Bank of America, N.A., v. Treo North And South Homeowners' Association, Inc. et al

MOTION to Dismiss for Lack of Jurisdiction

D. Neb.February 6, 2017

MOTION TO DISMISS CLAIMS AGAINST HOMEOWNER ASSOCIATION SERVICES INC.- 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Wolfe Thompson Attorney for Homeowner Association Services, Inc. NSB 6463 6785 S. Eastern Ave. Ste 4 Las Vegas, NV 89119 702-263-3030 wolfe@wolfelawyer.com US District Court for District of Nevada ¾½¼» BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING, LP FKA COUNTRYWIDE HOME LOANS SERVICING, LP, Plaintiff, VS. TREO NORTH AND SOUTH HOMEOWNERS' ASSOCIATION. INC.; LALA GRIGORYAN; BARGAIN PROPERTIES, LLC; and HOMEOWNER ASSOCIATION SERVICES, INC., Defendants. Case No. 2:16-CV-0845-MMD-NJK MOTION TO DISMISS CLAIMS AGAINST HOMEOWNER ASSOCIATION SERVICES INC. MOTION Plaintiff moves to dismiss the complaint as to Homeowner Association Services Inc. This motion is based on Fed. R. Civ. Proc. 12(b)(6) and Fed. R. Civ. Proc. 8 and the following points and authorities. BACKGROUND Defendant Homeowner Association Services, Inc. (HASI) is a servicer and foreclosure trustee for Nevada homeowner associations, which impose and collect monthly assessments pursuant to covenants running with land pursuant to the Nevada Common Interest Community Statutes. NRS Chapter 116. HASI initiates and completes foreclosure of Association liens under NRS Chapter 116 only as a designated agent. Case 2:16-cv-00845-MMD-NJK Document 45 Filed 02/06/17 Page 1 of 9 MOTION TO DISMISS CLAIMS AGAINST HOMEOWNER ASSOCIATION SERVICES INC.- 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ISSUES 1. Does the court have jurisdiction over either of plaintiff’s state-law claims against HASI 2. Does the Complaint state a factual or legal basis for plaintiff’s first claim of Declaratory Relief? 3. Does the Complaint state a factual or legal basis for plaintiff’s other state-law claims?1 POINTS & AUTHORITIES I. MOTION TO DISMISS STANDARDS. Under Rule 8(a)(2), a pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” “[T]he pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662 129 S. Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Until the Supreme Court decision in. Twombly, courts routinely followed the rule that, “a complaint should not be dismissed for failure to state a claim unless it appears beyond a doubt that the plaintiff could prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). However, pursuant to Twombly, to survive a motion to dismiss, a complaint must now contain factual allegations which are “enough to raise a right to relief above the speculative level ... on the assumption that all the allegations in the complaint are 1 Plaintiff fourth cause of action relates to injunctive relief which is not at all pleaded against HASI. Case 2:16-cv-00845-MMD-NJK Document 45 Filed 02/06/17 Page 2 of 9 MOTION TO DISMISS CLAIMS AGAINST HOMEOWNER ASSOCIATION SERVICES INC.- 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 true (even if doubtful in fact).” 550 U.S. at 555. “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations ... a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. Taking the facts as true, a court may grant a motion to dismiss when, “on the basis of a dispositive issue of law, no construction of the factual allegations will support the cause of action.” Marshall Cty. Bd. of Educ. v. Marshall Cty. Gas Dist., 992 F.2d 1171, 1174 (11th Cir.1993). In Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949-50, 173 L.Ed.2d 868 (2009), the Supreme Court further stated that a court need not accept legal conclusions as true, but only well-pleaded factual allegations are entitled to an assumption of truth. II. HASI’S MOTION TO DISMISS. A. The Court lacks jurisdiction to consider Plaintiff’s state law claims. 1. DECLARATORY JUDGMENT A declaratory judgment action satisfies the well-pleaded complaint rule only if a well-pleaded coercive action would raise a federal issue. State law claims are not sufficient, and here plaintiff has only pleaded a state-law claim. There is not even a remote gesture by plaintiff to invoke any federal statute or law. The general rule “is that an action for a declaratory judgment will invoke federal question jurisdiction only if the coercive action that would have been brought (were declaratory judgments not available) would have been within that jurisdiction.” 