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Washington & Sandhill Homeowners Association v. Bank of America, N.A.

United States District Court, D. Nevada

September 25, 2014

WASHINGTON & SANDHILL HOMEOWNERS ASSOCIATION, Plaintiff,
v.
BANK OF AMERICA, N.A., dba BAC HOME LOANS SERVICING, L.P., a national corporation; SHAUN DONOVAN; SECRETARY OF HOUSING AND URBAN DEVELOPMENT OF WASHINGTON D.C. 20410, a government entity; DOES I through X; and ROE BUSINESS ENTITIES I through X, Defendants.

ORDER

GLORIA M. NAVARRO, Chief District Judge.

Pending before the Court is the Motion to Dismiss (ECF No. 9) filed by Defendant Bank of America, N.A., successor by merger to BAC Home Loans Servicing, L.P. fka Countrywide Home Loans Servicing, L.P. ("BOA") and Defendant Department of Housing and Urban Development ("HUD") (collectively "Defendants") on November 15, 2013. Plaintiff Washington & Sandhill Homeowners Association ("HOA") filed their Response to the Motion to Dismiss (ECF No. 12) on November 27, 2013, and Defendants filed their Reply (ECF No. 13) on December 9, 2013.

I. BACKGROUND

This case arises out of a dispute between the parties over the effects of HOA's foreclosure on their "super-priority" interest in real property under Nevada Revised Statutes § 116.3116. The relevant facts are as follows:

On May 1, 2008, Emiliano and Martha Renteria obtained title to a property located at 912 Swiss Street, Las Vegas, NV 89110 (the "Property"). (Grant, Bargain, and Sale Deed, ECF No. 9-1.)[1] The Renterias financed their purchase of the Property by obtaining a $147, 387 loan from IndyMac Bank, FSB (IndyMac) that was secured by a Deed of Trust on the Property. (Deed of Trust, ECF No. 9-2.) The Deed of Trust named Mortgage Electronic Registration Systems, Inc. ("MERS") as the beneficiary and Fidelity Nation Title ("Fidelity") as trustee granted MERS standing to foreclose and to substitute a trustee under the deed. ( Id. ) The Deed of Trust was also insured by HUD through the Single Family Mortgage Insurance Program.[2] ( Id. at 4-5, 7 ¶¶ 2-3, 18; see also Beltran Decl., ECF No. 23 (explaining the relationship of HUD to the Deed of Trust).)

The Renterias defaulted on their loan in September of 2009 and a Notice of Breach and Default and of Election to Cause Sale was recorded on the Property on February 11, 2010. (Notice of Breach, ECF No. 9-3.) Then on April 14, 2010, MERS executed an Assignment of Deed of Trust, assigning their interest under the Deed of Trust to BOA. (Assignment of Deed of Trusts, ECF No. 9-4.) A Certificate of Compliance with Nevada's mediation foreclosure program was recorded on May 21, 2010. (Cert. of Compliance, ECF No. 9-5.) After recording several Notices of Sale that did not result in a sale of the Property, a Notice of Trustee's Sale was recorded on the Property on May 10, 2012, (May 2012 Notice of Trustee's Sale, ECF No. 9-9), and the Property was foreclosed upon on July 2, 2012. (July 2012 Trustee's Deed, ECF No. 9-10.) Under the July 2012 Trustee's Deed, BOA assumed title to the Property. ( Id. ) However, on December 27, 2012, BOA rescinded the Trustee's Deed, (Notice of Rescission, ECF No. 9-11), and a new Notice of Trustee's Sale was recorded on April 12, 2013, (April 2013 Notice of Trustee's Sale, ECF No. 9-12), which led to a new foreclosure sale on May 3, 2013. (May 2013 Trustee's Deed, ECF No. 9-13.) Under the May 2013 Trustee's Deed, BOA again assumed title to the Property. ( Id. ) Following this sale, BOA conveyed title to the Property by grant deed to HUD on May 17, 2013. (HUD Deed, ECF No. 9-14.)

