Augusta Investment Management, LLC v. Grunstad et al

Filing 18

ORDER Denying 7 Motion to Remand to State Court. Signed by Chief Judge Gloria M. Navarro on 5/13/15. (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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AUGUSTA INVESTMENT
MANAGEMENT, LLC,

)
)
)
Plaintiff,
)
vs.
)
)
DOMONIC GRUNSTAD; KYLE
)
KURIATNYK; BANK OF AMERICA, N.A., )
successor by merger to BAC HOME LOANS )
SERVICING, LP fka COUNTRYWIDE
)
HOME LOANS SERVICING, LP;
)
ASSESSMENT MANAGEMENT
)
SERVICES; DOES 1 through 20, inclusive; )
and ROE CORPORATIONS 1 through 20,
)
inclusive,
)
)
Defendants.
)
)

Case No.: 2:15-cv-00125-GMN-NJK
ORDER

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Pending before the Court is the Motion to Remand (ECF No. 7) filed by Plaintiff

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Augusta Investment Management, LLC (“Plaintiff”). Defendant Bank of America, N.A.

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(“BOA”) filed a Response (ECF No. 10).

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I.

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BACKGROUND
This action concerns the impact of a foreclosure sale on certain real property located at

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9164 Conquest Court, Las Vegas, NV 89149 (the “Property”) under a lien for homeowner’s

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association (“HOA”) assessments. See generally (Compl., ECF No. 1-2). Plaintiff purchased

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the Property on November 6, 2014 pursuant to the foreclosure of the HOA lien and contends

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that the sale extinguished BOA’s prior deed of trust on the property under Nevada state law.

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(Id. at ¶¶ 1, 18–34); see also SFR Investments Pool 1 v. U.S. Bank, 130 Nev. Adv. Op. 75, at *1

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(2014) (holding that an HOA’s foreclosure of its super-priority lien under § 116.3116

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extinguishes a first deed of trust). Plaintiff initiated the present action by filing its Complaint in

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state court on December 15, 2014, seeking to quiet title against both BOA and the former

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owners of the Property, Defendants Domonic Grunstad and Kyle Kuriatnyk.1 (Id. at ¶¶ 37–57).

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BOA removed the case to this Court on January 22, 2015 (ECF No. 1). Plaintiff subsequently

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filed the current pending Motion to Remand, asserting that this Court lacks subject matter

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jurisdiction over this action.

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II.

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LEGAL STANDARD
Federal courts are courts of limited jurisdiction, possessing only those powers granted by

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the Constitution and by statute. See United States v. Marks, 530 F.3d 799, 810 (9th Cir. 2008)

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(citation omitted). District courts have jurisdiction in two instances. First, district courts have

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subject matter jurisdiction over civil actions that arise under federal law. 28 U.S.C. § 1331.

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Second, district courts have subject matter jurisdiction over civil actions where no plaintiff is a

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citizen of the same state as a defendant and the amount in controversy exceeds $75,000.

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28 U.S.C. § 1332(a).

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III.

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DISCUSSION
BOA asserts that this Court has jurisdiction over the present action pursuant to both

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diversity jurisdiction under 28 U.S.C. § 1332(a) and federal question jurisdiction under

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28 U.S.C. § 1331. (Not. of Removal at ¶¶ 3–4, ECF No. 1). For the reasons discussed below,

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the Court finds that it holds diversity jurisdiction over this case. Therefore, it is unnecessarily

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to determine whether this action arises under federal law.

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In its Notice of Removal, BOA asserts that the amount in controversy is met and that

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complete diversity exists among the parties. (Id.). Specifically, BOA asserts that the amount at

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issue is $221,523.00, that it is a citizen of North Carolina, and that Plaintiff is a citizen of

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As of the date of this Order, Defendants Grunstad and Kuriatnyk have not appeared in the litigation, and
Defendant Grunstad has not been served.

