Ditech Financial Services LLC et al v. Highland Ranch Homeowners Association et al

Filing 121

ORDER that Plaintiffs' motion for summary judgment (ECF No. 98 ) is granted as to Plaintiffs' claims for declaratory relief and quiet title against Airmotive; Clerk directed to enter judgment and close this case. Signed by Chief Judge Miranda M. Du on 9/12/2019. (Copies have been distributed pursuant to the NEF - LH)

1
2

UNITED STATES DISTRICT COURT

3

DISTRICT OF NEVADA

4

***

5
6

DITECH FINANCIAL SERVICES LLC
f/k/a GREEN TREE SERVICING LLC,
and; FEDERAL NATIONAL MORTGAGE
ASSOCIATION,

Case No. 3:16-cv-00194-MMD-WGC
ORDER

7
Plaintiffs,
v.

8
9
10

HIGHLAND RANCH HOMEOWNERS
ASSOCIATION; TBR I, LLC; AIRMOTIVE
INVESTMENTS, LLC,
Defendants.

11
12
13

I.

SUMMARY

14

This dispute arises from the foreclosure sale of property to satisfy a homeowners’

15

association lien. Before the Court is Plaintiffs Federal National Mortgage Association

16

(“Fannie Mae”) and Ditech Financial Services, LLC f/ka Green Tree Servicing LLC’s

17

(“Ditech”) motion for summary judgment (“Motion”) (ECF No. 98). The Court has reviewed

18

Defendant Airmotive Investments, LLC’s (“Airmotive”) response (ECF No. 105) and

19

Plaintiffs’ reply (ECF No. 113). The Court grants summary judgment in favor of Plaintiffs

20

on their claims for declaratory relief and quiet title against Airmotive because 12 U.S.C. §

21

4617(j)(3) (the “Federal Foreclosure Bar”) preserved Fannie Mae’s deed of trust. The

22

Court declines to exercise supplemental jurisdiction over Plaintiffs’ claim for recovery of

23

proceeds under NRS § 107A.330 and dismisses Plaintiffs’ remaining claims as moot.

24

II.

BACKGROUND

25

The following facts are undisputed unless otherwise indicated.

26

Janet Matthai (“Borrower”) purchased the property (“Property”) located at 7491

27

Rembrandt Drive, Sun Valley, Nevada 89433 with a loan (“Loan”) in the amount of

28

///

1

$144,500 secured by a first deed of trust (“DOT”). (ECF No. 98-1 at 2-4.) The DOT listed

2

Bank of America, N.A. (“BANA”) as the lender. (Id. at 3.)

3
4

Fannie Mae purchased the Loan—consisting of the DOT and the note—in October
2008.1 (ECF No. 98-2 at 3-4.)

5

The Property was located within Highland Ranch Homeowners Association (the

6

“HOA”). The HOA recorded the following notices against the Property between February

7

9, 2011 and March 5, 2013: (1) notice of delinquent assessment lien (ECF No. 98-4); (2)

8

notice of default and election to sell (ECF No. 98-5); and (3) three notices of trustee’s sale

9

(ECF Nos. 98-6, 98-7, 98-8). The HOA sold the Property to itself for $450 on April 10,

10

2013 (“HOA Sale”). (ECF No. 98-9 at 2-3.) The HOA recorded a quitclaim deed

11

transferring its interest in the Property to TBR I, LLC on March 21, 2014. (ECF No. 98-10.)

12

TBR I recorded a quitclaim deed transferring its interest in the Property to Airmotive on

13

February 29, 2016. (ECF No. 98-11.)

14

Fannie Mae asserts that it owned the Loan at the time of the HOA Sale, with BANA

15

serving as the recorded beneficiary of the DOT and servicer for Fannie Mae. (ECF No.

16

98-2 at 3.) BANA recorded an assignment of the DOT transferring its beneficial interest to

17

Green Tree Servicing f/k/a Ditech Financial, LLC on May 31, 2013. (ECF No. 98-3.)

18

Plaintiffs assert the following claims in the First Amended Complaint (“FAC”): (1)

19

declaratory relief under 12 U.S.C. § 4617(j)(3) – against Airmotive; (2) quiet title under 12

20

U.S.C. § 4617(j)(3) – against Airmotive; (3) declaratory relief under Amendments V and

21

XIV to the United States Constitution – Ditech against all defendants; (4) quiet title under

22

the Amendments V and XIV to the United States Constitution – Ditech Against Airmotive;

23

(5) recovery of proceeds under NRS § 107A.330(3)(a)-(b) – against Airmotive; (6)

24

declaratory judgment on state-law grounds – against Airmotive; (7) breach of NRS §

25

116.1113 – against Highland Ranch; and (8) wrongful foreclosure – against Highland

26

Ranch. (ECF No. 91 at 9-18.) Plaintiffs primarily seek a declaration that the HOA Sale did

27
28

1The

parties dispute whether Fannie Mae actually purchased the Loan and owned
the Loan at the time of the HOA Sale. The Court addresses this dispute infra Section IV(A).
2

1

not extinguish the DOT and that the DOT continues to encumber the Property based on

2

operation of the Federal Foreclosure Bar. (See ECF No. 91 at 18.)

