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A CASE IN REVIEW (1)

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

No. 09-17364    D.C. No. 2:09-cv-00517-JAT

OLGA CERVANTES, an unmarried
woman; CARLOS ALMENDAREZ, a
married man; ARTURO MAXIMO, a
married man, individually and on
behalf of a class of similarly
situated individuals,
Plaintiffs-Appellants,
v.

OPINION
COUNTRYWIDE HOME LOANS, INC., a
New York corporation; MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS,
INC., a subsidiary of MERSCORP,
INC., a Delaware corporation; ý MERSCORP, INC.; FEDERAL HOME
LOAN MORTGAGE CORPORATION, a
foreign corporation, AKA Freddie
Mac; FEDERAL NATIONAL
MORTGAGE ASSOCIATION, a foreign
corporation; GMAC MORTGAGE,
LLC, a Delaware corporation;
NATIONAL CITY MORTGAGE, a
foreign company and a division of
National City Bank, a foreign
company; J.P. MORGAN CHASE
BANK, N.A., a New York
corporation; CITIMORTGAGE, INC., a
New York corporation;

HSBC MORTGAGE CORPORATION,
U.S.A., a Delaware corporation;
AIG UNITED GUARANTY
CORPORATION, a foreign
corporation; WELLS FARGO BANK,
N.A., a California corporation,
DBA Wells Fargo Home Equity;
BANK OF AMERICA, N.A., a foreign
corporation; GE MONEY BANK, a
foreign company; PNC FINANCIAL
SERVICES GROUP, INC., a
Pennsylvania corporation; No. 09-17364
NATIONAL CITY CORPORATION, a D.C. No. subsidiary of PNC Financial  Services Group; N 2:09-cv-00517-JAT ATIONAL CITY
BANK, a subsidiary of National OPINION
City Corporation; MERRILL LYNCH
& COMPANY, INC., a subsidiary of
Bank of America Corporation;
FIRST FRANKLIN FINANCIAL
CORPORATION, a subsidiary of
Merrill Lynch & Company, Inc.;
LASALLE BANK, N.A., a subsidiary
of Bank of America; TIFFANY &
BOSCO P.A., an Arizona
professional association,
Defendants-Appellees.

Appeal from the United States District Court
for the District of Arizona
James A. Teilborg, District Judge, Presiding
Argued and Submitted
February 16, 2011—San Francisco, California
Filed September 7, 2011

Before: Richard C. Tallman, Johnnie B. Rawlinson,* and
Consuelo M. Callahan, Circuit Judges.
Opinion by Judge Callahan

*Due to the death of the Honorable David R. Thompson, the Honorable
Johnnie B. Rawlinson, United States Circuit Judge for the Ninth Circuit,
has been drawn to replace him on this panel. Judge Rawlinson has read
the briefs, reviewed the record, and listened to the audio recording of oral
argument held on February 16, 2011.

COUNSEL
William A. Nebeker and Valerie R. Edwards, Koeller
Nebeker Carlson & Haluck, LLP, Phoenix, Arizona, and Robert
Hager and Treva Hearne, Hager & Hearne, Reno, Nevada,
for the appellants.
Timothy J. Thomason, Mariscal Weeks McIntyre & Friedlander,
P.A., Phoenix, Arizona, Thomas M. Hefferon, Goodwin
Procter, LLP, Washington, DC, Howard N. Cayne,
Arnold & Porter, LLP, Washington, DC, Stephen E. Hart,
Federal Housing Finance Agency, Washington, DC, Mark S.
Landman, Landman Corsini Ballaine & Ford P.C., New York,
New York, and Robert M. Brochin, Morgan, Lewis & Bockius,
LLP, Miami, Florida, for the appellees.

OPINION

CALLAHAN, Circuit Judge:
This is a putative class action challenging origination and
foreclosure procedures for home loans maintained within the
Mortgage Electronic Registration System (MERS). The plaintiffs
appeal from the dismissal of their First Amended Complaint
for failure to state a claim. In their complaint, the
plaintiffs allege conspiracies by their lenders and others to use
MERS to commit fraud. They also allege that their lenders
violated the Truth in Lending Act (TILA), 15 U.S.C. § 1601
et seq., and the Arizona Consumer Fraud Act, Ariz. Rev. Stat.
§ 44-1522, and committed the tort of intentional infliction of
emotional distress by targeting the plaintiffs for loans they
could not repay. The plaintiffs were denied leave to file their
proposed Second Amended Complaint, and to add a new
claim for wrongful foreclosure based upon the operation of
the MERS system.

