GMAT Legal Title Trust 2013-1, by U.S. Bank v. Fitchner et al

Filing 48

ORDER denying without prejudice 27 Motion to Dismiss. Signed by Judge Howard D. McKibben on 11/19/15. (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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GMAT LEGAL TITLE TRUST 2013-1, BY )
U.S. BANK, NATIONAL ASSOCIATION )
AS LEGAL TITLE TRUSTEE, a
)
national association,
)
)
Plaintiff,
)
)
vs.
)
)
JAMES W. FITCHNER, an individual; )
SANDRA A. WHITE, an individual; )
NORENE M. VICKERS, an individual; )
BANK OF AMERICA, N.A., a national )
association; RAINBOW BEND
)
HOMEOWNERS ASSOCIATION, INC., a )
corporation; DOES 1 through 10, )
inclusive, and ROES 1 through 10, )
inclusive.
)
)
Defendants.
)
_________________________________ )
Before

the

court

is

3:15-cv-00044-HDM-WGC
ORDER

defendant

Rainbow

Bend

Homeowners

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Association’s

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alternative, motion for summary judgment (#27). Plaintiff has opposed

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(#36), and defendant Rainbow Bend has replied (#37).

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construes the pleading only as a motion to dismiss and not a motion

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for summary judgment.

(“Rainbow

Bend”)

motion

to

dismiss,

or

in

the

The court

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This action arises out of a foreclosure sale conducted by a

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homeowner’s association (“HOA”) to collect unpaid HOA assessments.

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Plaintiff’s complaint seeks declaratory relief and to quiet title(#1).

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Plaintiff requests a judicial determination of the parties’ rights and

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interest in the real property located at 296 Ave De La Bleu De Clair,
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Sparks, Nevada 89434 and a judgment declaring the foreclosure sale

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void or, alternatively, an order that its security interest in the

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property was not extinguished at the foreclosure sale because the sale

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was commercially unreasonable.

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Standard

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To meet Article III standing requirements, the party invoking

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federal jurisdiction bears the burden to show it has (1) suffered “an

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invasion of a legally protected interest which is (a) concrete and

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particularized

and

(b)

actual

or

imminent,

not

conjectural

or

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hypothetical”; (2) that the injury is ”fairly trace[able] to the

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challenged action of the defendant”; and (3) that it is “likely, as

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opposed to merely speculative, that the injury will be redressable by

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a favorable decision.”

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560-61 (1992) (internal quotation marks omitted).

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motion to dismiss for want of standing, the court must accept as true

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all material allegations in the complaint as well as all reasonable

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inferences that may be drawn from such allegations.

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Journalism v. Cederquist, 235 F.3d 1153, 1154 (9th Cir. 2000).

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allegations of the complaint also must be construed in the light most

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favorable to the nonmoving party.

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428, 435 (9th Cir. 2000).

Lujan v. Defenders of Wildlife, 504 U.S. 555,
In considering a

W. Ctr. for
The

Shwarz v. United States, 234 F.3d

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The court need not, however, accept as true those allegations

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that (1) contradict matters properly subject to judicial notice; (2)

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are conclusory allegations of law, mere legal conclusions, unwarranted

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deductions of fact, or unreasonable inferences; (3) are contradicted

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by documents referred to in the complaint; or (4) are internally

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inconsistent.

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Cir. 1998); Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th

Id. at 435; Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th

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Cir. 1994); Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), rev’d

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on other grounds by Galbraith v. Cty. of Santa Clara, 307 F.3d 1119

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(9th Cir. 2002); W. Mining Council v. Watt, 643 F.2d 618, 624 (9th

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Cir. 1981); Response Oncology, Inc. v. MetraHealth Ins. Co., 978

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F.Supp. 1052, 1058 (S.D. Fla. 1997).

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On the other hand, the purpose of a motion to dismiss under

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Federal Rule of Civil Procedure 12(b)(6) is to test the legal

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sufficiency of the complaint.

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(9th Cir. 2001). The court can grant the motion only if it is certain

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that the plaintiff will not be entitled to relief under any set of

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facts that could be proven under the allegations of the complaint.

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Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 338 (9th Cir. 1996).

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Background

Navarro v. Block, 250 F.3d 729, 732

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Defendants Sandra White and Norene Vickers previously owned the

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real property at issue, located at 296 Ave De La Bleu De Clair,

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Sparks, Nevada 89434.

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trust which was recorded with the Storey County Recorder’s Office on

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June 22, 2007, and identified non-party First National Bank of Nevada

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as the lender.

