Moberly v. Bank of America, N.A.

Filing 33

ORDER - Defendant's # 11 Motion to Dismiss is granted with respect to the second claim for relief (injunctive relief) and denied with respect to the remaining two claims. It is further ordered that Plaintiff's # 9 Motion for Partial Summary Judgment is denied. Signed by Judge Miranda M. Du on 1/11/2016. (Copies have been distributed pursuant to the NEF - DRM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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DEBORAH L. MOBERLY,

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Case No. 3:15-cv-00122-MMD-WGC
Plaintiff,

ORDER

v.
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BANK OF AMERICA, N.A., and DOES 110, inclusive,

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Defendants.

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I.

SUMMARY

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This quiet title action involves a dispute over the enforcement of a first deed of

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trust. Before the Court are Plaintiff Deborah L. Moberly’s Motion for Partial Summary

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Judgment (“Plaintiff’s Motion”) and Defendant Bank of America, N.A.’s (“Defendant” or

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“BANA”) Motion to Dismiss (“Defendant’s Motion”). (Dkt. nos. 9, 11.) The Court has

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reviewed the parties’ response and reply briefs. (Dkt. nos. 19, 21, 23, 24.) For the

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reasons discussed below, Defendant’s Motion is granted in part and denied in part and

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Plaintiff’s Motion is denied.

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II.

BACKGROUND

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Plaintiff is the current owner of the property in dispute, which is located at 3345

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Spring Creek Circle in Reno, Nevada (“the Property”). (Dkt. no. 9 at 3.) In March 2003,

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the prior owner, Victoria Mendoza (“Mendoza”), obtained a loan from First National

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Bank of Nevada (“First National”) to purchase the Property. (Id. at 4.) Mendoza

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executed a promissory note (“First Note”), which was secured by a deed of trust (“First

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DOT”) on the Property. (Id.) The next year, Mendoza borrowed additional money from

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First National and that indebtedness was effectuated with a second promissory note

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(“Second Note”) secured by a deed of trust that was subordinate to the First DOT

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(“Second DOT”). (Id.; dkt. no. 32 at 5.)

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The First DOT identified Mortgage Electronic Registration Systems, Inc.

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(“MERS”) as the beneficiary. (Dkt. no. 9 at 4.) In January 2011, MERS recorded an

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assignment of the First DOT to BAC Homes Servicing, LP FKA Countrywide Home

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Loans Servicing LP (“BAC”). (Id.) In July 2011, BAC merged with and into BANA. (Dkt.

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no. 19 at 2.) Mendoza defaulted on the First Note; as a result, Mendoza and BAC —

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and then Mendoza and BANA — participated in Nevada’s mandatory Foreclosure

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Mediation Program (“FMP”). (Dkt. no. 9 at 4-7.) In February 2014, the Nevada Supreme

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Court issued a Certificate of No Foreclosure, which precluded BANA from proceeding

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with the foreclosure because BANA had failed to bring certain required documents to

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the mediation to establish its right to pursue foreclosure. (Dkt. no. 9 at 6.)

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Meanwhile, Mutual Bank of Omaha (“Mutual”) acquired ownership of the Second

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Note and Second DOT. (Dkt. no. 32 at 5.) (Id.) Mendoza defaulted on the Second

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Note. (Dkt. no. 19 at 2.) Mutual ultimately obtained an order for judicial foreclosure, and

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Plaintiff acquired the Property at the foreclosure sale in May 2014. (Id. at 3.)

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Plaintiff moves for partial summary judgment, seeking resolution of four issues in

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her favor. (Dkt. no. 9.) BANA moves to dismiss for failure to state a claim. (Dkt. no. 11.)

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While Plaintiff’s Motion predates Defendant’s by one day, the Court finds that it would

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be more logical to address Defendant’s Motion first because of Defendant’s challenge to

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the sufficiency of the pleadings.

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III.

DEFENDANT’S MOTION

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A.

