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Deutsche Bank National Trust Company v. SFR Investments Pool 1, LLC

United States District Court, D. Nevada

September 27, 2019

SFR INVESTMENTS POOL I, LLC, et al., Defendants.


         Presently before the court is plaintiff Deutsche Bank National Trust Company’s (“Deutsche Bank”) motion for summary judgment. (ECF No. 41). Defendant/cross claimant/counter claimant SFR Investments Pool 1, LLC (“SFR”) filed a response (ECF No. 49), to which Deutsche Bank replied (ECF No. 50).

         Also before the court is SFR’s motion for summary judgment. (ECF No. 46). Deutsche Bank filed a response (ECF No. 48), to which SFR replied (ECF No. 51).

         I. Background

         This action arises from a dispute over real property located at 1013 Echo Beach Avenue, North Las Vegas, Nevada 89086 (“the property”). (ECF No. 1).

         Leslie L. Wright and Donna C. Gentry (“borrowers”) purchased the property on or about June 21, 2005. Id. The borrowers financed the purchase with a loan in the amount of $214, 050.00 from First Franklin, a Division of National City Bank of Indiana (“First Franklin”). Id. First Franklin secured the loan with a deed of trust, which names First Franklin as the lender and beneficiary, and Fidelity National Title as the trustee. (ECF No. 1-2). Deutsche Bank acquired all beneficial interest in the deed of trust via an assignment, which Deutsche Bank recorded with the Clark County recorder’s office on June 28, 2015. (ECF No. 1-3).

         On January 19, 2012, Springs at Centennial Ranch Homeowners Association (“HOA”), through its agent Alessi & Koenig, LLC (“A&K”), recorded a notice of delinquent assessment lien (“the lien”) against the property for the borrowers’ failure to pay the HOA in the amount of $1, 083.46. (ECF No. 46-1). On May 22, 2012, A&K recorded a notice of default and election to sell pursuant to the lien, stating that the amount due was $1, 966.96 as of April 25, 2012. Id.

         On December 7, 2012, the HOA recorded a first notice of foreclosure sale against the property. Id. On October 10, 2013, the HOA recorded a second notice of foreclosure sale against the property. Id. On November 6, 2013, the HOA sold the property in a nonjudicial foreclosure sale to SFR in exchange for $17, 000.00. Id. On November 13, 2013, SFR recorded the deed of foreclosure with the Clark County recorder’s office. (ECF No. 46-2).

         On April 3, 2018, Deutsche Bank filed a complaint, alleging a single cause of action: quiet title/declaratory relief pursuant to NRS 116.3116 et seq. (ECF No. 1).

         Now, Deutsche Bank and SFR have filed cross-motions for summary judgment, requesting that the court resolve whether the foreclosure sale extinguished the deed of trust. (ECF Nos. 41, 46).

         II. Legal Standard

         The Federal Rules of Civil Procedure allow summary judgment when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that “there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(a). A principal purpose of summary judgment is “to isolate and dispose of factually unsupported claims.” Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986).

         For purposes of summary judgment, disputed factual issues should be construed in favor of the nonmoving party. Lujan v. Nat’l Wildlife Fed., 497 U.S. 871, 888 (1990). However, to withstand summary judgment, the nonmoving party must “set forth specific facts showing that there is a genuine issue for trial.” Id.

         In determining summary judgment, a court applies a burden-shifting analysis. Where the party moving for summary judgment would bear the burden of proof at trial, “it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case.” C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted).

         By contrast, when the nonmoving party bears the burden of proving the claim or defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential element of the nonmoving party’s case; or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party’s case on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323–24. If the moving party fails to meet its initial burden, summary judgment must be denied and the court need not consider the nonmoving party’s evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159–60 (1970).

         If the moving party satisfies its initial burden, the burden then shifts to the opposing party to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The opposing party need not establish a dispute of material fact conclusively in its favor. See T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 631 (9th Cir. 1987). It is sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing versions of the truth at trial.” Id.

         In other words, the nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the pleadings and set forth specific facts by producing competent evidence that shows a genuine issue for trial. See Celotex, 477 U.S. at 324.

         At summary judgment, a court’s function is not to weigh the evidence and determine the truth, but to determine whether a genuine dispute exists for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The evidence of the nonmovant is “to be believed, and all justifiable inferences are to be drawn in his favor.” Id. at 255. But if the evidence of the nonmoving party is merely colorable or is not significantly probative, summary judgment may be granted. See Id . at 249–50.

         III. Discussion

         Deutsche Bank and SFR have filed cross-motions for summary judgment, disputing whether the foreclosure sale extinguished the deed of trust. (ECF Nos. 41, 46). Because neither Deutsche Bank nor SFR have provided sufficient grounds to enter summary judgment in their respective favor, the court will deny both motions.

         Under Nevada law, “[a]n action may be brought by any person against another who claims an estate or interest in real property, adverse to the person bringing the action for the purpose of determining such adverse claim.” Nev. Rev. Stat. § 40.010. “A plea to quiet title does not require any particular elements, but each party must plead and prove his or her own claim to the property in question and a plaintiff’s right to relief therefore depends on superiority of title.” Chapman v. Deutsche Bank Nat’l Trust Co., 302 P.3d 1103, 1106 (Nev. 2013) (citations and internal quotation marks omitted). Therefore, a plaintiff must show that its claim to the property is superior to all others in order to succeed on a quiet title action. See also Breliant v. Preferred Equities Corp., 918 P.2d 314, 318 (Nev. 1996) (“In a quiet title action, the burden of proof rests with the plaintiff to prove good title in himself.”).

         NRS 116.3116 et seq.[1] (“Chapter 116”) allows an HOA to place a lien on its homeowners’ residences for unpaid assessments and fines. Nev. Rev. Stat. § 116.3116(1). Under NRS 116.3116(2), HOA liens have priority over other encumbrances. Nev. Rev. Stat. § 116.3116(2). However, some encumbrances are not subject to an HOA lien’s priority, including “[a] first security interest on the unit recorded before the date on which the assessment sought to be enforced became delinquent.” Nev. Rev. Stat. § 116.3116(2)(b).

         Chapter 116 then provides an exception to the subparagraph (2)(b) exception for first security interests. See Nev. Rev. Stat. § 116.3116(2). In SFR Investments Pool 1 v. U.S. Bank, the Nevada Supreme Court provided the following explanation:

As to first deeds of trust, NRS 116.3116(2) thus splits an HOA lien into two pieces, a superpriority piece and a subpriority piece. The superpriority piece, consisting of the last nine months of unpaid HOA dues and maintenance and nuisance-abatement charges, is “prior to” a first deed of trust. The subpriority piece, consisting of all other HOA fees or assessments, is subordinate to a first deed of trust.

334 P.3d 408, 411 (Nev. 2014) (“SFR Investments”).

         Under Chapter 116, an HOA can enforce its superpriority lien with a nonjudicial foreclosure sale. Id. at 415. Thus, “NRS 116.3116(2) provides an HOA a true superpriority lien, proper foreclosure of which will extinguish a first deed of trust.” Id. at 419; see also Nev. Rev. Stat. § 116.31162(1) (providing that “the association may foreclose its lien by sale” upon compliance with the statutory notice and timing rules).

         NRS 116.31166(1) provides that when an HOA forecloses on a property pursuant to NRS 116.31164, the following recitals in the ...

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