The Property, however, is subject to a set of Covenants, Conditions, and Restrictions ("CC&Rs") recorded by HOA, which require the payment of homeowners' assessments to HOA by the title holder of the Property. (CC&Rs, ECF No. 1-1); see also (Complaint ¶ 14, ECF No. 1.) The Renterias appear to have failed to pay these assessments, and on February 22, 2010, HOA executed a Notice of Delinquent Assessment Lien on the Property. (Notice of Delinquent Assessment Lien against Renterias, ECF No. 9-15.) HOA subsequently recorded a Notice of Default and Elections to Sell on May 20, 2010, (Notice of Default, ECF No. 9-16), and a Notice of Trustee's Sale on March 20, 2012. (March 2012 Notice of Trustee's Sale, ECF No. 9-18.) HOA then purchased the Property at a foreclosure sale under the Delinquent Assessment Lien on May 23, 2012, prior to BOA's foreclosure sales of the Property on July 2, 2012 and May 3, 2013. (July 2012 Trustee's Deed, ECF No. 9-10; May 2012 Trustee's Deed, ECF No. 9-19.) HOA subsequently recorded two Releases of Delinquent Assessment Lien on July 24, 2012 and September 11, 2012. (Releases of Lien, ECF Nos. 9-20-9-21.)

On September 11, 2012, however, HOA recorded a Notice of Delinquent Assessment Lien against BOA's title to the Property. (Notice of Delinquent Assessment Lien against BOA, ECF No. 9-22.)[3] The notice demanded $4, 983.00 from BOA as payment for HOA assessments owed by the title holder of the Property. ( Id. ) HOA then recorded a Notice of Default and Election to Sell against BOA's title to the Property on November 13, 2012. (Notice of Default against BOA, ECF No. 9-23.)[4] Then on May 23, 2013, HOA recorded a Notice of Trustee's Sale against BOA, which states "[y]ou are in default under the Notice of Delinquent Assessment LIEN, dated SEPTEMBER 11, 2012. Unless you take action to protect your property, it may be sold at public sale.... The owner of [the Property] as of the date of the recording of said lien is purported to be: BANK AMERICA, NA." (May 2013 Notice of Trustee Sale, ECF No. 9-24.) No foreclosure sale, however, occurred pursuant to this notice.

Additionally, on October 1, 2013, following BOA's transfer of its title claim on the Property to HUD, HOA recorded another Notice of Delinquent Assessment Lien against HUD's title to the Property. (Notice of Delinquent Assessment Lien against HUD, ECF No. 9-25.)[5] This notice demanded payment in the amount of $1, 250.00 from HUD for HOA assessments owed by the title holder of the Property. ( Id. )

Following its demands for payments of assessments based upon BOA and HUD's title in the Property, HOA changed its position and determined that it was the true title holder on the Property based upon the earlier foreclosure of its Delinquent Assessment Lien. HOA then initiated the present action on October 9, 2013, seeking a declaration from this Court quieting title to the Property in favor of HOA and awarding it monetary damages against BOA and HUD for slander of title. (Complaint ¶¶ 47-140, ECF No. 1.)

The Court conducted a hearing (ECF No. 18) on February 28, 2014 to consider whether this action should be stayed pending the answer of a certified question to the Supreme Court of Nevada regarding the effects of HOA's foreclosure on BOA's interest in the Property. At the hearing, counsel for Defendants argued that HUD's presence in this case allowed this Court to resolve the issues without waiting for an answer from the Supreme Court of Nevada. On July 31, 2014, the Court ordered (ECF No. 19) the parties to file supplemental briefing regarding the applicability, or lack thereof, of the Property and Supremacy Clauses of the Constitution of the United States due to the involvement of HUD in this case. Defendants filed their Brief (ECF No. 20) on this issue on August 15, 2014, and HOA filed its Reply Brief (ECF No. 21) on August 22, 2014.

II. LEGAL STANDARD

Rule 12(b)(6) of the Federal Rules of Civil Procedure mandates that a court dismiss a cause of action that fails to state a claim upon which relief can be granted. See North Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the Court will take all material allegations as true and construe them in the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).

"Generally, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion.... However, material which is properly submitted as part of the complaint may be considered on a motion to dismiss." Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citations omitted). Similarly, "documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss" without converting the motion to dismiss into a motion for summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Under Federal Rule of Evidence 201, a court may take judicial notice of "matters of public record." Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the district ...


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