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Federal Housing Finance Agency v. Thunder Properties Inc.

United States District Court, D. Nevada

April 13, 2017

FEDERAL HOUSING FINANCE AGENCY et al., Plaintiffs,
v.
THUNDER PROPERTIES, INC., Defendant.

          ORDER

          ROBERT C. JONES United States District Judge.

         This case arises out of several homeowners' association foreclosure sales. Pending before the Court is a motion for summary judgment.

         I. FACTS AND PROCEDURAL HISTORY

         The Federal Housing Finance Agency (“FHFA'), the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and five lending institutions have sued Thunder Properties, Inc. (“Thunder”) to quiet title to thirteen properties in Reno and Sparks, Nevada (“the Properties”) for which Thunder is the current record owner. Specifically, Plaintiffs seek a declaration that under the Supremacy Clause and 12 U.S.C. § 4617(j)(3), first deeds of trust against the Properties were not extinguished under state law by homeowners' association foreclosure sales because Fannie Mae or Freddie Mac held the respective loans and first deeds of trust at the time of foreclosure. Plaintiffs have moved for offensive summary judgment.

         II. LEGAL STANDARDS

         A court must grant summary judgment when “the movant shows 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). Material facts are those which may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See Id. 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).

         In determining summary judgment, a court uses a burden-shifting scheme. 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.” C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citation and internal quotation marks omitted). In 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 nonmoving 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., 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 (1970). If the moving party meets its initial burden, the burden then shifts to the opposing party to establish a genuine issue of material fact. 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 unsupported by facts. 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 Fed. R. Civ. P. 56(e); Celotex Corp., 477 U.S. at 324.

         At the summary judgment stage, 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, 477 U.S. at 249. 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. Notably, facts are only viewed in the light most favorable to the non-moving party where there is a genuine dispute about those facts. Scott v. Harris, 550 U.S. 372, 380 (2007). That is, even where the underlying claim contains a reasonableness test, where a party's evidence is so clearly contradicted by the record as a whole that no reasonable jury could believe it, “a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment.” Id.

         III. ANALYSIS

         This Court and others in the District have ruled that 12 U.S.C. § 4617(j)(3) prevents the sale of any property in which the FHFA (as conservator of Fannie Mae or Freddie Mac) has an interest without the FHFA's consent. See My Global Vill., LLC v. Fed. Nat'l Mortg. Ass'n, No. 2:15-cv-00211, 2015 WL 4523501, at *4 (D. Nev. July 27, 2015) (Jones, J.) (citing Skylights LLC v. Byron, 112 F.Supp.3d 1145, 1151-59 (D. Nev. 2015) (Navarro, C.J.)). The Skylights case has been cited dozens of times by other judges of this District and only in approval. The Court considers this point of law settled unless and until the Court of Appeals rules otherwise. The dispositive question under § 4617(j)(3) is whether Fannie Mae or Freddie Mac (or the FHFA as conservator) held any interest in the Properties on the respective dates of foreclosure.

         Also, although § 4617(j)(3) is the only issue specifically addressed in the Complaint, Plaintiffs have broadly asked for a declaration that the deeds of trust survived the respective foreclosure sales, and they argue via the present motion that the deeds of trust cannot have been extinguished under Bourne Valley Court Tr. v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016) (ruling that Chapter 116's opt-in notice scheme is facially unconstitutional under the Due Process Clause of the Fourteenth Amendment). The Court is bound by Bourne Valley and must therefore grant summary judgment to Plaintiffs on that basis as to any of the Properties for which Thunder cannot show a factual dispute as to whether a constitutionally reasonable attempt at notice of the foreclosure sale was made. The Court will address § 4617(j)(3) as to each property, as well.

         A. The Ringneck Way Property

         Lender CTX Mortgage Co., LLC (“CTX”) held the promissory note and attendant deed of trust as to the Ringneck Way Property from July 14, 2006 until it transferred them to JPMorgan Chase Bank, N.A. (“Chase”) on January 16, 2012. (Deed of Trust, ECF No. 22-1, at 2; Assignment, ECF No. 22-1, at 23). Thunder bought the Ringneck Way Property at the foreclosure auction on August 7, 2013. (Foreclosure Deed, ECF No. 22-1, at 26). Plaintiffs have not satisfied their initial burden to produce evidence that would entitle them to a directed verdict under § 4617(j)(3) if uncontroverted at trial because they have adduced no evidence of Fannie Mae or Freddie Mac (or the FHFA as conservator) having held any interest in the Ringneck Way Property on the date of foreclosure (or ...


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