Yuichi v. Federal Home Loan Mortgage Corporation et al

Filing 26

ORDER granting ECF No. 19 Motion to Dismiss; giving Plaintiff 15 days to file amended complaint. Signed by Judge Miranda M. Du on 9/21/2016. (Copies have been distributed pursuant to the NEF - KR)

1
2
3
4
5
UNITED STATES DISTRICT COURT

6

DISTRICT OF NEVADA

7

***

8
9

MIYAYAMA YUICHI, an individual,
Plaintiff,

10
11
12
13

Case No. 2:16-cv-00206-MMD-CWH
ORDER

v.
MTC FINANCIAL INC., dba TRUSTEE
CORPS, a California corporation;
FEDERAL HOME LOAN MORTGAGE
CORPORATION, a federally chartered
corporation; and DOES 1-5, inclusive,

14

Defendants.

15
16

I.

SUMMARY

17

Plaintiff purchased property encumbered by a first deed of trust and seeks to halt

18

non-judicial foreclosure proceedings. Before the Court Federal Home Loan Mortgage

19

Corporation’s (“Freddie Mac”) Motion to Dismiss (“Motion”). (ECF No. 19.) Plaintiff has

20

opposed (ECF No. 20) and Freddie Mac has replied (ECF No. 21). For the reasons

21

discussed below, the Motion is granted.

22

II.

BACKGROUND

23

The following facts are taken primarily from the Complaint and the briefs relating

24

to Plaintiff’s motion for a temporary restraining order. On October 9, 2014, Plaintiff

25

acquired his interest in a residential real property located at 9404 Amber Valley Lane in

26

Las Vegas (“the Property”) from Indian Home Program, LLC, Series III. (ECF No. 1-1 at

27

4, 11.) Since then, he has spent a significant amount of money on improvements to the

28

Property. (Id. at 7-8.) The Property is encumbered by a deed of trust to National City

1

Mortgage to secure a mortgage loan to the previous owner, Dennis Del Re. (ECF No.

2

12-1.) A subsequent deed of trust (“DOT”) was recorded in August 2004 to secure a

3

loan by National City Mortgage.1 (ECF No. 12-2.)

4

On September 30, 2013, Defendant MTC Financial Inc. dba Trustee Corps

5

(“MTC” or “Trustee Corps”), as substitute trustee under the DOT, recorded a Notice of

6

Breach and Default and Election to Sale (“NOD”). (ECF No. 12-3.)

7

On March 10, 2014, Indian Homes recorded a Bankruptcy Trustee’s quitclaim

8

deed (“BT Quitclaim Deed”). (ECF No. 12-4.) Indian Homes conveyed the Property to

9

Plaintiff on October 9, 2014. (ECF No. 1-1 at 11.)

10

Shortly before Plaintiff acquired the Property, Trustee Corps recorded a Notice of

11

Trustee’s Sale (“NOTS”) on September 23, 2014. (ECF No. 12-5.) After Plaintiff

12

acquired the Property, on November 19, 2015, Trustee Corps recorded a new Notice of

13

Trustee’s Sale for December 30, 2015. (ECF No. 12-7.) An assignment of the DOT to

14

Freddie Mac was also recorded on November 19, 2015. (ECF No. 12-8.) Plaintiff

15

alleges that Freddie Mac “holds the mortgage loan encumbering the subject real

16

property.” (ECF No. 1-1 at 5.)
On December 28, 2015, Plaintiff initiated this action in state court. (ECF No. 1-1.)

17
18

Freddie Mac removed the action and has moved for dismissal. (ECF Nos. 1, 19.)

19

III.

LEGAL STANDARD

20

A court may dismiss a plaintiff’s complaint for “failure to state a claim upon which

21

relief can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pleaded complaint must

22

provide “a short and plain statement of the claim showing that the pleader is entitled to

23

relief.” Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

24

While Rule 8 does not require detailed factual allegations, it demands more than “labels

25
26
27
28

1

The Court takes judicial notice of the publicly recorded documents in connection
with the Property and referenced in this section of the Order. See Disabled Rights
Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 866 n.1 (9th Cir. 2004) (the
court may take judicial notice of the records of state agencies and other undisputed
matters of public record under Fed. R. Evid. 201).

2

1

and conclusions” or a “formulaic recitation of the elements of a cause of action.”

2

Ashcroft v. Iqbal, 556 US 662, 678 (2009) (quoting Twombly, 550 U.S. at 555) (internal

3

quotation marks omitted). “Factual allegations must be enough to raise a right to relief

4

above the speculative level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to

5

dismiss, a complaint must contain sufficient factual matter to “state a claim to relief that

6

is plausible on its face.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570)

7

(internal quotation marks omitted).