On appeal, the plaintiffs stand by the sufficiency of some
of their claims, but primarily contend that they could cure any
pleading deficiencies with a newly amended complaint, which
would include a claim for wrongful foreclosure. We are
unpersuaded that the plaintiffs’ allegations are sufficient to
support their claims. Although the plaintiffs allege that
aspects of the MERS system are fraudulent, they cannot
establish that they were misinformed about the MERS system,
relied on any misinformation in entering into their home
loans, or were injured as a result of the misinformation. If
anything, the allegations suggest that the plaintiffs were
informed of the exact aspects of the MERS system that they
now complain about when they agreed to enter into their
home loans. Further, although the plaintiffs contend that they
can state a claim for wrongful foreclosure, Arizona state law
does not currently recognize this cause of action, and their
claim is, in any case, without a basis. The plaintiffs’ claim
depends upon the conclusion that any home loan within the MERS system is unenforceable through a foreclosure sale, but
that conclusion is unsupported by the facts and law on which
they rely. Because the plaintiffs fail to establish a plausible
basis for relief on these and their other claims raised on
appeal, we affirm the district court’s dismissal of the complaint
without leave to amend.

     I.
The focus of this lawsuit—and many others around the
country—is the MERS system.

1. How MERS works
MERS is a private electronic database, operated by MERSCORP,
Inc., that tracks the transfer of the “beneficial interest”
in home loans, as well as any changes in loan servicers. After
a borrower takes out a home loan, the original lender may sell
all or a portion of its beneficial interest in the loan and change
loan servicers. The owner of the beneficial interest is entitled
to repayment of the loan. For simplicity, we will refer to the
owner of the beneficial interest as the “lender.” The servicer
of the loan collects payments from the borrower, sends payments
to the lender, and handles administrative aspects of the
loan. Many of the companies that participate in the mortgage
industry—by originating loans, buying or investing in the
beneficial interest in loans, or servicing loans—are members
of MERS and pay a fee to use the tracking system. See Jackson
v. Mortg. Elec. Registration Sys., Inc., 770 N.W.2d 487,
490 (Minn. 2009).

When a borrower takes out a home loan, the borrower executes
two documents in favor of the lender: (1) a promissory
note to repay the loan, and (2) a deed of trust, or mortgage,
that transfers legal title in the property as collateral to secure
the loan in the event of default. State laws require the lender
to record the deed in the county in which the property is located. Any subsequent sale or assignment of the deed must
be recorded in the county records, as well.

This recording process became cumbersome to the mortgage
industry, particularly as the trading of loans increased.
See Robert E. Dordan, Mortgage Electronic Registration Systems
(MERS), Its Recent Legal Battles, and the Chance for a
Peaceful Existence, 12 Loy. J. Pub. Int. L. 177, 178 (2010).
It has become common for original lenders to bundle the beneficial
interest in individual loans and sell them to investors
as mortgage-backed securities, which may themselves be
traded. See id. at 180; Jackson, 770 N.W.2d at 490. MERS
was designed to avoid the need to record multiple transfers of
the deed by serving as the nominal record holder of the deed
on behalf of the original lender and any subsequent lender.
Jackson, 770 N.W.2d at 490.

