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H&N Properties, LLC v. Quality Loan Service Corporation

United States District Court, D. Nevada

May 14, 2015

H&N PROPERTIES, LLC, Plaintiff(s),


JAMES C. MAHAN, District Judge.

Presently before the court is defendants Wells Fargo Bank National Association ("Wells Fargo") and Federal National Mortgage Association's ("FNMA") motion to dismiss plaintiff's amended complaint. (Doc. # 13). In support of their motion, defendants filed a request for judicial notice.[1] (Doc. # 14). Plaintiff H&N Properties, LLC ("H&N") filed a response (doc. # 15), and defendants filed a reply (doc. #16).

I. Background

On or about October 30, 2008, Humberto Moreno ("the borrower") obtained a loan from Provident Funding Associates ("Provident") in the amount of $213, 750 for the purchase of real property located at 1163 Toro Hills, Henderson, NV 89074. (Doc. # 14-1). In connection with the loan, the borrower executed a promissory note that required payment of the loan amount and a deed of trust encumbering the property and securing H&N's obligations under the note. ( Id. ). The deed of trust was recorded with the Clark County recorder's office on November 12, 2008. ( Id. ).

On March 9, 2012, the original lender, Provident, executed an assignment of mortgage, which transferred the loan to Wells Fargo. (Doc. # 14-2). The first assignment was recorded with the Clark County recorder's office on March 9, 2012. ( Id. ).

On May 31, 2013, Quality Loan Service Corp. ("Quality"), as trustee, recorded a notice of breach of default and election to cause sale of real property under deed of trust. (Doc. # 14-4). On August 28, 2013, the state of Nevada foreclosure mediation program recorded the mediation certificate, which stated that "[t]he Beneficiary may proceed with the foreclosure process." (Doc. # 14-5). On or about September 4, 2013, Quality recorded a notice of trustee's sale. (Doc. # 14-6).

On June 26, 2013, the borrower filed for chapter 7 bankruptcy. (Doc. # 13 at 3). The borrower listed his intent to surrender the property in his voluntary petition. (Doc. # 14-10). On March 4, 2014, the borrower's bankruptcy trustee moved to sell the property. (Doc. # 14-11). Wells Fargo opposed the sale of the property free and clear of its lean. (Doc. # 14-12). On April 11, 2014, the bankruptcy court entered its order granting the motion to sell the property subject to all liens, encumbrances, and claims. (Doc. # 14-9 at 2-3).

The bankruptcy court declined to allow the sale of the property to proceed free and clear of all liens and encumbrances. ( Id. at 2). The court instead approved "the Sale of the Property pursuant to § 363(b), with the § 363(b) Buyer taking title to the Property subject to all liens and encumbrances." ( Id. ). The bankruptcy court's order further provided that "[t]his Sale does not affect the secured creditors' abilities to exercise their remedies against the Property, including enforcing their security interests under a Note and Deed of Trust by foreclosing on the Property[.]" ( Id. at 4).

Additionally, the bankruptcy court's order required the purchaser to, within fourteen days of delivery, record the quitclaim deed and the order with the Clark County recorder's office. ( Id. at 3). The court then explicitly stated that "[f]ailure to timely record shall automatically void the § 363(b) sale and the Documents delivered, meaning any later attempt to record them after the 14 days has expired shall provide the §363(b) Buyer with no legal basis to successfully transfer the estate's interest in the Property." ( Id. ).

On April 11, 2014, H&N acquired an interest in the property by the bankruptcy trustee's quitclaim deed. (Doc. # 6-1). Under the quitclaim deed, H&N paid only $7, 000 for the property. ( Id. ). The bankruptcy quitclaim deed was not recorded until May 14, 2014. ( Id. ).

On or about April 23, 2014, prior to the recording of the quitclaim deed, Quality recorded a second notice of trustee's sale, scheduling a foreclosure sale for May 22, 2014. (Doc. # 14-7). On or about June 3, 2014, Wells Fargo executed a corporate assignment of deed of trust, which transferred the loan to FNMA. (Doc. # 14-8). The Clark County recorder's office recorded the second assignment on July 14, 2014. ( Id. ). On July 11, 2014, FNMA foreclosed on the property based on the trustee's deed upon sale recorded with the Clark County recorder on July 14, 2014. (Doc. # 6-3).

H&N initiated the instant case in the Eighth Judicial District Court for Clark County, Nevada on November 5, 2014, against defendants Quality, Wells Fargo, and FNMA.[2] (Doc. # 1 at 14). Defendants removed the case to this court on January 6, 2015. (Doc. # 1). On January 15, 2015, H&N filed an amended complaint. (Doc. # 6). H&N's amended complaint alleges three causes of action: (1) quiet title and declaratory relief; (2) a violation of Nevada Revised Statutes ("NRS") § 107.090;[3] and (3) unjust enrichment. (Doc. # 6). On February 17, 2015, Wells Fargo and FNMA filed the instant motion seeking to dismiss H&N's amended complaint in its entirety. (Doc. # 13).

II. Legal Standard[4]

A court may dismiss a plaintiff's complaint for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). A properly pled complaint must provide "[a] short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands "more than labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citation omitted). "Factual allegations must be enough to rise above the speculative level." Twombly, 550 U.S. at 555. Thus, to survive ...

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