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Federal National Mortgage Association v. Saticoy Bay LLC Series 6671 W. Tropicana 103

United States District Court, D. Nevada

September 25, 2019

FEDERAL NATIONAL MORTGAGE ASSOCIATION, Plaintiff,
v.
SATICOY BAY LLC SERIES 6671 W. TROPICANA 103; and CASA MESA VILLAS HOMEOWNERS ASSOCIATION, Defendants.

          ORDER

          RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Before the Court are Defendant Saticoy Bay LLC Series 6671 W. Tropicana 103’s (“Saticoy Bay”) Motion to Certify Question to the Nevada Supreme Court (ECF No. 46) and Motion for Summary Judgment (ECF No. 52), and Plaintiff Federal National Mortgage Association’s (“Fannie Mae”) Motion for Summary judgment (ECF No. 51). For the following reasons, the Court grants Plaintiff’s motion and denies Defendant’s motions.

         II. PROCEDURAL BACKGROUND

         Plaintiff Fannie Mae sued Defendants Saticoy Bay and the Casa Mesa Villas Homeowners Association (the “HOA”) on June 26, 2017. ECF No. 1. Fannie Mae filed the operative amended complaint on June 28, 2017. ECF No. 2. Fannie Mae seeks declaratory relief that a nonjudicial foreclosure sale conducted in 2016 under Chapter 116 of the Nevada Revised Statutes (“NRS”) did not extinguish Fannie Mae’s interest in a Las Vegas property. To obtain this relief, Fannie Mae asserts the following claims: 1) declaratory judgment relief under 12 U.S.C. § 4617(j)(3) against Saticoy Bay; 2) quiet title under 12 U.S.C. § 4617(j)(3) against Saticoy Bay; 3) declaratory relief under the Fifth and Fourteenth Amendments against Saticoy Bay and the HOA; 4) quiet title under the Fifth and Fourteenth Amendments against Saticoy Bay; 5) and injunctive relief against Saticoy Bay. Saticoy Bay filed a motion to dismiss on October 11, 2017. ECF No. 12. The HOA answered the amended complaint on October 20, 2017. ECF No. 15. Fannie Mae moved for summary judgment on March 9, 2018. ECF No. 28. The motion was fully briefed. ECF Nos. 32, 35. The Court held a hearing on September 10, 2018. ECF No. 42. On September 28, 2018, the Court administratively stayed the case pending the Nevada Supreme Court’s decisions in SFR Investments Pool 1, LLC v. Green Tree Servicing, LLC, 431 P.3d 718 (Nev. 2018) (unpublished) and Onewest Bank FSB v. Holm Int’l Props., LLC 432 P.3d 741 (Nev. 2018) (unpublished). The Court also denied all pending motions. ECF No. 43. The Court lifted the stay on January 11, 2019. ECF No. 45. Saticoy Bay moved the court to certify questions to the Nevada Supreme Court on January 31, 2019. ECF No. 46. The motion was fully briefed. ECF Nos. 54, 58. Saticoy Bay also answered and asserted counterclaims against Fannie Mae for declaratory relief on February 8, 2019. ECF Nos. 48, 50. On February 11, 2019, Fannie Mae and Saticoy Bay moved for summary judgment. ECF Nos. 51, 52. Both motions were fully briefed. ECF Nos. 56, 59, 62, 63.

         III. FACTUAL BACKGROUND

         The Court makes the following findings of undisputed and disputed facts.[1]

         a. Undisputed facts

          This matter concerns a nonjudicial foreclosure on a property located at 6671 W. Tropicana Avenue, # 103, Las Vegas, Nevada 89103 (the “property”). The property sits in a community governed by the HOA. The HOA requires its community members to pay HOA dues.

         Nonparty Frank Kiyono borrowed funds from RMS & Associates to purchase the property in 2007. To obtain the loan, Kiyono executed a promissory note and a corresponding deed of trust to secure repayment of the note. The deed of trust, which lists Kiyono as the borrower, RMS & Associates as the lender, and Mortgage Electronic Registration Systems, Inc., (“MERS”) as the beneficiary, was recorded on March 23, 2007. On March 2, 2017, MERS executed an assignment of the deed of trust to Fannie Mae.

         Kiyono fell behind on HOA payments. From July 2015 through February 2016, the HOA, through its agent, recorded a notice of delinquent assessment lien, followed by a notice of default and election to sell and then a notice of foreclosure sale. On March 4, 2016, the HOA held a foreclosure sale on the property under NRS Chapter 116. Saticoy Bay purchased the property at the foreclosure sale. A foreclosure deed in favor of Saticoy Bay was recorded on May 5, 2016.

         However, Federal National Mortgage Association (“Fannie Mae”) previously purchased the note and the deed of trust in April 2007. While its interest was not recorded under its name until March 2, 2017, Fannie Mae continued to maintain its ownership of the note and the deed of trust at the time of the foreclosure.

         The relationship between Fannie Mae and MERS, is governed by Fannie Mae’s Single-Family Servicing Guide (“the Guide”) and the MERS System Rules of Membership. The MERS System Rules of Membership state as follows:

Mortgage Electronic Registration Systems, Inc. (“MERS”) is . . . created for the purpose of serving as the Mortgagee of Record in the applicable public land records solely as Nominee for the Note Owner and the Note Owner’s successors and assigns, including the Note Holder. MERS shall have no rights whatsoever to retain any payments made on account of a MERS Loan, to any servicing rights related to MERS Loans, or to retain any mortgaged properties securing MERS Loans. MERS agrees not to assert ...

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