Posner v. U.S. Bank National Association

• Court: District Court, D. Nevada
• Decided: March 18, 2020
• Docket: 2:19-cv-00472
• Status: Unknown

Opinion

1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 Lance Posner and Eva Posner, Case No.: 2:19-cv-00472-JAD-VCF 4 Plaintiff Order Granting Motions to Dismiss 5 v. and to Expunge Lis Pendens and Closing Case 6 U.S. Bank National Association, [ECF Nos.16,17] 7 Defendant 8 Plaintiffs Lance and Eva Posner’s quiet-title action against defendant U.S. Bankis based 9 on two theories: (1) the original lender’s assignment to U.S. Bank was ineffectivebecause earlier 10 assignments cloud the chainoftitle and prevent the bank from foreclosing on the home,and (2) 11 the foreclosure is barred by a10-year statute of limitations inNRS 106.240.1 U.S. Bank moves 12 to dismiss the Posners’ claims for injunctive and declaratory relief because they are not true 13 causes of action.2 It also seeks dismissal of theirquiet-title claim and to expunge theirlis 14 pendens, arguing that the bankis the bona fide holder of the note and beneficiary of record for 15 the deed of trust and because NRS 106.240 does not apply. 16 Because the Posners’claims for injunctive and declaratory relief are mere prayers for 17 relief, I grant the Bank’s motion to dismiss these two claims. The Posners do not dispute that the 18 bank is the holder of the noteand beneficiary of record for the deed of trust,sothis case falls 19 squarely under the Nevada Supreme Court’s decision in Edelstein v. Bank of New York Mellon,3 20 which confirms the bank’s right to foreclose. The Posners fail to distinguish Edelstein and other 21 22 1 ECF No. 1-4(amended complaint). 23 2 ECF Nos. 16(motion to dismiss), 17 (motion to expunge lis pendens). 3 Edelstein v. Bank of N.Y. Mellon, 286 P.3d 249, 259 (Nev.2012). 1 Nevada authority that precludes them from challenging the assignment between the original 2 lenderto U.S. Bank,as the Posners were not parties to,or intended beneficiaries of,that 3 assignment. Finally, because NRS 106.240 is not a statute of limitations and does not apply to a 4 rescinded notice of default, it does not prevent the bankfrom foreclosing on the property. 5 Accordingly, I grant the bank’s motions to dismiss and expunge the lis pendens, and I close this

6 case. 7 Background4 8 In 2007, Lance and Eva Posner acquiredthe home at 2293Buckingham Courtin 9 Henderson, Nevada, by a quit-claim deed from David and Michelle Smith.5 The Smiths had 10 purchased the property with two mortgage loans totaling $1,237,000from Novelle Financial 11 Servicesin 2005.6 In November 2008,Chase Home Finance,LLC,recorded a Notice of Default 12 and Election to Sell,7 but that notice was rescinded one month later.8 Between 2008 and 2010, 13 during which JP Morgan Chase Bank had acquired Chase Home Finance, either one or both 14 entities attempted unsuccessfully to negotiate a loan modification with the Posners.9

15 OnNovember30,2010, multiple title-related changes occurred. Chase Home Finance 16 assigned the deed of trust to defendant U.S. Bank National Associationas trustee for MASTR 17 Asset Back Securities Trust 2006-HE1, Mortgage Pass-Through Certificates, Series HE-1.10 18 19 4 These facts are summarized from the plaintiffs’ complaint and are not to be construed as findings of fact. 20 5 ECF No. 1-4at 1–2. 21 6 Id. at 2. 7 Id. at 4. 22 8 Id.at 5. 23 9 Id. 10 Id. at 6. 1 Colleen Irbysigned the assignment as “Vice President”for Chase Home Financial; the Posners 2 believe that Irby was actually a robosigner.11 Irby, who later purported to be acting on behalf of 3 U.S. BankNational Association by JP Morgan Chase Bankas the attorney-in-fact, substituted 4 the original trustee, Ron Morrison, for California Reconveyance Company.12 And JP Morgan 5 Chase Bank filed another Notice of Default with the county recorder’s office.13 All three

