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Nationstar Mortgage LLC v. Highland Ranch Homeowners Association

United States District Court, D. Nevada

November 29, 2017

NATIONSTAR MORTGAGE LLC and FEDERAL NATIONAL MORTGAGE ASSOCIATION, a government sponsored enterprise, Plaintiffs,
v.
HIGHLAND RANCH HOMEOWNERS ASSOCIATION and AIRMOTIVE INVESTMENTS, LLC, Defendants.

          ORDER

          LARRY R. HICKS UNITED STATES DISTRICT JUDGE

         Two motions come before the court: defendant Airmotive Investments, LLC's motion to dismiss and defendant Highland Ranch Homeowners' Association's motion for partial summary judgment. ECF Nos. 13, 30. Plaintiffs Nationstar Mortgage LLC and Federal National Mortgage Association (“Fannie Mae”) opposed both motions. ECF Nos. 15, 31. A reply was filed in response to both oppositions. ECF Nos. 16, 32.

         After considering the parties' arguments, the court grants Airmotive's motion to dismiss in part. The court will stay this action until the resolution of the parallel state-court action rather than dismiss it. As a result, the court denies Highland Ranch's motion for partial summary judgment as moot.

         I. FACTUAL BACKGROUND

         Aaron Williams and Angela Bailey-Williams obtained a loan to purchase a property located at 6245 Choctaw Court, Sun Valley, Nevada 89433. ECF No. 31 at Ex. 1. The two executed a deed of trust to secure the repayment of the loan, which was recorded in Washoe County, Nevada. Id. Williams later transferred his interest in the property to Bailey-Williams via a grant, bargain, and sale deed. ECF No. 31 at Ex. 2.

         Fannie Mae allegedly acquired the loan in 2005, taking ownership of the deed of trust and the related promissory note. ECF No. 1, ¶ 27. Nationstar became the servicer of the loan by way of assignment. Id., ¶¶ 28-31. Between 2011 and 2013, Highland Ranch foreclosed on the property as a result of delinquent homeowners' association assessments. Id., ¶¶ 40-44. The foreclosure deed identified TBD, LLC (a non-party) as the purchaser of the property at the foreclosure sale. Id., ¶ 44. TBD deeded the property to TBR I LLC (a non-party), which then quitclaimed the property to Airmotive. Id., ¶¶ 44-46.

         Nationstar and Fannie Mae sued Highland Ranch and Airmotive in federal court on May 4, 2017. ECF No. 1. 1. The plaintiffs alleged eight 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 Amendments Five and Fourteen to the U.S. Constitution; (4) quiet title under Amendments Five and Fourteen to the U.S. Constitution; (5) declaratory judgment under 28 U.S.C. § 2201, N.R.S. § 40.010, and N.R.S. 30.040; (6) breach of N.R.S. § 116.1113; (7) wrongful foreclosure; and (8) injunctive relief.[1]

         But Airmotive sued Bailey-Williams, Nationstar, and Fannie Mae in state court one week earlier. ECF No. 13, Ex. 1. In the state action, Airmotive asserted a quiet-title and declaratory-relief claim against the state-court defendants. Id. Airmotive also asserted a misrepresentation claim against Nationstar. Id.

         II. DISCUSSION

         The court first considers Airmotive's motion to dismiss. Because the motion to dismiss results in a stay of this matter, the court denies Highland Ranch's motion for partial summary judgment as moot.

         A. Motion to Dismiss

         The parties dispute whether the Colorado River doctrine applies to this matter.[2] See ECF Nos. 13, 15, 16. “Generally ‘the pendency of an action in state court is no bar to proceedings concerning the same matter in the [f]ederal court having jurisdiction….'” Seneca Ins. Co., Inc. v. Strange Land, Inc., 862 F.3d 835, 841 (9th Cir. 2017) (quoting Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976)). “Abstention from the exercise of federal jurisdiction is the exception, not the rule.” Colo. River, 424 U.S. at 813. Accordingly, a strong presumption against abstention generally governs. Seneca Ins. Co., 862 F.3d at 842. But still, “[i]n exceptional circumstances, a federal court may decline to exercise its ‘virtually unflagging obligation' to exercise federal jurisdiction, in deference to pending, parallel state proceedings.” Montanore Minerals Corp. v. Bakie, 867 F.3d 1160, 1165 (9th Cir. 2017), as amended on denial of reh'g and reh'g en banc (Oct. 18, 2017) (quoting Colo. River, 424 U.S. at 817). If exceptional circumstances exist, the Ninth Circuit “generally require[s] a stay rather than a dismissal[, ]” which “ensures the federal forum will remain open if for some unexpected reason the state forum turns out to be inadequate.” Id. (quoting Attwood v. Mendocino Coast Dist. Hosp., 886 F.2d 241, 243 (9th Cir. 1989)) (internal quotation marks and punctuation marks omitted).

         Federal courts balance eight factors when determining whether to stay or dismiss a matter under the Colorado River doctrine:

(1) which court first assumed jurisdiction over any property at stake; (2) the inconvenience of the federal forum; (3) the desire to avoid piecemeal litigation; (4) the order in which the forums obtained jurisdiction; (5) whether federal law or state law provides the rule of decision on the merits; (6) whether the state court proceedings can adequately protect the rights of the federal litigants; (7) the desire to avoid ...

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