Green Tree Servicing LLC v. SFR Invs. Pool 1, LLC

• Decision Date: 23 February 2017
• Docket Number: Case No. 2:15–cv–00476–JCM–VCF
• Citation: 237 F.Supp.3d 1068
• Parties: GREEN TREE SERVICING LLC, Plaintiff, v. SFR INVESTMENTS POOL 1, LLC, et al., Defendants.
• Court: U.S. District Court — District of Nevada

237 F.Supp.3d 1068

GREEN TREE SERVICING LLC, Plaintiff,

v.SFR INVESTMENTS POOL 1, LLC, et al., Defendants.

Case No. 2:15–cv–00476–JCM–VCF

United States District Court, D. Nevada.

Signed February 23, 2017

Ariel E. Stern, Donna M. Wittig, Akerman LLP, Las Vegas, NV, Brett M. Coombs, Akerman, PLLC, Salt Lake City, UT, for Plaintiff.

Howard C. Kim, Jacqueline A. Gilbert, Karen L. Hanks, Diana Cline Ebron, Kim Gilbert Ebron, Edward D. Boyack, Boyack Orme & Taylor, Las Vegas, NV, for Defendants.

ORDER

JAMES C. MAHAN, UNITED STATES DISTRICT JUDGE

Presently before the court is defendant SFR Investments Pool 1, LLC ("SFR")motion for summary judgment(ECF No. 68), in which defendantElkhorn Community Association(the "HOA") joined (ECF No. 72).PlaintiffDitech Financial, LLC fka Green Tree Servicing LLC("Ditech") filed a response (ECF No.76), to which SFR replied (ECF No. 80).

Also before the court is Ditech's motion for summary judgment.(ECF No. 69).The HOA (ECF No. 75) and SFR (ECF No. 78) filed responses.

I.Facts

This case involves a dispute over real property located at 7701 Flourish Springs St., Las Vegas, NV 89131 (the "property").

On November 26, 2007, Sharon Cochran purchased the property and borrowed $184,000.00 from Countrywide Bank, FSB, which was secured by a deed of trust recorded December 13, 2007.(ECF No. 44).The deed of trust was assigned to Bank of America, N.A., successor by merger to BAC Home Loans Servicing, LP fka Countrywide Home Loans Servicing, LP("BANA") via an assignment of deed of trust recorded on October 5, 2011.(ECF No. 44).BANA assigned the deed of trust to plaintiff Ditech via an assignment of deed of trust recorded October 14, 2013.(ECF No. 44).On January 12, 2012, third-party defendantAbsolute Collection Services, LLC("ACS"), acting on behalf of the HOA, recorded a notice of delinquent assessment lien, stating an amount due of $1,796.31.(ECF No. 44).On April 06, 2012, ACS recorded a notice of default and election to sell to satisfy the delinquent assessment lien.(ECF No. 44).On August 02, 2012, ACS recorded a notice of trustee's sale, stating an amount due of $3,534.75.(ECF No. 44).ACS mailed by certified mail the notice of foreclosure sale to BANA.(ECF No. 68, exh.A–1).

On December 11, 2012, SFR purchased the property at the foreclosure sale for $8,100.00.(ECF No. 44).A trustee's deed upon sale was recorded December 13, 2012.(ECF No. 44).

On March 16, 2015, Ditech filed the original complaint (ECF No. 1), which it amended on June 24, 2015(ECF No. 30), and then again on December 18, 2015(ECF No. 44).In its second amended complaint, Ditech alleges five causes of action: (1) declaratory judgment against SFR and the HOA; (2) quiet title against SFR; (3) breach of NRS 116.1113 against the HOA; (4) wrongful foreclosure against the HOA; and (5) injunctive relief against SFR.(ECF No. 44).

On April 17, 2015, SFR filed a counter/crossclaim for quiet title and injunctive relief.(ECF No. 13).

