SFR Investments Pool 1, LLC v. Nationstar Mortgage LLC et al, No. 2:2022cv02035 - Document 32 (D. Nev. 2023)
Court Description: ORDER denying 5 , 6 Motion for Temporary Restraining Order/Motion for Preliminary Injunction. ORDER granting 20 Motion to Dismiss and Grants Leave to Amend Complaint. Signed by District Judge Anne R. Traum on 9/27/2023. (Copies have been distributed pursuant to the NEF - CT)
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SFR Investments Pool 1, LLC v. Nationstar Mortgage LLC et al Doc. 32 Case 2:22-cv-02035-ART-BNW Document 32 Filed 09/27/23 Page 1 of 13 1 2 UNITED STATES DISTRICT COURT 3 4 5 DISTRICT OF NEVADA SFR INVESTMENTS POOL 1, LLC, 6 7 v. Plaintiff, 9 NATIONSTAR MORTGAGE LLC D/B/A MR. COOPER; FEDERAL HOME LOAN MORTGAGE CORPORATION; DOES I though X; and ROE BUSINESS ENTITIES I through X, inclusive, 10 Defendants. 8 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case No. 2:22-cv-02035-ART-BNW ORDER Before the Court is a dispute concerning the validity of various claims of title over a property in Las Vegas, Nevada. Now pending are three motions: Plaintiff’s Emergency Motion for Temporary Restraining Order (ECF No. 5); Plaintiff’s Emergency Motion for Preliminary Injunction (ECF No. 6); and Defendants’ Motion to Dismiss Count One of the Complaint (ECF No. 20). For the reasons stated, the Court denies Plaintiff’s Emergency Motions and grants Defendants’ Motion to Dismiss. I. FACTUAL AND PROCEDURAL HISTORY On March 31, 2008, non-party First Horizon Home Loans recorded a Deed of Trust against the property located at 7927 Capistrano Valley Avenue, Las Vegas, Nevada, 89178 with the Clark County Recorder. (ECF No. 6, Exhibit 1.) The Deed of Trust designates non-party Jannetje Tolchin as the “Borrower,” First Horizon Home Loans as the “Lender,” and Mortgage Electronic Registration Systems, Inc. (“MERS”) as the beneficiary. (ECF No. 6, Exhibit 1.) The Deed of Trust references a promissory note signed by Tolchin requiring payment of $231,391.00 plus interest no later than April 1, 2038. (ECF No. 6, Exhibit 1.) It also includes language related to acceleration of the debt owed. In the event of 1 Dockets.Justia.com Case 2:22-cv-02035-ART-BNW Document 32 Filed 09/27/23 Page 2 of 13 1 default, the Lender “shall” give notice to the Borrower prior to acceleration, and 2 that if the default is not cured, “Lender at its option, and without further demand, 3 may invoke the power of sale, including the right to accelerate full payment of the 4 Note.” (ECF No. 6, Exhibit 1.) 5 On October 1, 2010, a Notice of Breach and Default and of Election to 6 Cause Sale of Real Property Under Deed of Trust was recorded against the 7 property. (ECF No. 6, Exhibit 2 (“First NOD”).) The First NOD indicates that 8 Tolchin became delinquent on the loan on March 1, 2009. (ECF No. 6, Exhibit 2.) 9 The First NOD stated the “present Beneficiary . . . has declared and does hereby 10 declare all sums secured thereby immediately due and payable” and advised 11 Tolchin that she “may have the right to cure the default.” (ECF No. 6, Exhibit 2.) 12 A second Notice of Default was filed on November 7, 2012, by a servicer on 13 behalf of Defendant, Nationstar Mortgage, LLC. (ECF No. 6, Exhibit 3 (“Second 14 NOD”).) The Second NOD indicates that Tolchin became delinquent on April 1, 15 2009. (ECF No. 6, Exhibit 3.) Like the First NOD, it includes language declaring 16 all sums “immediately due and payable” and stating Tolchin may “cure [her] 17 default.” (ECF No. 6, Exhibit 3.) 18 Plaintiff SFR Investments Pool 1, LLC acquired title to the property on April 19 16, 2013, at a public foreclosure auction held by the Rio Vista HOA following the 20 property owner’s failure to pay HOA fees. (ECF No. 6, Exhibit 4 (“Foreclosure 21 Deed”).) The Foreclosure Deed was recorded on April 18, 2023. (ECF No. 6, 22 Exhibit 4.) It indicates that Plaintiff purchased the property for $7,000. (ECF No. 23 6, Exhibit 4.) 