Opinion
No. CV-09-01314-PHX-NVW.
February 1, 2011
ORDER
Before the Court is Plaintiff's Motion for Leave to File Fourth Amended and Supplemental Complaint. (Doc. 110.) "The court should freely give leave [to amend] when justice so requires," Fed.R.Civ.P. 15(a)(2), but need not do so if amendment would be futile, Foman v. Davis, 371 U.S. 178, 182 (1962). Here, amendment would be futile because each cause of action is defective. Accordingly, the Court will deny the motion and dismiss this case.
Defendants have now foreclosed on Plaintiff's home twice. As the first foreclosure was pending, Plaintiff filed suit in this Court alleging "wrongful foreclosure/breach of contract." Plaintiff did not succeed in stopping the foreclosure, but following the trustee's sale, Defendants recorded a notice of rescission. Thus, Defendants unwound the first foreclosure and returned the parties to their previous positions. Defendants then served Plaintiff with a new notice of default and proceeded with a new foreclosure. The trustee's sale in that foreclosure took place September 30, 2010. Defendants bought the home at the trustee's sale, and later evicted Plaintiff from her home. Plaintiff now attempts to reframe her causes of action to attack the second foreclosure.
Plaintiff's first cause of action is for quiet title, based on the theory that Defendants' notice of default overstated the amount required to cure, thus supposedly invalidating the entire foreclosure sale process. The Court already resolved this issue, finding that Defendants' notice of default "provided a good faith estimate of the payment required to cure." (Doc. 97 at 5.) Having adjudicated a crucial factual element of Plaintiff's claim in favor of Defendants, it would therefore be futile to permit Plaintiff to assert this claim. Amendment would also be futile for the reasons stated in this Court's analysis of Plaintiff's fourth cause of action (for breach of the covenant of good faith and fair dealing), below.
Plaintiff's second cause of action is for "wrongful foreclosure/predatory lending." Plaintiff appears to assert two bases for this cause of action. First, she complains that Defendants wrongfully refused to accept money Plaintiff was willing to pay toward the loan, although Plaintiff admits that it was not enough money to cure the default. The Court sees no cause of action here absent a contractual provision obligating Defendants to accept less than the cure amount. Such a contractual provision would be highly unusual, and unless Plaintiff specifically pleads its existence, the Court finds Plaintiff's first "wrongful foreclosure/predatory lending" theory implausible.
Plaintiff's second "wrongful foreclosure/predatory lending" theory alleges that she was damaged because Defendants evicted her from the home. But, as explained throughout this order, Plaintiff has alleged no plausible argument that Defendants wrongfully foreclosed, and therefore no basis for declaring the eviction likewise wrongful. The Court therefore finds that it would be futile to allow Plaintiff to assert her second cause of action.
Plaintiff's third cause of action is for declaratory judgment under Arizona's declaratory judgment statute, A.R.S. §§ 12-1831 to -1846. Plaintiff asks this court to declare that Defendants wrongfully pursued foreclosure by inserting into the second notice of default a demand for sums due on the note, attorneys fees, and other costs. Plaintiff asserts that Defendants could not legally ask for these amounts because the first foreclosure wiped out all her liability to Defendants under Arizona's anti-deficiency statute, A.R.S. § 33-814(G). From a substantive standpoint, this argument suffers serious defects, but the Court will reserve that analysis for its discussion of Plaintiff's fourth cause of action. From a procedural standpoint, the Court need only say that it may refuse declaratory judgment where, as here "such judgment or decree, if rendered or entered, would not terminate the uncertainty or controversy giving rise to the proceeding." A.R.S. § 12-1836. The Court cannot see how a judgment in Plaintiff's favor would terminate any uncertainty or controversy, in light of the argument's substantive defects.
As to those substantive defects, Plaintiff's fourth cause of action asserts breach of the covenant of good faith and fair dealing, relying on the same anti-deficiency argument she asserted in her third cause of action. Specifically, Plaintiff claims that: (1) Arizona's antideficiency statute wiped out all her liability to Defendants after the first foreclosure; (2) Defendants therefore could not use the second notice of default to demand a cure, attorneys fees, costs, etc.; and accordingly (3) the second foreclosure sale was invalid for want of proper notice. This argument is illogical. To claim that the anti-deficiency statute wiped out her liability at the first (rescinded) trustee's sale is to acquiesce to the validity of the first trustee's sale. If the first trustee's sale was valid, then the second notice of default was not wrongful, just unnecessary — Defendants should have gone straight to eviction proceedings. Plaintiff cannot claim the benefits of the anti-deficiency statute and keep the house.
Plaintiff asserts a second theory for breach of the covenant of good faith and fair dealing, based on the allegation that Defendants had agreed to a modified payment schedule and dealt with Plaintiff unfairly by not allowing her to continue making modified payments. But even assuming Defendants agreed to modify the loan, Plaintiff admits that she eventually defaulted on that arrangement also. The Court therefore sees no viable legal claim here, and allowing amendment would be futile.
IT IS THEREFORE ORDERED that Plaintiff's Motion for Leave to File Fourth Amended and Supplemental Complaint (Doc. 110) is DENIED.
IT IS FURTHER ORDERED that the Clerk enter judgment in favor of Defendants against Plaintiff, and that Plaintiff take nothing. The Clerk shall terminate this case.
DATED this 1st day of February, 2011.