Newlands Asset Holding Trust v. SFR Investments Pool 1, LLC et al

Filing 26

ORDER granting ECF No. 19 Motion to Substitute Party; Clerk directed to substitute Carisbrook Asset Holding Trust into this case as the plaintiff in place and stead of Newlands Asset Hold Trust; denying ECF No. 16 Motion to Dismiss. Signed by Judge Larry R. Hicks on 11/17/2017. (Copies have been distributed pursuant to the NEF - KW)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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NEWLANDS ASSET HOLDING TRUST,

Plaintiff, ORDER

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v.

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***
Case No. 3:17-cv-00370-LRH-WGC

SFR INVESTMENTS POOL 1, LLC; and
STONEFIELD HOMEOWNERS
ASSOCIATION,
Defendants.

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Two motions come before the court. First, defendant SFR Investments Pool 1, LLC

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moves this court to dismiss plaintiff Newlands Asset Holding Trust’s complaint. ECF No. 16.

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Defendant Stonefield Homeowners’ Association (the “HOA”) joined SFR Investments’ motion.

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ECF No. 17. Newlands opposed the motion, and SFR Investments replied. ECF Nos. 20, 21.

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Second, Newlands moves to substitute nonparty Carisbrook Asset Holding Trust into this action

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as the plaintiff in the place and stead of Newlands, or Carisbrook moves to intervene in the

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alternative. ECF No. 19. SFR Investments does not oppose the motion, and no reply was filed.

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ECF No. 22.

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The court first grants the motion to substitute Carisbrook into the action in the place and

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stead of Newlands. The court finds that Newlands transferred its interest relevant to this matter to

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Carisbrook after bringing suit, making substitution of the parties proper. The court then denies

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the motion to dismiss, finding the applicable statute of limitations does not bar this suit.

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I.

BACKGROUND

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In 2009, Damian Webber purchased the property located at 7752 Corso Street, Reno,

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Nevada 89506. ECF No. 1 at 1–2. Webber executed a deed of trust, which identified Bank of

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America, N.A. as the lender and beneficiary and identified PRLAP, Inc. as the trustee. Id. at 2;

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id. at Ex. 2. After multiple assignments, Newlands came to hold the beneficial interests under the

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deed of trust. Id. at 3; id. at Exs. 3–7.
After recording a notice of delinquent assessment lien, a notice of default and election to

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sell, and a notice of homeowners’ association sale, the HOA held a nonjudicial foreclosure sale

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on July 24, 2012. Id. at 3–4; see id. at Exs. 8–11. The HOA then recorded a quitclaim deed in

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2014, giving rise to SFR Investments’ interest in the property. Id. at 4; id. at Ex. 12.
Newlands sued the HOA and SFR Investments on June 13, 2017, essentially seeking an

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order to quiet title over the property.1 Id. After initiating this suit, Newlands assigned its interest

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under the deed of trust to Carisbrook Asset Holding Trust. ECF No. 16, Ex. A.
Two motions now come before the court. First, SFR Investments moves to dismiss the

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complaint, and the HOA joins in the motion. ECF Nos. 16, 17. Second, Newlands moves to

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substitute Carisbrook Asset Holding Trust into this action in the place and stead of Newlands.

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ECF No. 19. SFR does not oppose the motion. ECF No. 22. The HOA did not respond, and no

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reply was filed.

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II.

LEGAL STANDARD

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A. Federal Rule of Civil Procedure 25

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Federal Rule of Civil Procedure 25(c) allows for the substitution of a party in an action if

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an interest has been transferred to another. Fed. R. Civ. P. 25(c). The rule also permits an action

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to proceed “by or against the original party.” Id. A motion brought under Rule 25 is decided

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Newlands asserts the following five claims: (1) quiet title and declaratory relief under 28 U.S.C. § 2201, N.R.S.
§ 30.010 et seq., and N.R.S. § 40.010 et seq.; (2) declaratory relief under the Fifth and Fourteenth Amendment of the
U.S. Constitution; (3) quiet title under the Fifth and Fourteenth Amendment of the U.S. Constitution; (4) permanent
and preliminary injunction; and (5) unjust enrichment. ECF No. 1. Newlands asserts each claim against all
defendants except for claim four, which Newlands asserts only against SFR Investments. ECF No. 1.

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under the court’s discretion. Sun-Maid Raisin Grow. of Cal. V. Cal. Pack. Corp., 273 F.2d, 282,

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284 (9th Cir. 1959); McComb v. Row River Lumber Co., 177 F.2d 129, 130 (9th Cir. 1949).

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B. Federal Rule of Civil Procedure 12(b)(6)

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Federal Rule of Civil Procedure 8(a)(2) requires a pleading to contain a “short and plain

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statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A

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court may dismiss a complaint that fails to meet this standard under Rule 12(b)(6). Fed. R. Civ.

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P. 12(b)(6). Rule 12(b)(6) permits dismissal on the basis of either (1) the “lack of a cognizable

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legal theory,” or (2) “the absence of sufficient facts alleged under a cognizable legal theory.”