At the origination of the loan, MERS is designated in the
deed of trust as a nominee for the lender and the lender’s
“successors and assigns,” and as the deed’s “beneficiary”
which holds legal title to the security interest conveyed. If the
lender sells or assigns the beneficial interest in the loan to
another MERS member, the change is recorded only in the
MERS database, not in county records, because MERS continues
to hold the deed on the new lender’s behalf. If the beneficial
interest in the loan is sold to a non-MERS member, the
transfer of the deed from MERS to the new lender is recorded
in county records and the loan is no longer tracked in the
MERS system.
In the event of a default on the loan, the lender may initiate
foreclosure in its own name, or may appoint a trustee to initiate
foreclosure on the lender’s behalf. However, to have the
legal power to foreclose, the trustee must have authority to act
as the holder, or agent of the holder, of both the deed and the
note together. See Landmark Nat’l Bank v. Kesler, 216 P.3d
158, 167 (Kan. 2009). The deed and note must be held
together because the holder of the note is only entitled to repayment, and does not have the right under the deed to use
the property as a means of satisfying repayment. Id. Conversely,
the holder of the deed alone does not have a right to
repayment and, thus, does not have an interest in foreclosing
on the property to satisfy repayment. Id. One of the main
premises of the plaintiffs’ lawsuit here is that the MERS system
impermissibly “splits” the note and deed by facilitating
the transfer of the beneficial interest in the loan among lenders
while maintaining MERS as the nominal holder of the
deed.
The plaintiffs’ lawsuit is also premised on the fact that
MERS does not have a financial interest in the loans, which,
according to the plaintiffs, renders MERS’s status as a beneficiary
a sham. MERS is not involved in originating the loan,
does not have any right to payments on the loan, and does not
service the loan. MERS relies on its members to have someone
on their own staff become a MERS officer with the
authority to sign documents on behalf of MERS. See Dordan,
12 Loy. J. Pub. Int. L. at 182; Jackson, 770 N.W.2d at 491.
As a result, most of the actions taken in MERS’s own name
are carried out by staff at the companies that sell and buy the
beneficial interest in the loans. Id.

2. The named plaintiffs
The three named plaintiffs in this case, Olga Cervantes,
Carlos Almendarez, and Arturo Maximo, obtained home
loans or refinanced existing loans in 2006. All three signed
promissory notes with their lenders—Cervantes with Countrywide
Home Loans, and Almendarez and Maximo with First
Franklin. Each executed a deed of trust in favor of his or her
lender, naming MERS as the “beneficiary” and as the “nominee”
for the lender and lender’s “successors and assigns.”
All three plaintiffs are Hispanic, and Almendarez and Maximo
do not speak or read English. Almendarez and Maximo
negotiated the mortgage loans with their lenders in Spanish, but were provided with, and signed, copies of their loan documents
written in English.
The plaintiffs subsequently defaulted on their loans. Following
Cervantes’s default, trustee Recontrust Company initiated
non-judicial foreclosure proceedings by recording a
notice of a trustee’s sale in the county records. The parties
have not addressed the status of the noticed sale. Following
defaults by Almendarez and Maximo, their lender, First
Franklin, appointed LaSalle Bank as its trustee to initiate nonjudicial
foreclosure proceedings. MERS recorded documents
with the county assigning its beneficial interest in the deeds
of trust to La Salle Bank. Later, Michael Bosco of Tiffany &
Bosco was substituted in as First Franklin’s trustee. Michael
Bosco sold Almendarez’s house at public auction in February
2009. The sale of Maximo’s property was cancelled in April
2009.

3. Procedural history
Cervantes filed suit in March 2009. Almendarez and Maximo
joined the lawsuit, and the plaintiffs filed their First
Amended Complaint a few days later. The First Amended
Complaint names several defendants, including the plaintiffs’
lenders, the trustees for the lenders, MERS, and MERS members
who are named only as co-conspirators based on their
role in using the MERS system. The defendants filed several
motions to dismiss, prompting the plaintiffs to file a motion
for leave to amend, along with a proposed Second Amended
Complaint. The district court held a hearing on the various
motions, at which the plaintiffs orally proposed to amend their
complaint with a wrongful foreclosure claim. The district
court granted the motions to dismiss the First Amended Complaint,
and denied the motion for leave to amend on the
ground that amendment would be futile. The plaintiffs appeal.

    II.
We have jurisdiction under 28 U.S.C. § 1291. We review
de novo the district court’s dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6).
Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097,
1102 (9th Cir. 2008). “To survive a motion to dismiss, a complaint
must contain sufficient factual matter, accepted as true,
to state a claim to relief that is plausible on its face.” Ashcroft
v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (internal quotation
marks omitted). Dismissal is proper when the complaint does
not make out a cognizable legal theory or does not allege sufficient
facts to support a cognizable legal theory. Mendiondo,
521 F.3d at 1104. A complaint that alleges only “labels and
conclusions” or a “formulaic recitation of the elements of the
cause of action” will not survive dismissal. Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007).

