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LN Management LLC Series 7937 Sierra Rim v. Pfeiffer

United States District Court, D. Nevada

September 20, 2017

LN MANAGEMENT LLC SERIES 7937 SIERRA RIM, Plaintiff(s),
v.
BENJAMIN T. PFEIFFER, et al., Defendant(s).

          ORDER

         Presently before the court is LN Management LLC Series 7937 Sierra Rim v. Pfeiffer et al, case number 2:13-cv-01934-JCM-PAL.

         I. Facts

         This case arises out of a dispute over property located at 7927 Sierra Rim Dr., Las Vegas, NV 89131 (“the property”). The dispute centers around the effect of a homeowner's association foreclosure sale on a first deed of trust.

         On September 25, 2013, plaintiff LN Management LLC Series 7937 Sierra Rim (“LN Management”) filed a complaint in the Eighth Judicial District of Nevada. Plaintiff's complaint asserts claims for quiet title and declaratory relief. Plaintiff asserted its claims against the former homeowners, Benjamin and Sabrina Pfeiffer (“the Pfeiffers”), among others. Plaintiff never served the Pfeiffers with the complaint or any other document related to the instant action.

         On October 22, 2013, defendant CitiMortgage, Inc. (“CMI”), filed a petition for removal. (ECF No. 1). Thereafter, for the next three years, the parties submitted to the court numerous motions, stipulations, and other filings. On May 5, 2015, Magistrate Judge Leen granted a stipulation to intervene filed by Federal Housing Finance Agency (“FHFA”) and Federal National Mortgage Association's (“Fannie Mae”). On May 12, 2015, CMI filed counterclaims against plaintiff for quiet title, declaratory relief, and unjust enrichment. (ECF No. 18).[1] On July 14, 2015, Fannie Mae filed counterclaims against plaintiff for quiet title and declaratory relief. (ECF No. 41).[2] On July 28, 2015, FHFA filed counterclaims against plaintiff for quiet title and declaratory relief.[3] (ECF No. 49). On March 9, 2017, the court granted defendants and counterclaimants FHFA and Fannie Mae's motion for summary judgment on their claims for quiet title and declaratory relief. (ECF No. 100).

         On July 5, 2017, the court issued an order to show cause as to why the court should not dismiss the action. (ECF No. 103). On July 12, 2017, defendant CMI filed its response. (ECF No. 104). CMI explained that the parties had to that point been unclear on the effect that the court's order granting defendant FHFA's motion for summary judgment (ECF No. 100) had on CMI and LN Management's claims. (ECF No. 104). CMI took the position that resolution of Fannie Mae and FHFA's claims necessarily meant that CMI was likewise entitled to summary judgment against plaintiff. Id. CMI asked the court to consider granting summary judgment sua sponte. Id.

         Also on July 12, 2017, plaintiff filed its response to the order to show cause. (ECF No. 105). In plaintiff's response, it argues that the Ninth Circuit decision in Weeping Hollow holds that this court lacks subject matter jurisdiction over the action. Id. In the alternative, plaintiff states that if the court has jurisdiction to hear the case, that the court resolve the outstanding claims “so that the matter may conclude and the time invested by the Court, and the parties, isn't just for naught.” Id. at 3.

         On July 28, the court entered an order giving CMI seven days to respond plaintiff's claim that, pursuant to Weeping Hollow, the court lacks subject matter jurisdiction. (ECF No. 106). On August 4, CMI filed its response. (ECF No. 107).

         II. Legal Standard

         “District courts unquestionably possess the power to enter summary judgment sua sponte.” Norse v. City of Santa Cruz, 629 F.3d 966, 971 (9th Cir. 2010). In order to grant summary judgment sua sponte, the losing party must have “reasonable notice that the sufficiency of [its] claim will be in issue.” Id. at 971-72 (citing United States v. 14.02 Acres of Land More or Less in Fresno Cnty., 547 F.3d 943, 955 (9th Cir. 2008). “Reasonable notice implies adequate time to develop the facts on which the litigant will depend to oppose summary judgment.” Id. at 972 (citing Portsmouth Square, Inc. v. Shareholders Protective Comm., 770 F.2d 866, 869 (9th Cir. 1985)).

         III. Discussion

         Plaintiff asserts that the Ninth Circuit decision in Weeping Hollow divests this court of subject matter jurisdiction over the instant dispute. Therefore, plaintiff continues, this court must remand the case to state court and accordingly vacate all prior orders in the case. CMI asserts that plaintiff fraudulently joined the Pfeiffers, and the court should therefore not consider them for purposes of determining whether diversity jurisdiction exists. Alternatively, CMI argues that the court should consider the Pfeiffers nominal defendants.

         As an initial matter, the court will dismiss defendants Benjamin and Sabrina Pfeiffer from the action. Plaintiff has not attempted to serve the Pfeiffers in the instant action, and none of its briefings in the past three years make more than passing mention of the Pfeiffers.[4] Defendant CMI raised fraudulent joinder concerns and noted plaintiff's failure to serve the Pfeiffers as early as November 11, 2013, (ECF No. 4) (CMI's statement regarding removed action), and as recently as August 4, 2017 (CMI's response to the courts order to show cause).

         The court noted plaintiff's failure to prosecute its claims in its July 5, 2017, order to show cause. (ECF No. 101). Plaintiff has received the adequate notice required by Federal Rule of Civil Procedure 4(m) of its failure to serve the Pfeiffers and the potential consequences of such failure. As plaintiff has not served plaintiff after years of litigation and multiple assertions that the Pfeiffers are not a proper party to the ...


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