Cervantes v. Countrywide Home Loans, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

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.

COUNTRYWIDE HOME LOANS, INC., a

New York corporation; MORTGAGE

ELECTRONIC REGISTRATION SYSTEMS,

INC., a subsidiary of MERSCORP,

INC., a Delaware corporation;

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;



16977

16978 CERVANTES v. COUNTRYWIDE HOME LOANS

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

subsidiary of PNC Financial  D.C. No.

2:09-cv-00517-JAT

Services Group; NATIONAL 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

CERVANTES v. COUNTRYWIDE HOME LOANS 16979

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.

16982 CERVANTES v. COUNTRYWIDE HOME LOANS

COUNSEL

William A. Nebeker and Valerie R. Edwards, Koeller

Nebeker Carlson & Haluck, LLP, Phoenix, Arizona, and Rob-

ert Hager and Treva Hearne, Hager & Hearne, Reno, Nevada,

for the appellants.

Timothy J. Thomason, Mariscal Weeks McIntyre & Fried-

lander, P.A., Phoenix, Arizona, Thomas M. Hefferon, Good-

win 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 & Bock-

ius, LLP, Miami, Florida, for the appellees.

CERVANTES v. COUNTRYWIDE HOME LOANS 16983

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 plain-

tiffs appeal from the dismissal of their First Amended Com-

plaint 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

16984 CERVANTES v. COUNTRYWIDE HOME LOANS

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 com-

plaint 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 MERS-

CORP, 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 pay-

ments 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 Jack-

son v. Mortg. Elec. Registration Sys., Inc., 770 N.W.2d 487,

490 (Minn. 2009).

When a borrower takes out a home loan, the borrower exe-

cutes 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

CERVANTES v. COUNTRYWIDE HOME LOANS 16985

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 mort-

gage industry, particularly as the trading of loans increased.

See Robert E. Dordan, Mortgage Electronic Registration Sys-

tems (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 ben-

eficial 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 con-

tinues to hold the deed on the new lender’s behalf. If the ben-

eficial 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 initi-

ate 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

16986 CERVANTES v. COUNTRYWIDE HOME LOANS

repayment, and does not have the right under the deed to use

the property as a means of satisfying repayment. Id. Con-

versely, 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 sys-

tem impermissibly “splits” the note and deed by facilitating

the transfer of the beneficial interest in the loan among lend-

ers 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 benefi-

ciary 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 some-

one 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 Country-

wide 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 “nomi-

nee” for the lender and lender’s “successors and assigns.”

All three plaintiffs are Hispanic, and Almendarez and Max-

imo do not speak or read English. Almendarez and Maximo

negotiated the mortgage loans with their lenders in Spanish,

CERVANTES v. COUNTRYWIDE HOME LOANS 16987

but were provided with, and signed, copies of their loan docu-

ments written in English.

The plaintiffs subsequently defaulted on their loans. Fol-

lowing Cervantes’s default, trustee Recontrust Company initi-

ated 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 non-

judicial 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 Max-

imo 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 mem-

bers 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 Com-

plaint, 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

16988 CERVANTES v. COUNTRYWIDE HOME LOANS

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 com-

plaint 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 suf-

ficient 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

III.

The plaintiffs challenge the dismissal of their complaint

without leave to amend but, on appeal, only address the dis-

trict 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 foreclo-

sure claim; (3) dismissal of trustee Tiffany & Bosco from the

1

The 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.

CERVANTES v. COUNTRYWIDE HOME LOANS 16989

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 [appel-

lant’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 pred-

atory 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

16990 CERVANTES v. COUNTRYWIDE HOME LOANS

MERS system and its role in their home loans that were false

and material. None of their allegations indicate that the plain-

tiffs 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 infor-

mation 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 obliga-

tions 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

2

Cervantes’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).

CERVANTES v. COUNTRYWIDE HOME LOANS 16991

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 con-

sumer 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 Cer-

vantes, it does not appear that the plaintiffs were misinformed

about MERS’s role in their home loans.

[4] Moreover, amendment would be futile. In their pro-

posed 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 Com-

plaint’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 dis-

cretion 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 dis-

miss. 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

16992 CERVANTES v. COUNTRYWIDE HOME LOANS

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 foreclo-

sure claim was procedurally improper and substantively

unsupported. The district court’s local rules require the plain-

tiffs 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 fed-

eral 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 plain-

tiffs’ 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 foreclo-

CERVANTES v. COUNTRYWIDE HOME LOANS 16993

sure claims, we note that such claims typically are available

after foreclosure and are premised on allegations that the bor-

rower 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. Mill-

sap & 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 fore-

closure 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 estab-

lish 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 quo-

tation 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 Cervan-

tes’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

16994 CERVANTES v. COUNTRYWIDE HOME LOANS

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 nec-

essary 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 foreclo-

sure 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 assign-

ments 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

CERVANTES v. COUNTRYWIDE HOME LOANS 16995

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. More-

over, 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 dis-

missal 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 improp-

erly 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 dis-

missed” from any action other than one “pertaining to a

breach of the trustee’s obligations,” because the trustee is oth-

erwise 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

16996 CERVANTES v. COUNTRYWIDE HOME LOANS

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 alle-

gations 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 limita-

tions. 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 dili-

gence 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 equi-

table tolling of their claims. “We will apply equitable tolling

in situations where, despite all due diligence, the party invok-

ing equitable tolling is unable to obtain vital information bear-

ing on the existence of the claim.” Socop-Gonzalez v. I.N.S.,

CERVANTES v. COUNTRYWIDE HOME LOANS 16997

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 mortga-

gor] from comparing the loan contract, [the lender’s] initial

disclosures, and TILA’s statutory and regulatory require-

ments”).

[13] In addition, the plaintiffs have not demonstrated a

basis for equitable estoppel. Equitable estoppel “halts the stat-

ute 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 dis-

closure.” The plaintiffs, however, have failed to specify what

true facts are at issue, or to establish that the alleged misrepre-

sentation 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.

16998 CERVANTES v. COUNTRYWIDE HOME LOANS

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 “be-

cause the subject of the loan was each Plaintiff ’s primary res-

idence.” 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 essen-

tially allege that the lenders offered them loans that the lend-

ers 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 ulti-

mately 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

CERVANTES v. COUNTRYWIDE HOME LOANS 16999

any misrepresentations about MERS’s role in their loans. Fur-

ther, 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 nec-

essarily “wrongful.” The plaintiffs’ claims against their origi-

nal 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.