The district court’s denial of leave to amend the complaint
is reviewed for an abuse of discretion. Gompper v. VISX, Inc.,
298 F.3d 893, 898 (9th Cir. 2002). Although leave to amend
should be given freely, a district court may dismiss without
leave where a plaintiff ’s proposed amendments would fail to
cure the pleading deficiencies and amendment would be
futile. See Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection
Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990) (per curiam).1

1The plaintiffs have requested that we take judicial notice of orders of
the United States District Court for the District of Arizona dismissing
complaints without prejudice in pending multidistrict litigation concerning
MERS. The plaintiffs imply that it was inconsistent for the same district
court to deny leave to amend here. We deny the requests because the
orders are not relevant.

                               III.
The plaintiffs challenge the dismissal of their complaint
without leave to amend but, on appeal, only address the district
court’s: (1) dismissal of their claim for conspiracy to
commit fraud through the MERS system; (2) failure to
address their oral request for leave to add a wrongful foreclosure
claim; (3) dismissal of trustee Tiffany & Bosco from the suit; (4) denial of leave to amend their pleadings regarding equitable tolling of their TILA and Arizona Consumer Fraud Act claims; and (5) dismissal of their claim for intentional infliction of emotional distress. We address these claims in
turn, and do not consider the dismissed claims that are not
raised on appeal. Entm’t Research Group v. Genesis Creative
Group, 122 F.3d 1211, 1217 (9th Cir. 1997) (“We will not
consider any claims that were not actually argued in [appellant’s]
opening brief.”).

1. Conspiracy to commit fraud through the MERS
system
On appeal, the plaintiffs contend that they sufficiently
alleged a conspiracy among MERS members to commit fraud.
In count seven of the First Amended Complaint, they allege
that MERS members conspired to commit fraud by using
MERS as a sham beneficiary, promoting and facilitating predatory
lending practices through the use of MERS, and making
it impossible for borrowers or regulators to track the changes
in lenders.

[1] Under Arizona law, a claim of civil conspiracy must be
based on an underlying tort, such as fraud in this instance.
Baker ex rel. Hall Brake Supply, Inc. v. Stewart Title & Trust
of Phoenix, Inc., 5 P.3d 249, 256 (Ariz. Ct. App. 2000). To
show fraud, a plaintiff must identify “(1) a representation; (2)
its falsity; (3) its materiality; (4) the speaker’s knowledge of
its falsity or ignorance of its truth; (5) the speaker’s intent that
it be acted upon by the recipient in the manner reasonably
contemplated; (6) the hearer’s ignorance of its falsity; (7) the
hearer’s reliance on its truth; (8) the right to rely on it; [and]
(9) his consequent and proximate injury.” Echols v. Beauty
Built Homes, Inc., 647 P.2d 629, 631 (Ariz. 1982).

[2] The plaintiffs’ allegations fail to address several of
these necessary elements for a fraud claim. The plaintiffs have
not identified any representations made to them about the MERS system and its role in their home loans that were false
and material. None of their allegations indicate that the plaintiffs
were misinformed about MERS’s role as a beneficiary,
or the possibility that their loans would be resold and tracked
through the MERS system. Similarly, the plaintiffs have not
alleged that they relied on any misrepresentations about
MERS in deciding to enter into their home loans, or that they
would not have entered into the loans if they had more information
about how MERS worked. Finally, the plaintiffs have
failed to show that the designation of MERS as a beneficiary
caused them any injury by, for example, affecting the terms
of their loans, their ability to repay the loans, or their obligations
as borrowers. Although the plaintiffs allege that they
were “deprived of the right to attempt to modify their toxic
loans, as the true identity of the actual beneficial owner was
intentionally hidden” from them, they do not support this bare
assertion with any explanation as to how the operation of the
MERS system actually stymied their efforts to identify and
contact the relevant party to modify their loans. Thus, the
plaintiffs fail to state a claim for conspiracy to commit fraud
through the MERS system, and dismissal of the claim was
proper.

