Collegium Fund Series 32 v. Snyder et al

Filing 56

ORDER denying 26 Motion for Summary Judgment. Signed by Judge James C. Mahan on 7/5/2017. (Copies have been distributed pursuant to the NEF - JM)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 *** 7 COLLEGIUM FUND SERIES 32, Case No. 2:16-CV-1640 JCM (PAL) 8 Plaintiff(s), 9 10 ORDER v. MARK DANIEL SNYDER, et al., 11 Defendant(s). 12 13 Presently before the court is intervenor-defendant/counterclaimant Federal Home Loan 14 Mortgage Corporation’s (“Freddie Mac”) motion for summary judgment (ECF No. 26), in which 15 defendant 16 Plaintiff/counterdefendant Collegium Fund LLC, Series 32 (“Collegium”) filed a response (ECF 17 Nos. 45, 52), to which Freddie Mac replied (ECF No. 53). 18 I. Wells Fargo Bank, N.A. (“Wells Fargo”) joined (ECF No. 29). Facts 19 This case involves a dispute over real property located at 1796 Nuevo Road, Henderson, 20 Nevada 89014 (the “property”). On October 18, 2006, Mark Daniel Snyder (“Snyder”) obtained 21 a loan from Wells Fargo in the amount of $134,500.00 to purchase the property, which was secured 22 by a deed of trust recorded on November 19, 2007. (ECF No. 1-2). 23 On December 12, 2006, Freddie Mac purchased the loan and Wells Fargo began servicing 24 the loan on Freddie Mac’s behalf pursuant to Freddie Mac’s single-family seller/servicer guide 25 (“the guide”). (ECF No. 26-2). Neither Freddie Mac nor Wells Fargo recorded the assignment. 26 On September 6, 2008, pursuant to the Housing Economic Recovery Act of 2008, 12 27 U.S.C. § 4617 et seq. (“HERA”), Federal Housing Finance Agency’s (“FHFA”) director placed 28 Freddie Mac into conservatorship. James C. Mahan U.S. District Judge 1 On June 5, 2012, Absolute Collection Services, LLC (“ACS”), acting on behalf of Nuevo 2 Vista Homeowners Association, Inc. (the “HOA”), recorded a notice of delinquent assessment 3 lien. (ECF No. 1-2). On May 16, 2013, ACS recorded a notice of default and election to sell to 4 satisfy the delinquent assessment lien. (ECF No. 1-2). On November 4, 2013, ACS recorded a 5 notice of trustee’s sale. (ECF No. 1-2). 6 On January 16, 2014, Collegium purchased the property for $63,500.00 at the HOA 7 foreclosure sale. (ECF No. 1-2). A trustee’s deed upon sale in Collegium’s favor was recorded 8 on January 16, 2014. (ECF No. 1-2). 9 10 FHFA did not consent to any purported extinguishment of Freddie Mac’s ownership interest in the property. (See, e.g., ECF No. 26-12). 11 On October 9, 2015, Collegium filed (in state court, case no. A-15-725950-C) the 12 underlying complaint against Snyder and Wells Fargo, alleging five causes of action: (1) quiet 13 title; (2) declaratory relief; (3) unjust enrichment; (4) injunctive relief; and (5) award of attorney’s 14 fees and costs. (ECF No. 1-2). 15 On November 30, 2015, Wells Fargo filed (in state court) an answer and counterclaim 16 against Collegium, ACS, and the HOA for declaratory relief, wrongful foreclosure, violation of 17 NRS 116.1113, intentional interference with contract, and quiet title. (ECF No. 1-2). 18 On February 26, 2016, the HOA filed (in state court) a crossclaim against ACS for implied 19 indemnity, contribution, apportionment, express indemnity, breach of contract, and declaratory 20 relief. (ECF No. 1-2). 21 On June 23, 2016, the state court granted Freddie Mac’s motion to intervene. (ECF No. 1- 22 2). On July 12, 2016, Freddie Mac removed the action to federal court pursuant to 28 U.S.C. §§ 23 1442 and 1446 and 12 U.S.C. § 1452(f). (ECF No. 1). On July 13, 2016, Freddie Mac filed an 24 answer and counterclaim for declaratory relief against Collegium, ACS, and the HOA and quiet 25 title against Collegium. (ECF No. 3). 26 On September 29, 2016, the HOA filed an answer to Freddie Mac’s counterclaim and a 27 second crossclaim against ACS, which is virtually identical to the crossclaim ACS previously filed 28 in state court in February (ECF No. 1-2). (ECF No. 22). James C. Mahan U.S. District Judge -2- 1 In the instant motion, Freddie Mac moves for summary judgment in its favor on Freddie 2 Mac’s counterclaims (ECF No. 3) and on Collegium’s quiet title and declaratory relief claims 3 (ECF No. 1-2). (ECF No. 26). 4 II. Legal Standard 5 The Federal Rules of Civil Procedure allow summary judgment when the pleadings, 6 depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 7 show that “there is no genuine dispute as to any material fact and the movant is entitled to a 8 judgment as a matter of law.” Fed. R. Civ. P. 56(a). A principal purpose of summary judgment is 9 “to isolate and dispose of factually unsupported claims.” Celotex Corp. v. Catrett, 477 U.S. 317, 10 323–24 (1986). 