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Wells Fargo Bank, N.A. v. SFR Investments Pool 1, LLC

United States District Court, D. Nevada

March 17, 2017

WELLS FARGO BANK, N.A., Plaintiff(s),
v.
SFR INVESTMENTS POOL 1, LLC, et al., Defendant(s).

          ORDER

         Presently before the court is defendant/counterclaimant SFR Investments Pool 1, LLC's (“SFR”) motion for summary judgment (ECF No. 55), [1] plaintiff Wells Fargo Bank, N.A.'s (“Wells Fargo”) motion for summary judgment (ECF No. 56), and defendant Sunrise Highlands Community Association's (the “HOA”) countermotion for summary judgment (ECF No. 64). Responses and replies to these motions are on the record. (ECF Nos. 61-63, 67-69, 74, 76).

         I. Introduction

         On May 8, 2008, Alfonso and Maria Razo bought the real property at 2678 Early Light Drive, Las Vegas, Nevada (the “property”) for a sum of $385, 000. (ECF No. 56). On September 23, 2010, the pair refinanced the property via Castle & Cooke Mortgage's (“C&C”) $376, 010 loan. (ECF Nos. 56, 56-4). Consequently, the Razos provided a deed of trust as security for the loan, which was recorded on September 29, 2010. (ECF No. 56-5).

         C&C appointed Mortgage Electronic Registration Systems, Inc. (“MERS”) as the note and deed of trust beneficiary and obtained mortgage insurance through the Secretary of Housing and Urban Development. (Id.). On September 21, 2011, MERS conveyed its interest in the deed of trust to plaintiff via a corporate assignment deed of trust. (ECF No. 56-6). On November 20, 2011, Wells Fargo recorded a substitution of trustee, appointing National Default Servicing Corporation as trustee of the deed of trust. (ECF No. 56-7).

         A notice of delinquent assessment (lien) was recorded on March 20, 2012, by Alessi & Koenig (“A&K”) on behalf of the HOA in the amount of $965.89. (ECF No. 55-1 at 133).

         On November 16, 2012, A&K mailed to plaintiff and others, via United States Postal Service certified mail, a notice of trustee's sale, which was recorded on November 19, 2012. (ECF No. 55-1 at 162-65). That notice indicated that $3, 025.11 was owed and explicitly warned that failure to satisfy the balance would result in the sale of the property at A&K's office on December 19, 2012. (ECF No. 56-10). That notice also referenced the record date and instrument number of the underlying HOA lien. (Id.).

         At that sale, SFR purchased the property for $16, 000, and the accompanying trustee's deed upon sale was recorded on December 20, 2012. (ECF No. 56-11).

         Wells Fargo initiated the present action on April 23, 2015. (ECF No. 1). On April 30, 2015, plaintiff filed its amended complaint-the operative one at this time. (ECF No. 10).

         Plaintiff's amended complaint asserts the following claims: (1) violation of the Fifth Amendment's takings clause against all defendants; (2) violation of the United States Constitution's supremacy clause against all defendants; (3) violation of the Fifth and Fourteenth Amendment due process clauses against all defendants; (4) wrongful foreclosure against all defendants; (5) violation of Nevada Revised Statute (“NRS”) 116.1113 et seq. against the HOA and A&K; (6) intentional interference with contract against all defendants; and (7) quiet title against all defendants. (ECF No. 10).

         SFR's answer to the amended complaint asserted its counter/cross-claims for quiet title and injunctive relief as to the property. (ECF No. 21). SFR's motion for summary judgment asks the court to hold that, inter alia, “the Association's foreclosure sale was commercially reasonable, SFR is the title holder of the Property, and that the Bank's deed of trust was extinguished.” (ECF No. 55 at 20).

         The HOA's countermotion for summary judgment requests that the court “deny [Wells Fargo]'s request for summary judgment” and resolve plaintiff's claims in this case in favor of the HOA. (ECF No. 64 at 5). The court will sequentially consider the claims in this case.

         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 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 non-moving party must “set forth specific facts showing that there is a genuine issue for trial.” Id.

         In determining summary judgment, the court applies a burden-shifting analysis. “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.” C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000). Moreover, “[i]n 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.” Id.

         By contrast, when the non-moving 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 non-moving 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, 630 (9th Cir. 1987).

         The Ninth Circuit has held that information contained in an inadmissible form may still be considered for summary judgment if the information itself would be admissible at trial. Fraser v. Goodale, 342 F.3d 1032, 1036 (9th Cir. 2003) (citing Block v. City of Los Angeles, 253 F.3d 410, 418-19 (9th Cir. 2001) (“To survive summary judgment, a party does not necessarily have to produce evidence in a form that would be admissible at trial, as long as the party satisfies the requirements of Federal Rules of Civil Procedure 56.”)).

         III. Discussion

         a. Takings clause Wells Fargo contends that NRS 116.3116 et seq. violates the Fifth Amendment takings clause. (ECF No. 56). The takings clause prohibits the state from taking private property for public use without just compensation. U.S. Const. amend. V. Wells Fargo's argument, however, has been rejected. See, e.g., Saticoy Bay LLC Series 350 Durango 104 v. Wells Fargo Home Mortg., a Div. of Wells Fargo Bank, N.A., 388 P.3d 970, 975 (Nev. 2017) (”[T]he extinguishment of a subordinate deed ...


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