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Wilmington Trust Co. v. SFR Investments Pool 1, LLC

United States District Court, D. Nevada

May 4, 2017

WILMINGTON TRUST COMPANY, AS TRUSTEE FOR THE BEAR STEARNS ALT-A TRUST, MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2007-1, Plaintiff,
v.
SFR INVESTMENTS POOL 1, LLC, a Nevada limited liability company; CLUB AT MADEIRA CANYON UNIT OWNERS' ASSOCIATION; DOES I through X, inclusive; and ROE CORPORATIONS I through X, inclusive, Defendants. SFR INVESTMENTS POOL 1, LLC, a Nevada limited liability company, Counter/Cross-Claimant,
v.
WILMINGTON TRUST COMPANY, AS TRUSTEE FOR THE BEAR STEARNS ALT-A TRUST, MORTGAGE PASS-THROUGH CERTIFICATES SERIES 2007-1; NATIONSTAR MORTGAGE, LLC, a Delaware limited liability company; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., a Delaware corporation, as nominee beneficiary for PULTE MORTGAGE, LLC; HAMLET McNEACE, an individual; and SHAWN McNEACE, an individual, Counter/Cross-Defendants.

          WRIGHT, FINLAY & ZAK, LLP Edgar C. Smith, Esq. Nevada Bar No. 5506 Rock K. Jung, Esq. Nevada Bar No. 10906 Attorneys for Plaintiff/Counter-Defendant, Wilmington Trust Company, as Trustee for the Bear Stearns ALT-A Trust, Mortgage Pass-Through Certificates, Series 2007-1; and Cross-Defendants, Nationstar Mortgage, LLC and Mortgage Electronic Registration Systems, Inc.

          PLAINTIFF'S MOTION TO AMEND COMPLAINT AND CAPTION

          Richard F. Boulware, II United States District Judge

         MOTION TO AMEND COMPLAINT AND CAPTION

         I. INTRODUCTION

         Plaintiff/Counterdefendant Wilmington Trust Company, as Trustee for the Bear Stearns ALT-A Trust, Mortgage Pass-Through Certificates, Series 2007-1, by and through their attorneys of record, Edgar C. Smith, Esq., and Rock K. Jung, Esq., of the law firm of Wright, Finlay & Zak, LLP, hereby moves for leave to amend its Complaint and to amend the caption to reflect the new parties.

         II. ARGUMENT

         Federal Rules of Civil Procedure (“F.R.C.P.”) 15(a)(2), 15(d) and 20 in federal court permits a party to amend its pleading by leave of court and states that “leave shall be freely given when justice so requires.” F.R.C.P. 15(a). The Ninth Circuit has similarly held that the policy of freely granting leave to amend “is to be applied with extreme liberality.” Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001). “In exercising its discretion a court must be guided by the underlying purpose of Rule 15 - to facilitate decision on the merits rather than on the pleadings or technicalities.” DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987)). Therefore, a party shall be given leave to amend freely provided there is no existing bad-faith factors such as undue delay, bad faith or dilatory motive on the part of the movant seeking leave. 3 Moore's Federal Practice - Civil § 15.14 (2011) (analyzing F.R.C.P. 15(a) and stating that “[d]enial of leave to amend is disfavored; and a district judge should grant leave absent a substantial reason to deny”).

         Here, applying these well-established principles, the Court should grant Plaintiff's request for leave to amend. Justice requires leave to amend, as the subject HOA and its sales trustee Nevada Association Services, Inc. (“NAS”) proceeded to sell the Property without, inter alia, proper notice and also including improper fees. Further, the Nevada Supreme Court's recent decision in Horizons at Seven Hills Homeowners Association v. Ikon Holdings, LLC, 132 Nev. Adv. Op. 35 (April 28, 2016) (“Ikon”) and Shadow Wood Homeowners Association, Inc. v. New York Community Bancorp, Inc., 132 Nev. Adv. Op. 5 (Jan. 28, 2016) (“Shadow Wood”)has substantially changed the law of HOA sales, regarding recitals, amounts that comprise the super-priority lien portion, and the pleadings should appropriately be amended to reflect the state of the law after that decision. Plaintiff's current action against just Defendant SFR INVESTMENTS POOL 1, LLC (“SFR”), and Defendant CLUB AT MADEIRA CANYON UNIT OWNERS' ASSOCIATION (the “HOA”) is untenable as it stands, as colorable claims also exist against the HOA's sales trustee/agent NAS. In the Shadow Wood case, an end was brought to the past arguments by buyers that relied solely on the recitals in an HOA foreclosure deed to establish quiet title in favor of the buyer. Plus the Shadow Wood decision demonstrates genuine issues of material fact related to fees and costs, commercial reasonableness, and the circumstances surrounding the HOA Sale need to be explored in discovery. Meanwhile, in the Ikon case, the Nevada Supreme court stated that the super-priority lien is ONLY 9 months of dues and nothing more. Thus, the Court soundly rejected the HOA's argument that they must be able to have collection fees and costs.

