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Hawkins Marital Trust v. Peterson

United States District Court, D. Nevada

March 29, 2018

RANDOLPH PETERSON et al., Defendants.


          Gloria M. Navarro, Chief Judge

         Pending before the Court is the Motion to Dismiss, (ECF No. 7), filed by Defendants Randolph Peterson and Teri Peterson (“Defendants”). Plaintiff Hawkins Marital Trust (“Plaintiff”) filed a Response, (ECF No. 8), and Defendants filed a Reply, (ECF No. 15). For the following reasons, the Motion to Dismiss is GRANTED.

         I. BACKGROUND

         The instant dispute arises from two deeds of trust (“DOTs”) on Lot 37 and Lot 38 (collectively “the Parcels”) located within the Las Vegas Motor Coach Owners Association (“HOA”) in Clark County, Nevada. (Pet. For Removal, Ex. A (“Compl.”) ¶ 4, ECF No. 1-1). American Underwriters Life Insurance Company (“American Underwriters”) received the DOTs from Defendants, and they were recorded against the Parcels on November 16, 2007, and January 11, 2008. (Id.). Eventually, Plaintiff became the successor to American Underwriters as the beneficiary under the DOTs. (Id.).

         The DOTs secured American Underwriters's loan to Defendants in the amount of $111, 930.00 for each parcel. (Id. ¶ 5). On January 14, 2010, and February 25, 2010, the HOA recorded a lien for delinquent assessments on the Parcels in the amounts of $1, 889.92 and $1, 335.80. (Id. ¶¶ 6-7). A notice of breach and election to sell pursuant to the lien for delinquent assessments was recorded against Lot 37 on September 9, 2011, and against Lot 38 on September 1, 2011. (Id. ¶¶ 8-9). On January 31, 2012, a notice of foreclosure was recorded on Lot 37 and Lot 38. (Id. ¶¶ 10-11). Foreclosure sales for the Parcels were conducted on February 24, 2012. (Id. ¶ 12). At the foreclosure sale, Plaintiff bid $25, 447.70 on Lot 37 and $25, 504.01 on Lot 38. (Id.).

         On June 26, 2012, the HOA filed suit against American Underwriters to quiet title and to wipe out American Underwriter's DOTs on the Parcels pursuant to the foreclosure sales. (Id. at ¶ 13); see Las Vegas Motor Coach Owners Ass'n, Inc. v. American Underwriters Life Insurance Co., No. A-12-664235-C, 2013 WL 3868804 (Nev. Dist. Ct., June 06, 2013) (the “Prior Action”). Notably, Defendants and Plaintiff were not named as parties. (Mot. to Dismiss 3:6, ECF No. 7); (see Compl., Ex. C at 21, ECF No. 1-1). On June 6, 2013, the court granted summary judgment in the Prior Action where the court found in favor of American Underwriters by holding that the foreclosure sales did not wipe out the DOTs on the Parcels. (Compl. ¶ 14, ECF No. 1-1).

         On September 19, 2013, the HOA filed an appeal with the Nevada Supreme Court. (Id. at ¶ 15). On September 18, 2014, the Nevada Supreme Court ruled in a different case that super priority lien foreclosures wipe out first trust deeds like the ones held by American Underwriters. See SFR Investments Pool 1 v. U.S. Bank, 334 P.3d 408 (Nev. 2014) (“SFR”). As a result of the decision in SFR, the Nevada Court of Appeals reversed and remanded the Prior Action. (See Compl. ¶ 17, ECF No. 1-1); see Las Vegas Motor Coach Owners Ass'n, Inc. v. Am. Underwriters Life Ins. Co., No. 63651, 2015 WL 5554318 (Nev. App. Sept. 16, 2015). On May 31, 2016, the state court granted the parties' stipulation to quiet title to the Parcels in favor of the HOA. (Id. at ¶ 18); (see Compl., Ex. C at 21-30, ECF No. 1-1). As a result of the order granting the stipulation from the remanded Prior Action, Plaintiff recovered $9, 000.00 on Lot 37 and $9, 000.00 on Lot 38. (Compl. at ¶ 19).

         In the instant case, Plaintiff claims that Defendants were obligated to pay back $119, 300.00 plus interest under the deed of trust on Lot 37. (Id. at ¶ 21). Plaintiff further alleges that Defendants began paying for both Lot 37 and Lot 38, but defaulted under the deed of trust by not keeping American Underwriters in a first secured position. (Id. at ¶ 22-23). Plaintiff claims that the entire balance is due and payable in the amounts of “$73, 304.02 in principal, $16, 013.39 in interest, less $9, 000 received from the HOA after the foreclosure sale” on Lot 37, and “$73, 802.02 in principal, $15, 514.40 in interest, less $9, 000 received from the HOA after the foreclosure sale” on Lot 38. (Id. at ¶¶ 22-23). The crux of Plaintiff's argument is that “[D]efendants have breached the terms and conditions of the deed of trust on both Lot 37 and Lot 38.” (Id. at ¶ 24).

         Plaintiff filed the instant suit in state court against Defendants on November 23, 2016, alleging the following causes of action: (1) breach of contract and (2) breach of the implied duty of good faith and fair dealing. (See Compl., ECF No. 1-1). Defendants filed a Petition for Removal on February 22, 2017. (See Pet. For Removal, ECF No. 1). In the instant Motion, Defendants request that the Court dismiss all of Plaintiff's claims with prejudice. (See generally Mot. to Dismiss, ECF No. 7).


         Dismissal is appropriate under Rule 12(b)(6) where a pleader fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A pleading must give fair notice of a legally cognizable claim and the grounds on which it rests, and although a court must take all factual allegations as true, legal conclusions couched as factual allegations are insufficient. Twombly, 550 U.S. at 555. Accordingly, Rule 12(b)(6) requires “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. “To survive a 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.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. This standard “asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.

         If the Court grants a motion to dismiss for failure to state a claim, leave to amend should be granted unless it is clear that the deficiencies of the complaint cannot be cured by amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992). Pursuant to Rule 15(a), the court should “freely” give leave to amend “when justice so requires, ” and in the absence of a reason such as “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962).


         In their Motion to Dismiss, Defendants argue that Plaintiff's Complaint is time-barred because Plaintiff failed to apply for a deficiency judgment or file a civil action within six months after the date of the foreclosure sale pursuant to Nevada Revised Statute (“NRS”) § 40.455 and NRS § 40.4639. (See Mot. to Dismiss 4:2-11, ECF No. 7); (see also Resp. 5:40- 15).[1] Plaintiff argues that “this litigation was commenced timely” under Nevada's discovery rule because Plaintiff “reasonably believed that its trust ...

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