The Bank of N.Y. Mellon v. Nev. Ass'n Serv.

1

THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK AS TRUSTEE FOR THE REGISTERED HOLDERS OF THE CWABS, INC., ASSET-BACKED CERTIFICATES, SERIES 2005-13, Plaintiff, v. NEVADA ASSOCIATION SERVICES, et al., Defendants.

No. 2:16-cv-02400-MMD-VCF

United States District Court, D. Nevada

February 9, 2023

ORDER

MIRANDA M. DU CHIEF UNITED STATES DISTRICT JUDGE

I. SUMMARY

This dispute arises from the homeowners' association foreclosure sale (“HOA Sale”) of real property located at 5513 Oakwood Ridge Street, Las Vegas, Nevada 89130 (“Property”) to satisfy a homeowners' association lien. (See, e.g., ECF No. 1 at 2-7.) Before the Court are Plaintiff and Counter Defendant The Bank of New York Mellon as Trustee for the Registered Holders of the CWABS, Inc., Asset-Backed Certificates, Series 2005-13's motions: to dismiss the counterclaim asserted against it by Defendant, Counter Claimant and Cross Claimant Maria Loyo-Morales (ECF No. 105);^[1] for judgment on the pleadings (ECF No. 106);^[2] to expunge lis pendens (ECF No 107);^[3] for rents and to appoint a receiver (ECF No. 108);^[4] and Cross Defendant Northgate Homeowners Association (“the HOA”)'s motion to dismiss Loyo-Morales' crossclaims asserted against it (ECF No. 127).^[5]Because the HOA Sale violated the automatic bankruptcy stay and Loyo-Morales' crossclaims are time-barred-and as further explained below-the Court will grant Plaintiff and the HOA's motions as to their claims and Loyo-Morales' claims asserted against them, and dismiss Loyo-Morales' claims. The Court will further mostly grant Plaintiff's motion to expunge lis pendens because this order resolves this case but deny Plaintiff's motion for rent because Plaintiff did not seek rent in its Complaint and has not otherwise shown it is entitled to rent at this time.

II. BACKGROUND

Per Plaintiff and the HOA's requests, the Court takes judicial notice of certain documents recorded with the Clark County Recorder's office to construct this factual background. (ECF Nos. 105 at 4, 127 at 4 n.2.) See also Dowers v. Nationstar Mortg., LLC, 852 F.3d 964, 967 n.1 (9th Cir. 2017) (taking judicial notice of “publicly-recorded documents Defendants attached to their motion to dismiss”); Mann v. Nationstar Mortg., LLC, 632 Fed.Appx. 410, 412 (9th Cir. 2016) (“However, the district court should have granted Mann's request for judicial notice of public documents, including a printout from the Clark County Recorder's office and a copy of a recorded deed of trust, because these documents were the proper subject of judicial notice.”).

Cross Defendant Kimberly Tiboni obtained a $196,000 loan secured by a deed of Trust (“DOT”) to purchase the Property. (ECF No. 105-1.) Plaintiff is the current assignee of the DOT.^[6] (ECF Nos. 105-2 (assigning DOT from Mortgage Electronic Registration Systems, Inc. to Plaintiff), 105-3 (assigning DOT from Plaintiff to Green Tree Servicing LLC), 105-4 (assigning DOT from Green Tree Servicing LLC back to Plaintiff).)

Tiboni filed for Chapter 7 bankruptcy in April 2010, identifying the Property as an asset in the schedules. (ECF No. 105-5^[7] at 4 (signed April 22, 2010), 9 (same), 12 (identifying the Property).) The Bankruptcy Court granted Tiboni a discharge on July 28, 2010. (ECF No. 105-6.) The Bankruptcy Court later closed Tiboni's Chapter 7 case on May 17, 2011. (ECF No. 105-7.)

Meanwhile, Tiboni stopped paying her homeowners' association dues, so the HOA recorded a notice of delinquent assessment lien against the Property on December 14, 2010. (ECF No. 105-8.) The HOA then recorded a notice of default and election to sell against the Property on February 11, 2011. (ECF No. 105-9.) The HOA recorded a notice of foreclosure sale against the Property on October 16, 2012. (ECF No. 105-10.) The HOA sold the Property to Loyo-Morales at the HOA Sale on November 9, 2012. (ECF No. 10511.)

Plaintiff's predecessor-in-interest filed this case on October 14, 2016, primarily seeking a declaration that the DOT continued to encumber the Property. (ECF No. 1.) Plaintiff's predecessor-in-interest also filed a notice of lis pendens regarding this case on October 17, 2016. (ECF No. 2.) According to the Clark County Recorder's Records, Plaintiff's predecessor-in-interest had that notice of lis pendens recorded on October 31, 2016. See Clark County Recorder's Office, Record Search System, Parcel # 125-36-516087, Instrument Number 201610310000564 (Oct. 31, 2016), https://recorderecomm.clarkcountynv.gov/AcclaimWeb/Document/LoadNextInstrumentD ocDetails?incomingTransactionItem Id=GV2T-OcF2Oo7jbKLT643MePba9P1WG2BrqhiZ7 VHp-7kPlTPTHoagBw5i5bRV7.