         These recent developments as well as the fact that Plaintiff, HOA and the HOA Trustee are still waiting to have a NRED mediation scheduled, makes vital the allegations in Plaintiff's Amended Complaint that NAS- failed to properly notify Plaintiff that it was foreclosing on the superpriority portion of its lien, that it further failed to identify or provide the super-priority amount in any of its notices, and even went as far as to refuse providing any payoff information regarding the alleged delinquent HOA account See attached as Exhibit “A”, Plaintiff's proposed Amended Complaint. Moreover, the Court stated that lenders should have a right to pay off an HOA delinquent assessment lien to protect its interest. Id. at 414 (“U.S. Bank could have paid off the [HOA] lien to avert loss of its security.”).

         As discussed earlier, in evaluating a request for leave to amend, courts examine such factors as undue delay, bad faith, or dilatory motive and whether they are present. Those factors or reasons are simply not present here. Plaintiff's request to amend the pleadings is timely as only limited discovery has been commenced, settlement negotiations have or will soon be commencing between Plaintiff and SFR, and Plaintiff did not unreasonably delay in bringing this motion as it was first seeking to complete the NRS Ch. 38 mediation. Furthermore, this request is not made in bad faith or for any dilatory motive. To the contrary, Plaintiff is seeking leave to amend to ensure that this case may be evaluated on its merits in light of a recent change in circumstances and in the law. See 3 Moore's Federal Practice - Civil § 15.14 (discussing F.R.C.P. 15(a) and noting that “a court should allow amendments to ensure that all the issues are before the court”).

         In addition, the clear benefits of streamlining adjudication of common facts and related issues weigh heavily in favor of permitting amendment, as joining all of the relevant parties and adjudicating all claims in one action will benefit judicial economy, save the parties time and resources, and enable a thorough and conclusive determination of the parties' contentions.

         Plaintiff also requests that the Court amend the caption to reflect the change in parties as shown in Plaintiff's proposed Amended Complaint, attached hereto as Exhibit “A”.

         III. CONCLUSION

         For these reasons, Plaintiff respectfully requests leave to amend its Complaint in this matter, and for an Order of the Court amending the caption to reflect the change in parties.

         Dated: September 12, 2016.

         IT IS SO ORDERED.

         EXHIBIT LIST

         1. Proposed Amended Complaint Exhibit A

         EXHIBIT A

         Proposed First Amended Complaint

         PLAINTIFF'S FIRST AMENDED COMPLAINT

         COMES NOW Plaintiff/Counter-defendant, Wilmington Trust Company, as Trustee for the Bear Stearns ALT-A Trust, Mortgage Pass-Through Certificates, Series 2007-1 (hereinafter “Plaintiff”), by and through their attorneys of record, Edgar C. Smith, Esq. and Rock K. Jung, Esq., of the law firm of WRIGHT, FINLAY & ZAK, LLP, and hereby submits its First Amended Complaint.

         INTRODUCTION

         1. The real property that is the subject of this civil action consists of a residence commonly known as 2745 King Louis Street, Henderson, Nevada 89044 (Parcel No.190-19-810-122) (hereinafter the “Property”).

         JURISDICTION AND VENUE

         2. The Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1332, as Plaintiff is a “citizen of a different States” from all defendants and the amount in controversy exceeds $75, 000, exclusive of interest and costs.

         3. Venue is proper in this judicial district pursuant to 28 U.S.C. §§ 1391(b)(1)-(2) because Defendants reside in this district; a substantial part of the events or omissions giving rise to Plaintiff's claims occurred in this district; and the property that is the subject of this action is situated in this district, in North Las Vegas, Clark County, Nevada.

         4. The Court has personal jurisdiction over SFR INVESTMENTS POOL I, LLC (hereinafter “Buyer” or “SFR”) because this lawsuit arises out of and is connected with its purposeful purchase of an interest in real property situated in the County of Clark, State of Nevada, and upon information and belief, SFR is a Nevada limited liability company.

         5. The Court has personal jurisdiction over MADEIRA CANYON UNIT OWNERS' ASSOCIATION (hereinafter “HOA”) because this lawsuit arises out of and is connected with the HOA's foreclosure of real property located in the County of Clark, State of Nevada, and upon information and belief, the HOA is a Nevada non-profit corporation.

