U.S. Bank, N.A. v. Ascente Homeowners Association et al

Filing 20

ORDER Denying Defendant Ascente Homeowners' Association's 10 Motion to Dismiss Plaintiff's Complaint. Signed by Judge Jennifer A. Dorsey on 12/15/2015. (Copies have been distributed pursuant to the NEF - NEV)

1

UNITED STATES DISTRICT COURT

2

DISTRICT OF NEVADA

3
4

U.S. Bank, N.A., as Trustee for the Certificateholders
of the LXS 2006-12N Trust Fund,

5

Plaintiff

6

v.

7

Ascente Homeowners Association; Las Vegas
Development Group, LLC; Does 1 through X; and
Roe Corporations I through X,

8

2:15-cv-00302-JAD-VCF

9

Order Denying Motion to Dismiss
Claims Against Ascente Homeowners
Association
[ECF 10]

Defendants

10
11

Plaintiff U.S. Bank brings this action to avoid the effects of the Nevada Supreme Court’s

12

holding in SFR Investments Pool 1, LLC v. U.S. Bank1 that homeowner associations’ nonjudicial

13

foreclosures on superpriority liens under NRS 116.3116 extinguish lenders’ first trust deeds. U.S.

14

Bank claims it held the note on a home in the Ascente neighborhood of Henderson, Nevada, when

15

the homeowner defaulted on her Ascente Homeowners’ Association (“HOA”) assessments. The

16

HOA then sold the home to Las Vegas Development Group, LLC (“LVDG”) in a nonjudicial

17

foreclosure conducted under NRS Chapter 116 for a small fraction of the unpaid loan amount.2 The

18

Bank sues LVDG for quiet title, unjust enrichment, injunctive relief, and a declaration that the sale to

19

LVDG did not extinguish the Bank’s interest despite the SFR holding, but it also names the HOA as

20

a defendant.3
The HOA asks to be dismissed from this suit.4 It argues it is an improper party to the Bank’s

21
22

quiet-title claim under Nevada law and, alternatively, that the claim against it must be dismissed

23

because NRS 38.310 requires a court to dismiss any claim relating to the interpretation, application,

24
1

SFR Inv. Pool 1 v. U.S. Bank, 334 P.3d 408, 419 (Nev. 2014).

26

2

ECF 1.

27

3

Id.

28

4

ECF 10.

25

Page 1 of 4

1

or enforcement of CC&Rs if the plaintiff has not first mediated its claim before the Nevada Real

2

Estate Division. I find that the HOA is a necessary party based on the relief the Bank prays for and

3

that the HOA’s NRS 38.310 argument ignores an express exception in the statute. I thus deny the

4

motion in its entirety.

5

Discussion

6

A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the

7

legal sufficiency of a complaint.5 A complaint should be dismissed under this rule only when it lacks

8

“a cognizable legal theory or sufficient facts to support a cognizable legal theory.”6 The Bank pleads

9

three enumerated causes of action in its complaint: (1) “Declaratory Relief/Quiet Title,” (2) “Unjust

10

Enrichment Against LVDG,” and (3) “Injunctive Relief Against LVDG.”7 Because only the first

11

cause of action is not titularly limited to LVDG, it is the only one that might contain a claim against

12

the HOA, and it is the only one I scrutinize under FRCP 12(b)(6).

13

A.

The HOA is a Necessary Party.
“NRS 40.010 governs Nevada quiet title actions and provides: ‘An action may be brought by

14
15

any person against another who claims an estate or interest in real property, adverse to the person

16

bringing the action, for the purpose of determining such adverse claim.’”8 Although “[a] plea to

17

quiet title does not require any particular elements,”9 each party must have or assert an interest in the

18

property. The Bank does not allege that the HOA has or claims, and the HOA by its motion

19

renounces,10 any present interest in this property. Indeed, the HOA’s interest was the lien it held

20

before—and satisfied with the proceeds of—the foreclosure sale.

21
22

5

Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001).

23

6

Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008).

24

7

ECF 1.