13D Wright & Miller § 3566, pp. 275-76; see also Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1 (1893) (jurisdiction lacking); Skelly Oil Co. v. Phillips Petrol. Co., 339 U.S. 667, 673-74 (1950) (jurisdiction lacking). The declaratory-judgment Case 2:16-cv-00845-MMD-NJK Document 45 Filed 02/06/17 Page 3 of 9 MOTION TO DISMISS CLAIMS AGAINST HOMEOWNER ASSOCIATION SERVICES INC.- 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 seeking plaintiff should not be able to file a complaint that anticipates a federal defense of the coercive action. Ne. Ill. Reg’l Commuter R.R. Corp. v. Hoey Farina & Downes, 212 F.3d 1010, 1014 (7th Cir. 2000) (jurisdiction lacking) (“[I]f the plaintiff cannot get into federal court by anticipating what amounts to a federal defense to a state-law cause of action, he also should not be able to use the Declaratory Judgment Act to do so by asserting what is really a preemptive federal defense as the basis of his complaint.”). See also, City of Rome, N.Y. v. Verizon Commc’n, 362 F.3d 168, 182 (2d Cir. 2004) (quoting Franchise Tax Bd., 463 U.S. at 16) (“It is well established that, in a declaratory judgment action, federal jurisdiction does not lie ‘if, but for the availability of the declaratory judgment procedure, the federal claim would arise only as a defense to a state created action.’”). Jurisdiction Lacking also in Republican Party of Guam v. Gutierrez, 277 F.3d 1086 (9th Cir. 2002) (discussing well-pleaded complaint rule and declaratory judgments); 15 Moore’s Federal Practice ¶¶ 103.44[1]-[3] (discussing well- pleaded complaint rule and declaratory judgment). HASI claims no past, present or future interest in the property. Bourne Valley Court Tr. v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016), established that the Deed of Trust that is the subject of plaintiff’s cause of action was not impaired by the HOA foreclosure sale. Consequently, there can be no such relief against HASI. 2. OTHER NON-MONETARY STATE LAW CLAIMS A federal complaint invoking diversity jurisdiction under 28 U.S.C. §1332 must concern an amount in controversy exceeding $75,000. If the only remedy sought is equitable relief, the plaintiff must make a good faith estimate of the value of the relief sought - which can be difficult to do at times. In Macken v. Jensen, 333 F.3d 797 (7th Cir. June 24, 2003), a plaintiff who is unable to value that relief at all must commence the case in state court. According to the court, a plaintiff is not permitted to file in Case 2:16-cv-00845-MMD-NJK Document 45 Filed 02/06/17 Page 4 of 9 MOTION TO DISMISS CLAIMS AGAINST HOMEOWNER ASSOCIATION SERVICES INC.- 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 federal court and then place the burden on the defendant of demonstrating that $75,000 or less is at stake; rather, Fed.R.Civ.P. 11(b)(3) requires plaintiff to establish sufficient support for federal diversity jurisdiction before filing in federal court. Bourne Valley, supra, established that plaintiff’s deed of trust was not impaired. Accordingly, plaintiff has not met its burden to invoke diversity jurisdiction under 28 U.S.C. §1332. B. Even under state law, Plaintiff’s Causes of action lack any legal or factual basis. According to the Supreme Court, “labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. The complaint must contain factual allegations, and they “must be enough to raise a right to relief above the speculative level.” Id. There must be sufficient facts plead to state a claim to relief that is “plausible on its face.” Id. at 570. The court should not assume the truth of legal conclusions in the complaint. See Iqbal at 1949. Thus, the first step when evaluating a motion to dismiss is to identify the legal conclusions, because they “are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Id. at 1950. Next, with respect to any “well-pleaded factual allegations” in the complaint “a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. The determination of whether a plausible claim for relief has been stated is “a context-specific task” that requires a court to “draw on its judicial experience and common sense.” Id. The Ninth Circuit also observed: “In sum, for a complaint to survive a motion to dismiss, the non- conclusory factual content, and reasonable inferences from that content, must be Case 2:16-cv-00845-MMD-NJK Document 45 Filed 02/06/17 Page 5 of 9 MOTION TO DISMISS CLAIMS AGAINST HOMEOWNER ASSOCIATION SERVICES INC.