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Bank of New York Mellon v. Las Vegas Development Group LLC

United States District Court, D. Nevada

December 22, 2017

THE BANK OF NEW YORK MELLON, FKA THE BANK OF NEW YORK AS SUCCESSOR IN INTEREST TO JP MORGAN CHASE BANK NA AS TRUSTEE FOR STRUCTURED ASSET MORTGAGE INVESTMENTS II INC. BEAR STEARNS ALT-A TRUST 2005-9, MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-9, Plaintiff,
v.
LAS VEGAS DEVELOPMENT GROUP LLC, a Nevada limited-liability company; ROYAL HIGHLANDS STREET AND LANDSCAPE MAINTENANCE CORPORATION, a Nevada non-profit corporation; and ALESSI & KOENIG, LLC, a Nevada limited-liability company; Defendants.

          Andrew M. Jacobs, Esq. Blakeley E. Griffith, Esq. Nevada Bar No. 12386 Holly E. Cheong, Esq. Nevada Bar No. 11936 SNELL & WILMER L.L.P. Attorneys for Plaintiff Bank of New York Mellon

          STIPULATION AND ORDER TO FILE FIRST AMENDED COMPLAINT

         Plaintiff the Bank of New York Mellon, fka The Bank of New York as Successor in Interest to JP Morgan Chase Bank NA as Trustee for Structured Asset Mortgage Investments II Inc. Bear Stearns ALT-A Trust 2005-9, Mortgage Pass-Through Certificates, Series 2005-9 ("BNYM" or "Plaintiff), and Defendants Las Vegas Development Group LLC ("LVDG") and Alessi & Koenig, LLC ("Alessi & Koenig" and collectively with BNYM and LVDG, the "Parties"), by and through their respective counsel, hereby stipulate to allow Plaintiff to file a First Amended Complaint ("FAC") as follows:

         WHEREAS, on March 4, 2016, Plaintiff filed its Complaint (ECF No. 1) ("Complaint");

         WHEREAS, no party has answered the Complaint, however both LVDG and Alessi & Koenig have appeared in the action (ECF No. 12 and ECF No. 14);

         WHEREAS, the Parties agree to allow Plaintiff to file the FAC, a copy of which is attached hereto as Exhibit 1;

         WHEREAS this request is not made for purposes of delay and is supported by good cause;

         NOW, THEREFORE, in consideration of the foregoing, and for good cause, IT IS HEREBY STIPULATED AND AGREED, by and between the Parties as follows:

         1. Plaintiff shall file its FAC within five (5) days of this Order;

         2. Alessi & Koenig and LVDG shall file a response to the FAC within thirty (30) days thereafter.

         IT IS SO STIPULATED.

         ORDER

         IT IS SO ORDERED.

         EXHIBIT 1

         FIRST AMENDED COMPLAINT

         Plaintiff, The Bank of New York Mellon, fka The Bank of New York as Successor in Interest to JP Morgan Chase Bank NA as Trustee for Structured Asset Mortgage Investments II Inc. Bear Stearns ALT-A Trust 2005-9, Mortgage Pass-Through Certificates, Series 2005-9 ("BNYM" or "Plaintiff), by and through its counsel, Snell & Wilmer L.L.P., submits this First Amended Complaint and states as follows:

         PARTIES, JURISDICTION, AND VENUE

         1. Plaintiff BNYM is the beneficiary of a mortgage loan secured by a Deed of Trust recorded on or about August 5, 2005, against the real property located at 10912 Fishers Island Street, Las Vegas, Nevada 89141, APN 177-31-714-009 (the "Property").

         2. Upon information and belief, Defendant Las Vegas Development Group, LLC ("LVDG") is a Nevada limited-liability company doing business in Clark County, Nevada.

         3. Upon information and belief, Defendant Royal Highlands Street and Landscape Maintenance Corporation (the "HO A") is a Nevada non-profit corporation doing business in, and with its principal place of business in, Clark County, Nevada.

         4. Defendant Alessi & Koenig, LLC ("Alessi") is a Nevada limited-liability company doing business in Clark County, Nevada.

         5. Upon information and belief, Defendant Airmotive Investments, LLC ("Airmotive") is a Nevada limited-liability company doing business in Clark County, Nevada.

         6. This Court has jurisdiction over the counts of the present action pursuant to 28 U.S.C. § 1331.

         7. This Court has supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a) over Plaintiffs claims arising under the laws of the State of Nevada, because those claims are related to Plaintiffs claims under federal law, form part of the same case or controversy, and are derived from a common nucleus of operative facts.

         8. Venue is proper in this district because Defendants reside and conduct business within this district, as provided in 28 U.S.C. § 1391(b)(1). Alternatively, venue is proper in this district because a substantial part of the events or omissions giving rise to the claim occurred in this judicial district, as provided in 28 U.S.C. § 1391(b)(2).

         9. This Court has personal jurisdiction over Defendants because Defendants reside and conduct business within this district and the State of Nevada.

