Absolute Business Solutions, Inc. et al v. Mortgage Electronic Registration Sys. Inc (MERS) et al
Filing
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ORDER denying ECF No. 61 Motion to Compel Deposit. Signed by Judge Robert C. Jones on 1/4/2017. (Copies have been distributed pursuant to the NEF - KR)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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ABSOLUTE BUSINESS SOLUTIONS, INC.,
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Plaintiff,
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2:15-cv-01325-RJC-NJK
vs.
ORDER
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC. et al.,
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Defendants.
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This case arises from a homeowners association foreclosure sale. Now pending before the
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Court is Defendant Fannie Mae’s Motion to Compel Plaintiff-in-Intervention Alessi & Koenig to
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deposit HOA sale proceeds with the Court. (ECF No. 61.) For the reasons given herein, the Court
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denies the motion.
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I.
FACTS AND PROCEDURAL BACKGROUND
In 2005, Irma Mendez (“Plaintiff”) purchased real property at 3416 Casa Alto Ave.,
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North Las Vegas, Nevada, 89031 (the “Property”) for $315,000, giving the lender a promissory
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note for $252,792 and a deed of trust against the Property securing the note. When Mendez
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became delinquent on her monthly assessment fees, Alessi & Koenig (“Alessi”) conducted a
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foreclosure sale on behalf of Fiesta Del Norte Homeowners Association (the “HOA”). At the
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HOA sale, the Property was sold to Plaintiff Absolute Business Solutions, Inc. (“ABS”) for
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$20,600.
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Following the HOA sale, on March 17, 2014, ABS brought this action to quiet title in the
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Eighth Judicial District Court of Clark County, Nevada. (See Compl., ECF No. 3-2 at 2–7.) On
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October 2, 2014, Alessi filed a complaint in interpleader in intervention, acknowledging that
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multiple persons have a claim to the HOA sale proceeds and asking the district court to
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determine who is entitled to the proceeds. (See Compl. in Interpleader, ECF No. 3-3 at 9–17.) In
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its complaint in interpleader, Alessi stated that it would “deposit excess proceeds with [the] court
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in the sum of $9,645.03, representing the total proceeds at sale [of] $20,600.00, minus [the]
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amount due to Fiesta Del Norte HOA of $4,954.97; and fees and costs of this interpleader action
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of $6,000.00.” (Id. at ¶ 27.)
On May 29, 2015, Federal National Mortgage Association (“Fannie Mae”) intervened in
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the action as a defendant, “due to Fannie Mae being the current beneficiary on the underlying
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Deed of Trust.” (Stipulation and Order, 3-12 at 89–92.) Then, on July 13, 2015, Fannie Mae
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removed the action to this Court under 28 U.S.C. § 1331, based on the fact that “Fannie Mae’s
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corporate charter confers federal question jurisdiction over claims brought against Fannie Mae.”
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(Pet. Removal 2, ECF No. 1.) See Lightfoot v. Cendant Mortg. Corp., 769 F.3d 681, 682 (9th Cir.
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2014).
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Fannie Mae now seeks an order compelling Alessi to deposit $20,600 in the registry of
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the Court, representing the full amount paid for the Property at the HOA sale. (Motion 5–6, ECF
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No. 61.) To date, contrary to Alessi’s stated intention of depositing $9,645.03 in “excess
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proceeds,” it appears that no such deposit has been made, in state or federal court. Fannie Mae
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argues that Alessi, having filed a complaint in interpleader, is required to make the promised
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deposit. Fannie Mae further contends that a deposit of less than the full HOA sale amount would
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be insufficient, because the entire $20,600 is in dispute in this case. Alessi has not responded to
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Fannie Mae’s motion, and the time for response has passed.
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II.
LEGAL STANDARDS
“The purpose of interpleader is for the stakeholder to ‘protect itself against the problems
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posed by multiple claimants to a single fund.’” Lee v. W. Coast Life Ins. Co., 688 F.3d 1004,
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1009 (9th Cir. 2012) (quoting Mack v. Kuckenmeister, 619 F.3d 1010, 1024 (9th Cir. 2010).
