The Bank Of New York Mellon, et al. v. Cape Jasmine - Docket Alarm

The Bank Of New York Mellon, et al. v. Cape Jasmine - Docket Alarm

Case 2:16-cv-00248-JAD-GWF Document 24 Filed 06/27/16 Page 1 of 10 1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 4 The Bank of New York ...

269KB Sizes 0 Downloads 4 Views

Recommend Documents

Sullivan et al v. The Bank of New York Mellon Corporation et al [PDF
Mar 19, 2015 - David B. Sullivan and Donna L. Beck (“Plaintiffs”) brought this action in state court against the Ban

Zografos et al v. Qwest Communications Corporation et - Docket Alarm
Jul 11, 2013 - MGM-Pathe Commc'ns Co.,. 129 F .3d 1026, 1027 (9th Cir. 1997) (holding that district court abused its dis

The Bank of New York et al. v. Ronald Sheff et al., Case No.: CAL 02
The Bank of New York et al. v. Ronald ... suit against Defendants Ronald Sheff, Kimi Murakimi, and Piper Rudnick, LLP, a

AMERICAN GENERAL LIFE INSURANCE CO et al v - Docket Alarm
PLAINTIFFS AMERICAN GENERAL LIFE INSURANCE COMPANY. AND AIG ANNUITY LIFE INSURANCE CONIPANY'S OPPOSITION TO THE. RAIN PA

EAGLE VIEW TECHNOLOGIES, INC. et al v - Docket Alarm
Aug 2, 2016 - This patent case arises from sales by Defendants Xactware Solutions, Inc. and Verisk. Analytics, Inc. (col

HULLEY ENTERPRISES LTD. et al v. RUSSIAN - Docket Alarm
Aug 17, 2016 - Michael Goldhaber's Column in The American Lawyer ... In 1995-1996, Mikhail Khodorkovsky and his friends

Strawbridge v. The Bank of New York Mellon :: 2017 :: Massachusetts
Justia › US Law › Case Law › Massachusetts Case Law › Massachusetts Appeals Court Decisions › 2017 › Strawbr

The Bank of New York Mellon - SEC.gov
Jun 13, 2016 - market at the time the trade is executed by the foreign exchange desk;” and (c) “ ... buying and sell

McDonagh et al v. Harrah's Las Vegas, Inc. et al, 2:13 - Docket Alarm
Jun 17, 2014 - ORDER. Presently before the court is a motion to dismiss filed by defendants Harrah's Las Vegas, Inc. and

Gehl et al v. Bloomin' Brands et al, 4:13-cv-05961, No - Docket Alarm
Nov 20, 2015 - The parties to the above-captioned action, through their attorneys of record, hereby respectfully request

Case 2:16-cv-00248-JAD-GWF Document 24 Filed 06/27/16 Page 1 of 10

1

UNITED STATES DISTRICT COURT

2

DISTRICT OF NEVADA

3 4

The Bank of New York Mellon fka The Bank of New York, Trustee,

Case No. 2:16-cv-0248-JAD-GWF

5 Plaintiff 6

Order Granting in Part and Denying in Part Motion to Dismiss

v. 7 Cape Jasmine CT Trust et al.,

[ECF No. 8]

8 Defendants 9 10

This action challenges the 2012 nonjudicial foreclosure sale of the home located at 5443

11

Cape Jasmine Court in North Las Vegas, Nevada. The Bank of New York Mellon, as Trustee for

12

the Certificateholders CWALT, Inc. Alternative Loan Trust 2005-61 Mortgage Pass-through

13

Certificates, Series 2005-61, claims it is the beneficiary of the senior deed of trust on the home.1

14

When the homeowner defaulted on his assessments owed to the Arbor Park Community

15

Association (“the HOA”), the HOA sold the property to the Cape Jasmine CT Trust for a small

16

fraction of the mortgage balance.2 Under the Nevada Supreme Court’s holding in SFR

17

Investments Pool 1, LLC v. U.S. Bank,3 if the HOA properly foreclosed on a superpriority lien

18

under NRS 116.3116, the Bank’s interest was extinguished. In an effort to retain its interest, the

19

Bank sues the Trust and the HOA to quiet title,4 and it sues the HOA for bad faith, wrongful

20 21 22 1

ECF No. 1 at ¶ 15.

