Case 4:10-cv-00208-FRZ Document 45 Filed 05/26/11 Page 1 of 18

1 VINCE RABAGO, Esq. (Bar No. 015522)

VINCE RABAGO LAW OFFICE
2 500 N. Tucson Blvd., Suite 100
Tucson, Arizona 85716
3 Telephone: (520) 955-9038
4 Facsimile: (888) 371-4011
Email: vince.rabago@azbar.org
5 Attorney for Plaintiff

6 IN THE UNITED STATES DISTRICT

7
FOR THE DISTRICT OF ARIZONA
8
9 ANNE MERCY KAKARALA, Case No. 4:10-CV-00208-TUC-FRZ

10 Plaintiff,
vs.
11
PLAINTIFF'S OPPOSITION TO
12 WELLS FARGO N.A.'S MOTION TO
WELLS FARGO BANK, N.A., DISMISS PLAINTIFF'S AMENDED
13 COMPLAINT

14 (ORAL ARGUMENT REQUESTED)

Defendant.
15
16
Plaintiff opposes Wells Fargo N.A.'s Motion to Dismiss pursuant to Fed. R. Civ. Proc.
17
18 8(a), 9(b), and 12(b)(b), relying on this supporting Memorandum of Points and Authorities.
19 MEMORANDUM OF POINTS AND AUTHORITIES

20 I. INTRODUCTION
21 Defendant and their agents, among other things, wrongfully sold Plaintiff's home in
22
July 2009 after deceiving her into believing she was no longer in foreclosure. Defendant lured
23
Plaintiff into non-action based on misrepresentations they were working with her; when she
24
least expected it, Defendants sold her home out from under her. (Doc. 38 at 1-18.) Defendant
25
26 engaged in fraud, actual and/or constructive, and at a minimum, negligent misrepresentation.
27 Unfortunately, Plaintiff is not alone in how she was treated by our banking system.
28
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1 Plaintiff's counsel is new to this case, which is a two-year pro se effort by Plaintiff to

2 vindicate her rights. In the interest of justice and to facilitate a “just, speedy, and inexpensive
3 determination” of the case in the spirit of Fed.R.Civ.P. Rule 1, Plaintiff is withdrawing many
4
claims to encourage a speedy and inexpensive resolution. Plaintiff thus urges a liberal review
5
of the pro se pleadings to achieve justice so she can develop and discover facts supporting the
6
7 remaining claims. Since Plaintiff was pro se, Plaintiff incorporates by reference any relevant
8 prior pleadings. Finally, Plaintiff's allegation of “unfair trade practice violations” under state
9 law operates as a separate claim applicable in relation to each fraud claim. (Doc. 38, p. 16.)
10 Plaintiff requests judicial notice of the agency findings in the Interagency Review of
11
Foreclosure Policies and Practices by the Federal Reserve Board, the Office of the
12
Comptroller of the Currency, and the Office of Thrift Supervision. (Exh. L.)1 These agencies
13
conducted on-site reviews of foreclosure processing at 14 federally regulated mortgage
14
15 servicers in 2010, including Wells Fargo, and “found critical weaknesses in servicers’
16 foreclosure governance processes, foreclosure document preparation processes, and oversight
17 and monitoring of third-party vendors, including foreclosure attorneys. While it is important
18 to note that findings varied across institutions, the weaknesses at each servicer, individually or
19
collectively, resulted in unsafe and unsound practices and violations of applicable federal and
20
state law and requirements.” (Exh. L, Exec. Summary, at 2-3.) The practices of individual
21
institutions and the financial system as a whole have been devastating to our country.2
22
1
The attached report is also publicly available at: http://www.ots.treas.gov/_files/4900701.pdf.
23
2
24 Plaintiff also requests judicial notice of all other relevant administrative agency reports, such
as the Permanent Subcommittee on Investigations of the U.S. Senate report, “Wall Street and
25 The Financial Crisis: Anatomy of a Financial Collapse,” for examples of securitization and
other financial institution practices. See http://www.ft.com/cms/fc7d55c8-661a-11e0-9d40-
26 00144feab49a.pdf. The Financial Crisis Inquiry Commission report reached general
conclusions on the collapse of our economy, including failures in financial regulation and a
27 systemic breakdown in accountability and ethics at our financial institutions. See generally
28 http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf at pages XVII and XXII.
2
 Case 4:10-cv-00208-FRZ Document 45 Filed 05/26/11 Page 3 of 18