24 Shortly after acquiring the property, Plaintiff filed a quiet-title action in 25 state court attempting to extinguish Defendants’ Deed of Trust and recorded a lis 26 pendens against the property. (ECF No. 20, Exhibit B.) Plaintiff eventually lost in 27 state court on summary judgment and then stipulated to dismiss the subsequent 28 appeal. (ECF No. 20, Exhibits C, D.) 2 Case 2:22-cv-02035-ART-BNW Document 32 Filed 09/27/23 Page 3 of 13 1 On July 25, 2022, a third Notice of Default was recorded against the 2 property, substantively identical to the Second NOD. (ECF No. 6, Exhibit 5 (“Third 3 NOD”).) 4 In August of 2022, Plaintiff alleges that it sent a request for information 5 pursuant to NRS 107.200 and NRS 107.210. (ECF No. 6, Exhibits 6, 7.) 6 Defendants deny ever receiving the request. (ECF No. 20, Exhibit A.) 7 On November 17, 2022, a Notice of Trustee’s Sale was recorded on the 8 property scheduling a foreclosure sale for December 16, 2022. (ECF No. 6, Exhibit 9 8.) On November 18, 2022, Defendant Nationstar Mortgage recorded an 10 Assignment of Deed of Trust on the property that transferred the property to 11 Defendant Federal Home Loan Mortgage Corporation (“Freddie Mac”). (ECF No. 12 6, Exhibit 9.) Plaintiff commenced this action on December 8, 2022. (ECF No. 1.) 13 Plaintiff’s complaint (ECF No. 1) alleges two causes of action. First, Plaintiff 14 brings a quiet-title action based on NRS 106.240, Nevada’s ancient lien statute, 15 arguing Defendants’ deed of trust on the property was extinguished by law. 16 Second, Plaintiff brings a claim for damages based on alleged violations of NRS 17 107.200 et seq., arguing Defendants willfully failed to make compulsory 18 disclosures following Plaintiff’s formal, written request. 19 Along with its complaint, Plaintiff also filed emergency motions for a 20 temporary restraining order and a preliminary injunction, seeking to enjoin 21 Defendants from moving forward with the foreclosure sale of the property. (ECF 22 No. 5, 6.) The Court issued an Order (ECF No. 17), consistent with a stipulation 23 filed by the parties (ECF No. 15), directing Defendants to take no steps toward 24 the foreclosure of the property until the Court issues a decision on the pending 25 motion for preliminary injunction. Defendants opposed the emergency motions 26 for injunctive relief (ECF No. 20) and Plaintiff replied (ECF No. 22). 27 Defendants also filed its Motion to Dismiss Count One of the Complaint 28 (ECF No. 20), arguing the claim fails as a matter of law because federal law bars 3 Case 2:22-cv-02035-ART-BNW Document 32 Filed 09/27/23 Page 4 of 13 1 the relief Plaintiff seeks and because the facts Plaintiff alleged in its complaint 2 cannot trigger NRS 106.240. Plaintiff opposed the motion (ECF No. 23) and 3 Defendant replied (ECF No. 26). 4 II. DISCUSSION 5 Factually, this case is typical of many actions for quiet title concerning 6 homes in Nevada bought and sold at foreclosure auctions during the fallout of 7 the 2008 financial crisis. Plaintiff purchased the property at issue here in a HOA 8 foreclosure sale for $7,000. In state court, the parties litigated the validity of 9 Defendants’ Deed of Trust following Plaintiff’s purchase, and Defendants 10 prevailed on summary judgment. Shortly before Defendants’ foreclosure sale of 11 the property to collect on a delinquent loan, Plaintiff filed an action in this Court 12 arguing Defendants’ interest in the property was extinguished by operation of 13 NRS 106.240. 14 NRS 106.240, Nevada’s ancient lien statute, “provides that certain liens on 15 real property are automatically cleared from the public records after a specified 16 period of time.” LV Debt Collect, LLC v. Bank of New York Mellon as Tr. for 17 Certificateholders of CWMBS, Inc., CHL Mortg. Pass-Through Tr. 2005-02, Mortg. 