Nationstar Mortgage, LLC v. D'Andrea Community Association

          ORDER

          ROBERT C. JONES United States District Judge

         This case arises out of a homeowners' association foreclosure sale. Pending before the Court is Plaintiff Nationstar Mortgage LLC's (“Nationstar”) Motion for Summary Judgment (ECF No. 27). As the basis for its motion, Nationstar advances a single argument: That the Federal National Mortgage Association (“Fannie Mae”) owned the note and first deed of trust on the subject property at the time of the foreclosure sale, with Nationstar as beneficiary of record. Accordingly, Fannie Mae's interest in the property could not have been extinguished by the foreclosure sale, because the Federal Housing Finance Agency (“FHFA”) did not consent to foreclosure. See 12 U.S.C. § 4617(j)(3).

         Because Nationstar's evidence fails to establish that there is no genuine dispute of material fact with respect to the existence, nature, and timing of Fannie Mae's purported interest in the property, its motion is denied.

         I. FACTS AND PROCEDURAL HISTORY

         On or about October 5, 2007, Laura Kerr purchased real property at 3247 Modena Drive, Sparks, Nevada 89434 (the “Property”) via a $196, 000 loan (the “Loan”), secured by a first deed of trust (the “DOT”) recorded on October 9, 2007. (Compl. ¶¶ 8, 13, ECF No. 1.) The Property is governed by a set of codes, covenants, and restrictions (CC&Rs) that establish, among other things, the homeowner's obligation to pay dues and assessments; that obligation is enforced by Defendant D'Andrea Community Association (the “HOA”). (Id. at ¶ 3; Opp'n Mot. Summ. J. 3- 4, ECF No. 35.)

         Nationstar argues that on or about December 1, 2007, Fannie Mae purchased the Loan, acquiring the note and DOT, and thereafter never resold it. (Mot. Summ. J. ¶¶ II(A)(4)-(7), ECF No. 27.) However, on or about October 13, 2011, non-party Mortgage Electronic Registration Systems, Inc. (“MERS”) recorded an assignment of its interest in the DOT to non-party Bank of America, N.A. (“BOA”). (ECF No. 27-6.) Another assignment was recorded on May 6, 2013, transferring BOA's interest to Nationstar. (ECF No. 27-8.) These assignments transferred “all beneficial interest” under the DOT, along with “the note(s) and obligations therein described and the money due and to become due thereon with interest and all rights accrued or to accrue under said Deed of Trust.” Contrary to the facial import of these assignments, Nationstar argues that ownership of the note was never transferred to BOA or Nationstar; rather, the assignments merely made BOA, and subsequently Nationstar, servicers of the Loan and beneficiaries of record of the DOT. (Mot. Summ. J. ¶¶ II(A)(9)-(11), ECF No. 27.)

         After purchasing the home, Ms. Kerr failed to pay assessments under the CC&Rs, and the HOA recorded a notice of delinquent assessment lien on August 12, 2011, a notice of default and election to sell on May 3, 2013, and a notice of foreclosure sale on October 21, 2013. (Id. at ¶¶ II(C)(17)-(19).) The Property was ultimately sold to Defendant LVDG at auction on December 19, 2013 for $5, 233. (Id. at ¶ II(C)(20).)

         On or around July 21, 2015, Nationstar filed this action against the HOA and LVDG, primarily seeking a declaration that the foreclosure sale did not extinguish its interest in the DOT. Nationstar now moves for summary judgment on the theory that Fannie Mae owned the note and DOT at the time of the foreclosure sale, and therefore extinguishment of the DOT is preempted by 12 U.S.C. § 4617(j)(3).

         II. LEGAL STANDARD

         A court must grant summary judgment when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Material facts are those which may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See Id. On a summary judgment motion, a court's function is not to weigh the evidence and determine the truth, but to decide whether there is a genuine issue for trial. See Id. at 249.

         In determining summary judgment, the federal courts use a burden-shifting scheme. The moving party must first satisfy its initial burden. “When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial.” C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citation and internal quotation marks omitted). If the moving party fails to meet its initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970). If the moving party meets its initial burden, the burden then shifts to the opposing party to establish a genuine issue of material fact. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

         To establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 631 (9th Cir. 1987). Moreover, at the summary judgment stage, the evidence of the non-movant is “to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson, 477 U.S. at 255.

         III. ANALYSIS

         A. The preemptive effect of § 4617(j)(3) is now ...