United States District Court, D. Nevada
C. JONES, United States District Judge
case arises out of a homeowner's association foreclosure
sale. Pending before the Court is a motion for summary
FACTS AND PROCEDURAL HISTORY
about March 15, 2013, Plaintiff LN Management, LLC Series
5664 Divot (“LN”) purchased real property located
at 5664 Divot Place, Las Vegas, Nevada 89130 (“the
Property”) at an HOA foreclosure sale. (Compl. ¶
6, ECF No. 1-3). Plaintiff sued Defendants Kit Dansker and
JPMorgan Chase Bank, N.A. (“Chase”) in state
court to quiet title to the property and for a declaration
that Plaintiff owns the Property free and clear of any
purported interests of Defendants.
removed and moved to dismiss. LN moved to remand and notified
the Court that Dansker, the previous homeowner, had passed
away approximately four years earlier in October 2009. The
Court denied both the motion to remand and a motion to
substitute Dansker's estate (“the Estate”) as
a party, based on fraudulent joinder. The Court granted the
motion to dismiss based on its interpretation of the state
statute governing lien priority, Nevada Revised Statutes
section 116.3116. LN appealed. After the Nevada Supreme Court
resolved the statutory question differently than this Court
had, the parties stipulated to dismiss the appeal and conduct
further proceedings in this Court. Chase answered and filed a
Counterclaim for unjust enrichment.
parties stipulated to permit the Federal National Mortgage
Association (“Fannie Mae”) and the Federal
Housing Finance Authority (“FHFA”), as
conservator for Fannie Mae, to intervene. Fannie Mae answered
and filed a Counterclaim for quiet title and a declaration
that 12 U.S.C. § 4617(j)(3) preempts state law such that
the HOA foreclosure sale under state law cannot have
extinguished the first mortgage held by Fannie Mae at the
time of the sale. Fannie Mae joined Los Prados Community
Association (“Los Prados”) as a Counterdefendant.
FHFA separately answered and filed an essentially identical
Counterclaim. FHFA and Fannie Mae voluntarily dismissed their
Counterclaims against Los Prados without prejudice. FHFA and
Fannie Mae jointly moved for defensive summary judgment
against the Complaint and for offensive summary judgment on
their Counterclaims. The Court denied the motion (and a
motion to reconsider), agreeing with movants on the law but
finding that in this case there remained a genuine issue of
material fact as to whether FHFA or Fannie Mae owned the note
and deed of trust at the time of sale.
has asked the Court to grant it offensive summary judgment on
its counterclaims and defensive summary judgment against
LN's claims based on the Court of Appeals' decision
invalidating the Chapter 116 opt-in notice scheme as facially
unconstitutional under the Due Process Clause of the
Fourteenth Amendment. See Bourne Valley Court Tr. v.
Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016).
LN notes that the Nevada Supreme Court recently ruled
contrary to Bourne Valley. But state court rulings
on federal issues are only potentially persuasive authority.
The Court of Appeals' rulings are binding on this Court.
argues, however, that a recent ruling of the Court of Appeals
undermines this Court's previous ruling that
Dansker's joinder was fraudulent, and that the Court
should therefore reconsider remand. See Weeping Hollow
Ave. Tr. v. Spencer, 831 F.3d 1110, 1113-14 (9th Cir.
2016) (holding that the possibility of a foreclosed homeowner
later filing an equitable action against the purchaser to
unwind the sale made it reasonable for the purchaser to join
the homeowner in a quiet title action). The Court of Appeals
appears to hold that the possibility of the homeowner validly
challenging the foreclosure is enough to overcome any issues
of bad faith and avoid a finding of fraudulent joinder in
these circumstances. In this case, as in others like it, it
appears the homeowner would have a non-frivolous claim.
Court will not enter any judgment until it is satisfied of
its jurisdiction, but the Court will not remand until
Defendants have had a fair opportunity to discover the
citizenships of the parties and failed to show diversity. It
is possible that there is complete diversity between LN and
Dansker's successor(s)-in-interest. The parties shall
engage in jurisdictional discovery as to the identities and
citizenships of: (1) Dansker's successor(s) in interest;
and (2) LN's members and citizenships (and the members
and citizenships of any business entities who are members of
HEREBY ORDERED that the Motion for Summary Judgment (ECF No.
58) is DENIED without prejudice.
FURTHER ORDERED that JPMorgan Chase Bank, N.A. shall have
twenty-eight (28) days to conduct jurisdictional discovery
and make a further statement of removal alleging the
citizenships of the other parties, i.e., the identities and
citizenships of ...