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Bank of America, N.A. v. Desert Canyon Homeowners Association

United States District Court, D. Nevada

October 31, 2017

BANK OF AMERICA, N.A., Plaintiff,
v.
DESERT CANYON HOMEOWNERS ASSOCIATION; SFR INVESTMENTS POOL 1, LLC; and ABSOLUTE COLLECTION SERVICES, LLC, Defendants. SFR INVESTMENTS POOL1, LLC, Counter/Cross Claimant,
v.
BANK OF AMERICA, N.A.; BAYVIEW LOAN SERVICING, LLC; TIMOTHY GOERING, an individual; ADRIAN GOERING, an individual, Counter/Cross Defendants.

          ORDER (DEF.'S MOTION TO DISMISS - ECF NO. 8)

          MIRANDA M. DU UNITED STATES DISTRICT JUDGE.

         I. SUMMARY

         Before the Court is Defendant Desert Canyon Homeowners' Association's (“Desert Canyon” or “HOA”) motion to dismiss (“Motion”) (ECF No. 8). The Court has reviewed Plaintiff Bank of America, N.A.'s response (ECF No. 17) and Desert Canyon's reply (ECF No. 18). Defendant SFR Investments Pool 1, LLC (“SFR”) filed an untimely response (ECF No. 22) to which Desert Canyon replied (ECF No. 26). The Court agrees with Desert Canyon that the Court should disregard SFR's response as the Motion addresses only Plaintiff's claims against Desert Canyon.

         II. RELEVANT FACTS

         The following facts are taken from the Complaint. (ECF No. 1.) In August 2008, Timothy and Adrian A. Goering (“Borrowers”) obtained a loan (“Loan”) in the amount of $226, 395.00 evidenced by a note and secured by a deed of trust (“DOT”) on property located in Desert Canyon (“the Property”). Plaintiff subsequently acquired the Loan.

         On August 9, 2012, Desert Canyon recorded a notice of default and election to sell to satisfy the delinquent assessment lien. On January 7, 2013, Desert Canyon recorded a notice of trustee's sale, which listed the amount due to the HOA as $4, 063.84. Plaintiff's predecessor attempted to remit payment to Desert Canyon to satisfy the super-priority amount owed to the HOA. However, Desert Canyon foreclosed on the Property on March 12, 2013. A trustee's deed upon sale in favor of SFR was recorded on March 14, 2013. SFR paid $10, 000.

         Plaintiff asserts three claims against the HOA-quiet title/declaratory relief, breach of NRS § 116.1113, and wrongful foreclosure.

         III. LEGAL STANDARD

         A court may dismiss a plaintiff's complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A properly pleaded 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) (citing Twombly, 550 U.S. at 555). “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 (quoting Twombly, 550 U.S. at 570).

         In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, a district court must accept as true all well-pleaded factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 678. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 678. Second, a district 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 a court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 678. Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has “alleged-but it has not show[n]-that the pleader is entitled to relief.” Id. at 679 (alteration in original) (internal quotation marks omitted). When the claims in a complaint have not crossed the line from conceivable to plausible, the complaint must be dismissed. See Twombly, 550 U.S. at 570.

         IV. DISCUSSION

         Desert Canyon argues that Plaintiff's claims are time-barred or, in the alternative, subject to dismissal under Rule 12(b)(6). (ECF No. 8 at 3-10.) The Court agrees that two of Plaintiff's claims-breach of NRS § 116.1113 and wrongful foreclosure-are time-barred. The Court finds that Plaintiff states a claim for quiet title and declaratory relief.

         A. Statute of Limitations

         Desert Canyon argues that Plaintiff's claims accrued at the time of the foreclosure sale. (Id. at 3.) Plaintiff counters that it only realized its injury when the Nevada Supreme Court decided SFR Investments Pool 1, LLC v. U.S. Bank, N.A.,334 P.3d 408 (Nev. 2014), clarifying that the foreclosure sale on a homeowner's association lien extinguishes a first deed of trust. (ECF No. 17 at 5.) However, this Court has held that a cause of action accrues at the time of the foreclosure sale in homeowner's association foreclosure cases such as this. See Goldsmith Enterprises, LLC v. U.S. Bank, N.A., No. 2:15-cv-00991-MMD-PAL, ...


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