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Whittington Holdings 1 LLC v. Westerfield

United States District Court, D. Nevada

November 12, 2019

WHITTINGTON HOLDINGS 1 LLC Plaintiff(s),
v.
JOSEPH H. WESTERFIELD; DENISE R. WESTERFIELD; EL PARQUE HOMEOWNERS ASSOCIATION; SECURED FUNDING CORPORATION; TRUSTEE SERVICES INC.; CALIFORNIA RECONVEYANCE COMPANY, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC.; JPMORGAN CHASE BANK, N.A.; CHASE HOME FINANCE, LLC; FEDERAL HOME LOAN MORTGAGE CORPORATION; and COLDWELL BANKER PREMIER REALTY Defendants. and FEDERAL HOUSING FINANCE AGENCY, as Intervenor-Defendant for Federal Home Loan Mortgage Corporation, AND ALL RELATED COUNTERACTIONS

          ORDER

          RICHARD F. BOULWARE, II, UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Before the Court are Defendant Federal Home Loan Mortgage Corporation (“Freddie Mac”), and Intervenor-Defendant Federal Housing Finance Agency's (“FHFA”) and Plaintiff Whittington Holdings 1 LLC's (“Whittington”) competing Motions for Summary Judgment. ECF Nos, 72, 75. For the following reasons, the Court grants Freddie Mac and FHFA's Motion for Summary Judgment and denies Whittington's motion.

         II. PROCEDURAL BACKGROUND

         Whittington initially filed its complaint against Defendants Joseph H. Westerfield, Denise R. Westerfield, El Parque Homeowners Association, Secured Funding Corporation, Trustee Services Inc., California Reconveyance Company, Mortgage Electration(sic) Systems Inc., JP Morgan Chase Bank National Association, Chase Home Finance LLC, Cooper Castle Law Firm LLP, Freddie Mac, Coldwell Banker Premier Realty, City of Las Vegas Sewer, in the Eighth Judicial District Court of Clark County on or about March 6, 2014. ECF No.1-3. In that complaint, Whittington asserted claims for injunctive and declaratory relief, quiet title, slander of title, trespass of real property, respondeat superior and negligence. Defendant Freddie Mac removed the case to federal court on February 23, 2015. ECF No. 1. On March 17, 2015, Whittington voluntarily dismissed its claims without prejudice against Defendant El Parque Homeowners Association, which the Court so-ordered the following day. ECF Nos. 10, 11. On May 4, 2015, the Court granted FHFA's stipulation to intervene. ECF No. 21. FHFA filed its answer and asserted counterclaims against Whittington LLC. ECF No. 22. Whittington filed its answer to FHFA's counterclaims on May 19, 2015. ECF No. 24. Freddie Mac filed a motion for summary judgment on July 31, 2015. ECF No. 26. The Court denied the motion without prejudice on February 19, 2016. ECF No. 43. Freddie Mac and FHFA filed a second motion for summary judgment on July 29, 2016. ECF No. 60. The Court denied the motion and stayed proceedings pending pertinent cases on appeal from the Ninth Circuit and the Nevada Supreme Court. ECF No. 68. On April 8, 2019, the Court lifted the stay. ECF No. 70. On May 13, 2019, Whittington voluntarily dismissed its claims against Secured Finding Corporation and Trustee Services Inc. ECF Nos. 73, 74. Freddie Mac and FHFA subsequently filed moved again for summary judgment. Whittington also moved for summary judgment. ECF Nos. 72, 75. Both motions have been fully briefed.

         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 1800 Edmond Street, Apt 245, Las Vegas, Nevada, 89146 (the “property”). The property sits in a community governed by the El Parque Homeowners Association (the “HOA”). The HOA requires its community members to pay HOA dues.

         Nonparties Joseph and Denise Westerfield borrowed funds from Essential Mortgage Loan Services, Inc. to purchase the property in 2006. To obtain the loan, the Westerfields executed a promissory note and a corresponding deed of trust to secure repayment of the note. The deed of trust listed Essential Mortgage Loan Services, Inc. as the lender and Mortgage Electronic Registration Systems (“MERS”) as beneficiary and was recorded on December 18, 2006. On October 22, 2010, an assignment of deed of trust was recorded, whereby MERS assigned the deed of trust to Chase Home Finance, LLC. On May 15, 2013, MERS, as nominee for Lender and Lender's successors and assigns, recorded an assignment of the deed of trust to JP Morgan Chase (“Chase”). On February 14, 2014, Chase recorded an assignment of the Deed of Trust to Freddie Mac. On February 20, 2014 a Trustee's Deed Upon Sale was recorded showing that Freddie Mac purchased the Property at a February 13, 2014 public auction for $73, 436.51. FHFA did not affirmatively consent to the HOA sale extinguishing or foreclosing Freddie Mac's interest.

         The Westerfields fell behind on their HOA payments. On May 18, 2012 Alessi & Koenig, on behalf of the HOA, recorded a notice of delinquent assessment lien concerning past-due assessments, followed by a notice of default and election to sell and a notice of trustee's sale against the property. On January 22, 2014, the HOA foreclosed on its lien and sold the property to Plaintiff Whittington, which purchased it for $12, 000 per the foreclosure deed recorded on January 27, 2014.

         While the parties dispute whether and when Freddie Mac purchased the loan and maintained an interest in the Property, the parties do not dispute the following general information about FHFA, Freddie Mac, and Freddie Mac's relationships with servicers.

         The relationship between Freddie Mac and its servicers is governed by Freddie Mac 's Single-Family Servicing Guide (“the Guide”). The Guide provides that servicers may act as record beneficiaries for deeds of trust owned by Freddie Mac. It also requires that servicers assign the deeds of trust to Freddie Mac on Freddie Mac 's demand. The Guide states:

The Seller/Servicer is not required to prepare an assignment of the Security Instrument to the Federal Home Loan Mortgage Corporation (Freddie Mac). However, Freddie Mac may, at its sole discretion and at any time, require a Seller/Servicer, at the Seller/Servicer's expense, to prepare, execute ...

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