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Carrington Mortgage Services, LLC v. SFR Investments Pool 1, LLC

United States District Court, D. Nevada

February 9, 2017

CARRFNGTON MORTGAGE SERVICES, LLC, Plaintiffs,
v.
SFR FNVESTMENTS POOL 1, LLC, Defendants.

          ORDER

         Presently before the court is defendant/counterclaimant SFR Investments Pool 1, LLC's ("SFR") motion for summary judgment. (ECF No. 44). Crossdefendant Bank of America, N. A. ("BANA") and plaintiff/counterdefendant Carrington Mortgage Services, LLC ("CMS") filed responses (ECF Nos. 50, 53), to which SFR replied (ECF No. 77).

         Also before the court is BANA's motion for summary judgment. (ECF No. 45). SFR and CMS filed responses (ECF Nos. 52, 53), to which BANA replied (ECF No. 64).

         Also before the court is defendant Oak Park Homeowners Association's (the "HOA") motion to dismiss. (ECF No. 61). CMS filed a response (ECF No. 74), to which the HOA replied (ECF No. 80).

         Also before the court is SFR's motion to certify question of law to the Nevada Supreme Court (ECF No. 86), in which the HOA joined (ECF No. 87). BANA filed a response (ECF No. 89), to which SFR replied (ECF No. 90).

         I. Facts

         This case involves a dispute over real property located at 909 Veranda View Avenue, Las Vegas, Nevada 89123 (the "property").

         On September 25, 2008, Samuel and Harry Juergens obtained a loan in the amount of $171, 311.00 from Taylor, Bean & Whitaker Mortgage Corp. ("TBW") to purchase the property, which was secured by a deed of trust recorded on November 3, 2008. (ECF No. 37). The loan was insured by the Federal Housing Administration ("FHA"). (ECF No. 37).

         On April 14, 2010, defendant Nevada Association Services, Inc. ("NAS"), acting on behalf of the HOA, recorded a notice of delinquent assessment lien. (ECF No. 37). On December 1, 2010, NAS recorded a notice of default and election to sell to satisfy the delinquent assessment lien. (ECF No. 37).

         On January 4, 2011, BANA's prior counsel Miles, Bauer, Bergstrom & Winters, LLP ("MBBW") requested a superpriority demand payoff from NAS. (ECF No. 37). On January 25, 2011, MBBW received a payoff demand from NAS, with a full lien payoff in the amount of $3, 281.56. (ECF No. 37). MBBW determined the superpriority portion of the lien to be $503.10, and tendered that amount to NAS on February 25, 2011, which NAS allegedly rejected. (ECF No. 37).

         On July 28, 2011, the deed of trust was assigned to BAC Home Loans Servicing, LP, fka Countrywide Home Loan Servicing, LP via an assignment deed recorded August 1, 2011. (ECF No. 37).

         On August 23, 2012, NAS sent, by certified mail, to BAC (among others) a notice of trustee's sale. (ECF No. 44-1 at 82-88). On August 27, 2012, NAS recorded a notice of trustee's sale. (ECF No. 37). On December 28, 2012, SFR purchased the property at the foreclosure sale for $7, 400.00. (ECF No. 37). A foreclosure deed in favor of SFR was recorded on January 3, 2013. (ECF No. 37).

         On September 5, 2014, BANA recorded a request for notice pursuant to NRS 116.3118. (ECF No. 50 at 4). On December 23, 2014, BANA assigned its beneficial interest under the deed of trust to CMS via an assignment deed, which was recorded on January 29, 2015. (ECF Nos. 37, 50).

         On July 20, 2015, CMS filed a complaint (ECF No. 1), which was later amended on February 29, 2016 (ECF No. 37). In the amended complaint, CMS alleges nine claims for relief: (1) quiet title/declaratory relief against SFR, the HO A, and NAS; (2) preliminary injunction against SFR; (3) wrongful/statutorily defective foreclosure against the HOA and NAS; (4) negligence against the HOA and NAS; (5) negligence per se against the HOA and NAS; (6) unjust enrichment against SFR, the HOA, and NAS; (7) breach of contract against the HOA and NAS; (8) misrepresentation against the HOA; and (9) breach of good faith and fair dealing against the HOA and NAS. (ECF No. 37).

         On August 20, 2015, SFR filed a crossclaim, alleging three claims for relief: (1) quiet title/declaratory relief against CMS, BANA, and the Juergens; (2) preliminary and permanent injunction; and (3) slander of title against CMS and BANA. (ECF No. 12).

         In the instant motions, SFR moves for summary judgment on the amended complaint (ECF No. 44), BANA moves for summary judgment on SFR's slander of title claim (ECF No. 45), the HOA moves to dismiss the amended complaint (ECF No. 61), and SFR moves to certify a question of law to the Nevada Supreme Court (ECF No. 86). The court will address these motions as it sees fit.

         II. Legal Standards

         A. Motion to Dismiss

         A court may dismiss a 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, 556 U.S. 662, 678 (2009) (citation omitted).

         "Factual allegations must be enough to rise above the speculative level." Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to "state a claim to relief that is plausible on its face." Iqbal, 556 U.S. 662, 678 (citation omitted).

         In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, the court must accept as true all well-pled factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 678-79. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 678.

         Second, the court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiffs complaint alleges facts that allow the court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 678.

         Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has "alleged-but not shown-that the pleader is entitled to relief." Id. (internal quotation marks omitted). When the allegations in a complaint have not crossed the line from conceivable to plausible, plaintiffs claim must be dismissed. Twombly, 550 U.S. at 570.

         The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The Starr court stated, in relevant part:

First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.

Id.

         B. Summary Judgment

         The Federal Rules of Civil Procedure allow summary judgment when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that "there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(a). A principal purpose of summary judgment is "to isolate and dispose of factually unsupported claims." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).

