LJS&G, LTD. v. Z's et al

Filing 39

ORDER. IT IS HEREBY ORDERED that 34 Defendant Lake Vegas Master Association's Motion for Judgment on the Pleadings is DENIED.IT IS FURTHER ORDERED that 36 the Government's Motion for Summary Judgment is DENIED. IT IS FURTHER ORDERED that the parties shall file a Joint Pretrial Order by 4/22/2019. Signed by Chief Judge Gloria M. Navarro on 3/20/2019. (Copies have been distributed pursuant to the NEF - MR)

1

UNITED STATES DISTRICT COURT

2

DISTRICT OF NEVADA

3
4
5
6
7
8
9
10
11
12
13
14

LJS&G, LTD., a Nevada Corporation, d/b/a/
LEACH JOHNSON SONG & GRUCHOW,

)
)
)
Plaintiff,
)
vs.
)
)
Z’s, a Nevada Corporation, et al.,
)
)
Defendants,
)
______________________________________ )
UNITED STATES OF AMERICA,
)
)
Cross-Claim Plaintiff,
)
vs.
)
)
LAKE LAS VEGAS MASTER
)
ASSOCIATION,
)
)
Cross-Claim Defendant.
)

Case No.: 2:16-cv-01150-GMN-CWH
ORDER

Pending before the Court is the Motion for Judgment on the Pleadings, (ECF No. 34),

15
16

filed by Defendant/Cross-Claim Defendant Lake Las Vegas Master Association (“LLVMA”).

17

Cross-Claim Plaintiff United States of America (the “Government”) filed a Response, (ECF

18

No. 35), and LLVMA filed a Reply, (ECF No. 37).
Also pending before the Court is the Government’s Motion for Summary Judgment,

19
20

(ECF No. 36). LLVMA did not file a response, and the time to do so has passed.

21

I.

22

BACKGROUND
This case concerns real property located at 31 Rue Mediterra, Henderson, Nevada (the

23

“Property”), which Z’s (a Nevada corporation) purchased in 2004. (Mot. J. 2:12–19, 3:5–6,

24

ECF No. 34). LLVMA and the South Shore Residential Community Association (“SSRCA”)

25

are the homeowners associations (“HOAs”) that manage the Property. (Id. 2:12–18).

Page 1 of 6

On January 5, 2010, the Government filed a Notice of Federal Tax Lien against the

1
2

Property with the Clark County Recorder due to Z’s unpaid federal income tax assessments for

3

the years 2004 and 2005. (Mot. Summ. J. (“MSJ”) 3:18–21, ECF No. 36). On December 14,

4

2010, LLVMA recorded an HOA lien against the Property for outstanding fees. (Id. 4:1–3). On

5

March 21, 2013, SSRCA conducted a foreclosure sale on the Property because of its own lien

6

on the Property. (Id.); (Mot. J. 2:13–19). Roughly six months after the foreclosure sale,

7

LLVMA received a check for $7,206.23 from the Property’s foreclosure agent, which

8

represented outstanding fees owed by Z’s to LLVMA. (MSJ 4:7–10).
On January 15, 2016, Plaintiff LJS&G, LTD. filed a Complaint in the Eighth Judicial

9
10

District Court for the District of Nevada, seeking a distribution of $59,472.43 in proceeds from

11

the Property’s foreclosure sale. (Id. 4:11–13). The Government then removed the action to this

12

Court on May 23, 2016. (Pet. Removal, ECF No. 1). Upon removal, the Government filed a

13

cross-claim against LLVMA to recover $7,206.23 that LLVMA received from the Property’s

14

March 21, 2013 foreclosure sale. (Am. Answer, ECF No. 26).
On April 17, 2018, LLVMA filed its instant Motion for Judgment on the Pleadings,

15
16

seeking dismissal of the Government’s cross-claim against it. (ECF No. 34). Shortly afterward,

17

the Government filed its Motion for Summary Judgment, (ECF No. 36), requesting a judgment

18

that distributes $59,472.43 in proceeds to the Government, plus $7,206.23 in proceeds already

19

received by LLVMA.

20
21

II.