On May 20, 2015, the HOA filed a third-party complaint against ACS, alleging (1) breach of contract, (2) indemnity, and (3) contribution.(ECF No. 21).

In the instant motions, SFR and Ditech both move for summary judgment in their favor.The court will address each as it sees fit.¹

II.Legal Standard

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, 106 S.Ct. 2548, 91 L.Ed.2d 265(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, 110 S.Ct. 3177, 111 L.Ed.2d 695(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.SeeCelotex Corp. , 477 U.S. at 323–24, 106 S.Ct. 2548.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.SeeAdickes v. S.H. Kress & Co. , 398 U.S. 144, 159–60, 90 S.Ct. 1598, 26 L.Ed.2d 142(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.SeeMatsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538(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.SeeTaylor 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.SeeCelotex , 477 U.S. at 324, 106 S.Ct. 2548.

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.SeeAnderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202(1986).The evidence of the nonmovant is "to be believed, and all justifiable inferences are to be drawn in his favor."Id. at 255, 106 S.Ct. 2505.But if the evidence of the nonmoving party is merely colorable or is not significantly probative, summary judgment may be granted.Seeid. at 249–50, 106 S.Ct. 2505.

II.Discussion

Under Nevada law, "[a]n action may be brought by any person against another who claims an estate or interest in real property, adverse to the person bringing the action for the purpose of determining such adverse claim."Nev. Rev. Stat. § 40.010."A plea to quiet title does not require any particular elements, but each party must plead and prove his or her own claim to the property in question and a plaintiff's right to relief therefore depends on superiority of title."Chapman v. Deutsche Bank Nat'l Trust Co. , 302 P.3d 1103, 1106(Nev.2013)(internal quotation marks and citations omitted).Therefore, for plaintiff to succeed on its quiet title action, it needs to show that its claim to the property is superior to all others.See alsoBreliant v. Preferred Equities Corp. , 112 Nev. 663, 918 P.2d 314, 318(1996)("In a quiet title action, the burden of proof rests with the plaintiff to prove good title in himself.").

A.Conclusive Recitals²

Section 116.3116(1) of the Nevada Revised Statutes gives a homeowners' association a lien on its homeowners' residences for unpaid assessments and fines; moreover, NRS 116.3116(2) gives priority to that HOA lien over all other liens and encumbrances with limited exceptions—such as "[a] first security interest on the unit recorded before the date on which the assessment sought to be enforced became delinquent."Nev. Rev. Stat. § 116.3116(2)(b).

The statute then carves out a partial exception to subparagraph (2)(b)'s exception for first security interests.SeeNev. Rev. Stat. § 116.3116(2).In SFR Investment Pool1 v. U.S. Bank , the Nevada Supreme Court provided the following explanation:

As to first deeds of trust, NRS 116.3116(2) thus splits an HOA lien into two pieces, a superpriority piece and a subpriority piece.The superpriority piece, consisting of the last nine months of unpaid HOA dues and maintenance and nuisance-abatement charges, is "prior to" a first deed of trust.The subpriority piece, consisting of all other HOA fees or assessments, is subordinate to a first deed of trust.

334 P.3d 408, 411(Nev.2014)(" SFR Investments ").

Chapter 116 of the Nevada Revised Statutes permits an HOA to enforce its superpriority lien by nonjudicial foreclosure sale.Id. at 415.Thus, " NRS 116.3116(2) provides an HOA a true superpriority lien, proper foreclosure of which will extinguish a first deed of trust."Id. at 419;see alsoNev. Rev. Stat. § 116.31162(1)(providing that "the association may foreclose its lien by sale" upon compliance with the statutory notice and timing rules).

Subsection (1) of NRS 116.31166 provides that the recitals in a deed made pursuant to NRS 116.31164 of the following are conclusive proof of the matters recited:

(a) Default, the mailing of the notice of delinquent assessment, and the recording of the notice of default and election to

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