Golden Creek Holdings, Inc. v. MTC Financial , Inc dba Trustee Corps

• Court: District Court, D. Nevada
• Decided: March 30, 2025
• Docket: 2:24-cv-00177
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *

7 GOLDEN CREEK HOLDINGS, INC., Case No. 2:24-cv-00177-RFB-NJK

8 Plaintiff, ORDER

9 v.

10 MTC FINANCIAL, INC. D/B/A TRUSTEE CORPS, et al., 11 Defendants. 12 13 Before the Court are Defendant MTC Financial, Inc. d/b/a Trustee Corps (“MTC 14 Financial”)’s and Defendant U.S. Bank Trust National Association (“U.S. Bank”)’s motions to 15 dismiss. ECF Nos. 9, 13, 23. For the following reasons, the Court denies the first motion as moot 16 and grants the remaining motions. 17 I. PROCEDURAL HISTORY 18 Plaintiff Golden Creek Holdings, Inc. (“Golden Creek”) initiated this action on December 19 14, 2023, by filing a Complaint in the Eighth Judicial District Court in Clark County, Nevada. ECF 20 No. 1-1. On January 25, 2024, Defendant U.S. Bank removed the action to this Court. ECF No. 1. 21 On March 12, Defendant MTC Financial filed the instant motion to dismiss. ECF No. 9. On 22 March 26, 2024, Plaintiff responded to the motion and filed the operative Amended Complaint. 23 ECF Nos. 10, 11. 24 On April 10, Defendant MTC Financial filed the instant motion to dismiss the Amended 25 Complaint. ECF No. 13. Plaintiff responded on April 24. ECF No. 17. On July 3, 2024, Defendant 26 U.S. Bank filed the instant motion to dismiss. ECF No. 23. The motion was fully briefed by August 27 30. ECF Nos. 24, 25. 28 II. FACTUAL ALLEGATIONS 1 The following facts are drawn from Plaintiff’s Amended Complaint. 2 Plaintiff is the owner of real property located at 343 Perry Ellis Drive in Henderson, Nevada 3 (“the Subject Property”). Defendant U.S. Bank claims to be the beneficiary of the Subject Property 4 pursuant to a deed of trust. Defendant MTC Financial acts as the trustee for Defendant U.S. Bank. 5 Plaintiff brings this quiet-title action to challenge the validity of the U.S. Bank’s deed of trust. 6 Plaintiff alleges that the original promissory note, secured by the Subject Property’s deed 7 of trust, was endorsed in blank. Plaintiff alleges that Defendant U.S. Bank never held the original 8 promissory note. Thus, when Bank of America “transferred and conveyed” the beneficial interest 9 in the deed of trust to U.S. Bank, it did not do so legitimately. Since U.S. Bank is not the present 10 owner of the promissory note, it therefore has no rights or interest in the deed of trust. 11 Additionally, Plaintiff alleges that the entire amount due under the promissory note became 12 “wholly due” on or about March 11, 2011. Within 10 years after the balance became wholly due, 13 neither U.S. Bank nor Bank of America foreclosed on the deed of trust as mandated by NRS 14 106.240. Thus, the time for U.S. Bank to foreclose on the deed of trust has expired. 15 III. LEGAL STANDARD 16 An initial pleading must contain “a short and plain statement of the claim showing that the 17 pleader is entitled to relief.” Fed. R. Civ. P. 8(a). The court may dismiss a complaint for “failure 18 to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). In ruling on a motion 19 to dismiss, “[a]ll well-pleaded allegations of material fact in the complaint are accepted as true and 20 are construed in the light most favorable to the non-moving party.” Faulkner v. ADT Sec. Servs., 21 Inc., 706 F.3d 1017, 1019 (9th Cir. 2013) (citations omitted). 22 To survive a motion to dismiss, a complaint need not contain “detailed factual allegations,” 23 but it must do more than assert “labels and conclusions” or “a formulaic recitation of the elements 24 of a cause of action . . . .” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. 25 Twombly, 550 U.S. 544, 555 (2007)). In other words, a claim will not be dismissed if it contains 26 “sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face,” 27 meaning that the court can reasonably infer “that the defendant is liable for the misconduct 28 alleged.” Id. at 678 (internal quotation and citation omitted). The Ninth Circuit, in elaborating on 1 the pleading standard described in Twombly and Iqbal, has held that for a complaint to survive 2 dismissal, the plaintiff must allege non-conclusory facts that, together with reasonable inferences 3 from those facts, are “plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. 4 Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009). 5 IV. DISCUSSION 6 The Court turns to the merits of Defendants’ motions to dismiss, respectively. 7 A. Defendant U.S. Bank’s Motion to Dismiss 8 In the Amended Complaint, Plaintiff alleges four causes of action against Defendant U.S. 9 Bank: (1) quiet title, (2) declaratory relief, (3) injunctive relief, and (4) wrongful foreclosure. 10 Plaintiff presents two theories to support its claims. Plaintiff contends that the Deed of Trust was 11 extinguished under NRS 106.240. Plaintiff also contends that Defendant is not in possession of the 12 original promissory note. The Court grants Defendant U.S. Bank’s Motion to Dismiss and 13 dismisses the claims against it with prejudice. 14 i. Note-Related Claim 15 Plaintiff alleges that U.S. Bank is not in possession of the original promissory note and as 16 a result, the Deed of Trust is a rogue instrument that secures nothing. Defendant argues, inter alia, 17 that claim preclusion bars Plaintiff from asserting this argument. 18 The Court finds that the note-related issues have already been litigated in a prior quiet title 19 action in state court.1 A predecessor to Plaintiff purchased the property at the foreclosure sale, 20 Plaintiff later acquired the property, and Plaintiff then substituted into the underlying interpleader 21 action. In the action, Plaintiff sought a ruling that Bank of America’s deed of trust was extinguished 22 by the HOA foreclosure sale. The parties moved for summary judgment. On August 2, 2019, the 23 state district court ruled in Bank of America’s favor, concluding that the deed of trust survived the 24

