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Ditech Financial LLC v. SFR Investments Pool 1, LLC

United States District Court, D. Nevada

March 30, 2019

DITECH FINANCIAL LLC, et al., Plaintiffs
v.
SFR INVESTMENTS POOL 1, LLC, et al., Defendants.

          ORDER

          Gloria M. Navarro, Chief Judge United States District Court

         Pending before the Court is the Motion for Summary Judgment, (ECF No. 66), filed by Plaintiffs Federal Housing Finance Agency (“FHFA”), in its capacity as Conservator for Federal National Mortgage Association (“Fannie Mae”), and Federal Home Loan Mortgage Corporation (“Freddie Mac”) (collectively “Plaintiffs”). Defendant SFR Investments Pool 1, LLC (“SFR”) filed a Response, (ECF No. 66), [1] and Plaintiffs filed a Reply, (ECF No. 121). Also before the Court is SFR's Motion for Summary judgment, (ECF No. 117). Plaintiffs filed a Response, (ECF No. 122), and SFR filed a Reply, (ECF No. 126).[2] For the reasons stated herein, Plaintiffs' Motion for Summary Judgment is GRANTED.

         I. BACKGROUND

         The present action involves the interplay between Nev. Rev. Stat. (“NRS”) § 116 and 12 U.S.C. § 4617 as it relates to the parties' interests in 89 different residential units located in Nevada (collectively “the Properties”). (Am. Compl. ¶ 25, ECF No. 24). In Plaintiffs' Amended Complaint and Motion for Summary Judgment, Plaintiffs provide a brief history for the 89 properties, including the respective dates that they acquired the deeds of trust (“DOTs”) for each of the parcels. (See Id. ¶¶25-114); (See also Charts, Ex. A to Pls.' MSJ, ECF No. 66-1); (DOTS, Ex. E to Pls.' MSJ, ECF No. 66-5). In addition, Plaintiffs provide the date that each property was subject to a homeowners' association (“HOA”) foreclosure sale under NRS 116. (Id.). Based on their claimed ownership interest in the Properties, Plaintiffs seek to quiet title and obtain declaratory relief that their DOTs encumbering the Properties were not extinguished by the HOA foreclosure sales. (Id. ¶¶ 117-136). The parties now move for summary judgment on this issue.[3]

         II. LEGAL STANDARD

         The Federal Rules of Civil Procedure provide for summary adjudication 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 judgment as a matter of law.” Fed.R.Civ.P. 56(a). Material facts are those that may affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. Id. “Summary judgment is inappropriate if reasonable jurors, drawing all inferences in favor of the nonmoving party, could return a verdict in the nonmoving party's favor.” Diaz v. Eagle Produce Ltd. P'ship, 521 F.3d 1201, 1207 (9th Cir. 2008) (citing United States v. Shumway, 199 F.3d 1093, 1103-04 (9th Cir. 1999)). 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).

         In determining summary judgment, a court applies a burden-shifting analysis. “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). In 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 nonmoving 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. 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. 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. 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. 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. Celotex Corp., 477 U.S. at 324.

         At summary judgment, a court's function is not to weigh the evidence and determine the truth; it is to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 249. 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. Id. at 249-50.

         III. DISCUSSION

         Plaintiffs move for summary judgment on their quiet tile and declaratory relief claims, asserting that 12 U.S.C. § 4617(j)(3) (the “Federal Foreclosure Bar”) compels the Court to find that the HOA's foreclosure sale did not extinguish Plaintiffs' DOTs on the Properties. (Pls.' MSJ 13:18-26, ECF No. 66). In turn, SFR raises five arguments as to why the Federal Foreclosure Bar does not apply to this action: (1) the Court lacks jurisdiction; (2) Plaintiffs' claims are time-barred; (3) Plaintiffs fail to proffer admissible evidence; (4) Plaintiffs lack a property interest; and (5) FHFA consented to the extinguishment of the DOTs. (See SFR's MSJ 5:2-7:11); (SFR's Resp. 6:5-25:27, ECF No. 115). The Court first addresses the threshold questions of jurisdiction and statute of limitations.

         A. Subject Matter Jurisdiction

         1) In Rem Jurisdiction

         SFR argues that the Court lacks jurisdiction because four of the properties listed in the Amended Complaint are already subject to the in rem jurisdiction of the Eighth Judicial District Court of Nevada. (SFR's MTD 5:22-7:22, ECF No. 60). These four properties are identified as: (1) Rolling Boulder; (2) Benezette Court; (3) Cimarron Cove; and (4) Sea Rock Road. (See Am. Compl. ¶¶ 47, 55, 62, 86). According to SFR, “[t]he ...


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