1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *
7 TRP FUND IV, LLC, Case No. 2:22-CV-839 JCM (DJA)
8 Plaintiff(s), ORDER
9 v.
10 NATIONAL DEFAULT SERVICING CORPORATION, et al., 11 Defendant(s). 12
13 Presently before the court is defendant Bank of America, N.A. (“BANA”)’s motion to 14 dismiss complaint. (ECF No. 15). Plaintiff TRP Fund V, LLC (“TRP”) filed a response (ECF 15 No. 17), to which defendant replied (ECF No. 19). 16 Also before the court is defendant National Default Servicing Corporation (“NDSC”)’s 17 motion to dismiss complaint and expunge lis pendens, to which BANA joins. (ECF No. 7, see 18 ECF No. 15). TRP filed a response. (ECF No. 8). NDSC replied. (ECF No. 12). 19 I. INTRODUCTION This matter arises from the pending foreclosure of 10218 Chestnut Sweet Street, Las 20 Vegas, Nevada, 89131, APN # 125-04-611-037 (the “property”). In 2008, individuals purchased 21 the property with a loan secured by a deed of trust and promissory note (the “note”). The deed of 22 trust and note were assigned to BANA in 2012, then to the Department of Housing and Urban 23 Development in 2014, then to Bayview Loan Servicing. And in 2015, the deed of trust was 24 again transferred to BANA via an assignment that transferred the deed of trust “that secures the 25 underlying promissory note.” This final assignment, however, does not expressly transfer the 26 note. 27 The property was foreclosed in 2014 pursuant to a homeowners’ association lien. At that 28 foreclosure sale, TRP purchased the property. TRP is the record owner of the property. TRP 1 initiated litigation in 2015 against BANA seeking quiet title to the property (the “prior 2 litigation”). In the prior litigation, the Eighth Judicial District Court in Clark County, Nevada, 3 granted summary judgment in favor of BANA finding that the deed of trust remained a valid encumbrance against title to the property. In 2020, the Nevada Supreme Court affirmed the 4 judgment in the prior litigation. 5 In 2019, BANA substituted NDSC as the trustee under the deed of trust. In March 2022, 6 NDSC began foreclosure proceedings by recording a notice of default and election to sell under 7 deed of trust against the property. 8 Evidence of the foregoing is public record, which the court takes judicial notice of at 9 NDSC’s request. (See ECF No. 7). 10 TRP seeks to avoid the pending foreclosure. Its complaint titles four claims for relief 11 against both BANA and NDSC: wrongful foreclosure, wrongful foreclosure/chain of title, 12 wrongful foreclosure – lack of unity, and declaratory relief/quiet title. TRP’s responses to the instant motions, however, clarify that “TRP is not asserting the ‘tort of wrongful foreclosure’ in 13 this case” and that “TRP is not seeking quiet title to the [p]roperty…TRP only seeks declaratory 14 relief.” (ECF Nos. 8, 17). Thus, the court addresses only TRP’s claim for declaratory relief. 15 Specifically, TRP seeks “declaratory judgment from this [c]ourt finding that (1) pending 16 foreclosure on the [p]roperty is void for [d]efendants [sic] failure to comply with NRS 107; (2) 17 that the foreclosure not be had; and (3) that BANA produce the original ‘wet ink’ version of the 18 [n]ote or the custodial written agreement of the entity currently in actual, physical possession of 19 the note.” (ECF No. 6-1). 20 II. LEGAL STANDARD 21 A court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pled complaint must provide “[a] short and plain 22 statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2); Bell 23 Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed 24 factual allegations, it demands “more than labels and conclusions” or a “formulaic recitation of 25 the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation 26 omitted). 27 “Factual allegations must be enough to rise above the speculative level.” Twombly, 550 28 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual 1 matter to “state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (citation 2 omitted). 3 In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, the court must accept as true all well-pled factual 4 allegations in the complaint; however, legal conclusions are not entitled to the assumption of 5 truth. Id. at 678–79. Mere recitals of the elements of a cause of action, supported only by 6 conclusory statements, do not suffice. Id. at 678. 