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Barbara J. Forde, #013220 BARBARA J. FORDE, P.C. 20247 N. 86th Street Scottsdale, AZ 85255 (602) 721-3177 BarbaraJForde@gmail.com Attorney for Plaintiffs

SUPERIOR COURT OF ARIZONA

MARICOPA COUNTY

STELLA LEE BICKLEY fka SANGMI LEE and ERIC BICKLEY, wife and husband,

Plaintiffs,

v.

BAC HOME LOANS SERVICING, LP, et al,

Defendants.

No. CV2011-054822 PLAINTIFFS’ RESPONSE TO MOTION TO DISMISS ON BEHALF OF DEFENDANTS BANK OF AMERICA, N.A., COUNTRYWIDE HOME LOANS, INC., AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (Assigned to the Honorable Michael McVey)

I. INTRODUCTION.

Plaintiffs Stella Lee Bickley and Eric Bickley ("Bickley") hereby file their Response to

the Motion to Dismiss (the “Motion”) on behalf of Defendants Bank of America, N.A. (“BOA”),

Countrywide Home Loans, Inc., and Mortgage Electronic Registration Systems, Inc. ("MERS").1

The Plaintiffs have stated claims upon which relief may be granted, the Motion should be denied.

II. FACTUAL BACKGROUND. April 11, 2006, Warranty Deed issued to Sangmi Lee and Eric Bickley, in fee simple, as

joint tenants with right of survivorship (Exhibit “A”)2 April 12, 2006, Sangmi Lee signs Note dated April 3, to Lender Preferred Home Mortgage

Co. (“PHMC”). Critical terms of the Note are detailed below (See also Exhibit “B”) April 12, 2006, Sangmi Lee and Eric Bickley sign Deed of Trust (“DOT”) dated April 3,

with PHMC as Lender, MERS as nominee for Lender and lender’s successors and assigns. Critical terms of the Deed of Trust are detailed below (See also Exhibit “D”)

1 The Defendants claim that BOA is “successor by merger to BAC Home Loans Servicing, LP” but no evidence of same is currently before this Court. 2 References to Exhibits are to those attached to the First Amended Complaint (“FAC”).

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April 3, 2006 Allonge to Note is unsigned, and therefore not transferred (Exhibit “E”) May 31, 2011, Assignment of Deed of Trust signed by Bud Kamyabi as Assistant

Secretary of MERS, said to be in Ocala, Florida, notarized on May 31, 2011, by Irma Diaz in Ventura County, CA, saying Mr. Kamyabi “acknowledged to me that he executed the same in his authorized capacity….” Purports to assign the DOT and the Note to BAC in Vienna, VA, even though MERS admittedly never had the Note3 (Exhibit “I”)

June 27, 2011 letter from Tiffany & Bosco (“T&B”) to Sangmi Lee: the loan servicer is

Bank of America/Fidelity, and leaving the identity of the creditor, blank (Exhibit “J”) June 28, 2011 letter from T&B’s “Loss Mitigation” department, “working with Bank of

America, N.A. to help you keep your home. We represent your mortgage company and have received notice to commence foreclosure proceedings against your property. It is Bank of America, N.A.’s mission to attempt to work out a solution to your loan situation….” “We hope that you will complete the enclosed forms so that we can work with you….” Documents to be sent to Diana Hannah in Loss Mitigation. Exhibit “K”

June, 2011 undated letter from BOA to Sangmi Lee: effective July 1, 2011, servicing of

the loan is transferred from BAC to BOA. Section 2(b) states that the “creditor to whom the debt is owed” is “FHLMC S/A-3DAY ARC-125949.” This is a reference to Freddie Mac, though no ordinary citizen would know this. “Please note that unless Bank of America, N.A. is listed in 2(b) as the creditor of your loan, Bank of America, N.A. does not own your loan and only services your loan on behalf of your creditor….” (Exhibit “L”)(emphasis in original)

June 30, 2011, letter from Bank of America Home Loans (an entity never mentioned

before, and with no revealed connection to the loan) to Sangmi Lee, saying that the loan has been referred for foreclosure review, but that “[w]e want to work with you and are here to help….” The letter says that BAC provides various options “to help you avoid foreclosure.” Note that the next day, BAC was no longer the servicer. (Exhibit “M”)

July 7, 2011, Corporation Assignment of Deed of Trust, signed by Debbie Nieblas as

Assistant Secretary of MERS, which is a Delaware corporation with its offices in Virginia, but the signature is notarized by Penny Russo Marchal in Los Angeles County, CA. Purports to assign the DOT from MERS to BAC; this was already done on May 31, 2011. This Second Assignment does not mention the Note. (Exhibit “N”)

July 19, 2011, Substitution of Trustee digitally signed by Mark S. Bosco “by Limited

Power of Attorney” for Bank of America, N.A., as successor by merger to BAC Home Loans Servicing, LP, appointing Michael A. Bosco trustee on the DOT (Exhibit “O”)

Limited Powers of Attorney (the “POAs”) purportedly appointing Mark Bosco attorney-in-

fact for BOA and BAC with authority to sign Substitutions of Trustee “in accordance with the standard of care of a fiduciary agent.” Both POAs are supposedly notarized by Jamie L. Monostori, but the notarization signatures are not the same (Exhibit “P”)

July 19, 2011 Notice of Trustee’s Sale (“NTS”) digitally signed by Michael Bosco, setting

a sale on the Property, and claiming that “[t]he beneficiary under the [] Deed of Trust has 3 See Motion, p. 7, l. 4.