3

III.

LEGAL STANDARD

4

“The purpose of summary judgment is to avoid unnecessary trials when there is no

5

dispute as to the facts before the court.” Nw. Motorcycle Ass’n v. U.S. Dep’t of Agric., 18

6

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

7

the discovery and disclosure materials on file, and any affidavits “show that there is no

8

genuine issue as to any material fact and that the moving party is entitled to a judgment

9

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

10

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

11

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

12

suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

13

Where reasonable minds could differ on the material facts at issue, however, summary

14

judgment is not appropriate. See id. at 250-51. “The amount of evidence necessary to

15

raise a genuine issue of material fact is enough ‘to require a jury or judge to resolve the

16

parties’ differing versions of the truth at trial.’” Aydin Corp. v. Loral Corp., 718 F.2d 897,

17

902 (9th Cir. 1983) (quoting First Nat’l Bank v. Cities Serv. Co., 391 U.S. 253, 288-89

18

(1968)). In evaluating a summary judgment motion, a court views all facts and draws all

19

inferences in the light most favorable to the nonmoving party. Kaiser Cement Corp. v.

20

Fishbach & Moore, Inc., 793 F.2d 1100, 1103 (9th Cir. 1986).

21

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

22

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

23

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

24

motion to “set forth specific facts showing that there is a genuine issue for trial.” Anderson,

25

477 U.S. at 256. The nonmoving party “may not rely on denials in the pleadings but must

26

produce specific evidence, through affidavits or admissible discovery material, to show

27

that the dispute exists,” Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991),

28

and “must do more than simply show that there is some metaphysical doubt as to the
3

1

material facts.” Orr v. Bank of Am., NT & SA, 285 F.3d 764, 783 (9th Cir. 2002) (quoting

2

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). “The mere

3

existence of a scintilla of evidence in support of the plaintiff’s position will be insufficient.”

4

Anderson, 477 U.S. at 252.

5

IV.

DISCUSSION

6

A.

Federal Foreclosure Bar

7

Plaintiffs argue that the Federal Foreclosure Bar protects Fannie Mae’s interest in

8

the DOT. (ECF No. 98 at 2.) The Federal Foreclosure Bar prohibits nonconsensual

9

foreclosure of Federal Housing Finance Agency (“FHFA”) assets. Berezovsky v. Moniz,

10

869 F.3d 923, 925 (9th Cir. 2017). As a result, the Federal Foreclosure Bar generally

11

protects Fannie Mae’s property interests from extinguishment if Fannie Mae was under

12

FHFA’s conservatorship, did not consent to such extinguishment, and possessed an

13

enforceable property interest at the time of the HOA Sale. See id. at 933.

14

The first two factors are satisfied because the Court grants Fannie Mae’s request

15

for judicial notice (ECF No. 98 at 7-8) of the following: (1) facts derived from the publicly

16

available records of the Washoe County Recorder; (2) FHFA’s statement available on the

17

federal government’s website regarding FHFA’s policy not to consent to the

18

extinguishment of property of the Enterprises—including Fannie Mae; and (3) the fact that

19

Fannie Mae was placed under FHFA’s conservatorship in 2008 per FHFA’s website. See

20

Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 866 n.1 (9th Cir.

21

2004) (explaining that a court may take judicial notice of a government agency’s records

22

and other undisputed matters of public record under Fed. R. Evid. 201); Eagle SPE NV 1,

23

Inc. v. S. Highlands Dev. Corp., 36 F. Supp. 3d 981, 986 n.6 (D. Nev. 2014) (taking judicial

24

notice of document on the Federal Deposit Insurance Corporation’s website).

25

The third factor—whether Fannie Mae possessed an enforceable property interest

26

at the time of the HOA Sale—is also satisfied. Fannie Mae has produced evidence in the

27

form of business records and a declaration of a Fannie Mae employee describing those

28

records to show that Fannie Mae acquired the Loan in October 2008 and continued to own
4

1

the Loan at the time of the HOA Sale in April 2013. (See ECF No. 98-2 at 3-4, 7-21.)

2

Airmotive argues that the evidence is inconclusive because it consists primarily of

3

screenshots dated September 19, 2018. (ECF No. 105 at 12.) Thus, according to

4

Airmotive, the evidence only shows that Fannie Mae was the owner of the Loan in 2018.

