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JP Morgan Chase Bank, N.A. v. Saticoy Bay LLC

United States District Court, D. Nevada

December 26, 2017

JPMORGAN CHASE BANK, N.A., Plaintiff,
v.
SATICOY BAY LLC SERIES 7612 CRUZ BAY; DESERT SHORES COMMUNITY ASSOCIATION; EDEN F. KONISHI, Defendants.

          ORDER

          MIRANDA M. DU, UNITED STATES DISTRICT JUDGE

         I. SUMMARY

         This case arises out of a homeowner association's (“HOA”) foreclosure and involves the notice provisions applicable to foreclosure sales under Nevada Revised Statutes (“NRS”) Chapter 116. Pending before the Court are four motions: (1) Defendant Saticoy Bay LLC Series 7612 Cruz Bay's (“Saticoy Bay”) Motion to Dismiss (“Saticoy Bay's MTD”) (ECF No. 13); (2) Defendant Desert Shores Community Association's (“Desert Shores”) Motion to Dismiss (“Desert Shores' MTD”) (ECF No. 15); Plaintiff JPMorgan Chase Bank, N.A.'s (“JPMorgan”) Opposition to Motion to Dismiss First Amended Complaint and Countermotion for Summary Judgment (“Motion for Summary Judgment”) (ECF No. 26); and (4) Saticoy Bay's Motion to Stay Case for All Purposes (“Motion to Stay”) (ECF No. 44). The Court has reviewed the parties' respective responses and replies. (ECF Nos. 24, 25, 28, 30, 32, 33, 42, 43, 46, 47, 48.) The Court has also reviewed the supplemental briefs it requested[1] regarding the Motion to Stay. (ECF Nos. 50, 51.)

         For the reasons discussed below, the Motion to Stay is granted in part, and Desert Shores' MTD, Saticoy Bay's MTD, and JPMorgan's Motion for Summary Judgement are denied.

         II. BACKGROUND

         Plaintiff initiated this action on March 28, 2017. (ECF No. 1.) On May 19, 2017, Plaintiff filed its First Amended Complaint (“FAC”). (ECF No. 7.) The following facts are taken from the FAC unless otherwise indicated.

         On or about November 18, 2011, Eden Konishi (“Borrower”) took out a mortgage loan in the amount of $192, 460.00 (“the Loan”) to purchase real property located at 7612 Cruz Bay Court, Las Vegas, Nevada (“the Property”). The Property is located in a common interest community (otherwise known as an HOA). In exchange for the Loan, a deed of trust (“DOT”) was recorded against the Property. Plaintiff is the beneficiary of this DOT.

         Borrower became delinquent on her obligations to pay HOA assessments for the Property. As a result, Desert Shores-the HOA-recorded a notice of delinquent assessment lien, a notice of default and election to sell, and a notice of sale. At the Property foreclosure sale on November 1, 2013, Saticoy Bay purchased its “purported interest” in the Property for $30, 100.00. (ECF No. 7 at ¶ 23.) After Saticoy Bay purchased the Property, Plaintiff continued to make payments on behalf of the Property, including county tax and homeowners' insurance payments. However, Saticoy Bay maintains that it purchased the Property without being subject to Plaintiff's DOT.

         Plaintiff now brings claims for declaratory judgment, quiet title, and unjust enrichment based on a variety of constitutional deficiencies with NRS Chapter 116. In its request for relief, Plaintiff asks that this Court declare that its DOT “remains a valid first-position security interest” that still encumbers the Property or, in the alternative, if the Court finds that Plaintiff's DOT was extinguished by the HOA foreclosure sale, an award of damages for all amounts JPMorgan expended to “maintain and preserve the Property.” (ECF No. 7 at 9.)

         III. DESERT SHORES' MTD (ECF No. 15)

         Desert Shores brings its motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that the FAC fails to state a claim against it and that there is no justiciable controversy between itself and Plaintiff. (ECF No. 15 at 2-3.) Plaintiff responds that because Desert Shores is a necessary party joined under Fed.R.Civ.P. 19 and because invalidation of the foreclosure sale will affect it, Plaintiff may join Desert Shores without alleging any substantive claim against it. (ECF No. 24 at 3, 5-6.) The Court agrees with Plaintiff.

         “[A] party is ‘necessary' in two circumstances: (1) when complete relief is not possible without the absent party's presence; or (2) when the absent party claims a legally protected interest in the action.” United States v. Bowen, 172 F.3d 682, 688 (9th Cir. 1999). Here, Desert Shores is necessary under the first factor.

         In the FAC, Plaintiff asserts that the foreclosure sale was invalid and requests as an alternative claim for relief that the foreclosure sale be set aside such that the foreclosure sale is void ab initio. (ECF No. 7 at 6, 8.) In light of this requested relief, it is not possible for the Court to accord complete relief among the parties without Desert Shores being a party to this action; if Desert Shores were not a party, it would not necessarily be bound by the Court's order. Furthermore, the Court agrees with courts in this District who have found that a lender's request to set aside the foreclosure sale (even when requested as an alternative form of relief) precludes the Court from according complete relief among the existing parties. Bank of N.Y. Mellon Tr. Co. v. ...


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