         GENERAL ALLEGATIONS

         10. This case is about the constitutionality of Nevada Revised Statute ("NRS") 116.3116, both on its face and as applied. In particular, it concerns the purported extinguishment of BNYM's Deed of Trust-and also a large debt owed to BNYM-by the foreclosure of a small homeowners' association lien on the Property, though the mortgage debt came before the lien.

         11. Chapter 116 of the Nevada Revised Statutes generally provides a non-judicial foreclosure scheme for a homeowners' association to conduct a non-judicial foreclosure where the unit owner fails to pay its monthly assessments.

         12. NRS 116.3116 makes a homeowners' association lien for assessments junior to a first deed of trust beneficiary's secured interest in the property with one limited exception: a homeowners' association lien is senior to a first deed of trust beneficiary's secured interest "to the extent of the assessments for common expenses based on the periodic budget adopted by the association pursuant to NRS 116.3115 which would have become due in the absence of acceleration during the 9 months immediately preceding institution of an action to enforce the lien[.]"NRS116.3116(2)(c).

         13. The Ninth Circuit Court of Appeals has recently declared certain portions of Chapter 116 of the Nevada Revised Statutes unconstitutional because the notice provisions do not meet minimum standards of due process under the Fourteenth Amendment to the U.S. Constitution. Bourne Valley Court Trust v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016).

         14. On or about July 25, 2005, Ronald Burnside (the "Borrower") executed a Promissory Note ("Note") secured by a Deed of Trust in the amount of Three Hundred Fifty-Four Thousand Two Hundred Fifty and 00/100 Dollars ($354, 250.00) in favor of Stearns Lending, Inc. as the beneficiary, Mortgage Electronic Registration Systems, Inc. as the nominee for the lender (Stearns), and First American Title as the trustee.

         15. The Deed of Trust was recorded in the Office of the Clark County Recorder ("Recorder's Office") on August 8, 2005, as Instrument Number 20050805-0004376 (the "Deed of Trust") and was filed against the Property.

         16. On or about July 25, 2005, Borrower executed a second promissory note in the amount of Ninety Four Thousand Four Hundred Fifty and 00/100 Dollars ($94, 450.00) in favor of Stearns Lending, Inc. which was secured by a second deed of trust filed on the Property with the Recorder's Office on August 8, 2005, as Instrument Number 20050805-0004377.

         17. Thereafter, BNYM is informed and believes, and thereon alleges, that Borrower stopped making payments due under the Deed of Trust and likewise stopped paying HOA dues.

         18. On or about November 5, 2010, a Notice of Delinquent Assessment was recorded with the Recorder's Office as Instrument Number 201011050003208. The Notice of Delinquent Assessment was submitted by Alessi on behalf of the HOA for outstanding amounts owed as of October 7, 2010, in the amount of $1, 314.11.

         19. On or about January 13, 2011, a Notice of Default and Election to Sell under Homeowners Association Lien was recorded with the Recorder's Office as Instrument Number 201101130001575. The Notice of Default and Election to Sell under Homeowners Association Lien was submitted by Alessi on behalf of the HOA for outstanding amounts owed as of April 19, 2011, in the amount of $2, 149.52.

         20. On or about May 4, 2011, Mortgage Electronic Registration Systems, Inc., as nominee for Stearns Lending, Inc., transferred and assigned any beneficial interest in the Note and Deed of Trust to BNYM, pursuant to that certain Assignment of Deed of Trust, recorded in the Recorder's Office as Instrument Number 201104040002575.

         21. On or about April 2, 2012, a Notice of Trustee's Sale was recorded with the Recorder's Office as Instrument Number 201204020001883. The Notice of Trustee's Sale was submitted by Alessi on behalf of the HOA pursuant to the November 5, 2010 Notice of Delinquent Assessment and listed outstanding amounts owed as $4, 622.25. The Notice of Trustee's Sale set a date of sale for April 25, 2012.

         22. On or about October 2, 2012, a Notice of Violation (Lien) was recorded with the Recorder's Office as Instrument Number 201210020001741. The Notice of Violation was submitted by Alessi on behalf of the HOA for outstanding amounts owed as of September 18, 2012, in the amount of $26, 200.00.

         23. On or about December 13, 2012, a Substitution of Trustee was recorded with the Recorder's Office as Instrument Number 201212130002175 removing First American Title as the trustee and naming Quality Loan Service Corporation as the trustee under the Deed of Trust.

         24. On or about February 28, 2013, a Notice of Breach and Default and of Election to Cause Sale of Real Property under Deed of Trust was recorded with the Recorder's Office as Instrument Number 201302280003226. The Notice of Breach and Default and of Election to Sell under Deed of Trust was submitted by Quality Loan Service Corporation as the trustee for outstanding amounts owed on the Deed of Trust.

         25. On or about March 18, 2013, a Trustee's Deed upon Sale was recorded with the Recorder's Office as Instrument Number 201303080003502. The Trustee's Deed upon Sale was submitted by Alessi on behalf of the HOA and showed LVDG purchased the Property for $25, 100.00 at public auction on ...


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