U.S. Bank v. Diamond Creek Community Association et al
Filing
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ORDER denying 88 Motion to Dismiss; ORDER denying 92 Motion for Summary Judgment; ORDER granting 106 Motion for Summary Judgment; Signed by Chief Judge Gloria M. Navarro on 5/22/2018. (Copies have been distributed pursuant to the NEF - JM)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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U.S. BANK AS TRUSTEE FOR GSAA
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HOME EQUITY TRUST 2006-9, ASSET)
BACKED CERTIFICATES, SERIES 2006-9, )
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Plaintiff,
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vs.
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DIAMOND CREEK HOMEOWNERS’
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ASSOCIATION; UNDERWOOD
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PARTNERS LLC; NV EAGLES LLC; DOE )
INDIVIDUALS I-X, inclusive, and ROE
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CORPORATIONS I-X, inclusive,
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Defendants.
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Case No.: 2:15-cv-01177-GMN-NJK
ORDER
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Pending before the Court is the Motion to Dismiss, (ECF No. 88) filed by Defendant
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Diamond Creek Community Association (“HOA”). Plaintiff U.S. Bank (“Plaintiff’) filed a
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Response, (ECF No. 90), and HOA filed a Reply, (ECF No. 91).
Also pending before the Court is the Motion for Summary Judgment, (ECF No. 92),
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filed by Defendant NV Eagles, LLC (“NV Eagles”). Plaintiff filed a Response, (ECF No. 94),
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and NV Eagles filed a Reply, (ECF No. 96).
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Also pending before the Court is the Motion for Summary Judgment, (ECF No. 106),
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filed by Plaintiff. HOA and NV Eagles filed Responses, (ECF Nos. 107, 108), and Plaintiff
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filed a Reply, (ECF No. 109). For the reasons discussed below, the Court GRANTS Plaintiff’s
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Motion and DENIES Defendants’ Motions.
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I.
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BACKGROUND
Plaintiff filed its Complaint on June 22, 2015, and its Amended Complaint, (ECF No.
51), asserting claims involving the non-judicial foreclosure on real property located at 9426
Cormorant Lake Way, Las Vegas, Nevada 89178 (the “Property”). (Am. Compl. ¶ 9). On
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February 21, 2006, Garrett C. Pattiani purchased the Property by way of a loan in the amount of
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$284,360.00 secured by a Deed of Trust (“DOT”) recorded February 1, 2006. (Id. ¶ 14).
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On August 9, 2010, HOA, through its agent, Alessi & Koenig, LLC, recorded a notice of
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delinquent assessment lien. (Id. ¶ 21). On November 5, 2010, HOA recorded a notice of
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default and election to sell to satisfy the delinquent assessment lien. (Id. ¶ 22). After recording
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three notices of trustee’s sale, on May 3, 2013, Underwood Partners, LLC, (“Underwood”)
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purchased the Property at the foreclosure sale pursuant to NRS § 116.1113. (Id. ¶ 36).
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Underwood subsequently transferred its interest in the Property to NV Eagles. (Id. ¶ 38).
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Plaintiff asserts the following causes of action against various parties involved in the
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foreclosure and subsequent sales of the Property: (1) quiet title with a requested remedy of
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declaratory judgment; (2) breach of Nevada Revised Statute (“NRS”) 116.1113; (3) injunctive
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relief; and (4) violation of procedural due process. (Id.).
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II.
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LEGAL STANDARD
The Federal Rules of Civil Procedure provide for summary adjudication when the
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pleadings, depositions, answers to interrogatories, and admissions on file, together with the
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affidavits, if any, show that “there is no genuine dispute as to any material fact and the movant
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is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Material facts are those that
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may affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
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A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to
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return a verdict for the nonmoving party. Id. “Summary judgment is inappropriate if
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reasonable jurors, drawing all inferences in favor of the nonmoving party, could return a verdict
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in the nonmoving party’s favor.” Diaz v. Eagle Produce Ltd. P’ship, 521 F.3d 1201, 1207 (9th
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Cir. 2008) (citing United States v. Shumway, 199 F.3d 1093, 1103–04 (9th Cir. 1999)). A
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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 applies a burden-shifting analysis. “When
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the party moving for summary judgment would bear the burden of proof at trial, it must come
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forward with evidence which would entitle it to a directed verdict if the evidence went
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uncontroverted at trial. In such a case, the moving party has the initial burden of establishing
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the absence of a genuine issue of fact on each issue material to its case.” C.A.R. Transp.
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Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted). In
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contrast, when the nonmoving party bears the burden of proving the claim or defense, the
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moving party can meet its burden in two ways: (1) by presenting evidence to negate an
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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
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on which that party will bear the burden of proof at trial. Celotex Corp., 477 U.S. at 323–24. If
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the moving party fails to meet its initial burden, summary judgment must be denied and the
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court need not consider the nonmoving party’s evidence. Adickes v. S.H. Kress & Co., 398 U.S.
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144, 159–60 (1970).
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If the moving party satisfies its initial burden, the burden then shifts to the opposing
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party to establish that a genuine issue of material fact exists. 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 that are unsupported by factual
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data. Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go
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beyond the assertions and allegations of the pleadings and set forth specific facts by producing
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competent evidence that shows a genuine issue for trial. Celotex Corp., 477 U.S. at 324.
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At summary judgment, a court’s function is not to weigh the evidence and determine the
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truth but to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 249. The
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evidence of the nonmovant is “to be believed, and all justifiable inferences are to be drawn in
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his favor.” Id. at 255. But if the evidence of the nonmoving party is merely colorable or is not
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significantly probative, summary judgment may be granted. Id. at 249–50.
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II.
