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Prof-2013-S3 Legal Title Trust v. Desert Rain Holdings, LLC

United States District Court, D. Nevada

November 29, 2017

PROF-2013-S3 LEGAL TITLE TRUST, BY U.S. BANK NATIONAL ASSOCIATION, AS LEGAL TITLE TRUSTEE, Plaintiff,
v.
DESERT RAIN HOLDINGS, LLC; DOE INDIVIDUALS I through X, inclusive; and ROE CORPORATIONS I through X, inclusive, Defendants.

          WRIGHT, FINLAY & ZAK, LLP, Edgar C. Smith, Esq., Rock K. Jung, Esq., Attorneys for Plaintiff, PROF-2013-S3 LEGAL TITLE TRUST, BY U.S. BANK NATIONAL ASSOCIATION, AS LEGAL TITLE TRUSTEE.

          STIPULATION AND ORDER TO ALLOW PLAINTIFF TO AMEND ITS COMPLAINT TO ADD PARTIES

         COMES NOW, Plaintiff, PROF-2013-S3 Legal Title Trust, by U.S. Bank National Association, as Legal Title Trustee (hereinafter “Plaintiff” or “U.S. Bank”), by and through its attorney, ROCK K. JUNG, ESQ., of the law firm of Wright, Finlay & Zak, LLP, and and Defendant, Desert Rain Holdings, LLC (hereinafter “Desert” or “Defendant”), by and through its counsel of record, Joseph P. Reiff, Esq., and hereby stipulate and agree as follows:

1. On June 29, 2017, Plaintiff filed the instant action concerning claims to the real property commonly known as 3937 Rain Flower Lane, North Las Vegas, NV 89031, APN# 124-30-611-062 (hereinafter the “Property”).
2. On August 19, 2017, Defendant filed its Answer to the Complaint.
3. On September 13, 2017 the parties submitted their Proposed Joint Discovery Plan and Scheduling Order.
4. On September 29, 2017 Plaintiff propounded discovery to Defendant.
5. Plaintiff has served its initial disclosures.
6. At this time, the parties agree that Highland Hills Homeowners Association, Inc.

(hereinafter “HOA”) is a necessary party to the instant action and agree that Plaintiff should be permitted to amend its complaint to assert claims against the HOA.

         IT IS HEREBY STIPULATED AND AGREED that Plaintiff.shall have leave to amend its pleadings in the form of a First Amended Complaint a copy of which is attached as Exhibit 1.

         IT IS FURTHER STIPULATED AND AGREED that Plaintiff shall file its First Amended Complaint within seven (7) days of entry of the order approving this stipulation.

         ORDER

         IT IS SO ORDERED.

         Exhibit 1

         [PROPOSED] FIRST AMENDED COMPLAINT FOR QUIET TITLE AND DECLARATORY RELIEF

         COMES NOW Plaintiff, PROF-2013-S3 LEGAL TITLE TRUST, BY U.S. BANK NATIONAL ASSOCIATION, AS LEGAL TITLE TRUSTEE (“Plaintiff” or “U.S. Bank”), by and through its attorneys of record, Edgar C. Smith, Esq. and Rock K. Jung, Esq., of the law firm of Wright, Finlay & Zak, LLP, and hereby files this civil action against the Defendants.

         PARTIES, JURISDICTION AND VENUE

         1. The real property at issue is known as 3937 Rain Flower Lane, North Las Vegas, Nevada 89031; APN 124-30-611-062 (the “Property”).

         2. The Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1332, as all Plaintiffs are “citizens of different States” from all defendants and the amount in controversy exceeds $75, 000, exclusive of interest and costs. This Court also has original federal question jurisdiction under 28 U.S.C. § 1331 because Plaintiff, U.S. Bank, is asserting civil claims arising under the Constitution, laws, or treaties of the United States.

         3. Venue is proper in this judicial district pursuant to 28 U.S.C. §§ 1391(b)(1)-(2) because Defendant resides in this district; a substantial part of the events or omissions giving rise to Plaintiff's claims occurred in this district; and the Property that is the subject of this action is situated in this district, in North Las Vegas, Clark County, Nevada.

         4. Plaintiff is a national banking association, with its main office located in the state of Minnesota, organized and existing under the laws of the United States.

         5. Plaintiff is now and at all times relevant herein, the assigned Beneficiary under a Deed of Trust signed by Andrea Robertson (“Borrower” or “Robertson”), a single woman, and recorded on August 31, 2010, in the official records of the Clark County Recorder's Office (“Deed of Trust”), which encumbers the Property and secures a promissory note.

