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LLC v. Federal Home Loan Mortgage Corp.

United States District Court, D. Nevada

May 22, 2019

LVDG SERIES 125, established under LVDG LLC, a Nevada series limited-liability company, Plaintiff,
v.
FEDERAL HOME LOAN MORTGAGE CORPORATION, a federally chartered corporation; HAROLD M. WELLES, an individual; VALERIE M. WELLES, an individual; WELLS FARGO BANK, N.A., a national banking association; MTC FINANCIAL INC. d/b/a TRUSTEE CORPS, a California corporation; DOE individuals I through XX; and ROE CORPORATIONS I through XX, Defendants. WELLS FARGO BANK, N.A., a national association; FEDERAL HOME LOAN MORTGAGE CORPORATION, Counter-Claimants,
v.
LVDG Series 125, established under LVDG LLC, a Nevada series limited-liability company, Counter-Defendant.

          ORDER

          LARRY R. HICKS UNITED STATES DISTRICT JUDGE

         Before the court is a motion for summary judgment filed by defendants and counter-claimants Wells Fargo Bank, N.A., (“Wells Fargo”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”), brought under the Federal Foreclosure Bar, 12 U.S.C. § 4617(j)(3). ECF No. 108. Plaintiff and counter-defendant, LVDG Series 125, established under LVDG LLC, (“LVDG”) opposed the motion (ECF No. 109), to which Freddie Mac and Wells Fargo replied (ECF No. 112). Under the federal foreclosure bar and Berezovsky v. Moniz, Freddie Mac's interest in the at-issue property cannot be extinguished by a nonjudicial foreclosure without consent from the Federal Housing Finance Agency (“FHFA” or “the Agency”). 869 F.3d 923, 930-31 (9th Cir. 2017). Because no consent was given, the court grants in part Freddie Mac's and Wells Fargo's motion for summary judgment.

         I. BACKGROUND

         This matter arises from a nonjudicial foreclosure sale on real property located at 1125 Tule Drive, Reno, Nevada, 89521, (“the property”), conducted under Nevada Revised Statute (“NRS”) § 116.3116 et. seq. ECF Nos. 108-1[1]; 109-5. Harold and Valerie Welles acquired title to and ownership of the property, and in November 2006, they executed a deed of trust designating Wells Fargo as the lender and beneficiary and United Title of Nevada as Trustee, in the amount of $260, 000.00. ECF No. 108-1. The deed of trust was recorded in the Washoe County Recorder's Office on November 15, 2006. Id. The property sits in Meadows Homeowners Association (“the HOA”) and is therefore subject to HOA assessments. See ECF No. 109 at 4. Wells Fargo and Freddie Mac argue the loan was purchased by Freddie Mac in December 2006, which retained Wells Fargo to act as servicer of the loan. ECF Nos. 108 at 5; 108-2 ¶ 5(c).

         After the Welles failed to pay HOA assessments that came due, the HOA, through its agent, recorded a Notice of Delinquent Assessment (Lien) against the property on January 12, 2010. ECF Nos. 108-14; 109-2. On June 29, 2010, the HOA filed a Notice of Default and Election to Sell under Homeowners Association Lien. ECF Nos. 108-15; 109-3. A Notice of Trustee's Sale was then recorded on March 13, 2013. ECF No. 109-4. At the nonjudicial foreclosure sale held on August 15, 2013, LVDG purchased the property for $5, 300.00; a Trustee's Deed upon Sale was then recorded on August 30, 2013. ECF Nos. 108-3; 109-5. Wells Fargo and Freddie Mac argue that at no time did the FHFA consent to this foreclosure.[2] ECF No. 108 at 8.

         In the same month that the HOA recorded the notice of foreclosure sale, Wells Fargo recorded a certificate from the State of Nevada Foreclosure Mediation Program, which indicated Wells Fargo could proceed with the foreclosure process under the deed of trust. ECF No. 92-9. Wells Fargo then recorded a notice of trustee's sale on the same day the HOA conducted its foreclosure sale. Compare ECF No. 92-10 with ECF No. 92-8. Roughly one week later, LVDG initiated this matter by filing a complaint in the Second Judicial District Court of Washoe County, Nevada. See ECF No. 1. After the state court granted a temporary restraining order that enjoined Wells Fargo from conducting the foreclosure sale in September 2013, the matter was removed to this court. Id.; ECF Nos. 92 at 3-4; 98 at 7. After the temporary restraining order expired, Wells Fargo held a trustee's foreclosure sale on November 1, 2013. ECF No. 108-18; 109-6. Freddie Mac placed the winning bid. Id.

