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Bank of America, N.A. v. Country Garden Owners' Association

United States District Court, D. Nevada

March 14, 2018

BANK OF AMERICA, N.A., Plaintiff,



         This is one of many lawsuits arising out of non-judicial foreclosure sales by homeowners associations (HOAs). Plaintiff Bank of America asserts a claim for “quiet title/declaratory judgment” against defendants Country Garden Owners Association (the HOA) and SFR Investments Pool 1, LLC (the current property owner) on the basis that the HOA foreclosure sale did not extinguish its deed of trust. ECF No. 1 at 7-12. Bank of America also asserts damages claims against Country Garden for breach of Nevada Revised Statutes § 116.1113 and wrongful foreclosure.

         The defendants move to dismiss Bank of America's claims as time-barred. I agree, so I grant the motions to dismiss.

         I. ANALYSIS

         In considering a motion to dismiss, “all well-pleaded allegations of material fact are taken as true and construed in a light most favorable to the non-moving party.” Wyler Summit P'ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998). However, I do not necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations in the complaint. See Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994). A plaintiff must make sufficient factual allegations to establish a plausible entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). Such allegations must amount to “more than labels and conclusions, [or] a formulaic recitation of the elements of a cause of action.” Id. at 555.

         “A claim may be dismissed as untimely pursuant to a 12(b)(6) motion only when the running of the statute of limitations is apparent on the face of the complaint.” United States ex rel. Air Control Techs., Inc. v. Pre Con Indus., Inc., 720 F.3d 1174, 1178 (9th Cir. 2013) (alteration and quotation omitted). A limitations period begins to run “from the day the cause of action accrued.” Clark v. Robison, 944 P.2d 788, 789 (Nev. 1997). A cause of action generally accrues “when the wrong occurs and a party sustains injuries for which relief could be sought.” Petersen v. Bruen, 792 P.2d 18, 20 (Nev. 1990); see also State ex rel. Dep't of Transp. v. Pub. Emps.' Ret. Sys. of Nev., 83 P.3d 815, 817 (Nev. 2004) (en banc) (“A cause of action ‘accrues' when a suit may be maintained thereon.” (quotation omitted)). Nevada has adopted the discovery rule, and thus time limits generally “do not commence and the cause of action does not ‘accrue' until the aggrieved party knew, or reasonably should have known, of the facts giving rise to the damage or injury.” G & H Assocs. v. Ernest W. Hahn, Inc., 934 P.2d 229, 233 (Nev. 1997).

         A. Quiet Title

         Bank of America's “quiet title/declaratory judgment” claim arises under Nevada Revised Statutes § 40.010. Under that section, an “action may be brought by any person against another who claims an estate or interest in real property, adverse to the person bringing the action, for the purpose of determining such adverse claim.” Nev. Rev. Stat. § 40.010. Thus, any person claiming an interest in the property may seek to determine adverse claims, even if that person does not hold title to, or possession of, the property.

         The parties dispute, however, which statute of limitations applies when, as here, the person seeking to determine its adverse interest in property has a lien but does not have a claim to title to the property. The parties offer three possibilities: (1) Nevada Revised Statutes § 11.070, which provides a five-year period for quiet title claims; (2) § 11.190(3)(a), which provides a three-year period for “[a]n action upon a liability created by statute;” or (3) § 11.220, which provides a four-year catchall period for claims that are not covered by another provision.

         The Supreme Court of Nevada has not addressed which statute of limitations applies in these circumstances. I therefore must predict how that court would decide the question, “using intermediate appellate court decisions, statutes, and decisions from other jurisdictions as interpretive aids.” Gravquick A/S v. Trimble Navigation Int'l Ltd., 323 F.3d 1219, 1222 (9th Cir. 2003).

         Under Nevada rules of statutory interpretation, I look first to the statute's plain language. Clay v. Eighth Jud. Dist. Ct., 305 P.3d 898, 902 (Nev. 2013). If the statute's “language is clear and unambiguous, ” I enforce it “as written.” Id. (quotation omitted). I “avoid[] statutory interpretation that renders language meaningless or superfluous, ” and “interpret a rule or statute in harmony with other rules and statutes.” Id. (quotation omitted).

         Nevada Revised Statutes § 11.070 provides the limitation period for quiet title actions.

         Pursuant to that statute,

No cause of action or defense to an action, founded upon the title to real property, . . . shall be effectual, unless it appears that the person prosecuting the action or making the defense, or under whose title the action is prosecuted or the defense is made, . . . was seized or possessed of the premises in question within 5 years before the ...

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