LVDG Series 125 established under LVDG, LLC, a Nevada series limited liability company v. Welles et al
Filing
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ORDER denying 36 Motion to Vacate and denying 37 Motion to Remand to State Court. Signed by Judge Larry R. Hicks on 4/10/14. (Copies have been distributed pursuant to the NEF - JC)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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LVDG SERIES 125,
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Plaintiff,
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v.
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HAROLD M. WELLES; et al.,
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Defendants.
3:13-CV-00503-LRH-WGC
ORDER
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Before the court are plaintiff LVDG Series 125's (“LVDG”) motion to vacate judgment
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(Doc. #361) and motion to remand (Doc. #37). Defendant Wells Fargo Bank, N.A. (“Wells Fargo”)
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filed oppositions to both motions. Doc. ##39, 40.
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I.
Facts and Procedural History
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In May 1999, defendants Harold M. Welles and Valerie M. Welles (“the Welles”)
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purchased real property in Reno, Nevada. On November 6, 2006, the Welles executed a deed of
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trust in favor of defendant Wells Fargo.
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Several years later, on January 12, 2010, a notice of delinquent assessment for homeowner’s
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association (“HOA”) dues was recorded on the property. On June 29, 2010, a notice of default and
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election to sell under the HOA lien was recorded. Eventually, on March 13, 2013, a HOA sale was
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conducted. At the HOA sale, plaintiff LVDG purchased the property for $5,300.
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Refers to the court’s docket number.
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Subsequently, on August 23, 2013, LVDG filed a complaint to quiet title against defendants
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alleging that its purchase of the property at the HOA sale extinguished all the other liens, including
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Wells Fargo’s first deed of trust. Doc. #1, Exhibit A. In response, Wells Fargo filed a motion to
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dismiss (Doc. #4) which was granted by the court (Doc. #32). Thereafter, LVDG filed the present
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motions to vacate and remand. Doc. ##36, 37.
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II.
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Discussion
LVDG brings its motion to vacate pursuant to Federal Rule of Civil Procedure 60(b). A
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motion under Rule 60(b) is an “extraordinary remedy, to be used sparingly in the interests of
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finality and conservation of judicial resources.” Kona Enters., Inc. v. Estate of Bishop, 229 F.3d
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887, 890 (9th Cir. 2000). A district court may vacate a prior judgment where the court is presented
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with newly discovered evidence, an intervening change of controlling law, manifest injustice, or
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where the prior order was clearly erroneous. Fed. R. Civ. P. 60(b)(1)–(6); United States v. Cuddy,
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147 F.3d 1111, 1114 (9th Cir. 1998); School Dist. No. 1J, Multnomah County v. AcandS, Inc.,
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5 F.3d 1255, 1263 (9th Cir. 1993).
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In its motion, LVDG claims that the court’s order was clearly erroneous because the court
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was without subject matter jurisdiction2 to enter the order of dismissal. Specifically, LVDG
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contends that there is not complete diversity between the parties because both it, and the Welles
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defendants are Nevada citizens.
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The court has reviewed the documents and pleadings on file in this matter and finds that it
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did have subject matter jurisdiction to enter the underlying order because the non-diverse Welles
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defendants were fraudulently joined defendants whose Nevada citizenship cannot be used to defeat
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the exercise of diversity jurisdiction. A fraudulently joined defendant does not “defeat removal on
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diversity grounds.” Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998). Fraudulent
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A district court has original jurisdiction over civil actions where the suit is between citizens of
different states and the amount in controversy, exclusive of interest and costs, exceeds $75,000.
28 U.S.C. § 1332(a).
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joinder “occurs when a plaintiff fails to state a cause of action against a resident defendant, and the
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failure is obvious according to the settled rules of the state.” Ritchey, 139 F.3d at 1318; see also
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McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987); Kruso v. International Tel.
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& Tel. Corp., 872 F.2d 1416, 1426-27 (9th Cir. 1989); Gasnik v. State Farm Ins. Co., 825 F.Supp.
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245, 247 (E.D. Cal. 1992). In determining whether a cause of action is stated against a non-diverse
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defendant, courts look only to a plaintiff’s pleadings. Gardner v. UICI, 508 F.3d 559, 561 n.3 (9th
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Cir. 2007).
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In its complaint, LVDG sought a determination that it owned the underlying property free
and clear of any defendants’ interest. LVDG’s sole claim for declaratory relief was premised on
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seeking a judicial determination that Wells Fargo’s lien was extinguished by the HOA sale. LVDG
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did not seek any claim for relief against the Welles except for a declaration that the Welles have no
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interest in the property. But, with respect to that claim, the complaint did not plead any facts or
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assert any claim that the Welles were asserting any interest in the property adverse to LVDG. In
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fact, the Welles have not expressed any adverse interest in the property since it was sold at the
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trustee’s sale, nor have they made an appearance in this action. As such, a declaration of rights
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relating to the extinguishment of Wells Fargo’s lien does not affect the Welles in any way.
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Therefore, based on the allegations in the complaint, the court finds that the non-diverse Welles
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defendants are fraudulently joined defendants whose citizenship does not defeat the exercise of
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diversity jurisdiction. Thus, the court finds that there was complete diversity between the parties
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and that the exercise of diversity jurisdiction was appropriate. Accordingly, the court shall deny
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both LVDG’s motion to vacate and motion to remand.
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IT IS THEREFORE ORDERED that plaintiff’s motion to vacate (Doc. #36) and motion to
remand (Doc. #37) are DENIED.
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IT IS SO ORDERED.
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DATED this 10th day of April, 2014.
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__________________________________
LARRY R. HICKS
UNITED STATES DISTRICT JUDGE
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