1 II. STANDARD FOR A MOTION TO DISMISS

2 Under Fed.R.Civ.Proc. 8(a)(2), a pleading must contain a “short and plain statement of
3 the claim showing that the pleader is entitled to relief.” The complaint must give “fair notice
4
of what the claim is and the grounds upon which it rests.” Bell Atlantic v. Twombly, 550 U.S.
5
544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotation and modification
6
7 omitted). The complaint must be supported by factual allegations. Ashcroft v. Iqbal, __ U.S.
8 ___, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). “While legal conclusions can provide the
9 framework of a complaint,” neither legal conclusions nor conclusory statements are
10 themselves sufficient, and such statements are not entitled to a presumption of truth. Id. at
11
1949-50. Iqbal and Twombly prescribe a two step process for evaluation of motions to
12
dismiss. The court first identifies the non-conclusory factual allegations, and the court then
13
determines whether these allegations, taken as true and construed in the light most favorable to
14
15 the plaintiff, “plausibly give rise to an entitlement to relief.” Id.; Erickson v. Pardus, 551 U.S.
16 89, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007).3
17 Plaintiff prior pro se pleadings are held to less stringent standards. As in Erickson v.
18 Pardus, 551 U.S. at __, 127 S.Ct. At 2200, she “has been proceeding, from the litigation's
19
outset, without counsel. A document filed pro se is "to be liberally construed,” Estelle [v.
20
Gamble, 429 U.S. 97, 106, 97 S.Ct. 285, 50 L.Ed.2d 251 (1976)], and “a pro se complaint,
21
however inartfully pleaded, must be held to less stringent standards than formal pleadings
22
23 3
“Plausibility,” as it is used in Twombly and Iqbal, does not refer to the likelihood that a
24 plaintiff will succeed in proving the allegations. Instead, it refers to whether the non-
conclusory factual allegations, when assumed to be true, “allow[] the court to draw the
25 reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct.
at 1949. “The plausibility standard is not akin to a 'probability requirement,' but it asks for
26 more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly,
550 U.S. at 557, 127 S.Ct. 1955). A complaint may fail to show a right to relief either by
27 lacking a cognizable legal theory or by lacking sufficient facts alleged under a cognizable
28 legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1988).
3
 Case 4:10-cv-00208-FRZ Document 45 Filed 05/26/11 Page 4 of 18

1 drafted by lawyers.” (Ibid.) (internal quotation marks omitted). Cf. Fed. Rule Civ. Proc. 8(f)
2 ("All pleadings shall be so construed as to do substantial justice”). In fact,
3 Iqbal incorporated the Twombly pleading standard and Twombly did not alter courts'
4 treatment of pro se filings; accordingly, we continue to construe pro se filings liberally
when evaluating them under Iqbal. While the standard is higher, [the Court's]
5 “obligation” remains, “where the petitioner is pro se, particularly in civil rights cases,
to construe the pleadings liberally and to afford the petitioner the benefit of any doubt."
6 Bretz v. Kelman, 773 F.2d 1026, 1027 n. 1 (9th Cir. 1985) (en banc).
Hebbe v. Plyler, 627 F.3d 338, 341-342 (9th Cir. 2010).
7
8 The Court construes the pleading in the light most favorable to the party opposing the

9 motion, and resolve all doubts in the pleader's favor. Hebbe v. Plyler, 627 F. 3d 338. Also, a
10 complaint need not identify the statutory or constitutional source of the claim raised in order to
11 th
survive a motion to dismiss. Alvarez v. Hill, 518 F.3d 1152, 1157 (9 Cir. 2008).
12
Rule 9(b) provides a heightened pleading standard for “all averments of fraud or
13
mistake”; it requires that “the circumstances constituting fraud ... be stated with particularity”
14
15 but provides that “[m]alice, intent, knowledge, and other condition of mind of a person, may
16 be averred generally.” Tellabs Inc. v. Makor Issues & Rights LTD., 551 U.S. 308, 127 S.Ct.
17 2499, 2507 (2007); Vess v. Ciba-Geigy Corp., 317 F.3d 1097, 1103 (9th Cir. 2003). “A
18 pleading is sufficient under Rule 9(b) if it identifies the circumstances constituting fraud so
19
that the defendant can prepare an adequate answer from the allegations. The complaint must
20
specify such facts as the times, dates, places, benefits received, and other details of the alleged
21
fraudulent activity.” Neubronner v. Milken, 6 F.3d 666, 671-72 (9th Cir.1993) (quotations and
22
23 citations omitted). To the extent that various state law claims are alleged, Plaintiff contends
24 that the proper standard for review of pendant state claims is the Arizona standard of review.
25 It is only until now that Plaintiff been able to obtain counsel. In the event that a
26 complaint fails to state a claim, unless amendment would be futile, the District Court should
27 rd
give a plaintiff the opportunity to amend. Phillips v. County of Alleghany, 515 F.3d 224 (3
28
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 Case 4:10-cv-00208-FRZ Document 45 Filed 05/26/11 Page 5 of 18

