United States District Court, D. Nevada
FEDERAL HOUSING FINANCE AGENCY, in its capacity as Conservator of Federal National Mortgage Association and Federal Home Loan Mortgage Corporation; FEDERAL NATIONAL MORTGAGE ASSOCIATION; and FEDERAL HOME LOAN MORTGAGE CORPORATION, Plaintiffs,
LAS VEGAS DEVELOPMENT GROUP, LLC; LVDG, LLC; and LAS VEGAS DEVELOPMENT, LLC, Defendants.
M. NAVARRO, CHI UNITED STATES DISTRICT JUDGE
before the Court is the Motion to Dismiss,  (ECF No. 29),
filed by Defendants LVDG, LLC (“LVDG”), and Las
Vegas Development, LLC (“Las Vegas Development”)
(collectively “Defendants”). Plaintiffs Federal
Home Loan Mortgage Corporation (“Freddie Mac”),
Federal Housing Finance Agency (“FHFA”), and
Federal National Mortgage Association (“Fannie
Mae”) (collectively “Plaintiffs”) filed a
Response, (ECF No. 34), and Defendants filed a Reply, (ECF
No. 37). For the reasons discussed below, Defendants'
Motion is DENIED.
case arises out of HOA foreclosure sales of nine properties
where Plaintiffs' liens continued to encumber the
properties during the sales. (First Am. Compl.
(“FAC”) ¶ 1, ECF No. 16). Plaintiffs allege
that “Defendants are the current record owner of at
least nine properties that have been the subject of completed
HOA [f]oreclosure [s]ales and are encumbered by
[Plaintiffs'] [l]iens.” (Id. ¶ 5). As
such, Plaintiffs assert that 12 U.S.C. § 4617(j)(3), the
Federal Foreclosure Bar that permits Plaintiffs to have an
interest in the properties, preempts NRS § 116.3116,
which extinguishes Plaintiffs' interest. (See,
e.g., id. ¶ 56). Plaintiffs therefore
allege that the HOA foreclosure sales did not extinguish
Plaintiffs' interests in the properties. (Id.).
26, 2016, Plaintiffs filed their Complaint, (ECF No. 1), and
on July 14, 2016, Plaintiffs filed their First Amended
Complaint. In their First Amended Complaint, Plaintiffs
allege causes of action for: (1) declaratory relief and (2)
quiet title. (FAC ¶¶ 40-59). On October 18, 2016,
Defendants filed the instant Motion seeking to sever
themselves from the present action. (See generally
Mot. to Dismiss (“MTD”)).
20(a)(2) of the Federal Rules of Civil Procedure provides
that, in order for more than one defendant to be joined
together in an action, the defendants must meet two specific
requirements: (1) the right to relief asserted against each
defendant must arise out of or relate to the same transaction
or occurrence or series of transactions or occurrences; and
(2) a question of law or fact common to all defendants must
arise in the action. Fed.R.Civ.P. 20(a)(2). “If the
test for permissive joinder is not satisfied, a court, in its
discretion, may sever the misjoined parties, so long as no
substantial right will be prejudiced by the severance.”
Coughlin v. Rogers, 130 F.3d 1348, 1350 (9th Cir.
1997) (citing Fed.R.Civ.P. 21). If the district court chooses
to sever the case, it may do so by dismissing “all but
the first named [defendant] without prejudice to the
institution of new, separate lawsuits [against] the dropped
assert that they should be severed because Plaintiffs'
First Amended Complaint “focus[es] on
particularized houses, mortgages, deeds of trust,
HOA's [sic], collection agents, association sales,
buyers, sellers, and details surrounding the . . . alleged
‘purchase' of 9 completely different loans secured
by 9 completely different real properties owned by 3
different Defendants.” (MTD 8:23-26) (emphasis in
Plaintiffs contend that this case concerns “a central
legal issue: whether 12 U.S.C. § 4617(j)(3) (the
“Federal Foreclosure Bar”) precludes the
extinguishment of Fannie Mae's and Freddie Mac's
property interests via HOA foreclosure sales.” (Resp.
3:2-5). Plaintiffs continue that the three Defendants
“are Nevada limited liability corporations created by
the same principals and that share similar names, the same
business address, the same counsel, and conduct the same
business of purchasing properties that have been the subject
of HOA foreclosure proceedings.” (Id. 3:8-11).
Plaintiffs therefore assert that joinder is favored here.
20(a)'s rule for joinder of parties “is designed to
promote judicial economy and reduce inconvenience, delay, and
added expense.” Coughlin, 130 F.3d at 1351.
The Ninth Circuit has indicated that Rule 20 must be
“construed liberally in order to promote trial
convenience and to expedite the final determination of
disputes, thereby preventing multiple lawsuits.”
See, e.g., League to Save Lake Tahoe v. Tahoe
Reg'l Planning Agency, 558 F.2d 914, 917 (9th Cir.
1977); see also United Mine Workers of Am. v. Gibbs,
383 U.S. 715, 724 (1966) (noting that the “impulse is
toward entertaining the broadest possible scope of action
consistent with fairness to the parties; joinder of claims,
parties and remedies is strongly encouraged”).
Rule 20(a)'s first requirement, Plaintiffs' claims
must arise from “the same transaction, occurrence, or
series of transactions or occurrences.” Fed.R.Civ.P.
20(a)(2)(A). “By its terms, this provision requires
factual similarity in the allegations supporting
[p]laintiffs' claims.” Visendi v. Bank of Am.,
N.A., 733 F.3d 863, 870 (9th Cir. 2013). In
Visendi, the Ninth Circuit held that “[s]uch
factual similarity is absent here” because the case
involved “over 100 distinct loan transactions with many
different lenders, ” the loans “were secured by
separate properties scattered across the country, ” and
“some of the properties, but not all, were sold in
Defendants do not have such disparate factual differences.
The nine properties in this case all had their loans
purchased by either Fannie Mae or Freddie Mac. (Compl. ¶
28). The properties were not “scattered across the
country, ” or even scattered across the State of
Nevada, but were all located in the greater Las Vegas area,
including Henderson and North Las Vegas. (Id.).
Finally, all of the properties in this case were sold in
foreclosure. (Id. ¶¶ 29-37). Although
Defendants attempt to draw parallels to the facts in
Visendi to support severance, the Court disagrees
and instead holds that there is sufficient factual similarity
here to adequately meet Rule 20(a)'s first requirement.
Rule 20(a)'s second requirement, Plaintiffs' claims
must present “any question of law or fact common to all
defendants.” Fed.R.Civ.P. 20(a)(2)(B). In
Visendi, the Ninth Circuit held that the
plaintiffs' claims of invalid assignment, mistake, and
negligence “each require particularized factual
analysis, ” and that the plaintiffs' merely
alleging that the ...