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Bank of America, N.A. v. SFR Investments Pool 1, LLC

United States District Court, D. Nevada

February 14, 2017

BANK OF AMERICA, N.A., Plaintiffs,
SFR INVESTMENTS POOL 1, LLC, et al., Defendants.


         Presently before the court is defendant/third-party plaintiff Thomas Jessup, LLC's (“Jessup”) motion to dismiss. (ECF No. 47). Defendant/counterclaimant SFR Investments Pool 1, LLC (“SFR”) filed a response (ECF No. 51), to which Jessup replied (ECF No. 55).

         Also before the court is third-party defendant Daunshari Wong-Culotta's (“Wong”) motion to dismiss. (ECF No. 50).[1] Jessup filed a response (ECF No. 56), to which Wong replied (ECF No. 63).

         Also before the court is plaintiff/counterdefendant Bank of America, N.A., successor by merger to BAC Home Loans Servicing, LP's (“BANA”) motion for summary judgment. (ECF No. 59). Responses were filed by Jessup (ECF No. 65), SFR (ECF No. 66), and defendant Davyn Ridge Homeowners Association (the “HOA”) (ECF No. 72), to which BANA replied 73).

         Also before the court is the HOA's motion for summary judgment. (ECF No. 60). BANA filed a response. (ECF No. 68). The HOA has not replied, and the period to do so has since passed.[2]

         Also before the court is SFR's motion for summary judgment. (ECF No. 61). BANA filed a response (ECF No. 67), to which SFR replied (ECF No. 71).

         Also before the court is SFR's motion to certify a question of law to the Nevada Supreme Court (ECF No. 83), in which the HOA joined (ECF No. 86). BANA filed a response (ECF No. 84), to which SFR replied (ECF No. 85).

         I. Facts

         This case involves a dispute over real property located at 3917 Jamison Park Lane, North Las Vegas, Nevada 89032 (the “property”).

         On November 18, 2009, crossdefendant Donald Gould (“Gould”) obtained a loan in the amount of $142, 373.00 from Ryland Mortgage Company and purchased the property. (ECF No. 1 at 4). The loan was secured by a deed of trust recorded November 20, 2009. (ECF No. 1 at 4).

         The deed of trust was assigned to BAC Home Loans Servicing, LP f/k/a/ Countrywide Home Loans Servicing, LP (“BAC”) via assignment deed recorded on July 21, 2011. (ECF No. 1 at 4). BAC subsequently merged into BANA. (ECF No. 1 at 4).

         On December 9, 2011, Nevada Association Services, Inc. (“NAS”), acting on behalf of the HOA, recorded a notice of delinquent assessment lien, stating an amount due of $1, 262.70. (ECF No. 1 at 5). On January 30, 2012, NAS recorded a notice of default and election to sell to satisfy the delinquent assessment lien, stating an amount due of $2, 448.50. (ECF No. 1 at 5).

         In February 2012, BANA's counsel Miles Bauer Bergstrom & Winters, LLP (“MBBW”) request a payoff ledger, but NAS refused. (ECF No. 1 at 6). BANA and its counsel calculated the sum of nine-months of common assessments and determined the superpriority amount to be $585.00. (ECF No. 1 at 6). On March 15, 2012, BANA tendered that amount to the HOA, which the HOA refused. (ECF No. 1 at 6).

         On June 6, 2012, NAS recorded a notice of trustee's sale, stating an amount due of $3, 442.17. (ECF No. 1 at 5). Jessup purchased the property for $5, 500.00 at the foreclosure sale on September 14, 2012. (ECF No. 1 at 6). A trustee's deed upon sale in favor of Jessup was recorded on September 20, 2012. (ECF No. 1 at 6).

         On April 3, 2013, Jessup transferred title to SFR via a grant, bargain, sale deed recorded on April 8, 2013. (ECF No. 1 at 7).

         On September 14, 2015, BANA filed a complaint against SFR, the HOA, and Jessup, alleging four causes of action: (1) quiet title/declaratory judgment against SFR; (2) breach of NRS 116.1113 against the HOA; (3) wrongful foreclosure against the HOA; and (4) injunctive relief against SFR. (ECF No. 1). The court subsequently dismissed claims (2) through (4) in an order granting the HOA's motion to dismiss (ECF No. 13), but allowed claim 1 (quiet title/declaratory judgment) to proceed. (ECF No. 58).

         On December 10, 2015, SFR filed a counterclaim against BANA and a crossclaim against Gould, alleging two causes of action: (1) declaratory relief/quiet title; and (2) preliminary and permanent injunction. (ECF No. 27).

         On January 20, 2016, Jessup filed a third-party complaint against Wong, alleging two causes of action: (1) fraud; and (2) negligence and equitable indemnity. (ECF No. 38). Jessup alleges that Wong is in the business of buying foreclosed properties and that Wong placed Jessup's name on the property after purchasing it at the foreclosure sale without Jessup's knowledge or consent. (ECF No. 38). Jessup alleges that thereafter, Wong induced Jessup into signing over power of attorney to transfer the property to a different company with a false story that the property was inadvertently placed in Jessup's name. (ECF No. 38 at 5). Jessup further alleges that Wong then executed a grant, bargain, and sale deed of the property to SFR without Jessup's knowledge or consent. (ECF No. 38 at 5).

         In the instant motions, Jessup and Wong move to dismiss (ECF Nos. 47, 50), BANA, the HOA, and SFR move for summary judgment (ECF Nos. 59, 60, 61), and SFR moves to certify a question of law to the Nevada Supreme Court (ECF No. 83). The court will address each in turn.

         II. Legal Standard

         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 plaintiff's 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, plaintiff's 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.


         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. Transp. 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 ...

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