2

Id. at ¶ 21.

25

3

SFR Inv. Pool 1, LLC v. U.S. Bank, 334 P.3d 408, 419 (Nev. 2014) (en banc).

26

4

23 24

27 28

The Bank also asserts a “cause of action” against the Trust for injunctive relief, see ECF No. 1 at 10, although injunctive relief is a remedy, not an independent claim for relief. See, e.g., Indian Homes Programs, LLC Series III v. Green Tree Servicing, LLC, 2015 WL 5132456, at *4 (D. Nev. Sept. 1, 2015).

f Find authenticated court documents without watermarks at docketalarm.com.

Case 2:16-cv-00248-JAD-GWF Document 24 Filed 06/27/16 Page 2 of 10

1

foreclosure, and deceptive trade practices.5 The HOA moves to dismiss all claims against it.6 It contends that the Bank’s claims for

2 3

breach of NRS 116.1113 (bad faith) and wrongful foreclosure must be dismissed under NRS

4

38.310, which requires a court to dismiss any claim relating to the interpretation, application, or

5

enforcement of regulations applicable to residential property or an HOA’s governing documents

6

if the plaintiff has not first mediated or arbitrated that claim before the Nevada Real Estate

7

Division. It argues that it is not a proper target of the quiet-title cause of action because it claims

8

no present interest in the property. Finally, it contends that the deceptive-trade-practices claim

9

fails because this case is based on real-estate transactions, not the sale or lease of goods or

10

services.7

11

I grant the motion in part: I dismiss the bad-faith and wrongful-foreclosure claims under

12

NRS 38.310, and I dismiss a portion of the deceptive-trade claim because the statutory provision

13

it is based on does not apply to real-estate transactions. But I allow the remainder of the Bank’s

14

claims against the HOA to proceed.

15

Discussion

16 17

A.

The Bank’s bad-faith and wrongful-foreclosure claims against the HOA are dismissed under NRS 38.310.

18

NRS 38.310 bars any “civil action based upon a claim relating to . . . [t]he interpretation,

19

application[,] or enforcement of any covenants, conditions or restrictions applicable to residential

20

property or any bylaws, rules[,] or regulations adopted by an association”8 that has not been first

21

mediated or arbitrated. And NRS 38.300(3) defines “civil action” to include all claims except

22 23

5

ECF 1.

6

ECF 8. I find this motion suitable for disposition without oral argument. L.R. 78-2.

7

The Bank filed an opposition, ECF No. 22, but the HOA filed no reply.

8

Nev. Rev. Stat. § 38.310.

24 25 26 27 28

2

f Find authenticated court documents without watermarks at docketalarm.com.

Case 2:16-cv-00248-JAD-GWF Document 24 Filed 06/27/16 Page 3 of 10

1

quiet-title claims and those seeking injunctive relief for an immediate threat of irreparable harm.9

2

The court must consider each claim separately and dismiss those “initiated in violation of NRS

3

38.310(1).”10 The HOA moves to dismiss only the bad-faith and wrongful-foreclosure claims

4

under this exhaustion statute.

5

1.

6

The Bank argues11 that NRS 38.310 does not apply to its claims because the statute only

7

governs civil actions between homeowners and their HOAs, and the Bank is not a homeowner.12

8

But the statute contains no language suggesting that it is limited only to homeowner plaintiffs.

9

“The preeminent canon of statutory interpretation requires [the court] to ‘presume that the

NRS 38.310 is not limited to suits between homeowners and their HOAs.

