Deutsche Bank Nat'l Tr. Co. v. SFR Invs. Pool 1, LLC, Case No.: 2:18-cv-00194-GMN-GWF

• Decision Date: 28 March 2019
• Docket Number: Case No.: 2:18-cv-00194-GMN-GWF
• Parties: DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee for Saxon Asset Securities Trust 2007-3, Mortgage Loan Asset Backed Certificates, Series 2007-3, Plaintiff, v. SFR INVESTMENTS POOL 1, LLC, et al., Defendants.
• Court: U.S. District Court — District of Nevada

DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee forSaxon Asset Securities Trust 2007-3,Mortgage Loan Asset Backed Certificates, Series 2007-3, Plaintiff, v. SFR INVESTMENTS POOL 1, LLC, et al., Defendants.

Case No.: 2:18-cv-00194-GMN-GWF

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

March 28, 2019

ORDER

Pending before the Court is the Motion for Summary Judgment, (ECF No. 69), filed by Plaintiff Deutsche Bank National Trust Company ("Plaintiff"). Defendants Heather Glen Homeowners Association ("HOA") and SFR Investments Pool 1, LLC ("SFR") (collectively "Defendants") filed Responses, (ECF Nos. 74, 76), and Plaintiff filed Replies, (ECF Nos. 79, 80).

Also pending before the Court are the Motions for Summary Judgment, (ECF Nos. 70, 71), filed by HOA and SFR, respectively. Plaintiff filed Responses, (ECF Nos. 73, 75), and Defendants filed Replies, (ECF Nos. 78, 81).¹

For the reasons discussed herein, Plaintiff's Motion for Summary Judgment is DENIED and Defendants' Motions for Summary Judgment are GRANTED.

I. BACKGROUND

This quiet title action arises from the non-judicial foreclosure on real property located at 2835 Jamie Rose Street, Las Vegas, Nevada 89135 (the "Property"). (See Am. Compl. ¶ 1, ECFNo. 49). On May 17, 2007, Robert L. Willhite and Robin M. Willhite ("Borrowers") took out a loan secured by a deed of trust. (See Deed of Trust, Ex. 4 to Am. Compl., ECF No. 49-4).² On October 7, 2011, Saxon Mortgage, Inc., the original beneficiary under the deed of trust, assigned all beneficial interest in the deed to Plaintiff. (See Assignment, ECF No. 49-5).

On July 10, 2012, upon Borrowers' failure to pay all amounts due, HOA initiated foreclosure proceedings through its agent, Nevada Association Services, Inc ("NAS"), by recording a notice of delinquent assessment lien. (See Notice of Lien, ECF No. 49-8). NAS subsequently recorded a notice of default and election to sell, followed by a notice of foreclosure sale. (See Notice of Default, ECF No. 49-9); (Notice of Foreclosure Sale, ECF No. 49-10). HOA conducted a public auction on August 23, 2013, at which SFR purchased the Property for $39,000. (See Foreclosure Deed, ECF No. 49-11).

Initially filed on February 2, 2018, (see ECF No. 1), Plaintiff filed an Amended Complaint on July 3, 2018, bringing the following causes of action arising from the foreclosure and subsequent sale of the Property: (1) quiet title; (2) unjust enrichment; (3) wrongful foreclosure; (4) negligence; (5) negligence per se; (6) injunctive relief; (7) declaratory relief under 28 U.S.C. § 2201 and the United States Constitution; and (8) quiet title under the Fifth and Fourteenth Amendments to the United States Constitution. (Am. Compl. ¶¶ 72-143).

On December 17, 2018, the parties filed their respective Motions for Summary Judgment, (ECF Nos. 69-71).

II. LEGAL STANDARD

The Federal Rules of Civil Procedure provide for summary adjudication 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 movantis entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Material facts are those that may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See id. "Summary judgment is inappropriate if reasonable jurors, drawing all inferences in favor of the nonmoving party, could return a verdict in the nonmoving party's favor." Diaz v. Eagle Produce Ltd. P'ship, 521 F.3d 1201, 1207 (9th Cir. 2008) (citing United States v. Shumway, 199 F.3d 1093, 1103-04 (9th Cir. 1999)). 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).

In determining summary judgment, a court applies a burden-shifting analysis. "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). In 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 nonmoving 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 Corp., 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, 477 U.S. at 249. 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.

III. DISCUSSION

Plaintiff seeks summary judgment on its quiet title claim, asserting that its deed of trust continues to encumber the Property because the foreclosure sale is void. (Pl.'s Mot. Summ. J. ("MSJ"), ECF No. 69). According to Plaintiff, the Court should invalidate the sale because it was in contravention of NRS Chapter 116 and conducted pursuant to a facially unconstitutional statute. (Id. 12:16-17:3). Plaintiff further contends the sale should be equitably set aside because it was sufficiently tainted with fraud, oppression, and unfairness. (Id. 5:16-9:14).

SFR moves for summary judgment on the basis that Plaintiff's claims are time-barred, Plaintiff lacks standing to enforce the deed of trust, and the foreclosure sale was validly conducted, resulting in SFR taking title to the Property free of Plaintiff's lien. (SFR's MSJ 1:5-7:21, ECF No. 71). HOA also moves for summary judgment, arguing Plaintiff's claims areuntimely, Plaintiff failed to join Borrowers as necessary parties to this action, and the foreclosure sale's compliance with NRS Chapter 116 precludes Plaintiff from recovery on its remaining claims. (HOA's MSJ 6:5-17:11, ECF No. 70).

Prior to considering the merits of Plaintiff's claims, the Court turns to the threshold questions of the timeliness of causes of action, the constitutionality of NRS Chapter 116, and Plaintiff's standing to bring the quiet title claim.

A. Statute of Limitations

According to Defendants, each of Plaintiff's claims are barred by their respective, applicable statutes of limitations. (SFR's MSJ 4:22-24); (HOA's MSJ 6:2-9:17). Plaintiff contends that its claims are timely when considered under the proper limitation periods and trigger dates. (Pl.'s Resp. to HOA's MSJ 4:9-18). The Court addresses the timeliness of each claim in turn.

1. Quiet Title

At issue here is whether Plaintiff's quiet title claim is subject to the five-year limitations period under NRS 11.070 and 11.080, or the four-year residual limitations period under NRS 11.220.³

Plaintiff's quiet title claim is governed by the five-year limitations period set forth in NRS 11.070, which applies to a "cause of action or defense to an action, founded upon title to real property." NRS 11.070. A quiet title claim is reciprocal in nature as it "requests a judicial determination of all adverse claims to disputed property." Del Webb Conservation Holding Corp. v. Tolman, 44 F. Supp. 2d 1105, 1110 (D. Nev. 1999) (citing Clay v. Scheeline Banking & Trust Co., 159 P. 1081, 1082-83 (Nev. 1916)).

The adverse claims here are between Plaintiff, a lienholder, and SFR, titleholder. The essence of Plaintiff's requested relief, a declaration as to the viability of the first deed of trust, is necessarily a challenge to SFR's interest. See Clay, 159 P. at 1082 ("[O]ne of the essentials of a good complaint in such an action is that [the plaintiff] must show that the defendants claim an interest in the property adverse to the plaintiffs."). Indeed, should Plaintiff obtain its requested remedy of invalidating the foreclosure sale, SFR would be divested of its title. Because the Court must adjudicate the competing interests here, including the asserted title interest, the action is founded upon title.⁴

Under NRS 11.070, the five-year limitations period is triggered at the time "the person prosecuting the...