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The Bank of New York Mellon v. Elkhorn Community Association

United States District Court, D. Nevada

February 1, 2018

THE BANK OF NEW YORK MELLON, Plaintiffs,
v.
ELKHORN COMMUNITY ASSOCIATION, et al., Defendants.

          ORDER

         Presently before the court is plaintiff Bank of New York Mellon f/k/a The Bank of New York, as successor to JP Morgan Chase Bank, N.A., as Trustee for the Holders of the MLMI Surf Trust, Mortgage Loan Asset-Backed Certificates, Series 2005-AB1's (“BNYM”) motion for summary judgment. (ECF No. 43). Defendants Elkhorn Community Association (“the HOA”) and 7321 Wandering Street Trust (“WST”) filed responses (ECF Nos. 44, 46), to which plaintiff replied (ECF No. 48).

         Also before the court is defendant WST's motion to dismiss.[1] (ECF No. 24). Plaintiff filed a response (ECF No. 30), to which defendant replied (ECF No. 31).

         Also before the court is defendant HOA's motion for summary judgment. (ECF No. 42). Plaintiff filed a response (ECF No. 45), to which defendant replied (ECF No. 47). . . . . . . . . .

         I. Facts

         This case involves a dispute over real property located at 7321 Wandering Street, Las Vegas, Nevada, 89131 (the “property”). On September 18, 2002, April Stewart purchased the property. (ECF No. 43-1).

         On December 6, 2004, Stewart transferred the property to herself and Jason McCormac (collectively, “the borrowers”). (ECF No. 43-2). The borrowers obtained a loan in the amount of $194, 400 from non-party United Pacific Mortgage d/b/a Mandalay Mortgage (“UPM”) to refinance ownership of the property. (ECF No. 43-3). The loan was secured by a deed of trust, dated December 6, 2004, and recorded on December 16, 2004. Id. The deed of trust listed Mortgage Electronics Registration Systems Inc. (“MERS”) as nominee for the lender UPM. Id. The covenants, conditions, and restrictions (“CC&R's”) governing the property contained a mortgage protection clause (section 6.16). (ECF No. 43-15).

         On December 20, 2010, MERS assigned the deed of trust to BNYM via an assignment of deed of trust. (ECF No. 43-4). The borrowers subsequently defaulted on the terms of the note and senior deed of trust by not making a payment due on April 1, 2010, and failing to make any payments due thereafter. (ECF No. 43-5).

         On March 2, 2011, non-party Angius & Terry Collections, LLC (“Angius”), acting on behalf of the HOA, recorded a notice of delinquent assessment lien, stating an amount due of $711.07. (ECF No. 43-6). On April 4, 2011, Angius recorded a notice of default and election to sell to satisfy the delinquent assessment lien, stating an amount due of $1, 586.07. (ECF No. 43-7).

         On December 21, 2011, Angius recorded a notice of trustee's sale, stating an amount due of $2, 697.40 and an anticipated sale date of January 11, 2012. (ECF No. 43-8). On January 11, 2012, Angius, on behalf of the HOA, foreclosed on the property. (ECF No. 43-9). At the foreclosure sale, the auctioneer stated,

You are hereby notified by the Association, the beneficiary, through its foreclosure agent, that the opening bid does not include the super-priority lien amount. That the super-priority lien amount will still be a lien on the property once the sale is completed. You are hereby being notified by the Association, the beneficiary, through its foreclosure agent, that said lien may affect the property, title to the property or value of the property. The purchaser buys this property with full knowledge and understanding of same.

(ECF Nos. 43-11 and 43-12).

         WST had a representative who attended the sale, and admits to hearing a statement regarding the super-priority portion of the lien remaining on the property after the foreclosure:

Q: Do you remember what [the auctioneer's] instructions were?
A: It had something to do with the opening bid did not include the super priority amount, which seemed -- I was wondering why their opening bid amount was so low. In other words, it didn't seem like it included the full amount due in the Notice of Sale.
Q: Does [the auctioneer's notice I just read] sound like what you were talking about before, that she said something about the super priority lien still being in place and that confused you?
A: Yes.

(ECF No. 43-14 at 7-9) (Deposition of Jacob Lefkowitz, 30(b)(6) representative for WST). Further, WST acknowledged the announcement in writing. (ECF No. 43-12, 43-13 and 43-14).

         WST purchased the property at the foreclosure sale for $1, 050. (ECF No. 43-9). A trustee's deed upon sale in favor of WST was recorded on January 13, 2012. Id. The trustee's deed upon sale states that the HOA conveyed “without warranty expressed or implied to [WST] that portion of its right, title and interest secured by the non-priority portion of its lien under NRS 116.3116.” Id. Plaintiff alleges that at the time of foreclosure the property had a fair market value of $77, 000. (ECF No. 43-10).

         On July 6, 2015, plaintiff filed a complaint in this district against the HOA and WST. See Bank of New York Mellon v. Elkhorn Community Association et al, 2:15-cv-01272-APG-PAL (“Elkhorn I”) (ECF No. 3). On July 22, 2015, the HOA filed a third party complaint against Angius. Id. at (ECF No. 7). On November 20, 2015, WST filed a motion to dismiss in that case. Id. at (ECF No. 19). Plaintiff failed to respond after the court granted two requests for extension of time. Id. at (ECF No. 31). The court granted WST's motion to dismiss, citing plaintiff's failure to respond as consent to the granting of the motion. Id. The order language reads “IT IS HEREBY ORDERED that the motion to dismiss (Dkt. #19) is GRANTED and this case is DISMISSED.” Id.

         On November 4, 2016, plaintiff filed the underlying complaint, alleging four causes of action: quiet title against all defendants; breach of NRS 116.1113 against the HOA; wrongful foreclosure against the HOA; and injunctive relief against WST.[2] (ECF No. 1).

         In the instant motions, WST moves to dismiss plaintiff's complaint for failure to state a claim upon which relief can be granted. (ECF No. 24). Plaintiff moves for summary judgment on its claim for quiet title.[3] (ECF No. 43). The HOA moves for summary judgment on all plaintiff's claims against the HOA. (ECF No. 42).

         II. Legal Standard

         a. Failure to state a claim

         A court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A properly pled complaint must provide “[a] short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands “more than labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted).

         “Factual allegations must be enough to rise above the speculative level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to ‚Äústate a claim to relief that is ...


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