Turning to the procedural history of this case, the Court incorporates by reference the factual background it provided in a prior order later partially vacated by the United States Court of Appeals for the Ninth Circuit. (ECF No. 84 at 2-5.) The Ninth Circuit vacated the entry of default and default judgment that the Court had entered, finding Loyo-Morales had not been properly served with the Complaint because there was no evidence that the Property was her dwelling or usual place of abode in 2016. (ECF No. 95 at 5.)

Following the Ninth Circuit's remand (ECF Nos. 96, 97), the Court adopted Plaintiff and Loyo-Morales' joint plan for how the case was to proceed (ECF No. 99). Per the schedule they agreed to, Loyo-Morales filed an answer to Plaintiff's Complaint (ECF No. 100 at 1-20), along with a counterclaim for quiet title against Plaintiff and Tiboni (id. at 2829), and alternative crossclaims against the HOA and NAS for intentional or negligent misrepresentation (id. at 29-31), breach of the duty of good faith (id. at 31-32), and wrongful foreclosure (id. at 32-34).

Loyo-Morales served NAS and the HOA (ECF Nos. 109, 110, 111), and they have been participating in this case since then. See supra n.5. Loyo-Morales served Tiboni with her counterclaim by leaving a copy a summons with a man named Charles who identified himself as Tiboni's son. (ECF No. 124.) Tiboni has not taken any action in this case since that time.

III. DISCUSSION

The Court begins by addressing Plaintiff's motion for judgment on the pleadings and to dismiss Loyo-Morales' counterclaim, then addresses the issue of Tiboni's lack of participation in this case, then moves to the HOA's motion to dismiss, and then turns to Plaintiff's motions seeking expungement of Loyo-Morales' lis pendens on the Property and for rents.

A. Plaintiff's Motions for Judgment on the Pleadings and to Dismiss Loyo-Morales' Counterclaim

These two motions turn on Plaintiff's argument that the HOA's foreclosure violated the automatic bankruptcy stay, and Plaintiff's DOT accordingly continues to encumber the Property. (ECF Nos. 105 at 5-6, 106 at 5-6.) While Loyo-Morales offers some arguments in response, she does not address the Ninth Circuit and Nevada Supreme Court decisions upon which Plaintiff's main argument relies. (ECF Nos. 112 at 3-6, 11-14, 113 at 3-6, 1114.) Loyo-Morales' counterarguments are accordingly unpersuasive.

To start, Plaintiff has standing to raise the HOA's violation of the automatic stay created by Tiboni's bankruptcy. See Bank of New York Mellon as Tr. for Certificateholders of CWALT, Inc., Alternative Loan Tr. 2005-54CB, Mortg. Pass-Through Certificates Series 2005-54CB v. Enchantment at Sunset Bay Condo. Ass'n, 2 F.4th 1229, 1233 (9th Cir. 2021) (“Sunset Bay”). And the facts that the Court has taken judicial notice of, see supra Section II, establish that the HOA recorded the operative notice of delinquent assessment lien (ECF No. 105-8 (recorded December 14, 2010)) and notice of default and election to sell (ECF No. 105-9 (February 11, 2011)) against the Property before the Bankruptcy Court closed Tiboni's Chapter 7 case on May 17, 2011 (ECF No. 105-7). Moreover, the Property was listed in one of Tiboni's bankruptcy schedules. (ECF No. 105-5 at 12 (identifying the Property).) “Accordingly, the HOA foreclosure sale was an act in violation of the automatic stay, despite the lack of notice of the homeowners' bankruptcy.” LN Mgmt. LLC Series 5105 Portraits Place v. Green Tree Loan Servicing LLC, 399 P.3d 359, 360 (Nev. 2017) (“Portraits Place”); see also Sunset Bay, 2 F.4th at 1233-34 (finding that “the Bank should receive quiet title to the Property”). In addition, the fact that the HOA Sale occurred after the Bankruptcy Court closed Tiboni's case does not matter because the HOA recorded the notice of delinquent assessment lien and notice of default while the automatic stay was in place. See CitiMortgage, Inc. v. Corte Madera Homeowners Ass'n, Case No. 20-16638, 2021 WL 5505409, at *1 (9th Cir. Nov. 24, 2021).

This means that Plaintiff's DOT continues to encumber the Property. It also means that the HOA Sale was void. See Portraits Place, 399 P.3d at 360-61.

Plaintiff is accordingly entitled to judgment on the pleadings that its DOT continues to encumber the Property. And because the HOA Sale was void, Loyo-Morales' quiet title claim against Plaintiff and Tiboni fails-and is therefore dismissed with prejudice, as amendment would be futile-because she lacks a valid interest in the Property. For these reasons, the Court grants both Plaintiff's motion for judgment on the pleadings as to its declaratory relief claim for quiet title based on the violation of the automatic bankruptcy stay theory (ECF No. 1 at 7-8), and Plaintiff's motion to dismiss Loyo-Morales' counterclaim.

B. Tiboni

While Tiboni did not participate in the motion practice surrounding the pending motions, the Court nonetheless sua sponte dismisses-with prejudice, as amendment would be futile-Loyo-Morales' counterclaim against Tiboni for the same reasons provided supra in Section III.A. A court “may properly on its own motion dismiss an action...