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RJRN Holdings LLC v. Davis

United States District Court, D. Nevada

March 2, 2017

RHONDA DAVIS, et al., Defendants.


         Presently before the court is a motion for summary judgment filed by defendants BAC Home Loans Servicing, LP, fka Countrywide Home Loans Servicing, LP ("BAC"), Carrington Mortgage Services ("CMS"), and Mortgage Electronic Registration Systems, Inc. ("MERS" and collectively, with BAC and CMS, as "defendants"). (ECF Nos. 76, 77). Counterdefendant/third-party plaintiff RH Kids, LLC ("RHK") filed a response (ECF No. 80), to which defendants replied (ECF No. 82).

         Also before the court is RHK's motion for summary judgment. (ECF No. 78). Defendants filed a response (ECF No. 81), to which RHK replied (ECF No. 83).

         I. Facts

         This case involves a dispute over real property located at 5234 Fire Night Avenue, Las Vegas, Nevada 89122 (the "property").

         Rhonda Davis obtained a loan to purchase the property, which was secured by a deed of trust in favor of Pulte Mortgage LLC and recorded on January 6, 2009. (ECF No. 4 at 6). Pulte Mortgage LLC transferred the beneficial interest in the deed of trust to BAC via a corporate assignment deed recorded on August 11, 2010. (ECF No. 4 at 6).

         Hacienda North Homeowners' Association (the "HOA") claimed a lien on the property for assessments accruing pursuant to the covenants, conditions, and restrictions ("CC&Rs"). (ECF No. 4). On April 12, 2011, Absolute Collection Services, LLC ("ACS"), on behalf of the HOA, recorded a notice of delinquent assessment lien, stating an amount due of $1, 074.00. (ECF No. 77). On July 18, 2011, ACS recorded a notice of default and election to sell, stating an amount due of $2, 009.41. (ECF No. 77). On November 10, 2011, ACS recorded a notice of trustee's sale, stating an amount due of $3, 530.72. (ECF No. 77).

         On January 30, 2012, BANA's prior counsel sent a letter to the HO A/ACS requesting and offering to pay the superpriority amount "upon presentation of adequate proof. (ECF No. 77 at 4). ACS alleged refused BANA's offer to pay the superpriority amount of the HOA's lien. (ECF No. 77 at 4).

         On April 17, 2012, the HOA conducted a foreclosure sale pursuant to NRS Chapter 116. (ECF No. 4 at 6). Rex Archambault ("Archambault") purchased the property at the foreclosure sale for $5, 000.00, and a trustee's deed upon sale was recorded on April 18, 1012. (ECF No. 4 at 6). RJRN obtained title to the property via quitclaim deed recorded on February 10, 2014. (ECF No. 4 at 6). RHK was subsequently transferred title to the property via a quit claim deed recorded on December 23, 2015. (ECF No. 28).

         CMS recorded a request for notification of default on December 14, 2014. (ECF No. 4 at 7).

         RJRN filed the original complaint in state court on June 6, 2015, alleging three causes of action: (1) declaratory relief/quiet title; (2) preliminary and permanent injunction; and (3) slander to title. (ECF No. 4). Defendants removed the action to federal court on July 2, 2015. (ECF No. 1). On February 15, 2017, the court dismissed RJRN's second and third claims. (ECF No. 87).

         On April 28, 2016, RHK filed a third-party complaint against Davis, MERS, and BAC, alleging two causes of action: (1) quiet title; and (2) injunctive relief. (ECF No. 28).

         In the instant motions, defendants and RHK move for summary judgment. The court will address each as it sees fit.[1]

         II. Legal Standard

         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 nonmoving 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., 411 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.

         III. Discussion

         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").

         In defendants' motion, they argue that quiet title in their favor is proper because the HOA lien statute is facially unconstitutional, BANA's tender extinguished the superpriority lien, RHK is not a bona fide purchaser, the foreclosure sale was commercially unreasonable, SFR Investments should not apply retroactively, and the HOA lien statute is preempted. (ECF No. 77).

         In RHK's motion, it contends that quiet title in its favor is proper because the foreclosure sale complied with NRS Chapter 116, RHK is a bona fide purchaser, the foreclosure sale was commercially reasonable, and RHK implicates no federal interest in its claim. (ECF No. 78).

         A. Deed Recitals[2]

         Section 116.3116(1) of the Nevada Revised Statutes gives an HOA a lien on its homeowners' residences for unpaid assessments and fines; moreover, NRS 116.3116(2) gives priority to that HOA lien over all other liens and encumbrances with limited exceptions-such as "[a] first security interest on the unit recorded before the date on which the assessment sought to be enforced became delinquent." Nev. Rev. Stat. § 116.3116(2)(b).

         The statute then carves out a partial exception to subparagraph (2)(b)'s exception for first security interests. See Nev. Rev. Stat. § 116.3116(2). In SFR Investment Pool 1 v. U.S. Bank, ...

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