Legal Standard

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A court may dismiss a plaintiff’s complaint for “failure to state a claim upon which

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relief can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pleaded complaint must

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provide “a short and plain statement of the claim showing that the pleader is entitled to

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relief.” Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

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While Rule 8 does not require detailed factual allegations, it demands more than “labels

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and conclusions” or a “formulaic recitation of the elements of a cause of action.”

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Ashcroft v. Iqbal, 556 US 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “Factual

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allegations must be enough to raise a right to relief above the speculative level.”

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Twombly, 550 U.S. at 555. Thus, “[t]o survive a motion to dismiss, a complaint must

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contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is

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plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).

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In Iqbal, the Supreme Court clarified the two-step approach that district courts

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are to apply when considering motions to dismiss. First, a district court must accept as

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true all well-pleaded factual allegations in the complaint; however, legal conclusions are

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not entitled to the assumption of truth. Id. at 678-79. Mere recitals of the elements of a

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cause of action, supported only by conclusory statements, do not suffice. Id. at 678.

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Second, a district court must consider whether the factual allegations in the complaint

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allege a plausible claim for relief. Id. at 679. A claim is facially plausible when the

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plaintiff’s complaint alleges facts that allow a court to draw a reasonable inference that

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the defendant is liable for the alleged misconduct. Id. at 678. Where the complaint fails

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to “permit the court to infer more than the mere possibility of misconduct, the complaint

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has alleged — but it has not ‘shown’ — ‘that the pleader is entitled to relief.’” Id. at 679

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(quoting Fed. R. Civ. P. 8(a)(2)) (alteration omitted). When the claims in a complaint

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have not crossed the line from conceivable to plausible, the complaint must be

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dismissed. Twombly, 550 U.S. at 570. A complaint must contain either direct or

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inferential allegations concerning “all the material elements necessary to sustain

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recovery under some viable legal theory.” Id. at 562 (quoting Car Carriers, Inc. v. Ford

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Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984)).

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B.

Discussion

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As an initial matter, the Court must address Plaintiff’s incredible argument that

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Defendant’s Motion should be denied because Defendant lacks standing to contest

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Plaintiff’s claims. (Dkt. no. 21 at 2.)

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Plaintiff cannot sue Defendant to quiet title and then argue that Defendant is without

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standing to defend the action by moving to dismiss.
The Court will next address Defendant’s arguments relating to Plaintiff’s three

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Plaintiff uses the term “standing” too loosely.

claims.
1.

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Quiet Title

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A quiet title action is a proper means to adjudicate competing interests in real

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property. See Chapman v. Deutsche Bank Nat’l Trust Co., 302 P.3d 1103, 1106 (Nev.

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2013); Royal v. Countrywide Homes Loan, Inc., No. 2:10-cv-750-ECR-PAL, 2010 WL

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5136013, at *2 (D. Nev. Dec. 9, 2010).

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Defendant argues that Plaintiff fails to state a claim for quiet title because the

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Complaint does not allege that the underlying debt has been satisfied, and because

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Plaintiff took title subject to the First DOT, which is part of the public records. However,

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“[a] plea to quiet title does not require any particular elements, but ‘each party must

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plead and prove his or her own claim to the property in question’ and a ‘plaintiff's right to

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relief therefore depends on superiority of title.’ Chapman, 302 at 1106 (quoting Yokeno

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v. Mafnas, 973 F.2d 803, 808 (9th Cir.1992)). Defendant’s arguments thus go to the

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merits of Plaintiff’s claim, not the sufficiency of her pleadings.

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Defendant also argues that Plaintiff’s allegation that BANA failed to comply with

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Nevada law does not give sufficient notice of her claim. The Court disagrees. The

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Complaint alleges that BANA failed to provide the mandatory documents to establish its

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right to foreclose on the Property and lacks standing to enforce the First DOT. 1 (Dkt. no.

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32 at 6.) These allegations sufficiently notify Defendant of Plaintiff’s legal theories.

