US Bank National Association v. BDJ Intestments, LLC, et al.

Filing 94

ORDER that 82 Motion to Dismiss is DENIED and 85 Motion to Dismiss is DENIED. FURTHER ORDERED that Plaintiff shall file a second amended complaint consistent with the foregoing discussion within fourteen (14) days of this Order's iss uance. FURTHER ORDERED that the parties shall file Motions for Summary Judgment within twenty-one (21) days of the filing of Plaintiff's second amended complaint. Signed by Chief Judge Gloria M. Navarro on 4/8/2019. (Copies have been distributed pursuant to the NEF - MMM)

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1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 10 ) ) ) ) ) ) ) ) ) ) ) ) 11 Pending before the Court are the Motions to Dismiss, (ECF Nos. 82, 85), filed by 4 5 US BANK NATIONAL ASSOCIATION, as Trustee for Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset Back Certificates Series 2005-A8, 6 Plaintiff, 7 8 vs. BDJ INVESTMENTS, LLC, et al., 9 Defendants. Case No.: 2:16-cv-00866-GMN-PAL ORDER 12 Defendant Lone Mountain Quartette Community Association (“HOA”) and BDJ Investments, 13 LLC (“BDJ”) (collectively “Defendants”). Plaintiff US Bank National Association (“Plaintiff”) 14 filed Responses, (ECF Nos. 83, 86), and Defendants filed Replies, (ECF Nos. 84, 91), in 15 support of their respective Motions. 16 17 18 For the reasons discussed herein, Defendants’ Motions to Dismiss are DENIED. I. BACKGROUND This case arises from the non-judicial foreclosure on real property located at 10625 19 Colter Bay Court, Las Vegas, Nevada 89129 (the “Property”). (See Am. Compl. ¶ 7, ECF No. 20 81). In July 2005, Isam Halteh (“Borrower”) purchased the Property by way of a loan in the 21 amount of $255,400.00 secured by a deed of trust, identifying Mortgage Electronic Registration 22 Systems (“MERS”) as beneficiary. (Id. ¶¶ 7–8). Plaintiff later obtained an interest in the 23 Property and is the current holder of the deed of trust. (Id. ¶ 9). 24 25 In 2011, upon Borrower’s failure to pay all amounts due, HOA initiated foreclosure proceedings, recording a notice of delinquent assessment lien, followed by a notice of default Page 1 of 8 1 and election to sell. (Id. ¶¶ 11, 12). HOA recorded a notice of trustee’s sale and conducted a 2 public auction on April 17, 2012. (Id. ¶ 14). BDJ purchased the Property for $6,000 on April 3 18, 2012. (Id.). 4 Plaintiff filed its initial complaint on April 15, 2016, asserting causes of action for 5 declaratory relief, quiet title, and breach of NRS 112.190. (Compl. ¶¶ 30–72, ECF No. 1). The 6 Court subsequently granted HOA’s motion to dismiss, dismissing the declaratory relief and 7 quiet title claims without prejudice, and dismissing the NRS 112.190 with prejudice. (See Order 8 12:14–19, ECF No. 80). 9 Plaintiff filed its Amended Complaint on October 15, 2018, bringing the following 10 causes of action arising from the foreclosure and subsequent sale of the Property: (1) quiet title 11 through the remedy of declaratory relief; (2) injunctive relief; and (3) unjust enrichment. (See 12 Am. Compl. ¶¶ 51–82). Shortly thereafter, HOA and BDJ filed the instant Motions to Dismiss, 13 (ECF Nos. 82, 85). 14 II. 15 LEGAL STANDARD Dismissal is appropriate under Rule 12(b)(6) where a pleader fails to state a claim upon 16 which relief can be granted. Fed. R. Civ. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 17 555 (2007). A pleading must give fair notice of a legally cognizable claim and the grounds on 18 which it rests, and although a court must take all factual allegations as true, legal conclusions 19 couched as a factual allegations are insufficient. Twombly, 550 U.S. at 555. Accordingly, Rule 20 12(b)(6) requires “more than labels and conclusions, and a formulaic recitation of the elements 21 of a cause of action will not do.” Id. “To survive a motion to dismiss, a complaint must contain 22 sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its 23 face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A 24 claim has facial plausibility when the plaintiff pleads factual content that allows the court to 25 draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. This standard “asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. Page 2 of 8 “Generally, a district court may not consider any material beyond the pleadings in ruling 1 2 on a Rule 12(b)(6) motion.