         6. Upon information and belief, Desert Rain Holdings, LLC (hereinafter “Buyer”), is a Nevada limited liability company, licensed to do business in the State of Nevada and was named as the purchaser of the Property on a Trustee's Deed Upon Sale recorded as Book and Instrument Number 20150312-0003125 in the official records of the Clark County Recorder's Office.

         7. Upon information and belief, Highland Hills Homeowners Association, Inc. (hereinafter the “HOA”) is a Nevada domestic non-profit Corporation, licensed to do business in the State of Nevada, and was the HOA that foreclosed on the Property.

         8. Upon information and belief, non-party, Alessi & Koenig, LLC (hereinafter “HOA Trustee”) was a Nevada domestic limited-liability company licensed to do business in the State of Nevada, and acted as the foreclosure trustee, which allegedly mailed and served the foreclosure notices, if any, and cried the foreclosure sale for the HOA.

         9. In accordance with NRS Chapter 38.310, Plaintiff satisfied the Nevada Real Estate Division Alternative Dispute Resolution (hereinafter, “NRED”) requirement by filing a claim naming the HOA and HOA Trustee as respondents which was then served on said HOA and HOA Trustee. However, on November 6, 2017, the claim was closed out by NRED due to the HOA and HOA Trustee's failure to timely file a written answer within 30 days after being served.[1]

         GENERAL ALLEGATIONS

         10. On or about June 12, 2008, the Borrower purchased the Property.[2]

         11. The Deed of Trust executed by the Borrower identified FPF Wholesale, a division of Stearns Lending, Inc. as the Lender, Nevada Title Company as the Trustee, and Mortgage Electronic Registration Systems, Inc. (“MERS”) solely as a nominee for Lender and Lender's successors and assigns, securing a loan in the amount of $186, 834.00 (hereinafter the “Robertson Loan”).[3]

         12. On October 8, 2012, an Assignment of Deed of Trust was recorded in which all beneficial interest in the Deed of Trust was assigned to Bank of America, N.A.[4]

         13. On May 29, 2014, an Assignment of Deed of Trust was recorded by which Bank of America, N.A. assigned all beneficial interest in the Deed of Trust to Secretary of Housing and Urban Development.[5]

         14. On June 11, 2014, an Assignment of Deed of Trust was recorded by which Secretary of Housing and Urban Development by PRMF Acquisition LLC, its attorney-in-fact, by Avenue 365 Lender Services, LLC, its designee assigned all beneficial interest in the Deed of Trust to U.S. Bank, National Association, as trustee for SROF-2013-S3 REMIC Trust I.[6]

         15. On July 20, 2015, an Assignment of Deed of Trust was recorded by which U.S. Bank, National Association, as trustee for SROF-2013-S3 REMIC Trust I assigned all beneficial interest in the Deed of Trust to USROF III Legal Title Trust 2015-1, by U.S. Bank National Association, as Legal Title Trustee.[7]

         16. On October 21, 2016, an Assignment of Deed of Trust was recorded by which U.S. ROF III Legal Title Trust 2015-1, by U.S. Bank National Association, as Legal Title Trustee assigned all beneficial interest in the Deed of Trust to PROF-2013-S3 Legal Title Trust, by U.S. Bank National Association, as Legal Title Trustee.[8]

         17. On August 28, 2013, a Notice of Delinquent Assessment (Lien) (“HOA Lien”) was recorded against the Property by Alessi & Koenig, LLC (the “HOA Trustee”) on behalf of Highland Hills Homeowners Association (the “HOA”).[9] The HOA Trustee acted as the foreclosure trustee, and allegedly mailed and served the foreclosure notices, if any, and cried the foreclosure sale for the HOA.

         18. On December 10, 2013, a Notice of Default and Election to Sell under Homeowners Association Lien was recorded against the Property by the HOA Trustee on behalf of the HOA, stating that the amount due as of December 8, 2013 was $2, 051.56.[10]

         19. On May 27, 2014, a Notice of Trustee's Sale was recorded against the Property by the HOA Trustee on behalf of the HOA, stating that the amount due as of May 12, 2014 was $3, 174.84.[11]

         20. Upon information and belief, pursuant to the Trustee's Deed Upon Sale, a non-judicial foreclosure sale occurred on or about October 29, 2014 (hereinafter, the “HOA Sale”), whereby Buyer acquired its interest, if any, in the Property for $30, 000.00.[12]

         21. On March 12, 2015, a Trustee's Deed Upon Sale - Corrective Trustee's Deed upon Sale Inst #201412080002918 Recording to Correct Grantee Name was recorded against the Property, naming Buyer.[13]

         22. The Trustee's Deed Upon Sale stated that the amount of the unpaid debt together with costs at the time of the HOA Sale was $4, 199.84.