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The Complaint alleges that BANA “purports to have acquired the ownership
interest in the Original [First] Note and Original [First] Deed of Trust.” (Dkt. no. 32 ¶ 9.)
It does not allege how such right was acquired or acknowledge that BANA has valid
ownership of the First DOT.

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2.

Declaratory Relief

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Defendant argues that Plaintiff’s claim for declaratory relief is not a proper claim

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because declaratory relief is a remedy. Plaintiff counters that she is seeking declaratory

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relief under NRS §§ 30.030 and 30.040.

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Section 30.030 of the Nevada Revised Statutes authorizes courts to “declare

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rights” and provides that “declaration may be either affirmative or negative in form” and

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“shall have the force and effect of a final judgment or decree.” NRS § 30.030.

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Section 30.040(1) provides, in pertinent part, that “[a]ny person interested under a deed,

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. . . may have determined any question of construction or validity arising under the

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instrument . . . and obtain a declaration of rights, status or other legal relations

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thereunder.” NRS § 30.040(1). “Declaratory relief is available only if: (1) a justiciable

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controversy exists between persons with adverse interests, (2) the party seeking

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declaratory relief has a legally protectable interest in the controversy, and (3) the issue

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is ripe for judicial determination.” County of Clark ex rel. Univ. Med. Ctr. v. Upchurch,

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961 P.2d 754, 756 (Nev. 1998). The Complaint asserts these threshold allegations.

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Plaintiff argues that her declaratory relief claim — in which she asks the Court to

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make certain declarations relating to BANA’s standing to enforce the First DOT and

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BANA’s rights and conduct in connection with the DOT — falls within NRS § 30.040(1).

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BANA does not appear to dispute this contention, nor does BANA dispute that the

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requested declarations involve “question[s] of construction or validity arising under the

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instrument” under NRS § 30.040(1).2 Accordingly, the Court finds that Plaintiff has

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sufficiently stated a claim for declaratory relief.

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3.

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Injunctive Relief

The Court agrees with Defendant that injunctive relief is a remedy, not a proper

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claim. See In re Wal-Mart Wage & Hour Emp’t Practices Litig., 490 F. Supp. 2d 1091,

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BANA’s reply focuses on the merits of the declaratory relief claim, not the
sufficiency of the pleading.

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1130 (D. Nev. 2007) (noting that a request for injunctive relief “is not a separate cause

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of action” or “an independent ground for relief”). This claim will be dismissed.

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IV.

PLAINTIFF’S MOTION

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A.

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“The purpose of summary judgment is to avoid unnecessary trials when there is

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no dispute as to the facts before the court.” Nw. Motorcycle Ass’n v. U.S. Dep’t of Agric.,

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18 F.3d 1468, 1471 (9th Cir. 1994). Summary judgment is appropriate when the

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pleadings, the discovery and disclosure materials on file, and any affidavits “show that

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there is no genuine issue as to any material fact and that the moving party is entitled to

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a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). An

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issue is “genuine” if there is a sufficient evidentiary basis on which a reasonable fact-

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finder could find for the nonmoving party and a dispute is “material” if it could affect the

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outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S.

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242, 248 (1986). Where reasonable minds could differ on the material facts at issue,

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however, summary judgment is not appropriate. See id. at 250-51. “The amount of

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evidence necessary to raise a genuine issue of material fact is enough ‘to require a jury

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or judge to resolve the parties' differing versions of the truth at trial.’” Aydin Corp. v.

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Loral Corp., 718 F.2d 897, 902 (9th Cir. 1983) (quoting First Nat’l Bank v. Cities Serv.

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Co., 391 U.S. 253, 288-89 (1968)). In evaluating a summary judgment motion, a court

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views all facts and draws all inferences in the light most favorable to the nonmoving

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party. Kaiser Cement Corp. v. Fishbach & Moore, Inc., 793 F.2d 1100, 1103 (9th Cir.

