Wells Fargo Bank, N.A. v. SFR Investments Pool 1, LLC

Filing 116

ORDER granting ECF Nos. 99 , 100 Motions for Summary Judgment; denying ECF No. 101 Motion for Summary Judgment; denying ECF No. 111 Motion to Stay; directing Plaintiff to submit a proposed form of judgment within 14 days. Signed by Judge Robert C. Jones on 10/13/2016. (Copies have been distributed pursuant to the NEF - KR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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______________________________________
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WELLS FARGO BANK N.A.,
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Plaintiff,
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vs.
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SFR INVESTMENTS POOL 1, LLC,
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Defendant.
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2:13-cv-01231-RCJ-GWF
ORDER

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This case arises out of a homeowners’ association (“HOA”) foreclosure sale. Pending

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before the Court are three motions for summary judgment.

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I.

FACTS AND PROCEDURAL HISTORY

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On or about February 9, 2005, Anthony V. Roybal gave Plaintiff Wells Fargo Bank, N.A.

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(“Wells Fargo”) a $270,000 promissory note (“Note”) in exchange for proceeds in that amount to

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purchase real property at 2280 Laramine River Dr., Henderson, NV 89502 (the “Property”), as

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well as a first deed of trust (“DOT”) against the Property. (See Am. Compl. ¶¶ 4, 8–9, ECF No.

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79). Wells Fargo became the assignee of the Note and DOT on or before May 24, 2010, when

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the assignment was recorded. (See id. ¶ 10). When Roybal became delinquent on his HOA dues,

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Nevada Association Services, Inc., as agent for Sunrise Ridge Manor HOA (“the HOA”),

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recorded an HOA lien against the Property and conducted a foreclosure sale at which Defendant

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SFR Investments Pool 1, LLC (“SFR”) purchased the Property for $18,000. (Id. ¶¶ 11–14).

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Wells Fargo sued SFR in this Court for declaratory relief that the HOA foreclosure did

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not extinguish the first mortgage, and to quiet title to that effect. Defendant filed counterclaims

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and third-party claims against Wells Fargo, Roybal, and Bank of America, N.A. (“BOA”) for

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declaratory relief that the HOA foreclosure extinguished Plaintiff’s first mortgage, BOA’s

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second mortgage, and any interest of Roybal in the Property, to quiet title to that effect, and for

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unjust enrichment. Wells Fargo and SFR filed cross motions for summary judgment. The Court

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granted Wells Fargo’s motion and denied SFR’s. SFR and BOA later filed a stipulation that

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BOA’s second deed of trust was extinguished by the HOA foreclosure sale and that BOA

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claimed no interest in the Property. SFR asked the Clerk to enter default against Roybal as to its

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third-party claims, but the Court denied the motion because there was no evidence of service

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upon Roybal. The Clerk entered default after SFR submitted proof of service. The Court

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granted a stipulation to vacate its previous summary judgment order when the Nevada Supreme

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Court decided SFR Investments Pool I, LLC v. U.S. Bank, N.A., 334 P.3d 408 (Nev. 2014), ruling

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that HOA foreclosures extinguished first deeds of trust under Nevada Revised Statutes section

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(“NRS”) 116.3116.

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In the meantime, Wells Fargo had conducted a non-judicial foreclosure of the Property

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under Chapter 107 at which it purchased the Property itself. (See Am. Compl. ¶¶ 18–21). Wells

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Fargo filed the Amended Complaint (“AC”) for declaratory relief, quiet title, and unjust

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enrichment. SFR filed the Counterclaim for quiet title, declaratory relief, wrongful foreclosure,

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unjust enrichment, injunctive relief, and intentional interference with contractual relations.

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Wells Fargo has now filed two summary judgment motions, and SFR has filed one.

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II.

SUMMARY JUDGMENT STANDARDS
A court must grant summary judgment when “the movant shows that there is no genuine

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dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.

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Civ. P. 56(a). Material facts are those which may affect the outcome of the case. See Anderson

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v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if

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there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See

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id. A principal purpose of summary judgment is “to isolate and dispose of factually unsupported

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claims.” Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986).

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In determining summary judgment, a court uses a burden-shifting scheme. The moving

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party must first satisfy its initial burden. “When the party moving for summary judgment would

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bear the burden of proof at trial, it must come forward with evidence which would entitle it to a

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directed verdict if the evidence went uncontroverted at trial.” C.A.R. Transp. Brokerage Co. v.

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Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citation and internal quotation marks

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omitted). In contrast, when the nonmoving party bears the burden of proving the claim or

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defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate

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an essential element of the nonmoving party’s case; or (2) by demonstrating that the nonmoving

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party failed to make a showing sufficient to establish an element essential to that party’s case on

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which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323–24.

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If the moving party fails to meet its initial burden, summary judgment must be denied and

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the court need not consider the nonmoving party’s evidence. See Adickes v. S.H. Kress & Co.,

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398 U.S. 144 (1970). If the moving party meets its initial burden, the burden then shifts to the

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opposing party to establish a genuine issue of material fact. See Matsushita Elec. Indus. Co. v.

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Zenith Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute,

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the opposing party need not establish a material issue of fact conclusively in its favor. It is

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sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the

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parties’ differing versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors

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Ass’n, 809 F.2d 626, 631 (9th Cir. 1987). In other words, the nonmoving party cannot avoid

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summary judgment by relying solely on conclusory allegations unsupported by facts. See Taylor

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v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go beyond the

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assertions and allegations of the pleadings and set forth specific facts by producing competent

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evidence that shows a genuine issue for trial. See Fed. R. Civ. P. 56(e); Celotex Corp., 477 U.S.

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at 324.

