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Wells Fargo Bank, N.A. v. Fidelity National Title Insurance Co.

United States District Court, D. Nevada

October 29, 2019

WELLS FARGO BANK, N.A., AS TRUSTEE FOR OPTION ONE MORTGAGE LOAN TRUST 2007-5 ASSET-BACKED CERTIFICATES, SERIES 2007-5, Plaintiff,
v.
FIDELITY NATIONAL INSURANCE COMPANY, Defendant.

          ORDER

          MIRANDA M. DU CHIEF UNITED STATES DISTRICT JUDGE

         I. SUMMARY

         This is a dispute about title insurance coverage that relates to a foreclosure sale by a homeowners association (“HOA”). Before the Court is Fidelity National Title Insurance Company's (“Fidelity”) motion to dismiss (“Motion”) (ECF No. 5). The Court has reviewed Plaintiff Wells Fargo Bank, N.A.'s (“Wells Fargo”) response (ECF No. 7) as well as Fidelity's reply (ECF No. 8). For the following reasons, the Court grants Fidelity's Motion.

         II. BACKGROUND

         The following facts are taken from the Complaint (ECF No. 1) unless otherwise indicated.

         Deanna Milton (“Borrower”) purchased real property[1] (“Property”) on February 27, 1998, with a loan in the amount of $140, 000 secured by a first deed of trust (“DOT”). (Id. at 2-3.) The DOT identified Premier Trust Deed Services, Inc. as the Trustee and Option One Mortgage Corporation as the lender and beneficiary under the DOT. (Id. at 3.) Wells Fargo became the assigned beneficiary under the DOT around November 2016. (See id.)

         Fidelity issued a title insurance policy (“Policy”) in connection with the recordation of the DOT. (Id.) The Policy identified Option One Mortgage Corporation and or its assigns as the insured. (Id.)

         The Property is located within an HOA, and the HOA recorded a notice of delinquent assessment lien against the Property on June 18, 2014 (“HOA Lien”). (See Id. at 4.) The HOA sold the Property to Entrust Education Trust/Deuk Choi Trustee (“Buyer”) at a foreclosure sale (“HOA Sale”) on December 17, 2014. (Id. at 5.)

         Wells Fargo filed a complaint in this Court on December 28, 2016, against Buyer and the HOA. (Id. at 6; see also Case No. 3:16-cv-00758.) The Court granted summary judgment in favor of Wells Fargo. (ECF No. 1 at 6.)

         Wells Fargo's predecessor provided written notice to Fidelity that Buyer claimed an interest in the Property superior to the DOT. (Id.) The tender letter requested both indemnity and defense from Fidelity. (Id. at 7.) Fidelity denied the claim on the basis that the claim did not fall within the insuring provisions of the Policy and that the HOA Lien was created after the date the Policy issued. (Id.) Wells Fargo disputed the denial, but Fidelity maintained the denial in a second, subsequent letter. (Id. at 7-8.)

         Wells Fargo asserts the following claims against Fidelity: (1) breach of contract; (2) contractual breach of the implied covenant of good faith and fair dealing; (3) tortious breach of the implied covenant of good faith and fair dealing; (4) breach of fiduciary duties; and (5) violation of NRS § 686A.310. (Id. at 8-13.) Wells Fargo seeks contractual damages, extra-contractual damages including attorneys' fees and costs, and punitive damages. (Id. at 13.)

         III. DISCUSSION

         A. Jurisdiction

         The parties first dispute whether the Court has subject matter jurisdiction over Wells Fargo's claims. Wells Fargo seeks to invoke the Court's diversity jurisdiction. (See ECF No. 1 at 2.) Fidelity argues that the Court lacks subject matter jurisdiction over Wells Fargo's claims because the amount in controversy does not exceed $75, 000. (ECF No. 5 at 4-7.) The Court disagrees.

         Rule 12(b)(1) of the Federal Rules of Civil Procedure allows defendants to seek dismissal of a claim or action for a lack of subject matter jurisdiction. Dismissal under Rule 12(b)(1) is appropriate if the complaint, considered in its entirety, fails to allege facts on its face sufficient to establish subject matter jurisdiction. In re Dynamic Random Access Memory (DRAM) Antitrust Litig., 546 F.3d 981, 984-85 (9th Cir. 2008). Here, Wells Fargo bears the burden of proving that the case is properly in federal court even though Fidelity is the moving party because Wells Fargo is the party invoking the ...


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