10

legislature says in a statute what it means and means in a statute what it says there.’”13 Had the

11

Nevada legislature intended to restrict NRS 38.310’s application to claims between homeowners

12

and their HOAs, it could have easily said so. Instead, it broadly prescribed alternative dispute

13

resolution for “any civil action” that meets the statutory definition.

14 9

15 16 17 18 19 20

Nev. Rev. Stat. § 38.300(3).

10

McKnight Family, LLP v. Adept Mgmt. Servs., Inc., 310 P.3d 555, 558 (Nev. 2013).

11

The Bank’s argument that NRS 38.310 “cannot affect” federal subject-matter jurisdiction misses the point. See ECF No. 22 at 4. NRS 38.310 is not a jurisdictional statute; it is an exhaustion statute that creates prerequisites for filing certain state-law claims. Its applicability is governed by the Erie doctrine, see United States ex rel. Newsham v. Lockheed Missiles & Space Co., 190 F.3d 963, 972 (9th Cir. 1999), which the Bank fails to analyze here. 12

21

ECF No. 22 at 8.

13

27

Bldg. Energetix Corp. v. EHE, LP, 294 P.3d 1228, 1232 (Nev. 2013) (quoting BedRoc Limited, LLC v. United States, 541 U.S. 176, 183 (2004)). This court must apply Nevada’s rules of statutory construction when sitting in diversity. See, e.g., In re Goldman, 70 F.3d 1028, 1029 (9th Cir. 1995); see also ECF 1 at ¶¶ 1–8 (noting that jurisdiction in this case is based on diversity). And because I do not find this statute ambiguous, I do not consider its legislative history. See Silver State Elec. Supply Co. v. State ex rel. Dep’t of Taxation, 157 P.3d 710, 713 (Nev. 2007) (“If the words of a statute are unambiguous, this court will give those words their plain meaning. Otherwise, this court will look to legislative history and rules of statutory construction in determining the statute’s meaning.”).

28

3

22 23 24 25 26

f Find authenticated court documents without watermarks at docketalarm.com.

Case 2:16-cv-00248-JAD-GWF Document 24 Filed 06/27/16 Page 4 of 10

1

That NRS 38.310 “is silent as to whom it applies” does not render the statute ambiguous

2

such that I must consider the legislative intent behind its enactment. I am thus bound by

3

Nevada’s first rule of statutory interpretation: “if a statute is clear and unambiguous,” the court

4

must give “effect to the plain and ordinary meaning of the statute’s language, and . . . not resort

5

to the rules of statutory construction.”14

6

2.

7

The Bank also offers a narrow construction of NRS 38.310 and argues that the statute

NRS 38.310 applies to a broader swath of claims than the Bank acknowledges.

8

requires pre-litigation dispute resolution only for claims involving the interpretation, application,

9

or enforcement of the HOA’s CC&Rs, and because its claims are not based on the CC&Rs, NRS

10

38.310 does not apply.15

11

To make this argument, the Bank omits and ignores one of the statute’s plain terms: the

12

one that comes right before the clause that the Bank focuses on, and which clearly states that the

13

pre-litigation resolution process also applies to claims relating to “[t]he interpretation,

14

application or enforcement of any covenants, conditions[,] or restrictions applicable to residential

15

property.”16 The Nevada Supreme Court noted this broad reach of NRS 38.310 in McKnight

16

Family, LLP v. Adept Management Services, Inc.17 In McKnight, the homeowner sued the HOA

17

alleging that it failed to properly credit his payments and wrongfully foreclosed based on

18

delinquent assessments.18 Like the Bank, he alleged claims for quiet title, bad faith, and

19

wrongful foreclosure.19 The district court dismissed all of his claims under NRS 38.310 because

20 21

14

W. Sur. Co. v. ADCO Credit, Inc., 251 P.3d 714, 716 (Nev. 2011).

22

15

ECF 22 at 5–6.

