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The Bank of New York Mellon v. Highland Ranch Homeowners Association

United States District Court, D. Nevada

May 20, 2019

THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK, AS TRUSTEE FOR THE CERTIFICATEHOLDERS OF CWALT, INC., ALTERNATIVE LOAN TRUST 2007-AL1, MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-AL1, a New York corporation, Plaintiff,
v.
HIGHLAND RANCH HOMEOWNERS ASSOCIATION, a Nevada corporation; AIRMOTIVE INVESTMENTS, LLC, a Nevada limited liability company; LETICIA RANGEL DE LOPEZ, an individual; LUIS LOPEZ-LANDEROS, an individual; DOES 1 through 10, inclusive, and ROES 1 through 10, inclusive, Defendants.

          ORDER

          LARRY R. HICKS, UNITED STATES DISTRICT JUDGE.

         Plaintiff, Bank of New York Mellon, FKA The Bank of New York as Trustee for the Certificateholders of CWALT, Inc., Alternative Loan Trust 2007-AL1, Mortgage Pass-Through Certificates, Series 2007-AL1 (“BoNYM”), moves this court for default judgment against defendants Leticia Rangel De Lopez (ECF No. 50) and Luis Lopez-Landeros (ECF No. 51) pursuant to Federal Civil Procedure Rule 55. Defendants have failed to respond. Because the requirements of default judgment are met in this case and relief is warranted, the court will grant BoNYM's motion and order the clerk of court to enter judgment in its favor.

         I. BACKGROUND

         This matter arises from a nonjudicial foreclosure sale by Highland Ranch Homeowners Association (“Highland Ranch”) on real property located at 6185 Arapaho Drive, Sun Valley, Nevada 89433 (“the property”) under Nevada Revised Statute (“NRS”) § 116.3116 et. seq. ECF No. 1 ¶ 6; ECF No. 34 at 2. In 2006, Leticia Rangel de Lopez and Luis Lopez-Landeros (“borrowers”) purchased the property, executing a deed of trust with lender Alliance Bankcorp and designating Mortgage Electronic Registration Systems Inc. (MERS) as the beneficiary, in the amount of $229, 600.00. ECF No. 1 ¶ 8; ECF Nos. 34-1; 43-1. The deed was recorded in the Washoe County Recorder's Office on December 4, 2006, Document Number 3470178. ECF Nos. 34-1; 43-1. MERS subsequently assigned the deed of trust to BoNYM and recorded the assignment in the Washoe County Recorder's Office on July 30, 2013. ECF No. 34-4.

         After the borrowers failed to pay their HOA assessments, Highland Ranch filed the applicable notices regarding foreclosure on its superpriority lien. See ECF Nos. 34-5; 34-6; 34-7; 43-2; 43-3; 43-5. Miles, Bauer, Bergstrom & Winters, LLP (“Miles”), counsel for MERS as nominee for Bank of America, attempted to tender the superpriority total to Highland Ranch in order to discharge the HOA's senior lien. ECF No. 34-8. However, Highland Ranch refused to accept tender stating it was impermissibly conditional. ECF No. 43-4. Highland Ranch then held a nonjudicial foreclosure sale on or around March 28, 2013, and the property was ultimately conveyed to Airmotive Investments, LLC (“Airmotive”) via quitclaim deed on February 29, 2016. ECF Nos. 34-9; 34-11; 34-6; 48-8.

         Approximately one year later, BoNYM brought suit against Airmotive, Highland Ranch, and the borrowers, alleging one cause of action, quiet title, and seeking this court declare Highland Ranch's foreclosure sale void ab initio and/or that the foreclosure did not extinguish its first deed of trust. ECF No. 1. After the borrowers failed to answer, move, or otherwise plead before this court, the Clerk entered notice of default against Luis Lopez-Landeros and Leticia Rangel De Lopez on July 7, 2017. ECF No. 23. Per stipulation, the court dismissed Highland Ranch on May 29, 2018. ECF No. 36. On February 25, 2019, this court then granted BoNYM's motion for partial summary judgment finding that because the tender was proper and unconditional, Airmotive took title to the property subject to the first deed of trust. ECF No. 49. BoNYM now moves this court for default judgment against the borrowers. ECF Nos. 50, 51.

         II. LEGAL STANDARD

         Obtaining a default judgment is a two-step process governed by Federal Rule of Civil Procedure 55. Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986). First, Rule 55(a) provides, “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.” Second, after the clerk enters default, a party must seek entry of default judgment under Rule 55(b). Nevertheless, while entry of default by the clerk is a prerequisite to default judgment, “[e]ntry of default does not entitle the non-defaulting party to a default judgment as a matter of right.” In re Villegas, 132 B.R. 742, 746 (9th Cir. BAP 1991).

         Rather, granting or denying relief is within the court's discretion. Id. The Ninth Circuit has identified seven relevant factors in determining whether to grant default judgment: (1) the possibility of prejudice to the plaintiff; (2) the merits of the plaintiff's substantive claim; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning the material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy favoring decisions on the merits. Eitel, 782 F.2d at 1471-72.

         The court takes the well-pleaded factual allegations in the non-defaulting party's complaint as true, except as to the amount of damages. Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). Finally, “[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed.R.Civ.P. 54(c).

         III. DISCUSSION

         The court finds that default judgment is warranted in this case. First, BoNYM has satisfied the procedural requirements for default judgment: both defendants were properly served[1] and failed to respond, BoNYM acquired the clerk's entry of default on July 7, 2017, (ECF No. 23), and there is no reason to believe either defendant is a “minor or incompetent person. . . .” Fed.R.Civ.P. 55(b)(2).

         Moreover, the applicable Eitel factors weigh in favor of granting this relief. First, “[c]ourts in this district hold that a defendant's failure to respond or otherwise appear in a case ‘prejudices a plaintiff's ability to pursue its claims on the merits,' and therefore satisfies this first factor.” Bank of America, N.A. v. Terraces at Rose Lake Homeowners Ass'n, No. 2:16-cv-01106-GMN-PAL, 2018 WL 4778033, at *4 (D. Nev. Oct. 2, 2018); see e.g., Tropicana Entm't Inc. v. N3A Mfg., Inc., No. 3:16-cv-0257-LRH-VPC, 2018 WL 2088871, at *2 (D. Nev. May 3, 2018) (“Tropicana will be severely prejudiced if a default judgment is not entered because defendants have shown an unwillingness to appear or otherwise defend themselves in this action . . ..”); Summit Canyon Res., LLC v. Tanksley, No. 2:15-cv-00656-RFB-VCF, 2018 WL 5116842, at *2 (D. Nev. Oct. 18, 2018) (“Because of [defendants'] inaction, [plaintiff] cannot litigate its claim against [defendants] on the merits”). Similarly, BoNYM will be severely prejudiced if a default judgment is not granted because the defendants have shown an unwillingness to appear or otherwise defend themselves in this action.

         The second and third factors, the merits of the plaintiff's substantive claim and the sufficiency of the complaint, also weigh in favor of default judgment. As discussed fully in the court's prior order granting BoNYM's motion for summary judgment, because BoNYM's successor in interest properly and unconditionally tendered the superpriority lien ...


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