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Nationstar Mortgage, LLC v. Maplewood Springs Homeowners Association

United States District Court, D. Nevada

March 1, 2017



         Presently before the court is defendant Maplewood Springs Homeowners' Association's (the "HOA") renewed motion to dismiss. (ECF No. 75). Plaintiff/counterdefendant Nationstar Mortgage, LLC ("Nationstar") filed a response (ECF No. 84), as did defendant/counterclaimant SFR Investments Pool 1, LLC ("SFR") (ECF No. 78), to which the HOA replied (ECF Nos. 82; 91).[1]

         Also before the court is Deutsche Bank National Trust Company, as trustee for holders of the GSAA home equity trust 2006-11 asset backed certificates series 2006-11 ("Deutsche") and Nationstar's renewed motion for summary judgment. (ECF No. 70). The HOA and SFR filed responses (ECF Nos. 79, 87), to which Deutsche and Nationstar replied (ECF No. 89).

         Also before the court is SFR's renewed motion for summary judgment. (ECF No. 71). Deutsche and Nationstar filed a response, (ECF No. 83), to which SFR replied (ECF No. 93).

         Also before the court is the HOA's renewed motion for summary judgment (ECF No. 73). No responses were filed and the time to respond has since passed.[2]

         I. Facts

         The present case involves a dispute over real property located at 6229 Sugartree Avenue, Las Vegas, Nevada (the "property"). (ECF No. 1 at 2). Gholam H. Farzad (the "borrower") purchased the property on April 13, 2006. (ECF No. 1 at 3). The borrower financed the purchase with a $297, 800.00 loan that was secured by a deed of trust dated April 13, 2006, and recorded on April 24, 2006. (ECF No. 1-1 at 2-18).

         On October 10, 2012, the deed of trust was assigned to Deutsche, via an assignment of deed of trust. (ECF No. 1-2).

         On February 7, 2013, Nevada Association Services, Inc. ("NAS"), as the HOA's trustee, recorded a notice of delinquent assessment lien. (ECF No. 1-5). The notice asserted that the borrower owed $1, 409.08 in fees. (ECF No. 1-5 at 2).

         On August 9, 2013, NAS, as the HOA's trustee, recorded a notice of default and election to sell to satisfy the delinquent assessment lien. (ECF No. 1-6). The notice asserted that the borrower owed $2, 632.74 in fees. (ECF No. 1-6 at 2). On the same day as it was recorded, NAS mailed the notice of default and election to sell (via certified mail, return receipt requested) to the borrower, Bank of New York Mellon, Deutsche Bank National Trust, Countrywide Home Loans, Inc., and Mortgage Electronic Registration Services ("MERS"). (ECF Nos. 40 at 2; 40-2 at 4-5).

         On October 1, 2013, Nationstar's interest in the deed of trust was recorded. (ECF No. 1- 3).

         On January 31, 2014, the HOA recorded a notice of trustee's sale through its agent. (ECF No. 1-7). The notice asserted that the borrower owed $4, 106.60 in fees and that the trustee's sale would occur on February 21, 2014. (ECF No. 1-7 at 3). On the same day as it was recorded, NAS mailed the notice of trustee's sale (via certified mail, return receipt requested) to the borrower, Bank of New York Mellon ("BNYM"), Deutsche, Countrywide Home Loans, Inc., and Mortgage Electronic Registration Services ("MERS"). (ECF Nos. 40 at 2; 40-3 at 4-7).

         NAS held the trustee's sale on April 4, 2014, at which SFR purchased the property for $16, 000.00. (ECF No. 70-8 at 2). The foreclosure deed was recorded on April 7, 2014. (ECF No. 70-8).

         Nationstar filed the original complaint on August 31, 2015, asserting four claims against the HOA and SFR: (1) declaratory relief/quiet title; (2) breach of Nevada Revised Statute ("NRS") 16.1113 against the HOA; (3) injunctive relief against SFR; and (4) violation of procedural due process. (ECF No. 1). Nationstar contends that the notices prior to the HOA's foreclosure sale violated NRS Chapter 116, that the HOA violated NRS 116.1113 by falsely promising its liens were subordinate to the senior deed of trust and thereafter failing to notify Nationstar that its security interest was at risk, that the sale should be set aside as it was commercially unreasonable, and that Nevada's statutory scheme providing superpriority liens to homeowner's associations is violative of procedural due process under the Constitution. (ECF No. 1).

         On November 6, 2015, SFR filed an answer and counterclaim asserting three claims of relief against Nationstar, Deutsche, BNYM, and the borrower: (1) declaratory relief/quiet title; (2) preliminary and permanent injunction; and (3) slander of title. (ECF No. 18).