23

16

Nev. Rev. Stat. § 38.310(1)(a).

17

McKnight Family, LLP, 310 P.3d at 555.

18

Id. at 557.

19

Id.

24 25 26 27 28

4

f Find authenticated court documents without watermarks at docketalarm.com.

Case 2:16-cv-00248-JAD-GWF Document 24 Filed 06/27/16 Page 5 of 10

1

the parties had not mediated or arbitrated before the suit was filed.20

2

On appeal, the Nevada Supreme Court held that the quiet-title claim should not have been

3

dismissed because quiet-title claims are expressly exempted from the statute’s definition of

4

“civil action.”21 But the Court found that the bad-faith and wrongful-foreclosure claims “fell

5

under NRS 38.310’s purview.”22 It reasoned that the NRS 116.1113 claim “required the district

6

court to interpret regulations and statutes that contain[] conditions and restrictions applicable to

7

residential property” and, because the homeowner “sought money damages” for this claim, it

8

qualified as a “civil action[] as defined in NRS 38.300(3).”23 It also concluded that the

9

homeowner’s claim that the HOA wrongfully foreclosed because it failed to properly credit the

10

homeowner’s payments likewise “involve[d] interpreting covenants, conditions, or restrictions

11

applicable to residential property” and also required the court to “interpret the CC&Rs to

12

determine their applicability and enforceability regarding” this property owner.24 Thus,

13

McKnight demonstrates that the Nevada Supreme Court broadly interprets NRS 38.310 to require

14

pre-litigation dispute resolution of claims relating to the interpretation, application, or

15

enforcement of laws governing residential property, not just claims relating to the HOA’s

16

CC&Rs and governing documents.

17 18 19 20 21 22

20

Id.

23

21

Id. at 559 (“it is not a civil action as defined in NRS 38.300(3)”).

22

Id. at 558–59.

23

Id.

24

Id. at 560.

24 25 26 27 28

5

f Find authenticated court documents without watermarks at docketalarm.com.

Case 2:16-cv-00248-JAD-GWF Document 24 Filed 06/27/16 Page 6 of 10

1 3. 2

McKnight dictates that the Bank’s bad-faith and wrongful-foreclosure claims be dismissed under NRS 38.310.

Like the claims in McKnight,25 the Bank’s bad-faith and wrongful-foreclosure claims fall

3 4

under the purview of NRS 38.310. The bad-faith claim is founded on the allegation that the

5

HOA breached NRS 116.1113, which “provides that every duty governed by NRS 116, the

6

Common-Interest Ownership Uniform Act, must be performed in good faith.”26 NRS 116.1113

7

imposes a duty of good faith and fair dealing on any act performed under an HOA’s CC&Rs

8

adopted in accordance with Chapter 116.27 So this bad-faith claim is “a claim relating to” the

9

“enforcement of” a covenant applicable to residential property (the statutory provisions of NRS

10

Chapter 116) and potentially the “bylaws, rules[,] or regulations adopted by an association.”28

11

The factual premise of the Bank’s wrongful-foreclosure claim is that: (1) the HOA gave

12

inadequate notice or opportunity to cure the deficiency; (2) the sale price was commercially

13

unreasonable; (3) and the HOA breached the covenant of good faith and fair dealing imposed by

14

NRS 116.1113.29 Each of these theories will require “[t]he interpretation, application or

15

enforcement of” various provisions of NRS Chapter 116, which constitute “covenants,

16

conditions[,] or restrictions applicable to residential property” or “[t]he interpretation, application

17 18 19 25

20 21 22 23

“When interpreting state law, federal courts are bound by decisions of the state’s highest court.” Easyriders Freedom F.I.G.H.T. v. Hannigan, 92 F.3d 1486, 1494 n.4 (9th Cir. 1996) (quoting Arizona Elec. Power Coop., Inc. v. Berkeley, 59 F.3d 988, 991 (9th Cir. 1995)); accord, Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 494 n.5 (1982) (federal courts must follow the state courts’ interpretation of a state statute). 26

ECF No. 1 at ¶ 63.