[3] While the plaintiffs’ allegations alone fail to raise a
plausible fraud claim, we also note that their claim is undercut
by the terms in Cervantes’s standard deed of trust, which
describe MERS’s role in the home loan.2 For example, the
plaintiffs allege they were defrauded because MERS is a
“sham” beneficiary without a financial interest in the loan, yet
the disclosures in the deed indicate that MERS is acting
“solely as a nominee for Lender and Lender’s successors and
assigns” and holds “only legal title to the interest granted by Borrower in this Security Instrument.” Further, while the
plaintiffs indicate that MERS was used to hide who owned the
loan, the deed states that the loan or a partial interest in it “can
be sold one or more times without prior notice to Borrower,”
but that “[i]f there is a change in Loan Servicer, Borrower will
be given written notice of the change” as required by consumer
protection laws. Finally, the deed indicates that MERS
has “the right to foreclose and sell the property.” By signing
the deeds of trust, the plaintiffs agreed to the terms and were
on notice of the contents. See Kenly v. Miracle Props., 412 F.
Supp. 1072, 1075 (D. Ariz. 1976) (explaining that a deed of
trust is “an essentially private contractual arrangement”). In
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.

2Cervantes’s deed of trust, attached to MERSCORP’s reply in support
of its motion to dismiss, may be considered at the pleadings stage because the complaint references and relies on the deed, and its authenticity is unquestioned. See Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007) (per curiam).

[4] Moreover, amendment would be futile. In their proposed
Second Amended Complaint, the plaintiffs seek to add
further detail concerning how MERS works in general and
how it has facilitated the trade in mortgage-backed securities.
But none of the new allegations cure the First Amended Complaint’s
deficiencies: the plaintiffs have not shown that they
received material misrepresentations about MERS that they
detrimentally relied upon. Accordingly, we affirm the district
court’s dismissal, without leave to amend, of the claim for
conspiracy to commit fraud through the MERS system.

2. Wrongful foreclosure
The plaintiffs contend that the district court abused its discretion
by dismissing their complaint without leave to add a
wrongful foreclosure claim. The only mention of a wrongful
foreclosure claim was during the hearing on the plaintiffs’
motion for leave to amend and the defendants’ motions to dismiss.
Although the plaintiffs expressed their intention to add
a wrongful foreclosure claim, they failed to include it in their
proposed Second Amended Complaint. Moreover, during the
hearing, the plaintiffs stated only a general theory of the claim: they posited that any foreclosure on a home loan tracked in the MERS system is “wrongful” because MERS is not a true beneficiary. As the plaintiffs describe it on appeal, their claim is that “the MERS system was used to facilitate wrongful foreclosure based on the naming of MERS as the
beneficiary on the deed of trust, which results in the note and
deed of trust being split and unenforceable.”

[5] The plaintiffs’ oral request to add a wrongful foreclosure
claim was procedurally improper and substantively
unsupported. The district court’s local rules require the plaintiffs
to submit a copy of the proposed amended pleadings
along with a motion for leave to amend. See D. Ariz. Civ. L.
R. 15.1. The plaintiffs failed to do so. Further, they failed to
provide the district court with an explanation of the legal and
factual grounds for adding the claim. It is particularly notable
here that Arizona state courts have not yet recognized a
wrongful foreclosure cause of action. Although a federal court
exercising diversity jurisdiction is “at liberty to predict the
future course of [a state’s] law,” plaintiffs choosing “the federal
forum . . . [are] not entitled to trailblazing initiatives
under [state law].” Ed Peters Jewelry Co. v. C & J Jewelry
Co., Inc., 124 F.3d 252, 262- 63 (1st Cir. 1997) (affirming
dismissal of a wrongful foreclosure claim when no such
action existed under state law). Under the circumstances, we
conclude that it was not an abuse of discretion for the district
court to deny leave to amend without addressing the plaintiffs’
proposed claim for wrongful foreclosure. See Gardner
v. Martino (In re Gardner), 563 F.3d 981, 991 (9th Cir. 2009)
(concluding that the district court did not abuse its discretion
by denying leave to amend where the party seeking leave
failed to attach a proposed amended complaint in violation of
local rules and failed to articulate a factual and legal basis for
amendment).

