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Bank of America, N.A. v. Santa Barbara Homeowners Association

United States District Court, D. Nevada

August 29, 2019

BANK OF AMERICA, N.A., successor by merger to BAC HOME LOANS SERVICING, LP fka COUNTRYWIDE HOME LOANS SERVICING, LP and FEDERAL NATIONAL MORTGAGE ASSOCIATION, Plaintiffs,
v.
SANTA BARBARA HOMEOWNERS ASSOCIATION; SFR INVESTMENTS POOL 1, LLC; ABSOLUTE COLLECTION SERVICES, LLC, Defendants. AND RELATED CASES

          ORDER

          MIRANDA M. DU, UNITED STATES DISTRICT JUDGE

         I. SUMMARY

         This dispute arises from a non-judicial foreclosure sale of real property located at 1124 Milpas Lane, Las Vegas, Nevada, 89134, APN 138-30-614-037 (“Property”) to satisfy a homeowners' association lien (“HOA Sale”). The dispositive issue is whether Plaintiffs Bank of America, N.A (“BANA”) and the Federal National Mortgage Association (“Fannie Mae”) (collectively, “Plaintiffs”) own a property interest that is entitled to protection under 12 U.S.C. § 4617(j)(3) (“Federal Foreclosure Bar”). The Court finds in the affirmative and concludes that Fannie Mae's first deed of trust was not extinguished by the HOA Sale and thus continues to encumber the Property.[1]

         II. RELEVANT BACKGROUND

         The following facts are undisputed unless otherwise indicated.[2]

         Katy L. Lee (“Borrower”) executed a note (“Note”) and first deed of trust (“DOT”) that was recorded on February 24, 2006. (ECF No. 84-1.) The DOT granted Countrywide Bank, N.A. (“Lender”) a security interest in the Property to secure repayment of a $231, 000.00 loan that Borrower obtained from Lender to finance the Property (“Loan”). (Id. at 2.) Mortgage Electronic Registration Systems, Inc. (“MERS”) was listed as the beneficiary, as nominee for Lender and Lender's successors and assigns. (Id.)

         Fannie Mae's business records show Fannie Mae purchased the Loan in March 2006. (ECF No. 84-7.) Fannie Mae thereby obtained a property interest in the DOT. On October 8, 2010, MERS recorded an assignment of the DOT-together with the Note-to BAC Home Loans Servicing, LP fka Countrywide Home Loans Servicing LP (“BAC”). (ECF No. 84-2.) BAC merged into BANA in 2011.

         Fannie Mae owned the Loan at the time of the HOA Sale and BANA was Fannie Mae's contractually authorized loan servicer. (ECF No. 84-7 at 3-4, 7.)

         The HOA Sale occurred on January 15, 2013, whereby Defendant SFR Investments Pool I, LLC's (“SFR”) purchased the Property for $18, 500.00. (ECF No. 84-6.)

         Plaintiffs brought this lawsuit on December 2, 2016. (ECF No. 1.) They allege the following claims: (1) declaratory relief under the Federal Foreclosure Bar against SFR; (2) quiet title under the Federal Foreclosure Bar against SFR; (3) declaratory relief under the Fifth and Fourteenth Amendments of the U.S. Constitution against SFR; (4) quiet title under the same amendments against SFR; (5) declaratory judgment against all Defendants; (6) breach of NRS § 116.1113 against Defendants Santa Barbara Homeowners Association (“HOA”) and Absolute Collection Services, LLC (“ACS”)[3]; (7) wrongful foreclosure against these latter Defendants; and (8) injunctive relief against SFR. (Id.) All other relief are requested in the alternative to Plaintiffs' request for quiet title and declaratory relief under the Federal Foreclosure Bar. (Id. at 18.) SFR filed counterclaims for quiet title and injunctive relief against Plaintiffs and Borrower and Katy L. Lee, Trustee or her successors in trust, under the Klee Living Trust, dated August 10, 2006. (ECF No. 8 at 12.)

         III. LEGAL STANDARD

         “The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the facts before the court.” Nw. Motorcycle Ass'n v. U.S. Dep't of Agric., 18 F.3d 1468, 1471 (9th Cir. 1994). Summary judgment is appropriate when the pleadings, the discovery and disclosure materials on file, and any affidavits “show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). An issue is “genuine” if there is a sufficient evidentiary basis on which a reasonable fact-finder could find for the nonmoving party and a dispute is “material” if it could affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         The moving party bears the burden of showing that there are no genuine issues of material fact. Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir. 1982). Once the moving party satisfies Rule 56's requirements, the burden shifts to the party resisting the motion to “set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256. The nonmoving party “may not rely on denials in the pleadings but must produce specific evidence, through affidavits or admissible discovery material, to show that the dispute exists, ” Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991), and “must do more than simply show that there is some metaphysical doubt as to the material facts.” Orr v. Bank of Am., NT & SA, 285 F.3d 764, 783 (9th Cir. 2002) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). “The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient.” Anderson, 477 U.S. at 252. Moreover, a court views all facts and draws all inferences in the light most favorable to the nonmoving party. Kaiser Cement Corp. v. Fischbach & Moore, Inc., 793 F.2d 1100, 1103 (9th Cir. 1986).

         Further, “when parties submit cross-motions for summary judgment, ‘[e]ach motion must be considered on its own merits.'” Fair Hous. Council of Riverside Cty., Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001) (citations omitted) (quoting William W. Schwarzer, et al., The Analysis and Decision of Summary Judgment Motions, 139 F.R.D. 441, 499 (Feb. 1992)). “In fulfilling its duty to review ...


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