6 exhibits were notarized in California by the same notary, C. Lucas.14 7 After the Posners receivedthe Notice of Default, the parties participated in Nevada’s 8 Foreclosure Mediation Program.15 The program requiredthe lenderto provide documents to 9 verify its legal right to foreclose on the property and chain of title in order for a certificateof 10 foreclosure to issue.16 The mediation occurred in July 2011and Chase Bank appeared on behalf 11 of the lender.17 Chase Bank claimed “that the loan had gone from Novelle Financial Services to 12 Washington Mutual Bank,”but that Washington Mutual Bank was “taken over by the Federal 13 Deposit Insurance Corporation”becauseit became insolvent during the recession.18 Chase Bank 14 produced a document to show that JP Morgan Chase had purchased “most of the assets of

15 Washington Mutual Bank,” but it was not clear that the subject property was includedin that 16 transaction, and this assignment wasn’t recorded.19 Chase Bank also didn’t provide evidence of 17 18 11 Id. 12 Id.at 6–7. 19 13 Id. at 7. 20 14 Id. at 8. 21 15 Id 16 Id. 22 17 Id. 23 18 Id. 19 Id.at 8–10. 1 the assignment from Novelle Financial Services to Washington Mutual Bank, so the mediator 2 denied it a foreclosure certificate.20 The trustee then rescinded the Notice of Default in 2012.21 3 In May 2012,another set of assignments cleaned up the chain of title. ACorporation 4 Assignment of Deed of Trust was recorded, representingthat Novelle Financial Services 5 assigned the deed of trust to U.S. Bank National Association. It was signed by J.T. Long, an

6 employee of JP Morgan Chase Bank, who purported to be the attorney-in-fact for Novelle 7 Financial Services.22 JP Morgan Chase Bank also substituted the National Default Servicing 8 Corporation as Trustee.23 9 U.S. Bank then filed for a judicial foreclosure in state court in 2012 and 2013, but both 10 suits were dismissed without prejudice for failing to effectuate service of process.24 In 2017, 11 U.S. Bank filed a notice of default and the parties participated in a second foreclosure 12 mediation.25 It, too, failed.26 The Posners then filed this lawsuit for an “injunction, quiet title to 13 real property, and declaratory judgment” in state court27 before the bank removedit to federal 14 court.28

15 16 17 18 20 Id.at 9. 21 Id. 19 22 Id. at 10. 20 23 Id. at 11. 21 24 Id. at 11–12 25 Id. at 15–16. 22 26 Id. 23 27 ECF Nos. 1-2, 1-4. 28 ECF No. 1. 1 Discussion 2 I. The Posners overpled their prayers for declaratory and injunctive reliefas claims. 3 The Posners’first and second causes of action ask for an injunction and declaratory relief 4 to bar the bank from foreclosing on the subject property.29 The bank argues that neither claim is 5 an independent cause of action, or these claims are duplicative of the relief sought for the

6 Posners’ quiet-title claim.30 Neither “claim” is a an independent cause of action, but rather a 7 remedy for the quiet-title claim.31 Because the Posners’ first and second causes of action are 8 more accurately just prayers for relief, I grant the bank’s motion to dismiss them and I construe 9 them instead as prayed-for remedies for the Posners’ single quiet-title claim. 10 II. The Posners cannot plead a plausible quiet-title claim on these facts. 11 The Posners’ quiet-title claim is based on two theories why this court should declare that 12 the bank has no right to enforce the deed of trust and foreclose on the home: (1)the bank is not a 13 bona fide assignee of the deed of trust and promissory note,and (2) any foreclosure is barred by 14 NRS 106.240.32 The bank argues that the Posners can’t plead a quiet-title claim because they

15 admittedly are still in default; it is the bona fide holder of the note and deed of trust, as certified 16 through the state’s foreclosure mediation program; and NRS 106.240 is inapplicable.33 Because 17 18 29 ECF No. 1-4. 19 30 ECF No. 16. 20 31 See Stock West, Inc. v. Confederated Tribes of Colville Reservations, 873 F.2d 1221, 1225 (9th Cir.1989) (explaining that the Declaratory Relief Act, 28 U.S.C. § 2201, does not provide an 21 independent cause of action or basis of jurisdiction); In re Wal-Mart Wage & Hour Employment Practices Litig., 490 F. Supp. 2d 1091, 1130 (D. Nev. 2007) (dismissing claim for injunctive 22 relief “with the understanding that [the claim] is not an independent ground for relief” but a remedy). 23 32 ECF No. 1-4. 33 ECF No 16. 1 I find that the Posners can’t establish their right to quiet-title relief under either of their theories 2 based on the facts and documents they rely on, I grant the bank’s motion to dismiss.34 3 A. NRS 106.240 does not prevent the bank from foreclosing. 4 The Posners allege that the bank is not entitled to foreclose on the subject property 5 because NRS 106.240gave the bank just ten years after the loan was accelerated by the first

