Shirehampton Drive Trust v. JPMorgan Chase Bank, Nat'l Ass'n
| Decision Date | 29 September 2019 |
| Docket Number | Case No. 2:16-cv-02276-RFB-EJY |
| Citation | 417 F.Supp.3d 1342 |
| Parties | SHIREHAMPTON DRIVE TRUST, Plaintiff, v. JPMORGAN CHASE BANK, NATIONAL ASSOCIATION; MTC Financial Inc., dba Trustee Corps; Louisa Oakenell; and United States of America on behalf of Treasury Department on behalf of Internal Revenue Service, Defendants. JPMorgan Chase Bank, N.A., Counter Claimant, v. Shirehampton Drive Trust, Counter Defendant. |
| Court | U.S. District Court — District of Nevada |
Adam R. Trippiedi, Michael F. Bohn, Law Office of Michael F. Bohn, Henderson, NV, for Plaintiff/Counter Defendant.
Kent F. Larsen, Smith Larsen & Wixom, Las Vegas, NV, Boris Kukso, US Dept. of Justice, Tax Division, Washington, DC, for Defendants.
Katie M. Weber, Smith Larsen & Wixom, Las Vegas, NV, for Defendants/Counter Claimant.
Before the Court are Defendant United States of America Treasury Department, Internal Revenue Service's ("IRS") Renewed Motion for Summary Judgment, Plaintiff Shirehampton Drive Trust's ("Shirehampton") Motions for Summary Judgment, and Defendant JP Morgan Chase Bank, N.A's ("Chase") Motion for Summary Judgment. ECF Nos. 42 – 46. For the following reasons, the Court grants the IRS's motion, denies Chase's motion and grants Shirehampton's motion only as against Chase.
Plaintiff Shirehampton sued Defendants on September 1, 2016 in the Eighth Judicial District Court in Clark County, Nevada. ECF No. 1-1. Shirehampton seeks a declaration from this Court that a Las Vegas property that it obtained at a foreclosure sale in 2013 was not encumbered by Chase's deed of trust. To that end, Shirehampton asserts claims for injunctive relief, quiet title and declaratory relief. The IRS removed the case to federal court on September 28, 2016. ECF No. 1. The IRS answered and counterclaimed against Plaintiff (and crossclaimed against Defendants) to enforce federal tax liens pursuant to 26 U.S.C. §§ 6321, 6322 and 7401 on October 12, 2016. ECF No. 6. Chase answered the complaint on October 27, 2016 and asserted counterclaims for quiet title under NRS 40.010, declaratory relief under NRS 30.010 and 28 U.S.C. § 2201, and unjust enrichment. ECF No. 8. Shirehampton answered the counterclaims. ECF Nos. 11, 13. On March 13, 2017, the Court dismissed Defendants MTC Financial Inc. and Louisa Oakenell without prejudice. ECF No. On August 24, 2017, all remaining parties moved for summary judgment. ECF Nos. 24–26, 28. On March 22, 2018, the Court administratively stayed the case pending the Nevada Supreme Court's decision in SFR Investments Pool 1, LLC v. Bank of New York Mellon, 134 Nev. 483, 422 P.3d 1248 (2018) and denied all pending summary judgment motions without prejudice. On August 23, 2018, the Court lifted the stay. ECF No. 41. All remaining parties moved for summary judgment on September 24, 2018. ECF Nos. 42–45. All motions were fully briefed. ECF Nos. 47–50, 53 – 56.
The Court makes the following findings of undisputed and disputed facts.
a. Undisputed Facts
This matter concerns a nonjudicial foreclosure on a property located at 705 Shirehampton Drive, Las Vegas, Nevada 89178 ("the property"). The property sits in a community governed by the Essex at Huntington Homeowners Association ("HOA"). The HOA requires its community members to pay dues.
Louisa Oakenell borrowed funds from MetLife Home Loans, a Division of MetLife Bank, N.A. ("MetLife") to purchase the property in 2008. To obtain the loan, Oakenell executed a promissory note and a corresponding deed of trust to secure repayment of the note. The deed of trust, which lists Oakenell as the borrower, MetLife as the lender and Mortgage Electronic Registration Systems, Inc., ("MERS") as the beneficiary, was recorded on December 24, 2008. MERS assigned the deed of trust to Chase in May 2013.
