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Bank of America, N.A. v. Hutton-Potts

United States District Court, D. Nevada

January 22, 2018

BANK OF AMERICA, N.A., Plaintiff,
v.
M. DIANE HUTTON-POTTS, SURVIVING TRUSTEE OF THE HUTTON-POTTS FAMILY TRUST DATED SEPTEMBER 25, 1989; SECRETARY OF HOUSING AND URBAN DEVELOPMENT; DEPARTMENT OF TREASURY-INTERNAL REVENEU SERVICE, Defendants.

         Removed from the District Court for the State of Nevada, Douglas County, No. 17-cv-0243

          HENRY C. DARMSTADTER Trial Attorney, Tax Division U.S. Department of Justice Of Counsel STEVEN W. MYHRE Acting United States Attorney Attorneys for the United States

          KRISTAN LEHTINEN, ESQ. Fidelity National Law Group Attorneys for Plaintiff

          STIPULATION [AND] PROPOSED ORDER BETWEEN BANK OF AMERICA, N.A. AND UNTIED STATES (IRS) REGARDING COMPLAINT FOR QUIET TITLE AND DECLARATORY RELIEF

         COMES now Plaintiff, Bank of America, N.A. and Defendant, United States of America, on behalf of the Internal Revenue Service, an agency of the Department of Treasury, by and through their undersigned counsel, and submit the following stipulation to resolve issue issues in dispute between the two parties:

         1. On October 20, 2017, the Bank of America, N.A. filed a civil action in the Douglas County District Court against M. Diane Hutton-Potts, surviving trustee of the Hutton-Potts Family Trust Dated September 25, 1989 (“Hutton-Potts”), the Secretary of Housing and Urban Development (“HUD”), and the Department of Treasury-Internal Revenue Service (“IRS”). The Plaintiff seeks to reform a deed of trust on real property in Douglas County due to an error in the legal description of the property as described in more detail in the Complaint. The Plaintiff also seeks declaratory relief that its deed of trust has priority over the interests of the other defendants, including the subject federal tax liens.

         2. On November 20, 2017, the United States on behalf of the IRS, removed this action to the United States District Court for the District of Nevada (Notice of Removal-ECF No. 1). On December 7, 2017, Defendant HUD filed a Notice of Disclaimer of Interest (ECF No. 5). Defendant Hutton-Potts has not responded to the Complaint or otherwise entered an appearance in either the State Court or District Court proceedings.

         7. On December 27, 2017, the Court granted the parties Joint Motion for extension for United States to respond to Complaint (ECF No. 7). The United States' response to the Complaint is currently due by February 8, 2018.

         8. In 2010, Hutton-Potts submitted a refinance application to Bank of America, N.A. in order to refinance a loan secured by a Deed of Trust recorded in 2008 against real property commonly known as 211 Mountain Reach Court, Gardnerville, Nevada 89460 (hereinafter “Subject Property”). The 2008 Deed of Trust was released as a lien against the Subject Property after the close of the 2010 refinance escrow.

         9. In conjunction with the refinance escrow, on May 3, 2010 a Deed of Trust in the amount of $690, 000.00 against the subject Property was recorded with the Douglas County Recorder's Office at Document 762979 with Hutton-Potts as the Borrower and Bank of America, N.A. as the Lender. The legal description of the Subject Property attached to Bank of America, N.A's Deed of Trust contained errors, as it did not contain easement language described as Parcel 2.

         10. The Bank of America, N.A's Deed of Trust is secured by a Reverse Amortization Note. The amount advanced at closing on March 30, 2010 was $283, 433.39. The Bank of America, N.A. has represented that no further monies were advanced pursuant to the terms of the Note after the March 30, 2010 refinance escrow closed. Any increase in the amount owed under the Note secured by the Deed of Trust is due solely to the accrual of interest and servicing costs and other charges.

         11. On April 11, 2016, the Internal Revenue Service recorded a Notice of Federal Tax Lien against Diane M. Hutton-Potts with the Douglas County Recorder's Office for unpaid income taxes for the years 2013 and 2014 in the amount of $20, 818.23. Bank of America, N.A and the United States agree and stipulate that the federal tax liens on this liability arose on the date of assessment, June 2, 2014, and currently encumber the Subject Property.

         12. Bank of America, N.A. and the United States stipulate and agree that the Bank of America, N.A.'s Deed of Trust recorded on May 3, 2010 with the Douglas County Recorder's Office at Document 762979 is secured by the Subject Property as of May 3, 2010, and is senior to the federal tax liens identified above on the Subject Property.

         13. The United States does not oppose Bank of America, N.A.'s reformation of its Deed of Trust to incorporate the legal description set forth below, and does not oppose the retroactive application of the reformation to the date the Deed of Trust was originally recorded with the Douglas County Recorder's Office on May 3, 2010:

         14. The United States stipulates and agrees that Bank of America, N.A.'s Deed of Trust may be reformed with the ...


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