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At the summary judgment stage, a court’s function is not to weigh the evidence and

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determine the truth, but to determine whether there is a genuine issue for trial. See Anderson, 477

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U.S. at 249. The evidence of the nonmovant is “to be believed, and all justifiable inferences are

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to be drawn in his favor.” Id. at 255. But if the evidence of the nonmoving party is merely

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colorable or is not significantly probative, summary judgment may be granted. See id. at 249–50.

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Notably, facts are only viewed in the light most favorable to the nonmoving party where there is

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a genuine dispute about those facts. Scott v. Harris, 550 U.S. 372, 380 (2007). That is, even

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where the underlying claim contains a reasonableness test, where a party’s evidence is so clearly

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contradicted by the record as a whole that no reasonable jury could believe it, “a court should not

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adopt that version of the facts for purposes of ruling on a motion for summary judgment.” Id.

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III.

ANALYSIS

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A.

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Since the briefs have been filed, the Court of Appeals has ruled that the opt-in notice

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The Quiet Title and Declaratory Judgment Claims and Counterclaims

scheme under Chapter 116 is facially unconstitutional under the Due Process Clause of the

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Fourteenth Amendment. See generally Bourne Valley Ct. Trust v. Wells Fargo Bank, N.A., No.

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15-15233, 2016 WL 4254983 (9th Cir. 2016). That is enough to settle the declaratory judgment

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and quiet title claims and counterclaims in favor of Wells Fargo as a matter of law as to the

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HOA’s foreclosure. The HOA’s foreclosure did not extinguish the DOT against the Property,

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and Wells Fargo’s trustee’s deed based on its own foreclosure is valid absent some defect in that

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foreclosure. SFR has asked the Court to stay the case until a pending motion for en banc

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reconsideration of the Bourne Valley case is determined in the Court of Appeals. The Court will

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not stay the case based on the remote chance of en banc rehearing.
B.

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The Wrongful Foreclosure Counterclaim

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A common law wrongful foreclosure action only lies where there is a foreclosure in the

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absence of a default. Collins v. Union Fed. Sav. & Loan Ass’n, 662 P.2d 610, 623 (Nev. 1983).

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It is not disputed that Roybal was in default under the DOT, and the Court has ruled that the

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DOT survived the HOA’s foreclosure. Moreover, SFR cannot challenge the Chapter 107

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foreclosure under the statutes if such a challenge is not brought within 30 days of the date of sale

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or 45 days of the date of recordation of the trustee’s deed, depending on which version of NRS

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107.080(5)(b) was in effect at the time of the sale or recordation. Senate Bill 239, which enacted

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the change, became effective when Governor Sandoval signed it on June 1, 2015. See S.B. 239

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§ 6, 2015 Nev. Stat. 1609, 1620. It is undisputed that Wells Fargo’s foreclosure sale occurred on

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August 18, 2014 and that the trustee’s deed was recorded on August 27, 2014. (See Trustee’s

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Deed, ECF No. 99-12). SFR first brought its wrongful foreclosure counterclaim via the present

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Counterclaim on January 19, 2016. Wells Fargo is therefore entitled to summary judgment

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against the wrongful foreclosure counterclaim under either the common law or Chapter 107.

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C.

The Unjust Enrichment and Intentional Interference with Contractual
Relations Counterclaims

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Wells Fargo’s alternative unjust enrichment claim is moot due to its success on its quiet

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title claim, and SFR notes in response that it thereby abandons its counterclaims for unjust

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enrichment and intentional interference with contractual relations. The Court will briefly address

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the merits of those counterclaims for the record.

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An unjust enrichment claim lies where a plaintiff alleges that he bestowed a benefit upon

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a defendant that in equity belongs to the plaintiff. See Leasepartners Corp., Inc. v. Robert L.

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Brooks Trust, 942 P.2d 182, 187 (Nev.1997) (quoting Unionamerica v. McDonald, 626 P.2d

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1272, 1273 (Nev.1981) (quoting Dass v. Epplen, 424 P.2d 779, 780 (Colo.1967))); Restatement

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(First) of Restitution § 1 cmt. b (1937). SFR argues that it has expended funds to maintain the

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Property in the interim, which provided an indirect benefit to Wells Fargo. Wells Fargo does not

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appear to deny that any such expenditures may be recoverable under an unjust enrichment theory

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but argues that SFR has provided no evidence of having made any such expenditures.

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Specifically, when asked via discovery to produce any documents reflecting maintenance or

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improvements to the Property, SFR gave a nonresponsive answer consisting only of an objection.

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Although the failure to produce any such documents if they existed was unjustified, it does not

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strictly constitute an admission that there is no such evidence. The Court would grant summary

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judgment against this claim if SFR could produce no such evidence but would be inclined to

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deny summary judgment if it could.

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Next, because Wells Fargo properly foreclosed under the DOT, its foreclosure-related

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activities cannot have constituted improper interference with SFR’s contractual relations with

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any lessee, even assuming a lease existed, and the Court would be inclined to grant summary

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judgment against this claim as a matter of law had SFR not abandoned it.

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CONCLUSION

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IT IS HEREBY ORDERED that the Motions for Summary Judgment (ECF Nos. 99, 100)
are GRANTED, and the Motion for Summary Judgment (ECF No. 101) is DENIED.

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IT IS FURTHER ORDERED that the Motion to Stay (ECF No. 111) is DENIED.

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IT IS FURTHER ORDERED that Plaintiff shall SUBMIT a proposed form of judgment

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within fourteen (14) days.
IT IS SO ORDERED.
Dated this This 13th October, 2016. 2016.
DATED: 6th day of day of October,

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_____________________________________
ROBERT C. JONES
United States District Judge

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