VARBEL v. BANK OF AMERICA

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NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c); ARCAP 28(c); Ariz. R. Crim. P. 31.24 IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE DUANE VARBEL, ) ) Plaintiff/Appellant, ) ) v. ) ) BANK OF AMERICA NATIONAL ) ASSOCIATION, ) ) Defendant/Appellee. ) __________________________________) DIVISION ONE FILED: 03/05/2013 RUTH A. WILLINGHAM, CLERK BY: sls 1 CA-CV 12-0263 DEPARTMENT D MEMORANDUM DECISION (Not for Publication Rule 28, Arizona Rules of Civil Appellate Procedure) Appeal from the Superior Court in Maricopa County Cause No. CV2011-013703 The Honorable Dean M. Fink, Judge AFFIRMED Duane Varbel, Plaintiff/Appellant In Propria Persona Phoenix Bryan Cave LLP by Robert W. Shely Shayna N. Fernandez Attorneys for Defendant/Appellee Phoenix T H O M P S O N, Judge ¶1 his Duane Varbel (Varbel) appeals from the dismissal of amended complaint and action for declaratory judgment against Bank of America National Association (BANA). For the reasons that follow, we affirm the dismissal. BACKGROUND I. The Amended Complaint ¶2 In reviewing the Arizona Rule of Civil Procedure 12(b)(6) dismissal, we assume that the well-pleaded facts in Varbel s amended complaint are true. See Cullen v. Auto-Owners Ins. Co., 218 Ariz. 417, 419, ¶ 7, 189 P.3d 344, 346 (2008). According to the complaint, Bradley Borrowers) Deed of H. Wishon obtained Trust $307,789 attached and to Charlayne from LHM the P. Financial amended Lobit (the Corporation (LHM) to purchase property in Goodyear (the Property) on July 1, 2009. The Deed of Trust identifies the beneficiary as Mortgage Electronic Registration Systems (MERS). ¶3 The Borrowers then quit-claimed the Property to Varbel in consideration for ten dollars in a deed recorded on July 22, 2011. Varbel did not make payments due under the Borrowers original promissory knowledge payments. as to note the (the name of Note) the because Party of his entitled to lack of enforce As a result, the Property is in danger of being lost in a Non Judicial Foreclosure Sale. Varbel accordingly filed suit against BANA to obtain (1) the name of the party entitled to enforce the Note signed by the Borrowers, (2) an order relieving Varbel of any obligation to make payments until 2 provided with this information, as well as the record attached to the Note, and (3) a $5000 judgment. 1 BANA then filed a Rule 12(b)(6) motion to dismiss raising issue preclusion, standing, and quiet title issues. II. The Declaratory Judgment Motion ¶4 Next, Varbel filed a motion for declaratory judgment. Varbel s motion requested a finding that BANA did not possess the Note Varbel and lacked appended an two equitable new interest documents to the in the Property. motion: (1) his settlement agreement with LHM stating that LHM did not possess the Note; and (2) an assignment of deed of trust from MERS to BANA that describes LHM as the original lender. 2 ¶5 argued During that briefing BANA had on no the motion standing to to move dismiss, for the Varbel amended complaint s dismissal because (1) BANA has no equitable interest in the Note, and (2) BANA is not entitled to enforce the Note or act as a loan servicer. BANA countered that Varbel s complaint and motion rested on the same flawed show me the note theory. 1 Varbel named dismissed it. LHM as a defendant 2 in the complaint, then Among the exhibits Varbel attached to his Reply Brief are a Settlement Agreement and an Assignment of Deed of Trust. Contrary to BANA s arguments, both documents were attached to Varbel s motion for declaratory judgment and are part of the superior court record. Accordingly, we deny BANA s motion under Arizona Rule of Civil Appellate Procedure 13(d) to strike Exhibits 2 and 3 of the Reply Brief. 3 Further, ownership BANA argued, were the immaterial whereabouts to BANA s of right the to Note and its conduct a non- judicial foreclosure sale. ¶6 the The superior court, focusing solely on sufficiency of complaint s allegations, held that Arizona law does not require possession of the promissory note in order to enforce a deed of trust. both the relief. Based upon this analysis, the court dismissed amended complaint and the motion for declaratory The superior court did not discuss BANA s quiet title, standing, and issue preclusion arguments. ¶7 was Varbel not equitable standing a moved real party interest, to file for a reconsideration, in did interest, not motion possess to had the dismiss. arguing never recorded Note, After that and BANA an lacked denying this motion, the superior court entered a signed judgment dismissing the complaint and the action with prejudice. Varbel timely appealed. DISCUSSION 3 I. Arizona Law Does Not Require Production Of The Underlying Note, Or Its Chain Of Custody, In Order To Conduct A Non-Judicial Trustee s Sale. 3 We exercise our discretion to consider Varbel s arguments notwithstanding his failure to adequately support them with references to the record and legal authority. See ARCAP 13(a)(6); State v. Moody, 208 Ariz. 424, 452 n.9, ¶ 101, 94 P.3d 1119, 1147 n.9 (2004). 