1 Cir. 2008). Plaintiff agrees with Defendant that this Court should consider publicly recorded
2 and other documents “central to the allegations” presented. It is also proper to take judicial
3 notice of public documents. Lingad v. Indymac Federal Bank, 682 F. Supp. 2d 1142, 1146
4
(Dist. Court, ED Cal. 2010) (proper to take judicial notice of public mortgage records, etc.).
5
A. A.R.S. § 33-811(C) DOES NOT BAR PLAINTIFF'S CLAIMS
6
Defendant Wells Fargo N.A. argues that all claims are barred by A.R.S. § 33-811(c)
7
8 because Plaintiff did not obtain an order under to Ariz. R. Civ. P. 65 to enjoin the sale. Not so.
9 Some of Plaintiff's claims are based, in part, on the fact that Defendant withdrew or

10 postponed the sale via communications with Plaintiff and at a minimum lied to and/or
11 negligently misrepresented that it was working with Plaintiff and that no trustee sale would
12
occur, luring her into inaction. The misrepresentations effectively indicated there was no need
13
to sue because they were not going to sell the property and instead were working with her, It
14
is self-evident this law does not or should not apply where a bank misrepresents that no sale
15
16 would occur, thus obviating any need to file legal action. Likewise, the trustee deed statute
17 cited by Defendant merely creates a presumption of correctness. How can one be reasonably
18 expected to file a protective legal action to conform to A.R.S. § 33-811(c) to challenge a sale
19
when you have been affirmatively led to believe it not going to occur? Herring v.
20
Countrywide Home Loans, 2007 WL 2051394 (D. Ariz. 2007) (holding A.R.S. § 33-811(c)
21
inapplicable where bank made an agreement and plaintiff believed it would act accordingly).
22
In any event, even if “objections” or “defenses” to the trustee's conducting of the sale
23
24 are arguably waived, the law does not bar affirmative litigation afterward based on the claims
25 alleged. Such claims can provide the bases for damages irrespective of whether A.R.S. § 33-
26 811(c) can bar undoing a sale. Insofar as any claims permit actual, compensatory or punitive
27
28
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1 monetary damages, such claims are unaffected by A.R.S. § 33-811(c). The Motion to
2 Dismiss all of the claims on this simple wave of the hand should be rejected.
3 B. COUNT ONE - FRAUD
4
Defendant Wells Fargo N.A. gives short shrift to Plaintiff's claim by summarizing it as
5
liability “for fraud because it offered to work with [Plaintiff] to keep her property.” (Motion at
6
3, ll. 5-6.) Citing the specific pleading requirement of Rule 9(b), Defendant claims Plaintiff
7
8 alleges no specific facts supporting any of the elements of fraud under Arizona law. (Motion
9 at 3-4.) Defendant reads the Amended Complaint to allege that the bank's misrepresentation
10 “was confirmed” in an April 11, 2009 letter (which Defendant claims was actually March 11,
11 2009, which Defendant attaches to its Motion as Exhibit 6), and Defendant argues Plaintiff
12
does not specify which representation “in the letter” was false, and that the letter instead
13
proclaims that the bank would not delay foreclosure. (Motion at 4.) Finally, Defendant claims
14
that the damages allegation is conclusory and unsupported by facts, claiming that Plaintiff is
15
16 purportedly required as a matter of law to allege that she was able to bring the loan current to
17 be able to establish any damages. (Motion at 5.) The Motion is unsupported by the record.
18 Contrary to Defendant's claims, Plaintiff's pro se Amended Complaint, construed
19
liberally, alleges all of the elements and with sufficient facts. First, Plaintiff alleges Wells
20
Fargo made a misrepresentation of one or more material facts. According to Plaintiff's factual
21
allegations, Wells Fargo specifically notified Plaintiff that it would work with her to keep her
22
23 house if she could send payments in with financial statements. Plaintiff alleges that evidence
24 of the misrepresentation that they would work with her to keep her house was confirmed by an
25 April 11, 2009 letter. (Doc. # 38.) Plaintiff further alleges that such representations were false
26 when made and that such a representation was verbally made on 12/28/2009 when Plaintiff
27
called Wells Fargo. Plaintiff further alleges that Wells Fargo knew that the representation was
28
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1 false or recklessly made the representation, given that Wells Fargo knew that there was a
2 foreclosure action pending. Since the trustee acted on behalf of Wells Fargo, the Defendant
3 did indeed know the sale was going forward anyway despite their communications to Plaintiff.
4
Plaintiff alleges Wells Fargo made the statement with intent to rely. It is reasonable to
5
conclude Defendant wanted Plaintiff to continue making such payments. Plaintiff continued to
6
7 pay. On page 12 of the Amended Complaint, in further allegations and discussion on her loan
8 modification allegations, Plaintiff specifically alleges that she “was sending her payments
9 through Western Union as requested by the bank.” (Doc. 38, at page 12, count 9.) Plaintiff
10 avers that she “sent all required documents 3 times.” (Id.) Plaintiff further alleges that
11
correspondence from the bank in “April 2009” made her believe she would be given a loan
12
modification. But, without further notice, Wells Fargo foreclosed after making her believe
13
that she would be getting a loan modification. As further proof that Wells Fargo misled
14
15 Plaintiff to believe she was being considered for a loan modification, and that any foreclosure
16 process had been suspended or withdrawn, Wells Fargo continued to asked Plaintiff “to send
17 more paperwork” on July 28, 2009, which was sent to the bank on that date. (Id.)
18 Finally, Plaintiff alleges she did in fact rely on the statement and believed the
19
statement and “believed there was no foreclosure.” As a result, Plaintiff suffered damages,
20
and also alleges she lost her home at the sale as result of her reliance on the representations.
21
Defendant relies on additional evidence outside the Amended Complaint, providing a
22
23 letter dated March 11, 2009, as being “central to the allegations,” to factually dispute
24 Plaintiff's allegations. Consequently, Defendant has opened the door to a factual dispute and
25 Plaintiff is forced to present additional evidence central to the allegations. On December 4,
26 2009, Wells Fargo sent correspondence indicating Plaintiff's “problems could result in
27
foreclosure ….” but that “We [Wells Fargo] think we can help, by partnering with you to find
28
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 Case 4:10-cv-00208-FRZ Document 45 Filed 05/26/11 Page 8 of 18