18 Pass-Through Certificates, Series 2005-02, 139 Nev. Adv. Op. 25 (2023). The 19 statute discharges liens tied to a mortgage or deed of trust “10 years after the 20 debt secured by the mortgage or deed of trust according to the terms thereof or 21 any recorded written extension thereof become wholly due.” NRS 106.240. 22 Plaintiff contends that when Defendants recorded the First NOD, the 23 Second NOD, at some point before recording both, or when the thirty-five-day 24 period to cure a default under NRS 107.080 ended after recording both, 25 Defendants accelerated the loan, making it wholly due under NRS 106.240. 26 Because ten years have passed since any of these possible dates of acceleration, 27 Plaintiff argues that Defendants’ interest in the property was discharged. As such, 28 Plaintiff requests an injunction preventing Defendants from foreclosing on the 4 Case 2:22-cv-02035-ART-BNW Document 32 Filed 09/27/23 Page 5 of 13 1 property, a declaratory judgment establishing Plaintiff’s unencumbered title to 2 the property, and damages for Defendants’ alleged violations of NRS 107.200 et 3 seq. But, as shown below, federal law, specifically 12 U.S.C. § 4617(f), bars the 4 Court from granting injunctive relief in this case, and Plaintiff’s quiet-title action 5 fails as a matter of law in light of the Nevada Supreme Court’s recent decision 6 interpreting NRS 106.240. LV Debt Collect, LLC, 139 Nev. Adv. Op. at 1. 7 A. EMERGENCY MOTIONS FOR INJUNCTIVE RELIEF 8 First, the Court addresses Plaintiff’s Emergency Motions for injunctive 9 relief. Restraining orders and preliminary injunctions are “extraordinary 10 remed[ies] never awarded as of right.” Winter v. Nat. Res. Def. Council, Inc., 555 11 U.S. 7, 24 (2008). The legal standard for obtaining a temporary restraining order 12 and the legal standard for obtaining a preliminary injunction are “substantially 13 identical.” See Stuhlbarg Intern. Sales Co. v. John D. Bush and Co., 240 F.3d 832, 14 839 n.7 (9th Cir. 2001), overruled on other grounds by Winter, 555 U.S. at 20. 15 The Supreme Court clarified the standard for these forms of equitable relief in 16 Winter, instructing that the plaintiff “must establish that [it] is likely to succeed 17 on the merits, that [it] is likely to suffer irreparable harm in the absence of 18 preliminary relief, that the balance of equities tips in [its] favor, and that an 19 injunction [or restraining order] is in the public interest.” 555 U.S. at 20. The 20 Ninth Circuit also recognizes an additional standard: “if a plaintiff can only show 21 that there are ‘serious questions going to the merits’—a lesser showing than 22 likelihood of success on the merits—then a preliminary injunction may still issue 23 if the ‘balance of hardships tips sharply in the plaintiff’s favor, and the other two 24 Winter factors are satisfied.’” Shell Offshore, Inc. v. Greenpeace, Inc., 709 F.3d 25 1281, 1291 (9th Cir. 2013) (quoting Alliance for the Wild Rockies v. Cottrell, 632 26 F.3d 1127, 1135 (9th Cir. 2011)). 27 Beyond the Winter factors, there is a fundamental jurisdictional question 28 because Defendants’ interest in the property is owned by Freddie Mac, which 5 Case 2:22-cv-02035-ART-BNW Document 32 Filed 09/27/23 Page 6 of 13 1 neither party contests. (ECF No. 6, Exhibit 9.) “Congress created . . . Freddie Mac 2 (the Federal Home Loan Mortgage Corporation) to foster the secondary market for 3 home mortgages.” City of Spokane v. Fed. Nat. Mortg. Ass'n, 775 F.3d 1113, 114 4 (9th Cir. 2014). As a response to the 2008 housing crisis, “Congress passed the 5 Housing and Economic Recovery Act of 2008 (‘HERA’), which . . . established the 6 Federal Housing Finance Agency (‘FHFA’), an independent agency charged with 7 supervising [Freddie Mac].” Cnty. of Sonoma v. Fed. Hous. Fin. Agency, 710 F.3d 8 987, 989 (9th Cir. 2013). HERA also granted the FHFA the power to place Freddie 9 Mac into conservatorship, which the FHFA did on September 6, 2008. Id.; see 10 also 12 U.S.C. § 4617(a)(2). 