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accelerated the note secured thereby and has declared the entire unpaid principal balance … immediately due and payable.” Current Beneficiary listed as BOA, as successor by merger to BAC, in care of servicer BOA/Fidelity (Exhibit “Q”)

Assuming without admitting, that these documents are accurate, BOA and BAC are only

servicers of the loan, not the Lender, and not the creditor. Freddie Mac or a Trust is the

creditor/Lender. MERS never possessed the Note; it cannot assign the Note. BOA notified T&B

that a default was being declared, that the debt was accelerated, and instructed T&B to foreclose.

Under the Note, the Note Holder is the Lender or anyone who takes the Note by transfer

and who is entitled to receive payments under the Note. Under the Note, only the Note Holder:

(1) can provide the 30-day notice of default; (2) accelerate the balance due; (3) is protected from

possible losses for non-payment by the DOT. See FAC ¶ 14 and Exhibit “B” thereto. BOA and

BAC are not the Note Holder, therefore those entities had no authority to declare a default,

accelerate the balance, or order foreclosure.

Under the DOT, only the Lender can invoke the power of sale, and the Lender shall give

written notice to Trustee of the occurrence of an event of default and of Lender’s election to cause

the property to be sold. See FAC ¶ 15 and Exhibit “D” thereto. BOA and BAC are not the

Lender; the Defendants admit that Freddie Mac is the Lender. Plaintiffs have alleged that the

Lender did not notify anyone, in writing: (1) of the 30-day cure period; (2) of the declaration of a

default; (3) of acceleration of the balance; or (4) of the ordering of the foreclosure. Therefore,

any action by BOA or BAC purporting to provide the written notice as Lender, is void and

without authority under the Note and DOT.

III. LEGAL ANALYSIS.

A. The Bickleys Have Satisfied the Standard Under Rule 12(b)(6) and Under Rule 8.

On a Rule 12(b)(6) motion to dismiss, the well-pled allegations therein are

accepted. Cullen v. Auto-Owners Ins., 218 Ariz. 417, 419, 189 P.3d 344, 346 (2008). "Because

Arizona is a notice pleading state, extensive factual recitations are not required." Anserv Ins.

Svcs., Inc. v. Albrecht, 192 Ariz. 48, 49, 960 P.2d 1159, 1160 (1998). Plaintiffs must give

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defendants fair notice of the claim and the ground upon which it rests. See Motion, p. 3, ll. 25-27.

The Defendants assert that the Plaintiffs have not put the parties on notice of what conduct

is allegedly ascribed to what Defendant. See Motion, p. 4, ll. 9-10. Since the time of Anserv,4 the

Arizona Supreme Court held that the federal dismissal standard is vastly different from the State

standard. Cullen, 218 Ariz. at 420, 189 P.3d at 347. Under Rule 8, a pleading should contain a

short and plain statement of the claims. Id. at 419, 189 P.3d at 346. The opponent must be given

fair notice of the nature and basis of the claim, and indicate generally the type of litigation

involved. Id. The court is limited to considering the well-pled facts and all reasonable

interpretations of those facts. Id. at 420, 189 P.3d at 347, ¶14 (emphasis supplied).

The FAC easily satisfies Rule 8's requirements. Each of these Defendants is well aware of

whether it signed/notarized or authorized the signing/notarization of, and/or recorded, the

foreclosure documents. Each knows whether it is the Lender, or the Note Holder.

B. The Bickleys Are Entitled To A Declaratory Judgment.

1. Defendants Mischaracterize The Bickleys' Claims Regarding The "Note Holder."

The Bickleys' allegations pertaining to the Note Holder arise directly out of the terms of

the Note, and the DOT. The Note Holder is the Lender or anyone who takes the Note by transfer

and who is entitled to receive payments under the Note. See FAC, ¶ 14 and Exhibit “B” thereto.

Pursuant to the Note, the Note Holder is the only one which may send written notice to the

borrower of default, accelerate the balance, or instruct the trustee to initiate foreclosure. Id. In

addition, the Note Holder is the only one secured by the DOT. Id. Therefore, the only entity

entitled to: (1) payments; (2) send written notice of default to the borrower; (3) accelerate; and (4)

who is protected by the DOT, is the Note Holder. This is pursuant to the clear and unambiguous

terms of the Note. This is not a "show-me-the-note" argument. This is an argument that the

identity of the Note Holder must be proven, based on that requirement in the contracts between

the parties, before foreclosure may occur. This argument has never been decided in Arizona.