1 a solution that fits your needs and circumstances.” (Exhibit A.) This letter included options,
2 including loan modification, that might “extend repayment of past due amounts over the
3 remaining term of the loan.” This letter (like the March 11, 2009, letter) continued as follows:
4
“To determine the best option, we must hear from you. Although we are eager to help you, we
5
will not delay foreclosure on your home. We therefore urge you to call at once, so we can
6
7 begin working to avoid the tax liabilities and credit impact of foreclosure.” (Plaintiff's Exhibit
8 A, emphasis added.) Reasonably construed, the language, including the phrase cited by
9 Defendant – when viewed in context – undeniably indicates that contacting the bank
10 immediately so that they could begin “working to avoid … foreclosure” was affirmative
11
conduct in response to bank requests that would help avoid or delay any current foreclosure.
12
Next, on December 28, 2009, were the bank's verbal representations to Plaintiff (that
13
the bank would work with her to keep her house if she could send payments in with financial
14
15 statements). (Doc. 38 at 4.) Then came the March 11, 2009 letter. (Exh. B.) Both the March
16 11th letter and a subsequent April 9th letter urged that she had to make contact immediately as a
17 first step and should have her financial information ready. But that's not all.
18 On March 23, 2009, Defendant communicated by letter, making the following specific
19
representations: “Please read: Important information on what you can do to receive
20
payment relief and suspend the foreclosure process for thirty (30) days on your Wells
21
Fargo Home Mortgage Loan,”; “... this program offers the assistance you need to stay in
22
23 your home[,]”; and “You are being considered for a modification … If you qualify, we will
24 suspend your foreclosure activity for thirty (30) days .... [This program] could reduce your
25 monthly payments and help you stay in your home.” (Exhibit C, emphasis in original). The
26 letter urged Plaintiff to contact the bank by April 8, 2009, to inform the bank she does “want
27
28
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 Case 4:10-cv-00208-FRZ Document 45 Filed 05/26/11 Page 9 of 18

1 to participate and remain in [her] home. We'll also need your financial information... so be
2 sure to have it handy when you call.” (Exhibit C, italics added.) The letter ended by stating:
3 What Happens Next:
4 If you qualify, we can help. We'll review your financial information and create a new
payment plan. After you make three (3) payments in the new amount under the new
5 plan, we'll finalize your loan modification.
If We Do Not Hear From You
6 If we do not hear from you, we will not be able to help you, and your foreclosure
process will continue. [Emphasis added]
7
Call Now, So You Can Remain In Your Home ….
8 (Exhibit C, emphasis in original, italics added.)

9 Defendant represented that affirmative steps could or would stop foreclosure, even
10 noting that “if we do not hear from you … your foreclosure process will continue.” (Exh. C.)
11
Next, Wells Fargo sent a letter dated April 6, 2009, virtually identical to the letter sent
12
March 11, 2009. (Exhibit D.) Days later, Wells Fargo sent a letter dated April 9, 2009,
13
thanking Plaintiff for having spoken with employees of the bank that day. This letter asked for
14
15 “additional financial information,” and stated that “Our primary goal is to help you continue to
16 experience the pride of home ownership,” but the letter mentioned absolutely nothing about
17 continuing with the foreclosure regardless of the circumstances. (Exhibit E.)
18 Last but not least, Plaintiff has alleged she lost her home, and as alleged via Count
19
Eleven, she also lost the opportunity to refinance her home. In addition, Plaintiff lost the right
20
to utilize the protection of Chapter 13 bankruptcy to try to save her home. Moreover, Plaintiff
21
need not establish that she was eligible for a modification or refinance, or that she was able to
22
23 bring the loan current to establish damages. Defendant cites no law for this proposition.
24 The Motion should be denied. The pro se allegations are ample and the elaboration on

