9th Circuit Opinion by Judge W. Fletcher Allows Quiet Title and Damages for Wrongful Filing of False Documents
This case has succeeded in getting at least a partial and significant victory over the MERS system, and voiding robosigned documents as being forged per se.
This case affirms the homeowners right to sue for quiet title and damages for slander of his title by the use and filing of patently false documentation in Court, in the County records etc.
One caveat: you must plead facts for nullification, cancellation of the instrument on the grounds that it is void before you can get to your cause of action on quiet title and damages for slander of the homeowner’s title.
This decision makes clear the damage wrought by use of the MERS system. It is strong persuasive authority in other jurisdictions and now the law for all courts within the 9th Circuit’s jurisdiction.
Here are some of the significant quotes.
Writing in 2011, the MDL Court dismissed Count I on four grounds. None of these grounds provides an appropriate basis for dismissal. We recognize that at the time of its decision, the MDL Court had plausible arguments under Arizona law in support of three of these grounds. But decisions by Arizona courts after 2011 have made clear that the MDL Court was incorrect in relying on them.
First, the MDL Court concluded that § 33-420 does not apply to the specific documents that the CAC alleges to be false. However, in Stauffer v. U.S. Bank National Ass’n, 308 P.3d 1173, 1175 (Ariz. Ct. App. 2013), the Arizona Court of Appeals held that a § 33-420(A) damages claim is available in a case in which plaintiffs alleged as false documents “a Notice of Trustee Sale, a Notice of Substitution of Trustee, and an Assignment of a Deed of Trust.” These are precisely the documents that the CAC alleges to be false.
Third, the MDL Court held that appellants lacked standing to sue under § 33-420 on the ground that, even if the documents were false, appellants were still obligated to repay their loans.
In the view of the MDL Court, because appellants were in default they suffered no concrete and particularized injury.
However, on virtually identical allegations, the Arizona Court of Appeals held to the contrary in Stauffer.
The plaintiffs in Stauffer were defaulting residential homeowners who brought suit for damages under § 33-420(A) and to clear title under § 33-420(B). One of the grounds on which the documents were alleged to be false was that “the same person executed the Notice of Trustee Sale and the Notice of Breach, but because the signatures did not look the same, the signature of the Notice of Trustee Sale was possibly forged.” Stauffer, 308 P.3d at 1175 n.2.
“Appellees argue that the Stauffers do not have standing because the Recorded Documents have not caused them any injury, they have not disputed their own default, and the Property has not been sold pursuant to the Recorded Documents. The purpose of A.R.S. § 33-420 is to “protect property owners from actions clouding title to their property.” We find that the recording of false or fraudulent documents that assert an interest in a property may cloud the property’s title; in this case, the Stauffers, as owners of the Property, have alleged that they have suffered a distinct and palpable injury as a result of those clouds on their Property’s title.” [Stauffer at 1179]
The Court of Appeals not only held that the Stauffers had standing based on their “distinct and palpable injury.”
It also held that they had stated claims under §§ 33-420(A) and (B). The court held that because the “Recorded Documents assert[ed] an interest in the Property,” the trial court had improperly dismissed the Stauffers’ damages claim under § 33-420(A). Id. at 1178.
It then held that because the Stauffers had properly brought an action for damages under § 33-420(A), they could join an action to clear title of the allegedly false documents under § 33-420(B). The court wrote:
“The third sentence in subsection B states that an owner “may bring a separate special action to clear title to the real property or join such action with an action for damages as described in this section.” A.R.S. § 33-420.B. Therefore, we find that an action to clear title of a false or fraudulent document that asserts an interest in real property may be joined with an action for damages under § 33-420.A.”
Fourth, the MDL Court held that appellants had not pleaded their robosigning claims with sufficient particularity to satisfy Federal Rule of Civil Procedure 8(a).
We disagree. Section 33-420 characterizes as false, and therefore actionable, a document that is “forged, groundless, contains a material misstatement or false claim or is otherwise invalid.” Ariz. Rev. Stat. §§ 33-420(A), (B).
[Importance of Pleading NO DEFAULT:]
An action for the tort of wrongful foreclosure will lie if the trustor or mortgagor can establish that the material issue of fact in a wrongful foreclosure claim is whether the trustor was in default when the power of sale was exercised.
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