Valencia Mgmt. v. NewRez LLC
| Decision Date | 14 October 2022 |
| Docket Number | 2:22-cv-00345-APG-DJA |
| Parties | VALENCIA MANAGEMENT LLC SERIES 4, Plaintiff v. NEWREZ LLC and NATIONAL DEFAULT SERVICING CORPORATION, Defendants |
| Court | U.S. District Court — District of Nevada |
ORDER (1) GRANTING DEFENDANT'S MOTION FOR JUDGMENT ON THE PLEADINGS AND (2) SETTING DEADLINE TO FILE AMENDED COMPLAINT [ECF NO. 26]
Plaintiff Valencia Management LLC Series 4 sues to prevent foreclosure on its property located at 10784 Teton Village Court in Henderson, Nevada. Defendant NewRez LLC is the current beneficiary of record for the deed of trust that encumbers Valencia's property. NewRez initiated foreclosure under the deed of trust. In response, Valencia filed suit in state court. NewRez removed the action to this court.
NewRez moves for judgment on the pleadings on each of Valencia's claims for quiet title/declaratory relief, slander of title fraud, injunctive relief, and wrongful foreclosure. Valencia opposes and requests leave to amend if necessary. The parties are familiar with the facts, so I repeat them here only as necessary to resolve the motion. I grant NewRez's motion for judgment on the pleadings, with leave for Valencia to amend to assert a claim for violation of Nevada Revised Statutes (NRS) § 107.200 et seq.
A party may move for judgment on the pleadings “[a]fter the pleadings are closed.” Fed.R.Civ.P. 12(c). “A judgment on the pleadings is properly granted when, taking all allegations in the pleadings as true, the moving party is entitled to judgment as a matter of law.” Nelson v. City of Irvine, 143 F.3d 1196, 1200 (9th Cir. 1998).
Count one of the complaint seeks declaratory relief and to quiet title based on Valencia's allegations that the deed of trust was extinguished by operation of law. ECF No. 1-1 at 6-7. NewRez argues that this claim fails because the deed of trust was not extinguished by operation of NRS § 106.240, as the 2010 notice of default was timely rescinded. NewRez alternatively argues that the ten-year clock under NRS § 106.240 should be tolled for various reasons. Valencia responds that the loan was accelerated by an unrecorded letter that the 2011 rescission did not affect. It also contends no tolling should apply because NRS § 106.240 is a statute of repose. Finally, Valencia contends that its quiet title/declaratory relief claim is also based on NewRez's failure to comply with NRS § 107.200 et seq.
NRS § 106.240 provides:
The lien heretofore or hereafter created of any mortgage or deed of trust upon any real property, appearing of record, and not otherwise satisfied and discharged of record, shall at the expiration of 10 years after the debt secured by the mortgage or deed of trust according to the terms thereof or any recorded written extension thereof become wholly due, terminate, and it shall be conclusively presumed that the debt has been regularly satisfied and the lien discharged.
This section “creates a conclusive presumption that a lien on real property is extinguished ten years after the debt becomes due.” Pro-Max Corp. v. Feenstra, 16 P.3d 1074, 1077 (Nev. 2001), opinion reinstated on reh'g (Jan. 31, 2001).
Here, the 2010 notice of default was rescinded in 2011. ECF Nos. 26-2; 26-3. The Supreme Court of Nevada has confirmed that a rescission like the one in this case decelerates the loan for purposes of § 106.240. SFR Invs. Pool 1, LLC v. U.S. Bank N.A., 507 P.3d 194, 197-98 (Nev. 2022). Because the 2010 notice of default was rescinded in 2011, the 10-year period in NRS § 106.240 has not run.