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Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).
In considering whether the complaint is sufficient to state a claim, the court accepts as

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true all factual allegations contained in the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678

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(2009). However, a court need not “accept as true allegations that contradict matters properly

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subject to judicial notice or by exhibit” or “allegations that are merely conclusory, unwarranted

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deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049,

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1055 (9th Cir. 2008) (internal quotations omitted). While a complaint need not allege detailed

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factual allegations, it “must contain sufficient factual matter, accepted as true, to ‘state a claim to

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relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly,

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550 U.S. 544, 570 (2007)). A claim is facially plausible when it “allows the court to draw the

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reasonable inference that the defendant is liable for the misconduct alleged.” Id.

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Further, motions to dismiss filed after an answer are treated as a motion for judgment on

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the pleadings under Rule 12(c). Aldabe v. Aldabe, 616 F.2d 1089, 1093 (9th Cir. 1980). A court

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must still treat all allegations in the complaint as true under Rule 12(c) and must treat

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contradicting allegation in the answer as false. Elvig v. Calvin Presbyterian Chruch, 375 F.3d

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951, 955 (9th Cir. 2004).

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III.

DISCUSSION
The court first addresses the motion to substitute a party and then resolves the motion to

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dismiss.

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A. Motion to Substitute a Party

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The parties do not dispute the facts regarding this motion. At the time Newlands initiated

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this suit, Newlands held the beneficial interests under the deed of trust. Newlands then

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transferred the beneficial interests under the deed of trust to Carisbrook. Rule 25(c) therefore

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allows for the substitution of Newlands for Carisbrook because Newlands transferred its interest

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to Carisbrook. Further, SFR Investments does not oppose the motion and the HOA did not file a

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response. The court therefore grants the motion to substitute and substitutes Carisbrook into this

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action as the plaintiff in the place and stead of Newlands.
B. Motion to Dismiss

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The court now turns to the motion to dismiss. In the motion to dismiss, SFR Investments

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and the HOA argue for dismissal on two grounds: (1) Newlands lacks standing as it no longer

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holds any interest in the property and (2) the applicable statute of limitations bars the action.

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Because the court granted the motion to substitute above, the first ground for dismissal is

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rendered moot. Accordingly, the court addresses only the applicable statute of limitations below.
SFR Investments and the HOA argue a three-year statute of limitation should apply to

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this matter, construing Newlands’ quiet-title claims as wrongful-foreclosure claims. ECF No. 16

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at 5. More specifically, they argue that Newlands held a lien interest in the property rather than a

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title interest and therefore cannot seek to quiet title on the property. 2 Id. The court disagrees.
Newlands may bring a quiet-title claim. In Nevada, courts possess “the inherent equitable

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power to consider quiet title actions[.]” Shadow Wood HOA v. N.Y. Cmty. Bancorp., 366 P.3d

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1105, 1110 (Nev. 2016) (internal citations omitted). “An action may be brought by any person

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against another who claims an estate or interest in real property, adverse to the person bringing

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the action, for the purpose of determining such adverse claim.” Nev. Rev. Stat. § 40.010. A lien

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is “[a] legal right or interest that a creditor has in another’s property[.]” LIEN, Black’s Law

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Dictionary (10th ed. 2014). Accordingly, Newlands held an interest in the property; Newlands

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held the beneficiary interest under the deed of trust, which secured the mortgage lien on the

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SFR Investments and the HOA also argue the claims relying on the Due Process Clause of the U.S. Constitution
should be construed as wrongful-foreclosure claims. The court declines to entertain this argument for the same
reason it dismisses the arguments herein.

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property. As a result, Newlands could assert a quiet-title claim under N.R.S. § 40.010 against any

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other person claiming an interest adverse to Newlands’ interest. The court therefore construes

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Newlands’ claims as quiet-title claims rather than wrongful-foreclosure claims.
Newlands timely filed its quiet-title claims. In Nevada, the applicable statute of

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limitations imposes a five-year time-bar for quiet-title claims. Nev. Rev. Stat. § 11.070; Weeping

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Hollow Ave. Tr. v. Spencer, 831 F.3d 1110, 1114 (9th Cir. 2016) (citing N.R.S. § 11.070 as the

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governing statute of limitations in Nevada for quiet-title claims); Saticoy Bay LLC Series 2021

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Gray Eagle Way v. JPMorgan Chase Bank, N.A., 388 P.3d 226, 232 (Nev. 2017) (stating quiet-

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title claims are governed by a five-year statute of limitations). Here, the foreclosure sale took

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place on July 24, 2012, and Newlands sued to quiet title on June 13, 2017. Newlands therefore

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initiated this matter within the five-year statute of limitations. The court denies the motion to

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dismiss accordingly.

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IV.

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CONCLUSION
IT IS THEREFORE ORDERED that plaintiff Newlands Asset Holding Trust’s motion to

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substitute, or, in the alternative, motion to intervene (ECF No. 19) is GRANTED. The court

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instructs the clerk of the court to substitute Carisbrook Asset Holding Trust into this action as the

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plaintiff in the place and stead of Newlands Asset Holding Trust.

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IT IS FURTHER ORDERED that defendants SFR Investments Pool 1, LLC and
Stonefield Homeowners’ Association’s motion to dismiss (ECF No. 16) is DENIED.

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IT IS SO ORDERED.

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DATED this 17th day of November, 2017.

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LARRY R. HICKS
UNITED STATES DISTRICT JUDGE

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