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 3 1555 n.19 (9th Cir. 1990). “However, material which is properly submitted as part of the 4 complaint may be considered.” Id. Similarly, “documents whose contents are alleged in a 5 complaint and whose authenticity no party questions, but which are not physically attached to 6 the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss” without 7 converting the motion to dismiss into a motion for summary judgment. Branch v. Tunnell, 14 8 F.3d 449, 454 (9th Cir. 1994). On a motion to dismiss, a court may also take judicial notice of 9 “matters of public record.” Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986). 10 Otherwise, if a court considers materials outside of the pleadings, the motion to dismiss is 11 converted into a motion for summary judgment. Fed. R. Civ. P. 12(d). 12 If the court grants a motion to dismiss for failure to state a claim, leave to amend should 13 be granted unless it is clear that the deficiencies of the complaint cannot be cured by 14 amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992). Pursuant 15 to Rule 15(a), the court should “freely” give leave to amend “when justice so requires,” and in 16 the absence of a reason such as “undue delay, bad faith or dilatory motive on the part of the 17 movant, repeated failure to cure deficiencies by amendments previously allowed, undue 18 prejudice to the opposing party by virtue of allowance of the amendment, futility of the 19 amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962). 20 III. 21 DISCUSSION HOA moves to dismiss Plaintiff’s Amended Complaint on the following grounds: (1) 22 Plaintiff’s quiet title claim is premised upon the same the equitable and constitutional 23 arguments the Court has already rejected; (2) the injunctive relief claim is improperly pled as a 24 stand-alone claim for relief; and (3) the unjust enrichment claim is barred by the statute of 25 limitations and is otherwise not a cognizable cause of action. (HOA’s MTD 5:1–15:13, ECF Page 3 of 8 1 No. 82). BDJ also seeks dismissal by raising a statute-of-limitations defense and contending 2 that Plaintiff fails to rebut the presumption that the HOA sale was validly conducted. (BDJ’s 3 MTD 7:21–20:1, ECF No. 85).1 4 A. Statute of Limitations 5 According to Defendants, Plaintiff’s substantive claims for quiet title and unjust 6 enrichment are untimely. (BDJ’s MTD 8:27–11:16); (HOA’s MTD 15:4–3). The Court 7 disagrees. 8 i. 9 Quiet Title As stated in the Court’s prior order, Plaintiff’s quiet title claim is timely pursuant to the 10 five-year limitations period set forth in NRS 11.070. (See Order 4:3–12, ECF No. 80). The 11 underlying foreclosure sale took place on April 17, 2012, and Plaintiff filed this action less than 12 five years later. (Id.); (see Compl., ECF No. 1) (filed April 15, 2016). 13 ii. 14 Unjust Enrichment Unjust enrichment claims are subject to a four-year limitations period under Nevada law. 15 See NRS 11.190(2)(c); In re Amerco Derivative Litig., 252 P.3d 681, 703 (Nev. 2011) (“The 16 statute of limitation for an unjust enrichment claim is four years.”). 17 Plaintiff’s allegations underpinning its unjust enrichment claim correspond to Plaintiff’s 18 conferral of benefits “since the time of the HOA sale.” (Am. Compl. ¶¶ 77, 80) (emphasis 19 added). Because HOA sold the Property to BDJ less than four years prior to Plaintiff initiating 20 this action, the unjust enrichment claim is timely. 