7 Second, the court must consider whether the factual allegations in the complaint allege a 8 plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiff’s complaint 9 alleges facts that allow the court to draw a reasonable inference that the defendant is liable for 10 the alleged misconduct. Id. at 678. 11 Where the complaint does not permit the court to infer more than the mere possibility of 12 misconduct, the complaint has “alleged—but not shown—that the pleader is entitled to relief.” Id. (internal quotation marks omitted). When the allegations in a complaint have not crossed the 13 line from conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550 U.S. at 14 570. 15 The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 16 1202, 1216 (9th Cir. 2011). The Starr court stated, in relevant part: 17 First, to be entitled to the presumption of truth, allegations in a complaint or 18 counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable 19 the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not 20 unfair to require the opposing party to be subjected to the expense of discovery 21 and continued litigation. Id. 22 If the court grants a Rule 12(b)(6) motion to dismiss, it should grant leave to amend 23 unless the deficiencies cannot be cured by amendment. DeSoto v. Yellow Freight Sys., Inc., 957 24 F.2d 655, 658 (9th Cir. 1992). The court should grant leave to amend “even if no request to 25 amend the pleading was made.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) 26 (internal quotation marks omitted). 27 Federal Rule of Civil Procedure 15(a) provides that “[t]he court should freely give leave 28 [to amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). The United States Supreme 1 Court has interpreted Rule 15(a) and confirmed the liberal standard district courts must apply 2 when granting such leave. In Foman v.
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1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *
7 TRP FUND IV, LLC, Case No. 2:22-CV-839 JCM (DJA)
8 Plaintiff(s), ORDER
9 v.
10 NATIONAL DEFAULT SERVICING CORPORATION, et al., 11 Defendant(s). 12
13 Presently before the court is defendant Bank of America, N.A. (“BANA”)’s motion to 14 dismiss complaint. (ECF No. 15). Plaintiff TRP Fund V, LLC (“TRP”) filed a response (ECF 15 No. 17), to which defendant replied (ECF No. 19). 16 Also before the court is defendant National Default Servicing Corporation (“NDSC”)’s 17 motion to dismiss complaint and expunge lis pendens, to which BANA joins. (ECF No. 7, see 18 ECF No. 15). TRP filed a response. (ECF No. 8). NDSC replied. (ECF No. 12). 19 I. INTRODUCTION This matter arises from the pending foreclosure of 10218 Chestnut Sweet Street, Las 20 Vegas, Nevada, 89131, APN # 125-04-611-037 (the “property”). In 2008, individuals purchased 21 the property with a loan secured by a deed of trust and promissory note (the “note”). The deed of 22 trust and note were assigned to BANA in 2012, then to the Department of Housing and Urban 23 Development in 2014, then to Bayview Loan Servicing. And in 2015, the deed of trust was 24 again transferred to BANA via an assignment that transferred the deed of trust “that secures the 25 underlying promissory note.” This final assignment, however, does not expressly transfer the 26 note. 27 The property was foreclosed in 2014 pursuant to a homeowners’ association lien. At that 28 foreclosure sale, TRP purchased the property. TRP is the record owner of the property. TRP 1 initiated litigation in 2015 against BANA seeking quiet title to the property (the “prior 2 litigation”). In the prior litigation, the Eighth Judicial District Court in Clark County, Nevada, 3 granted summary judgment in favor of BANA finding that the deed of trust remained a valid encumbrance against title to the property. In 2020, the Nevada Supreme Court affirmed the 4 judgment in the prior litigation. 5 In 2019, BANA substituted NDSC as the trustee under the deed of trust. In March 2022, 6 NDSC began foreclosure proceedings by recording a notice of default and election to sell under 7 deed of trust against the property. 