4 Anserv Ins. Svcs., Inc. v. Albrecht, 192 Ariz. 48, 49, 960 P.2d 1159, 1160 (1998).

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Equally as compelling, the DOT contains other requirements with which the Defendants

have not complied. Only the Lender can invoke the power of sale by sending written notice to the

Trustee of the occurrence of any event of default and of Lender's election to cause the Property to

be sold. See FAC, ¶15. If this has not been done, the Trustee has no authority to foreclose. The

Trustee did not receive these written directives from the Lender. See, e.g., FAC, ¶ 77.

Under the plain terms of the contracts, one of the Defendants must prove that it is the

Lender and the Note Holder as defined in the Note. Otherwise, the foreclosure must be cancelled.

The Defendants claim that the Bickleys are not entitled to a declaratory judgment on these

issues, citing Hogan v. Washington Mutual Bank, 57 Ariz. 561, 261 P.3d 445 (Ct. App. 2001).

The dismissal of the claims in Hogan was based on the plaintiff's Uniform Commercial Code

(“UCC”) arguments. Hogan did not challenge the trustee's authority to foreclose. Id. at 448. The

Bickleys allege that the Trustee has no authority to conduct the sale; Hogan does not apply.

The Defendants next take the odd position that only the deed of trust statutes determine

whether a beneficiary or a trustee is entitled to foreclose. See Motion, p. 5. But the statute quoted

by the Defendants, ARS § 33-807(A), states that the power of sale may be exercised by the

Trustee only "after a breach or default in performance of the contract or contracts…." This is

the critical piece of the puzzle. In order for the Trustee to know that there is a breach or a default

in the performance of the contract, the Trustee must have been notified in writing of such breach

by the Lender. Without that written notification from the Lender, and without that Lender also

being the Note Holder (the only party secured by the Deed of Trust), no foreclosure can proceed.

The Note and DOT play a critical role in the propriety of a foreclosure. Schaeffer v.

Chapman, 176 Ariz. 326, 861 P.2d 611 (1993). A deed of trust must be strictly construed in

favor of the borrower, and that all clauses and terms must be construed in a light most favorable

to that borrower. Id. at 328, 861 P.2d at 613. The foreclosure was found to be void because the

Lender gave the borrowers the 30-day notice at the same time that the Lender initiated the 90-day

foreclosure process. Id. at 329, 861 P.2d at 614. The breach of the deed of trust voided the sale:

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In addition to construing the deed of trust in a light unfavorable to the borrower and ignoring its plain language, the court of appeals construed the deed of trust in a manner that favors rather than disfavors forfeiture. We repeatedly have held that contracts will be strictly construed to avoid forfeitures. This deed of trust has a common sense meaning that favors the borrower and avoids forfeiture.

Id. (citations omitted).

Following Schaeffer, the terms of the Note and DOT must be properly interpreted

according to their common sense meaning, which favors the borrower and avoids forefeiture.

The identity of the Note Holder and Lender must be legally determined, after appropriate

discovery has been taken, to determine whether any of these Defendants may foreclose.

The Bickleys alleged the terms of the Note and DOT, and the fact that the Defendants

utterly failed to follow them, in their FAC. See, e.g., FAC, ¶¶14, 15, 37, 38, 42, 44, 45, 48, 61,

73, 75, 77, 80, 81, 83, 84, 85, 88-98, 114.

The Defendants assert that all that needs to be done to foreclose is for a Trustee to declare

a default and move ahead. See Motion, p. 5, ll. 15-17. In fact, the Trustee has no authority to

take any action without instruction from the Note Holder and Lender, as described above.

A failure to strictly follow the deed of trust was found to void a trustee’s sale which had

already occurred, in Martenson v. RG Financing, 2010 WL 334648 at *8 (D. Ariz. Jan. 22,

2010)(“Because the Defendants had not provided the first part of the notice required by the Deed

of Trust, the Notice of Trustee’s Sale and the purported sale were invalid.”)(emphasis supplied).

The Defendants here must comply with the Note and DOT, or all actions taken are invalid.

The Bickleys also assert that the splitting of the Note and DOT has rendered the Note

unsecured. See FAC, ¶¶63, 99, 109. At closing, the DOT was placed with MERS, according to

the clear terms of the DOT itself. See FAC, ¶¶63-66. The Defendants themselves admitted in

their Motion, that, "[a]t no point did MERS physically acquire the Note here…." See Motion, p.

