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Wells Fargo Bank, N.A. v. Sfr Investments Pool 1, LLC

United States District Court, D. Nevada

November 8, 2017

WELLS FARGO BANK, N.A., a national banking association, Plaintiff,
v.
SFR INVESTMENTS POOL 1, LLC, a Nevada limited liability company; THE FOOTHILLS AT WINGFIELD HOMEOWNERS ASSOCIATION, a Nevada non-profit corporation; FULLER JENKINS CLARKSON, P.C., a Nevada professional corporation Defendants. SFR INVESTMENTS POOL 1, LLC, a Nevada limited liability company, Counterclaimant,
v.
WELLS FARGO BANK, N.A., a national banking association; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., its successors and assigns, as Nominee Beneficiary for DHI MORTGAGE COMPANY, a Texas limited partnership; BRIAN MCKAY, an individual; LAWRENCE D. MCKAY, an individual, Counter-Defendants.

          ORDER

          LARRY R. HICKS UNITED STATES DISTRICT JUDGE

         This matter centers on a nonjudicial foreclosure sale conducted in 2012 under Nevada Revised Statute (“N.R.S.”) § 116.3116 et seq. by defendant The Foothills at Wingfield Homeowners' Association (“HOA”). See ECF Nos. 1, 16, 23. Plaintiff Wells Fargo Bank, N.A. challenges the constitutionality of the foreclosure sale and, more specifically, the effect of the foreclosure sale on Wells Fargo's deed of trust that encumbered the at-issue property. ECF No. 1 at ¶¶ 12, 34-36. Wells Fargo brings seven claims for relief, including claims to quiet title, claims for declaratory relief, and claims arising under Nevada state law. ECF No. 1 at 7-14.

         Currently before the court is the HOA's motion to dismiss. ECF No. 23. In its motion, the HOA moves to dismiss all claims against it. Id. Wells Fargo opposed the motion. ECF No. 27. Defendant SFR Investments Pool 1, LLC also opposed the motion but in a limited manner. ECF No. 25. The HOA filed a reply. ECF No. 28. The court now grants the motion in part and denies the motion in part, dismissing claim four, claim five, and claim seven.

         I. BACKGROUND

         In 2008, defendants Brian McKay and Lawrence McKay executed a promissory note and a deed of trust to obtain a loan to purchase the property at 4329 Clearwood Drive, Sparks, Nevada 89436 (Parcel Number 526-371-02). ECF No. 1 at ¶¶ 4, 15, 16. The deed of trust was recorded in Washoe County, Nevada, designating DHI Mortgage Company as the lender, Ticor Title of Nevada as the trustee, and Mortgage Electronic Registrations Systems, Inc. as the nominee for the lender. Id. Wells Fargo came to hold the beneficial interest under the deed of trust by way of assignment. Id. at ¶ 18. Wells Fargo was also assigned the note. Id.

         The at-issue property sits in a community governed by the HOA and is therefore subject to assessments. See Id. at ¶¶ 19-20. After the McKays failed to pay the assessments as they came due, defendant Fuller Jenkins Clarkson, P.C. (“Fuller”) recorded a notice of delinquent assessment lien on behalf of the HOA. Id. Fuller later recorded a notice of default and election to sell and then a notice of foreclosure sale, both on behalf of the HOA. Id. at ¶¶ 22, 25. At the nonjudicial foreclosure sale held in November 2012, the HOA purchased the property. Id. at ¶ 27. The HOA transferred the property to SFR via a quitclaim deed in 2013. Id. at ¶ 31.

         Wells Fargo sues the defendants, alleging seven causes of action: (1) quiet title and declaratory relief under the Takings Clause of the 5th and 14th Amendments to the U.S. Constitution; (2) quiet title and declaratory relief under the Supremacy Clause in Article 4, § 3 of the U.S. Constitution; (3) quiet title and declaratory relief under the Due Process Clause of the 5th and 14th Amendments to the U.S. Constitution; (4) wrongful foreclosure; (5) violation of the duty of good faith imposed by N.R.S. § 116.1113 et seq.; (6) quiet title; and (7) unjust enrichment.[1] ECF No. 1 at 7-14. SFR asserts two counterclaims, which are not at issue here. ECF No. 16. The HOA filed its answer to the complaint, which included the defense of failure to state a claim. ECF No. 7. It now moves to dismiss the complaint, arguing that it is a disinterested party in this matter and that Wells Fargo failed to mediate its claims as required by Nevada law. ECF No. 23 at 3-10.

         II. LEGAL STANDARD

         A. Federal Rule of Civil Procedure 12(b)(1)

         Rule 12(b)(1) permits a party to move for dismissal of a complaint based on lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). In examining a facial attack of subject matter jurisdiction, the court accepts the allegations in the complaint as true. Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004).

         B. Federal Rule of Civil Procedure 12(b)(6)

         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.

         Further, motions to dismiss filed after an answer are treated as a motion for judgment on the pleadings under Rule 12(c). Aldabe v. Aldabe, 616 F.2d 1089, 1093 (9th Cir. 1980). A court must still treat all allegations in the complaint as true under Rule 12(c) and must treat contradicting allegation in the ...


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