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ensure repayment of a $193,762 loan to Sandra White and Norene

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Vickers, who executed and delivered a promissory note to First

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National Bank of Nevada evidencing the loan on June 21, 2007.

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loan was insured by the U.S. Federal Housing Administration (“FHA”)

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through the secretary of Housing and Urban Development (“HUD”).

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Sandra White and Norene Vickers also delivered to First National Bank

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of Nevada a second deed of trust evidencing a $21,500 loan to them,

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that was ultimately assigned to defendant Bank of America, N.A.

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The property was subject to a first deed of

The deed of trust encumbered the subject property to

The

Beneficial interest in the first deed of trust was assigned, in
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chronological order to: Bank of America, N.A., Successor by Merger to

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BAC Home Loan Servicing, LP FKA Countrywide Home Loans Servicing; HUD;

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RBS

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Plaintiff currently holds the beneficial interest in the first deed

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of trust.

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Financial

Products,

Inc.

(“RBS

Financial”);

and

plaintiff.

On June 6, 2011, defendant Rainbow Bend caused to be recorded a

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notice of delinquent assessment lien on the subject property.

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January 15, 2013, Rainbow Bend caused to be recorded a notice of

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default and election to sell under the HOA lien.

On

On May 22, 2013,

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Rainbow Bend caused to be recorded a notice of HOA sale under the June

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6, 2011 assessment lien.

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foreclosure sale of the subject property.

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highest bidder at the sale, with a winning bid of $900.

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defendant James Fitchner purchased the subject property for an unknown

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amount.

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to the foreclosure deed. On January 22, 2015, plaintiff initiated the

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instant action against defendants James Fitchner, Sandra White, Norene

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Vickers, Bank of America, N.A., and Rainbow Bend, seeking to quiet

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title.

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of interest and a stipulation to dismiss it from the case (#40), which

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the court granted (#45).

On June 25, 2013, Rainbow Bend conducted a
Rainbow Bend was the
Thereafter,

James Fitchner is the current owner of the property pursuant

On August 3, 2015, Bank of America, N.A. filed a disclaimer

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In sum, plaintiff asserts that its interest in the security

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interest in the property was not extinguished by the foreclosure sale.

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Plaintiff alleges that a mortgage interest in real property, such as

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the

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property,

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Constitution. Plaintiff requests the court to declare the foreclosure

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sale void, with no legal effect, for violating the Supremacy Clause

secretary
is

of

HUD’s

federal

potential

property

repurchase

protected

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by

obligation
the

United

in

the

States

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and

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Alternatively, plaintiff asks the court to find that its security

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interest in the property as evidenced by the deed of trust survived

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the foreclosure sale.

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the

Contracts

Clause

of

the

United

States

Constitution.

Rainbow Bend moves to dismiss plaintiff’s complaint, or in the

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alternative, moves for summary judgment.

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plaintiff lacks standing for two reasons: 1) it lacks Article III

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standing; and 2) it cannot establish good title in itself.

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Bend also argues that to the extent the quiet title claim is a

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wrongful foreclosure claim, this court lacks jurisdiction because

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plaintiff failed to exhaust the mandatory mediation process that NRS

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38.310

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conditions or restrictions may be filed.

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Sandra White and Norene Vickers are not parties to the motion (#27)

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presently before the court.

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Analysis

requires

before

a

lawsuit

Rainbow Bend asserts that

regarding

a

HOA’s

Rainbow

covenants,

Defendants James Fitchner,

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Under Nevada law, an action to quiet title “may be brought by any

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person against another who claims an estate or interest in real

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property, adverse to the person bringing the action.” NEV. REV. STAT.

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§ 40.010.

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party seeks to settle a dispute over ownership of property or to

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remove a cloud upon his or her title to the property.

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Krause, 77 Nev. 312, 317-18, 362 P.2d 724, 727 (1961).

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quiet title does not require particular elements, but each party must

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plead and prove his or her own claim to the property in question.”

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Chapman v. Deutsche Bank Nat’l Trust Co., 129 Nev. Adv. Op. 34, 302

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P.3d 1103, 1106 (2013) (citations and quotation marks omitted).

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Therefore, a plaintiff’s right to relief depends on superiority of

Quiet title actions are equitable proceedings in which a

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MacDonald v.
“A plea to

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title.

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Id.

To have standing to assert a quiet title claim, a plaintiff must

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have a current claim to the land in dispute.

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Lahontan Mines Co., 151 P. 514, 516 (Nev. 1915) aff’d on reh’g, 158

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P.285 (1916) (“An action to quiet title based upon the presumption

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that the plaintiff has title”).

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interest in the property which is adverse to Rainbow Bend.