27

Nev. Rev. Stat. § 116.1113.

28

See Nev. Rev. Stat. § 38.310(1).

29

ECF 1 at 12.

24 25 26 27 28

6

Case 2:16-cv-00248-JAD-GWF Document 24 Filed 06/27/16 Page 7 of 10

1

or enforcement of” the HOA’s “bylaws, rules[,] or regulations.”30 I thus dismiss both claims

2

under NRS 38.310.31

3

B.

4

The Bank has pled a justiciable quiet-title claim against the HOA. The HOA next argues that the Bank’s quiet-title/declaratory-relief claim fails because the

5

HOA “does not claim a present interest in the Property adverse to the Bank.”32 “NRS 40.010

6

governs Nevada quiet title actions and provides: ‘An action may be brought by any person

7

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

8

the action, for the purpose of determining such adverse claim.’”33 Although “[a] plea to quiet

9

title does not require any particular elements,”34 each party must have or assert an interest in the

10

property. The Bank does not allege that the HOA has or claims any present interest in this

11

property. Indeed, the HOA’s interest was the lien it held before—and satisfied with the proceeds

12

of—the foreclosure sale.

13

But the Bank is challenging the validity of that sale, and the remedies it seeks in this

14

action include declarations that the sale was invalid and that the sale did not extinguish the

15

Bank’s interest.35 With some limitations not applicable here, Rule 19(a) of the Federal Rules of

16

Civil Procedure requires a party to be joined in a suit if it “claims an interest relating to the

17

subject of the action and is so situated that the disposition of the action in [its] absence may (i) as

18

a practical matter impair or impede [its] ability to protect that interest or (ii) leave any of the

19 20 21 22

30

31

Because I dismiss these claims under NRS 38.310, I decline to reach the HOA’s alternative arguments for their dismissal. See ECF No. 8 at 7–8. 32

23 24 25

28

ECF No. 8 at 5–6.

33

Chapman v. Deutsche Bank Nat’l Trust Co., 302 P.3d 1103, 1106 (Nev. 2013) (quoting Nev. Rev. Stat. § 40.010).

34

Id.

35

ECF 1 at 8–10.

26 27

See Nev. Rev. Stat. § 38.310(1).

7

Case 2:16-cv-00248-JAD-GWF Document 24 Filed 06/27/16 Page 8 of 10

1

persons already parties subject to a substantial risk of incurring double, multiple, or otherwise

2

inconsistent obligations by reason of [its] claimed interest.”36 The “complete relief” factor

3

considers whether the existing parties can obtain “consummate rather than partial or hollow

4

relief” and whether there is a real possibility of “multiple lawsuits on the same cause of action.”37

5

Based on the allegations and the type of relief that the Bank prays for, it appears at this

6

nascent stage of this litigation that the HOA is a necessary party. The disposition of this action in

7

the HOA’s absence may impair or impede its ability to protect its interests.38 And if the Bank

8

succeeds in invalidating the sale without the HOA being a party to this suit, separate litigation to

9

further settle the priority of the parties’ respective liens and rights may be necessary. Thus, at

10

this point, the HOA appears to be a necessary party, at least nominally, so the motion to release it

11

from the quiet-title/declaratory-relief claim is denied.

12

C.

A portion of the Bank’s DTPA claim must be dismissed.

13

Finally, the HOA moves to dismiss the Bank’s claim that the HOA violated Nevada’s

14

Deceptive Trade Practices Act (DTPA), codified in NRS Chapter 598, arguing that the DTPA

15

only governs the sale of goods and services, not real estate transactions like the one on which the

16

Bank’s claim is based.39 NRS 41.600 allows a victim of fraud to bring an action for “consumer

17

fraud,” which is defined to include any of the dozens of deceptive trade practices identified in the

18

DTPA at NRS 598.0915 to 598.0925. Some of those deceptive trade practices relate only to the

19

sale or lease of goods or services, but some are more broadly defined.