8 Evidence of the foregoing is public record, which the court takes judicial notice of at 9 NDSC’s request. (See ECF No. 7). 10 TRP seeks to avoid the pending foreclosure. Its complaint titles four claims for relief 11 against both BANA and NDSC: wrongful foreclosure, wrongful foreclosure/chain of title, 12 wrongful foreclosure – lack of unity, and declaratory relief/quiet title. TRP’s responses to the instant motions, however, clarify that “TRP is not asserting the ‘tort of wrongful foreclosure’ in 13 this case” and that “TRP is not seeking quiet title to the [p]roperty…TRP only seeks declaratory 14 relief.” (ECF Nos. 8, 17). Thus, the court addresses only TRP’s claim for declaratory relief. 15 Specifically, TRP seeks “declaratory judgment from this [c]ourt finding that (1) pending 16 foreclosure on the [p]roperty is void for [d]efendants [sic] failure to comply with NRS 107; (2) 17 that the foreclosure not be had; and (3) that BANA produce the original ‘wet ink’ version of the 18 [n]ote or the custodial written agreement of the entity currently in actual, physical possession of 19 the note.” (ECF No. 6-1). 20 II. LEGAL STANDARD 21 A court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pled complaint must provide “[a] short and plain 22 statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2); Bell 23 Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed 24 factual allegations, it demands “more than labels and conclusions” or a “formulaic recitation of 25 the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation 26 omitted). 27 “Factual allegations must be enough to rise above the speculative level.” Twombly, 550 28 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual 1 matter to “state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (citation 2 omitted). 3 In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, the court must accept as true all well-pled factual 4 allegations in the complaint; however, legal conclusions are not entitled to the assumption of 5 truth. Id. at 678–79. Mere recitals of the elements of a cause of action, supported only by 6 conclusory statements, do not suffice. Id. at 678. 7 Second, the court must consider whether the factual allegations in the complaint allege a 8 plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiff’s complaint 9 alleges facts that allow the court to draw a reasonable inference that the defendant is liable for 10 the alleged misconduct. Id. at 678. 11 Where the complaint does not permit the court to infer more than the mere possibility of 12 misconduct, the complaint has “alleged—but not shown—that the pleader is entitled to relief.” Id. (internal quotation marks omitted). When the allegations in a complaint have not crossed the 13 line from conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550 U.S. at 14 570. 15 The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 16 1202, 1216 (9th Cir. 2011). The Starr court stated, in relevant part: 17 First, to be entitled to the presumption of truth, allegations in a complaint or 18 counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable 19 the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not 20 unfair to require the opposing party to be subjected to the expense of discovery 21 and continued litigation. Id. 22 If the court grants a Rule 12(b)(6) motion to dismiss, it should grant leave to amend 23 unless the deficiencies cannot be cured by amendment. DeSoto v. Yellow Freight Sys., Inc., 957 24 F.2d 655, 658 (9th Cir. 1992). The court should grant leave to amend “even if no request to 25 amend the pleading was made.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) 26 (internal quotation marks omitted). 27 Federal Rule of Civil Procedure 15(a) provides that “[t]he court should freely give leave 28 [to amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). The United States Supreme 1 Court has interpreted Rule 15(a) and confirmed the liberal standard district courts must apply 2 when granting such leave. In Foman v. Davis, the Supreme Court explained: 3 In the absence of any apparent or declared reason—such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies 4 by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment, etc.