Beverly, Trustee of the Beverly-Blair Meadowridge Trust v. Weaver-Farley et al

Filing 18

ORDER granting 2 Motion to Dismiss; granting 3 Motion to Expunge Lis Pendens. Submission of Proposed Order due by 10/19/2013. Signed by Judge Larry R. Hicks on 10/08/2013. (Copies have been distributed pursuant to the NEF - KR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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NADINA BEVERLY,

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Plaintiff,

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v.

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GAYLE WEAVER-FARLEY; et al.,

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Defendants.

3:13-CV-0348-LRH-VPC
ORDER

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Before the court are defendant Wells Fargo Bank, N.A.’s (“Wells Fargo”) motion to dismiss

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(Doc. #21) and motion to expunge lis pendens (Doc. #3). Plaintiff Nadina Beverly, trustee of the

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Beverly-Blair Meadowridge Trust (“Beverly”), filed oppositions (Doc. ##12, 13) to which Wells

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Fargo replied (Doc. ##14, 15).

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I.

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Facts and Procedural History
In October 2004, defendant Gayle Farley (“Farley”) purchased real property in Reno,

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Nevada through an executed deed of trust listing non-party Sierra Financial Mortgage, LLC as the

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lender and the Mortgage Electronic Registration System (“MERS”) as the beneficiary. On April 16,

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2009, a corporate deed of trust was recorded on the property whereby MERS, as nominee for Sierra

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Financial Mortgage, LLC, transferred and assigned all beneficial interest in the first deed of trust to

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defendant Wells Fargo.

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Refers to the court’s docket number.

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Later that year, on May 27, 2009, a notice of delinquent assessment for homeowner’s

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association (“HOA”) dues was recorded on the property. On September 3, 2010, a notice of HOA

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sale was recorded. At that HOA sale, plaintiff Beverly purchased the property for $16,000.

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Subsequently, on May 31, 2013, Beverly filed a complaint against defendants to quiet title

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alleging that her purchase of the property from the HOA sale extinguished all the other liens,

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including the first deed of trust. Doc. #1, Exhibit A. Thereafter, Wells Fargo filed the present

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motion to dismiss. Doc. #2.

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II.

Legal Standard

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Wells Fargo seeks dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure

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to state a claim upon which relief can be granted. To survive a motion to dismiss for failure to state

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a claim, a complaint must satisfy the Federal Rule of Civil Procedure 8(a)(2) notice pleading

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standard. See Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1103 (9th Cir. 2008). That

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is, a complaint must contain “a short and plain statement of the claim showing that the pleader is

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entitled to relief.” Fed. R. Civ. P. 8(a)(2). The Rule 8(a)(2) pleading standard does not require

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detailed factual allegations; however, a pleading that offers “‘labels and conclusions’ or ‘a

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formulaic recitation of the elements of a cause of action’” will not suffice. Ashcroft v. Iqbal, 129 S.

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Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

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Furthermore, Rule 8(a)(2) requires a complaint to “contain sufficient factual matter,

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accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. at 1949 (quoting

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Twombly, 550 U.S. at 570). A claim has facial plausibility when the pleaded factual content allows

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the court to draw the reasonable inference, based on the court’s judicial experience and common

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sense, that the defendant is liable for the misconduct alleged. See id. at 1949-50. “The plausibility

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standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a

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defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a

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defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to

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relief.” Id. at 1949 (internal quotation marks and citation omitted).
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In reviewing a motion to dismiss, the court accepts the facts alleged in the complaint as

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true. Id. However, “bare assertions . . . amount[ing] to nothing more than a formulaic recitation of

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the elements of a . . . claim . . . are not entitled to an assumption of truth.” Moss v. U.S. Secret

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Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quoting Iqbal, 129 S. Ct. at 1951) (brackets in original)

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(internal quotation marks omitted). The court discounts these allegations because “they do nothing

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more than state a legal conclusion—even if that conclusion is cast in the form of a factual

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allegation.” Id. (citing Iqbal, 129 S. Ct. at 1951.) “In sum, for a complaint to survive a motion to

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dismiss, the non-conclusory ‘factual content,’ and reasonable inferences from that content, must be

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plausibly suggestive of a claim entitling the plaintiff to relief.” Id.

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III.

Discussion
In her complaint, Beverly alleges that pursuant to NRS 116.3116(2)(b), Wells Fargo’s first

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deed of trust was extinguished by the HOA’s foreclosure and sale of the underlying property. See

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Doc. #1, Exhibit A.

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The court has reviewed the documents and pleadings on file in this matter and finds that

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Beverly misconstrues the language of Section 3116(2)(b). NRS 116.3116 relates to liens by

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homeowner’s associations and reads as follows:

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2. A lien under this section is prior to all other liens and encumbrances on a unit except:
(b) A first security interest on the unit recorded before the date on which the assessment
sought to be enforced became delinquent or, in a cooperative, the first security interest
encumbering only the unit’s owner’s interest and perfected before the date on which the
assessment sought to be enforced became delinquent . . .

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By its very language, Section 3116(2)(b) specifically states that an HOA lien is prior to all other

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liens and encumbrances on the property except a first security interest recorded before the date the

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HOA assessment became delinquent.

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Here, the first deed of trust was recorded in October 2004. Defendant Wells Fargo was

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assigned all rights under the first deed of trust in April 2009, a full month before the delinquent

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HOA assessment was recorded on the subject property. Thus, Wells Fargo’s lien meets the

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statutory requirements of NRS 116.3116(2)(b) and survived the HOA sale. As such, Beverly took
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title to the property subject to the first deed of trust.

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As an alternative argument, Beverly contends that Section 3116(2)(c) carves out a limited

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exception to Section 3116(2)(b) that is applicable in this matter. NRS 116.3116(2)(c) provides in

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pertinent part that:

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The lien is also prior to all security interests described in paragraph (b) to the extent of any
charges incurred by the association . . .would have become due in the absence of acceleration
during the 9 months immediately preceding institution of an action to enforce the lien . . .

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Beverly contends that this section provides that the foreclosure of a delinquent HOA

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assessment lien extinguishes the first security interest on the property if it relates to charges

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incurred during the nine (9) months prior to the foreclosure. However, once again Beverly

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misconstrues the statute. The plain language of NRS 116.2116(2)(c) simply creates a limited super

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priority lien for nine (9) months of HOA assessments leading up to the foreclosure of the first

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mortgage, but it does not eliminate the first security interest. Contrary to Beverly’s assertion, the

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statutory scheme does not require an HOA to wait until the holder of the deed of trust forecloses on

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its interest. Rather, as in this case, the HOA may initiate a non-judicial foreclosure to recover

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delinquent assessments and the purchaser at the HOA sale takes the property subject to the first

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security interest. Therefore, based on the express language of the statutes, the court finds that

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Beverly’s claim for quiet title fails as a matter of law. Accordingly, the court shall grant Wells

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Fargo’s motion to dismiss.

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IT IS THEREFORE ORDERED that defendant’s motion to dismiss (Doc. #2) is

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GRANTED. Plaintiff’s complaint (Doc. #1, Exhibit A) is DISMISSED in its entirety.

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IT IS FURTHER ORDERED that defendant’s motion to expunge lis pendens (Doc. #3) is

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GRANTED. Defendant Wells Fargo Bank, N.A. shall have ten (10) days after entry of this order to

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prepare an appropriate proposed order expunging lis pendens and submit the same for approval and

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signature.

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IT IS SO ORDERED.

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DATED this 8th day of October, 2013.

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__________________________________
LARRY R. HICKS
UNITED STATES DISTRICT JUDGE

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