DISCUSSION
Plaintiff asserts claims against Defendants for quiet title, violation of NRS § 116.1113,
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injunctive relief, and violation of procedural due process. The Court first considers the impact
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of the Ninth Circuit’s ruling in Bourne Valley Court Trust v. Wells Fargo Bank, NA, 832 F.3d
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1154 (9th Cir. 2016), cert. denied, No. 16-1208, 2017 WL 1300223 (U.S. June 26, 2017),
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before turning to Plaintiff’s individual claims.
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A.
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In Bourne Valley, the Ninth Circuit held that NRS § 116.3116’s “‘opt-in’ notice scheme,
The Scope and Effect of Bourne Valley
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which required a homeowners’ association to alert a mortgage lender that it intended to
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foreclose only if the lender had affirmatively requested notice, facially violated the lender’s
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constitutional due process rights under the Fourteenth Amendment to the Federal Constitution.”
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Bourne Valley, 832 F.3d at 1156. Specifically, the Court of Appeals found that by enacting the
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statute, the legislature acted to adversely affect the property interests of mortgage lenders, and
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was thus required to provide “notice reasonably calculated, under all circumstances, to apprise
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interested parties of the pendency of the action and afford them an opportunity to present their
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objections.” Id. at 1159. The statute’s opt-in notice provisions therefore violated the Fourteenth
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Amendment’s Due Process Clause because they impermissibly “shifted the burden of ensuring
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adequate notice from the foreclosing homeowners’ association to a mortgage lender.” Id.
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The necessary implication of the Ninth Circuit’s opinion in Bourne Valley is that the
petitioner succeeded in showing that no set of circumstances exists under which the opt-in
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notice provisions of NRS § 116.3116 would pass constitutional muster. See, e.g., United States
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v. Salerno, 481 U.S. 739, 745 (1987) (“A facial challenge to a legislative Act is, of course, the
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most difficult challenge to mount successfully, since the challenger must establish that no set of
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circumstances exists under which the Act would be valid.”); William Jefferson & Co. v. Bd. of
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Assessment & Appeals No. 3 ex rel. Orange Cty., 695 F.3d 960, 963 (9th Cir. 2012) (applying
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Salerno to facial procedural due process challenge under the Fourteenth Amendment). The fact
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that a statute “might operate unconstitutionally under some conceivable set of circumstances is
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insufficient to render it wholly invalid.” Salerno, 481 U.S. at 745. To put it slightly differently,
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if there were any conceivable set of circumstances where the application of a statute would not
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violate the constitution, then a facial challenge to the statute would necessarily fail. See, e.g.,
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United States v. Inzunza, 638 F.3d 1006, 1019 (9th Cir. 2011) (holding that a facial challenge to
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a statute necessarily fails if an as-applied challenge has failed because the plaintiff must
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“establish that no set of circumstances exists under which the [statute] would be valid”).
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Here, the Ninth Circuit expressly invalidated the “opt-in notice scheme” of NRS
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§ 116.3116, which it pinpointed in NRS 116.3116(2). Bourne Valley, 832 F.3d at 1158. In
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addition, this Court understands Bourne Valley also to invalidate NRS 116.311635(1)(b)(2),
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which also provides for opt-in notice to interested third parties. According to the Ninth Circuit,
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therefore, these provisions are unconstitutional in each and every application; no conceivable
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set of circumstances exists under which the provisions would be valid. The factual
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particularities surrounding the foreclosure notices in this case—which would be of paramount
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importance in an as-applied challenge—cannot save the facially unconstitutional statutory
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provisions. In fact, it bears noting that in Bourne Valley, the Ninth Circuit indicated that the
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petitioner had not shown that it did not receive notice of the impending foreclosure sale. Thus,
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the Ninth Circuit declared the statute’s provisions facially unconstitutional notwithstanding the
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possibility that the petitioner may have had actual notice of the sale.
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Accordingly, the HOA foreclosed under a facially unconstitutional notice scheme, and
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thus the HOA foreclosure cannot have extinguished the DOT. Therefore, the Court must quiet
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title as a matter of law in favor of Plaintiff as assignee of the DOT.
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B.
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Plaintiff’s Remaining Claims for Violation of NRS § 116.1113, Injunctive
Relief, and Violation of Procedural Due Process
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In its prayer for relief, Plaintiff requests primarily a declaration that Underwood and NV
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Eagles purchased the Property subject to its DOT. (See Am. Compl. 14:13–14). The other
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relief requested—with the exception of the injunctive relief—is phrased in the alternative. (See
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id. 14:15–26). Therefore, because the Court grants summary judgment for Plaintiff on its quiet
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title claim, Plaintiff has received the relief it requested. Accordingly, the Court dismisses
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Plaintiff’s second and fourth causes of action as moot.
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With regard to Plaintiff’s request for a preliminary injunction pending a determination
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by the Court concerning the parties’ respective rights and interests, the Court’s grant of
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summary judgment for Plaintiff moots this claim, and it is therefore dismissed.
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III.
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IT IS HEREBY ORDERED that Plaintiff’s Motion for Summary Judgment, (ECF No.
106), is GRANTED pursuant to the foregoing.
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CONCLUSION
IT IS FURTHER ORDERED that HOA’s Motion to Dismiss, (ECF No. 88), is
DENIED.
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IT IS FURTHER ORDERED that NV Eagles’s Motion for Summary Judgment, (ECF
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No. 92), is DENIED.
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IT IS FURTHER ORDERED that Plaintiff’s remaining claims are DISMISSED with
prejudice.
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The Clerk of Court is ordered to close the case.
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DATED this _____ day of May, 2018.
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___________________________________
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Gloria M. Navarro, Chief Judge
United States District Judge
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