Bank of N.Y. Mellon v. Christopher Cmtys.

Decision Date09 September 2019
Docket NumberCase No. 2:17-CV-1033 JCM (GWF)
CourtU.S. District Court — District of Nevada

Presently before the court is cross-defendant Christopher Communities at Southern Highlands Golf Club Homeowners Association's (the "HOA") motion to dismiss cross-claimant Alan and Theresa Lahrs as Trustees of the Lahrs Family Trust's (the "Lahrses") answer to complaint, cross claims, and third-party complaint for lack of diversity jurisdiction. (ECF No. 92). Cross-defendant Kupperlin Law Group, LLC ("Kupperlin) joined in the motion. (ECF No. 93). The Lahrses filed a response (ECF No. 99), to which the HOA replied (ECF No. 101).

Also before the court is third-party plaintiff Lahrses' motion for partial summary judgment for declaration of title insurance coverage. (ECF No. 127). Third-party defendants Commonwealth Land Title Insurance Company ("Commonwealth") and Lawyers Title Company of Nevada ("Lawyers Title") filed a response (ECF No. 142), to which the Lahrses replied (ECF No. 144).

Also before the court is cross-defendant First 100, LLC's ("First 100") and third-party defendant Jay Bloom's ("Bloom") motion to compel arbitration. (ECF No. 130). The Lahrses filed a limited opposition. (ECF No. 133).

I. Facts

This case has been thoroughly litigated, and its procedural posture is staggering. As relevant to this order, the instant action arises from a foreclosure sale of 11966 Port Labelle Drive, Las Vegas, Nevada 89141. (ECF No. 1 at 3). The prior owners of 11966 Port Labelle Drive were delinquent on their HOA assessments. (ECF No. 74 at 2). Red Rock Financial Services, acting on behalf of the HOA, recorded a notice of delinquent assessment lien. Id.

Pursuant to a purchase and sale agreement, the HOA assigned its right to payment on the delinquency to First 100 and retained its lien on the property. Id. Also pursuant to the purchase and sale agreement, Kupperlin replaced Red Rock Financial Services as the HOA's agent, and the HOA promised that it would not send anyone to the foreclosure sale to bid "in any amount in excess of the Opening Bid" of $99. (ECF No. 59-2 at 9).

"Kupperlin was instructed not to postpone any foreclosure sale, even if few or no bidders were present." (ECF No. 59-2 at 9). As a result, Kupperlin foreclosed on the property. (ECF No. 74 at 2-3). First 100 purchased the for $151. Id. at 3.

The court has already granted summary judgment in favor of the plaintiff Bank of New York Mellon ("BNYM") and quieted title in its favor; thus, its first priority lien still encumbers the property. See generally id.

The Lahrses filed a third-party complaint against Jay Bloom ("Bloom") and crossclaims against the HOA, Kupperlin, and First 100. (ECF No. 75). The Lahrses allege intentional and negligent misrepresentation against First 100, Bloom, and Kupperlin; fraudulent concealment against First 100 and Bloom; fraud in the inducement against First 100; civil conspiracy against First 100, Bloom, Kupperlin, and the HOA; and breach of the covenant of good faith and fair dealing against First 100. Id.

The Lahrses' also filed a third-party complaint against Commonwealth and Lawyers Title seeking a judicial declaration of insurance coverage and alleging breach of contract and breach of the implied covenant of good faith and fair dealing. (ECF No. 114).

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II. Legal Standard
A. Motion to dismiss

Federal courts are courts of limited jurisdiction. Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). "A federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears." Stock West, Inc. v. Confederated Tribes of Colville Reservation, 873 F.2d 1221, 1225 (9th Cir. 1989). Thus, federal subject matter jurisdiction must exist at the time an action is commenced. Mallard Auto. Grp., Ltd. v. United States, 343 F. Supp. 2d 949, 952 (D. Nev. 2004).

Federal Rule of Civil Procedure 12(b)(1) allows defendants to seek dismissal of a claim or action for a lack of subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). 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).

Although the defendant is the moving party in a 12(b)(1) motion to dismiss, the plaintiff is the party invoking the court's jurisdiction. As a result, the plaintiff bears the burden of proving that the case is properly in federal court to survive the motion. McCauley v. Ford Motor Co., 264 F.3d 952, 957 (9th Cir. 2001) (citing McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936)). More specifically, the plaintiff's pleadings must show "the existence of whatever is essential to federal jurisdiction, and, if [plaintiff] does not do so, the court, on having the defect called to its attention or on discovering the same, must dismiss the case, unless the defect be corrected by amendment." Smith v. McCullough, 270 U.S. 456, 459 (1926).

In moving to dismiss under Rule 12(b)(1), the challenging party may either make a "facial attack," confining the inquiry to challenges in the complaint, or a "factual attack" challenging subject matter on a factual basis. Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.2 (9th Cir. 2003). For a facial attack, the court assumes the truthfulness of the allegations, as in a motion to dismiss under Rule 12(b)(6). Trentacosta v. Frontier Pac. Aircraft Indus., Inc., 813 F.2d 1553, 1559 (9th Cir. 1987). By contrast, when presented as a factual challenge, a Rule 12(b)(1) motion can be supported by affidavits or other evidence outside of the pleadings. UnitedStates v. LSL Biotechs., 379 F.3d 672, 700 n. 14 (9th Cir. 2004) (citing St. Clair v. City of Chicago, 880 F.2d 199, 201 (9th Cir. 1989)).

B. Motion for summary judgment

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 non-moving party. Lujan v. Nat'l Wildlife Fed., 497 U.S. 871, 888 (1990). However, to be entitled to a denial of 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. The moving party must first satisfy its initial burden. "When 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 non-moving 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). To establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. 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." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 631 (9th Cir. 1987).

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 there is a genuine issue 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.

C. Motion to compel arbitration

The Federal Arbitration Act ("FAA") provides for the enforcement of arbitration agreements in any contract affecting interstate commerce. 9 U.S.C. § 2; AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). A party to an arbitration agreement can invoke his or her rights under the FAA by...

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