LN Management, LLC Series 5664 Divot v. Dansker et al

Filing 55

ORDER Denying 54 Motion to Reconsider Order. Signed by Judge Robert C. Jones on 11/12/15. (Copies have been distributed pursuant to the NEF - TR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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______________________________________
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LN MANAGEMENT, LLC SERIES 5664
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DIVOT,
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Plaintiff,
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vs.
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KIT DANSKER et al.,
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Defendants.
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2:13-cv-01420-RCJ-GWF
ORDER

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This case arises out of a homeowner’s association foreclosure sale. Pending before the

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Court is a Motion to Reconsider (ECF No. 54). For the reasons given herein, the Court denies

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the motion.

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I.

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FACTS AND PROCEDURAL HISTORY
On or about March 15, 2013, Plaintiff LN Management, LLC Series 5664 Divot (“LN

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Management”) purchased real property located at 5664 Divot Place, Las Vegas, Nevada 89130

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(the “Property”) at an HOA foreclosure sale. (Compl. ¶ 6, ECF No. 1-3). Plaintiff sued

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Defendants Kit Dansker and JPMorgan Chase Bank, N.A. (“Chase”) in state court to quiet title to

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the property and for a declaration that Plaintiff owns the Property free and clear of any purported

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interests of Defendants.

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Chase removed and moved to dismiss. LN Management moved to remand. Dansker, the

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previous homeowner, passed away. The Court denied both the motion to remand and a motion

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to substitute Dansker’s estate as a party, based on fraudulent joinder. The Court granted the

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motion to dismiss based on its interpretation of state statutes governing lien priorities. LN

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Management appealed. After the Nevada Supreme Court resolved the statutory question

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differently than this Court had, the parties stipulated to dismiss the appeal and conduct further

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proceedings in this Court. Chase answered and filed a Counterclaim for unjust enrichment.

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The parties stipulated to permit the Federal National Mortgage Association (“Fannie

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Mae”) and the Federal Housing Finance Authority (“FHFA”), as conservator for Fannie Mae, to

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intervene. Fannie Mae answered and filed a Counterclaim for quiet title and a declaration that 12

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U.S.C. § 4617(j)(3) preempts state law such that the HOA foreclosure sale under state law cannot

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have extinguished the first mortgage held by Fannie Mae at the time of the sale. Fannie Mae

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joined Los Prados Community Association (“Los Prados”) as a Counterdefendant. FHFA

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separately answered and filed an essentially identical Counterclaim. FHFA and Fannie Mae

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voluntarily dismissed their Counterclaims against Los Prados, without prejudice. FHFA and

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Fannie Mae jointly moved for defensive summary judgment against the Complaint and for

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offensive summary judgment on their Counterclaims. The Court denied the motion. FHFA and

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Fannie Mae have asked the Court to reconsider.

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II.

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LEGAL STANDARDS
Motions to reconsider made too late to be considered as motions to alter or amend a

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judgment, i.e., more than 28 days after the challenged order is entered, Fed. R. Civ. P. 59(e), are

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treated as motions for relief from judgment under Rule 60(b), Am. Ironworks & Erectors, Inc. v.

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N. Am. Constr. Corp., 248 F.3d 892, 898–99 (9th Cir. 2001). Because FHFA and Fannie Mae

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filed the present motion to reconsider 29 days after the Court entered its order denying summary

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judgment, Rule 60(b) applies. 1

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III.

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ANALYSIS
The Court previously noted that it agreed with FHFA and Fannie Mae that 12 U.S.C.

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§ 4617(j)(3) prevented the sale of any property in which the FHFA, as conservator for Fannie

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Mae, has an interest without consent. However, movants’ own evidence created a genuine issue

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of material fact as to whether FHFA or Fannie Mae owned the note and deed of trust at the time

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of sale. FHFA and Fannie Mae adduced evidence that Fannie Mae owned the “mortgage loan”

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since about April 1, 2003, and that Chase is the current servicer. But that would not be enough

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to entitle them to a directed verdict because in Nevada, a payee, endorsee, or assignee of a

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promissory note who is not also the beneficiary of an attendant deed of trust cannot foreclose but

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may only sue on the note, and such a person therefore loses no legal rights via extinguishment of

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the deed of trust. See Edelstein v. Bank of N.Y. Mellon, 286 P.3d 249, 254 (Nev. 2012).

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Although FHFA’s Counterclaim alleges that Fannie Mae is the beneficiary of the deed of trust,

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(see FHFA Countercl. ¶¶ 8-9, ECF No. 40), movants adduced no evidence of that, and both

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Fannie Mae’s and Chase’s Counterclaims affirmatively allege that Chase is the beneficiary of the

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deed of trust, (see Fannie Mae Countercl. ¶ 3, ECF No. 36; Chase Countercl. ¶ 3, ECF No. 32).

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Also, movants themselves asked the Court to take judicial notice of, inter alia, a May 1, 2013

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assignment of the “Deed of Trust with all interest secured thereby” from the FDIC to Chase,

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indicating that Chase is not only the servicer of the loan but the beneficiary of both the note and

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the deed of trust. (See Assignment, ECF No. 51-1, at 23; Deed of Trust 1, ECF No. 51-1, at 2).