[6] In any event, leave to amend would be futile because
the plaintiffs cannot state a plausible basis for relief. Looking
to states that have recognized substantive wrongful foreclosure claims, we note that such claims typically are available
after foreclosure and are premised on allegations that the borrower
was not in default, or on procedural issues that resulted
in damages to the borrower. See, e.g., Ed Peters Jewelry Co.,
124 F.3d at 263 n.8 (noting that the Massachusetts Supreme
Court recognized a claim for wrongful foreclosure where no
default had occurred in Mechanics Nat’l Bank of Worcester v.
Killeen, 384 N.E.2d 1231, 1236 (Mass. 1979)); Fields v. Millsap
& Singer, P.C., 295 S.W.3d 567, 571 (Mo. Ct. App.
2009) (stating that “a plaintiff seeking damages in a wrongful
foreclosure action must plead and prove that when the foreclosure
proceeding was begun, there was no default on its part
that would give rise to a right to foreclose” (internal alteration
and citation omitted)); Gregorakos v. Wells Fargo Nat’l
Ass’n, 647 S.E.2d 289, 292 (Ga. App. 2007) (“In Georgia, a
plaintiff asserting a claim of wrongful foreclosure must establish
a legal duty owed to it by the foreclosing party, a breach
of that duty, a causal connection between the breach of that
duty and the injury it sustained, and damages.” (internal quotation
marks and alteration omitted)); Collins v. Union Fed.
Sav. & Loan Ass’n, 662 P.2d 610, 623 (Nev. 1983) (“[T]he
material issue of fact in a wrongful foreclosure claim is
whether the trustor was in default when the power of sale was
exercised.”). Similarly, the case that the plaintiffs cite for the
availability of a wrongful foreclosure claim under Arizona
law, Herring v. Countrywide Home Loans, Inc., No. 06-2622,
2007 WL 2051394, at *6 (D. Ariz. July 13, 2007), recognized
such a claim where the borrower was not in default at the time
of foreclosure. The plaintiffs have not alleged that Cervantes’s
or Maximo’s homes were sold and, in any event, all are
in default and have not identified damages. Thus, under the
established theories of wrongful foreclosure, the plaintiffs
have failed to state a claim.

Instead, the plaintiffs advance a novel theory of wrongful
foreclosure. They contend that all transfers of the interests in
the home loans within the MERS system are invalid because
the designation of MERS as a beneficiary is a sham and the system splits the deed from the note, and, thus, no party is in
a position to foreclose.

[7] Even if we were to accept the plaintiffs’ premises that
MERS is a sham beneficiary and the note is split from the
deed, we would reject the plaintiffs’ conclusion that, as a necessary
consequence, no party has the power to foreclose. The
legality of MERS’s role as a beneficiary may be at issue
where MERS initiates foreclosure in its own name, or where
the plaintiffs allege a violation of state recording and foreclosure
statutes based on the designation. See, e.g., Mortgage
Elec. Registration Sys. v. Saunders, 2 A.3d 289, 294-97 (Me.
2010) (concluding that MERS cannot foreclose because it
does not have an independent interest in the loan because it
functions solely as a nominee); Landmark Nat’l Bank, 216
P.3d at 165-69 (same); Hooker v. Northwest Tr. Servs., No.
10-3111, 2011 WL 2119103, at *4 (D. Or. May 25, 2011)
(concluding that the defendants’ failure to register all assignments
of the deed of trust violated the Oregon recording laws
so as to prevent non-judicial foreclosure). But see Jackson,
770 N.W.2d at 501 (concluding that defendants’ failure to
register assignments of the beneficial interest in the mortgage
loan did not violate Minnesota recording laws so as to prevent
non-judicial foreclosure). This case does not present either of
these circumstances and, thus, we do not consider them.

[8] Here, MERS did not initiate foreclosure: the trustees
initiated foreclosure in the name of the lenders. Even if
MERS were a sham beneficiary, the lenders would still be
entitled to repayment of the loans and would be the proper
parties to initiate foreclosure after the plaintiffs defaulted on
their loans. The plaintiffs’ allegations do not call into question
whether the trustees were agents of the lenders. Rather, the
foreclosures against Almendarez and Maximo were initiated
by the trustee Tiffany & Bosco on behalf of First Franklin,
who is the original lender and holder of Almendarez’s and
Maximo’s promissory notes. Although it is unclear from the
pleadings who the current lender is on plaintiff Cervantes’s loan, the allegations do not raise any inference that the trustee
Recontrust Company lacks the authority to act on behalf of
the lender.