7, l. 4. The Defendants claim that this bifurcation theory has been rejected by Arizona courts,

citing Hogan. But Hogan failed to address it, because the argument was made for the first time

on appeal. Id. at 449, ¶¶18-19 (the rejecting of the argument based on ARS § 47-3117 does not

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apply here; Bickley did not make that argument). MERS admits that when the DOT is “held” by

MERS, but not the Note, this “does affect the parties’ legal rights” and thus courts have granted

relief under the “splitting” theory. 2011 WL 4550189 at *3 n. 4.

2. The Deed of Trust Assignments Are Invalid.

The Defendants claim that their Assignments are valid because the Ninth Circuit found

that MERS can serve as a beneficiary, citing Cervantes v. Countrywide Home Loans, Inc., 656

F.3d 1034 (9th Cir. 2011). But this is not what Cervantes found. When the Plaintiff argued that

MERS was not a valid beneficiary and was not entitled to foreclose, the Ninth Circuit only stated,

“[i]n light of the explicit terms of the standard deed signed by Cervantes, it does not appear that

the plaintiffs were misinformed about MERS's role in their home loans.” Id. at 1042. This is

hardly a declaration by the Ninth Circuit that MERS is a proper beneficiary in all cases.

The Defendants make the bald assertion that, "it is well established that acting as a

beneficiary does not require one to acquire an interest in the loan." See Motion, pp. 6-7. No

authority is provided for this declaration. The statutes define “beneficiary” as “the person named

or otherwise designated in a trust deed as the person for whose benefit a trust deed is given, or the

person’s successor in interest.” A.R.S. § 33-801(1). Thus the only true beneficiary the Note

Holder; only the Note Holder is protected by that security. See FAC ¶ 14 and Exhibit “B”

thereto. MERS was not the Note Holder, so MERS cannot be the true beneficiary.

The Defendants assert that it is "perfectly appropriate" for a Lender to hold the beneficial

interest in its loan, and for MERS to hold the beneficial title in the property interest. Again, no

authority is provided. On a motion to dismiss, unsupported assertions do not carry the day.

Plaintiffs have adequately alleged their claims of splitting of the Note and DOT, thereby

rendering the Note unsecured. The Motion should be denied.

The Defendants next argue that there is no factual support showing that MERS'

signatories are not MERS employees/ acted without authority from MERS. The FAC alleges,

inter alia, that the First Assignment shows “the undersigned” MERS is located in Florida, and

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that Mr. Kamyabi signed on May 31, 2011, yet the First Assignment is notarized in California on

the same day. See FAC, ¶¶36-41. See also, Exhibit "I." The Consent Order against MERS finds

that MERS was allowing individuals without authority to sign foreclosure documents. See FAC,

Exhibit "G." The First Assignment is grossly inconsistent and clearly invalid.

The Defendants now admit that the Second Assignment is invalid due to the First

Assignment, so that document will not be discussed further. See Motion, p. 8, ll. 2-3.

The Defendants cite Phillips v. Wells Fargo Bank, 2009 WL 3756698 (S.D. CA. Nov. 6,

2009), which does not help them. The Phillips complaint was dismissed because no facts were

provided to show that the signature was not authorized. Id. at *4. Here, the Bickleys have

pointed out the numerous deficiencies which are found in the First Assignment, as well as the

MERS Consent Order. See, e.g., FAC ¶¶36, 41, and 55; Exhibit “G.”

The Defendants next claim that MERS now ratifies the Assignments. See Motion, p. 7,

ll. 14, 15. This is a Motion to Dismiss. Defendants may not controvert the factual allegations

made by the Plaintiffs in the FAC, with their unsubstantiated avowals. All well-pled allegations

in the FAC must be accepted as true. Assertions regarding ratification cannot be made here.

The Bickleys note that a claim of ratification has very little credibility here. It is hardly

surprising that each of the Defendants will ratify the other’s conduct in order to allow the tsunami

of foreclosures to continue. Again, Plaintiffs refer the Court to Exhibits “F” and “G”, which spell

out the defalcations of MERS, and BOA, with respect to their foreclosure practices.5

The Defendants claim there is no factual support that the notarizations were improper.

The First Assignment shows that MERS is located in Ocala, Florida, and Bud Kamyabi signed it

on May 31, 2011. The Ventura County, California, notary notarized the signature the same day.

Given these contradictory facts, the MERS Consent Order, and the standard on a Motion to

Dismiss, Plaintiffs have shown the void nature of the First Assignment. See FAC, ¶¶36, 41, 55. 5 Defendants cite to Brown v. Bank of America, 2011 WL2633150 (D. Nev. July 5, 2011), to support their assertion that a defendant may ratify its employee's action in signing a document. The case does not apply because it is from the District Court of Nevada, and because the purported signers here are not employees of MERS, nor are the signatures properly notarized.

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The Defendants also argue that the notary does not need to witness the signature.

However, A.R.S. § 41-313(B)(1) requires that the signer appear personally before the notary. The

First Assignment is clearly invalid for lack of proper notarization, as it was signed in Florida on

the same day that it was notarized in California.

