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U.S. Bank Trust, N.A. v. Fodor Family Trust

United States District Court, D. Nevada

March 31, 2019

U.S. BANK TRUST, N.A., Trustees for LSF8 Master Participation Trust, Plaintiff,


          Gloria M. Navarro, United States District Judge

         Pending before the Court are the Motions to Dismiss, (ECF Nos. 28, 35), filed by Defendants Fodor Family Trust (“Fodor”) and Palo Verde Homeowners Association (“HOA”). Plaintiff U.S. Bank Trust, N.A. (“Plaintiff”) filed Responses, (ECF Nos. 32, 39), and Fodor and HOA filed Replies, (ECF Nos. 33, 41). For the reasons discussed below, the Court GRANTS HOA's Motion to Dismiss.[1]

         I. BACKGROUND

         This case arises from the non-judicial foreclosure on real property located at 751 Palo Verde Circle #2, Las Vegas, Nevada 89119 (the “Property”). (First Am. Compl. (“FAC”) ¶ 8, ECF No. 1). On May 31, 2005, Marian S. Schoenfeld (“Borrower”) purchased the Property by way of a loan in the amount of $577, 000.00 with Ascent Home Loans (“Ascent”); and Ascent recorded that loan as a deed of trust (“DOT”) on the Property. (Id. ¶ 10). Borrower subsequently defaulted on the loan, for which Ascent's agent recorded a Notice of Breach and Default and Election to Sell. (Id. ¶ 11).

         On September 28, 2007, Household Finance Realty Corporation of Nevada received an assignment of the DOT from Ascent. (Id. ¶ 11). Thereafter, on March 25, 2011, HOA began foreclosure proceedings on the Property by filing a Notice of Delinquent Assessment on the Property due to Borrower's failure to meet payment obligations to the HOA. (Id. ¶¶ 13-14). Moreover, HOA began those foreclosure proceedings pursuant to Nevada Revised Statutes (“NRS”) Chapter 116. (Id. ¶¶ 19, 32). HOA then recorded, through its agent, a Notice of Default and Election to Sell on the Property. (Id. ¶¶ 15-16). On December 28, 2012, HOA sold the Property by public auction to Palo Verde Circle Trust (the “Circle Trust”); and the Trust recorded the sale with a foreclosure deed on January 2, 2013. (Id. ¶¶ 18-19).

         Plaintiff received an assignment of the DOT from Household Finance Realty Corporation of Nevada on April 8, 2014. Roughly one year later, on March 26, 2015, the Circle Trust conveyed its title to the Property to Fodor. (Id. ¶ 24).

         Plaintiff now seeks to challenge the HOA's foreclosure sale of the Property. Plaintiff accordingly filed its initial Complaint, followed by its First Amended Complaint, asserting the following causes of action against various parties involved in the foreclosure and subsequent sale of the Property: (1) quiet title / declaratory relief; (2) declaratory relief under the Fifth Amendment and Fourteenth Amendment; (3) quiet title under the Fifth Amendment and Fourteenth Amendment; (4) injunctive relief; (5) breach of statutory duty; (6) negligent misrepresentation; (7) breach of contract; and (8) breach of covenant of good faith and fair dealing. (Id. ¶¶ 63-142).


         Rule 12(b)(6) of the Federal Rules of Civil Procedure mandates that a court dismiss a cause of action that fails to state a claim upon which relief can be granted. See North Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the Court will take all material allegations as true and construe them in the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).

         The Court, however, is not required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A formulaic recitation of a cause of action with conclusory allegations is not sufficient; a plaintiff must plead facts showing that a violation is plausible, not just possible. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555) (emphasis added). In order to survive a motion to dismiss, a complaint must allege “sufficient factual matter, accepted as true, 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.

         “Generally, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion . . . . However, material which is properly submitted as part of the complaint may be considered on a motion to dismiss.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citations omitted). Similarly, “documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss” without converting the motion to dismiss into a motion for summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Under Federal Rule of Evidence 201, a court may take judicial notice of “matters of public record.” Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the district court considers materials outside of the pleadings, the motion to dismiss is converted into a motion for summary judgment. See Fed. R. Civ. P. 12(d); Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 925 (9th Cir. 2001).

         If the court grants a motion to dismiss, it must then decide whether to grant leave to amend. Pursuant to Rule 15(a), the court should “freely” give leave to amend “when justice so requires, ” and in the absence of a reason such as “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962). Generally, leave to amend is only denied when it is clear that the deficiencies of the complaint cannot be cured by amendment. See DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).


         HOA argues that the Court should dismiss Plaintiff's Complaint because each named cause of action is time-barred. (Mot. to Dismiss (“MTD”) 1:27-2:5, ECF No. 35). Additionally, HOA argues the Court should dismiss Plaintiff's contract causes of action for failure to state a claim. (Id. 13:4-14:21). In response, Plaintiff argues that his claims are timely because the statute of limitations “did not begin to run until September 18, 2014, ” which is the date the Nevada Supreme Court issued its ruling in SFR Investments Pool 1, LLC v. U.S. Bank, 334 P.3d 408 (Nev. 2014). (See Pl.'s ...

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