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Nevada. (Id. at ¶ 3). BOA further asserts that the citizenship of Defendants Grunstad and

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Kuriatnyk—which appears to be Nevada—may be ignored because they claim no interest in the

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Property and have been fraudulently joined. (Id.). In their Motion to Remand, Plaintiff does not

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dispute that the amount in controversy is sufficient for diversity jurisdiction. See (Mot. to

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Remand, ECF No. 7). Instead, Plaintiff argues that Defendants Grunstad and Kuriatnyk have

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not been fraudulently joined, and therefore, their presence in this lawsuit destroys complete

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diversity. (Mot. to Remand 2:13–6:21, ECF No. 7).

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An exception to complete diversity exists where a non-diverse defendant has been
fraudulently joined. Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001).

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“Joinder of a non-diverse defendant is deemed fraudulent, and the defendant’s presence in the

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lawsuit is ignored for purposes of determining diversity, ‘[i]f the plaintiff fails to state a cause

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of action against a resident defendant, and the failure is obvious according to the settled rules of

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the state.’” Id.

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Here, Defendants Grunstad and Kuriatnyk have been fraudulently joined. Plaintiff

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obtained title to the Property pursuant to a foreclosure sale under Chapter 116 of the Nevada

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Revised Statute following Defendants Grunstad’s and Kuriatnyk’s failure to pay HOA

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assessments. Nevada Revised Statute § 116.31166(3) states that the “sale of a unit pursuant to

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NRS §§ 116.31162, 116.31163 and 116.31164 vests in the purchaser the title of the unit’s

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owner without equity or right of redemption.” Plaintiff’s Complaint affirmatively states that it

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properly complied with all the requirements of Nevada Revised Statute § 116 and that the

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foreclosure was lawful and proper. (Compl. at ¶¶ 17–34, ECF No. 1-2). The Complaint also

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fails to allege that Defendants Grunstad and Kuriatnyk are asserting, or have even threatened to

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assert, any interest or rights in the property. (Id.). Finally, the statutory period of time for

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Defendants Grunstad and Kuriatnyk to challenge the foreclosure, which could be 90 or 120

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days depending on the circumstances, has expired. Accordingly, because Plaintiff’s foreclosure

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pursuant to NRS § 116 extinguished any rights and interests Defendants Grunstad and

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Kuriatnyk may have had in the Property, and Defendants Grunstad and Kuriatnyk are not

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asserting any adverse interest to the Property, Plaintiff has no claim for quiet title against them.

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See Kemberling v. Ocwen Loan Servicing, LLC, No. 2:09-CV-00567-RCJ-LRL, 2009 WL

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5039495, at *2 (D. Nev. Dec. 15, 2009) (“A quiet title claim requires a plaintiff to allege that

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the defendant is unlawfully asserting an adverse claim to title to real property.”) (citing Union

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Mill v. Mining Co. v. Warren, 82 F. 519, 520 (C.C.D. Nev. 1897). Therefore, the Court finds

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that Defendants Grunstad and Kuriatnyk are fraudulently joined and their presence will be

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ignored for the purpose of determining diversity jurisdiction in this matter. See LN Mgmt. LLC

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Series 5664 Divot v. Dansker, No. 2:13-CV-1420-RCJ-GWF, 2013 WL 6174679, at *4 (D.

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Nev. Nov. 19, 2013) (finding that a prior homeowner whose property was sold at an HOA

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foreclosure was fraudulently joined to a quiet title action when the prior homeowner was not

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asserting any claim to the title); Weeping Hollow Ave. Trust v. Spencer, No. 2:13-cv-544-JCM-

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VCF, 2013 WL 2296313, at *2–3 (D. Nev. May 24, 2013) (same).

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Because the amount in controversy exceeds $75,000 and diversity exists among all

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parties who have not been fraudulently joined, this Court has jurisdiction over this action. See

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28 U.S.C. § 1332(a).

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IV.

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CONCLUSION
IT IS HEREBY ORDERED that Plaintiff’s Motion to Remand (ECF No. 7) is

DENIED.
DATED this 13th day of May, 2015.

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___________________________________
Gloria M. Navarro, Chief Judge
United States District Judge

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