3. The Substitution and Notice of Trustee's Sale are void.

The Bickleys have alleged that the Substitution is invalid for the reasons given by the

Defendants in their Motion, as well as the fact that the Assignments, upon which the Substitution

is based, are void and therefore invalid. See, e.g, Martenson, 2010 WL 334648 at *8 (the notice

of trustee’s sale, and the sale itself, are invalid because the borrower did not receive the notices

required under the deed of trust before the sale).

The Defendants essentially admit that the Powers of Attorney which designated Mark

Bosco as attorney in fact for BOA and BAC are robo-notarized, by unknown individuals. See

Motion, p. 8, ll. 12-16. Exhibit "P" shows that two different individuals notarized these

documents, claiming to be the same person. The Defendants again attempt to cover up with a

ratification defense. Factual allegations in the FAC may not be controverted by factual avowals

in the Motion. The Defendants cannot retool the FAC’s allegations with their own “evidence.”

The Substitution is invalid; the Motion should be denied.

The Defendants argue that the NTS is valid, claiming the Bickleys failed to plead any

facts that BOA did not instruct the trustee to proceed with trustees' sale. The Bickleys alleged

these facts. See, e.g. FAC, ¶¶ 77, 80-82. Also, BOA is not the Lender, and cannot legally instruct

anyone to foreclose. Further, in an attempt to justify its foreclosure documents, the Defendants

assert that, "BANA is the beneficiary under the Deed of Trust…." See Motion, p. 8, ll. 20-21.

Again, the Defendants cannot controvert the facts in the FAC by asserting their own avowal in

this Motion. The FAC alleges that BOA is not the legal beneficiary. See, e.g., FAC, ¶¶ 37-41,

45, 48, 53, 75, 77; Exhibit "L." The creditor is Freddie Mac or a Trust, and the servicer is BOA.

The Assignment and Substitution are invalid, so the NTS must also be invalid. See Martenson.

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4. The Defendants are not Entitled to Foreclose on 100 percent of the Property.

The Lender, PHMC, chose to have Sangmi Lee sign the Note, alone. The obligation is her

sole and separate obligation. See, e.g., Exhibit "C." Any assertion by the Defendants that Eric

Bickley is a borrower, is an improper attempt to justify an illegal foreclosure. The FAC asserts

this deficiency. See, e.g., FAC, ¶¶ 15, 25. Married joint tenants hold an equal, undivided interest

in real property; each holds the ownership interest as separate property. State v. Superior Court,

188 Ariz. 372, 373, 936 P.2d 558, 559 (Ct. App. 1997). Therefore, Eric Bickley has an undivided

half interest in the Property which cannot be subject to foreclosure. The Defendants have cited no

case law which allows them to foreclose on the Property here; the Motion should be denied.

C. The Bickleys' Breach of Contract Claim Must Stand.

The Defendants argue that the breach of contract claim must be dismissed because, "the

Bickleys failed to identify a single provision of the Note, Deed of Trust, or Powers of Attorney

that Defendants have breached." See Motion, p. 9, ll. 15-17. The FAC is replete with breaches of

these documents. See, e.g., FAC ¶¶ 14, 15, 37, 38, 42, 44, 45, 48, 51, 73, 75, 77, 81, 82, 83, 84,

85, 88-98, 114.6 The Defendants complain that the Bickleys have not cited statutes and law; the

FAC need not contain legal citations. Although not necessary, the Bickleys assert, without

limitation, that A.R.S. § 33-807(A) has been violated, which requires that the Lender declare a

breach before foreclosure begins. The Lender did not declare a breach in writing to anyone.

Next, Defendants argue that because the Bickleys did not allow the foreclosure to occur,

they have not suffered any damages. The law does not require the Bickleys to allow the

foreclosure to occur, before making a claim. If they had, these same Defendants would now be

arguing that the Bickleys had waived all their defenses to sale. See, e.g., A.R.S. § 33-811(C).

Arizona law sides with the Bickleys here. Enyart v. Transamerica Ins. Co., 195 Ariz. 71, 985

P.2d 556 (Ct. App. 1998). In Enyart, a lawsuit was brought against Transamerica for failing to

6 Paragraph 140 of Count Three incorporates these paragraphs by reference. Plaintiffs attempted to avoid repeating the same allegations in each count for brevity; Defendants still complained of repetition, so they cannot be heard to complain about this incorporation by reference.

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obtain a backup annuity policy, because the primary carrier went insolvent. Id. at 73, 985 P.2d at

558. Transamerica admitted its failure, but claimed that the plaintiff had not been injured. Id. at

74, 985 P.2d at 559. The plaintiff had suffered no damages, as Transamerica had paid any

shortfalls that occurred. Id. The plaintiff, nevertheless, could seek a remedy: In case of a failure to issue a policy, the right to recover is fully matured when the agreement is violated, and the party to whom it was to be issued is not obliged to wait until his property is destroyed by fire before instituting an action for damages. The general rule is that a cause of action for a breach of contract accrues immediately upon the happening of the breach, even though the actual damage resulting therefrom may not occur until afterward.

