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Bank of New York Mellon v. Blackrose Investments, LLC

United States District Court, D. Nevada

July 24, 2019

BANK OF NEW YORK MELLON, Plaintiff
v.
BLACKROSE INVESTMENTS, LLC, et al., Defendants

          ORDER GRANTING DEFENDANT PACIFIC'S MOTION TO DISMISS AND SETTING DEADLINE FOR FILING AN AMENDED COMPLAINT [ECF NO. 36]

          ANDREW P. GORDON, UNITED STATES DISTRICT JUDGE

         Plaintiff Bank of New York Mellon (BONY) sues to determine whether its deed of trust still encumbers property located at 2961 Juniper Hills #101 in Las Vegas, Nevada, following a non-judicial foreclosure sale conducted by the homeowners association (HOA), defendant Pacific Harbors-Stonegate Property Owners Association (Pacific). Pacific moves to dismiss the claims against it, arguing BONY's claims are time-barred and fail to state a claim. BONY opposes dismissal and alternatively requests leave to amend.

         The parties are familiar with the facts, and I will not repeat them here except where necessary. I deny Pacific's motion to dismiss based on the statute of limitations because BONY's claims against Pacific are timely. I grant Pacific's motion to dismiss the declaratory relief claim's due process allegations with prejudice. I grant Pacific's motion to dismiss it from the declaratory relief claim's other allegations because BONY has not plausibly alleged a basis to set aside the sale. I grant Pacific's motion to dismiss BONY's claims for wrongful foreclosure and breach of a duty of good faith under Nevada Revised Statutes § 116.1113 because BONY has not adequately alleged what Pacific did that was wrongful or how it breached a duty of good faith in light of BONY's allegations that it validly tendered the superpriority amount and Pacific's agent accepted that tender. Finally, I grant in part Pacific's motion to dismiss BONY's claim under the Nevada Deceptive Trade Practices Act (NDTPA) because some allegations refer to the sale of goods and services, which is not at issue here. However, I deny Pacific's motion as to other provisions of the NDTPA because those statutory sections may apply to real estate transactions and Pacific has not shown BONY cannot assert a claim under those provisions.

         I. ANALYSIS

         A. Statute of Limitations

         “A claim may be dismissed as untimely pursuant to a 12(b)(6) motion only when the running of the statute of limitations is apparent on the face of the complaint.” United States ex rel. Air Control Techs., Inc. v. Pre Con Indus., Inc., 720 F.3d 1174, 1178 (9th Cir. 2013) (alteration and quotation omitted). A limitations period begins to run “from the day the cause of action accrued.” Clark v. Robison, 944 P.2d 788, 789 (Nev. 1997). A cause of action generally accrues “when the wrong occurs and a party sustains injuries for which relief could be sought.” Petersen v. Bruen, 792 P.2d 18, 20 (Nev. 1990); see also State ex rel. Dep't of Transp. v. Pub. Emps.' Ret. Sys. of Nev., 83 P.3d 815, 817 (Nev. 2004) (en banc) (“A cause of action ‘accrues' when a suit may be maintained thereon.” (quotation omitted)). Nevada has adopted the discovery rule, and thus time limits generally “do not commence and the cause of action does not ‘accrue' until the aggrieved party knew, or reasonably should have known, of the facts giving rise to the damage or injury.” G & H Assocs. v. Ernest W. Hahn, Inc., 934 P.2d 229, 233 (Nev. 1997).

         Pacific argues BONY's claims are untimely because they are subject to either a 45- or 60-day limitation period under Nevada Revised Statutes § 107.080, but it provides no authority for that proposition. Section 107.080 refers to foreclosures of deeds of trust, not HOA liens. Nev. Rev. Stat. § 107.080(1).

         Rather, the four-year catchall limitation period in Nevada Revised Statutes § 11.220 applies to claims brought by a lienholder like BONY seeking to determine whether an HOA sale extinguished its deed of trust. See Bank of Am., N.A. v. Country Garden Owners Ass'n, No. 2:17-cv-01850-APG-CWH, 2018 WL 1336721, at *2 (D. Nev. Mar. 14, 2018). BONY's claims for wrongful foreclosure and breach of § 116.1113 are governed by three or four-year limitations periods. See Bank of New York for Certificateholders of CWALT, Inc., Alternative Loan Tr. 2006-OA16, Mortg. Pass-Through Certificates, Series 2006-OA16 v. Foothills at MacDonald Ranch Master Ass'n, 329 F.Supp.3d 1221, 1234 (D. Nev. 2018); Nationstar Mortg. LLC v. Amber Hills II Homeowners Ass'n, No. 2:15-cv-01433-APG-CWH, 2016 WL 1298108, at *5 (D. Nev. Mar. 31, 2016).

         The HOA sale was conducted on September 9, 2014, and the deed upon sale was recorded on September 19, 2014. ECF No. 1 at 6. BONY filed this lawsuit on January 6, 2017. Thus, even using the earlier date of the HOA sale, and even considering a three-year limitation period, BONY's claims are timely. Accordingly, I deny Pacific's motion to dismiss based on the statute of limitations.

         B. Failure to State a Claim

         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.

         1. Declaratory Relief

         a. Due Process

         BONY's first claim seeks a declaration that the deed of trust was not extinguished by the HOA foreclosure sale. Included within that claim are allegations that Chapter 116 as it existed at the time of the sale violated BONY's due process rights. Pacific moves to dismiss the due process allegations. To the extent BONY's due process allegations are based on the reasoning of Bourne Valley Court Trust v. Wells Fargo Bank, NA, 832 F.3d 1154 (9th Cir. 2016) or the content of the foreclosure notices, I grant Pacific's motion. See Bank of Am., N.A. v. Arlington W. Twilight Homeowners Ass'n, 920 F.3d 620, 623-24 (9th Cir. 2019) (citing SFR Invs. Pool 1, LLC v. Bank of N.Y. Mellon, ...


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