         II. Legal standard

         A. Motion to dismiss

         The court may dismiss a plaintiffs 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). Although Rule 8 does not require detailed factual allegations, it does require more than labels and conclusions. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Furthermore, a formulaic recitation of the elements of a cause of action will not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009) (citation omitted). Rule 8 does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions. Id. at 678-79.

         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." Id. 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. Id. When a complaint pleads facts that are merely consistent with a defendant's liability, and shows only a mere possibility of entitlement, the complaint does not meet the requirements to show plausibility of entitlement to relief. Id.

         In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering a motion to dismiss. Id. First, the court must accept as true all of the allegations contained in a complaint. Id. However, this requirement is inapplicable to legal conclusions. Id. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. 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. at 679. 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 held:

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. Motion for 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. DardenRests., 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, 411 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). Nonmovant's evidence 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.

         III. Discussion[3]

         The HOA seeks to dismiss Nationstar's claims and argues: (1) that Nationstar does not have an adverse interest in the property to sustain a claim of declaratory relief/quiet title; (2) that NRS 38.310 bars claims based on covenants, conditions and restrictions ("CC&Rs") that have not first been mediated; and (3) that NRS 116.31162-31168's notice provisions satisfy due process. (ECF No. 75 at 2).

         A. Motion to dismiss

         1. Injunctive relief

         Preliminarily, this court turns to Nationstar's cause of action for injunctive relief. (ECF No. 1 at 8-9). Though the parties omit argument for dismissing this cause of action in the briefing, the court finds no sustainable cause of action for injunctive relief. In fact, injunctive relief is a remedy, not a cause of action. See, e.g., Ajetunmobi v. Clarion Mortg. Capital, Inc., 595 Fed.Appx. 680, 684 (9th Cir. 2014) (citation omitted). If Nationstar still seeks this remedy, it would properly be brought as a motion under Federal Rule of Civil Procedure 65. Therefore, the court will dismiss Nationstar's claim for injunctive relief.

         2. Untimely response

         The local rules have the force of law. See United States v. Hvass, 355 U.S. 570, 574-575 (1958). Under Local Rule 7-2(d), "[t]he failure of an opposing party to file points and authorities in response to any motion . . . constitutes a consent to the granting of the motion." The Ninth Circuit instructs that a district court must weigh several factors before granting a motion filed pursuant to Federal Rule of Civil Procedure 12 because a party failed to comply with a local rule: "(1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its docket; (3) the risk of prejudice to the defendants; (4) the public policy favoring disposition of cases o[n] their merits; and (5) the availability of less drastic sanctions." Ghazali v. Moron, 46 F.3d 52, 53 (9th Cir. 1995) (quoting Henderson v. Duncan, 779 F.2d 1421, 1423 (9th Cir. 1986)) (discussing a Nevada local rule construing a failure to oppose a motion as effectively consenting to the granting of that motion); see also Martinez v. Stanford, 323 F.3d 1178, 1183 (9th Cir. 2003) (indicating that Ghazali provides the applicable rule for evaluating a Rule 12 motion to dismiss in light of a local rule authorizing dismissal).

         Indeed, Nationstar and Deutsche failed to timely respond in accordance with Local Rule 7-2. See (ECF No. 72, HOA's Motion to Dismiss) (filed on August 26, 2016; responses due by September 12, 2016); see also (ECF No. 84; Nationstar and Deutsche's responses) (filed on September 19, 2016). However, this court finds that the public policy favoring disposition of cases on their merits outweighs any prejudice to SFR. See Ghazali, 46 F.3d at 53.

         This court also finds that granting the HOA's motion to dismiss would not enhance the court's ability to effectively manage its docket. See Ghazali, 46 F.3d at 53. Additionally, the HOA would neither be forced to wait for plaintiffs response, nor prejudiced in an outcome on the merits as the responses are now on record, as is SFR's reply.

         This court acknowledges the public's interest in an expeditious resolution of litigation. See Id. However, dismissal is an inappropriate sanction in this circumstance because, inter alia, Nationstar and Deutsche's responses are on record, and the HOA has already replied to those responses. See (ECF Nos. 83, 84, 91).

         Accordingly, the court will not dismiss Nationstar's complaint, and continues with its analysis under the briefings.

         3. Declaratory Relief/Quiet Title

         In Nevada, "[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 BankNat'l Trust Co., 302 P.3d 1103, 1106 (Nev. 2013) (quoting Yokeno v. Mafnas, 973 F.2d 803, 808(9thCir. 1992)).

         The HOA maintains that it does not have a current adverse interest in the property as required by a plea to quiet title under NRS 40.010 and asks the court to dismiss it from this claim. (ECF No. 75 at 6). The HOA states it never made a claim to title, and that while it had a lien on the property in the past, it does not currently. (ECF No. 75 at 6).

         Under rule 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 double, ...

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