21 22 23 24 25 1 Notwithstanding the Court’s rejection of the theory in its prior order, the parties continue to dispute the applicability of Bourne Valley Court Tr. v. Wells Fargo Bank, NA, 832 F.3d 1154 (9th Cir. 2016). To the extent there is any lingering doubt that Bourne Valley is a nullity, the Ninth Circuit has put the issue to rest. See Bank of Am., N.A. v. Arlington W. Twilight Homeowners Ass’n, No. 17-15796, 2019 WL 1461317, at *3 (9th Cir. Apr. 3, 2019) (“Bourne Valley no longer controls the analysis, and we conclude that Nev. Rev. Stat. § 116.3116 et seq. is not facially unconstitutional on the basis of an impermissible opt-in notice scheme.”). Page 4 of 8 1 B. Quiet Title 2 Plaintiff argues that its Amended Complaint adequately states a quiet title claim given 3 the allegations concerning the grossly inadequate sale price of the Property, as well as HOA 4 and BDJ’s knowledge that Plaintiff was under the false assumption that the foreclosure sale 5 would leave its deed of trust undisturbed. (Pl.’s Resp. to BDJ’s MTD 4:26–7:7, ECF No. 86). 6 In particular, the Amended Complaint states “Plaintiff did not know it had to attend the HOA 7 sale to protect its security interest,” because of the “failure of HOA to provide such notice.” 8 (Am. Compl. ¶¶ 37–38). Plaintiff asserts in its Response that it learned during discovery that 9 its “predecessor-in-interest requested a payoff demand of the superpriority lien, and the HOA’s 10 agent, ACS, advised [Plaintiff’s] predecessor-in-interest that there was no superpriority lien 11 until the beneficiary of the first deed of trust forecloses.” (Pl.’s Resp. to BDJ’s MTD 6:19–21). 12 Assuming the latter allegation was pled, the Court finds Plaintiff has stated a viable claim for 13 relief. 14 Under NRS 116.3116, the deed of trust holder may pay off the superpriority portion of 15 an HOA lien to prevent the foreclosure sale from extinguishing the deed of trust. See NRS 16 116.31166(1); see also SFR Invs. Pool 1 v. U.S. Bank, 334 P.3d 408, 414 (Nev. 2014). 17 In Thomas Jessup, the Nevada Supreme Court held that a first deed of trust holder was excused 18 from tendering the superpriority amount because the HOA agent represented that it would 19 reject any such tender if attempted. Bank of Am., N.A. v. Thomas Jessup, LLC Series VII, 435 20 P.3d 1217, 1220 (Nev. 2019). In that case, the HOA agent, ACS, sent the deed of trust holder a 21 fax stating it would not provide a ledger identifying nine months’ worth of HOA assessments 22 unless the deed of trust holder initiates foreclosure proceedings. Id. The Court held that the 23 deed of trust holder’s offer to pay the “yet-to-be-determined superpriority amount,” combined 24 with “ACS’s rejection of that offer, operated to cure the default as to [the superpriority] portion 25 of the lien such that the ensuing foreclosure sale did not extinguish the first deed of trust.” Id. Page 5 of 8 1 Here, taking Plaintiff’s allegations as true, Plaintiff has stated a claim for quiet title. The 2 Court will permit Plaintiff to correct its Amended Complaint to allege ACS’s representations to 3 Plaintiff concerning the impact of the HOA sale on the first deed of trust.2 Accordingly, the 4 Court denies Defendants’ Motions as to the quiet title claim. 5 C. Unjust Enrichment 6 Defendants contend that dismissal is appropriate on the unjust enrichment claim because 7 Plaintiff cannot establish it conferred a benefit upon BDJ or HOA. (BDJ’s MTD 19:27–20:1); 8 (HOA’s MTD 13:9–14:11). HOA also argues that the claim fails as a matter of law because a 9 contract underlies the parties’ relationship, rendering the unjust enrichment claim inapplicable. 10 (HOA’s MTD 13:20–14:11). 11 Plaintiff argues its payments of taxes, insurance, and HOA assessments benefited 12 HOA’s financial condition and were made without knowledge that its deed of trust was 13 purportedly extinguished. (Pl.’s Resp. to HOA’s MTD 8:17–28, ECF No. 83). Plaintiff 14 alternatively argues that if the Court were to determine that the HOA sale extinguished its deed 15 of trust, then HOA would be enriched by claiming proceeds in excess of the superpriority lien 16 amount. (Id. 9:1–11). 