Federal Housing Finance Agency et al v. Nevada New Builds, LLC

Filing 14

ORDER Granting 9 Motion for Summary Judgment. The Clerk of Court shall enter judgment accordingly and close the case. Signed by Chief Judge Gloria M. Navarro on 3/3/17. (Copies have been distributed pursuant to the NEF - ADR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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FEDERAL HOUSING FINANCE AGENCY,
in its capacity as Conservator of Federal
National Mortgage Association; and
FEDERAL NATIONAL MORTGAGE
ASSOCIATION,

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Plaintiffs,
vs.

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NEVADA NEW BUILDS, LLC, a Nevada
Domestic Limited Liability Company,

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Defendant.

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Case No.: 2:16-cv-1188-GMN-CWH
ORDER

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Pending before the Court is the Motion for Summary Judgment, (ECF No. 9), filed by

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Plaintiffs Federal National Mortgage Association (“Fannie Mae”) and Federal Housing Finance

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Agency (“FHFA”) (collectively “Plaintiffs”). Defendant Nevada New Builds, LLC

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(“Defendant”) filed a Response, (ECF No. 10), and Plaintiffs filed a Reply, (ECF No. 11).

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I.

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BACKGROUND
The present action involves the interplay between Nevada Revised Statute § 116.3116

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and 12 U.S.C. § 4617 as it relates to the parties’ interests in three real properties located at:

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(1) 3952 Edgemoor Way, Las Vegas, Nevada (“Edgemoor Way”), (Mot. for Summ. J. (“MSJ”)

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5:24–26, ECF No. 9); (2) 1050 East Cactus Avenue, No. 1127, Las Vegas, Nevada (“East

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Cactus Avenue”), (id. 6:19–21); and (3) 435 Mesa Boulevard, Unit 202, Mesquite, Nevada

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(“Mesa Boulevard”), (id. 9:6–8) (collectively the “Properties”).

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1. Edgemoor Way

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On September 26, 2003, Darline K. Shrader (“Shrader”) obtained a loan (the “Edgemoor
Loan”) in the amount of $148,800 from Countrywide Home Loans, Inc. (“Countrywide”) that
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was secured by a Deed of Trust on the Edgemoor Way Property. (Deed of Trust, Ex. C to MSJ,

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ECF No. 9-3).1 Fannie Mae purchase the Edgemoor Loan on October 1, 2003, and has owned

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it ever since. (See Curcio Decl., Ex. D to MSJ ¶¶ 12–14, ECF No. 9-4).

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On August 2, 2013 a Corporate Assignment of Deed of Trust was recorded, whereby

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Mortgage Electronic Registration Systems, Inc. (“MERS”), as the nominee for Countrywide

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and Countrywide’s successors and assigns, assigned the Deed of Trust to Fannie Mae. (Ex. E to

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MSJ, ECF No. 9-5).

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On November 30, 2013, Alessi & Koenig, LLC (A&K), as agent for Forest Hills HOA
(the “Forest Hills HOA”) held a trustee’s sale, selling the Edgemoor Way Property to the Forest

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Hills HOA for $11,418.74. (Ex. F to MSJ, ECF No. 9-6). On February 11, 2015, the Forest

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Hills HOA recorded a quitclaim deed that transferred the Edgemoor Way Property to

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Defendant. (Ex. G to MSJ, ECF No. 9-7).

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2. East Cactus Avenue

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On October 6, 200, Lawrence Shamuel (“Shamuel”) obtained a loan (the “East Cactus

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Loan”) in the amount of $156,000 from Countrywide that was secured by a Deed of Trust on

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the East Cactus Avenue Property. (Deed of Trust, Ex. I to MSJ, ECF No. 9-9). Fannie Mae

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purchased the East Cactus Loan on October 1, 2004, and has owned it ever since. (See Curcio

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Decl., Ex. D to MSJ ¶¶ 6–8).

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On June 1, 2011 an Assignment of Deed of Trust was recorded, whereby MERS, as the

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nominee for Countrywide and Countrywide’s successors and assigns, assigned the Deed of

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Trust to BAC Home Loans Servicing, LP (“BAC”). (Ex. J to MSJ, ECF No. 9-10). Then on

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October 14, 2013, an additional Assignment of Deed of Trust was recorded where BAC

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The Court takes judicial notice of Exhibits C, E, F, G, I, J, K, L, M, N, O, P, Q, R, S to Plaintiffs’ Motion for
Summary Judgment. (See ECF No. 9); Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986). Each
of these documents is publicly recorded in the Clark County Recorder’s Office.
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assigned the Deed of Trust to Green Tree Servicing, LLC (“Green Tree”). (Ex. K to MSJ, ECF

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No. 9-11).