8

In Iqbal, the Supreme Court clarified the two-step approach district courts are to

9

apply when considering motions to dismiss. First, a district court must accept as true all

10

well-pleaded factual allegations in the complaint; however, legal conclusions are not

11

entitled to the assumption of truth. Id. at 679. Mere recitals of the elements of a cause of

12

action, supported only by conclusory statements, do not suffice. Id. at 678. Second, a

13

district court must consider whether the factual allegations in the complaint allege a

14

plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiff’s

15

complaint alleges facts that allow a court to draw a reasonable inference that the

16

defendant is liable for the alleged misconduct. Id. at 678. Where the complaint does not

17

permit the court to infer more than the mere possibility of misconduct, the complaint has

18

“alleged — but it has not shown — that the pleader is entitled to relief.” Id. at 679

19

(quoting Fed. R. Civ. P. 8(a)(2)) (internal quotation marks and alteration omitted). When

20

the claims in a complaint have not crossed the line from conceivable to plausible, the

21

complaint must be dismissed. Twombly, 550 U.S. at 570. A complaint must contain

22

either direct or inferential allegations concerning “all the material elements necessary to

23

sustain recovery under some viable legal theory.” Twombly, 550 U.S. at 562 (quoting

24

Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984)).

25

Generally, a court may not consider any material beyond the pleadings in ruling

26

on a Rule 12(b)(6) motion to dismiss. U.S. v. Ritchie, 342 F.3d 903, 907 (9th Cir.2003).

27

One exception to this rule is where, as here, a court take judicial notice of “matters of

28

///

3

1

public record.” See Lee v. Los Angeles, 250 F.3d 668, 688–89 (9th Cir.2001) (internal

2

citations omitted).

3

IV.

DISCUSSION

4

The Complaint asserts three claims for violations of NRS § 107.080, declaratory

5

relief, and unjust enrichment. (Dkt. no. 1-1 at 5-8.) Freddie Mac seeks to dismiss all

6

three claims. The Court will address each claim in turn.

7

A.

Violations of NRS § 107.080

8

The Complaint alleges that NRS 107.080(3) and (4)(a) require “Defendants to

9

provide notice of default and election to sell and/or notice of trustee sale to all persons

10

with an interest in the property, including Plaintiff” and Defendants failed to provide

11

Plaintiff with notice of trustee sale.2 (ECF NO. 1-1 at 5 (emphasis omitted).) Freddie

12

Mac points to the express language of statute to argue that it complied with Nevada’s

13

statutory requirements.

14

The procedures for conducting a trustee’s foreclosure sale are set forth in NRS

15

§ 107.080. To commence a foreclosure, the beneficiary, the successor in interest of the

16

beneficiary, or the trustee must execute and record a notice of default and election to

17

sell. NRS § 107.080(2)(c). A copy of the notice of default and election to sell must be

18

mailed by registered mail or certified mail with return receipt requested to “the grantor

19

or, to the person who holds the title of record on the date the notice of default and

20

election to sell is recorded, and, if the property is operated as a facility licensed under

21

chapter 449 of NRS, to the State Board of Health, at their respective addresses, if

22

known, otherwise to the address of the trust property. NRS § 107.080(3). The trustee or

23
24
25
26
27
28

2

In response to the Motion, Plaintiff contends that the Complaint should be
construed to allege that Freddie Mac violated NRS § 17.080(3)(a) by failing to include in
the NOD a description of “the deficiency in performance or payment,” which deprived
him of the opportunity to cure the default. (ECF No. 20 at 6.) However, the NOD did
identify the deficiency as “including but not limited to, the obligations set forth in that
certain Promissory Note with a face amount of $207,000.00.” (ECF No. 12-3 at 1.) The
unpaid balance is identified in the NOTS. (ECF No. 12-7.) Moreover, it is not clear to
the Court that Plaintiff has standing to challenge the content of the NOD when he was
not among the parties entitled to notice under NRS § 17.080(3)(a).

4

1

other person authorized to make the sale must wait at least three months after

2

recording the notice of default and election to sell before the sale may proceed.

3

NRS § 107.080(2)(e). After the three month period, the trustee must give notice of the

4

time and place of the sale to the following: “each trustor, any other person entitled to

5

notice pursuant to this section and, if the property is operated as a facility licensed

6

under chapter 449 of NRS, the State Board of Health, by personal service or by mailing

7

the notice by registered or certified mail to the last known address of the trustor and any

8

other person entitled to such notice pursuant to this section.” NRS § 107.080(4)(a).

