Invalidly Substituted Arizona Trustee Does Not Have to Be Dismissed

According to Living Lies, this was a recent Arizona order.  The court denied a motion to dismiss the sale trustee (in AZ, a proper trustee should be dismissed or not sued, unless bad faith or a breach of the trust deed is alleged, but in many cases the status of the claimed trustee is in question), because the Plaintiffs pled a break in the chain of title, showing that the trustee was invalidly substituted by a non-beneficiary, or at least a non-proven beneficiary.  I’m trying to get my hands on the actual order, but here’s a quote from the order:

Defendant Quality Loan Service Corp. (“Quality”) has filed a Motion to Dismiss, or in the alternative, a Motion for Summary Judgment arguing that Counts 1-6 do not state a claim for relief against it, as trustee. In support, Defendant Quality has attached a recorded Substitution of Trustee. The Court is puzzled by this document because it is signed by an officer of Defendant Quality, as agent for One West Bank, FSB yet (1) there is no evidence of such an agency, (2) there is no evidence linking One West Bank, FSB to MILA, Inc., the entity from which Plaintiff obtained the original loan, and (3) the Plaintiff has alleged a break in the chain of title regarding the loan and Defendant Quality as Trustee, which the Court must accept as true. Thus, while A.R.S. §33-807(E) may operate to dismiss a trustee in certain instances, if one of the allegations of a complaint is that the entity purporting to act as trustee has not been legally appointed as trustee, this statute would not come into play. Taking the allegations of the Complaint as true, causes of actions have been alleged by Plaintiff against Defendant Quality in Count 2 (alleging that Defendant Quality was not appointed as trustee by an entity in the chain of title to the underlying note/deed of trust), Count 3 (alleging that the document appointing Defendant Quality as trustee is false or forged), and Count 5 (allege fraud in the appointment of Defendant Quality as trustee), and Count 6 (alleging statutory and contractual violations in Defendant Quality’s notice of the trustee sale). The Court finds that there are no allegations against Defendant Quality stated in Counts 1 or 4. Therefore,
IT IS ORDERED granting Defendant Quality Loan Service Corp.’s Motion to Dismiss as to Counts 1 and 4 only, with prejudice, and denying the Motion as to Counts 2, 3, 5, and 6


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