LEGAL STANDARD
The Federal Rules of Civil Procedure provide for summary adjudication when the

22

pleadings, depositions, answers to interrogatories, and admissions on file, together with the

23

affidavits, if any, show that “there is no genuine dispute as to any material fact and the movant

24

is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Material facts are those that

25

may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

Page 2 of 6

1

(1986). A dispute as to a material fact is genuine if there is a sufficient evidentiary basis on

2

which a reasonable fact-finder could rely to find for the nonmoving party. See id. “The amount

3

of evidence necessary to raise a genuine issue of material fact is enough ‘to require a jury or

4

judge to resolve the parties’ differing versions of the truth at trial.’” Aydin Corp. v. Loral

5

Corp., 718 F.2d 897, 902 (9th Cir. 1983) (quoting First Nat’l Bank v. Cities Serv. Co., 391 U.S.

6

253, 288–89 (1968)). “Summary judgment is inappropriate if reasonable jurors, drawing all

7

inferences in favor of the nonmoving party, could return a verdict in the nonmoving party’s

8

favor.” Diaz v. Eagle Produce Ltd. P’ship, 521 F.3d 1201, 1207 (9th Cir. 2008) (citing United

9

States v. Shumway, 199 F.3d 1093, 1103–04 (9th Cir. 1999)). A principal purpose of summary

10

judgment is “to isolate and dispose of factually unsupported claims.” Celotex Corp. v. Catrett,

11

477 U.S. 317, 323–24 (1986).

12

In determining summary judgment, a court applies a burden-shifting analysis. “When

13

the party moving for summary judgment would bear the burden of proof at trial, it must come

14

forward with evidence which would entitle it to a directed verdict if the evidence went

15

uncontroverted at trial. In such a case, the moving party has the initial burden of establishing

16

the absence of a genuine issue of fact on each issue material to its case.” C.A.R. Transp.

17

Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted). In

18

contrast, when the nonmoving party bears the burden of proving the claim or defense, the

19

moving party can meet its burden in two ways: (1) by presenting evidence to negate an

20

essential element of the nonmoving party’s case; or (2) by demonstrating that the nonmoving

21

party failed to make a showing sufficient to establish an element essential to that party’s case

22

on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323–

23

24. If the moving party fails to meet its initial burden, summary judgment must be denied and

24

the court need not consider the nonmoving party’s evidence. See Adickes v. S.H. Kress & Co.,

25

398 U.S. 144, 159–60 (1970).

Page 3 of 6

1

If the moving party satisfies its initial burden, the burden then shifts to the opposing

2

party to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v.

3

Zenith Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute,

4

the opposing party need not establish a material issue of fact conclusively in its favor. It is

5

sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the

6

parties’ differing versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors

7

Ass’n, 809 F.2d 626, 631 (9th Cir. 1987). However, the nonmoving party “may not rely on

8

denials in the pleadings but must produce specific evidence, through affidavits or admissible

9

discovery material, to show that the dispute exists,” Bhan v. NME Hosps., Inc., 929 F.2d 1404,

10

1409 (9th Cir. 1991), and “must do more than simply show that there is some metaphysical

11

doubt as to the material facts.” Orr v. Bank of America, 285 F.3d 764, 783 (9th Cir. 2002)

12

(internal citations omitted). “The mere existence of a scintilla of evidence in support of the

13

plaintiff’s position will be insufficient.” Anderson, 477 U.S. at 252. In other words, the

14

nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations

15

that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989).

16

Instead, the opposition must go beyond the assertions and allegations of the pleadings and set

17

forth specific facts by producing competent evidence that shows a genuine issue for trial. See

18

Celotex Corp., 477 U.S. at 324.

19

At summary judgment, a court’s function is not to weigh the evidence and determine the

20

truth but to determine whether there is a genuine issue for trial. See Anderson, 477 U.S. at 249.

21

The evidence of the nonmovant is “to be believed, and all justifiable inferences are to be drawn

22

in his favor.” Id. at 255. But if the evidence of the nonmoving party is merely colorable or is

23

not significantly probative, summary judgment may be granted. See id. at 249–50.

24
25

Page 4 of 6

1
2

III.

