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HSBC Bank USA National Association v. Fidelity National Title Group, Inc

United States District Court, D. Nevada

October 30, 2019

HSBC BANK USA, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE HOLDERS OF DEUTSCHE ALT-A SECURITIES, INC., MORTGAGE LOAN TRUST PASS-THROUGH CERTIFICATES SERIES 2007-OA3, a National Banking Association, Plaintiffs,
v.
FIDELITY NATIONAL TITLE GROUP, INC. and CHICAGO TITLE INSURANCE COMPANY, Defendants.

          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 are Defendants Fidelity National Title Group (“Fidelity”) and Chicago Title Insurance Company's (“Chicago”) motion to strike Plaintiff HSBC Bank USA, National Association, as Trustee for the Holders of Deutsche Alt-A Securities, Inc., Mortgage Loan Trust Pass-Through Certificates Series 2007-OA3's (“Bank”) claim for punitive damages (ECF No. 13), as well as Defendants' motion to dismiss the Bank's Complaint (ECF No. 14; ECF No. 16 (errata)).[1] For the following reasons, the Court grants Defendants' motion to dismiss and denies Defendants' motion to strike as moot.

         II. BACKGROUND

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

         Howard E. Neel and Elinor L. Neel (“Borrowers”) purchased real property[2](“Property”) on April 19, 2002, with a loan in the amount of $202, 000 secured by a first deed of trust (“DOT”). (Id. at 2-3.) The DOT identified Countrywide Bank, FSB as the lender, Servicelink as the trustee, and Mortgage Electronic Registration Systems, Inc. (“MERS”) as beneficiary acting solely as a nominee for the lender and the lender's successors and assigns. (Id. at 3.) The Bank is the assigned beneficiary under the DOT. (Id.)

         Chicago issued an insurance policy (“Policy”) in connection with the recording of the DOT that named Countrywide Bank, FSB and its successors and/or assigns, as the insured. (Id.)

         The Property is located within an HOA, and the HOA recorded a lien against the Property on December 27, 2012 (“HOA Lien”). (ECF No. 1 at 4.) The HOA ultimately sold the Property to Nevada New Builds, LLC (“Buyer”) at a foreclosure sale (“HOA Sale”) on August 30, 2013. (Id. at 5.)

         The Buyer filed a complaint for quiet title against the Bank and others in state court in December 2013. (Id. at 5.) The Bank filed counterclaims, and the litigation is ongoing. (Id.) The Bank has incurred significant attorneys' fees and costs defending its interest in the Property. (Id.)

         The Bank asserts the following claims against Fidelity and Chicago: (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 7-11.)

         III. LEGAL STANDARD

         A court may dismiss a plaintiff's complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A properly pleaded complaint must provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands more than “labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). “Factual allegations must be enough to rise above the speculative level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to “state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).

         In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, a district court must accept as true all well-pleaded factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 678. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 678. Second, a district court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiff's complaint alleges facts that allow a court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 678. Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has “alleged-but it has not show[n]-that the pleader is entitled to relief.” Id. at 679 (alteration in original) (internal quotation marks omitted). When the claims in a complaint have not crossed the line from conceivable to plausible, the complaint must be dismissed. See Twombly, 550 U.S. at 570.

         In ruling on a motion to dismiss, a court may “consider certain materials- documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice-without converting the motion . . . into a motion for summary judgment.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).

         IV. ...


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