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Christiana Trust v. Red Lizard Productions, LLC

United States District Court, D. Nevada

May 24, 2018

CHRISTIANA TRUST, A DIVISION OF WILMINGTON SAVINGS FUND SOCIETY, FSB, NOT IN ITS INDIVIDUAL CAPACITY BUT AS TRUSTEE OF ARLP TRUST 3, Plaintiff(s),
v.
RED LIZARD PRODUCTIONS, LLC, Defendant(s).

          ORDER

         Presently before the court is defendant Treasures Landscape Maintenance Association's (the “HOA”) motion to dismiss. (ECF No. 23). Plaintiff Christina Trust, a division of Wilmington Savings Fund Society, FSB (“Christina Trust”) filed a response (ECF No. 25), to which the HOA replied (ECF No. 26).

         Also before the court is the HOA's motion to dismiss defendants Red Lizard Productions, LLC (“Red Lizard”) and RLP-Shasta Daisy, LLC's (“RLP-Shasta”) crossclaims. (ECF No. 41). Defendants Red Lizard and RLP-Shasta filed a response (ECF No. 42), to which the HOA replied (ECF No. 43).

         Also before the court is plaintiff's first motion for summary judgment. (ECF No. 45). The HOA filed a response (ECF No. 48), as did Red Lizard and RLP-Shasta (ECF No. 52). Thereafter, plaintiff filed a reply. (ECF No. 56).

         Also before the court is the HOA's motion for summary judgment against plaintiff. (ECF No. 57). Plaintiff filed a response, (ECF No. 64), to which the HOA replied (ECF No. 66).

         Also before the court is the HOA's motion for summary judgment against defendant Red Lizard. (ECF No. 58). Red Lizard has not filed a response, and the time for doing so has since passed.

         Also before the court is plaintiff's second motion for summary judgment. (ECF No. 59). The HOA filed a response (ECF No. 63), to which plaintiff replied (ECF No. 65).

         I. Introduction

         This case involves a dispute over real property located at 5236 Shasta Daisy Street, North Las Vegas, Nevada, 89031 (the “property”).

         1. Plaintiff's interest in the property

         On June 14, 2007, Miguel A. Chavez purchased the property. (ECF No. 12). On the same day, Chavez executed and recorded a deed of trust identifying Countrywide Home Loans, Inc. as the lender, ReconTrust Company, N.A. as the trustee, and Mortgage Electronic Registration Systems, Inc. (“MERS”), as nomine for lender and lenders successors and assigns. Id. The deed of trust secured a loan in the amount of $247, 500.00. Id On January 25, 2010, a corporate assignment of deed of trust was recorded, whereby MERS assigned all beneficial interest in the loan to BAC Home Loans Servicing, LP (“BAC Home Loans”) f/k/a Countrywide Home Loan Servicing, LP. Id. On June 3, 2014, an assignment of deed of trust was recorded, whereby Bank of America, N.A. (“BANA”), successor by merger to BAC Home Loans, assigned all beneficial interest in the deed of trust to plaintiff in its individual capacity.[1] Id.

         2. Defendants' interest in the property

         On November 26, 2008, a notice of delinquent assessment lien was recorded against the property by Nevada Association Services, Inc. (“NAS”), as agent for the HOA. Id. On January 22, 2009, a notice of default and election to sell under homeowners' association lien was recorded against the property by NAS on behalf of the HOA. Id. On March 12, 2010, a release of notice of delinquent lien was recorded against the property by NAS, on behalf of the HOA, in which the HOA gave notice that the first notice of lien was satisfied and released. Id.

         Also on March 12, 2010, a notice of rescission was recorded against the property by NAS, on behalf of the HOA, pursuant to which the HOA rescinded the first notice of default. Id. On November 18, 2010, a second notice of delinquent assessment lien was recorded against the property by NAS, on behalf of the HOA. Id.

         On May 13, 2011, Chavez filed for a voluntary petition under Chapter 7 of the Bankruptcy Code. Id. On August 16, 2011, a discharge of debtor was entered in the bankruptcy action. Id. Pursuant to this discharge, Chavez's pre-petition debt to the HOA was discharged. Id. The bankruptcy action was closed on November 22, 2011. Id.

         On October 4, 2011, a second notice of default and election to sell was recorded against the property by NAS, on behalf of the HOA. Id. On May 15, 2012, a notice of foreclosure sale was recorded against the property by NAS, on behalf of the HOA. Id.

         On May 30, 2012, BANA sent NAS a letter requesting a payoff ledger. (ECF No. 59). Neither the HOA nor NAS provided BANA with a payoff ledger. Id.

         On December 14, 2012, a foreclosure sale took place whereby Red Lizard acquired the property for $4, 758.00.[2] (ECF No. 12).

