Nationstar Mortgage, LLC v. Casitas on the Green Homeowners' Association et al

Filing 32

ORDERED that the Motion for Summary Judgment (ECF No. 27 ) is DENIED. Signed by Judge Robert C. Jones on 4/13/2017. (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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NATIONSTAR MORTGAGE, LLC,
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Plaintiff,
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vs.
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CASITAS ON THE GREEN
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HOMEOWNERS’ ASSOCIATION et al.,
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Defendants.
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3:16-cv-00472-RCJ-WGC
ORDER

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This case arises out of a homeowners’ association foreclosure sale. Pending before the

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Court is a motion for summary judgment.
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FACTS AND PROCEDURAL HISTORY
In June 2005, Walter and Janet Coopman refinanced a loan against real property at 5593

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Churchill Green Drive, Sparks, Nevada 89436 (“the Property”), giving a $236,250 promissory

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note (“the Note”) and deed of trust (“the DOT”) to a predecessor-in-interest of Nationstar

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Mortgage, LLC (“Nationstar”). (Compl. ¶¶ 6, 12–13, ECF No. 1). Casitas on the Green

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Homeowners’ Association (“the HOA”) auctioned the Property to Thunder Properties, Inc.

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(“Thunder”) for $13,100 on or about March 28, 2014. (Id. ¶¶ 23–24). Nationstar has sued the

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HOA and Thunder in this Court to quiet title to the Property. Nationstar also brings claims

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against the HOA for violation of Nevada Revised Statutes section (“NRS”) 116.1113 and

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common law wrongful foreclosure. Nationstar has moved for offensive summary judgment.
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II.

SUMMARY JUDGMENT STANDARDS
A court must grant summary judgment when “the movant shows that there is no genuine

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dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.

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Civ. P. 56(a). Material facts are those which may affect the outcome of the case. See Anderson

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v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if

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there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See

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id. A principal purpose of summary judgment is “to isolate and dispose of factually unsupported

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claims.” Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986).

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In determining summary judgment, a court uses a burden-shifting scheme. The moving

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party must first satisfy its initial burden. “When the party moving for summary judgment would

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bear the burden of proof at trial, it must come forward with evidence which would entitle it to a

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directed verdict if the evidence went uncontroverted at trial.” C.A.R. Transp. Brokerage Co. v.

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Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citation and internal quotation marks

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omitted). In contrast, when the nonmoving party bears the burden of proving the claim or

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defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate

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an essential element of the nonmoving party’s case; or (2) by demonstrating that the nonmoving

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party failed to make a showing sufficient to establish an element essential to that party’s case on

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which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323–24.

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If the moving party fails to meet its initial burden, summary judgment must be denied and

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the court need not consider the nonmoving party’s evidence. See Adickes v. S.H. Kress & Co.,

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398 U.S. 144 (1970). If the moving party meets its initial burden, the burden then shifts to the

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opposing party to establish a genuine issue of material fact. See Matsushita Elec. Indus. Co. v.

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Zenith Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute,

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the opposing party need not establish a material issue of fact conclusively in its favor. It is
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sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the

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parties’ differing versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors

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Ass’n, 809 F.2d 626, 631 (9th Cir. 1987). In other words, the nonmoving party cannot avoid

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summary judgment by relying solely on conclusory allegations unsupported by facts. See Taylor

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v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go beyond the

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assertions and allegations of the pleadings and set forth specific facts by producing competent

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evidence that shows a genuine issue for trial. See Fed. R. Civ. P. 56(e); Celotex Corp., 477 U.S.

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at 324.

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At the summary judgment stage, a court’s function is not to weigh the evidence and

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determine the truth, but to determine whether there is a genuine issue for trial. See Anderson, 477

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U.S. at 249. The evidence of the nonmovant is “to be believed, and all justifiable inferences are

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to be drawn in his favor.” Id. at 255. But if the evidence of the nonmoving party is merely

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colorable or is not significantly probative, summary judgment may be granted. See id. at 249–50.

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Notably, facts are only viewed in the light most favorable to the non-moving party where there is

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a genuine dispute about those facts. Scott v. Harris, 550 U.S. 372, 380 (2007). That is, even

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where the underlying claim contains a reasonableness test, where a party’s evidence is so clearly

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contradicted by the record as a whole that no reasonable jury could believe it, “a court should not

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adopt that version of the facts for purposes of ruling on a motion for summary judgment.” Id.

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III.

ANALYSIS

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A.