DISCUSSION
The Government argues that its recorded federal tax lien against Z’s corporation is

3

superior to any interest that LLVMA had on the Property. (MSJ 7:3-11, ECF No. 36). As a

4

superior lienholder, the Government contends that it stands ahead of LLVMA for any proceeds

5

from the Property’s foreclosure sale. (Id. 7:12–20). The Government accordingly requests that

6

the Court order LLVMA to disgorge the $7,206.23 that it received from the foreclosure sale,

7

and for the Court to then distribute those proceeds to the Government. (Id. 10:2–11).

8

In response, LLVMA argues, under NRS 116.3116, that it holds the same priority to

9

foreclosure proceeds as the foreclosing party (SSRCA). (Mot. J. 3:19–4:1, ECF No. 34). Thus,

10

if the Government is arguing that its liens are superior to LLVMA, the Government’s liens are

11

then superior to the foreclosing party. (Id.). However, as a superior lienholder to the

12

foreclosing party, LLVMA contends that the Government’s lien would simply survive the

13

foreclosure, and the Government would not be entitled to foreclosure sale proceeds owed to

14

junior lienholders such as LLVMA. (Id. 4:18–26).

15

“[F]ederal law governs the relative priority of federal tax liens and state-created liens.”

16

Quality Loan Serv. Corp. v. 24702 Pallas Way, Mission Viejo, CA 92691, 635 F.3d 1128, 1134

17

(9th Cir. 2011) (citations omitted). “Absent provision to the contrary, priority for purposes of

18

federal law is governed by the common-law principle that ‘the first in time is the first in right.’”

19

Id. (citing United States v. McDermott, 507 U.S. 447, 449 (1993)).

20

Here, Plaintiff LJS&G, LTD. conducted the foreclosure sale pursuant to NRS 116.3116

21

and on behalf of SSRCA. (Pl.’s Compl. Interpleader ¶¶ 8–9). Because SSRCA and LLVMA

22

were both HOAs managing the Property, NRS 116.3116 may provide them “equal priority” to

23

foreclosure sale proceeds. S. Highlands Comm. Ass’n v. San Florentine Ave. Tr., 365 P.3d 503,

24

505 (2016) (discussing NRS 116.3116(4), which is now NRS 116.3116(8)).

25

Page 5 of 6

However, “equal priority” does not exist when the applicable HOA declaration

1
2

“otherwise provides.” See S. Highlands Comm. Ass’n, 365 P.3d at 505, 505 n.4. Neither party

3

here provides documentation or statements concerning whether the applicable HOA declaration

4

altered the scheme of NRS 116.3116. Thus, at this stage, the Court cannot determine whether

5

LLVMA held equal priority to SSRCA, nor can the Court declare the proper distribution of

6

foreclosure sale proceeds between the Government and LLVMA.1

7

IV.

IT IS HEREBY ORDERED that Defendant Lake Vegas Master Association’s Motion

8
9

for Judgment on the Pleadings, (ECF No. 34), is DENIED.
IT IS FURTHER ORDERED that the Government’s Motion for Summary Judgment,

10
11

(ECF No. 36), is DENIED.
IT IS FURTHER ORDERED that the parties shall file a Joint Pretrial Order by April

12
13

CONCLUSION

22, 2019.

14

20
DATED this _____ day of March, 2019.

15
16
17

___________________________________
Gloria M. Navarro, Chief Judge
United States District Court

18
19
20

Because the Property’s foreclosure sale occurred under NRS 116.3116, proceeds from the sale are divided “in
the order of priority of any subordinate claim of record.” NRS 116.31164(7)(b)(4) (emphasis added).
Consequently, were LLVMA’s to be equal to SSRCA’s lien, the Government has not provided any authority that
allows it to override the process outlined in NRS 116.3116 et seq. so that it could simultaneously be superior to
the foreclosing party yet capable of receiving LLVMA’s proceeds from the sale. Indeed, general authorities
show otherwise. See 59A C.J.S. Mortgages § 1331 (“Where senior lienors’ rights are unaffected by foreclosure,
holders of liens that are senior in priority do not have the right to share in a surplus produced by the foreclosure
of a junior mortgage.”); United States v. Sage, 566 F.2d 1114, 1114–15 (9th Cir. 1977) (“Foreclosure affects the
rights of all mortgagees junior to the foreclosing mortgagee and requires them to look to the proceeds for
satisfaction, but it has no effect whatsoever upon the interest of senior mortgagees . . . .”).
1

21
22
23
24
25

Page 6 of 6