         3. Procedural history

         On September 25, 2015, plaintiff filed its original complaint in this action. (ECF No. 1). On January 31, 2017, plaintiff filed its first amended complaint. (ECF No. 12). The amended complaint alleges the following claims: (1) quiet title/declaratory relief pursuant to NRS 30.010 and NRS 40.010 against all defendants; (2) preliminary and permanent injunction against all defendants; (3) unjust enrichment against all defendants; (4) wrongful foreclosure against the HOA and NAS; (5) negligence against the HOA and NAS; (6) negligence per se against the HOA and NAS; (7) breach of contract against the HOA and NAS; (8) misrepresentation against the HOA and NAS; and (9) breach of the covenant of good faith and fair dealing against the HOA and NAS. Id.

         On June 15, 2017, RLP-Shasta and Red Lizard filed crossclaims against Christiana Trust and counterclaims against the HOA, and NAS. (ECF No. 35). The crossclaims and counterclaims allege the following causes of action: (1) declaratory relief/quiet title pursuant to NRS 30.010 and 116.3116 against Christiana Trust, the HOA, and NAS; (2) preliminary and permanent injunction from foreclosure action against Christiana Trust, the HOA, and NAS; and (3) unjust enrichment against Christiana Trust, the HOA, and NAS. (ECF No. 35).

         II. Legal Standard

         a. Dismissal

         The court may dismiss a plaintiff's 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). Although rule 8 does not require detailed factual allegations, it does require more than labels and conclusions. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Furthermore, a formulaic recitation of the elements of a cause of action will not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009) (citation omitted). Rule 8 does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions. Id. at 678-79.

         To survive a motion to dismiss, a complaint must contain sufficient factual matter to “state a claim to relief that is plausible on its face.” Id. 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. When a complaint pleads facts that are merely consistent with a defendant's liability, and shows only a mere possibility of entitlement, the complaint does not meet the requirements to show plausibility of entitlement to relief. Id.

         In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering a motion to dismiss. Id. First, the court must accept as true all of the allegations contained in a complaint. However, this requirement is inapplicable to legal conclusions. Id. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. Id. at 678. Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has “alleged - but not shown - that the pleader is entitled to relief.” Id. at 679. When the allegations in a complaint have not crossed the line from conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550 U.S. at 570.

         The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The Starr court held:

First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.

Id.

         b. Summary judgment

         The Federal Rules of Civil Procedure allow summary judgment when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that “there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(a). A principal purpose of summary judgment is “to isolate and dispose of factually unsupported claims.” Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).

         For purposes of summary judgment, disputed factual issues should be construed in favor of the non-moving party. Lujan v. Nat'l Wildlife Fed., 497 U.S. 871, 888 (1990). However, to be entitled to a denial of summary judgment, the nonmoving party must “set forth specific facts showing that there is a genuine issue for trial.” Id.

         In determining summary judgment, a court applies a burden-shifting analysis. The moving party must first satisfy its initial burden. “When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case.” C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted).

         By contrast, when the nonmoving party bears the burden of proving the claim or defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential element of the non-moving party's case; or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323-24. If the moving party fails to meet its initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159- 60 (1970).

         If the moving party satisfies its initial burden, the burden then shifts to the opposing party to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 631 (9th Cir. 1987).

         In other words, the nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the pleadings and set forth specific facts by producing competent evidence that shows a genuine issue for trial. See Celotex, 477 U.S. at 324.

         At summary judgment, a court's function is not to weigh the evidence and determine the truth, but to determine whether there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The evidence of the nonmovant is “to be believed, and all justifiable inferences are to be drawn in his favor.” Id. at 255. But if the evidence of the nonmoving party is merely colorable or is not significantly probative, summary judgment may be granted. See Id. at 249-50.

         III. Discussion

         1. Motion to dismiss Christina Trust's first amended complaint (ECF No. 23)

         a. Quiet title/declaratory relief

         The HOA argues that plaintiff's claim for quiet title/declaratory relief should be dismissed because plaintiff's first amended complaint fails to allege, and cannot allege, it paid any debts owed on the property. (ECF No. 23).

         In response, plaintiff argues that it is not obligated to pay all debts owed on the property. (ECF No. 25). The court agrees. Under Nevada law, to assert a claim for quiet title pursuant to NRS 40.010, plaintiff need only allege that it has an interest in the real property that is adverse to another. Plaintiff does not need to have paid all debts on the property, as claimed by the HOA. See Nev. Rev. Stat. 40.010; see also Lopez v. Bank of Am., N.A., no. 2:12-cv-00801-JCM, 2013 WL 1501449, at *3 (D. Nev. Apr. 10, 2013).

         Next the HOA argues that plaintiff cannot prove good title in itself. (ECF No. 23). The HOA argues that because plaintiff did not foreclose on the property plaintiff cannot hold title to the property. Id. Plaintiff responds that it is not asserting an ownership or possessory interest in the property as the HOA contends, but instead asks the court to hold that either its first deed of trust still encumbers the property, or that the foreclosure sale was invalid. (ECF No. 25).

         “The purpose of a quiet title action is to establish one's title against adverse claims to real property or any interest therein.” Holmes v. Countrywide Home Loans, 2:12-cv-02013-JCM-CWH, 2013 WL 1787182, at *3 (D. Nev. Apr. 25, 2013) (emphasis added). A plaintiff does not have to assert an ownership interest in property in order to assert a claim for quiet title. See Id. ...


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