5

(See id.) The Court finds Airmotive’s argument unpersuasive. While the screenshots

6

apparently were captured on September 19, 2018, the content of the screenshots reflects

7

that Fannie Mae acquired the Loan in 2008 and tracked payments on the Loan during the

8

time of the HOA Sale. (See ECF No. 98-2 at 3-4, 7-21.) This is sufficient to show that

9

Fannie Mae owned the Loan at the time of the HOA Sale. See, e.g., Bank of Am., N.A. v.

10

Casoleil Homeowners Ass’n, No. 3:16-cv-00307-MMD-WGC, 2019 WL 2601555, at *4 (D.

11

Nev. June 25, 2019).

12

Thus, the Court finds that the Federal Foreclosure Bar protected Fannie Mae’s DOT

13

from extinguishment given that Fannie Mae held an enforceable interest in the Property at

14

the time of the HOA Sale, was under the conservatorship of FHFA at the time of the HOA

15

Sale, and did not consent to the HOA Sale extinguishing or foreclosing Fannie Mae’s

16

interest in the Property. Accordingly, the HOA Sale did not extinguish Fannie Mae’s

17

interest in the Property, and the DOT therefore continues to encumber the Property.

18

Airmotive argues that BANA—not Fannie Mae—held a property interest in the DOT

19

at the time of the HOA Sale because only the servicer of the Loan (not the owner) holds a

20

property interest in the DOT. (ECF No. 105 at 16.) The Court finds this argument

21

unpersuasive because the Nevada Supreme Court has found that Fannie Mae has

22

standing to invoke the Federal Foreclosure Bar. See, e.g., Saticoy Bay LLC Series 9641

23

Christine View v. Fed. Nat’l Mortg. Ass’n, 417 P.3d 363, 366 (Nev. 2018).

24

Airmotive argues that Fannie Mae was required to record an assignment

25

demonstrating Fannie Mae’s interest in the DOT. (ECF No. 105 at 17-23.) The Court

26

rejects this argument as it has in similar cases. See Casoleil, 2019 WL 2601555, at *4;

27

see also CitiMortgage, Inc. v. TRP Fund VI, LLC, 435 P.3d 1226 (Nev. 2019) (“We

28

///
5

1

conclude that NRS 111.325 does not support respondent’s position that the purported

2

transfer of the loan to Fannie Mae needed to be recorded.”).

3

Airmotive also argues that it is a bona fide purchaser. (ECF No. 105 at 27.) This

4

Court has concluded that “the Federal Foreclosure Bar preempts Nevada’s bona fide

5

purchaser statute.” Casoleil, 2019 WL 2601555, at *4 (quoting U.S. Bank Home Mortg. v.

6

Jensen, No. 3:17-cv-00603-MMD-VPC, 2018 WL 3078753, at *2 (D. Nev. June 20, 2018)).

7

B.

Assignment of Rents

8

Plaintiffs seek summary judgment on their fifth claim for recovery of proceeds under

9

NRS § 107A.330. (ECF No. 98 at 16.) The Court does not have original jurisdiction over

10

this state law claim, and it appears to present a novel issue of state law given that no

11

Nevada appellate court has cited or discussed the statute. The Court thus declines to

12

exercise supplemental jurisdiction over this claim. See 28 U.S.C. § 1367(c)(3) (“The district

13

courts may decline to exercise supplemental jurisdiction over a claim under subsection (a)

14

if . . . the claim raises a novel or complex issue of State law.”).

15

C.

Remaining Claims

16

The Court will grant summary judgment in favor of Plaintiffs as to their claim for

17

quiet title against Airmotive. The Court declares that the Federal Foreclosure Bar

18

prevented the HOA Sale from extinguishing the DOT and that any interest of Airmotive in

19

the Property is subject to the DOT. Given that this is the primary relief requested in

20

Plaintiff’s FAC and Motion2 (see ECF No. 91 at 18; ECF No. 98 at 21), the Court dismisses

21

Plaintiffs’ remaining claims as moot.

22

V.

CONCLUSION

23

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

24

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

25

that they do not warrant discussion as they do not affect the outcome of the motions before

26

the Court.

27
28

2Other

than Plaintiffs’ request for an order requiring Airmotive to pay rents under
NRS § 107A.330.
6

1

It is therefore ordered that Plaintiffs’ motion for summary judgment (ECF No. 98) is

2

granted as to Plaintiffs’ claims for declaratory relief and quiet title against Airmotive. The

3

Court declares that the Federal Foreclosure Bar prevented the HOA Sale from

4

extinguishing the DOT and that any interest of Airmotive in the Property is subject to the

5

DOT. The Court declines to exercise supplemental jurisdiction over Plaintiffs’ claim under

6

NRS § 107A.330 and dismisses Plaintiffs’ remaining claims as moot.
The Clerk of the Court is instructed to enter judgment accordingly and close this

7
8
9

case.
DATED THIS 12th day of September 2019.

10
MIRANDA M. DU
UNITED STATES DISTRICT JUDGE

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
7