DAVID KESTER V. CITIMORTGAGE, INC. | 9th Cir - “the recording of false or fraudulent documents that assert an interest in a property may cloud the property’s title”

NOT FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT DAVID A. KESTER, on behalf of himself and all others similarly situated, Plaintiff-Appellant, v. CITIMORTGAGE INC.; et al., Defendants-Appellees. excerpt CitiMortgage and CR Title (“Defendants”) knowingly caused the recording of invalid property documents in violation of ARIZ. REV. STAT. (“A.R.S.”) § 33- 420(A). The district court granted Defendants’ motion to dismiss. We reverse and remand. 1. Kester has standing to bring this action, despite the fact that A.R.S. § 33- 411(C) provides that “an instrument affecting real property containing any defect, omission or informality in the certificate of acknowledgment and which has been recorded for longer than one year . . . shall be deemed to have been lawfully recorded on and after the date of its recording.”1 “The irreducible constitutional minimum of standing consists of three elements. The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016), as revised (May 24, 2016). Kester has adequately alleged all three elements. See Washington Env’tl Council v. Bellon, 732 F.3d 1131, 1139 (9th Cir. 2013) (“The plaintiff . . . bears the burden of proof to establish standing ‘with the manner and degree of evidence required at the successive stages of the litigation.’ (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992))). First, “the recording of false or fraudulent documents that assert an interest in a property may cloud the property’s title”; therefore, Kester has adequately alleged “a distinct and palpable injury as a result of those clouds on [his former property’s] title.” In re Mortg. Elec. Registration Sys., Inc., 754 F.3d 772, 783 (9th Cir. 2014) (quoting Stauffer v. U.S. Bank Nat. Ass’n, 308 P.3d 1173, 1179 (Ariz. Ct. App. 2013)). Second, this injury is fairly traceable to Defendants’ conduct: despite receiving notice of the revocation of Kristen Lindner’s notary commission, Defendants allegedly continued to use her notary services to execute Assignments of Deeds of Trust, Substitutions of Trustee, Notices of Default, and Notices of Trustee Sale for three months. Third, Kester’s “injury would be redressed by an award of statutory damages, which [A.R.S. § 33-420(A)] makes available to prevailing [former property owners].” See Tourgeman v. Collins Fin. Servs., Inc., 755 F.3d 1109, 1116 (9th Cir. 2014), as amended on denial of reh’g and reh’g en banc (Oct. 31, 2014). 2. The district court incorrectly held that A.R.S. § 33-420(A) requires Kester to allege “material” invalidity in the trustee’s sale documents. Arizona caselaw does not clearly resolve the question whether a plaintiff must allege materiality to [...]

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