6 Notice of Default in 2008to foreclose, and it missed that window.35 The bank argues that NRS 7 106.240 does not apply here becausethat Notice of Default was rescindeda month after it was 8 filed, effectively “deaccelerat[ing]the loan and restoring the original terms under the loan 9 contract” by operation of NRS 107.550(3).36 The Posners respond that “[t]here is nothing in 10 [NRS 106.240] that permits a mortgage lender to voluntarily or unilaterally decelerate a 11 foreclosure initiated by a Notice of Default and Election to Sell.”37 12 NRS 106.240states that a lien created by a recorded deed of trust “shall[,] at the 13 expiration of 10 years after the debt secured by the mortgage or deed of trust according to the 14 terms thereof or any recorded written extension thereof become wholly due, terminate, and it

15 shall be conclusively presumed that the debt has been regularly satisfied and the lien 16 discharged.” This section “creates a conclusive presumption that a lien on real property is 17 extinguished ten years after the debt becomes due,”andit is not a statute of limitation.38 More 18 19 34 Because I dismiss on this basis, I need not and do not reach the question of whether the 20 Posners can even seek this relief while in default. 35 ECFNo. 1-4. 21 36 ECFNo. 16at9. 22 37 ECF No. 24 at 17. The Posners also argue that the doctrine of laches bars the bank’s foreclosure, however, they did not allege alaches theory in their complaint, so I do not reach this 23 argument. Id. at 18. 38 Pro-Max Corp. v. Feenstra, 16 P.3d 1074, 1077 (Nev. 2001). 1 importantly for our purposes, its application in this case is prevented by NRS 107.550(3), which 2 provides that, ifa recorded notice of default and election to sale is subsequently rescinded, “the 3 mortgagee or beneficiary of the deed of trust is thereupon restored to its former position and has 4 the same rights as though an action for a judicial foreclosure had not been commenced or a 5 notice of default and election to sell had not been recorded.” Because the Posners concede in

6 their complaint that the 2008Notice of Default was rescinded,39 and they have not shownthat 7 NRS 107.550(3) doesn’t apply, the Posners cannot establish a claim based on this quiet-title 8 theory as a matter of law. So I grant the bank’s motion to dismiss this NRS 106.240-based 9 theory. 10 B. The Posners cannot establish that chain-of-title issues prevent 11 the bank from enforcing its security interest. 12 The Posners allege that Novelle Financial Services was the original holder of the note and 13 beneficiary of the deed of trust on the Smith loan, and that the Smiths quitclaimed titleto the 14 Posners in 2007.40 They also allege that in 2012—after several assignments—Novelle assigned 15 the note and its interest in the deed of trust to defendant U.S. Bank.41 The bank argues that it has 16 the right to foreclose because it is both the holder of the note and beneficiary of record for the 17 deed of trust, stressingthat it received a certificate of its rights through Nevada’s foreclosure 18 19 20 39 ECF No. 1-4at 16 (citing ECF No. 1-5 at 23–24). 21 40 See ECF No. 1-4 at 3; ECF No. 1-5 at 4–5. The Posners submitted an incomplete copy of the deed, so I incorporate by reference the bank’s exhibit of the deed, ECF No. 16-1. I take judicial 22 notice of this record. See United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003) (providing that a court can consider the pleading, attached documents, documents incorporated by reference, 23 or judicially[ ]noticed matters without converting the motion to one for summary judgment.”). 41 ECF No. 1-4 at 10; ECF No. 1-6 at7,19. 1 mediation program.42 As theNevadaSupreme Court explained in Edelstein v. Bank of New York 2 Mellon,deeds of trust are enforceable even if the note and deed of trust are at some point “split,” 3 so long as they are united at the time of foreclosure.43 The Posners do not dispute that the note 4 and deed of trust have been reunified,therefore establishing U.S. Bank’s right to enforce the loan 5 under Edelstein. Instead, the Posners contend that the use of a robosigner in the assignment to