Further, the notes and deeds are not irreparably split: the
split only renders the mortgage unenforceable if MERS or the
trustee, as nominal holders of the deeds, are not agents of the
lenders. See Landmark Nat’l Bank, 216 P.3d at 167. Moreover,
the plaintiffs have not alleged violations of Arizona
recording and foreclosure statutes related to the purported
splitting of the notes and deeds.

[9] Accordingly, the plaintiffs have not raised a plausible
claim for wrongful foreclosure, and we conclude that dismissal
of the complaint without leave to add such a claim was
not an abuse of discretion.

3. Injunctive relief against Tiffany & Bosco
[10] The plaintiffs contend that the district court improperly
dismissed the trustee Tiffany & Bosco from this suit
under Arizona Revised Statute 33-807(E). Section 33-807(E)
provides that a “trustee is entitled to be immediately dismissed”
from any action other than one “pertaining to a
breach of the trustee’s obligations,” because the trustee is otherwise
bound by an order entered against a beneficiary for
actions that the trustee took on its behalf. The only breach that
the plaintiffs allege against Tiffany & Bosco is that it failed
to recognize that its appointment was invalid. According to
the plaintiffs, the appointment was invalid because MERS is
a sham beneficiary and lacks power to “appoint” a trustee.
However, a trustee such as Tiffany & Bosco has the “absolute
right” under Arizona law “to rely upon any written direction
or information furnished to him by the beneficiary.” Ariz.
Rev. Stat. § 33-820(A). Thus, Tiffany & Bosco did not have
an obligation to consider whether its presumptively legal
appointment as trustee, which was recorded in the county
records, was invalid based on the original designation of MERS as a beneficiary. Accordingly, Tiffany & Bosco was
properly dismissed.

4. Equitable Tolling and Estoppel
The plaintiffs contend that the district court failed to
address the equitable tolling of their claims under TILA and
the Arizona Consumer Fraud Act and, in any event, abused its
discretion by denying the plaintiffs leave to amend their allegations
in support of equitable tolling and estoppel. A district
court may dismiss a claim “[i]f the running of the statute is
apparent on the face of the complaint.” Jablon v. Dean Witter
& Co., 614 F.2d 677, 682 (9th Cir. 1980). However, a district
court may do so “only if the assertions of the complaint, read
with the required liberality, would not permit the plaintiff to
prove that the statute was tolled.” Id.

[11] The plaintiffs’ claims under TILA and the Arizona
Consumer Fraud Act are subject to one-year statutes of limitations.
15 U.S.C. § 1640(e); Ariz. Rev. Stat. § 12-541(5). Both
limitations periods began to run when the plaintiffs executed
their loan documents, because they could have discovered the
alleged disclosure violations and discrepancies at that time.
See 15 U.S.C. § 1640(e) (the one-year limitations period for
a TILA claim begins when the violation occurred); Alaface v.
Nat’l Inv. Co., 892 P.2d 1375, 1379 (Ariz. Ct. App. 1994) (a
cause of action for consumer fraud under Arizona law accrues
“ ‘when the defrauded party discovers or with reasonable diligence
could have discovered the fraud’ ”). The running of the
limitations periods on both claims is apparent on the face of
the complaint because the plaintiffs obtained their loans in
2006, but commenced their action in 2009.

[12] The plaintiffs have not demonstrated a basis for equitable
tolling of their claims. “We will apply equitable tolling
in situations where, despite all due diligence, the party invoking
equitable tolling is unable to obtain vital information bearing
on the existence of the claim.” Socop-Gonzalez v. I.N.S., 272 F.3d 1176, 1193 (9th Cir. 2001) (internal quotation marks
and alterations omitted). The plaintiffs suggest that their
TILA claim should have been tolled because Almendarez and
Maximo speak only Spanish, but received loan documents
written in English. However, the plaintiffs have not alleged
circumstances beyond their control that prevented them from
seeking a translation of the loan documents that they signed
and received. Thus, the plaintiffs have not stated a basis for
equitable tolling. See Hubbard v. Fidelity Fed. Bank, 91 F.3d
75, 79 (9th Cir. 1996) (per curiam) (declining to toll TILA’s
statute of limitations when “nothing prevented [the mortgagor]
from comparing the loan contract, [the lender’s] initial
disclosures, and TILA’s statutory and regulatory requirements”).