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1986).

Legal Standard

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The moving party bears the burden of showing that there are no genuine issues

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of material fact. Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir. 1982). Once

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the moving party satisfies Rule 56’s requirements, the burden shifts to the party

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resisting the motion to “set forth specific facts showing that there is a genuine issue for

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trial.” Anderson, 477 U.S. at 256. The nonmoving party “may not rely on denials in the

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pleadings but must produce specific evidence, through affidavits or admissible

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discovery material, to show that the dispute exists,” Bhan v. NME Hosps., Inc., 929 F.2d

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1404, 1409 (9th Cir. 1991), and “must do more than simply show that there is some

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metaphysical doubt as to the material facts.” Orr v. Bank of Am., NT & SA, 285 F.3d

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764, 783 (9th Cir. 2002) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475

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U.S. 574, 586 (1986)). “The mere existence of a scintilla of evidence in support of the

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plaintiff’s position will be insufficient.” Anderson, 477 U.S. at 252.

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B.

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Plaintiff requests resolution of four issues involving enforcement of the First DOT:

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(1) whether BANA is the beneficiary of record; (2) whether BANA failed to comply with

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the FMP; (3) whether BANA failed to mitigate; and (4) whether BANA engaged in

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laches. The Court declines to resolve these issues in Plaintiff’s favor.

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Discussion

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Beneficiary of Record under the Original DOT

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Plaintiff presents the first issue as follows: “Is BOA [BANA] precluded from

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enforcing the Deed of Trust because it is not the beneficiary of record under the Deed of

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Trust?” (Dkt. no. 9 at 2.) Plaintiff then argues, however, that Nevada’s foreclosure

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statutes require “strict compliance,” such that BANA cannot pursue non-judicial

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foreclose under the First DOT because it is not the beneficiary of record under the First

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DOT. (Id. at 7-8; dkt. no. 23 at 7-8.) As support, Plaintiff cites to NRS § 106.210, which

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addresses recording of reassignment of a mortgage, Chapter 107 of the Nevada

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Revised Statutes, which in part covers the recording of any mortgage assignment, as

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well as case law construing Nevada’s non-judicial foreclosure statutes. (Id.) There are

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two problems with Plaintiff’s argument. First, Plaintiff’s argument fails to relate to the

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question presented, which goes to enforcement of the First DOT, not foreclosure under

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the First Note and the First DOT. Second, Plaintiff is not challenging a foreclosure

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action under the First DOT. In fact, Plaintiff essentially acknowledges that no

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foreclosure proceeding is pending. (Dkt. no. 32 at 5-7.) Plaintiff argues that BANA’s

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merger with BAC does not cover any assignment of the First DOT from BAC to BANA,

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which would have allowed BANA to pursue non-judicial foreclosure. Thus even

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accepting, without deciding, that BANA cannot pursue a non-judicial foreclosure

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because it is not the beneficiary of record under the First DOT, that determination does

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not resolve the dispute presented in Plaintiff’s quiet title claim as to the parties’

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respective interests in the Property.

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2.

Compliance with FMP

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Plaintiff argues that because BANA failed to comply with the FMP by providing

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the recorded assignment of the First DOT, and later failed to challenge the Certificate of

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No Foreclosure, BANA is barred from pursuing non-judicial foreclosure and enforcing

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the First DOT. (Dkt. no. 9 at 9-10.) Again, Plaintiff collapses the right to proceed with

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non-judicial foreclosure with the ability to enforce the First DOT. Moreover, the Nevada

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Supreme Court has found that “[d]enial of an FMP certificate does not, without more,

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permanently preclude foreclosure.” Holt v. Reg’l Trustee Servs. Corp., 266 P.3d 602,

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605 (Nev. 2011). In fact, “[n]othing in the FMP statutes or rules suggests that denial of

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an FMP certificate permanently costs a lender the security afforded by the deed of

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trust.” Id. at 607. Plaintiff’s request for a finding that BANA’s failure to comply with the

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FMP precludes it from enforcing the First DOT is denied.