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¶¶ 28-29.

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assigned the deed of trust from RBS Financial in May of 2014.

See, e.g., Daly v.

Here, plaintiff claims a current
See #1 at

Plaintiff asserts that it acquired title when it was
#1 at

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¶ 18.

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to the property through the foreclosure sale, which extinguished the

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deed of trust.

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plaintiff has standing to assert the rights held by any of its

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successors in interest, such as RBS Financial, the beneficiary of the

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deed of trust at the time of the foreclosure sale.

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Interim Capital LLC v. Herr Law Group, Ltd., 2011 WL 7047062 at *3 (D.

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Nev. Oct. 21, 2011) (“The general rule of assignments is that the

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transferee has the same rights as the transferor.”).

On the other hand, Rainbow bend claims that it acquired title

As the beneficiary and assignee of the deed of trust,

#36 at 3-4; see

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In addition to prudential standing, Plaintiff also has Article

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III standing to bring its quiet title claim. Rainbow Bend argues that

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plaintiff lacks Article III standing because there can be no retro-

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injury, the HOA did not cause the foreclosure, and the claimed injury

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is not redressable because it would require unwinding the foreclosure.

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#27 at 10-12.

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HOA foreclosure purports to eliminate plaintiff’s deed of trust; this

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constitutes injury in fact. The requested relief of resolution of the

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title dispute and a determination of the owner of the subject property

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would redress that injury.

However, plaintiff is adversely affected because the

Thus, plaintiff has Article III standing
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to dispute the validity of the foreclosure sale and can state a claim

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for quiet title.

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Additionally, plaintiff also alleges that the foreclosure sale

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was not conducted in a commercially reasonably manner and is thus

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voidable.

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factual allegations in the complaint, including the allegations that

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Rainbow Bend included in its record notices fees and costs which are

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not part of the super priority lien.

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the complaint are sufficient to defeat the motion to dismiss on the

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On a motion to dismiss, the court must accept as true the

At this stage, the averments in

Article III standing issue.

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Finally, Rainbow Bend asserts that, to the extent the quiet title

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claim is a wrongful foreclosure claim, it should be dismissed as

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failing substantively or dismissed because plaintiff bypassed the

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mandatory

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responds that this action is not subject to mandatory arbitration

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because its claims do not relate to the interpretation, application,

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or enforcement of any HOA covenants, conditions or restrictions.

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Rather, plaintiff asserts that its claims concern the foreclosure

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process.

mediation

process

outlined

in

NRS

38.310.

Plaintiff

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NRS 38.310 prevents the commencement of any “civil action based

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upon a claim relating to: (a) The interpretation, application or

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enforcement of any covenants, conditions or restrictions applicable

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to the residential property or any bylaws, rules or regulations

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adopted by the association; or (b) The procedures used for increasing,

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decreasing

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property, . . . unless the action has been submitted to mediation.”

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The statute defines “civil action” as “includ[ing] an action for money

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damages or equitable relief,” but does not include actions “relating

or

imposing

additional

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assessments

upon

residential

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to the title to residential property.”

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Thus, as the Nevada Supreme Court explained in McKnight Family L.L.P.

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v. Adept Mgmt., 129 Nev. Adv. Op. 64, 310 P.3d 555, 559 (2013), a

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claim to quiet title “directly relates to an individual’s right to

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possess and use his or her property . . . and accordingly, is exempt

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from NRS 38.310.”

NEV. REV. STAT. 38.300(3).

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Plaintiff alleges that the foreclosure was ineffective for a

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number of reasons, including preemption, the sale was conducted in a

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commercially unreasonable manner, and that the notice provided to

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plaintiff violated due process.

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the property, and thus are not barred by NRS 38.310.

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plaintiff asserts that the complaint contains no claims that directly

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implicate the interpretation of defendant’s covenants, conditions or

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restrictions but instead the application of NRS 116.3116.

For

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purposes

the

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representation. Should discovery prove otherwise, the defendant shall

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not

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arbitration process as it relates to this claim in a motion for

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summary judgment.

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be

of

the

precluded

Accordingly,

motion

from

to

These claims relate to the title of

dismiss

raising

the

defendant’s

the

issue

motion

to

court

as

to

Finally, the

accepts

the

mandatory

dismiss, or in the

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alternative, motion for summary judgment (#27) is construed only as

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a motion to dismiss and is DENIED WITHOUT PREJUDICE, to be renewed in

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a motion for summary judgment at the close of discovery.

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IT IS SO ORDERED.

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DATED: This 19th day of November, 2015.

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____________________________
UNITED STATES DISTRICT JUDGE

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