Oakenell fell behind on HOA payments. The HOA, through its agent Red Rock Financial Services, LLC ("Red Rock") sent Oakenell a demand letter by certified mail for the collection of unpaid assessments on June 26, 2009. On July 21, 2009, the HOA, through its agent, recorded a notice of delinquent assessment lien. The HOA sent Oakenell a copy of the notice of delinquent assessment lien on July 24, 2009. The HOA subsequently recorded a notice of default and election to sell on October 21, 2009 and then a notice of foreclosure sale on September 18, 2012. Red Rock mailed copies of the notice of default and election to sell to Oakenell, the HOA, Republic Services, the IRS, and Metlife Home Loans. Red Rock did not mail a copy of the notice of default and election to sell to MERS. On January 28, 2013, the HOA held a foreclosure sale on the property under NRS Chapter 116. Shirehampton purchased the property at the foreclosure sale. A foreclosure deed in favor of Shirehampton was recorded on February 7, 2013.
In addition to falling behind on her HOA payments, however, Oakenell also stopped paying federal income taxes. The IRS subsequently filed notices of federal tax liens against Oakenell at the Clark County Recorder's office on May 1, 2009 and June 24, 2009. As of October 1, 2018, Oakenell had accrued $250,953. 37 in income tax liability plus daily compounding interest.
Summary judgment is appropriate 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 judgment as a matter of law." Fed. R. Civ. P. 56(a) ; accord Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). When considering the propriety of summary judgment, the court views all facts and draws all inferences in the light most favorable to the nonmoving party. Gonzalez v. City of Anaheim, 747 F.3d 789, 793 (9th Cir. 2014). If the movant has carried its burden, the non-moving party Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007) (alteration in original) (internal quotation marks omitted). It is improper for the Court to resolve genuine factual disputes or make credibility determinations at the summary judgment stage. Zetwick v. Cty. of Yolo, 850 F.3d 436, 441 (9th Cir. 2017) (citations omitted).
The Court first addresses whether Shirehampton purchased the property subject to Chase's deed of trust. The Court concludes that it did not.
Chase argues that the foreclosure sale was void because the HOA, through its agent, did not comply with the notice requirements of the version of NRS 107.090 in effect at the time by serving a copy of the notice of default and notice of sale on MERS, its predecessor-in-interest. Nev. Rev. Stat. § 107.090(3)(b) (West 2009) (). However, the Nevada Supreme Court considered and rejected this argument in West Sunset 2050 Trust v. Nationstar Mortg., LLC, 134 Nev. 352, 420 P.3d 1032, 1034 (2018). In that case, Nationstar argued that a HOA foreclosure sale was void because the HOA failed to provide statutorily required notice of the foreclosure sale to Nationstar's predecessor-in-interest Bank of America. The court noted that Nationstar did not allege that it was deprived of notice, and provided no explanation as to how Nationstar "was affected—much less injured—by defective notice to Bank of America." Id. The court also noted that the HOA had properly recorded the notice of default prior to the assignment of the deed of trust to Nationstar, thus giving Nationstar record notice of the notice of default. Id. The court thus concluded that "Nationstar's failure to allege prejudice resulting from defective notice dooms its claim that the defective notice invalidates the HOA sale." Id.
The Court finds the facts in this case to be substantially similar to Nationstar. Like Nationstar, Chase had record notice of the notice of default and the notice of foreclosure sale because it was assigned the deed of trust after both notices had already been recorded. Also like Nationstar, Chase has not alleged any prejudice resulting from the defective notice. The Court thus finds that Nationstar is controlling here and thus the imperfect notice did not render the sale void.
The Court next considers Chase's argument that the HOA did not intend to conduct a foreclosure on the superpriority portion of the lien. Chase argues that the HOA did not intend to foreclose on the superpriority portion of the lien because the assessment lien notices do not specify that the sale was a superpriority sale. Chase also points to a letter sent from Red Rock to the lender MetLife in which the letter says that "The Association's lien for Delinquent Assessments is Junior only to the Senior Lender/Mortgage Holder." Finally, Chase attaches a declaration from a supervisor at Red Rock stating that "Red Rock did not believe that any Association assessment lien enforcement to be conducted would result in the termination of any first deed of trust on the Property."
The Nevada Supreme Court has recently confirmed that a HOA may nonjudicially foreclose on the subpriority portion of its lien. See Cogburn St. Trust v. U.S. Bank Nat'l Ass'n, 442 P.3d 138 (Nev. 2019) (). However, for the following reasons, the Court finds that Chase's evidence is insufficient to find that the HOA intended to foreclose on the subpriority portion of the...
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