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On February 7, 2014, Nevada Association Services, Inc. (“NAS”), as trustee for Antiqua

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Condominiums, held a trustee’s sale, selling the East Cactus Avenue Property to Paul Turcutto

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(“Turcutto”) and Athena Sack (“Sack”) for $16,000. (Ex. L to MSJ, ECF No. 9-12). On June

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18, 2014, Turcutto sold the East Cactus Avenue Property to Azzurra Capital, LLC (“Azzurra”),

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and on September 18, 2014, Sack transferred her interest to Azzurra as well. (Ex. M to MSJ at

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1, ECF No. 9-13); (Ex. O to MSJ at 1, ECF No. 9-15). Azzurra is an affiliate of Defendant.

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(Ex. P to MSJ at 1, ECF No. 9-16).

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3. Mesa Boulevard

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On November 30, 2007, Jay D. Hills and Rhoda V. Hills obtained a loan (the “Mesa

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Boulevard Loan”) in the amount of $99,200 from Freedom Mortgage Corporation and MERS

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that was secured by a Deed of Trust on the Property. (Ex. Q to MSJ at 1–2, ECF No. 9-17).

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Fannie Mae purchased the Mesa Boulevard Loan on December 1, 2007, and has owned it ever

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since. (See Curcio Decl., Ex. D to MSJ ¶¶ 17–19).

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On February 19, 2014, A&K, as trustee for Rock Springs Mesquite HOA (the “Rock

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Springs HOA”), held a trustee’s sale, selling the Mesa Boulevard Property to the Rock Springs

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HOA for $6,375.48. (Ex. R to MSJ at 1, ECF No. 9-18). At this time, MERS was the

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beneficiary of record of the Mesa Boulevard Deed of Trust as nominee for Lender and Lender’s

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successors and assigns, which included Plaintiffs. (Id.). On June 5, 2014, Rock Springs HOA

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recorded a quitclaim deed that transferred the Mesa Boulevard Property to Defendant. (Ex. S to

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MSJ at 1, ECF No. 9-19).

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Plaintiffs initiated this action by filing the Complaint on May 26, 2016, asserting claims

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for quiet title and declaratory relief against Defendant. (Compl. ¶¶ 29–48, ECF No. 1). On

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August 3, 2016, Plaintiffs filed the pending Motion for Summary Judgment. (MSJ, ECF No. 9).

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II.

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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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. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

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(1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable

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jury to return a verdict for the nonmoving party. See 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. See Celotex Corp., 477 U.S. at 323–

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

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

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398 U.S. 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. See 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. See 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. See 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. See Anderson, 477 U.S. at 249.

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

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

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

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III.

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DISCUSSION
In the instant Motion for Summary Judgment, Plaintiffs request that the Court declare

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that “12 U.S.C. § 4617(j)(3) preempts any Nevada law that otherwise would permit a

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foreclosure of an HOA lien to extinguish a property interest of Fannie Mae while it is under

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FHFA’s conservatorship,” “the HOA Sale did not extinguish Fannie Mae’s interest in the

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Property and thus the Deed of Trust continues to encumber the Property,” and “any interest of

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the Plaintiff in the Property is subject to Fannie Mae’s first secured interest in the Property.”

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(MSJ 21:25–22:4).

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The Court addressed the applicability of 12 U.S.C. § 4617(j)(3) in Skylights LLC v.

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Fannie Mae, 112 F. Supp. 3d 1145 (D. Nev. 2015). After addressing many different arguments

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regarding the applicability of § 4617(j)(3), the Court held that the plain language of

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§ 4617(j)(3) prohibits property of FHFA from being subject to a foreclosure without its

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consent. Id. at 1159.

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Here, Fannie Mae has held an interest in each of the Properties since, respectively,
October 1, 2003; October 1, 2004; and December 1, 2007. (See Curcio Decl., Ex. B to MSJ ¶¶

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6–19). Accordingly, because FHFA held an interest in the Deeds of Trust as conservator for

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Fannie Mae prior to the HOA foreclosures, § 4617(j)(3) prevents the HOA foreclosures on the

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Properties from extinguishing the Deeds of Trust.

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IV.

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CONCLUSION
IT IS HEREBY ORDERED that Plaintiffs’ Motion for Summary Judgment, (ECF No.

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9), is GRANTED. The Court finds that 12 U.S.C. § 4617(j)(3) preempts Nevada Revised

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Statute § 116.3116 to the extent that a homeowner association’s foreclosure of its super-priority

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lien cannot extinguish a property interest of Fannie Mae or Freddie Mac while those entities are

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under FHFA’s conservatorship. Accordingly, the HOAs’ foreclosure sales of their super-

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priority interest on the Properties did not extinguish Fannie Mae’s interest in the Properties

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secured by the Deeds of Trust or convey the Properties free and clear to Defendant.

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The Clerk of Court shall enter judgment accordingly and close the case.

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DATED this ___ day of March, 2017.

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