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3.

Failure to Mitigate

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Plaintiff argues that BANA is precluded from enforcing the First DOT because it

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failed to mitigate its damages. Plaintiff cites to cases that bar recovery of damages by a

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party that failed to mitigate its damages. (Dkt. no. 9 at 11.) But BANA is not seeking to

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recover damages in this case. Nor is Plaintiff, for that matter, since the surviving claims

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are for quiet title and declaratory relief.

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Setting aside the lack of any nexus between BANA’s purported failure to mitigate

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and the enforcement of the First DOT, the Court finds that there is a genuine issue of

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material fact as to whether BANA unreasonably delayed in pursuing its rights under the

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First DOT. Mendoza defaulted under the First Note around November 2010. (Dkt. no. 9

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at 4.) In October 2011, BAC initiated foreclosure proceedings and obtained the FMP

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Certificate to proceed with foreclosure, but never did. (Id. at 5.) Nearly two years later,

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in September 2013, BANA initiated foreclosure, but failed to comply with the FMP and,

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as a result, the Nevada Supreme Court issued the Certificate of No Foreclosure in

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February 2014. (Id. at 5-6.) BANA argues that Plaintiff cannot challenge any delay

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during that time frame because she did not have any interest in the Property. Viewing

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this evidence in the light most favorable to BANA, the Court cannot find that BANA

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undisputedly failed to timely take actions to enforce its rights under the First Note and

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the First DOT. Indeed, the delay may have worked to the benefit of Mendoza, the

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former owner of the Property, assuming she had possession and use of the Property

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despite her default.
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Laches

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The final issue presented in Plaintiff’s Motion is the contention that BANA cannot

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enforce the First DOT under the doctrine of laches. “Laches is an equitable doctrine

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which may be invoked when delay by one party works to the disadvantage of the other,

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causing a change of circumstances which would make the grant of relief to the delaying

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party inequitable.”3 Bldg. & Constr. Trades Council v. Nevada ex rel. Pub. Works Bd.,

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836 P.2d 633, 636-37 (Nev. 1992). “Thus, laches is more than a mere delay in seeking

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to enforce one's rights; it is a delay that works to the disadvantage of another.” Carson

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City v. Price, 934 P.2d 1042, 1043 (Nev. 1997).

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Viewing the evidence in the light most favorable to BANA, the Court finds that a

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genuine issue of material fact exists as to whether BANA engaged in an unreasonable

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delay in enforcing its right that works to the detriment of Plaintiff. As noted, BANA’s

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delay in asserting its rights before Plaintiff acquired the Property may very well have

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benefited the prior owner of the Property. Moreover, Plaintiff acquired the Property with

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at least constructive notice of the First DOT — a lien on the Property.4

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It is not clear that the doctrine of laches may be affirmatively asserted by a
plaintiff, but BANA did not raise this point.
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A “deed of trust does not convey title so as to allow the beneficiary to obtain the
property without foreclosure and sale, but is considered merely a lien on the property as
security for the debt, subject to the laws on foreclosure and sale.” Edelstein v. Bank of
New York Mellon, 286 P.3d 249, 254 (Nev. 2012).

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V.

CONCLUSION

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The Court notes that the parties made several arguments and cited to several

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cases not discussed above. The Court has reviewed these arguments and cases and

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determines that they do not warrant discussion as they do not affect the outcome of the

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parties’ motions.

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It is ordered that Defendant’s Motion to Dismiss (dkt. no. 11) is granted with

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respect to the second claim for relief (injunctive relief) and denied with respect to the

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remaining two claims. It is further ordered that Plaintiff’s Motion for Partial Summary

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Judgment (dkt. no. 9) is denied.

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DATED THIS 11th day of January 2016.

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MIRANDA M. DU
UNITED STATES DISTRICT JUDGE

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