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Federal National Mortgage Association v. Rainbow Bend Homeowners Association

United States District Court, D. Nevada

November 7, 2017

FEDERAL NATIONAL MORTGAGE ASSOCIATION; and ROUNDPOINT MORTGAGE SERVICING CORPORATION, Plaintiffs,
v.
RAINBOW BEND HOMEOWNERS ASSOCIATION; DANIEL HALL; and DIANA HALL, Defendants.

          ORDER

          LARRY R. HICKS UNITED STATES DISTRICT JUDGE

         This matter centers on a nonjudicial foreclosure sale. The foreclosure sale was conducted under Nevada Revised Statute (“N.R.S.”) § 116.3116 et seq. in 2013. See ECF Nos. 10, 16, 28. After the foreclosure sale, the Ninth Circuit struck down the notice scheme employed by N.R.S. § 116.3116 et seq. as facially unconstitutional. Bourne Valley Court Tr. v. Wells Fargo Bank, NA, 832 F.3d 1154 (9th Cir. 2016), cert. denied, 137 S.Ct. 2296 (2017). As a result, plaintiffs Federal National Mortgage Association (“Fannie Mae”) and Roundpoint Mortgage Servicing Corporation (“Roundpoint”) brought this action, seeking declaratory relief or an order quieting title on the at-issue property. ECF No. 1.

         Now, three motions come before the court. First, defendant Rainbow Bend Homeowners' Association (the “HOA”) moves to dismiss or, alternatively, for summary judgment on Fannie Mae and Roundpoint's complaint. ECF No. 10. Second, defendants Daniel Hall and Diana Hall move to dismiss or, alternatively, for summary judgment on the complaint. ECF No. 16. And third, Fannie Mae and Roundpoint oppose both motions and counter-move for summary judgment. ECF No. 28. The defendants filed a joint reply. ECF No. 33. The court resolves the three pending motions by turning to Bourne Valley-a Ninth Circuit opinion that binds the court in its decision. Under the guidance of Bourne Valley, the court denies the HOA's motion, denies the Hall's motion, and grants Fannie Mae and Roundpoint's countermotion.

         I. BACKGROUND

         The court takes the following facts from the HOA's motion for summary judgment unless otherwise noted.[1]

         In 2003, a pair of trustees (James Loftis and Jean Loftis) obtained a loan from Morgan Stanley Dean Witter Credit Corporation to purchase property at 53 Avenue Bleu De Clair, Sparks, Nevada 89434 (Parcel Number 003-531-23).[2] ECF No. 10 at 6. This transaction gave rise to the first deed of trust on the property, which was recorded in Storey County, Nevada. ECF No. 10 at 8; ECF No. 1, Ex. 1.[3] After multiple assignments, Roundpoint came to hold the beneficial interests under the deed of trust. ECF No. 10 at 9; ECF No. 1, Exs. 1-4.

         The purchased property sits in a community governed by the HOA and is subject to HOA assessments. ECF No. 10 at 7. In 2012, the trustees failed to pay the required assessments. ECF No. 10 at 12. The HOA therefore recorded a Notice of Delinquent Assessment Lien in March 2012. Id.; ECF No. 1, Ex. 5. Approximately five months later, the HOA recorded a Notice of Default and Election to Sell. ECF No. 10 at 12; ECF No. 1, Ex. 6. The delinquent assessments remained unpaid, prompting the HOA to record a Notice of Foreclosure Sale in August 2013. ECF No. 10 at 13; ECF No. 1, Ex. 7. At the nonjudicial foreclosure sale, which was held in September 2013, the HOA purchased the property. ECF No. 10 at 13; ECF No. 1, Ex. 8. The Halls then purchased the property in 2014. ECF No. 10 at 13, ECF No. 1, Ex. 9.

         Fannie Mae and Roundpoint brought this action after the foreclosure sale, alleging five causes of action: (1) declaratory relief under 12 U.S.C. § 4617(j)(3); (2) quiet title under 12 U.S.C. § 4617(j)(3); (3) declaratory relief under the Fifth and Fourteenth Amendment of the U.S. Constitution; (4) quiet title under the Fifth and Fourteenth Amendment of the U.S. Constitution; and (5) permanent and preliminary injunction. ECF No. 1. The HOA and the Halls now move to dismiss or, alternatively, for summary judgment. ECF Nos. 10, 16. Fannie Mae and Roundpoint counter-move for summary judgment. ECF No. 28. The HOA and the Halls filed a joint reply. ECF No. 33.

         II. LEGAL STANDARD

         A. Motion to Dismiss

         Federal Rule of Civil Procedure (“Rule”) 8(a)(2) requires a pleading to contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). A court may dismiss a complaint that fails to meet this standard under Rule 12(b)(6). Fed.R.Civ.P. 12(b)(6). Rule 12(b)(6) permits dismissal on the basis of either (1) the “lack of a cognizable legal theory, ” or (2) “the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

         In considering whether the complaint is sufficient to state a claim, the court accepts as true all factual allegations contained in the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). However, a court need not “accept as true allegations that contradict matters properly subject to judicial notice or by exhibit” or “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (internal quotations omitted). While a complaint need not allege detailed factual allegations, it “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when it “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         B. Summary Judgment

         Summary judgment is appropriate only when the pleadings, depositions, answers to interrogatories, affidavits or declarations, stipulations, admissions, and other materials in the record show that “there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In assessing a motion for summary judgment, the evidence, together with all inferences that can reasonably be drawn therefrom, must be read in the light most favorable to the party opposing the motion. Matsu ...


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