25

8

26

Chapman v. Deutsche Bank Nat'l Trust Co., 302 P.3d 1103, 1106 (Nev. 2013) (quoting Nev. Rev.
Stat. § 40.010).

27

9

28

10

Id.
ECF 10 at 2 (“the Association currently claims no interest in the Property . . .”).
Page 2 of 4

1

But the Bank is challenging the validity of that sale, and the remedies it seeks in this action

2

include declarations that the sale was invalid, that the sale did not extinguish the Bank’s interest, and

3

“that the super-priority portion of the HOA’s lien [was] eliminated as a result of [the Bank’s] tender

4

of an amount equal to or greater than the super-priority amount.”11 With some limitations not

5

applicable here, Rule 19(a) of the Federal Rules of Civil Procedure requires a party to be joined in a

6

suit if it “claims an interest relating to the subject of the action and is so situated that the disposition

7

of the action in [its] absence may (i) as a practical matter impair or impede [its] ability to protect that

8

interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring

9

double, multiple, or otherwise inconsistent obligations by reason of [its] claimed interest.”12 The

10

“complete relief” factor considers whether the existing parties can obtain “consummate rather than

11

partial or hollow relief” and whether there is a real possibility of “multiple lawsuits on the same

12

cause of action.”13

13

Based on the allegations and the type of relief the Bank prays for, it appears at this nascent

14

stage of this litigation that the HOA is a necessary party. The disposition of this action in the HOA’s

15

absence may impair or impede its ability to protect its interests. And if the Bank succeeds in

16

invalidating the sale without the HOA being a party to this suit, separate litigation to further settle

17

the priority of the parties’ respective liens and rights may be necessary. Thus, at this point, the HOA

18

appears to be a necessary party, at least nominally, so the motion to dismiss is denied.

19

B.

20

The Bank’s Claim Against the HOA Is Not Barred by NRS 38.310.
NRS 38.310 prevents the commencement of any “civil action based upon a claim relating to

21

(a) The interpretation, application or enforcement of any covenants, conditions or restrictions

22

applicable to residential property or any bylaws, rules or regulations adopted by an association; or (b)

23

The procedures used for increasing, decreasing or imposing additional assessments upon residential

24
25
26

11

ECF 1 at 11.

27

12

Fed. R. Civ. P. 19(a).

28

13

Northrop Corp. v. McDonnell Douglas Corp., 705 F.2d 1030, 1043 (9th Cir. 1983).
Page 3 of 4

1

property, . . . unless the action has been submitted to mediation . . . .”14 As the Nevada Supreme

2

Court explained in Hamm v. Arrowcreek Homeowners’ Association, “If a party institutes a civil

3

action in violation of NRS 38.310(1), the district court must dismiss it” under NRS 38.310(2).15

4

But the statute expressly exempts from its preclusive reach “an action relating to the title to

5

residential property.”16 So, assuming this Nevada statute could dictate federal-court jurisdiction, it

6

still would not bar the Bank’s quiet title/declaratory relief claim against the HOA because this claim

7

squarely relates to the title of residential property.

8

Conclusion

9
10

Accordingly, IT IS HEREBY ORDERED that Defendant Ascente Homeowners’
Association’s Motion to Dismiss Plaintiff’s Complaint [ECF 10] is DENIED.

11

Dated this 15th day of December, 2015

12
_________________________________
________________________
_
_
_
_
Jennifer A. Dorsey
ifer A. Dorsey
or
or
United States District Judge
ed
Judge
d

13
14
15
16
17
18
19
20
21
22
23
24

14

25

15

26

Nev. Rev. Stat. § 38.310.

Hamm v. Arrowcreek Homeowners’ Ass’n, 183 P.3d 895, 900 (Nev. 2008); McKnight Family,
LLP v. Adept Mgmt., 310 P.3d 555, 558 (Nev. 2013) (the statute’s language “mandates the court to
dismiss any civil action initiation in violation of NRS 38.310(1)”).

27
16

28

Nev. Rev. Stat. § 38.300(3) (“‘Civil action’ . . . does not include . . . an action relating to the title
to residential property.”).
Page 4 of 4