United States District Court, D. Nevada
C. JONES, United States District Judge.
case arises from a residential foreclosure by the El Capitan
Homeowners Association ("HOA") for failure to pay
HOA fees. Now pending before the Court are two Motions for
Summary Judgment. (ECF Nos. 101, 102.)
FACTS AND PROCEDURAL BACKGROUND
2007, Defendant Claire Ali ("Ali") obtained a $278,
400 mortgage loan to purchase property located at 8769
Country View Avenue, Las Vegas, Nevada 89129 (the
"Property"). The loan was evidenced by a promissory
note and secured by a deed of trust ("DOT")
recorded on February 9, 2005. Defendant JPMorgan Chase
("Chase") is the beneficiary of the DOT, and
Defendant MTC Financial ("MTC") is the trustee.
September 9, 2009, as a result of Ali's failure to pay
HOA fees, the HOA recorded a lien for delinquent assessment.
The HOA later foreclosed, and on September 5, 2012, Daisy
Trust purchased the Property for $8, 600 at the foreclosure
sale. The deed of sale was recorded on September 11, 2012.
Thereafter, Chase recorded a notice of default and election
to sell under its DOT. As a result of Chase's steps
toward foreclosure, Daisy Trust commenced this lawsuit,
seeking to enjoin the sale and quiet its title to the
31, 2013, MTC removed the action to this Court. MTC alleged
that Daisy Trust is a citizen of Nevada, and that MTC and
Chase are citizens of California and Ohio, respectively. MTC
further alleged that Ali, a Nevada citizen, was joined as a
sham defendant in order to destroy complete diversity. Daisy
Trust moved to remand, arguing that Ali was properly joined
and thus diversity did not exist. Around the same time, MTC
and Chase also moved to dismiss Daisy Trust's complaint.
On December 11, 2013, the Court denied Daisy Trust's
motion to remand, finding that Ali was fraudulently joined.
(Order, ECF No. 30.) The Court also granted Defendants'
motions to dismiss, and directed the Clerk of the Court to
enter judgment in favor of Defendants and close the case.
time of dismissal, the Nevada Supreme Court had yet to rule
on whether NRS 116.3116 gave HOAs a true superpriority lien
such that foreclosure on that lien would extinguish all other
liens on a property, even the first deed of trust. In
dismissing Daisy Trust's complaint, this Court, in
conformity with all but one of the courts in this District,
found that NRS 116.3116 created a limited superpriority that
did "not alter or extinguish a first position security
January 8, 2014, Daisy Trust filed a Notice of Appeal at the
Ninth Circuit. (ECF No. 33.) While the appeal was pending, on
September 18, 2014, the Nevada Supreme Court held that NRS
116.3116 "gives an HOA a true superpriority lien, proper
foreclosure of which will extinguish a first deed of
trust." SFR Investments Pool 1, LLC v. U.S. Bank,
NA, 334 P.3d 408, 419 (Nev. 2014). Rather than proceed
with the appeal, the parties stipulated to a dismissal
thereof upon agreement that Daisy Trust would seek a
reconsideration of this Court's prior ruling given the
decision in SFR Investments. Accordingly, Daisy
Trust filed a motion to vacate, which the Court granted. (ECF
No. 48.) However, the Court denied Daisy Trust's
contemporaneous request to remand, finding that "[t]he
holding in SFR Investments has no impact whatsoever
on the Court's prior ruling denying remand."
(Id. at 2.)
on August 10, 2016, Daisy Trust filed a motion for
reconsideration of the Court's prior order denying remand
based on a change in controlling law at the Ninth Circuit.
(Mot. Recon., ECF No. 74.) In Weeping Hollow Ave. Tr. v.
Spencer, 831 F.3d 1110, 1111 (9th Cir. 2016), the Ninth
Circuit held that, because a former homeowner could challenge
an HOA foreclosure sale on equitable grounds under Nevada
law, it is "entirely reasonable" to join the former
homeowner as a defendant in a quiet title action arising from
the sale, in order "to avoid potential disputes over who
had title to the property." Id. at 1114. In
ruling on the motion to reconsider, this Court found that its
order denying remand was "directly at odds with the
Ninth Circuit's opinion in Weeping Hollow."
(Order 5, ECF No. 84.) Accordingly, the Court set aside
"that portion of its prior order (ECF No. 30) holding
that Ms. Ali was a fraudulently joined defendant."
(Id. at 7.)
the Court did not remand the case at that time, despite the
fact that Daisy Trust and Ali were both alleged to be Nevada
citizens. Rather, the Court expressed its opinion that MTC,
upon removing the case, had not sufficiently alleged the
citizenship of Daisy Trust:
MTC has alleged on information and belief that Daisy Trust is
a citizen of Nevada, and Daisy Trust has not disputed that
allegation. (Pet. for Removal ¶ 7, ECF No. 1.) However,
subject matter jurisdiction is not subject to waiver or
stipulation of the parties. See Singer v. State Farm Mut.
Auto. Ins. Co., 116 F.3d 373, 376 (9th Cir. 1997).
Before allowing this action to proceed further, the Court
must ensure that it has subject matter jurisdiction to hear
it. Therefore, as the parties invoking diversity
jurisdiction, Defendants will be required to proffer
competent evidence of Daisy Trust's citizenship. See
Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992)
("[T]he defendant always has the burden of establishing
that removal is proper.").
(Order 5-6, ECF No. 84.) Accordingly, the Court granted
Defendants a period of ninety days to conduct jurisdictional
discovery regarding: (1) the nature of Daisy Trust (i.e., the
type of trust it is); (2) if a fiduciary relationship, the
citizenship of its trustee; and (3) if an unassociated
entity, the citizenship of its members. (Id. at
date, MTC has not provided additional information regarding
the nature or citizenship of Daisy Trust. However, it does
appear that some jurisdictional discovery was conducted. On
June 12, 2017, Chase filed a motion to compel Daisy Trust to
provide further information in response to jurisdictional
discovery. (Mot. Compel, ECF No. 94.) On July 18, 2017, the
magistrate judge granted that motion, on the grounds that it
was not opposed and that Daisy Trust's responses to the
jurisdictional discovery propounded by Chase had been
inadequate. (Order, ...