NRS 116.1113 and Wrongful Foreclosure

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The Court denies summary judgment on the claims under NRS 116.1113 and the

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common law of wrongful foreclosure. No evidence is adduced of Nationstar having mediated or

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arbitrated the propriety of the foreclosure under the HOA’s governing documents, so the Court

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cannot grant offensive summary judgment on the NRS 116.1113 claim. See McKnight Family,
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L.L.P. v. Adept Mgmt., 310 P.3d 555, 558 (Nev. 2013) (en banc) (citing Nev. Rev. Stat.

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§ 38.310)). And there is no evidence of a wrongful foreclosure under the common law, because

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it does not appear disputed that there remained a default on the HOA dues as of the date of sale,

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i.e., at least as to the subpriority piece, regardless of whether the superpriority piece had been

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tendered. See Collins v. Union Fed. Sav. & Loan Ass’n, 662 P.2d 610, 623 (Nev. 1983). Indeed,

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in the present case, Nationstar does not even appear to argue having tendered the superpriority

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piece of the HOA lien prior to sale. In any case, Nationstar does not appear to argue these causes

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of action in its present motion.

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B.

Quiet Title

Nationstar’s motion is directed primarily to the quiet title claim. It argues that the opt-in

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notice scheme of Chapter 116 as it existed on the date of foreclosure was facially

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unconstitutional under the Due Process Clause of the Fourteenth Amendment, see Bourne Valley

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Court Tr. v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016), that the sale was

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commercially unreasonable under Shadow Wood Homeowners Association, Inc. v. N.Y.

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Community Bancorp, Inc., 366 P.3d 1105 (Nev. 2016) and/or Levers v. Rio King Land &

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Investments Co., 560 P.2d 917, 919–20 (Nev. 1977), and that SFR Investments Pool 1, LLC v. US

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Bank, N.A., 334 P.3d 408 (Nev. 2014) should not be applied retroactively.

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1.

Due Process

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The Court denies summary judgment under Bourne Valley under the circumstances of the

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present case. Thunder has attached a copy of a letter sent from Assessment Management

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Services (“AMS”) to Mortgage Electronic Registration Systems, Inc. (“MERS”) notifying

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MERS of the sale. (See Letter, Feb. 18, 2014, ECF No. 29-7, at 10). Nationstar did not obtain its

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interest until after the March 28, 2014 sale. (See Assignment, May 5, 2014, ECF No. 29-6, at 2).

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The original lender, Soma Financial (“Soma”), held the Note at the time of sale, and MERS held
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the DOT. (See Deed of Trust, ECF No. 29-1, at 2 (splitting the DOT from the Note in typical

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MERS-fashion)). There is therefore evidence of notice of the sale to the holder of the DOT.

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But notice ultimately doesn’t even matter in this case, because the Note and DOT were

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split at the time of sale. See Edelstein v. Bank of N.Y. Mellon, 286 P.3d 249, 258–59 (Nev. 2012).

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After a contractual split of a deed of trust from the not it secures—which is permissible under

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Nevada law and which occurs under MERS-type deeds of trust, as used here—the holder of the

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deed of trust has no standing to foreclose until he also obtains the note. Id. at 254–59. That was

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the situation here from the date the DOT was given until May 5, 2014, when MERS assigned

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both Soma’s Note and its own DOT to Nationstar. But the foreclosure sale happened on March

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28, 2014, before the split was cured via the assignment of the Note and DOT to a single entity.

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Because MERS (the holder of the DOT at the time of the foreclosure sale) had no standing to

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complain of its loss, Nationstar can have obtained no standing from MERS. For the same

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reason, MERS was not entitled to notice of the sale under the Due Process Clause (even though it

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appears to have received it), because under Nevada law MERS had no interest in the Property to

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lose via extinguishment of the DOT while it was split from the Note.

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2.

Commercial Unreasonableness

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As it has done in other cases where a property is sold at auction for a small fraction of an

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outstanding loan (here 6%), the Court will leave the Shadow Wood and Levers issues to a jury.

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See, e.g., U.S. Bank v. Countryside Homeowners Ass’n, No. 2:15-cv-1463, 2016 WL 3638112, at

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*6 (D. Nev. July 7, 2016) (Jones, J.).

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3.

Retroactivity of SFR Investments Pool 1

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The Court will not grant summary judgment while the issue is pending oral argument

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before the en banc Nevada Supreme Court on May 1, 2017 pursuant to this Court’s certification

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in another case.
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CONCLUSION

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IT IS HEREBY ORDERED that the Motion for Summary Judgment (ECF No. 27) is
DENIED.

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IT IS SO ORDERED.

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DATED: 11th day of of April, 2017.
Dated thisThis 13th dayApril, 2017.

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_____________________________________
ROBERT C. JONES
United States District Judge

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