25 1 The Court takes judicial notice of the Eight Judicial District Court decision dated September 23, 2019, and the Nevada Court of Appeals decision dated April 12, 2021, as they are a matter of 26 public record. A court may take judicial notice of a fact that is not “subject to reasonable dispute 27 in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot 28 reasonably be questioned.” Fed. R. Evid. 201(b). Under Rule 201 “a court may take judicial notice of matters of public record.” Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001). 1 foreclosure sale. That judgment was affirmed by the Nevada Court of Appeals in October of 2021. 2 Then, on December 14, 2023, Plaintiff filed this case in federal court arguing that Defendant U.S. 3 Bank, the successor of Bank of America, did not possess the promissory note secured by the deed 4 of trust. The Court finds that Plaintiff’s argument is foreclosed based on claim preclusion. 5 “Claim preclusion makes a valid final judgment conclusive on the parties and ordinarily 6 bars a later action based on the claims that were or could have been asserted in the first case.” Boca 7 Park Marketplace Syndications Grp., LLC v. Higco, Inc., 407 P.3d 761, 763 (Nev. 2017). Claim 8 preclusion applies when “(1) the parties or their privies are the same, (2) the final judgment is 9 valid, and (3) the subsequent action is based on the same claims or any part of them were or could 10 have been brought in the first case.” Dockins v. Am. Fam. Fin. Servs., Inc., 606 Fed. App’x 877, 11 878 (9th Cir. 2015) (citing Five Star Cap. Corp. v. Ruby, 194 P.3d 709, 713 (Nev. 2008)). 12 Here, all the elements of claim preclusion are met. Plaintiff is the same and Defendant U.S. 13 Bank, as successor-in-interest to Bank of America, is entitled to the protection of claim preclusion 14 in a quiet title action. Regarding the second element, the state court issued a valid final judgment. 15 This action concerns the same property and the validity of the same deed of trust. To the extent 16 that Plaintiff argues that they are raising new claims related to the validity of the promissory note, 17 Plaintiff “‘could have’ asserted those claims in” the prior litigation. See Golden Creek Holdings, 18 Inc. v. Nationstar Mortg. LLC, 489 P.3d 918, at *1 (Nev. 2021). The only factual circumstance 19 that has changed in the interim is that U.S. Bank, instead of Bank of America, is now the 20 beneficiary of the deed of trust. Plaintiff has thus not demonstrated why “this court should disrupt 21 sound claim preclusion principles[.]” Five Star, 194 P.3d at 716. Therefore, the Court declines to 22 consider Plaintiff’s note-related argument because it is barred by claim preclusion.2 23 24 2 The Court notes that, even if the argument were not foreclosed, Plaintiff’s argument fails as a matter of law. Under Nevada law, it is presumed that a note is transferred with the deed of 25 trust. See, e.g., Jones v. U.S. Bank Nat'l Ass'n as Tr. for TBW Mortg.