25 page 12 and other Counts in the Amended Complaint give additional detailed allegations. The
26 evidence presented by the parties and the judicially noticed facts further amplify the claims.4
27 4
If the Court treats this as a Motion for Summary Judgment because of Defendant's evidence,
28 which was controverted, Plaintiff requests discovery and opportunity to present all evidence.
9
 Case 4:10-cv-00208-FRZ Document 45 Filed 05/26/11 Page 10 of 18

1 C. COUNT TWO – DEFENDANT FAILED TO FOLLOW HUD REQUIREMENTS

2 Plaintiff alleges Defendant failed to meet HUD federal requirements to prevent the
3 foreclosure. Defendant does not dispute the sufficiency of the factual allegations. Instead,
4
Defendant cites district court decisions to argue there is no private right of action for
5
intentionally, recklessly, or negligently failing to follow HUD regulations. Plaintiff disagrees.
6
The Supreme Court itself has found private enforceable rights arising from violations
7
8 of HUD rules in other contexts. Wright Et Al. v. City of Roanoke Redevelopment and Housing
9 Authority, 479 U.S. 418, 107 S.Ct. 766, 93 L.Ed.2d 781 (1987). Defendant's cases do not
10 really analyze the regulations at issue or Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d
11 26 (1975), which established four factors to consider in determining whether a private right of
12
action should be implied: (1) whether plaintiff is one of the class for whose special benefit the
13
statute was enacted; (2) whether there is any indication of legislative intent to create a federal
14
right in favor of the plaintiff; (3) whether implication of such a remedy is consistent with the
15
16 legislative scheme; and (4) whether the cause of action is one "traditionally relegated to state
17 law." City of Rohnert Park v. Harris, 601 F. 2d 1040, 1046 (9th Cir. 1979). The Cort factors
18 weigh in favor of a private right, since the regulations were to protect this class, enforcement
19
is consistent with the law and the regulators have done virtually nothing to enforce widespread
20
refusal by banks to comply with regulations or guidelines to help homeowners avoid
21
foreclosure. Plaintiff is aware of no language in the regulations or law barring a private right.
22
Defendant cites McHatten v. Chase Home Fin. LLC., 2010 U.S. Dist. LEXIS 140281
23
24 (D. Ariz. Sept.29, 2010), for the view there is no duty since the statutes set forth relationships
25 vis-a-vis HUD and banks, but McHatten dealt with allegations of a contract violation where a
26 deed of trust cited certain requirements contingent on HUD rules. Fantroy v. Countrywide
27
Home Loans, Inc., 2007 U.S. Dist. LEXIS 53707 (N.D. Tex. 2007), is also inapposite. Careful
28
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1 review of these and other district court cases reveal generalizations without much analysis and
2 no mention of the Wright case, which is on the side of courts that have found a private right in
3 a HUD context. Here, Wells Fargo failed to meet HUD's regulatory requirements to prevent
4
foreclosure, including but not limited to 23 C.F.R. 203.605, such as minimum requirements to
5
visit or send one certified letter, and other requirements. The motion should be denied.
6
7 D. COUNT THREE – FORCLOSURE WITHOUT DUE COURSE (UNDER LAW)