4 ¶8 Although pleaded facts allegations as we accept true, containing our the amended acceptance conclusions complaint s does of not law, well- extend to unreasonable inferences or unsupported conclusions, inferences and deductions not necessarily implied by the conclusions alleged as facts. well-pleaded facts, or legal Jeter v. Mayo Clinic Ariz., 211 Ariz. 386, 389, ¶ 4, 121 P.3d 1256, 1259 (App. 2005). We affirm the dismissal only if plaintiff would not be entitled to relief under any interpretation of the facts. Bunker s Glass Co. v. Pilkington PLC, 202 Ariz. 481, 484, ¶ 9, 47 P.3d 1119, 1122 (App. 2002), aff d, 206 Ariz. 9, 75 P.3d 99 (2003). ¶9 Varbel attached the deed of trust and quit claim deed to the amended complaint as exhibits. documents without converting a A court may consider such motion to one for summary judgment, because public records referenced in a complaint are not outside the pleading for purposes of Rule 12(b). See Strategic Dev. & Constr., Inc. v. 7th & Roosevelt Partners, LLC, 224 Ariz. 60, 63, ¶ 10, 64, ¶ 13, 226 P.3d 1046, 1049, 1050 (App. 2010). ¶10 had On appeal, Varbel reiterates his contentions that BANA no standing to move for dismissal because BANA has no equitable interest in the Note, and indeed does not even claim that it is entitled to enforce 5 the Note or act as a loan servicer. BANA counters that Varbel lacks standing and his claims are barred by collateral estoppel. ¶11 Like the superior court, we direct our attention to the sufficiency of the amended complaint s allegations. pleading s should premise make is payments that on Varbel the Note, does not know to and any successor The whom he to the lender must demonstrate an assignment of the Note, or the deed of trust is invalid. This theory appears to derive from a Uniform Commercial Code principle that a purported note holder who does not possess the original negotiable instrument is not entitled to enforce it. Diessner v. Mortgage Elec. Registration Sys., 618 F. Supp. 2d 1184, 1187 (D. Ariz. 2009) (citing Ariz. Rev. Stat. (A.R.S.) §§ 47-3101 to -3119). Arizona s non- judicial foreclosure statute contains no such requirement. See A.R.S. § 33-807(A) (2007) ( [a] power of sale is conferred upon the trustee of a trust deed under which the trust property may be sold . . . after a breach or default . . . . ). ¶12 Moreover, the Arizona Supreme Court and local federal courts have held that a party need not present the promissory note in order to enforce the deed of trust. See Diessner, 618 F. Supp. 2d at 1187 (holding that MERS was entitled to foreclose and need not be in possession of the note); Mansour v. Cal-W. Reconveyance Corp., 618 F. Supp. 2d 1178, 1181 (D. Ariz. 2009) (reaching the same result and holding that the plaintiff failed 6 to state a claim for this reason); Hogan v. Washington Mut. Bank, N.A., __ Ariz. __, __, ¶¶ 11-13, 277 P.3d 781, 784 (2012) (allowing a trustee to proceed with a non-judicial foreclosure without first requiring the beneficiary to prove ownership of the underlying note); see generally In re Weisband, 427 B.R. 13, 22 (Bankr. D. Ariz. 2010) ( Arizona s deed of trust statute does not require a beneficiary of a deed of trust to produce the underlying note (or its chain of assignment) in order to conduct a Trustee s Sale. ). The claim for declaratory relief also fails, because the facts alleged likewise fail to support it. ¶13 Finally, reliance upon (2011). That case holds that recording an assignment of a deed In we re find that Vasquez, 228 Varbel has Ariz. 357, misplaced 266 of trust is not a prerequisite to a trustee s sale. ¶ 5, 266 P.3d at 1055. affect the deed s P.3d his 1053 Id. at 359, Thus, any failure to record does not validity as to the obligor. Id. at ¶ 7 (citing A.R.S. § 33-412(B)). ¶14 Because Varbel can prove no set of facts to support his claims for relief from his payment obligations and prevent non-judicial foreclosure, and he is not entitled to the requested declaratory relief, the superior court s dismissal was proper. This holding obviates the need to discuss the remaining issues raised by the parties. 7 CONCLUSION ¶15 We affirm the dismissal of the amended complaint and this action. /s/ JON W. THOMPSON, Judge CONCURRING: /s/ JOHN C. GEMMILL, Presiding Judge /s/ DONN KESSLER, Judge 8

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