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

United States District Court, D. Nevada

May 9, 2017

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

          ORDER

         Presently before the court is SFR Investments Pool 1, LLC's (“SFR”) motion to certify question of law to the Nevada Supreme Court. (ECF No. 20). Plaintiff Wells Fargo Bank, N.A. (“Wells Fargo”) filed a response (ECF No. 26), to which SFR replied (ECF No. 30).

         Also before the court is defendant Foothills at MacDonald Ranch Master Association's (the “HOA”) motion to dismiss. (ECF No. 23). Wells Fargo filed a response (ECF No. 31), to which the HOA replied (ECF No. 35).

         I.Facts

         This case involves a dispute over real property located at 1741 Choice Hills Drive, Henderson, Nevada 89012 (the “property”). Theresa J. Wingender obtained a loan from World Savings Bank FSB in the amount of $562, 500.00 to purchase the property, which was secured by a deed of trust recorded on June 23, 2003. (ECF No. 1). Wells Fargo is the successor-in-interest to World Savings Bank FSB by merger. (ECF No. 1).

         On January 17, 2007, defendant Homeowner Association Services, Inc. (“HASI”), acting on behalf of the HOA, recorded a notice of delinquent assessment lien, stating an amount due of $1, 194.00. (ECF No. 1). On August 16, 2011, HASI recorded a notice of delinquent assessment lien, stating an amount due of $19, 454.00. (ECF No. 1). On August 29, 2011, HASI recorded a notice of default and election to sell to satisfy the delinquent assessment lien, stating an amount due of $24, 129.69. (ECF No. 1). On August 12, 2013, HASI recorded a notice of trustee's sale, stating an amount due of $33, 877.90. (ECF No. 1).

         On September 26, 2013, SFR purchased the property at the foreclosure sale for $56, 000.00. (ECF No. 1). A trustee's deed upon sale in favor of SFR was recorded on January 14, 2014. (ECF No. 1).

         On September 26, 2016, Wells Fargo filed the underlying complaint, alleging six causes of action: (1) declaratory relief under the Takings Clause of the Fifth Amendment against all defendants; (2) declaratory relief under the Due Process Clause of the Fifth and Fourteenth Amendments against all defendants; (3) wrongful foreclosure against all defendants; (4) violation of NRS 116.1113 against the HOA and HASI; (5) unjust enrichment against the HOA and SFR; and (6) quiet title against all defendants. (ECF No. 1)

         On January 6, 2017, SFR filed a counterclaim against Wells Fargo and a crossclaim against Transunion Settlement Solutions for quiet title and injunctive relief. (ECF No. 18).

         In the instant motions, SFR moves to certify a question of law to the Nevada Supreme Court (ECF No. 20), and the HOA moves to dismiss Wells Fargo's claims against it pursuant to NRS 38.310 and Federal Rule of Civil Procedure 12(b)(6) (ECF No. 23). The court will address each as it sees fit.

         II. Legal Standards

         A. Certify Question of Law to the Nevada Supreme Court

         The Nevada Rules of Appellate Procedure provide that the Supreme Court of Nevada has the power to answer “questions of [state] law . . . which may be determinative of the cause then pending in the certifying court and as to which it appears to the certifying court there is no controlling precedent in the decisions of the Supreme Court of [Nevada].” Nev. R. App. P. 5(a).

         The Nevada Supreme Court “may answer questions of law certified [] by a federal court when (1) [the] answers to the certified questions may be determinative of part of the federal case, (2) there is no clearly controlling Nevada precedent, and (3) the answers to the certified questions will help settle important questions of law. See, e.g., Hartford Fire Ins. Co. v. Tr. of Const. Indus., 208 P.3d 884, 888 (Nev. 2009).

         Where the question does not impact the merits of a claim pending before the certifying court, the question should not be certified to the Supreme Court. See Nev. R. App. P. 5(a) (requiring that certified question be “determinative”); see also Volvo Cars of N. Am., Inc. v. Ricci, 137 P.2d 1161, 1164 (Nev. 2006) (declining to answer certified questions where “answers to the questions posed [] would not ‘be determinative' of any part of the case”). “The certification procedure is reserved for state law questions that present significant issues, including those with important public policy ramifications, and that have not yet been resolved by the state courts.” Kremen v. Cohen, 325 F.3d 1035, 1037 (9th Cir. 2003).

         Federal courts have discretion to certify questions of state law. Lehman Bros. v. Schein, 416 U.S. 386, 391 (1974). “Resort to certification is not mandatory where state law is unclear on a particular issue.” Carolina Cas. Ins. Co. v. McGhan, 572 F.Supp.2d 1222, 1225 (D. Nev. 2008) (citing Lehman Bros., 416 U.S. at 390-91). Generally, “[w]hen a decision turns on applicable state law and the state's highest court has not adjudicated the issue, a federal court must make a reasonable determination of the result the highest state court would reach if it were deciding the case.” Aetna Cas. & Sur. Co. v. Sheft, 989 F.2d 1105, 1108 (9th Cir. 1993).

         Further, a federal court may decline to certify a question where controlling precedent is available for guidance. Slayman v. FedEx Ground Package Sys., Inc., 765 F.3d 1033, 1041 (9th Cir. 2014); see also Kehoe v. Aurora Loan Servs., LLC, No. 3:10-cv-256-RCJ-RAM; 2010 WL 4286331, at *11 (D. Nev. Oct. 20, 2010) (declining to certify question to Nevada Supreme Court where statutory language was sufficiently clear for the court to apply).

         Finally, a party must show “particularly compelling reasons” for certification when that party first requests it after losing on an issue. Complaint of McLinn, 744 F.2d 677, 681 (9th Cir. 1984) (“Ordinarily such a movant should not be allowed a second chance at victory when, as here, the district court employed a reasonable interpretation of state law.”). . . . . . .

         B. Motion to Dismiss

         A court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A properly pled complaint must provide “[a] short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands “more than labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted).

         “Factual allegations must be enough to rise above the speculative level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to “state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (citation omitted).

         In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, the court must accept as true all well-pled factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 678-79. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 678.

         Second, the court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiff's complaint alleges facts that allow the court to draw a reasonable ...


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