8 Defendant dismisses this claim as a “show me the note” claim, noting the citation to

9 the Uniform Commercial Code (U.C.C.) as requiring lenders to acquire in due course and
10 allegations Wells Fargo did not acquire the note in due course. Among other things, Plaintiff
11 alleges the bank must act in due course and record assignments, etc. The Amended Complaint
12
alleges that a sale cannot be held without properly recording assignment of notes, etc.
13
But this claim does not argue the bank had to produce the note at or prior to sale.
14
Various cases do hold that a trustee in Arizona need not show the note to carry out a trustee's
15
16 sale, as this is not judicial action. But the allegations can be read to assert the bank had to
17 have a perfected legal interest (see Rodney v. Arizona Bank, 836 P.2d 434, 172 Ariz. 221
18 (Ariz. App. Div. 2 1992)) and properly recorded assignments to be able to exercise the right to
19
sell under the deed of trust. Thus, despite the U.C.C. citation, this claim – when construed
20
liberally – is a valid argument for compliance with proper recording and establishment of a
21
property interest or assignment for purposes of acting on a sale under Arizona law. Under
22
23 such circumstances, the fact that a trustee may not have to present the note prior to a sale does
24 not preclude filing a legal action to establish that the bank did not have a valid perfected
25 interest by virtue of improper assignments or documents not properly recorded.
26 Significantly, trustee sales provide a truncated version of due process; this contractual
27
right to sell is regulated by Arizona law. If there is a lawsuit after the fact attacking the
28
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1 underlying truth of whether a bank had power to act in the first instance, such a lawsuit should
2 be permitted in order to establish that the defendant did not sell under the due course of
3 applicable legal requirements This would constitute a state law tortious violation of the
4
standard of care reasonably expected in the handling of Plaintiff's loan obligation.
5
E. COUNT FOUR – INACCUATE ACCOUNTING AND BILLING
6
This claim constitutes a tortious breach of accounting duties under state law. Although
7
8 an “accounting” may also be classified as a remedy, insofar as Wells Fargo's separate
9 servicing entity accepted and serviced the loan, its role was to act as escrow for distribution of
10 the funds to the creditor (Wells Fargo or otherwise). An escrow requires proper handling and
11
billing of accounts. Although Arizona escrow laws would not directly regulate the bank, a
12
violation of such standards would sound in tort. A.R.S. § 6-811 exempts Defendant or its
13
servicer from state-operated regulation under the Arizona requirements for escrow, but this
14
15 does not preclude state regulations from establishing a tort standard of conduct even where
16 regulations do not specifically provide such, as the Arizona Supreme Court has explained
17 elsewhere. Lombardu v. Albu, 199 Ariz. 97, 14 P.2d 288, 291-292 (2000) (Ariz. real estate
18 regulations established standard of care under tort law even if they did not specifically state).
19
F. COUNT FIVE- CONSTRUCTIVE FRAUD: GROSSLY INADEQUATE PRICE
20
Plaintiff alleges Wells Fargo and its agent the trustee breached a fiduciary duty and
21
sacrificed her property with the low sale price of $126,000.00 in contrast with the fair market
22
23 value of $190,000.00. Plaintiff further alleges a conflict of interest, noting that when an actual
24 conflict arises between the roles of attorney for the beneficiary and trustee, the attorney should
25 withdraw from one position to prevent a breach of fiduciary duty. (Doc. 38 at 8.) Wells Fargo
26 claims that (1) a fiduciary relationship does not exist between lender and borrower, thus
27
defeating any claim of constructive fraud; and (2) the price was not grossly inadequate.
28
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1 Under Arizona law, where a price is grossly inadequate so as to constitute proof of

2 fraud, a sale may be set aside. First American Title Insurance Co. v. Action Acquisitions,
3 LLC, 216 Ariz. 537, 169 P. 3d 127 (App. 2007), citing Homecraft v. Fimbres, 119 Ariz. 299,
4
302, 580 P.2d 760, 763 (App. 1978); In re Krohn, 203 Ariz. 205, 214, 52 P.3d 774 (2002)
5
(rule applies to trustee sales; 20 percent less than market value after adjustment for
6
7 encumbrances may be grossly inadequate). Plaintiff's allegation of her home's market value is
8 relevant and competent here. Acheson v. Shafter, 107 Ariz. 576, 578, 490 P.2d 832 (1971).
9 To the extent Wells Fargo directed the sale via trustee Michael Bosco, substituted in as
10 trustee by Mark Bosco – purportedly acting on behalf of limited power of attorney for Wells
11
Fargo, N.A. – the trustee had an equitable duty and/or a limited fiduciary duty of fairness to
12
Plaintiff and to sell the property at maximum value. E.g., Blodgett v. Marsh, 590 P.2d 298,
13
302 (Utah 1978) (citing cases from multiple jurisdictions). Plaintiff contends the homeowner
14
15 is also owed a limited fiduciary duty arising from the statutes regulating sales and requiring
16 the trustee to provide post-sale equity to the homeowner. It is horn-book law that a trustee
17 must endeavor to get the best possible price for the property. Bowen v. Watz, 5 Ariz. App.
18 519, 522, 428 P.2d 694 (1967) (citing Restatement of Trusts (2nd) § 190, comment i: “And a
19
trustee, if it is necessary to sell trust property, must endeavor to get the best possible price for
20
it.”).
21
Plaintiff also alleges an actual conflict in relation to Wells Fargo's agents and trustee.
22
23 Significantly, the recorded documents show Wells Fargo N.A. allegedly directed (via an
24 unrecorded power of attorney) that Mark Bosco – who works alongside his father Michael
25 Bosco in the law firm Tiffany & Bosco where both are principals5 – be substituted as trustee
26 for Wells Fargo. (Exhibit G.) The substitution filed on behalf of Wells Fargo lacks any
27 5
This public information, published by Attorney at Law magazine (Ex. F at 11), and by the law
28 firm at www.tblaw.com/news-and-events/latest/view/attorney-at-law is not subject to dispute.
13
 Case 4:10-cv-00208-FRZ Document 45 Filed 05/26/11 Page 14 of 18