Id. at 75-76, 985 P.2d at 560-61. The right to sue does not depend on the fact of a loss after a

breach of contract. Id. Under Enyart, the Bickleys do not have to suffer the ultimate loss of

foreclosure before bringing these illegal activities to a stop. Even if the losses suffered to date are

fees and costs of suit, these are losses sufficient to sustain a claim for breach of contract. There is

no threshold dollar amount required to state a claim for breach of contract claim.

The Bickleys have stated a claim for breach of duty of good faith and fair dealing. A

party which manipulates its bargaining power to its own advantage, may breach its duty of good

faith without actually breaching a term of the contract. Wells Fargo Bank v. Arizona Laborers,

Teamsters and Cement Mason Local No. 395 Pension Trust Fund, 201 Ariz. 474, 491, 38 P.3d

12, 29 ¶ 64 (2002). A contracting party may not exercise a retained contractual power in bad

faith. Id. at 492, 39 P.3d at 30 ¶ 66. The contractual relationship based upon a Note and DOT

"clearly implies a duty of good faith and fair dealing in such relationship." Silving v. Wells Fargo

Bank, 2011 WL 2669246 at *12 (D. Ariz. July 7, 2011). In addition, the Silving court found that

a claim had been stated in arguing "that foreclosing using defective instruments is a violation of

the covenant of good faith implied in the Deed of Trust and Note …." Id.

The Defendants' pursuing foreclosure under the DOT, in violation of the contacts and the

law, was a breach of the duty of good faith and fair dealing. Further, in voluntarily, but

negligently, undertaking to modify Plaintiffs' loan, BAC/BOA breached those duties. See FAC,

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¶¶ 25-30, 32, 47, 49, 144, 145. The Plaintiffs have adequately stated claims in Count Three. D. The Fraudulent Concealment and Consumer Fraud Claims Are Properly Stated.

The Defendants argue that the fraudulent concealment claim should be dismissed for

failure to plead what the Defendants concealed, that the information was intentionally concealed,

which Defendant concealed information, and when and how the concealment took place. See

Motion, p. 11, ll. 12-15. These assertions are untrue. See, e.g., FAC, ¶ 151.

The Defendants again claim that the Bickleys have not incurred any damage as a result of

their fraudulent concealment. In fact, they have alleged such damage. See ¶ 153.

The Defendants claim the Bickleys have not pled fraud with specificity. See Motion,

p. 11. The Bickleys make no fraud claim. Defendants say the Plaintiffs must state the time, place

and specific content of false representations, citing Semegen v. Weidner, 780 F.2d 727, 731 (9th

Cir. 1985). While Semegen did so state, the dismissal for failure to properly allege fraud was

based on "conclusory allegations of fraud … punctuated by a handful of neutral facts." Id. at 731.

Even if a fraud claim were asserted, "[n]o formal language is necessary, so long as all the

elements of fraud are found in the complaint as a whole." Parks v. Macro-Dynamics, Inc., 121

Ariz. 517, 520, 591 P.2d 1005, 1008 (Ct. App. 1979). The particularity rule may be relaxed as to

matters peculiarly within the opposing party's knowledge. Wool v. Tandem Computers Inc., 818

F.2d 1433, 1439 (9th Cir. 1987). "Such 'an exception exists where, as in cases in corporate fraud,

the plaintiffs cannot be expected to have personal knowledge of the fact constituting the

wrongdoing.'" Id.; see also Buena Vista, LLC v. New Resource Bank, 2010 WL 3448561 at *7

(M.D. Cal. August 31, 2010)("[A]s to matters peculiarly within the opposing party's knowledge,

allegations based on information and belief may satisfy Rule 9(b) if they also state the fact upon

which the belief is founded.").

The Bickleys have listed the fraudulent concealment in the documents in great detail, and

to the extent possible, specifically listed Defendants responsible for certain conduct. However,

the very gravamen of these claims, is that the truth was kept from Plaintiffs with respect to the

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identity of the Lender, the Note Holder, and more. A plaintiff in these circumstances cannot be

expected to name names and give dates and times for when improper actions under the contract,

and illegal foreclosure actions took place. The Bickleys have detailed the invalidity of the

foreclosure documents. An ordinary citizen would not know they are invalid. Defendants’

attempt to foreclose proves that the Defendants concealed the fact of the void documents. The

Defendants knew that each was not the Lender, and not the Note Holder, that the Lender had not

declared a default in writing, had not notified the Trustee in writing of its election to proceed to

foreclosure, and had not notified the borrower in writing of an acceleration of the debt.

The Bickleys' assertions, on information and belief, that the individuals signing the

foreclosure documents were not authorized to do so, suffices at this stage in the litigation. Wool

and Buena Vista allow these allegations. Defendants will have no trouble formulating a response.