         For purposes of summary judgment, disputed factual issues should be construed in favor of the non-moving party. Lujan v. Nat'l Wildlife Fed, 497 U.S. 871, 888 (1990). However, to be entitled to a denial of summary judgment, the nonmoving party must "set forth specific facts showing that there is a genuine issue for trial." Id.

         In determining summary judgment, a court applies a burden-shifting analysis. 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. In such a case, the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case." C.A.R. Tramp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted).

         By contrast, when the nonmoving party bears the burden of proving the claim or defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential element of the non-moving party's case; or (2) by demonstrating that the non-moving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323-24. 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, 159- 60 (1970).

         If the moving party satisfies its initial burden, the burden then shifts to the opposing party to establish that a genuine issue of material fact exists. 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).

         In other words, the nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the pleadings and set forth specific facts by producing competent evidence that shows a genuine issue for trial. See Celotex, 477 U.S. at 324.

         At summary judgment, a court's function is not to weigh the evidence and determine the truth, but to determine whether there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The evidence of the nonmovant is "to be believed, and all justifiable inferences are to be drawn in his favor." Id. at 255. But if the evidence of the nonmoving party is merely colorable or is not significantly probative, summary judgment may be granted. See Id. at 249-50.

         C. Certify Question of Law to the Nevada Supreme Court

         The Nevada Rules of Appellate Procedure provide that the Supreme Court of Nevada has the power to answer "questions of [state] law . . . which may be determinative of the cause then pending in the certifying court and as to which it appears to the certifying court there is no controlling precedent in the decisions of the Supreme Court of [Nevada]." Nev. R. App. P. 5(a).

         The Nevada Supreme Court "may answer questions of law certified [] by a federal court when (1) [the] answers to the certified questions may be determinative of part of the federal case, (2) there is no clearly controlling Nevada precedent, and (3) the answers to the certified questions will help settle important questions of law. See, e.g., Hartford Fire Ins. Co. v. Tr. of Const. Indus., 208 P.3d 884, 888 (Nev. 2009).

         Where the question does not impact the merits of a claim pending before the certifying court, the question should not be certified to the Supreme Court. See Nev. R. App. P. 5(a) (requiring that certified question be "determinative"); see also Volvo Cars of N. Am., Inc. v. Ricci, 137 P.2d 1161, 1164 (Nev. 2006) (declining to answer certified questions where "answers to the questions posed [] would not 'be determinative' of any part of the case"). "The certification procedure is reserved for state law questions that present significant issues, including those with important public policy ramifications, and that have not yet been resolved by the state courts." Kremen v. Cohen, 325 F.3d 1035, 1037 (9th Cir. 2003).

         Federal courts have discretion to certify questions of state law. Lehman Bros. v. Schein, 416 U.S. 386, 391 (1974). "Resort to certification is not mandatory where state law is unclear on a particular issue." Carolina Cas. Ins. Co. v. McGhan, 572 F.Supp.2d 1222, 1225 (D. Nev. 2008) (citing Lehman Bros., 416 U.S. at 390-91). Generally, "[w]hen a decision turns on applicable state law and the state's highest court has not adjudicated the issue, a federal court must make a reasonable determination of the result the highest state court would reach if it were deciding the case." Aetna Cas. & Sur. Co. v. Sheft, 989 F.2d 1105, 1108 (9th Cir. 1993).

         Further, a federal court may decline to certify a question where controlling precedent is available for guidance. Slayman v. FedEx Ground Package Sys., Inc., 765 F.3d 1033, 1041 (9th Cir. 2014); see also Kehoe v. Aurora Loan Servs., LLC, No. 3:10-cv-256-RCJ-RAM; 2010 WL 4286331, at *11 (D. Nev. Oct. 20, 2010) (declining to certify question to Nevada Supreme Court where statutory language was sufficiently clear for the court to apply).

         Finally, a party must show "particularly compelling reasons" for certification when that party first requests it after losing on an issue. Complaint of McLinn, 744 F.2d 677, 681 (9th Cir. 1984) ("Ordinarily such a movant should not be allowed a second chance at victory when, as here, the district court employed a reasonable interpretation of state law.").

         III. Discussion

         A. The HOA's Motion to Dismiss (ECF No 61)

         1. Quiet Title/Declaratory Relief (claim I)

         The HOA argues that CMS's quiet title claim fails because it cannot prove good title in itself and the HOA is not a proper party. (ECF No. 61). The court disagrees.

         Under Nevada law, "[a]n action may be brought by any person against another who claims an estate or interest in real property, adverse to the person bringing the action for the purpose of determining such adverse claim." Nev. Rev. Stat. § 40.010. "A plea to quiet title does not require any particular elements, but each party must plead and prove his or her own claim to the property in question and a plaintiffs right to relief therefore depends on superiority of title." Chapman v. Deutsche Bank Nat'l Trust Co., 302 P.3d 1103, 1106 (Nev. 2013) (citations and internal quotation marks omitted). Therefore, for plaintiff to succeed on its quiet title action, it needs to show that its claim to the property is superior to all others. See also Breliant v. Preferred Equities Corp., 918 P.2d 314, 318 (Nev. 1996) ("In a quiet title action, the burden of proof rests with the plaintiff to prove good title in himself").

         Under Federal Rule of Civil Procedure 19(a), a party must be joined as a "required" party in two circumstances: (1) when "the court cannot accord complete relief among existing parties" in that party's absence, or (2) when the absent party "claims an interest relating to the subject of the action" and resolving the action in the person's absence may, as a practical matter, "impair or impede the person's ability to protect the interest, " or may "leave an existing party subject to a substantial risk of incurring ...


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