17 Under Nevada law, unjust enrichment is an equitable doctrine that allows recovery of 18 damages “whenever a person has and retains a benefit which in equity and good conscience 19 belongs to another.” Unionamerica Mortg. & Equity Tr. v. McDonald, 626 P.2d 1272, 1273 20 (Nev. 1981). To prevail on an unjust enrichment claim, a plaintiff must prove the following 21 three elements: (1) a benefit conferred on the defendant by the plaintiff; (2) appreciation by the 22 defendant of such benefit; and (3) an acceptance and retention by the defendant of such benefit 23 under circumstances such that it would be inequitable for him to retain the benefit without 24 25 2 On the record in this case, the Court finds reopening discovery is unwarranted at this time. Nonetheless, should the parties believe that limited additional discovery is necessary on this issue, they may so petition the Court. Page 6 of 8 1 payment of the value thereof. Takiguchi v. MRI Intern., Inc., 47 F. Supp. 3d 1100, 1119 (Nev. 2 2014). 3 Plaintiff has sufficiently alleged the elements of unjust enrichment. The Amended 4 Complaint provides that after the foreclosure sale, Plaintiff paid HOA assessments, taxes, and 5 insurance on the Property. (Am. Compl. ¶ 77). Plaintiff alleges that should it prevail on its 6 quiet title claim, BDJ and HOA will have been unjustly enriched because Plaintiff’s payments 7 were applied toward maintaining the Property. (Id. ¶¶ 77–78). Alternatively, if the Court 8 determines the HOA sale wiped out Plaintiff’s deed of trust, Plaintiff alleges HOA’s retention 9 of the sale proceeds on top of the superpriority lien amount is unjust as those proceeds 10 rightfully belong to Plaintiff. (Id. ¶ 79). These allegations are enough to state a plausible claim 11 for unjust enrichment. See, e.g., Las Vegas Dev. Grp., LLC v. Yfantis, 173 F. Supp. 3d 1046, 12 1059 (D. Nev. 2016); Holm Int’l Props., LLC v. Pac. Legends E. Condo. Ass’n, No. 68726, 391 13 P.3d 103 (Nev. 2017) (unpublished). 14 Finally, the Court rejects HOA’s contention that the unjust enrichment claim fails 15 because “a contract underlies the relationship,” between Plaintiff and HOA. (HOA’s MTD 16 13:20–14:11). Plaintiff does not allege any contract-based claims in this action; nor does 17 Plaintiff allege it had a contractual relationship with HOA. Indeed, the only contractual 18 relationship HOA points to is that between HOA and the former homeowner. (Id. 13:23–14:5). 19 That contract has no bearing on the merits of Plaintiff’s unjust enrichment claim. Thus, the 20 Court denies Defendants’ Motions as to the unjust enrichment claim. 21 D. Injunctive Relief 22 Last, Defendants move to dismiss Plaintiff’s claim for injunctive relief because it is 23 improperly plead as a substantive cause of action. (HOA’s MTD 10:9–12:22); (BDJ’s MTD 24 19:14–17). It is well established that injunctive relief is a remedy rather than a stand-alone 25 cause of action. See, e.g., Deutsche Bank Nat’l Tr. Co. v. SFR Invs. Pool 1, LLC, No. 2:17-cv- Page 7 of 8 1 02638-GMN-GWF, 2019 WL 1446956, at *2 n.2 (D. Nev. Mar. 31, 2019); Brannan v. Bank of 2 Am., No. 2:16-cv-01004-GMN-GWF, 2018 WL 1220562, at *6 (D. Nev. Mar. 8, 2018). 3 Accordingly, to the extent Plaintiff pleads injunctive relief as a distinct cause of action, 4 it necessarily fails. Insofar as Plaintiff seeks injunctive relief as a remedy linked to its quiet 5 title claim, this form of relief is viable and is not subject to dismissal at this stage. 6 IV. 7 8 9 10 CONCLUSION IT IS HEREBY ORDERED that HOA’s Motion to Dismiss, (ECF No. 82), is DENIED. IT IS FURTHER ORDERED that BDJ’s Motion to Dismiss, (ECF No. 85), is DENIED. 11 IT IS FURTHER ORDERED that Plaintiff shall file a second amended complaint 12 consistent with the foregoing discussion within fourteen (14) days of this Order’s issuance. 13 IT IS FURTHER ORDERED that the parties shall file Motions for Summary 14 Judgment within twenty-one (21) days of the filing of Plaintiff’s second amended complaint. 15 8 DATED this _____ day of April, 2019. 16 17 18 ___________________________________ Gloria M. Navarro, Chief Judge United States District Judge 19 20 21 22 23 24 25 Page 8 of 8

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