. P’ship v. Design 14 Alliance, Inc., 223 Ariz. 320, ____, 223 P.3d 664, 667 (2010). While this is not a products 15 case or a construction defect case, the doctrine sensibly applies to lender/borrower 16 relationships, the essence of which is contractual. Therefore, if a contract existed between 17 the parties, plaintiff’s negligence claim is barred by the economic loss rule and her remedies 18 are limited to those arising out of the contract. 19 Plaintiff’s negligence claim also fails if there was no contract. In order to maintain 20 a negligence cause of action, plaintiff must prove that the defendant had a duty imposed by 21 law to protect her against some unreasonable risk. Contempo Constr. Co. v. Mountain States 22 Tel. & Tel. Co., 153 Ariz. 279, 282, 736 P.2d 13, 16 (Ct. App. 1987). Plaintiff alleges only 23 that a duty existed by virtue of a contract with Wells Fargo. No other source of a duty is 24 plead. Again, if there was a contract, plaintiff’s remedies are limited to those arising from 25 the contract. Because plaintiff has not adequately plead that Wells Fargo owed plaintiff a 26 duty to provide the loan, her negligence claim fails. We grant Wells Fargo’s motion for 27 judgment on count 5. 28 B -3- 1 Wells Fargo next moves to dismiss plaintiff’s promissory estoppel claim in count 6. 2 Promissory estoppel requires a promise, upon which the promisor should reasonably foresee 3 that the promisee will rely, upon which the promisee actually relied to her detriment. 4 Higginbottom v. State, 203 Ariz. 139, 144, 51 P.3d 972, 977 (Ct. App. 2002). Wells Fargo 5 argues that the promissory estoppel claim fails because plaintiff did not plead that Wells 6 Fargo made any promises. Alternatively, it argues that, if a “promise” was made, plaintiff 7 cannot establish that she reasonably relied on it. 8 Plaintiff alleges that Wells Fargo “assured “ her that she qualified for the loan and that 9 payments would be made by Wells Fargo to Midland Mortgage for any delinquent payments. 10 FAC ¶¶ 14-15. She alleges that Wells Fargo “promise[d] to save her house from trustee’s 11 sale or foreclosure.” FAC ¶ 35. Mindful that we must accept as true the allegations in 12 plaintiff’s complaint, we conclude that plaintiff’s has sufficiently plead that Wells Fargo 13 made a promise. Nevertheless, we also conclude that plaintiff cannot establish that she 14 reasonably relied on these alleged promises. See Higginbottom, 203 Ariz. at 144, 51 P.3d 15 at 977 (holding that plaintiff can only recover under the theory of promissory estoppel if she 16 “had a ‘justifiable right to rely’ on the alleged promise”). 17 Plaintiff does not allege that Wells Fargo made any promises regarding funding or 18 loan approval. She alleges only that she was “assured” that she qualified for the loan, and 19 that Wells Fargo would “save her house from a trustee’s sale.” Under the circumstances 20 presented in plaintiff’s complaint, we conclude that plaintiff did not have a legal right to rely 21 upon her expectation that the loan would be approved and funded or that Wells Fargo could 22 or would save her house from foreclosure. See Renteria v. United States, 452 F. Supp. 2d 23 910, 916 (D. Ariz. 2006). 24 entitlement’ simply does not make [plaintiff] legally entitled to rely on [her] expectations of 25 an approved loan.” Id. (quoting Helgeson v. Bureau of Indian Affairs, 153 F.3d 1000, 1004 26 (9th Cir. 1998). 27 nevertheless have been denied or not immediately funded. We conclude that plaintiff cannot Plaintiff’s “attempt to ‘equate loan eligibility with loan Notwithstanding plaintiff’s alleged loan eligibility, the loan could 28 -4- 1 establish any right to reasonably rely on the statements stemming from the loan application 2 promise. Accordingly, we grant Wells Fargo’s motion for judgment on count 6. 3 C 4 Finally, Wells Fargo moves to dismiss plaintiff’s claim for negligent 5 misrepresentation. A plaintiff alleging negligent misrepresentation must prove that the 6 defendant supplied false information to the plaintiff, intending that she would rely on the 7 information, and that she justifiably relied on the misrepresentation, causing damages. 8 McAlister v. Citibank, 171 Ariz. 207, 215, 829 P.2d 1253, 1261 (Ct. App. 1992). “Negligent 9 misrepresentation requires a misrepresentation or omission of a fact. A promise of future 10 conduct is not a statement of fact capable of supporting a claim of negligent 11 misrepresentation.” Id. (holding that Bank’s alleged promise to renew customer’s credit line 12 at competitive rates involved promises of future conduct and therefore was not capable of 13 supporting a claim for negligent misrepresentation). 14 Plaintiff alleges that Wells Fargo promised to advance her a loan and save her house 15 from foreclosure. Accepting plaintiff’s allegations as true, these allegations all relate to 16 promises of future conduct and are not statements of a past or existing fact. Thus, we 17 conclude that plaintiff has failed to state a claim for negligent misrepresentation and we grant 18 Wells Fargo’s motion for judgment on count 7. 19 III 20 Based on the foregoing, IT IS ORDERED GRANTING Midfirst Bank and Midland 21 Mortgage’s motion for summary judgment on count 1 (doc. 53). IT IS FURTHER 22 ORDERED GRANTING Wells Fargo’s motion for judgment on the pleadings (doc. 55) and 23 DENYING Wells Fargo’s motion for summary disposition (doc. 59). 24 The clerk is instructed to enter final judgment in favor of all defendants. 25 DATED this 1st day of September, 2010. 26 27 28 -5-
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
