Bank of New York Mellon v. SFR Investments Pool 1, LLC et al

Filing 54

ORDER granting 36 Motion for Partial Summary Judgment; ORDER denying 41 Motion to Strike.Plaintiff's remaining claims are DISMISSED with prejudice. IT IS FURTHER ORDERED that because SFR's counterclaims and cross-claims are directly opposite of Plaintiffs, SFRs counterclaims and cross-claims are DISMISSED with prejudice. Signed by Chief Judge Gloria M. Navarro on 4/18/2018. (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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THE BANK OF NEW YORK MELLON FKA )
THE BANK OF NEW YORK, AS TRUSTEE )
FOR THE CERTIFICATEHOLDERS OF THE )
CWABS, INC. ASSET-BACKED
)
CERTIFICATES, SERIES 2004-7,
)
)
Plaintiff,
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vs.
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SFR INVESTMENTS POOL 1, LLC;
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MONTAGNE MARRON COMMUNITY
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ASSOCIATION; ALESSI & KOENIG, LLC, )
)
Defendants.
)
______________________________________ )
SFR INVESTMENTS POOL 1, LLC, a
)
Nevada limited liability company,
)
)
Counter/Cross Claimant. )
vs.
)
)
THE BANK OF NEW YORK FKA THE
)
BANK OF NEW YORK AS TRUSTEE FOR )
THE CERTIFICATEHOLDERS OF THE
)
CWABS, INC., ASSET-BACKED
)
CERTIFICATES, SERIES 2004-7; and JOHN )
EDWARD BOSTAPH, JR., an individual,
)
)
Counter/Cross Defendants. )
)

Case No.: 2:16-cv-00847-GMN-CWH
ORDER

Pending before the Court is the Motion for Summary Judgment, (ECF No. 36), filed by
Plaintiff The Bank of New York Mellon (“Plaintiff”). Defendant SFR Investments Pool 1,

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LLC (“SFR”) filed a Response, (see ECF No. 37), to which Plaintiff filed a Reply, (see ECF

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No. 44).1

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I.

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BACKGROUND
Plaintiff filed its Complaint on April 14, 2016, asserting claims involving the non-

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judicial foreclosure on real property located at 10949 Sospel Place, Las Vegas, NV 89141 (the

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“Property”). (Compl. ¶ 7, ECF No. 1). On July 14, 2004, non-party John Edward Bostaph, Jr.,

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purchased the Property by way of a loan in the amount of $302,400.00 secured by a Deed of

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Trust (“DOT”) recorded July 20, 2004. (Id. ¶ 13).

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On July 31, 2009, Defendant, Montagne Marron Community Association (“HOA”),

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through its agent Alessi & Koenig, LLC (“Alessi”), recorded a notice of delinquent assessment

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lien. (Id. ¶ 15). On September 28, 2009, HOA recorded a notice of default and election to sell

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to satisfy the delinquent assessment lien. (Id. ¶ 16). On March 31, 2010, HOA recorded a

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notice of trustee’s sale. (Id. ¶ 17). HOA foreclosed on October 19, 2011 pursuant to NRS

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§ 116.1113, and on April 8, 2013, HOA issued a quitclaim deed transferring title to SFR. (Id.

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¶¶ 24–25).

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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) wrongful

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foreclosure; and (4) injunctive relief. (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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Also pending before the Court is the Motion to Strike, (ECF No. 41), filed by SFR. Plaintiff filed a Response,
(ECF No. 45), and SFR filed a Reply, (ECF No. 49). Because the Court does not find Plaintiff’s filing of its
Motion for Summary Judgment as inappropriate, the Court DENIES SFR’s Motion.

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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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wrongful foreclosure, and injunctive relief. The Court first considers the impact of the Ninth

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Circuit’s ruling in Bourne Valley Court Trust v. Wells Fargo Bank, NA, 832 F.3d 1154 (9th Cir.

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2016), cert. denied, No. 16-1208, 2017 WL 1300223 (U.S. June 26, 2017), before turning to

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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.

Plaintiff’s Remaining Claims for Violation of NRS § 116.1113, Wrongful
Foreclosure, and Injunctive Relief

In its prayer for relief, Plaintiff requests primarily a declaration that HOA and SFR

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purchased the Property subject to its DOT. (See Compl. 12:10–11). The other relief

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requested—with the exception of the injunctive relief—is phrased in the alternative. (See id.

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12:12–16). 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 third 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.

CONCLUSION
IT IS HEREBY ORDERED that Plaintiff’s Motion for Partial Summary Judgment,

(ECF No. 36), is GRANTED pursuant to the foregoing.

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IT IS FURTHER ORDERED that SFR’s Motion to Strike, (ECF No. 41), is DENIED.

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IT IS FURTHER ORDERED that Plaintiff’s remaining claims are DISMISSED with

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prejudice.
IT IS FURTHER ORDERED that because SFR’s counterclaims and cross-claims are

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directly opposite of Plaintiff’s, SFR’s counterclaims and cross-claims are DISMISSED with

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prejudice.

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The Clerk of Court is ordered to close the case.

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DATED this _____ day of April, 2018.
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___________________________________

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Gloria M. Navarro, Chief Judge
United States District Judge

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