         On November 8, 2013, Wells Fargo recorded a Corporate Assignment of Deed of Trust, which reflected that the Deed of Trust was assigned to Freddie Mac on March 27, 2013. ECF Nos. 108-2 ¶ 5(g); 108-17; 109-7. Also on November 8, 2013, a Trustee's Deed of Sale was recorded which reflects that Freddie Mac purchased the property at the trustee's sale held on November 1, 2013, under the Deed of Trust. ECF Nos. 108-2 ¶ 5(h); 108-18.

         LVDG amended its complaint in July 2016, ultimately asserting six causes of action[3]and, in part, seeking an order quieting title on the property. ECF No. 63. Wells Fargo and Freddie Mac filed a counterclaim, also seeking declaratory relief and quiet title to the property.[4]ECF No. 85. In June of 2016, Wells Fargo moved for summary judgment on the constitutionality of NRS § 116.3116 et. seq. and, therefore, on its declaratory-relief counterclaim brought under the U.S. Constitution. ECF No. 92. On November 8, 2017, the court granted Wells Fargo's motion for summary judgment finding the Ninth Circuit's ruling in Bourne Valley Court Trust v. Wells Fargo Bank, N.A., 832 F.3d 1154, 1158-59 (9th Cir. 2016), was binding on this court. ECF No. 101. However, in light of the Nevada Supreme Court's ruling in SFR Invs. Pool 1, LLC v. Bank of N.Y. Mellon, 422 P.3d 1248, 1253 (Nev. 2018), and the Ninth Circuit's ruling in Bank of America, N.A. v. Arlington West Twilight Homeowners Association, __ F.3d, 2019 WL 1461317, at *3 (9th Cir. April 3, 2019), the court now reconsiders its prior ruling sua sponte.

         The instant motion, filed on October 22, 2018, by Freddie Mac and Wells Fargo, moves this court for summary judgment based on the Federal Foreclosure Bar. ECF No. 108. LVDG opposed the motion (ECF No. 109) and Freddie Mac and Wells Fargo replied (ECF No. 112). The court's order as to each issue now follows.

         II. LEGAL STANDARD

         Motion for Summary Judgment Pursuant to Federal Civil Procedure Rule 56

         Summary judgment is appropriate only when the pleadings, depositions, answers to interrogatories, affidavits or declarations, stipulations, admissions, and other materials in the record show that “there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In assessing a motion for summary judgment, the evidence, together with all inferences that can reasonably be drawn therefrom, must be read in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); County of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th Cir. 2001).

         The moving party bears the initial burden of informing the court of the basis for its motion, along with evidence showing the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). On those issues for which it bears the burden of proof, the moving party must make a showing that is “sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party.” Calderone v. United States, 799 F.2d 254, 259 (6th Cir. 1986); see also Idema v. Dreamworks, Inc., 162 F.Supp.2d 1129, 1141 (C.D. Cal. 2001).

         To successfully rebut a motion for summary judgment, the nonmoving party must point to facts supported by the record which demonstrate a genuine issue of material fact. Reese v. Jefferson Sch. Dist. No. 14J, 208 F.3d 736 (9th Cir. 2000). A “material fact” is a fact “that might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Where reasonable minds could differ on the material facts at issue, summary judgment is not appropriate. See v. Durang, 711 F.2d 141, 143 (9th Cir. 1983). A dispute regarding a material fact is considered genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Liberty Lobby, 477 U.S. at 248. The mere existence of a scintilla of evidence in support of the party's position is insufficient to establish a genuine dispute; there must be evidence on which a jury could reasonably find for the party. See Id. at 252.

         III. DISCUSSION

         A. Upon reconsideration, the court denies Wells Fargo's prior motion for summary judgement because the Nevada Supreme Court held that the notice provision ...


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