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Ditech Financial Services LLC v. Highland Ranch Homeowners Association

United States District Court, D. Nevada

September 12, 2019

DITECH FINANCIAL SERVICES LLC f/k/a GREEN TREE SERVICING LLC, and; FEDERAL NATIONAL MORTGAGE ASSOCIATION, Plaintiffs,
v.
HIGHLAND RANCH HOMEOWNERS ASSOCIATION; TBR I, LLC; AIRMOTIVE INVESTMENTS, LLC, Defendants.

          ORDER

          MIRANDA M. DU UNITED STATES DISTRICT JUDGE

         I. SUMMARY

         This dispute arises from the foreclosure sale of property to satisfy a homeowners' association lien. Before the Court is Plaintiffs Federal National Mortgage Association (“Fannie Mae”) and Ditech Financial Services, LLC f/ka Green Tree Servicing LLC's (“Ditech”) motion for summary judgment (“Motion”) (ECF No. 98). The Court has reviewed Defendant Airmotive Investments, LLC's (“Airmotive”) response (ECF No. 105) and Plaintiffs' reply (ECF No. 113). The Court grants summary judgment in favor of Plaintiffs on their claims for declaratory relief and quiet title against Airmotive because 12 U.S.C. § 4617(j)(3) (the “Federal Foreclosure Bar”) preserved Fannie Mae's deed of trust. The Court declines to exercise supplemental jurisdiction over Plaintiffs' claim for recovery of proceeds under NRS § 107A.330 and dismisses Plaintiffs' remaining claims as moot.

         II. BACKGROUND

         The following facts are undisputed unless otherwise indicated.

         Janet Matthai (“Borrower”) purchased the property (“Property”) located at 7491 Rembrandt Drive, Sun Valley, Nevada 89433 with a loan (“Loan”) in the amount of $144, 500 secured by a first deed of trust (“DOT”). (ECF No. 98-1 at 2-4.) The DOT listed Bank of America, N.A. (“BANA”) as the lender. (Id. at 3.)

         Fannie Mae purchased the Loan-consisting of the DOT and the note-in October 2008.[1] (ECF No. 98-2 at 3-4.)

         The Property was located within Highland Ranch Homeowners Association (the “HOA”). The HOA recorded the following notices against the Property between February 9, 2011 and March 5, 2013: (1) notice of delinquent assessment lien (ECF No. 98-4); (2) notice of default and election to sell (ECF No. 98-5); and (3) three notices of trustee's sale (ECF Nos. 98-6, 98-7, 98-8). The HOA sold the Property to itself for $450 on April 10, 2013 (“HOA Sale”). (ECF No. 98-9 at 2-3.) The HOA recorded a quitclaim deed transferring its interest in the Property to TBR I, LLC on March 21, 2014. (ECF No. 98-10.) TBR I recorded a quitclaim deed transferring its interest in the Property to Airmotive on February 29, 2016. (ECF No. 98-11.)

         Fannie Mae asserts that it owned the Loan at the time of the HOA Sale, with BANA serving as the recorded beneficiary of the DOT and servicer for Fannie Mae. (ECF No. 98-2 at 3.) BANA recorded an assignment of the DOT transferring its beneficial interest to Green Tree Servicing f/k/a Ditech Financial, LLC on May 31, 2013. (ECF No. 98-3.)

         Plaintiffs assert the following claims in the First Amended Complaint (“FAC”): (1) declaratory relief under 12 U.S.C. § 4617(j)(3) - against Airmotive; (2) quiet title under 12 U.S.C. § 4617(j)(3) - against Airmotive; (3) declaratory relief under Amendments V and XIV to the United States Constitution - Ditech against all defendants; (4) quiet title under the Amendments V and XIV to the United States Constitution - Ditech Against Airmotive; (5) recovery of proceeds under NRS § 107A.330(3)(a)-(b) - against Airmotive; (6) declaratory judgment on state-law grounds - against Airmotive; (7) breach of NRS § 116.1113 - against Highland Ranch; and (8) wrongful foreclosure - against Highland Ranch. (ECF No. 91 at 9-18.) Plaintiffs primarily seek a declaration that the HOA Sale did not extinguish the DOT and that the DOT continues to encumber the Property based on operation of the Federal Foreclosure Bar. (See ECF No. 91 at 18.)

         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). Where reasonable minds could differ on the material facts at issue, however, summary judgment is not appropriate. See Id. at 250-51. “The amount of evidence necessary to raise a genuine issue of material fact is enough ‘to require a jury or judge to resolve the parties' differing versions of the truth at trial.'” Aydin Corp. v. Loral Corp., 718 F.2d 897, 902 (9th Cir. 1983) (quoting First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968)). In evaluating a summary judgment motion, a court views all facts and draws all inferences in the light most favorable to the nonmoving party. Kaiser Cement Corp. v. Fishbach & Moore, Inc., 793 F.2d 1100, 1103 (9th Cir. 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 plaintiffs position will be insufficient.” Anderson, 477 U.S. at 252.

         IV. ...


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