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Federal National Mortgage Association v. SFR Investments Pool 1, LLC

United States District Court, D. Nevada

May 20, 2019

FEDERAL NATIONAL MORTGAGE ASSOCIATION, et al., Plaintiffs,
v.
SFR INVESTMENTS POOL 1, LLC, Defendant.

          ORDER

          Gloria M. Navarro, Chief Judge.

         Pending before the Court is the Motion to Dismiss, (ECF No. 14), filed by Defendant SFR Investments Pool 1, LLC (“SFR”). Plaintiffs Federal Housing Finance Agency (“FHFA”) and Federal National Mortgage Association (“Fannie Mae”) (collectively “Plaintiffs”) filed a Response, (ECF No. 15), and SFR filed a Reply, (ECF No. 17).

         Also pending before the Court is the Motion for Summary Judgment, (ECF No. 16), filed by Plaintiffs. SFR filed a Response, (ECF No. 18), and Plaintiffs filed a Reply, (ECF No. 20). Also pending before the Court is SFR's Motion for Rule 56(d) Relief, (ECF No. 19), to which Plaintiffs filed a Response, (ECF No. 21), and SFR filed a Reply, (ECF No. 22).

         For the reasons discussed herein, the Court DENIES SFR's Motion to Dismiss, GRANTS SFR's Motion for Rule 56(d) Relief, [1] and DENIES without prejudice Plaintiffs' Motion for Summary Judgment.

         I. BACKGROUND

         This case arises from the non-judicial foreclosure on real property located at 4716 Rancho Camino Court, Las Vegas, Nevada 89129 (the “Property”). (See Compl. ¶ 1, ECF No. 1). In 2003, non-party Keith McCloud (“Borrower”) purchased the Property by way of loan from Wausau Mortgage Corporation (“Wausau”). (Id. ¶¶ 16-17). The loan is secured by a deed of trust, recorded on July 28, 2003, identifying Wausau as lender and beneficiary. (Id. ¶¶ 18-19). Plaintiff Fannie Mae acquired ownership of the deed of trust and promissory note in September 2003. (Id. ¶ 20).

         In 2006, Wausau assigned the deed of trust to Suntrust Mortgage Inc. (“Suntrust”) who, in turn, assigned the deed of trust to Mortgage Electronic Registration Systems, Inc. (“MERS”). (Id. ¶¶ 21-22). Beginning in September 2007, CitiMortgage, Inc. (“CMI”) began servicing the loan on Fannie Mae's behalf. (Id. ¶ 23).

         Upon Borrower's failure to stay current on his loan payments, Absolute Collections Services, LLC (“ACS”), on behalf of Spanish Springs HOA (“HOA”), initiated foreclosure proceedings on the Property. (Id. ¶¶ 35-36). ACS recorded a notice of foreclosure sale on February 12, 2014, stating the Property would be sold on April 15, 2014. (Id. ¶ 37). Defendant SFR purchased the Property at the sale and recorded a foreclosure deed evidencing the purchase on April 15, 2014. (Id. ¶ 38).

         At the time of HOA's foreclosure sale, Fannie Mae owned the loan, CMI serviced the loan, and MERS was record beneficiary under the deed of trust as nominee for Fannie Mae. (Id. ¶ 24). Plaintiffs allege that at no time did FHFA consent to the foreclosure sale extinguishing Fannie Mae's interest in the Property. (Id. ¶ 39).

         Plaintiffs filed the instant action on August 22, 2018, bringing claims against SFR for declaratory relief and quiet title under 12 U.S.C. § 4617(j)(3). (See Id. ¶¶ 40-62). Plaintiffs seek a declaration that the Federal Foreclosure Bar, 12 U.S.C. § 4617(j)(3), preempts Nevada law to the extent it would permit the foreclosure sale to extinguish Fannie Mae's deed of trust. (Id. 10:20-26). Shortly after Plaintiffs commenced this action, SFR filed its Motion to Dismiss and Plaintiffs filed their Motion for Summary Judgment.

         II. LEGAL STANDARD

         A. Rule 12(b)(6)

         Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action that fails to state a claim upon which relief can be granted. See N. 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), 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 determining whether the complaint is sufficient to state a claim, the Court will take all material allegations as true and construe them in a 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 ...


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