[13] In addition, the plaintiffs have not demonstrated a
basis for equitable estoppel. Equitable estoppel “halts the statute
of limitations when there is active conduct by a defendant,
above and beyond the wrongdoing upon which the plaintiff ’s
claim is filed, to prevent the plaintiff from suing in time.” See
Guerrero v. Gates, 442 F.3d 697, 706 (9th Cir. 2006) (internal
quotation marks omitted). The First Amended Complaint
alleges only that the defendants “fraudulently misrepresented
and concealed the true facts related to the items subject to disclosure.”
The plaintiffs, however, have failed to specify what
true facts are at issue, or to establish that the alleged misrepresentation
and concealment of facts is “above and beyond the
wrongdoing” that forms the basis for their TILA and Arizona
Consumer Fraud Act claims. Guerrero, 442 F.3d at 706.

[14] The district court therefore properly dismissed the
plaintiffs’ claims under both TILA and the Arizona Consumer
Fraud Act as barred by a one-year statute of limitations. The
plaintiffs did not add any new facts to the proposed Second
Amended Complaint, and do not suggest any on appeal, that
would support applying either equitable tolling or equitable
estoppel to their claims. Thus, the district court also did not
abuse its discretion by denying leave to amend.

5. Intentional Infliction of Emotional Distress
The plaintiffs contend that they sufficiently stated a claim
for intentional infliction of emotional distress. When ruling on
a motion to dismiss such a claim under Arizona law, a district
court may determine whether the alleged conduct rises to the
level of “extreme and outrageous.” See Cluff v. Farmers Ins.
Exch., 460 P.2d 666, 668 (Ariz. Ct. App. 1969), overruled on
other grounds by Godbehere v. Phoenix Newspapers, Inc.,
783 P.2d 781 (Ariz. 1989).

[15] Here, the plaintiffs fail to meet that threshold. They
allege that the lenders’ “actions in targeting Plaintiffs for a
loan, misrepresenting the terms and conditions of the loan,
negotiating the loan, and closing the loan” were “extreme and
outrageous because of the Plaintiffs’ vulnerability” and “because
the subject of the loan was each Plaintiff ’s primary residence.”
This conduct, though arguably offensive if true, is
not so outrageous as to go “beyond all possible bounds of
decency.” Lucchesi v. Frederic N. Stimmell, M.D., Ltd., 716
P.2d 1013, 1015 (Ariz. 1986) (en banc). The plaintiffs essentially
allege that the lenders offered them loans that the lenders
knew they could not repay; this is not inherently “extreme
and outrageous.” Moreover, the plaintiffs do not allege any
additional support for their claim in their proposed Second
Amended Complaint. Accordingly, the district court properly
dismissed, without leave to amend, the plaintiffs’ claim for
intentional infliction of emotional distress.

IV.
The district court properly dismissed the plaintiffs’ First
Amended Complaint without leave to amend. The plaintiffs’
claims that focus on the operation of the MERS system ultimately
fail because the plaintiffs have not shown that the
alleged illegalities associated with the MERS system injured
them or violated state law. As part of their fraud claim, the
plaintiffs have not shown that they detrimentally relied upon any misrepresentations about MERS’s role in their loans. Further,
even if we were to accept the plaintiffs’ contention that
MERS is a sham beneficiary and the note is split from the
deed in the MERS system, it does not follow that any attempt
to foreclose after the plaintiffs defaulted on their loans is necessarily
“wrongful.” The plaintiffs’ claims against their original
lenders fail because they have not stated a basis for
equitable tolling or estoppel of the statutes of limitations on
their TILA and Arizona Consumer Fraud Act claims, and
have not identified extreme and outrageous conduct in support
of their claim for intentional infliction of emotional distress.

Thus, we AFFIRM the decision of the district court.

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