Valencia contends that it is basing its claim on a prior, unrecorded acceleration. But the Ninth Circuit has held that an unrecorded notice of acceleration does not start the clock for purposes of NRS § 106.240. See Daisy Tr. v. Fed. Nat'l Mortg. Ass'n, No. 21-15595, 2022 WL 874634, at *1-2 (9th Cir. Mar. 24, 2022). Additionally, the 2011 rescission decelerated the same debt that would have been the subject of any unrecorded communication the lender sent the borrower prior to the 2010 notice of default. Valencia's claim based on NRS § 106.240 therefore fails as a matter of law and I grant NewRez's motion for judgment on the pleadings for this claim. I deny leave to amend this claim because amendment would be futile. Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1041 (9th Cir. 2011) ().
Valencia argues that its quiet title/declaratory relief claim is also based on NewRez's alleged violation of NRS § 107.200 et seq. But that is not how it is pleaded. See ECF No. 1-1 at 6-7. As discussed below in relation to the wrongful foreclosure claim, I grant Valencia leave to amend to assert a claim under NRS § 107.200 et seq. because it is not clear that amendment would be futile. Nat'l Council of La Raza v. Cegavske, 800 F.3d 1032, 1041 (9th Cir. 2015) ().
Count two of the complaint asserts a slander of title claim based on NewRez recording a notice of default in 2021 and a notice of sale in 2022. ECF No. 1-1 at 7. Valencia alleges these recorded documents falsely represented that NewRez could foreclose because the deed of trust was previously extinguished by operation of law. Id. at 7-8.
NewRez argues the slander of title claim is not pleaded with specificity. NewRez also contends that Valencia cannot plausibly allege that NewRez maliciously made a false statement concerning Valencia's title because prior litigation established that the deed of trust continued to encumber the property, and the deed of trust was not extinguished by operation of NRS § 106.240. Valencia responds that it has plausibly alleged that the deed of trust was extinguished, so it has alleged a false statement. Valencia contends it has adequately alleged that NewRez knew or should have known that the deed of trust was extinguished, so it has adequately alleged malice.
To state a slander of title claim, Valencia must plausibly allege that NewRez made a false statement, that NewRez did so maliciously, and that Valencia sustained special damage as a result. Rowland v. Lepire, 662 P.2d 1332, 1335 (Nev. 1983). Even taking Valencia's allegations as true, it has not plausibly alleged that NewRez made a false statement because the deed of trust was not extinguished by operation of NRS § 106.240. I therefore grant NewRez's motion for judgment on the pleadings on this claim. I deny leave to amend because it would be futile for the same reasons that Valencia's quiet title/declaratory relief claim based on NRS § 106.240 is futile.
Count three of the complaint asserts a claim for fraud based on NewRez recording the 2021 notice of default and 2022 notice of sale despite allegedly knowing that the deed of trust had been extinguished. ECF No. 1-1 at 8-9. NewRez argues that it has not made any misrepresentations about the property because prior litigation confirmed the deed of trust still encumbers the property and the deed of trust was not extinguished by operation of NRS § 106.240.
Valencia did not respond to this portion of NewRez's motion. I therefore grant NewRez's motion for judgment on the pleadings for this claim as unopposed. LR 7-2(d). I deny leave to amend because it would be futile for the same reasons that Valencia's quiet title/declaratory relief claim based on NRS § 106.240 is futile.
Count four of the complaint requests injunctive relief to stop the foreclosure sale under the deed of trust. ECF No. 1-1 at 9. NewRez contends that injunctive relief is a remedy, not a separate claim. Valencia does not specifically respond to this argument, instead contending that injunctive relief may be appropriate in support of its wrongful foreclosure claim.
Injunctive relief “is a remedy, not a separate claim.” RH Kids, LLC v. Nat'l Default Servicing Corp., No. 2:22-cv-00954-APG-NJK, 2022 WL 2316850, at *2 (D. Nev. June 28, 2022). I therefore grant NewRez's motion for judgment on the pleadings to the extent that the complaint sets forth injunctive relief as a separate claim.
Count five of the complaint asserts a claim for wrongful foreclosure based on the same NRS § 106.240 arguments. ECF No. 1-1 at 10...
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