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There are two avenues for an interpleader action in federal court: “rule interpleader” under
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Federal Rule of Civil Procedure 22, and “statutory interpleader” under 28 U.S.C. § 1335. See
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Libby, McNeill, & Libby v. City Nat. Bank, 592 F.2d 504, 507 n. 3 (9th Cir. 1978).
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Rule 22 interpleader is permissible where a plaintiff-stakeholder may be exposed to
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double or multiple liability due to the existence of multiple claimants, and is available even
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where the defendants’ claims “lack a common origin or are adverse and independent rather than
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identical,” and where the plaintiff “denies liability in whole or in part to any or all of the
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claimants.” Fed. R. Civ. P. 22(a). Rule 22 interpleader is “merely a procedural device,” and does
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not grant a plaintiff an independent basis for federal subject matter jurisdiction. Morongo Band
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of Mission Indians v. California State Bd. of Equalization, 858 F.2d 1376, 1382 (9th Cir. 1988).
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Therefore, “for the interpleader to be proper under [Rule 22] it must be within some statutory
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grant of jurisdiction.” Gelfgren v. Republic Nat. Life Ins. Co., 680 F.2d 79, 81 (9th Cir. 1982).
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Deposit of the disputed funds is not a requirement for Rule 22 interpleader. See id. at 81–82.
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Statutory interpleader under Section 1335 requires diversity between the adverse
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claimants, and that the plaintiff in interpleader deposit the disputed funds into the registry of the
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Court. 28 U.S.C. § 1335(a). In contrast to Rule 22 interpleader, satisfying the requirements of
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statutory interpleader will confer the federal courts with subject matter jurisdiction over the
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action. Gelfgren, 680 F.2d at 81.
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III.
ANALYSIS
Whether Alessi, as plaintiff in interpleader, is required to deposit the disputed funds in
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the Court’s registry depends on whether Rule 22 or Section 1335 applies to its interpleader
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action. In reality, when Alessi filed its complaint, neither Rule 22 nor Section 1335 was invoked.
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This action was in state court at the time, and thus Alessi filed its complaint in interpleader
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pursuant to Nevada Rule of Civil Procedure 22. NRCP 22 does not require a plaintiff to deposit
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the disputed funds with the court. See Golightly & Vannah, PLLC v. TJ Allen, LLC, 132 Nev.
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Adv. Op. 41, 373 P.3d 103, 106 (2016). Nevertheless, state court rules of procedure cease to
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govern a case at the time of removal, and the Court must determine whether deposit of the
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disputed funds is now required under any federal rule or statute. See Fed. R. Civ. P. 81(c);
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Savarese v. Edrick Transfer & Storage, Inc., 513 F.2d 140, 145 (9th Cir. 1975); Grivas v.
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Parmelee Transp. Co., 207 F.2d 334, 337 (7th Cir. 1953) (stating that after a defendant removes
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a case to federal court, it is “subject to the same rules of procedure as if it had been originally
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sued in that court”).
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The Court construes Alessi’s interpleader action as governed by Rule 22, and not Section
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1335. When Alessi filed its complaint in intervention, it used interpleader as merely a procedural
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device, not as a basis for invoking federal court jurisdiction (which is the very purpose of an
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interpleader action under Section 1335). Here, an independent basis exists for federal
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jurisdiction, namely, Defendant Fannie Mae’s federal corporate charter. Because Alessi’s
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interpleader action is unrelated to the Court’s jurisdiction over this case, Rule 22 is a better fit.
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Accordingly, the Court finds there is no basis in the federal rules or statutes—and surely Fannie
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Mae has cited none—to compel Alessi to deposit the disputed funds in the registry of the Court.
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CONCLUSION
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IT IS HEREBY ORDERED that the Motion to Compel Deposit (ECF No. 61) is
DENIED.
IT IS SO ORDERED.
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_____________________________________
ROBERT C. JONES
United States District Judge
Dated: January 4, 2017.
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