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Deutsche Bank National Trust Co. v. Garner

United States District Court, D. Nevada

December 27, 2017

DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR NEW CENTURY HOME EQUITY LOAN TRUST, SERIES 2005-C, ASSET BACKED PASS-THROUGH CERTIFICATES, Plaintiff,
v.
LEMMIE GARNER, SUSAN CARLILE, and WOODLAND VILLAGE HOMEOWNERS ASSOCIATION, Defendants. LEMMIE GARNER and SUSAN CARLILE, Counterclaimants,
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR NEW CENTURY HOME EQUITY LOAN TRUST, SERIES 2005-C, ASSET BACKED PASS-THROUGH CERTIFICATES, Counter-defendant.

          ORDER

          LARRY R. HICKS, UNITED STATES DISTRICT JUDGE

         This matter centers on a nonjudicial foreclosure of a Nevada property by a homeowners' association. The foreclosure sale was conducted under Nevada Revised Statute (“N.R.S.”) § 116.3116 et seq. in 2014.[1] After the foreclosure sale, the Ninth Circuit struck down the notice scheme of N.R.S. § 116.3116 et seq. as facially unconstitutional. Bourne Valley Court Tr. v. Wells Fargo Bank, NA, 832 F.3d 1154 (9th Cir. 2016), cert. denied, 137 S.Ct. 2296 (2017). As a result, plaintiff Deutsche Bank National Trust company brought this action against the homeowners' association that foreclosed on the property, defendant Woodland Village Homeowner's Association, as well as the purchasers at the foreclosure sale, defendants Lemmie Garner and Susan Carlile.

         The matter now brings five motions before the court: (1) Deutsche Bank's motion to dismiss Garner and Carlile's counterclaim for fraud, ECF No. 11; (2) Woodland Village's motion to dismiss the complaint, ECF No. 13; (3) Deutsche Bank's motion for summary judgment based on the allegedly statutorily defective foreclosure sale, ECF No. 22; (4) Woodland Village's motion for summary judgment, ECF Nos. 23, 26 (Errata to ECF No. 23); and (5) Deutsche Bank's motion for summary judgment based on the unconstitutionality of N.R.S. § 116.3116 et seq., ECF No. 24.

         The court first grants Deutsche Bank's motion to dismiss Garner and Carlile's counterclaim for fraud, finding the allegations fail to allege fraud with the required degree of particularity. The court then denies Woodland Village's motion to dismiss, finding the complaint survives the standards of both Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Finally, under the guidance of binding authority from the Ninth Circuit, the court grants Deutsche Bank's summary judgment motion regarding the unconstitutionality of N.R.S. § 116.3116 et seq., denies Woodland Village's competing summary judgment motion, and denies Deutsche Bank's remaining summary judgment motion as moot.

         I. BACKGROUND

         In 2004, John Davis and Kim Davis purchased property located at 18101 Alexandria Drive, Reno, NV 89506.[2] ECF No. 25, Ex. 1; ECF No. 23 at 2; ECF No. 22 at 3. The two executed a deed of trust in relation to the property in 2005. ECF No. 25, Ex. 2. The deed of trust identified Home123 Corporation as the beneficiary and Western Title as the trustee. Id. It was recorded in Washoe County, Nevada. Id. By way of assignment, Deutsche Bank came to hold the beneficial interests under the deed of trust as a trustee. Id., Ex. 3.

         The property sits in a community governed by a homeowners' association, Woodland Village. Woodland Village began the foreclosure process on the property by filing a notice of delinquent assessment lien in 2011. Id., Ex. 4. Woodland Village then recorded a notice of default and election to sell in 2013, which was followed shortly thereafter by a notice of trustee's sale. Id., Exs. 5-6. Garner and Carlile purchased the property at the foreclosure sale in 2014. Id., Ex. 7.