         6. The Court has personal jurisdiction over NEVADA ASSOCIATION SERVICES, INC. (hereinafter “HOA Trustee” or “NAS”) because this lawsuit arises out of and is connected with the NAS's acts or omissions in relation to the foreclosure of real property located in the County of Clark, State of Nevada, and upon information and belief, NAS is a Nevada domestic corporation.

         PARTIES

         7. Plaintiff is a Delaware corporation and authorized to do business in the State of Nevada.

         8. Plaintiff is now and at all times relevant herein the assigned Beneficiary under the Deed of Trust signed by Hamlet McNeace and Shawn L. McNeace (hereinafter “McNeace”), as husband and wife, recorded on November 1, 2006, (hereinafter “Deed of Trust”), which encumbers the Property and secures a promissory note.

         9. Upon information and belief, SFR is a Nevada limited-liability company. Public records show SFR is the current owner of record for the Property.

         10. Upon information and belief, the HOA, is a Nevada non-profit corporation licensed to do business in the state of Nevada.

         11. Upon information and belief, the HOA Trustee, is a Nevada domestic corporation licensed to do business in the State of Nevada.

         GENERAL ALLEGATIONS

         12. On or about October 31, 2006, McNeace purchased the Property.

         13. To purchase the Property, McNeace borrowed $683, 528.00 from originating lender Pulte Mortgage, LLC. To obtain the loan, McNeace executed a Note secured by a Deed of Trust recorded on November 1, 2006. The Deed of Trust identified Pulte Mortgage, LLC, as the Lender; Mortgage Electronic Registration Systems, Inc. (“MERS”) as nominee for Plaintiff's successors and assigns, and Lawyers Title as the Trustee.[1]

         14. On May 5, 2014, a Corporate Assignment of Deed of Trust was recorded against the Property conveying the beneficial interest under the Deed of Trust to Nationstar Mortgage, LLC.[2]

         15. On June 24, 2014, an Assignment of Deed of Trust was recorded against the Property conveying the beneficial interest under the Deed of Trust to Plaintiff.[3]

         16. On August 21, 2012, a Notice of Delinquent Assessment Lien was recorded against the Property by the HOA Trustee on behalf of the HOA.[4]

         17. On October 31, 2012, a Notice of Default and Election to Sell was recorded against the Property.[5]

         18. On October 4, 2013, the HOA Trustee recorded a Notice of Foreclosure Sale with the Clark County Recorder on behalf of the HOA.[6]

         19. Upon information and belief, a non-judicial foreclosure sale is alleged to have occurred on March 28, 2014 (the “HOA Sale”), whereby the HOA conveyed its interest in the Property, if any, to Buyer for the sum of $17, 000.00.

         20. Public records show that on March 31, 2014, a Foreclosure Deed was recorded by which Buyer claims its interest.[7]

         21. None of the aforementioned notices identified above and attached as Exhibits 4-6 identified what portion of the claimed lien was for alleged late fees, interest, fines/violations, or collection fees/costs.

         22. None of the aforementioned notices identified above and attached as Exhibits 4-6 specified what portion of the lien, if any, that the HOA claimed constituted a “super-priority” lien.

         23. None of the aforementioned notices identified above and attached as Exhibits 4-6 specified whether the HOA was foreclosing on the “super-priority” portion of its lien, if any, or under the non-super-priority portion of the lien.

         24. None of the aforementioned notices identified above and attached as Exhibits 4-6 provided any notice of a right to cure.

         25. A homeowner's association sale conducted pursuant to NRS Chapter 116 must comply with all notice provisions as stated in NRS 116.31162 through NRS 116.31168 and NRS 107.090.

         26. A lender or a holder of a beneficial interest in a senior deed of trust, such as Plaintiff, has a right to cure a delinquent homeowner's association lien in order to protect its interest.

         27. Upon information and belief, the HOA and its agent, the HOA Trustee, did not comply with all mailing and noticing requirements stated in NRS 116.31162 through NRS 116.31168, or as required by the CC&R's.

         28. A recorded notice of default must “describe the deficiency in payment.” 29. The HOA Sale occurred without notice to Plaintiff, what portion of the lien, if any, that HOA and HOA Trustee claimed constituted a “super-priority” lien.

         30. The HOA Sale occurred without notice to Plaintiff, whether HOA was foreclosing on the “super-priority” portion of its lien, if any, or under the non-super-priority portion of the lien.

         31. The HOA Sale occurred without notice to Plaintiff, of a right to cure the delinquent assessment and ...


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