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1 The twenty-eighth day was a Tuesday and not a holiday. See Fed. R. Civ. P. 6(a).
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In their motion to reconsider, FHFA and Fannie Mae argue that the Court misinterpreted

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Nevada law in its previous order when it denied summary judgment to them based on a genuine

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issue of material fact as to whether FHFA or Fannie Mae owned the deed of trust at the time of

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the foreclosure sale. Movants argue that under Nevada law, Fannie Mae obtained the deed of

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trust as a matter of law when it acquired the loan. The Court has never denied this point of law.

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Indeed, this Court had ruled based on California and Arizona law and the Restatement (Third) of

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Property that mortgages and deeds of trust follow the promissory notes they secure since long

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before the Nevada Supreme Court confirmed the point in the 2015 case movants cite. See, e.g.,

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Berhe v. Fannie Mae, No. 2:13-cv-552, 2013 WL 5234301, at *1 (D. Nev. Sept. 16, 2013)

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(Jones, J.); Gomez v. Countrywide Bank, FSB, No. 2:09-cv-1489, 2009 WL 3617650, at *3 (D.

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Nev. Oct. 26, 2009) (Jones, J.). Movants point out, as the Court previously acknowledged, that

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they adduced evidence that Fannie Mae obtained the loan in 2003. But the Nevada Supreme

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Court has ruled that deeds of trust may be split from the beneficial interests in the promissory

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notes they secure, Edelstein, 286 P.3d at 257–60, and Fannie Mae adduced no evidence as to

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how it obtained the loan, only a declaration to the effect that it obtained the loan in 2003 and an

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internal Fannie Mae printout in support. Nor has it adduced such evidence with its present

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motion. Fannie Mae’s evidence was consistent with either a loan that was or was not split from

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the deed of trust and tended only to show that Fannie Mae owned the beneficial interest in the

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loan, not that it also owned the beneficial interest in the deed of trust.

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Furthermore, the evidence showed a May 2013 assignment of the note and deed of trust

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from the FDIC to Chase on May 1, 2013 soon after the March 2013 foreclosure sale. Without

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evidence that the FDIC obtained its interest in the loan after the foreclosure sale in March 2013,

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it is a fair inference that it held this interest prior to March 2013 and that Fannie Mae therefore

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had already transferred its interest to the FDIC before the foreclosure sale. Fannie Mae adduced

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no evidence tending to show that the FDIC obtained its interest only after the foreclosure sale.

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Fannie Mae argues that the May 1, 2013 assignment from the FDIC (as receiver for

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Washington Mutual Bank) to Chase “had no bearing on, and did not disturb, Fannie Mae’s

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ownership of the note and Deed of Trust” but only reflected the transfer of servicing rights. But

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that is not what the evidence tends to show. The assignment very clearly purports to transfer not

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servicing rights but “the described Deed of Trust with all interest secured thereby, all liens, and

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any rights due or to become due thereon.” (See Assignment, ECF No. 51-1, at 23). It is of course

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possible that Fannie Mae is right that the FDIC had no interest in the loan, that the May 1, 2013

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assignment was intended to be an assignment of servicing rights only, and that whatever official

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executed and recorded the May 1, 2013 assignment purporting to transfer the note and deed of

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trust from the FDIC to Chase didn’t have the slightest idea of the legal implications of the

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instrument he was creating but recklessly used a form assignment for a purpose for which it was

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not intended. But that mere possibility does not eliminate the genuine issue of material fact

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created by the facial purpose and effect of the assignment. Nor does it eliminate the genuine

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issue of fact as to whether Fannie Mae in 2003 obtained the loan in such a way as to have also

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obtained an interest in the deed of trust, particularly in an era where contractual splits between

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notes and deeds of trust were commonplace. Fannie Mae may very well win at trial, but it was

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not and is not entitled to summary judgment based on the evidence it adduced.

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Rule 60(b)(6)—the subsection under which the present motion is properly considered—

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does not exist to permit parties to present arguments or evidence they failed to present earlier.

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United States v. Alpine Land & Reservoir Co., 984 F.2d 1047, 1049 (9th Cir. 1993) (“Rule

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60(b)(6) has been used sparingly as an equitable remedy to prevent manifest injustice. The rule

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is to be utilized only where extraordinary circumstances prevented a party from taking timely

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action to prevent or correct an erroneous judgment.”). There are no extraordinary circumstances

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alleged to have prevented movants from asking the Court to reconsider under Rule 59(e) within

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28 days to even have prevented movants from presenting the argumentation and evidence they

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now proffer along with their original motion for summary judgment. Even if a timely Rule 59(e)

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motion had been made, for the reasons given, supra, the Court would not have granted it.
CONCLUSION

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IT IS HEREBY ORDERED that the Motion to Reconsider (ECF No. 54) is DENIED.

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IT IS SO ORDERED.

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Dated this 12th day October, 2015.
Dated this 28th day of of November, 2015.

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_____________________________________
ROBERT C. JONES
United States District Judge

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