9

Plaintiff contends that NRS § 107.080(3) requires that the NOD be sent to him as

10

the titleholder of record and the grantor’s successor. (ECF No. 20 at 6-8.) However, his

11

argument does not find support in the statute. NRS § 107.080(3) requires that the NOD

12

be sent “to the grantor, or to the person who holds the title of record on the date the

13

notice of default and election to sell is recorded.” But Plaintiff did not hold the title to the

14

Property at the time the NOD was recorded on September 30, 2013, or when the first

15

NOTS was recorded on September 23, 2014.3 Nor is Plaintiff covered within the group

16

who must be given notice under NRS § 107.080(4)(a), which includes “any other person

17

entitled to notice pursuant to this section.” Plaintiff does not show how he would fall

18

among this catch-all group.

19

Plaintiff asserts policy arguments for why NRS § 107.080(3) should be construed

20

to require that the NOD and NOT must be provided to the “current record title holder.” 4

21

(ECF No. 20 at 8-10.) However, NRS § 107.080(3) is unambiguous in identifying the

22

parties who are entitled to notice: the grantor or the title holder on the date the NOD is

23

recorded.

24

///

25
26
27
28

3

Indeed, Plaintiff acquired the Property in October 2014, more than a year after
the NOD was recorded. Plaintiff thus should have had at least constructive notice of the
recorded NOD and the first NOTS at the time that he acquired the Property.
4
Plaintiff also alleges that Freddie Mac violated his constitutional due process
rights. This claim is not asserted in the Complaint and it is not clear whether such a
claim may be asserted against Defendants.

5

The Court agrees with Freddie Mac that Plaintiff’s claim for violations of NRS §

1
2

107.080(3) should be dismissed.

3

B.

Declaratory Relief

4

Plaintiff seeks a declaration that the Property “cannot be sold without providing

5

him with a reasonable opportunity to cure the default on the loan encumbering the

6

property.” (ECF No. 1-1 at 6.) Plaintiff relies on Title Insurance and Trust Co. v. Chicago

7

Title Insurance Co., 634 P.2d 1216 (Nev. 1981) to argue that as the title holder, he has

8

a right to cure the default.5 (ECF No. 20 at 14.) In that case, the Nevada Supreme Court

9

found that a vendee of the grantor of the deed of trust, who had purchased real property

10

from the borrower and grantor of the deed of trust, was a “successor in interest”

11

pursuant to NRS § 107.080(3).6 The court found that by including a “successor in

12

interest” in NRS § 107.080(3) shows that “the legislature intended that a purchaser of

13

real estate who is a grantor of a deed of trust should have a reasonable opportunity to

14

cure a default or deficiency before the property may be sold by the trustee, and that

15

such opportunity should be extended to one who holds under such a grantor.” Id. at

16

1218.

17

Here, Plaintiff has no contractual relationship with the borrower, Mr. Del Re, such

18

that he may be deemed Mr. Del Re’s successor in interest. Plaintiff acquired the

19

Property via a quitclaim deed from Indian Homes, whose interest in the Property was

20

subject to the DOT. (ECF No. 12-4.) Absent a legal relationship with Mr. Del Re or

21

Freddie Mac, Plaintiff cannot show that Freddie Mac must be compelled to give him the

22

opportunity to cure the default.

23
5

24
25
26
27
28

Plaintiff also relies on NRS § 107.080(3)(a) which requires the NOD to describe
the deficiency. (ECF No. 20 at 14.) Again, Plaintiff’s contention that the NOD failed to
describe the deficiency or payment is factually inaccurate. See discussion supra at n. 2.
6
The “successor in interest” language was removed from NRS § 107.080(3) in a
1989 amendment to the statute. 1989 Nev. Stat. 1770-71. Rather than requiring that a
notice of default and election to sell be mailed to a grantor’s successor in interest, the
1989 amendment provides that the mailing may be directed to “the person who holds
the title of record on the date the notice of default and election to sell is recorded.” 1989
Nev. Stat. 1771. This language appears in the current version of the statute.

6

1

Plaintiff asserts that he seeks declaratory relief “on information and belief, that

2

any encumbrance on the subject property was satisfied by the mortgage insurance.”

3

(ECF No. 20 at 14.) This allegation is not raised in the Complaint. Even if it was properly

4

raised, Plaintiff cannot seek declaratory relief without asserting a viable claim.

5

C.

Unjust Enrichment

6

“The phrase ‘unjust enrichment’ is used in law to characterize the result or effect

7

of a failure to make restitution of, or for, property or benefits received under such

8

circumstances as to give rise to a legal or equitable obligation to account therefor.”

9

Leasepartners Corp. v. Robert L. Brooks Trust Dated Nov. 12, 1975, 942 P.2d 182, 187

10

(Nev. 1997). “Unjust enrichment occurs when ever [sic] a person has and retains a

11

benefit which in equity and good conscience belongs to another.” Id. (quotations and

12

citation omitted).