1 disclosure that both men work together as principals in the same firm; the firm's address is
2 used but without mentioning that the address is Tiffany & Bosco law firm. Next, the notice of
3 assignment by M.E.R.S assigning beneficial interest to Wells Fargo just prior to Wells Fargo
4
issuing a Notice of Trustee sale, was signed by an employee of the Bosco's law firm, Jennifer
5
Hamlin. Hamlin works at and serves as notary public at the firm. She allegedly authorized the
6
7 assignment on 12//28/08, as a purported “Assistant Secretary” for M.E.R.S.. (Exh. H.) The
6
8 apparent conflicting dual roles and agency relationships were concealed or not disclosed.
9 Under these circumstances, there are sufficient allegations and public documents to
10 support enough of an appearance of conflict involving the trustee and recorded documents
11
leading to the sale that support the allegations of constructive fraud and a conflict of interest.
12
G. COUNT SIX – FAILURE TO FOLLOW NOTICE REQUIREMENTS
13
Plaintiff alleges Defendant agreed to stop pending foreclosure proceedings upon
14
15 receipt of payments, and after reaching such agreement, that no notice was sent 20 days before
16 the sale or recorded 14 days before the sale. Under the circumstances, which are taken as true,
17 Plaintiff alleges she was deprived of her property in violation of procedural due process under
18 the Constitution, citing Sniadich v. Family Finance Corporation, 395 U.S. 337, 339-342
19
(1969) (summary garnishment procedure without any pre-seizure hearing unconstitutional).
20
Defendant merely cites the Arizona trustee sale statutes and notes that the notice of
21
trustee sale was recorded December 26, 2008, and provided to Plaintiff, claiming this fulfills
22
23 the bank's obligation since the statutes does not require additional recorded notice. Defendant
24 does not address the factual and legal allegations or in context. When a bank withdraws
25 and/or post-pones a sale per agreement in direct dealings with a homeowner and induces
26 6Publicly available information about Jennifer Hamlin being a Tiffany & Bosco employee is
on the law firm's website and elsewhere in public documents ( Exh. I), and her status as a
27 notary is in recorded public documents where she notarized documents for Michael and Mark
28 Bosco in Arizona counties in other Wells Fargo-related filings. (See examples in Exh. J. )
14
 Case 4:10-cv-00208-FRZ Document 45 Filed 05/26/11 Page 15 of 18

1 reliance that no sale will occur, the prior statutory compliance does not immunize Defendant
2 from liability for subsequent conduct. Both principles of equity and the Constitution – if they
3 are to mean anything – require subsequent notice under such facts. If the truncated due
4
process provided by Arizona statutes which permit private trustees sales can be violated this
5
way, the process used here violates Plaintiff's fundamental due process constitutional rights.
6
7 F. COUNT SEVEN: PRODUCE THE ORIGINAL NOTE

8 Though similar to Count Three, Plaintiff argues there is no evidence she was obligated

9 under the note to Wells Fargo N.A., implicitly arguing her rights were tortiously violated
10 absent such obligation. Defendant correctly notes Arizona does not require presenting the
11 note prior to a private trustee sale. But the pro se allegations, construed liberally, are distilled
12
to the allegation Wells Fargo cannot prove the bank “owns the loan” and possessed “the legal
13
right to try to collect” and foreclose. If so, Wells Fargo lacked standing and violated the
14
terms, or did not have an interest. Plaintiff later cites the U.C.C. and F.D.C.P.A. for similar
15
16 grounds. Plaintiff is not barred from establishing by litigation afterward that Defendant did
17 not own the note and had no legal power to act. The facts are in Defendant's control. Plaintiff
18 is entitled to obtain the assigned note. See In re Andrew Bailey, Case No. 09-bk-6979-RTBP,
19
Adv. No. 09-ap-01728-SSC (AZ Bankr. Ct., 5/3/11) (dismissal w/o prejudice; bank ordered to
20
produce assigned note for similar reasons). (Exh.K, unpublished bankruptcy court decision.)
21
G. COUNT EIGHT: MERS
22
Plaintiff alleges M.E.R.S. lacked standing as nominee or beneficiary pursuant to the
23
24 principles in an Arkansas supreme court case (M.E.R.S. v. Southwest Homes of Arkansas, 301
25 S.W.3d 1 (2009)) and a Kansas case, which has been succeeded by the Kansas Supreme Court
26 in Landmark v. Kessler, 216 P. 3d 158 (2009), and two bankruptcy court decisions. Plaintiff
27 factually alleges the sale was performed after assignment by M.E.R.S. on December 24, 2006
28
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 Case 4:10-cv-00208-FRZ Document 45 Filed 05/26/11 Page 16 of 18

1 (recorded on December 26). Despite Defendant's citation to apparently adverse Arizona