         After the foreclosure sale, Deutsche Bank brought this action against Garner, Carlile, and Woodland Village, asserting five claims for relief: (1) quiet title and declaratory relief under 28 U.S.C. § 2201, N.R.S. § 30.010 et seq., and N.R.S. § 40.010; (2) declaratory relief under the Fifth and Fourteenth Amendments to the U.S. Constitution; (3) quiet title under the Fifth and Fourteenth Amendments to the U.S. Constitution; (4) permanent and preliminary injunction; and (5) unjust enrichment. ECF No. 1. Deutsche Bank asserts the third, fourth, and fifth claim against Garner and Carlile only. Id. Garner and Carlile answered the complaint and asserted three counter claims: (1) quiet title; (2) unjust enrichment; and (3) fraud. ECF No. 9.

         Two motions to dismiss have been filed. First, Deutsche Bank moves to dismiss the counterclaim for fraud. ECF No. 11. No opposition was filed. Second, Woodland Village moves to dismiss the complaint. ECF No. 13. Deutsche Bank opposed the motion, and Woodland Village filed a reply. ECF Nos. 15, 16.

         In addition to the two motions to dismiss, the parties filed competing motions for summary judgment. Deutsche Bank moves for summary judgment on two bases. First, it moves for summary judgment regarding the allegedly statutorily defective foreclosure sale and requests the court to take judicial notice of eleven exhibits for the motion. ECF Nos. 22, 25. Two oppositions were filed, one by the Garner and Carlile and one by Woodland Village. ECF Nos. 29, 32. Deutsche Bank replied. ECF Nos. 35, 39. Second, Deutsche Bank moves for summary judgment based on the alleged unconstitutionality of N.R.S. § 116.3116 et seq. ECF No. 24. Two oppositions were filed again, one by Garner and Carlile and one by Woodland Village. ECF Nos. 29, 33. Deutsche Bank replied to both oppositions. ECF Nos. 35, 39. Woodland Village also moves for summary judgment. ECF No. 23; see also ECF No. 26 (Errata to ECF No. 23). An opposition and a reply was filed. ECF Nos. 34, 38.

         Finally, Deutsche Bank filed a notice of completion of mediation pursuant to N.R.S. § 38.310. ECF No. 21.

         II. LEGAL STANDARD

         This order looks to four legal standards:

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

         A party may seek the dismissal of a complaint under Rule 12(b)(6) for failure to state a legally cognizable cause of action. Fed.R.Civ.P. 12(b)(6). To survive a motion to dismiss for failure to state a claim, a complaint must satisfy the notice pleading standard of Federal Rule 8(a)(2). See Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1103 (9th Cir. 2008). Under Rule 8(a)(2), a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 8(a)(2) does not require detailed factual allegations; however, a pleading that offers only “‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action'” is insufficient and fails to meet this broad pleading standard. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To sufficiently allege a claim under Rule 8(a)(2), viewed within the context of a Rule 12(b)(6) motion to dismiss, a complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (quoting Twombly, 550 U.S. at 570). A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference, based on the court's judicial experience and common sense, that the defendant is liable for the alleged misconduct. See Id. at 678-679 (stating that “[t]he plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.”) (internal quotation marks and citations omitted). Further, in reviewing a motion to dismiss, the court accepts the factual allegations in the complaint as true. Id. However, bare assertions in a complaint amounting “to nothing more than a formulaic recitation of the elements of a . . . claim . . . are not entitled to an assumption of truth.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quoting Iqbal, 556 U.S. at 698) (internal quotation marks omitted). The court discounts these allegations because “they do nothing more than state a legal conclusion-even if that conclusion is cast in the form of a factual allegation.” Id. “In sum, for a complaint to survive a motion to dismiss, the non-conclusory ‘factual content, ' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Id.

         B. Federal Rule of Civil Procedure 9(b)

         Rule 9(b) requires a party to “state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). Under the heightened pleading standard, a plaintiff must “plead the ‘who, what, when, where, and how' of the alleged misconduct” when claiming fraud. Johnson v. Wal-Mart Stores, Inc., 544 F. App'x 696, 698 (9th Cir. 2013) (quoting Vess v. Ciba-Geigy Corp. USA, 317 F.3d 10197, 1106 (9th Cir. 2003)).

         C. Federal Rule of Civil ...


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