—the leave 5 sought should, as the rules require, be “freely given.” 6 371 U.S. 178, 182 (1962). 7 III. DISCUSSION 8 In support of its claim for declaratory relief, TRP alleges (1) Carrington Mortgage 9 Services, LLC (“Carrington”), as BANA’s loan servicer, did not have authority to prepare and execute the affidavit of authority required to execute the foreclosure sale pursuant to NRS 10 107.805(2); (2) the chain of title is ambiguous because the original note has not been presented 11 for TRP’s review and the note was not expressly transferred to BANA in the final assignment; 12 and (3) without the note, unity of interest between BANA and NDSC cannot be demonstrated 13 and thus foreclosure cannot proceed under NRS 106, 107, 110, and 111. 14 Nevada Revised Statute (“NRS”) 107.0805(1)(b) governs the requirements of the 15 affidavit of authority, and it explicitly authorizes the “beneficiary, the successor in interest of the 16 beneficiary, or the trustee” of the deed of trust to execute the affidavit of authority required for 17 non-judicial foreclosure. TRP argues Carrington, was not authorized to execute the affidavit of 18 authority because NRS 107.0805(1)(b) does not grant such authority to a servicer. However, courts in this district have held that servicers may execute an affidavit of authority. See Broche 19 v. Quality Loan Serv. Corp., 2014 WL 548221, No. 3:13-cv-00320 (D. Nev. Feb. 11, 2014); 20 Toigo v. Wells Fargo Bank, N.A., 2013 WL 3049073, No. 2:13-cv-00792 (D. Nev. June 17, 21 2013); Hidalgo v. Nat’l Default Serv. Corp., 2013 WL 663213, No. 2:13-cv-00196 (D. Nev. Feb. 22 21, 2013). Thus, Carrington was authorized to execute the affidavit of authority, and TRP’s 23 argument to the contrary fails. 24 Further, TRP’s show-me-the-note argument claiming that NDSC and BANA may not 25 foreclose on the property without proffering the original promissory note has been “resoundingly 26 rejected” by courts in Nevada. See Juntilla v. RESI Home Loans IV, LLC, No. 2:12-cv-00790- 27 MMD-PAL, 2013 WL 1819636, at *1 (D. Nev. Apr. 29, 2013). TRP also argues that because the final assignment did not expressly transfer the note along with the deed of trust to BANA, the 28 foreclosure cannot proceed. However, “[a]lthough possession of the original promissory note is 1 | generally required to enforce the note, see NRS 104.3301, no such requirement exists to 2 | foreclose on a deed of trust. Rather, the authority to foreclose on a deed of trust is established by 3 | the deed of trust or an assignment thereof.” Wilmington Sav. Fund Soc'y FSB as Tr. for Hilldale 4 Tr. v. Deaver, 486 P.3d 710 (Nev. 2021) (citing Edelstein v. Bank of N.Y. Mellon, 286 P.3d 249, 5 260 (Nev. 2012) (“To prove that a previous beneficiary properly assigned its beneficial interest in the deed of trust, the new beneficiary can demonstrate the assignment by means of a signed ° writing.”)); see 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”). Thus, 8 TRP’s requests for declaratory judgment fail as a matter of law and are DISMISSED. 9 Though the complaint has not been amended to cure deficiencies, any amendment thereto 10 | would be futile. TRP has not asserted—nor can it given, in part, the extensive precedent in 11 | Nevada permitting foreclosures even when the deed of trust and note are “split”’—any viable 12 | legal reason why the pending foreclosure on the property cannot be executed pursuant to the 13 deed of trust. Thus, TRP is not granted leave to amend. 4 IV. CONCLUSION 5 Accordingly, IT IS HEREBY ORDERED, ADJUDGED, and DECREED that BANA’s motion to 16 dismiss (ECF No. 15) is GRANTED. 7 IT IS FURTHER ORDERED that NDSC’s motion to dismiss (ECF No. 7) is 13) GRANTED. 19 IT IS FURTHER ORDERED that TRP’s complaint (ECF No. 1-1) be DISMISSED with 20 | prejudice. 2] IT IS FURTHER ORDERED that the lis pendens encumbering 10218 Chestnut Sweet Street, Las Vegas, Nevada, 89131, APN # 125-04-61 1-037 shall be EXPUNGED. 73 The clerk of the court is instructed to close this case. 34 DATED March 2, 2023.
35 btw Ataltan UNITED, STATES DISTRICT JUDGE 26 “ 27 28
es C. Mahan District Judge _5-