2 district court cases, Plaintiff maintains that the correct rule is that which has been adopted by
3 the highest state courts in Arkansas and Kansas. In addition, the allegations regarding conflict
4
in Count Five apply to discussion of M.E.R.S. role in the transactions and sale, given that it
5
was actually an employee of both the trustee and the purported attorney in fact for Wells Fargo
6
7 who authorized the assignment of interest. (See above discussion in Count Five above.)
8 Plaintiff separately alleges that Wells Fargo fraudulently collected loan payments

9 without owning a beneficial interest in the loan before assignment. Wells Fargo N.A. did seek
10 payment from Plaintiff prior to the assignment on December 24, 201, as evidenced by the
11
Defendant's correspondence dated December 4, 2008. (Exhibit A.) Ultimately, the facts and
12
allegations at this point should be deemed sufficient to defeat the motion, subject to discovery.
13
H. COUNT NINE – LOAN MODIFICATION (FRAUD)
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Plaintiff alleges there was loan modification fraud in that Defendant's employees
15
16 deceived her into believing that a loan modification was started and that she made payments as
17 requested, and that she would be eligible if she sent in financial information. According to
18 Plaintiff, she sent in the requested documentation three (3) separate times, and while waiting
19
for an answer, Defendant foreclosed by selling the property. After the sale, as evidence that
20
Defendant itself acted in a manner consistent with these allegations, Defendant asked for more
21
documents on July 28, 2009, which was sent and received by Defendant on July 29, 2009.
22
Contrary to the liberty taken by Defendant in only casting this as an invalid oral
23
24 contract claim, Plaintiff's facts first allege trickery (fraud) and/or negligent misrepresentation
25 in relation to the promised modification and foreclosure delay. The allegations in Count One
26 are relevant and should be considered and incorporated in relation to this claim, as the Counts
27
do relate and overlap. Insofar as this Claim also alleges a breach of the parties agreement for a
28
16
 Case 4:10-cv-00208-FRZ Document 45 Filed 05/26/11 Page 17 of 18

1 loan modification, or for such consideration, while delaying foreclosure, there is ample proof
2 of writings by virtue of the letters and payments, etc. Defendant's argument must be rejected.
3 I. COUNTS TEN THROUGH FIFTEEN AND COUNT SEVENTEEN
4
After consulting with counsel, Plaintiff abandons Counts Eleven through Fifteen, and
5
Seventeen. However, Count Eleven alleges Plaintiff's reliance and damage from Defendant's
6
7 misconduct, so those allegations should be read in conjunction with the other related Counts.
8 In Count 10, Defendant violated HAMP federal policies by foreclosing while

9 considering modification. See guidelines at ww.hmpadmin.com/portal/programs/guidance.jsp

10 If the Court dismisses Count 10, Plaintiff specifically asks for dismissal without prejudice.
11
J. COUNT SIXTEEN: SECURITIZATION FRAUD
12
Count Sixteen is not based on the same allegations in Count Three. Read liberally,
13
Count Sixteen alleges that the mortgage and securitization process at issue here, whereby
14
notes and deeds were split, bundled, collateralized and pooled (for investment on Wall-street
15
16 and tracked and handled via M.E.R.S.), resulted in fraud resulting from action taken where the
17 Defendant did not have an enforceable right to act, given the method and absence of recorded
18 proof of assignments of the note. Ultimately, the business scheme utilized here deceptively
19
deprived Plaintiff from being able to ascertain who owns the note sold to her, and the process
20
was not disclosed, as can be seen from the trust documents in Defendant's Exhibit 2.
21
III. CONCLUSION
22
For the foregoing reasons, this Court should deny Plaintiff's Motion to Dismiss, and
23
24 provide any additional relief or request that is otherwise specifically requested above.
25 DATED this 26th day of May, 2011. VINCE RABAGO LAW OFFICE
26 BY: /s/ Vince Rabago
27 VINCE RABAGO, ESQ.
Attorney for Plaintiff
28
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 Case 4:10-cv-00208-FRZ Document 45 Filed 05/26/11 Page 18 of 18

1 CERTIFICATE OF SERVICE

2 I hereby certify that on May 26th, 2011, I electronically transmitted the foregoing
3 document to the Clerk's office using the ECF system for transmittal and filing of Notice of
4
Electronic Filing to the following ECF registrants:
5
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7 Gregory Marshall, Esq.
Melissa Marcus, Esq.
8 Snell and Wilmer
ONE ARIZONA CENTER
9 400 E. Van Buren
Phoenix . AZ 85004-2202
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11 Attorneys for Wells Fargo Bank N.A.
12
Henry Timmerman
13 The Cavannagh Law Firm PA
1850 Central Avenue Ste. 2400
14 Phoenix, AZ 85004
15 Attorney for Robins Nest Properties, LLC
16
/s/ Vince Rabago
17 Vince Rabago
Attorney for Plaintiff
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