United States District Court, D. Nevada
ALPINE VISTA II HOMEOWNERS ASSOCIATION, a Nevada Non-Profit Cooperative Corporation, Plaintiff,
XIU Y. PAN; et al., Defendants. FEDERAL NATIONAL MORTGAGE ASSOCIATION, Counterclaimant,
ALPINE VISTA II HOMEOWNERS ASSOCIATION; and KYLE KRCH, Counter-Defendants. KYLE KRCH, Cross-Claimant,
ALPINE VISTA II HOMEOWNERS ASSOCIATION, Cross-Defendant.
MIRANDA M. DU CHIEF UNITED STATES DISTRICT JUDGE
action arose out of a non-judicial foreclosure sale
(“HOA Sale”) of real property located at 859
Nutmeg Place, #21, in Reno, Nevada (“Property”).
Presently before the Court is Plaintiff Alpine Vista II
Homeowners Association's (“HOA”) motion for
an order to interplead surplus funds pursuant to Fed.R.Civ.P.
22 and 67 as well as NRS § 116.31164(7)(b)
(“Motion”). (ECF No. 81.) In the Motion, the HOA
also seeks attorneys' fees and costs in gist for bringing
the original state-court action (ECF No. 1 at 7-10) in
interpleader and bringing the Motion here. The Court will
deny the Motion because interpleading funds is not
appropriate at this juncture. The Court also declines to
exercise its discretion to grant the HOA's requested fees
the HOA collected money due and owing to it upon the HOA
Sale, surplus proceeds of $13, 298.40 remained. (ECF No. 81-1
at 6.) The HOA filed a complaint in interpleader in state
court naming the Federal National Mortgage Association
(“Fannie Mae”), Xiu Y. Pan
(“Borrower”), Bank of America, N.A.
(“BANA”) and unknown claimants as defendants.
(ECF No. 1 at 7-8.) Fannie Mae removed the case under 28
U.S.C. §§ 1331, 1441 and 1446, pursuant to its
charter-12 U.S.C. § 1723a. (ECF No. 3.) On December 20,
2018, the Court granted summary judgment for Fannie Mae based
on 12 U.S.C. § 4617(j)(3) (“Federal Foreclosure
Bar”). (ECF No. 73.) The Court specifically found that
the Federal Foreclosure Bar preserved Fannie Mae's
interest in the first deed of trust (“DOT”) from
being extinguished by the HOA Sale. (Id.; see
also ECF Nos. 79.) The Clerk of the Court entered
judgment accordingly on March 7, 2019. (ECF No. 80.) The HOA
filed the Motion the following day. (ECF No. 81.)
REQUEST TO INTERPLEAD FUNDS
purpose of interpleader is for the stakeholder to
‘protect itself against the problems posed by multiple
claimants to a single fund.'” Lee v. W. Coast
Life Ins. Co., 688 F.3d 1004, 1009 (9th Cir. 2012)
(quoting Mack v. Kuckenmeister, 619 F.3d 1010, 1024
(9th Cir. 2010). Under Fed.R.Civ.P. 22, “interpleader
is permissible where a plaintiff-stakeholder may be exposed
to double or multiple liability due to the existence of
multiple claimants . . ..” Absolute Bus. Sols.,
Inc. v. Mortg. Elec. Registration Sys., Inc., No.
2:15-cv-01325-RJC-NJK, 2017 WL 58569, at *1 (D. Nev. Jan. 4,
2017) (citations omitted). “[I]n order to avail itself
of the interpleader remedy, a stakeholder must have a good
faith belief that there are or may be colorable competing
claims to the stake.” Michelman v. Lincoln Nat.
Life Ins. Co., 685 F.3d 887, 894 (9th Cir. 2012). The
prerequisite of good faith demands that “a real and
reasonable fear of exposure to double liability or the
vexation of conflicting claims” exits. Id.
of whether the HOA could have been concerned with competing
interests when this action was initiated in state court, no
such competing interests exist at this time. There is no
dispute that the surplus funds should be paid to Fannie Mae.
(See generally ECF Nos. 81, 83, 84.) Notably, all
other claimants that were listed in the HOA's state-court
complaint have defaulted in this action. (Compare
ECF No. 1 at 7-8 with ECF Nos. 16 (default entered
against BANA for non-appearance), 44 (default entered against
Borrower); ECF No. 78 (default entered against fictitious or
unknown claimants).) Accordingly, there is no reason to
deposit the surplus funds via interpleader in this Court for
essentially simultaneous disbursement to Fannie Mae. Instead,
the surplus funds should be paid to Fannie Mae directly.
Thus, the Motion is denied.
ATTORNEYS' FEES AND COSTS
the surplus funds of $13, 298.40, the HOA seeks to first
deduct attorneys' fees and costs it claims is related to
bringing this action as plaintiff-in-interpleader in the
amount of $12, 575.99. (E.g., ECF No. 85 at 10.)
Such an award to the HOA would leave Fannie Mae with only
$722.41 of the surplus funds. (Id.) In its
discretion, the Court declines the HOA's request for the
have discretion to award attorney fees to a disinterested
stakeholder in an interpleader action.” Abex Corp.
v. Ski's Enterprises, Inc., 748 F.2d 513, 516 (9th
Cir. 1984). Such fees are typically appropriate where
“(1) the party seeking fees is a disinterested
stakeholder, (2) who had conceded liability, (3) has
deposited the disputed funds into court, and (4) has
sought a discharge from liability.” Sun Life Assur.
Co. of Canada v. Chan's Estate, No. C-03-2205 SC,
2003 WL 22227881, at *3 (N.D. Cal. Sept. 22, 2003) (emphasis
added) (quotation and citation omitted). “In addition,
if the stakeholder faces multiple claims in the ordinary
course of its business, some courts have declined to
award it attorneys' fees.” Fid. Nat. Title Co.
v. U.S. Small Bus. Admin., No. 2:13-CV-02030-KJM-AC,
2014 WL 6390275, at *4 (E.D. Cal. Nov. 13, 2014) (emphasis
added); see also Companion Life Ins. Co. v.
Schaffer, 442 F.Supp. 826, 830 (S.D.N.Y.1977)
(expressing an inclination to deny an insurer's fee
request because “[c]onflicting claims to the proceeds
of a policy are inevitable and normal risks of the insurance
preliminary matter and as the Court found above, interpleader
is not warranted here. The HOA's very concession that
Fannie Mae is entitled to the surplus funds supports this
conclusion. (ECF No. 81 at 7 (“Defendants to the
interpleader have been defaulted, but for Fannie Mae. The
only interests in the surplus funds, therefore, may be those
of Fannie Mae . . ..”).) The fact that the HOA knows
the party entitled to the surplus funds negate a good faith
belief that there are competing claims at stake at this time.
Additionally, the HOA is already bound to disburse funds to
Fannie Mae under NRS § 116.31164(7)(b). Fannie Mae, as
holder of the DOT on the Property, is next in line and the
only party entitled to receive the remainder of the proceeds
because the former unit owner (here, Borrower) no longer has
any interest in the Property after the HOA Sale. Id.
§ 116.31164(7)(b)(4) & (5). Further, it would be
completely unfair to permit the HOA to shift foreseeable
costs of its business and obligations in a foreclosure action
to Fannie Mae, leaving Fannie Mae with only $722.41 of $13,
298.40. Accordingly, the Court denies the HOA's request
for fees and costs.
Court notes that the parties made several arguments and cited
to several cases not discussed above. The Court has reviewed
these arguments and cases and determines that they do not
warrant discussion as ...