The Bickleys have cited to the paragraphs identifying these allegations numerous times, but will

do so again here. See, e.g, FAC, ¶¶ 14, 15, 19, 24, 36-41, 44, 55-62, 149-153.

The Defendants assert that a claim for consumer fraud must allege reliance on a false

promise or misrepresentation. See Motion, p. 11, l. 19. Not so: The act, use or employment by any person of any deception, deceptive act or practice, fraud, false pretense, false promise, misrepresentation, or concealment, suppression or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise whether or not any person has in fact been misled, deceived or damaged thereby, is [] unlawful….

ARS § 44-1522(A). An injury occurs with unreasonable reliance on false or misrepresented

information. Kuehn v. Stanley, 208 Ariz. 124, 129, 91 P.3d 346, 351 (Ct. App. 2004).

Here too, a claimant who suffers from a lack of knowledge due to corporate fraud, need

not plead with particularity. Nevertheless, Plaintiffs have pled when the misrepresentations

occurred (¶ 156(a)(b)(d), Exhibit "K", "M"), and which Defendants made those representations,

when possible. The Bickleys alleged how they relied (¶ 158), and how they have been damaged

(¶ 159). Again, the Defendants attempt to evade liability because foreclosure was stopped; the

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Bickleys have nevertheless suffered damage, and those damages have been alleged.

Plaintiffs have stated claims for fraudulent concealment and consumer fraud.

E. The Bickleys Have Stated a Claim for Negligence Per Se.

The Defendants claim there is no negligence per se because the signer need only appear

before the notary and provide an “acknowledgment” in the notary’s presence. See Motion, p. 12,

ll. 25-26. Even if true, the First Assignment is still invalid. “Acknowledgment” is defined in the

Arizona statutes as “a notarial act in which a notary certifies that a signer, whose identity is

proven by satisfactory evidence, appeared before the notary and acknowledged that the signer

signed the document.” A.R.S. § 41-311(1). The notary is required to confirm that whatever

identity the signer claims to have, “is proven by satisfactory evidence.” Bud Kamyabi, who

signed the First Assignment, claimed to be Assistant Secretary of MERS. The notarization states

that he “acknowledged to me that he executed the same in his authorized capacity….” The notary

had to confirm that he was Assistant Secretary of MERS. The FAC alleges that he is not.

The First Assignment is also invalid because it was signed in Ocala, Florida, on May 31,

2011, and notarized the same day, in Ventura County, California. The notary did not witness the

signature, nor did the signer acknowledge his signature to the notary on that day.

The Defendants next argue that A.R.S. §§ 39-161 and 33-420 do not apply. As to A.R.S.

§ 33-420, they claim that recording of a false assignment, substitution, or notice of trustee’s sale

will not render them negligent per se under this statute, citing In re Mortgage Electronic

Registration Systems (MERS) Litigation, 2011 WL 4550189 (D. Ariz. Oct. 3, 2011). First, the

MERS case is distinguished on its facts; Plaintiffs did not hinge all their claims on the argument

that the Note is split from the DOT and therefore all that MERS does, is void. Id. at *4.

Defendants argue that the statute does not apply because they had authority to sign and record the

Assignments, Substitution, and NTS. As has been fully discussed above, supported by ample

factual allegations, the MERS Consent Order and more, this is not true. Further, Plaintiffs have

alleged concrete injury in fact sustained as a result of the falsely recorded documents which were

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signed in breach of the contracts, and void for robosigning. See, e.g., FAC ¶¶ 16, 34, 36-43, 48,

55-62, 68, 69, 73-77, 80, 85, 111, 146, 153. To whom the borrower is obligated, is at the core of

this dispute; an entity not the Note Holder and Lender is seeking to take Plaintiffs’ home. These

Defendants are negligent per se for recording these false documents under A.R.S. § 33-420.

The Defendants do not argue that A.R.S. § 39-161 does not apply: A person who acknowledges, certifies, notarizes, procures or offers to be filed,

registered or recorded in a public office in this state an instrument he knows to be false or forged, which, if genuine, could be filed, registered or recorded under any law of this state or the United States … is guilty of a class 6 felony.

A.R.S. § 39-161. Without doubt, these Defendants have either acknowledged, certified,

notarized, or procured or offered to be filed or recorded at the Maricopa County Recorder’s

Office, the foreclosure documents in this matter. All Defendants are negligent per se for having

done so, and the Bickleys have certainly stated claims with respect to this statute.

A.R.S. § 39-161 was enacted to protect from the type of harm suffered by the Plaintiffs: The legislative intention in the enactment of the section is clearly one to protect

the integrity of our system of recordation of instruments and the vice interdicted is the placing of false or fictitious instruments of record which might have the effect to cloud the record.

