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U.S. Bank National Association v. Saticoy Bay LLC

United States District Court, D. Nevada

June 10, 2019

U.S. BANK NATIONAL ASSOCIATION, Plaintiff
v.
SATICOY BAY LLC, Defendant

          ORDER GRANTING MOTION TO DISMISS [ECF NO. 22]

          ANDREW P. GORDON UNITED STATES DISTRICT JUDGE.

         Plaintiff U.S. Bank National Association sues to determine whether its deed of trust still encumbers property located at 7610 Demona Drive in Las Vegas, Nevada following a non-judicial foreclosure sale conduct by the homeowners association (HOA). In its complaint, U.S. Bank seeks a declaration that Nevada Revised Statutes Chapter 116 violates the due process and takings clauses of the United States and Nevada constitutions. ECF No. 1 at 5-6. U.S. Bank also asserts a claim to determine adverse interests in property under Nevada Revised Statutes § 40.010. Id. at 6-7.

         Defendant Saticoy Bay LLC Series 7610 Demona, incorrectly named as Saticoy Bay LLC, purchased the property at the HOA foreclosure sale. Saticoy moves to dismiss, arguing that the bank is not entitled to equitable remedies because it has an adequate remedy at law and it did not act to protect its deed of trust before the HOA sale. Saticoy also contends that U.S. Bank has not alleged fraud, oppression, or unfairness to support equitably setting aside the sale, particularly because Saticoy is a bona fide purchaser. Finally, Saticoy argues Chapter 116 does not violate the due process or takings clauses.

         U.S. Bank responds that it has adequately alleged equitable bases to set aside the sale and that Saticoy is relying on its own allegations rather than on the complaint's allegations to argue for dismissal. U.S. Bank also contends that Chapter 116 violates the due process clause under the analysis set forth in Bourne Valley Court Trust v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016). Finally, U.S. Bank requests leave to amend if I grant Saticoy's motion.

         I grant Saticoy's motion because the complaint does not plausibly allege a constitutional violation or a basis to set aside the sale. I therefore dismiss the complaint, with leave to amend.

         I. ANALYSIS

         In considering a motion to dismiss, “all well-pleaded allegations of material fact are taken as true and construed in a light most favorable to the non-moving party.” Wyler Summit P'ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998). However, I do not assume the truth of legal conclusions merely because they are cast in the form of factual allegations. See Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994). A plaintiff must make sufficient factual allegations to establish a plausible entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). Such allegations must amount to “more than labels and conclusions, [or] a formulaic recitation of the elements of a cause of action.” Id. at 555.

         A. Declaratory Relief

         Count one of U.S. Bank's complaint seeks a declaration that Chapter 116 violates the Due Process and Takings Clauses. Saticoy moves to dismiss on the basis that the Supreme Court of Nevada has rejected similar due process and taking allegations. U.S. Bank responds that under Bourne Valley, it has alleged a due process violation.

         U.S. Bank does not respond to Saticoy's motion regarding the takings allegations. I therefore grant that portion of Saticoy's motion as unopposed. LR 7-2(d). Moreover, the Supreme Court of Nevada and I have previously rejected similar takings claims. See U.S. Bank Nat'l Ass'n for GSAA Home Equity Tr. 2007-3 Asset-Backed Certificates Series 2007-3 v. Saticoy Bay LLC Series 3930 Swenson, No. 2:17-cv-00463-APG-GWF, 2018 WL 3231245, at *4-5 (D. Nev. July 2, 2018) (citing Saticoy Bay LLC Series 350 Durango 104 v. Wells Fargo Home Mortg., a Div. of Wells Fargo Bank, N.A., 388 P.3d 970, 975 (Nev. 2017) (en banc)).

         I also grant Saticoy's motion on the due process allegations because Bourne Valley is no longer controlling authority and the statutory scheme does not violate U.S. Bank's due process rights. As a result of the Supreme Court of Nevada's decision in SFR Invs. Pool 1, LLC v. Bank of N.Y. Mellon, 422 P.3d 1248 (Nev. 2018) (en banc), “Bourne Valley no longer controls the analysis, and . . . Nev. Rev. Stat. § 116.3116 et seq. is not facially unconstitutional on the basis of an impermissible opt-in notice scheme.” Bank of Am., N.A. v. Arlington W. Twilight Homeowners Ass'n, 920 F.3d 620, 623-24 (9th Cir. 2019); see also Nationstar Mortg. LLC v. Amber Hills II Homeowners Ass'n, No. 2:15-cv-01433-APG-CWH, 2016 WL 1298108, at *6-9 (D. Nev. Mar. 31, 2016) (rejecting other due process arguments). I therefore grant Saticoy's motion and dismiss count one of the complaint.

         B. Determining Adverse Interests in Property

         Count two seeks to resolve the parties' adverse interests in the property following the HOA's non-judicial foreclosure sale. ECF No. 1 at 6-7. Saticoy moves to dismiss, arguing that U.S. Bank cannot state a claim because the deed of sale's recitals are conclusive and there is a presumption that the sale was conducted properly. Alternatively, Saticoy argues that U.S. Bank has not plausibly alleged a basis to equitably set aside the sale because U.S. Bank has an adequate remedy at law and it did not act to protect its deed of trust before the HOA sale. Saticoy also contends that U.S. Bank has not alleged fraud, oppression, or unfairness to support equitably setting aside the sale, particularly because Saticoy is a bona fide purchaser. U.S. Bank responds that Saticoy relies primarily on its own allegations, rather than on the complaint's allegations, in support of these contentions. U.S. Bank also contends that Nevada law allows for equitably setting aside HOA sales and that it has plausibly alleged a basis to do so because of the low price and the allegations of fraud, oppression, or unfairness.

         1. ...


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