11 For purposes of summary judgment, disputed factual issues should be construed in favor 12 of the non-moving party. Lujan v. Nat’l Wildlife Fed., 497 U.S. 871, 888 (1990). However, to be 13 entitled to a denial of summary judgment, the nonmoving party must “set forth specific facts 14 showing that there is a genuine issue for trial.” Id. 15 In determining summary judgment, a court applies a burden-shifting analysis. The moving 16 party must first satisfy its initial burden. “When the party moving for summary judgment would 17 bear the burden of proof at trial, it must come forward with evidence which would entitle it to a 18 directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has 19 the initial burden of establishing the absence of a genuine issue of fact on each issue material to 20 its case.” C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) 21 (citations omitted). 22 By contrast, when the nonmoving party bears the burden of proving the claim or defense, 23 the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential 24 element of the non-moving party’s case; or (2) by demonstrating that the nonmoving party failed 25 to make a showing sufficient to establish an element essential to that party’s case on which that 26 party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323–24. If the moving 27 party fails to meet its initial burden, summary judgment must be denied and the court need not 28 James C. Mahan U.S. District Judge -3- 1 consider the nonmoving party’s evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159– 2 60 (1970). 3 If the moving party satisfies its initial burden, the burden then shifts to the opposing party 4 to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith 5 Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute, the 6 opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient 7 that “the claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing 8 versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 9 631 (9th Cir. 1987). 10 In other words, the nonmoving party cannot avoid summary judgment by relying solely on 11 conclusory allegations that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040, 12 1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the 13 pleadings and set forth specific facts by producing competent evidence that shows a genuine issue 14 for trial. See Celotex, 477 U.S. at 324. 15 At summary judgment, a court’s function is not to weigh the evidence and determine the 16 truth, but to determine whether there is a genuine issue for trial. See Anderson v. Liberty Lobby, 17 Inc., 477 U.S. 242, 249 (1986). The evidence of the nonmovant is “to be believed, and all 18 justifiable inferences are to be drawn in his favor.” Id. at 255. But if the evidence of the 19 nonmoving party is merely colorable or is not significantly probative, summary judgment may be 20 granted. See id. at 249–50. 21 III. Discussion1 22 In the instant motion, Freddie Mac argues that 12 U.S.C. § 4617(j)(3) preempts NRS 23 Chapter 116 to the extent that it permits a HOA foreclosure sale to extinguish Freddie Mac’s 24 property interest while it is under FHFA’s conservatorship. (ECF No. 26). Freddie Mac thus 25 26 27 28 James C. Mahan U.S. District Judge 1 The court takes judicial notice of the recorded deed of trust attached as exhibit A (ECF No. 26-1) to Freddie Mac’s motion for summary judgment (ECF No. 26), as well as the recorded foreclosure deed attached as exhibit 18 (ECF No. 52-18) to Collegium’s response (ECF No. 52). See, e.g., United States v. Corinthian Colls., 655 F.3d 984, 998–99 (9th Cir. 2011) (holding that a court may take judicial notice of public records if the facts noticed are not subject to reasonable dispute); Intri-Plex Tech., Inv. v. Crest Grp., Inc., 499 F.3d 1048, 1052 (9th Cir. 2007). -4- 1 maintains that the deed of trust continues to encumber the property and that Collegium’s interest 2 in the property is subject to Freddie Mac’s first secured interest therein. 3 Accordingly, Freddie Mac requests that the court declare the foreclosure invalid and that the deed 4 of trust continues to encumber the property. (ECF No. 26 at 18). (ECF No. 26). 5 Under the Property Clause of the United States Constitution, only “Congress shall have the 6 power to dispose of and make all needful rules and regulations respecting the territory or other 7 property belonging to the United States . . . .” U.S. Const. Art. IV, § 3, cl. 2. The Supremacy 8 Clause provides that the “Constitution . . . shall be the supreme law of the land . . . .” U.S. Const. 9 Art. VI, cl. 2. “State legislation must yield under the Supremacy Clause of the Constitution to the 10 interests of the federal government when the legislation as applied interferes with the federal 11 purpose or operates to impede or condition the implementation of federal policies and programs.” 12 Rust v. Johnson, 597 F.2d 174, 179 (9th Cir. 1979). 