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

Filing 67

ORDERED that the Motion for Summary Judgment (ECF No. 58 ) is DENIED without prejudice. FURTHER ORDERED that JPMorgan Chase Bank, N.A. shall have twenty-eight (28) days to conduct jurisdictional discovery and make a further stateme nt of removal alleging the citizenships of the other parties, i.e., the identities and citizenships of Dansker's successor(s)-in-interest and all members of LN Management, LLC, etc. Signed by Judge Robert C. Jones on 4/13/2017. (Copies have been distributed pursuant to the NEF - DRM)

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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 for summary judgment.

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I.

FACTS AND PROCEDURAL HISTORY

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On or about March 15, 2013, Plaintiff LN Management, LLC Series 5664 Divot (“LN”)

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purchased real property located at 5664 Divot Place, Las Vegas, Nevada 89130 (“the Property”)

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at an HOA foreclosure sale. (Compl. ¶ 6, ECF No. 1-3). Plaintiff sued Defendants Kit Dansker

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and JPMorgan Chase Bank, N.A. (“Chase”) in state court to quiet title to the property and for a

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declaration that Plaintiff owns the Property free and clear of any purported interests of

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Defendants.

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Chase removed and moved to dismiss. LN moved to remand and notified the Court that

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Dansker, the previous homeowner, had passed away approximately four years earlier in October

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2009. The Court denied both the motion to remand and a motion to substitute Dansker’s estate

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(“the Estate”) as a party, based on fraudulent joinder. The Court granted the motion to dismiss

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based on its interpretation of the state statute governing lien priority, Nevada Revised Statutes

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section 116.3116. LN appealed. After the Nevada Supreme Court resolved the statutory

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

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

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enrichment.
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 (and a

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motion to reconsider), agreeing with movants on the law but finding that in this case there

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remained a genuine issue of material fact as to whether FHFA or Fannie Mae owned the note and

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deed of trust at the time of sale.

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II.

DISCUSSION

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Chase has asked the Court to grant it offensive summary judgment on its counterclaims

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and defensive summary judgment against LN’s claims based on the Court of Appeals’ decision

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invalidating the Chapter 116 opt-in notice scheme as facially unconstitutional under the Due

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Process Clause of the Fourteenth Amendment. See Bourne Valley Court Tr. v. Wells Fargo Bank,

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N.A., 832 F.3d 1154 (9th Cir. 2016). LN notes that the Nevada Supreme Court recently ruled

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contrary to Bourne Valley. But state court rulings on federal issues are only potentially

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persuasive authority. The Court of Appeals’ rulings are binding on this Court.
LN also argues, however, that a recent ruling of the Court of Appeals undermines this

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Court’s previous ruling that Dansker’s joinder was fraudulent, and that the Court should

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therefore reconsider remand. See Weeping Hollow Ave. Tr. v. Spencer, 831 F.3d 1110, 1113–14

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(9th Cir. 2016) (holding that the possibility of a foreclosed homeowner later filing an equitable

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action against the purchaser to unwind the sale made it reasonable for the purchaser to join the

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homeowner in a quiet title action). The Court of Appeals appears to hold that the possibility of

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the homeowner validly challenging the foreclosure is enough to overcome any issues of bad faith

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and avoid a finding of fraudulent joinder in these circumstances. In this case, as in others like it,

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it appears the homeowner would have a non-frivolous claim.
The Court will not enter any judgment until it is satisfied of its jurisdiction, but the Court

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will not remand until Defendants have had a fair opportunity to discover the citizenships of the

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parties and failed to show diversity. It is possible that there is complete diversity between LN

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and Dansker’s successor(s)-in-interest. The parties shall engage in jurisdictional discovery as to

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the identities and citizenships of: (1) Dansker’s successor(s) in interest; and (2) LN’s members

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and citizenships (and the members and citizenships of any business entities who are members of

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LN, etc.).

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CONCLUSION

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IT IS HEREBY ORDERED that the Motion for Summary Judgment (ECF No. 58) is
DENIED without prejudice.

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IT IS FURTHER ORDERED that JPMorgan Chase Bank, N.A. shall have twenty-eight

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(28) days to conduct jurisdictional discovery and make a further statement of removal alleging

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the citizenships of the other parties, i.e., the identities and citizenships of Dansker’s successor(s)-

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in-interest and all members of LN Management, LLC, etc.

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IT IS SO ORDERED.
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DATED: 24th day of of April, 2017.
Dated thisThis 13 dayMarch, 2017.

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_____________________________________
ROBERT C. JONES
United States District Judge

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