-Backed Pass-Through Certificates, Series 2006-03, 460 P.3d 958, 962 (Nev. 2020) (noting a “general presumption that 26 the note traveled with the deed of trust). Further, Plaintiff’s “show-me-the-note” argument has been “resoundingly rejected” by courts in Nevada. See Juntilla v. RESI Home Loans IV, LLC, No. 27 2:12-cv-00790-MMD-PAL, 2013 WL 1819636, at *1 (D. Nev. Apr. 29, 2013); Wilmington Sav. Fund Soc'y FSB as Tr. For Hilldale Tr. v. Deaver, 86 P.3d 710, at *1 (Nev. 2021) (“Although 28 possession of the original promissory note is generally required to enforce the note, see NRS 1 ii. NRS 106.240 Claim 2 Plaintiff alleges that Bank of America sent a “notice of intent to accelerate” letter in 2011. 3 The amount due on the promissory note became wholly due and payable as a matter of law in or 4 around September 2011, thus triggering the NRS 106.240 ten-year period. Under this theory, 5 Plaintiff alleges that the Deed of Trust became expunged and/or discharged pursuant to NRS 6 106.240 when no foreclosure occurred “within the 10 years” after the alleged 2011 trigger date. 7 The Court finds that claim preclusion does not foreclose this claim. Plaintiff could not have brought 8 this claim in the prior lawsuit, as ten years had not yet elapsed, and Defendant does not argue that 9 claim preclusion applies. However, the Court finds that Plaintiff’s argument fails as a matter of 10 law. 11 NRS 106.240 “provides that 10 years after the debt secured by the lien has become ‘wholly 12 due’ and has remained unpaid, ‘it shall be conclusively presumed that the debt has been regularly 13 satisfied and the lien discharged.’” SFR Invs. Pool 1, LLC v. U.S. Bank N.A., 507 P.3d 194, 195 14 (Nev. 2022). Thus, “NRS 106.240 operates to extinguish any debt upon real property secured by 15 a deed of trust ten years after the debt becomes due unless an extension is written and recorded.” 16 Pro-Max Corp. v. Feenstra, 16 P.3d 1074, 1076 (Nev. 2001). 17 Nevada law requires a notice of default to be recorded. NRS § 107.080(3) (stating that the 18 35-day period permitting remediation of the debt “commences on the first day following the day 19 upon which the notice of default and election to sell is recorded in the office of the country 20 recorder”). The Court rejects Plaintiff’s reliance on a 2011 “Notice of Intent to Accelerate” letter 21 to show that NRS 106.240 is triggered. This Notice by itself is insufficient to trigger NRS 106.240. 22 See Daisy Tr. v. Fed. Nat'l Mortg. Ass'n, No. 21-15595, 2022 WL 874634, at *2 (9th Cir. Mar. 24, 23 2022) (finding that NRS 106.240 generally is triggered with recording of notice of default); Golden 24 Creek Holdings, Inc. v. Nationstar Mortg., LLC, No. 23-16121, 2024 WL 808064 (9th Cir. Feb. 25 7, 2024) (finding that “[w]hether Nationstar issued an unrecorded acceleration in 2011 is legally 26 irrelevant; such an unrecorded notice could not have rendered its debt ‘wholly due’”). The debt