         23. A homeowner's association sale conducted pursuant to NRS Chapter 116 must comply with all notice provisions as stated in NRS 116.31162 through NRS 116.31168 and NRS 107.090.

         24. A lender or holder of a beneficial interest in a senior deed of trust, such as Plaintiff and its predecessors-in-interest in the Deed of Trust, has a right to cure a delinquent homeowner's association lien in order to protect its interest.

         25. Furthermore, the Declaration of Covenants, Conditions and Restrictions for Highland Hills Homeowners Association (“CC&Rs”) require reasonable notice of delinquency to all lien holders on the Property.

         26. Upon information and belief, the HOA and its agent, the HOA Trustee, did not comply with all mailing and noticing requirements stated in NRS 116.31162 through NRS 116.31168, or as required by the CC&Rs.

         27. A recorded notice of default must “describe the deficiency in payment.” 28. The above-identified Notice of Default did not properly “describe the deficiency in payment” in violation of NRS Chapter 116.

         29. The HOA assessment lien and foreclosure notices included improper fees and costs in amount demanded.

         30. The HOA Sale occurred without notice to Plaintiff, or its predecessors, agents, servicers or trustees, what proportion whether any amount of the HOA lien included a super-priority amount.

         31. The HOA Sale occurred without notice to Plaintiff, or its predecessors, agents, servicers or trustees, whether the HOA was foreclosing on the “super-priority” portion of its lien, if any, or under the non-super-priority portion of the lien.

         32. The HOA Sale occurred without notice to Plaintiff, or its predecessors, agents, servicers or trustees, of a right to cure the delinquent assessments and the super-priority lien, if any.

         33. The HOA Sale violated Plaintiff's rights to due process because Plaintiff was not given proper, adequate notice and the opportunity to cure the deficiency or default in the payment of the HOA's assessments and the super-priority lien, if any.

         34. The HOA Sale was an invalid sale and could not have extinguished Plaintiff's secured interest because of defects in the notices given to Plaintiff, or its predecessors, agents, servicers or trustees, if any.

         35. Under NRS Chapter 116, a lien under NRS 116.3116(1) can only include costs and fees that are specifically enumerated in the statute.

         36. A homeowner's association may only collect as a part of the super priority lien (a) nuisance abatement charges incurred by the association pursuant to NRS 116.310312 and (b) nine months of common assessments which became due prior to the institution of an action to enforce the lien.

         37. Upon information and belief, the HOA Foreclosure Notices included improper fees and costs in the amount demanded.

         38. The attorney's fees and the costs of collecting on a homeowner's association lien cannot be included in the super-priority lien.

         39. Upon information and belief, the HOA assessment lien and foreclosure notices included fines, interest, late fees, dues, attorney's fees, and costs of collection that are not properly included in a super-priority lien under Nevada law and that are not permissible under NRS 116.3102 et seq.

         40. The HOA Sale did not comply with NRS 116.3102 et seq. because none of the aforementioned notices identified above identified what portion of the claimed lien were for alleged late fees, interest, fines/violations, or collection fees/costs.

         41. The HOA Sale deprived Plaintiff of its right to due process because the foreclosure notices failed to identify the super-priority amount, to adequately describe the deficiency in payment, to provide Plaintiff notice of the correct super-priority amount, and to provide a reasonable opportunity to satisfy that amount.

         42. Alternatively, the sale itself was valid but Buyer took its interest subject to Plaintiff's first position Deed of Trust.

         43. The HOA Sale is unlawful and void because the “opt-in” provision in NRS 116.3116 does not satisfy Constitutional Due Process safeguards under the 5th and 14thAmendment to the United States Constitution, nor Clause 1, Section 8, of the Nevada Constitution, so that the statute is unconstitutional on its face.

         44. The HOA Sale is unlawful and void because the statutory scheme set forth in NRS 116.3116, et seq. constitutes a regulatory taking of private property without adequate compensation.

         45. NRS Chapter 116 is unconstitutional on its face as it lacks any express requirement for the HOA or its agents to provide notice of a foreclosure to the holder of a first deed of trust or mortgage.

         46. NRS Chapter 116 is unconstitutional on its face as it lacks any express requirement for the HOA or its agents to provide notice of the super-priority amount, if any, to the holder of a first deed of trust or mortgage to accept tender of the super-priority amount or any amount from the holder.

         47. NRS Chapter 116 is unconstitutional on its face due to vagueness and ambiguity.

         48. The HOA Sale deprived Plaintiff of its right to due process because the foreclosure notices failed to identify that an attempt to pay the super-priority amount had been made.

         49. A homeowner's association sale must be done in a ...


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