United States District Court, D. Nevada
ORDER (1) DENYING MOTION TO DISMISS, (2) GRANTING
MOTION FOR SUMMARY JUDGMENT, AND(3) ORDERING STATUS REPORT
(ECF Nos. 12, 28)
P. GORDON, UNITED STATES DISTRICT JUDGE
parties dispute whether a deed of trust still encumbers
property located at 6250 West Flamingo Road #39 in Las Vegas
following a non-judicial foreclosure sale conducted by a
homeowners association (HOA). Plaintiff Nationstar Mortgage
LLC is the beneficiary of record for the deed of trust and is
the servicer for Federal National Mortgage Association
(Fannie Mae). Nationstar seeks a declaration that the deed of
trust continues to encumber the property.
Tow Properties, LLC II (Tow) purchased the property at the
HOA foreclosure sale and is the current owner. Tow moves to
dismiss on a variety of grounds. Nationstar opposes the
motion to dismiss and separately moves for summary judgment
on the basis that the federal foreclosure bar in 12 U.S.C.
§ 4617(b)(2)(A)(i) precludes the HOA foreclosure sale
from extinguishing Fannie Mae's interest in the
Tow's motion to dismiss and grant Nationstar's motion
for summary judgment. Fannie Mae's interest cannot be
extinguished by the HOA sale under the federal foreclosure
Cain purchased the property in June 2003. ECF No. 1-2. Cain
financed the purchase through a loan from R.N.B., Inc., doing
business as Cornerstone Mortgage. ECF No. 1- 4. The loan was
secured by a deed of trust encumbering the property.
Id. The deed of trust identified Cain as the
borrower, Cornerstone as the lender, Land Title of Nevada as
the trustee, and Mortgage Electronic Registration Systems,
Inc. (MERS) as the beneficiary solely as nominee for the
lender and its assigns. Id. at 3-4.
November 2006, Fannie Mae acquired ownership of Cain's
loan and the associated deed of trust, and has owned them
ever since. ECF No. 28-2 at 3, 7. The transfer to Fannie Mae
is not recorded in the Clark County recorder's office.
Fannie Mae's servicer for the loan initially was Flagstar
Capital Markets Corporation. Id. at 4. Nationstar
became Fannie Mae's servicer in September 2009 and
remains the servicer. Id.
2012, defendant Flamingo Ridge Homeowners Association
recorded a notice of delinquent assessment lien, stating that
Cain owed over $2, 000 in unpaid HOA assessments. ECF No.
1-6. A few months later, Flamingo Ridge recorded a notice of
default and election to sell based on the unpaid assessments.
ECF No. 1-7. In April 2013, MERS assigned the beneficial
interest under the deed of trust to Nationstar. ECF No. 1-5.
Flamingo Ridge recorded a notice of trustee's sale in
July 2013, and set the sale for August 28, 2013. ECF No. 1-9.
The property was sold on that date to Flamingo Ridge for
close to $11, 000. ECF No. 1-10.
August 2014, Flamingo Ridge quitclaimed the property to Tow.
ECF No. 1-11. Nationstar filed this lawsuit on June 27, 2017.
ECF No. 1.
MOTION TO DISMISS (ECF No. 12)
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.
argues Nationstar's suit is barred by the doctrine of
laches because Nationstar waited too long after the HOA sale
to bring its lawsuit. Nationstar responds that laches does
not apply because it filed suit within the limitation period
and there is no extraordinary circumstance to justify
applying laches. Tow replies that Nationstar had the
opportunity to act before the HOA foreclosure sale in
addition to waiting several years after the sale to file
suit. Tow argues that had Nationstar done so earlier, Tow
could have protected itself, so this suit should be barred.
suit sounds in equity because it seeks to resolve competing
claims to interests in property. See Shadow Wood HOA v.
N.Y. Cmty. Bancorp, 366 P.3d 1105, 1111 (Nev. 2016) (en
banc) (stating that a person seeking to quiet title under
Nevada Revised Statutes § 40.010 may invoke the
court's equitable powers to resolve competing claims to
title). “Laches is an equitable time limitation on a
party's right to bring suit, . . . resting on the maxim
that one who seeks the help of a court of equity must not
sleep on his rights.” Jarrow Formulas, Inc. v.
Nutrition Now, Inc., 304 F.3d 829, 835 (9th Cir. 2002)
(quotations and internal citation omitted). The “laches
determination is made with reference to the limitations
period for the analogous action at law. If the plaintiff
filed suit within the analogous limitations period, the
strong presumption is that laches is inapplicable.”
Id. Laches is an affirmative defense that
“requires proof of (1) lack of diligence by the party
against whom the defense is asserted, and (2) prejudice to
the party asserting the defense.” In re Beaty,
306 F.3d 914, 926 (9th Cir. 2002). (quotation omitted).
filed this action within the limitation period for its quiet
title claim, so laches presumptively does not apply. It is
true that Fannie Mae, through Nationstar or its predecessor
servicer, could have filed this suit earlier, and facts
supporting some lack of diligence appear on the face of the
complaint. But at the motion to dismiss stage, nothing in the
complaint shows Tow's prejudice. Tow has not moved for
summary judgment, and because laches is an affirmative
defense, Tow bears the burden of showing prejudice. The
conclusory statement in its brief that it could have
protected its interests had Nationstar sued earlier is
insufficient. I therefore deny the motion to dismiss based on
Nevada Revised Statutes § 38.310
argues the complaint should be dismissed because Nationstar
did not first submit the matter to mediation as required
under Nevada Revised Statutes § 38.310. Nationstar
responds that its suit falls within an exception to the
statute for an action relating to the property's title.
Alternatively, Nationstar argues (1) its claims are not based
on interpretations of the Covenants, Conditions, and
Restrictions (CC&Rs), and (2) § 38.310 applies to
suits by homeowners against homeowners associations, not
suits by lienholders.
discussed below with respect to Nationstar's summary
judgment motion, this case can be resolved by the federal
foreclosure bar. Resolution of that question rests on the
interpretation and application of 12 U.S.C. § 4617(j)(3)
and does not require the interpretation, enforcement, or
application of the CC&Rs. Section 38.310 therefore does
not apply to the claim. See Fed. Nat'l Mortg.
Ass'n v. SFR Investments Pool 1, LLC, No.