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HSBC Bank USA, National Association v. Thunder Properties Inc.

United States District Court, D. Nevada

February 17, 2017

HSBC BANK USA, NATIONAL ASSOCIATION, Plaintiff,
v.
THUNDER PROPERTIES, INC. et al., Defendants.

          ORDER

          Robert C. Jones United States District Judge

         This case arises from a residential foreclosure by Defendant Eagle Canyon Association (“HOA”) due to the homeowner's failure to pay HOA assessments. Pending before the Court is the HOA's Motion to Dismiss. (ECF No. 16.) For the reasons given herein, the Court denies the motion.

         I. FACTS AND PROCEDURAL BACKGROUND

         In December 2002, non-party homeowners obtained title to property located at 840 Alena Way, Sparks, Nevada 89436 (the “Property”), by way of a grant deed. (Compl. ¶ 14, ECF No. 1.) In December 2004, the homeowners executed a promissory note (“Note”) and deed of trust (“DOT”) in the amount of $232, 000 in favor of First Source Financial USA. (Id. at ¶ 15.) The Note and DOT were subsequently assigned to Plaintiff HSBC Bank USA (“HSBC”). (Id. at ¶ 16.) Then, in May 2012, Defendant Red Rock Financial Services, LLC (“Red Rock”), on behalf of the HOA, recorded a Lien for Delinquent Assessments in the amount of $947.15, based on the homeowners' failure to pay their HOA assessments. The HOA eventually foreclosed, selling the Property to Defendant Thunder Properties (“Thunder”) on August 7, 2013, for the price of $3, 515. (Id. at ¶¶ 17-21.)

         On August 5, 2016, HSBC brought this action against Thunder, the HOA, and Red Rock, asserting six causes of action arising from the HOA foreclosure sale: (1) violation of the Takings Clause of the Fifth Amendment; (2) violation of the Due Process Clauses of the Fifth and Fourteenth Amendments; (3) wrongful foreclosure; (4) violation of NRS 116.1113 et seq.; (5) unjust enrichment;[1] and (6) quiet title. HSBC primarily seeks an order declaring that the foreclosure sale did not extinguish its first deed of trust, or that the sale was unlawful and invalid and should be set aside entirely. The HOA now moves to dismiss the claims of wrongful foreclosure, violation of NRS 116.1113, and quiet title based on (1) HSBC's failure to mediate its claims under NRS 38.310, and (2) the fact that the HOA does not claim a current interest in the Property. (Mot. Dismiss, ECF No. 16.) Red Rock joins the HOA's motion, and argues for dismissal of the same claims on the same grounds. (Joinder Mot. Dismiss, ECF No. 18.)

         II. LEGAL STANDARDS

         Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief” in order to “give the defendant fair notice of what the ... claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957). Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action that fails to state a claim upon which relief can be granted. 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). The court, however, is not required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).

         A formulaic recitation of a cause of action with conclusory allegations is not sufficient; a plaintiff must plead facts pertaining to his own case making a violation “plausible, ” not just “possible.” Ashcroft v. Iqbal, 556 U.S. 662, 677-79 (2009) (citing Twombly, 550 U.S. at 556) (“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”). That is, a plaintiff must not only specify or imply a cognizable legal theory, but also must allege the facts of the plaintiff's case so that the court can determine whether the plaintiff has any basis for relief under the legal theory the plaintiff has specified or implied, assuming the facts are as the plaintiff alleges (Twombly-Iqbal review).

         “After the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). The standards governing a Rule 12(c) motion are the same as those governing a Rule 12(b)(6) motion. See Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989) (“The principal difference ... is the time of filing. ... [T]he motions are functionally identical ....”).

         A defendant may challenge the court's subject-matter jurisdiction over a case or certain claims pursuant to Federal Rule of Civil Procedure 12(b)(1). The plaintiff, as the party seeking to invoke the court's jurisdiction, bears the burden of proving that the case is properly in federal court. Wright v. Incline Vill. Gen. Imp. Dist., 597 F.Supp.2d 1191, 1198 (D. Nev. 2009) (citing McCauley v. Ford Motor Co., 264 F.3d 952, 957 (9th Cir. 2001)). A challenge to subject-matter jurisdiction may be either facial or factual. Thornhill Publ'g Co. v. Gen. Tel. & Elec. Corp., 594 F.2d 730, 733 (9th Cir. 1979).

         A facial challenge asserts that the allegations contained in the complaint “are insufficient on their face to invoke federal jurisdiction.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). To determine whether the facts are sufficient to establish subject-matter jurisdiction, the court must “consider the allegations of the complaint to be true and construe them in the light most favorable to the plaintiff.” Nevada ex rel. Colo. River Comm'n of Nev. v. Pioneer Cos., 245 F.Supp.2d 1120, 1124 (D. Nev. 2003) (citing Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1989)).

         III. ANALYSIS

         a. Failure to Mediate

         The HOA argues that the claims of wrongful foreclosure and violation of NRS 116.1113 must be dismissed because HSBC failed to mediate its claims under ...


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