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Bank of America N.A. v. Operture Inc.

United States District Court, D. Nevada

July 2, 2018

BANK OF AMERICA, N.A., Plaintiff
v.
OPERTURE, INC., et al., Defendants

          ORDER GRANTING IN PART THE MOTION TO DISMISS [ECF NO. 31]

          ANDREW P. GORDON, UNITED STATES DISTRICT JUDGE.

         This is a dispute over the effect of a non-judicial foreclosure sale conducted by defendant Indigo Homeowners' Association (Indigo). Indigo foreclosed on the property located at 9268 Lapeer Street in Las Vegas after the former homeowner ceased paying homeowners association (HOA) assessments. Plaintiff Bank of America, N.A. sues to determine whether the HOA foreclosure sale extinguished Bank of America's deed of trust encumbering the property.

         Indigo moves to dismiss the claims against it for quiet title, unjust enrichment, wrongful foreclosure, negligence, negligence per se, breach of contract, misrepresentation, and tortious interference with contract.[1] I grant the motion in part.

         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. Quiet Title

         Indigo moves to dismiss the quiet title claim, arguing Bank of America did not pay all debts owed on the property, Bank of America cannot prove good title in itself because it is only a lienholder, and Indigo does not assert an adverse claim to the property. Bank of America responds that it need not pay all debts on the property to establish its lien priority. It also argues it has adequately alleged a claim to determine adverse interests in property.

         Under Nevada Revised Statutes § 40.010, 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.” “Thus, any person claiming an interest in the property may seek to determine adverse claims, even if that person does not have title to or possession of the property.” Nationstar Mortg. LLC v. Amber Hills II Homeowners Ass'n, No. 2:15-cv-01433-APG-CWH, 2016 WL 1298108, at *3 (D. Nev. Mar. 31, 2016). Accordingly, it is not fatal to Bank of America's claim that it asserts a lien interest rather than title to the property.

         Additionally, Indigo is a proper party to the quiet title claim.[2] Bank of America challenges the validity of the sale Indigo conducted and the corresponding validity of the title Indigo transferred to the purchaser at the HOA sale. If the HOA foreclosure sale is invalidated, Indigo's superpriority lien might be reinstated as an encumbrance against the property. Further, the existence and priority of that lien might still be in doubt where Bank of America alleges it tendered payment of that lien. “The disposition of this action in the HOA's absence may impair or impede [Bank of America's] ability to protect its interests.” U.S. Bank, N.A. v. Ascente Homeowners Ass'n, No. 2:15-cv-00302-JAD-VCF, 2015 WL 8780157, at *2 (D. Nev. Dec. 15, 2015). Additionally, if Bank of America “succeeds in invalidating the sale without the HOA being a party to this suit, separate litigation to further settle the priority of the parties' respective liens and rights may be necessary.” Id. Thus, if Indigo is dismissed as a party, Bank of America would not be able to secure the complete relief it seeks. See id.; Fed.R.Civ.P. 19(a). Accordingly, Indigo is a proper party to Bank of America's quiet title claim, and its motion to dismiss on this basis is denied.

         Finally, Bank of America is not required to pay all debts on the property to determine whether its lien was extinguished. The case Indigo cites, Nebab v. Bank of Am., N.A., No. 2:10-cv-01865-KJD-GWF, 2012 WL 2860660 (D. Nev. July 11, 2012), relies on a California case, Ferguson v. Avelo Mortg., LLC, 126 Cal.Rptr.3d 586, 591 (Cal.Ct.App. 2011).[3] Ferguson, in turn, relies on another California case stating that a “mortgagor cannot quiet his title against the mortgagee without paying the debt secured.” Shimpones v. Stickney, 28 P.2d 673, 678 (Cal. 1934). These cases have no application here because Bank of America is not the mortgagor trying to quiet title against the mortgagee. I therefore deny the motion to dismiss on that basis.

         B. Common Law Claims

         Indigo argues that Bank of America's common law claims for wrongful foreclosure, unjust enrichment, and negligence have been superseded by the comprehensive statutory scheme set forth in Nevada Revised Statutes Chapter 116. Bank of America responds that Supreme Court of Nevada authority establishes that common law claims are not statutorily superseded by Chapter 116.

         By statute, Nevada follows the “common law of England, so far as it is not repugnant to or in conflict with the . . . laws of this State.” Nev. Rev. Stat. § 1.030; see also State v. Hamilton, 111 P. 1026, 1029 (Nev. 1910) (stating Nevada adopts the common law “except as specially abrogated or where unsuitable to our conditions”). Chapter 116, although comprehensive, does not reflect an intent to supersede all common law causes of action. To the contrary, § 116.1108 reflects that the common law remains applicable to Chapter 116 unless the two conflict:

The principles of law and equity, including the law of corporations and any other form of organization authorized by law of this State, the law of unincorporated associations, the law of real property, and the law relative to capacity to contract, principal and agent, eminent domain, estoppel, fraud, misrepresentation, duress, coercion, mistake, receivership, substantial performance, or other validating or invalidating cause supplement the provisions of this chapter, except to the extent inconsistent with this chapter.

         I therefore deny the motion to dismiss on this basis.

         C. Wrongful Foreclosure

         Alternatively, Indigo argues the wrongful foreclosure claim must be dismissed because the prior homeowner was in default at the time of the HOA foreclosure sale. Indigo also argues that a lienholder like Bank of America cannot assert a wrongful foreclosure claim because that claim belongs only to the trustor or mortgagor. Bank of America responds that there is no law requiring a lienholder to show the homeowner was not in default to assert a wrongful foreclosure claim against ...


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