- 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir. 2009) (internal quotation marks omitted). 1. DECLARATORY JUDGMENT In Nevada, the elements for an equitable claim of declaratory relief are: • A justifiable controversy exists between two or more parties; • Regarding their respective rights pursuant to a contract; • Such that the plaintiff asserts a claim of a legally protected right; • The issue is ripe for judicial determination; and • Plaintiff asks the court to determine the parties’ relative rights under the contract. NRCP 57; NRS Chapter 30; Kress v. Corey, 65 Nev. 1, 189 P.2d 352 (1948). Here there no contract alleged between plaintiff and HASI. In fact, there no special relationship possible whatsoever between the parties. HASI claims no past, present or future interest in the property. Accordingly, the Declaratory Judgment action fails as to HASI. 2. BREACH OF NRS 116.1113 NRS 116.1113 provides no specific remedy for plaintiff even if HASI somehow breached it. Bourne Valley, supra, established that NRS Chapter 116 was unconstitutional. Seems like it is impossible for plaintiff to argue that it has a remedy based on a statute held to be unconstitutional. 3. WRONGFUL FORECLOSURE HASI have never claimed any interest in the property, and the Complaint here confirms it. HASI merely acted as a designated agent for the HOA for enforcing the Case 2:16-cv-00845-MMD-NJK Document 45 Filed 02/06/17 Page 6 of 9 MOTION TO DISMISS CLAIMS AGAINST HOMEOWNER ASSOCIATION SERVICES INC.- 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HOA’s property interests. Nevada has never found any right of tort action against such a party. Rather, in Nevada, an action for the tort of wrongful foreclosure will lie if the trustor or mortgagor can establish that at the time the power of sale was exercised or the foreclosure occurred, no breach of condition or failure of performance existed on the mortgagor’s or trustor’s part which would have authorized the foreclosure or exercise of the power of sale. Collins v. Union Federal Sav. & Loan Ass’n, 99 Nev. 284, 662 P.2d 610, 623 (Nev.1983) The claim here against HASI is similar to the claim dismissed in Larson v. Homecoming Financial, LLC, 680 F.Supp.2d 1230, 1237 (D. Nev. 2009) and should be dismissed for the same reasons. In Larson, Plaintiffs’ claim for wrongful foreclosure failed because they failed to allege that they were not in default on their obligations when Defendant initiated the foreclosure proceedings. In fact, plaintiff admits that the superiority portion of the lien was not paid. Unlike Larson, plaintiff does not bother to allege that Defendants’ actions were fraudulent, malicious, and oppressive. Finally, Bourne Valley, supra, established that NRS Chapter 116 was unconstitutional. Since such statutes were the basis for plaintiff’s claim that its deed of trust was wrongfully foreclosed, plaintiff has no remedy for a foreclosure that it did not suffer as a matter of law. CONCLUSION The Court lacks subject-matter jurisdiction over claims asserted against HASI. The Supreme Court’s decisions in Twombly and Iqbal also provide the Court with a powerful screening device to help weed out claims that lack facial plausibility and the plaintiff has failed to state a legal or factual case against HASI. Case 2:16-cv-00845-MMD-NJK Document 45 Filed 02/06/17 Page 7 of 9 MOTION TO DISMISS CLAIMS AGAINST HOMEOWNER ASSOCIATION SERVICES INC.- 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Plaintiff’s complaint should be dismissed against HASI. Dated February 6, 2017 /s/ Wolfe Thompson WOLFE THOMPSON, SBN #6463 Attorney for Homeowner Association Services, Inc. Case 2:16-cv-00845-MMD-NJK Document 45 Filed 02/06/17 Page 8 of 9 MOTION TO DISMISS CLAIMS AGAINST HOMEOWNER ASSOCIATION SERVICES INC.- 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CERTIFICATE OF SERVICE Pursuant to NRCP 5(b ), I certify that on the date below, I caused to be served via ECF e- service a true and correct copy of the within document in the above matter to all parties this action and who have registered for such service. Dated February 6, 2017 /s/ Wolfe Thompson WOLFE THOMPSON, SBN #6463 Attorney for Homeowner Association Services, Inc. Case 2:16-cv-00845-MMD-NJK Document 45 Filed 02/06/17 Page 9 of 9