Bank of N.Y. Mellon v. SFR Invs. Pool 1, LLC.

• Decision Date: 21 September 2018
• Docket Number: Case No. 2:17-CV-210 JCM (CWH)
• Parties: THE BANK OF NEW YORK MELLON, Plaintiff(s), v. SFR INVESTMENTS POOL 1, LLC., et al., Defendant(s).
• Court: U.S. District Court — District of Nevada

THE BANK OF NEW YORK MELLON, Plaintiff(s), v. SFR INVESTMENTS POOL 1, LLC., et al., Defendant(s).

Case No. 2:17-CV-210 JCM (CWH)

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

September 21, 2018

ORDER

Presently before the court is cross defendant Countrywide Home Loans, Inc.'s ("Countrywide") motion to dismiss defendant/cross claimant SFR Investments Pool 1, LLC's ("SFR") counterclaims. (ECF No. 74). SFR has not filed a response and the time to do so has passed.

Also before the court is defendant Aliante Master Association's ("Aliante") motion for summary judgment. (ECF No. 52). Plaintiff Bank of New York Mellon ("BNYM") filed a response (ECF No 57), to which Aliante replied (ECF No. 60).

Also before the court is BNYM's motion for summary judgment. (ECF No. 53). Aliante filed a response (ECF No. 55), to which BNYM replied (ECF No. 59). SFR also filed a response to BNYM's motion for summary judgment (ECF No. 58), to which BNYM replied (ECF No. 61).

I. Facts

This action arises from a dispute over real property located at 4108 Erinbird Avenue, North Las Vegas, Nevada. (ECF No. 1).

Roderick Smith and Melinda Smith purchased the property in 2005. (ECF No. 53-1). The Smiths financed their purchase with a loan in the amount of $263,520.00 from Countrywide. (Id.). Countrywide secured the loan with a deed of trust, which names Countrywide as the lender, Recontrust Company as the trustee, and Mortgage Electronic Registration Systems, Inc. as the beneficiary as nominee for the lender and lender's successors and assigns. (Id.). On November 30, 2005, Countrywide recorded the deed of trust. (Id.). On October 3, 2011, Countrywide assigned the deed of trust to BNYM. (ECF No. 53-2).¹

While in possession of the property, the Smiths were liable for a $39.00 monthly homeowners' association fee to Aliante. (ECF Nos. 1, 39). In July 2010, the Smiths stopped paying their homeowners' association fees. (ECF No. 53-4). On July 21, 2011, Nevada Association Services, on behalf of Aliante, recorded a notice of default and election to sell. (ECF No. 1). Nevada Association Services also mailed the notice of default and election to sell to BNYM, Countrywide, and all other relevant parties named in the deed of trust. (ECF Nos. 1, 52). Because Aliante had a superpriority lien on the property, a foreclosure sale would extinguish BNYM's deed of trust. To avoid losing its interest in the property, BNYM, through its sub-servicer, Bank of America, N.A., forwarded Nevada Association Services a request to pay off the superpriority lien. (ECF No. 53-4).

On September 15, 2011, Nevada Association Services provided BNYM with a statement of the Smiths' payment history from July 1, 2010 through October 31, 2011. (Id.). The statement shows an outstanding balance of $2582.26, but does not identify what portion of the balance constitutes the superprioirty lien. (Id.). On October 20, 2011, Bank of America, N.A. sent a check to Nevada Association Services in the amount of $351.00—the amount Bank of America, N.A. presumed to be the superpriority portion of the lien. (Id.). Nevada Association Services did not accept the check. (Id.). On January 23, 2014, Nevada Association Services, on behalf of Aliante, sold the property to SFR for $27,000. (ECF No. 53-3). On February 3, 2014, Nevada Association Services recorded the deed of foreclosure. (ECF No. 53-3).

On January 25, 2017, BNYM initiated this action against Aliante and SFR. (ECF No. 1). In its complaint, BNYM raises three causes of action: (1) quiet title against SFR; (2) violation of due process against all defendants; (3) wrongful foreclosure against Aliante. (Id.). On March 6,2017, SFR filed an answer, in which it raises various counterclaims and cross-claims against plaintiffs and new parties, including cross defendant Countrywide. (ECF No. 18).

On September 6, 2018, the parties filed stipulation requesting the court to dismiss with prejudice Aliante. (ECF No. 77). On September 7, 2018, the court dismissed Aliante. (ECF No. 78).

II. Legal Standard

a. Motion to dismiss

A court may dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A properly pled 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 Atlantic 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) (citation omitted).

"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 (citation omitted).

In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, the court must accept as true all well-pled factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 678-79. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 678.

Second, the 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 the 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 not shown—that the pleader is entitled to relief." Id.(internal quotation marks omitted). When the allegations in a complaint have not crossed the line from conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550 U.S. at 570.

The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The Starr court stated, in relevant part:

First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.

Id.

b. 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...