27 104.3301, no such requirement exists to foreclose on a deed of trust. Rather, the authority to foreclose on a deed of trust is established by the deed of trust or an assignment thereof.”); see 28 also NRS 107.0805(1)(b) (providing that an entity seeking to foreclose must only attest that it is the holder of the promissory note and “the current beneficiary of record”). 1 can only be accelerated through the recording of a notice of default and Plaintiff does not allege 2 that there was a recorded notice at any time before August 24, 2023, when the Notice of Breach 3 was recorded. Therefore, Plaintiff’s arguments regarding any acceleration of debt prior to the date 4 that the Notice of Breach was recorded are unavailing. Therefore, Plaintiff’s claims are dismissed 5 with prejudice and without leave to amend. 6 B. Defendant MTC’s Motion to Dismiss 7 In the Amended Complaint, Plaintiff alleges three causes of action against Defendant 8 MTC: (1) injunctive relief, (2) wrongful foreclose, and (3) violation of NRS 107.028. The Court 9 grants Defendant MTC’s Motion to Dismiss for all three causes of action. 10 In their Opposition to the Motion to Dismiss, Plaintiff voluntarily dismisses the injunctive 11 claim, as it is a remedy rather than an independent cause of action, and the wrongful foreclosure 12 claim, as it is not ripe and no foreclosure has occurred. Plaintiff also acknowledges that if the Court 13 adjudicates the NRS 106.240 claim in favor of Defendant U.S. Bank then the cause of action for 14 violation of NRS 107.028 should be adjudicated in favor of Defendant MTC since the violation of 15 NRS 107.028 is derivative to the other claims. The Court agrees. 16 NRS 107.028 requires, inter alia, that a trustee “act impartially and in good faith with 17 regard to the deed of trust and shall act in accordance with the law[.]” Nev. Rev. Stat. § 107.028(6). 18 To show that a trustee violated NRS 107.028, a plaintiff must, at minimum, allege facts that the 19 trustee was not acting impartially and in good faith with regard to the deed of trust or was not 20 acting in accordance with the law. In the Amended Complaint, Plaintiff alleges that MTC moved 21 forward with the nonjudicial foreclosure of the Deed of Trust despite knowing that Defendant U.S. 22 Bank is not the owner of the underlying original promissory note and/or that the Deed of Trust 23 was discharged/expunged as a matter of law by operation of NRS 106.240. The Court has already 24 rejected Plaintiff’s bases for the NRS 107.028 violation. Additionally, Plaintiff has failed to plead 25 facts showing that MTC did not act impartially or in good faith. The Court thus finds that Plaintiff 26 has failed to adequately plead a violation of NRS 107.028. Because Plaintiff’s NRS 107.028 cause 27 of action relies on an argument that the Court rejects as a matter of law, the Court additionally 28 finds that leave to amend would be futile here. Therefore, the Court grants Defendant MTC’s 1 | motion to dismiss with prejudice. 2 C. Expunging the Lis Pendens 3 A lis pendens is a “notice of an action affecting real property” which is pending in a judicial 4| proceeding. See Nev. Rev. Stat. § 14.010(2). Because this Order dismisses all of Plaintiff's claims 5 | without leave to amend, the lis pendens no longer serves any purpose. Am. Town Ctr. v. Hall 83 6| Assocs.,, 912 F.2d 104, 110 (6th Cir. 1990) (“With the complaint dismissed, the notices of lis 7 | pendens no longer served any purpose.”); see also Wensley v. First Nat. Bank of Nevada, 874 F. 8 | Supp. 2d 957, 968 (D. Nev. 2012) (granting motion to expunge lis pendens after dismissing all 9 | claims without leave to amend). Accordingly, U.S. Bank is entitled to the entry of an order 10 | expunging the lis pendens recorded against the Subject Property in connection with this lawsuit. 11 V. CONCLUSION 12 For the foregoing reasons, IT IS ORDERED that Defendant MTC’s Motion to Dismiss, 13 (ECF No. 9), is DENIED as moot. 14 IT IS FURTHER ORDERED that Defendant MTC’s Motion to Dismiss, (ECF No. 13) 15| GRANTED. 16 IT IS FURTHER ORDERED that Defendant U.S. Bank’s Motion to Dismiss, (ECF No. 23),is GRANTED. 18 IT IS FURTHER ORDERED that Defendants shall submit a proposed order expunging 19 | the lis pendens on the Subject Property by April 18 2025. 20 Because the Court dismisses Plaintiff's Amended Complaint without leave to amend, the Clerk of Court is instructed to close the case. 22 23 | DATED: March 29, 2025. 24 25 ae 6 RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE 27 28

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