20 21 22

36

Fed. R. Civ. P. 19(a).

23

37

Northrop Corp. v. McDonnell Douglas Corp., 705 F.2d 1030, 1043 (9th Cir. 1983).

24 25 26 27 28

38

This fact distinguishes this case from Majuba Mining, Ltd. v. Pumpkin Copper, Inc., 299 P.3d 363, 364 (Nev. 2013), in which Majuba had nothing to protect; its claims had been forfeited and “void by operation of law.” 39

ECF No. 8 at 9. 8

Case 2:16-cv-00248-JAD-GWF Document 24 Filed 06/27/16 Page 9 of 10

1

The Bank alleges four separate deceptive trade practices:

2

C

3

NRS 598.0915(15), which prohibits “Knowingly mak[ing] any other false representation in a transaction,”

C

4 5

NRS 598.092(8), which prohibits “Knowingly misrepresent[ing] the legal rights, obligations or remedies of a party to a transaction,”

C

6

NRS 598.0923(2), which defines a deceptive trade practice to include “Fail[ing]

7

to disclose a material fact in connection with the sale or lease of goods or

8

services,” and C

9

NRS 598.0923(3), which prohibits “Violat[ing] a state or federal statute or regulation relating to the sale or lease of goods or services.”40

10 11

The portions of this claim based on alleged violations of NRS 598.0923(2)–(3) require the sale or

12

lease of goods or services, which real estate is not.41 So the violations alleged in paragraph 89

13

based on these provisions do not state a viable claim for relief and must be dismissed. Because it

14

does not appear that the Bank can state a viable claim based on these subsections under the

15

circumstances of this case, I conclude that amendment would be futile and I dismiss this portion

16

of the claim with prejudice.

17

But the same cannot be said for the alleged violations of NRS 598.0915(15) and NRS

18

598.092(8), which do not appear to limit deceptive trade practices to goods or services. Because

19

the HOA has not demonstrated that a claim based on the deceptive trade practices described in

20

NRS 598.0915(15) and NRS 598.092(8) must be based on the sale or lease of goods or services, I

21

deny its motion to dismiss the remainder of this DTPA claim.

22 23 24

40

See ECF No. 1 at ¶¶ 79–84; Nev. Rev. Stat. §§598.0915–598.0923.

25 41

27

See, e.g., Gonzales v. Bank of America, N.A., 2015 WL 4744432, *3 (D. Nev., Aug. 10, 2015) (collecting cases in which judges of this court have consistently held that real estate is not a good or service to which the DTPA applies).

28

9

26

Case 2:16-cv-00248-JAD-GWF Document 24 Filed 06/27/16 Page 10 of 10

1

Conclusion

2 3

Accordingly, IT IS HEREBY ORDERED that the Arbor Park Community Association’s Motion to Dismiss [ECF 8] is GRANTED in part and DENIED in part: C

4 5

The Bank’s third and fourth claims for relief (breach of NRS 116.1113 and wrongful foreclosure) are DISMISSED without prejudice under NRS 38.310;

C

6

The portion of the bank’s fifth claim for relief (deceptive trade practices)

7

alleging a violation of NRS 598.0923(2)–(3) is DISMISSED with prejudice

8

under FRCP 12(b)(6); and C

9

This action proceeds against the HOA42 on the first claim for relief (quiet-

10

title/declaratory relief) and the remainder of the fifth claim for relief (deceptive

11

trade practices).

12

Dated: June 27, 2016.

13

_______________________________ _____ _ ____ _______ _ __ _ ____ _______ _____ __ _ Jennifer nnife ffeer A. Dorsey Dorsey United nitedd States Sttaaate tes District Judge te Juuddgee

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

42

No claim against the Trust has been disposed of by this order. 10