State v. Edgar, 124 Ariz. 472, 475, 605 P.2d 450, 453 (1979). The Bickleys are in the class of

people protected by this statute as property owners, the intention of which is to protect the

integrity of the recording system in this County, and prevent clouds on title. The preparation,

notarization, and recording of these false documents is negligence per se under this statute.

The Defendants assert that the Plaintiffs’ “damages” are “insufficient to establish a claim

for negligence.” See Motion, p. 14, l. 1. There is no threshold of damages which must be

suffered; the false recorded documents caused damage to the Bickleys as alleged. The Bickleys

do not have to suffer foreclosure before they can seek refuge in the law. See Enyart. F. The Bickleys Have Stated a Claim for Release of the Deed of Trust.

The Defendants argue that Count Seven depends on the UCC. It is not; Count Seven is

based on the terms of the Note and DOT. See FAC, Exhibit “B” thereto, ¶ 23. The DOT requires

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its release upon payment of all sums secured by it. If the Note has been paid by the borrowers, by

insurance proceeds, the FDIC shared loss agreement (See Exhibits “F” and “G”), Freddie Mac, or

others, the DOT must be released. A.R.S. § 33-713 allows this Court to order that release.

The Defendants complain that the Bickleys have not provided support for their allegations

regarding destruction of the Note, and that an allegation that other parties may have paid the loan

is “entirely implausible.” But Plaintiffs need only give their opponents fair notice of the nature

and basis of the claims, so that the opponent is generally aware of the type of litigation involved.

Cullen, 218 Ariz. At 419, 189 P.3d at 346. The Bickleys do not have a burden of proof at this

point in the litigation. Their well-pled allegations suffice; the Motion re Count 7 must be denied.

G. The Bickleys Have Adequately Stated a Claim for Injunctive Relief.

Because the Bickleys have adequately stated claims upon which injunctive relief can be

granted, Count 8 should be allowed to remain.

H. The Bickleys Have Stated a Claim for Quiet Title to the Property.

The Defendants’ only argument for dismissal of Count 2 for Quiet Title is that the

Bickleys had not paid off their mortgage. See Motion, p. 15. There are several critical exceptions

to the general rule that a party seeking quiet title must pay off the debt. First, that requirement

applies with respect to the beneficiary of the deed of trust, only. Eason v. IndyMac Bank, 2010

WL 1962309 at *2 (D. Ariz. May 4, 2010); Silving, 2011 WL 2669246 at *11. In Silving, the

court found that, “A titleholder may have a superior claim to title as to one party and an inferior

claim as to another.” Id. Therefore, in ruling on a motion to dismiss for quiet title, the dispositive

issue is whether plaintiff has a superior claim to title as against the defendants. Id. Here, the

true beneficiary under the DOT, is unknown. The beneficiary must also be the Note Holder.

Because the First Assignment is void and invalid, the only entity with an arguably enforceable

interest as beneficiary under the DOT, is the original Lender, PHMC. Plaintiffs are entitled to

quiet title as to the Defendants.

Another exception to the tender rule applies. When the purported trustee has no interest in

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the property, lacking an authorization to foreclose, any sale pursuant to that trustee’s act would be

void. Martinez v. America’s Wholesale Lender, 2011 WL 2562937 at *1 (9th Cir. 2011).

Because no party to this action is the true beneficiary/Lender and Note Holder both, the

Bickleys have stated a claim for quiet title. Because the Defendants have not sought dismissal as

to any specific Defendant, the Motion should be denied. See Silving, 2011 WL 2669246 at *11.

Because the Trustee was not properly appointed, and lacked authorization from the Lender to

effect the non-judicial foreclosure, and for other reasons, the foreclosure documents are void and

the tender rule does not apply. The quiet title claim must be allowed to stand.

IV. CONCLUSION.

Based on the foregoing, the Bickleys respectfully submit that they have stated eight claims

upon which relief may be granted in this matter. The Defendants’ Motion should be denied in

full, and Plaintiffs granted their attorney’s fees and costs for having to respond to this Motion.

RESPECTFULLY SUBMITTED this 18th day of January, 2012.

BARBARA J. FORDE, P.C. /s/ Barbara J. Forde Barbara J. Forde, Esq. 20247 N. 86th Street Scottsdale, AZ 85255 Attorney for Plaintiffs On this 18th day of January, 2012: Original of the foregoing e-filed with copies e-mailed to: Robert W. Shely Leonard J. McDonald, Jr. Molly L. Eskay David W. Cowles BRYAN CAVE LLP Nora L. Dillon Two N. Central Avenue, Suite 2200 TIFFANY & BOSCO, P.A. Phoenix, AZ 85004-4406 2525 East Camelback Rd, Suite 300 Attorneys for Bank of America, Phoenix, Az 85016-4237 Countrywide Home Loans, and MERS Attorneys for Freddie Mac, Tiffany & Bosco, Michael A. Bosco, and Mark S. Bosco /s/Barbara J. Forde