13

Plaintiff asserts a claim for unjust enrichment, but it is not entirely clear what

14

benefits Defendants purportedly retained that belongs to him. Plaintiff alleges that he

15

has invested in making improvements to the Property and paying expenses on the

16

Property. (ECF No. 1-1 at 8.) He alleges that because “Defendants’ deed of trust has

17

been paid in full through the original trustor’s mortgage insurance,” they are not entitled

18

to seek foreclosure and should not be allowed to retain the proceeds of the sale. (Id.)

19

(ECF No. 1-1 at 8.) He further asserts that Defendants would be unjustly enriched if

20

they are allowed to retain the proceeds of the sale on the Property. (Id.)

21

To the extent the recovery that Plaintiff seeks is to prevent foreclosure or to

22

prohibit Defendants from keeping the proceeds of the sale, such recovery is not

23

available under a claim for unjust enrichment. “The doctrine of unjust enrichment or

24

recovery in quasi contract applies to situations where there is no legal contract but

25

where the person sought to be charged is in possession of money or property which in

26

good conscience and justice he should not retain but should deliver to another [or

27

should pay for].” Leasepartners Corp., 942 P.2d at 187 (citing Lipshie v. Tracy Inv. Co.,

28

566 P.2d 819, 824 (1977) (“To permit recovery by quasi-contract where a written

7

1

agreement exists would constitute a subversion of contractual principles.”)). Defendants

2

are not unjustly enriched at Plaintiff’s expense and did not retain a benefit that belongs

3

to Plaintiff.

4

Freddie Mac argues that Plaintiff’s claim is barred by the voluntary payment

5

doctrine, citing to Nevada Ass’n Services, Inc. v. Dist. Ct., 338 P.3d 1250 (Nev. 2014).

6

In that case, the Nevada Supreme Court explained the doctrine as follows:

7

The voluntary payment doctrine is an affirmative defense that
“provides that one who makes a payment voluntarily cannot recover it on
the ground that he was under no legal obligation to make the payment.”
Best Buy Stores v. Benderson-Wainberg Assocs., 668 F.3d 1019, 1030
(8th Cir.2012) (internal quotations omitted). “The ‘voluntary’ in the
voluntary payment doctrine does not entail the mere payment of the bill or
fee.” Putnam v. Time Warner Cable of Se. Wis., 255 Wis.2d 447, 649
N.W.2d 626, 632 (2002). Instead, it considers “the willingness of a person
to pay a bill without protest as to its correctness or legality.” Id. at 633.
This doctrine serves to promote the “policy goals of certainty and stability”
in transactions. Berrum v. Otto, 127 Nev. ––––, –––– n. 5, 255 P.3d 1269,
1273 n. 5 (2011).

8
9
10
11
12
13
14

Id. at 1253-54. This doctrine does not apply to the situation here where Plaintiff is not

15

claiming that he made payments to Defendants and now seeks recovery of that

16

payment.

17

To the extent Plaintiff’s unjust enrichment claim is for recovery of money spent on

18

improvements to the Property, Plaintiff may be able to state a colorable claim depending

19

on the circumstances under which those improvements were made. Because of the

20

scant allegations relating to the improvements to the Property and expenses paid

21

relating to the Property, the Court cannot find that “[t]here is no unjust enrichment.” See

22

Bonneville Power Admin. V. Washington Public Power Supply Sys., 956 F.2d 1497,

23

1505 (9th Cir. 1992). The Court will therefore dismiss Plaintiff’s unjust enrichment claim

24

with leave to amend.

25

V.

CONCLUSION
The Court notes that the parties made several arguments and cited to several

26
27

cases not discussed above. The Court has reviewed these arguments and cases and

28

///

8

1

determines that they do not warrant discussion as they do not affect the outcome of

2

Freddie Mac’s Motion.

3

It is therefore ordered that Freddie Mac’s Motion to Dismiss (ECF No. 19) is

4

granted. Plaintiff’s first two claims for violation of NRS § 107.080 and for declaratory

5

relief are dismissed with prejudice. Plaintiff’s third claim for unjust enrichment is

6

dismissed without prejudice and with leave to amend. Should Plaintiff wish to amend his

7

Complaint, he has fifteen (15) days to file an amended complaint to assert a claim for

8

unjust enrichment to cure the deficiencies identified in this Order. Failure to file an

9

amended complaint will result in dismissal of the third claim for unjust enrichment with

10
11

prejudice.
DATED THIS 21st day of September 2016.

12
13
MIRANDA M. DU
UNITED STATES DISTRICT JUDGE

14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

9