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Bank of America, N.A. v. Bailey

United States District Court, D. Nevada

June 22, 2017

BANK OF AMERICA, N.A., Plaintiff(s),
v.
SAMUEL R. BAILEY, et al., Defendant(s).

          ORDER

         Presently before the court is plaintiff Bank of America, N.A.'s (“BANA”) motion for summary judgment. (ECF No. 68). Defendant Samuel Bailey has filed a response (ECF No. 71), and plaintiff has filed a reply (ECF No. 73).

         Also before the court is the defendant's motion for summary judgment. (ECF No. 70). Plaintiff filed a response (ECF No. 72), and defendant filed a reply (ECF No. 75).

         I. Introduction

         Plaintiff initiated the present action, requesting declaratory relief and quiet title as to its alleged first-position security interest in the real property at 4850 Impressario Court, Las Vegas, Nevada (the “property”). (ECF No. 1).

         Bailey then filed the following counterclaims against BANA: (1) an offset to BANA's potential damages due to costs incurred by acquiring the property; (2) unjust enrichment; (3) slander of title; and (4) attorneys' fees as special damages. (ECF No. 39).

         According to BANA, dismissed co-defendant Peter Aguilar owned the property, refinancing it with a roughly $400, 000.00 loan from Countrywide Bank, FSB (“Countrywide”) on December 17, 2008. (ECF No. 68). This transaction was secured by a deed of trust for Countrywide that was recorded on the same day. (Id.).

         On January 23, 2010, Aguilar then refinanced the property by means of a $396, 459.00 loan from BANA, which satisfied the outstanding Countrywide loan. (Id.). As a result, a February 2, 2010, substitution of trustee and reconveyance was recorded. (Id.).

         Plaintiff asserts that a first deed of trust on the property secured the BANA loan. (Id.). Importantly, plaintiff indicates that the deed of trust was executed by Aguilar on January 23, 2010, but it was not recorded until October 21, 2011. (Id.).

         In the meantime, Aguilar and Bailey allegedly acted as principals of Silver State Steel Group, Inc. in the course of that entity's acquisition of a Small Business Administration (“SBA”) loan from Meadows Bank (“Meadows”). (ECF No. 70).

         Plaintiff informs the court that “Aguilar and Bailey additionally each personally guaranteed the SBA Loan. As additional collateral for the SBA Loan, Aguilar granted Meadows a second-position Deed of Trust . . . on the Property, which was recorded on July 1, 2010.” (ECF No. 68 at 4) (citations omitted). Plaintiff alleges that Bailey and Meadows had actual knowledge of the BANA loan and unrecorded deed of trust. (Id.).

         Next, Aguilar received a loan from Franklin America Mortgage Company (“Franklin”). (Id.). That “[l]oan was secured by a First Deed of Trust recorded against the Property on December 1, 2010.” (Id. at 5). This loan was “used to fully satisfy the outstanding balance owed on the B[ANA] Deed.” (Id.).

         On December 13, 2012, Franklin assigned its deed of trust to BANA. (Id.). Thereafter, “Bailey . . . acquired an assignment of Meadows' right, title, and interest on June 6, 2013.” (ECF No. 71 at 6).

         On September 3, 2013, defendant Bailey recorded a notice of default and election to sell. (Id.). On May 14, 2014, defendant recorded a notice of sale. (Id.). Plaintiff initiated the instant action on June 6, 2014, requesting a declaratory judgment that its security interest in the property, stemming from the Franklin deed of trust, “is superior to and holds priority over the Meadows Deed of Trust.” (ECF No. 1 at 4). Finally, “Bailey acquired a Trustee's Sale Deed to the Property on September 9, 2014.” (ECF No. 70 at 5).

         Ultimately, plaintiff requests that the court rule in its favor as to two questions: (1) “Was the B[ANA] Deed of Trust in a position of priority to the Meadows Deed of Trust?”; and (2) “Was the Franklin Deed of Trust equitably subrogated to the position of the BOA Deed of Trust?” (ECF No. 68 at 8).

         Regarding the first question, BANA argues that the BOA deed of trust was in a priority position to the Meadows deed of trust because Meadows and Bailey had actual knowledge of BANA's loan and underlying position in the property. (Id.). As to the second question, BANA argues “that a refinancing mortgagee expects to receive equal priority to the mortgage being discharged” and “that the proceeds of the Franklin mortgage went to fully satisfy the B[ANA] mortgage, that Franklin did not intend[] to subordinate its interest to Meadows, and that Meadows was not prejudiced.” (Id. at 12).

         In the alternative, BANA requests that the court should grant summary judgment in its favor against Bailey's offset counterclaim because he received the benefit of the Meadows note and because BANA accuses Bailey of seeking damages for an issue outside of the scope of the instant litigation. (Id. at 16-17) (“Bailey's damage calculation similarly includes attorneys' fees incurred in wholly unrelated litigation against [his co-defendant, ] Aguilar.”).

         Finally, BANA also seeks relief from this court against Bailey's counterclaims of unjust enrichment, slander of title, and attorneys' fees. (Id.).

         Bailey's motion for summary judgment asks that this court adjudicate plaintiff's claims and Bailey's third counterclaim, slander of title, in his favor. (ECF No. 70). Bailey asserts two central points. (Id.). First, Bailey argues that “[BANA] cannot invoke equity to create a lien that does not exist, ” due to BANA's failure to record its deed of trust. (Id. at 2). Next, Bailey contests that “there is no justification for recording an extinguished deed of trust.” (Id. at 3).

         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 ...


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