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Ditech Financial LLC, v. Paradise Springs One Homeowners Association

United States District Court, D. Nevada

July 16, 2018

DITECH FINANCIAL LLC and FEDERAL NATIONAL MORTGAGE ASSOCIATION, Plaintiffs
v.
PARADISE SPRINGS ONE HOMEOWNERS ASSOCIATION; NEVADA ASSOCIATION SERVICES, INC.; ROBERT C. WANG; and ANNABEL E. BARBER, Defendants

          ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT PARADISE SPRINGS ONE HOMEOWNERS ASSOCIATION'S MOTION FOR SUMMARY JUDGMENT [ECF NOS. 42, 43]

          ANDREW P. GORDON UNITED STATES DISTRICT JUDGE.

         Plaintiffs Ditech Financial LLC (Ditech) and Federal National Mortgage Association (Fannie Mae) brought this suit to determine whether a deed of trust still encumbers property located at 5462 Birchbrook Court in Las Vegas following a foreclosure sale conducted by defendant Paradise Springs One Homeowners Association (Paradise). Paradise moves for summary judgment, arguing Ditech and Fannie Mae's claims are untimely, Paradise followed all statutory requirements, Ditech lacks standing, and the sale did not violate due process. Defendants Robert Wang and Annabel Barber join the motion.

         Ditech and Fannie Mae oppose Paradise's motion and also move for summary judgment. They argue that because Fannie Mae owned the note and deed of trust at the time of the foreclosure sale, the sale could not have extinguished Fannie Mae's interest under the federal foreclosure bar. Alternatively, they argue the sale violated their due process rights, they extinguished the superpriority lien by offering to pay the superpriority amount, and the sale should be equitably set aside.

         Ditech and Fannie Mae have standing, Paradise has not shown I should reconsider Judge Mahan's prior ruling that the remaining claims are timely, and the federal foreclosure bar applies. I therefore grant Ditech and Fannie Mae's motion and deny Paradise's motion.

         I. BACKGROUND

         In August 2003, former homeowner Emily Razzano obtained a loan in the amount of $175, 000 and executed a deed of trust to secure the loan. ECF Nos. 42-1; 42-5 at 4. The deed of trust was recorded in early September 2003. ECF No. 42-1. That same month, Fannie Mae acquired ownership of the loan and the deed of trust and has remained the owner ever since. ECF Nos. 42-2 at 3; 42-5 at 6. In May 2012, Bank of America, N.A. was Fannie Mae's servicer on the loan. ECF Nos. 42-2 at 4; 42-5 at 6. A year later, the loan servicing rights were transferred to Ditech. ECF Nos. 42-2 at 4; 42-5 at 7.

         In September 2011, Paradise, acting through its agent defendant Nevada Association Services, Inc. (NAS), recorded a notice of delinquent assessment lien because Razzano had failed to pay her homeowners association (HOA) assessments. ECF No. 42-8. Paradise subsequently recorded a notice of default and election to sell and a notice of foreclosure sale. ECF Nos. 42-9; 42-10. Paradise purchased the property for $9, 280.67 at the HOA foreclosure sale held on May 4, 2012. ECF No. 42-11. In August 2015, Paradise quitclaimed the property to Wang and Barber. ECF No. 42-12.

         Ditech and Fannie Mae filed this lawsuit against Paradise, NAS, Wang, and Barber, seeking to quiet title and obtain declarations that the deed of trust still encumbers the property following the HOA foreclosure sale or that the sale be set aside. Ditech and Fannie Mae also asserted two claims seeking money damages against Paradise and NAS: breach of Nevada Revised Statutes § 116.1113 and wrongful foreclosure.

         Paradise moved to dismiss the damages claims as time-barred and to dismiss the quiet title and declaratory relief claims on the merits. ECF No. 7. Judge Mahan, who previously presided over this case, dismissed the two damages claims but denied the motion as to the declaratory relief and quiet title claims. ECF No. 19. Although Paradise did not move to dismiss those claims on statute of limitations grounds, Judge Mahan identified the claims as ones brought pursuant to Nevada Revised Statutes § 40.010. Id. He stated that those claims are governed by a five-year limitation period, and thus are timely. Id. He also rejected Paradise's arguments to dismiss the quiet title and declaratory relief claims on the merits. Id.

         Defendants Wang and Barber subsequently filed an answer and crossclaims against Paradise and NAS. ECF No. 22. Judge Mahan dismissed the crossclaims without prejudice. ECF No. 31. Wang and Barber have not moved to amend their crossclaims.

         NAS has never appeared in this action. Ditech and Fannie Mae moved for entry of clerk's default, which was entered on April 11, 2017. ECF Nos. 27, 28.

         Accordingly, the remaining claims in this action are Ditech and Fannie Mae's declaratory relief and quiet title claims. Both sides now move for summary judgment. For the reasons set forth below, I grant Ditech and Fannie Mae's motion for summary judgment and deny Paradise's motion.

         II. ANALYSIS

         Summary judgment is appropriate if the movant shows “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a), (c). A fact is material if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue is genuine if ...


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