13 In Rust, the Ninth Circuit held that a city’s foreclosure on property insured by the Federal 14 National Mortgage Association was invalid under the Supremacy Clause. Id. The court reasoned 15 that upholding the sale “would run the risk of substantially impairing the Government’s 16 participation in the home mortgage market and of defeating the purpose of the National Housing 17 Act.” Id. 18 Foreclosure on federal property is prohibited where it interferes with the statutory mission 19 of a federal agency. See United States v. Lewis Cnty., 175 F.3d 671, 678 (9th Cir. 1999) (holding 20 that the state could not foreclose on federal Farm Service Agency property for non-payment of 21 taxes). 22 Under NRS 116.3116, a HOA has a lien on a unit for assessments levied against that unit 23 and such HOA liens are prior to all other liens and encumbrances, subject to exceptions. NRS 24 116.3116(1)–(2). In SFR Investment Pool 1 v. U.S. Bank, 334 P.3d 408, 409 (Nev. 2014) (“SFR 25 Investments”), the Nevada Supreme Court found that a HOA’s foreclosure of a superpriority lien 26 extinguishes a first recorded security interest. 27 HERA established FHFA to regulate Fannie Mae, Freddie Mac, and Federal Home Loan 28 Banks. See Pub. L. No. 110–289, 122 Stat. 2654, codified at 12 U.S.C. § 4511 et seq. In September James C. Mahan U.S. District Judge -5- 1 2008, FHFA placed Fannie Mae and Freddie Mac into conservatorships “for the purpose of 2 reorganizing, rehabilitating, or winding up [their] affairs.” 3 conservator, FHFA immediately succeeded to “all rights, titles, powers, and privileges” of Fannie 4 Mae and Freddie Mac. 12 U.S.C. § 4617(b)(2)(A)(i). Moreover, Congress granted FHFA 5 exemptions to carry out its statutory functions—specifically, in acting as conservator, “[n]o 6 property of [FHFA] shall be subject to levy, attachment, garnishment, foreclosure, or sale without 7 the consent of [FHFA], nor shall any involuntary lien attach to the property of [FHFA].” 12 U.S.C. 8 § 4617(j)(3). 12 U.S.C. § 4617(a)(2). As 9 In Skylights LLC v. Fannie Mae, 112 F. Supp. 3d 1145 (D. Nev. 2015), the court addressed 10 the applicability of 12 U.S.C. § 4617(j)(3) and held that the plain language of § 4617(j)(3) prohibits 11 property of FHFA from being subjected to a foreclosure without its consent. See also Saticoy Bay, 12 LLC v. Fannie Mae, No. 2:14-CV-01975-KJD-NJK, 2015 WL 5709484 (D. Nev. Sept. 29, 2015) 13 (holding that 12 U.S.C. § 4617(j)(3) preempts NRS 116.3116 to the extent that a HOA’s 14 foreclosure of its superpriority lien cannot extinguish a property interest of Fannie Mae while those 15 entities are under FHFA’s conservatorship). See generally G & P Inv. Enters., LLC v. Wells Fargo 16 Bank, N.A., 199 F. Supp. 3d 1266 (D. Nev. 2016). 17 Here, Freddie Mac has held an interest in the property since the purchase of the loan on 18 December 12, 2006. In turn, FHFA has held an interest in the deed of trust as conservator for 19 Freddie Mac since September 6, 2008, prior to the HOA foreclosure on January 16, 2014. FHFA 20 did not consent to the extinguishment of Freddie Mac’s property interest through the HOA’s 21 foreclosure sale. 22 However, neither Freddie Mac nor Wells Fargo recorded the assignment of deed of trust 23 so as to put Collegium and the HOA on notice of Freddie Mac’s/FHFA’s interest in the property. 24 Pursuant to NRS 111.320, “[e]very such conveyance or instrument of writing . . . recorded in the 25 manner prescribed in this chapter . . . must from the time of filing the same with the . . . recorder 26 for record, impart notice to all persons of the contents thereof; and subsequent purchasers and 27 mortgagees shall be deemed to . . . take with notice.” Nev. Rev. Stat. § 111.320. Moreover, NRS 28 111.315 provides that “[e]very conveyance of real property, and every instrument of writing . . . James C. Mahan U.S. District Judge -6- 1 whereby any real property may be affected . . . to operate as notice to third persons, shall be 2 recorded in the office of the recorder of the county in which the real property is situated.” Nev. 3 Rev. Stat. § 111.315; see also All Am. Van & Storage, Inc. v. DeLuca Realty, Inc., 592 P,2d 951, 4 952 (Nev. 1979) (“All American, by reason of the knowledge imputed to it pursuant to the 5 recording statutes, must be deemed to have had notice of the recorded encumbrance.”). 6 Because neither Freddie Mac nor Wells Fargo recorded the assignment of deed of trust, 7 genuine issues exist precluding summary judgment. Accordingly, the court will deny Freddie 8 Mac’s motion for summary judgment (ECF No. 26). 9 IV. Conclusion 10 Accordingly, 11 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that Freddie Mac’s motion for 12 13 14 15 summary judgment (ECF No. 26) be, and the same hereby is, DENIED. DATED July 5, 2017. __________________________________________ UNITED STATES DISTRICT JUDGE 16 17 18 19 20 21 22 23 24 25 26 27 28 James C. Mahan U.S. District Judge -7-

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