6 U.S. Bankstrips the bankof thatright.44 7 But the Posners, as strangers to that assignment, lack standing to attack it. In Wood v. 8 German, the Nevada Supreme Court foundthat a homeowner lacked standing to attack a loan 9 assignment, even if it violated a pooling and servicing agreement, because the homeowner “was 10 neither a party nor an intended third-party beneficiary of [that agreement].”45 The Posners have 11 not alleged that they were parties to the U.S. Bankassignment or intended third-party 12 beneficiaries ofit—nor can they legitimately do so. While they rely on a Massachusetts case46 13 for their standingto attack the assignment,thePosners fail to reconcile or address Wood or 14 Edelstein. Theypurport to rely on “[t]he requirement . . . also found in Foreclosure Mediation

15 16 42 ECF No. 16. The bank asks me to take judicial notice of severaldocuments, including an “Order for Foreclosure Mediation Certificate” that purportedly established its bona fide interest 17 as the beneficiary of record for the deed of trust and as the holder of the note, and I do. Id. at 4– 5, 9; ECF No. 16-8. But I only consider this exhibit to the extent that it shows that the parties 18 participated in the foreclosure mediation program because it doesn’t contain a discussion of the results of the mediation or of the bank’s rights as to the loan. At most, the exhibit shows that the 19 parties were unable to reach an agreement and that mediator recommended that the state court dismiss the petition for mediation. 20 43 Edelstein v. Bank of N.Y. Mellon, 286 P.3d 249, 259 (Nev.2012). 21 44 ECF No. 24 at 8, 19–25. 45 Wood v. Germann, 331 P.3d 859, 861 (Nev. 2014). 22 46 Ross v. Deutsche Bank Nat. Tr. Co., 933 F. Supp. 2d 225, 230 (D. Mass. 2013)(“The First Circuit has recently held that mortgagors have standing “to challenge the assignment of a 23 mortgage. . . to the extent that such a challenge is necessary to contest a foreclosing entity’s status qua mortgagee.”). 1 Rule 13,”47 but they provide no analysis of that rule to show how or why it serves as their basis 2 for suchstanding. Because the Edelstein decision establishes U.S. Bank’s current right to 3 enforce the deed of trust, and the Posners have not demonstratedany legitimate legal basis to 4 dispute it,I grant the bank’s motion to dismiss the Posners’ remaining quiet-title theory. 5 C. Leave to amend is denied.

6 “The decision of whether to grant leave to amend. ..remains within the discretion of the 7 district court, which may deny leave to amend due to undue delay, bad faith or dilatory motive 8 on the part of the movant, repeated failure to cure deficiencies by amendments previously 9 allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, and 10 futility of amendment.”48 The Posners already amended their complaint in state courtbefore the 11 bankremoved theircase to federal court.49 And the basis for my dismissal of their claims is not 12 inadequate or erroneous allegations, but thePosners’ affirmative factual allegations that plead 13 them out of any legal claim as a matter of law. Because further amendment would be futile, I 14 dismiss the Posners’ quiet-title actionwith prejudice.

15 Conclusion 16 IT IS THEREFORE ORDERED that U.S. Bank’s Motion to Dismiss [ECF No. 16] is 17 GRANTED. This case is dismissed with prejudice. 18 IT IS FURTHER ORDERED that U.S. Bank’s Motion to Expunge Lis Pendens [ECF 19 No. 17] is GRANTED. 20 21 22 47 ECFNo. 24. 48 Leadsinger, Inc. v. BMG Music Pub., 512 F.3d 522, 532 (9th Cir. 2008) (internal quotation and 23 alterations omitted). 49 ECF No. 1-2 (original complaint). ] The Clerk of Court is directed to ENTER JUDGMENT for the defendant and against 2|| the plaintiffs and CLOSE THIS CASE. 3 Dated: March 18, 2020 ells ; U.S. District Fudge Jennifer A. Dorsey

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23