11 As conservator, the FHFA has separate statutory powers. For example, 12 HERA authorizes the FHFA to take action “necessary to put the regulated entity 13 in a sound and solvent condition” and actions as may be appropriate to “preserve 14 and conserve the assets and property of the regulated entity.” 12 U.S.C. § 15 4617(b)(2)(D). Further, FHFA succeeds to “all . . . titles . . . of the regulated entity.” 16 12 U.S.C. § 4617(b)(2)(A). 17 HERA also “substantially limits judicial review of FHFA’s actions as 18 conservator.” Cnty. of Sonoma, 710 F.3d at 990; see also Saxton v. Fed. Hous. Fin. 19 Agency, 901 F.3d 954, 957 (8th Cir. 2018) (calling Section 4617(f) an “anti- 20 injunction provision”); Robinson v. Fed. Hous. Fin. Agency, 876 F.3d 220, 227 (6th 21 Cir. 2017) (referring to the statute’s “anti-injunction language”); Perry Cap. LLC 22 v. Mnuchin, 864 F.3d 591, 613–14 (D.C. Cir. 2017) (finding HERA limits judicial 23 remedies, including “injunctive, declaratory, and other equitable relief”); Jacobs 24 v. Fed. Hous. Fin. Agency, 908 F.3d 884, 894 (3d Cir. 2018) (concluding that 25 Section 4617(f) limits not only equitable relief, but also some monetary claims). 26 “Except as provided in this section or at the request of the Director, no court may 27 take any action to restrain or affect the exercise of powers or functions of the 28 Agency as a conservator.” 12 U.S.C. § 4617(f). Thus, if the action Plaintiff seeks 6 Case 2:22-cv-02035-ART-BNW Document 32 Filed 09/27/23 Page 7 of 13 1 to enjoin here “is a lawful exercise of FHFA’s power as conservator of [Freddie 2 Mac], the courts have no jurisdiction over [Plaintiff’s] claims, and this [motion 3 must be denied].” Cnty. of Sonoma, 710 F.3d at 990 (vacating a district court’s 4 order granting a preliminary injunction of an FHFA directive). On the other hand, 5 section 4617(f) is “inapplicable when FHFA acts beyond the scope of its 6 conservator power.” Id. At 992. The question before the Court, then, is whether 7 foreclosing on a loan when the borrower is delinquent falls within FHFA’s 8 conservator powers. 9 The Court finds that foreclosure falls within FHFA’s conservator powers. 10 HERA “grants the FHFA expansive authority in its role as a conservator. . . . [T]he 11 [FHFA] is authorized to take control of a regulated entity's assets and operations, 12 conduct business on its behalf, and transfer or sell any of its assets or liabilities.” 13 Collins v. Yellen, 141 S. Ct. 1761, 1776 (2021) (citing U.S.C. §§ 4617(b)(2)(B)–(C), 14 (G)). “When the FHFA exercises these powers, its actions must be ‘necessary to 15 put the regulated entity in a sound and solvent condition’ and must be 16 ‘appropriate to carry on the business of the regulated entity and preserve and 17 conserve [its] assets and property.’” Id. (quoting U.S.C. § 4617(b)(2)(D)). 18 Here, Freddie Mac’s loan has been in default since 2009. As conservator, 19 the FHFA assumes Freddie Mac’s assets and liabilities, including the loan at issue 20 here. 12 U.S.C. § 4617(b)(2)(A). HERA grants the FHFA, through Freddie Mac, the 21 power to transfer or sell any of its assets or liabilities. U.S.C. § 4617(b)(2)(G). So 22 long as the action taken puts Freddie Mac “in a sound and solvent condition” and 23 helps to “preserve and conserve” Freddie Mac’s assets and property, the action is 24 within the FHFA’s statutory powers as conservator. U.S.C. § 4617(b)(2)(D). 25 Foreclosure on the property to collect on obligations due to Freddie Mac is a valid 26 exercise of the FHFA’s powers as conservator under HERA to preserve and 27 conserve Freddie Mac’s asset. Thus, this Court has no jurisdiction to enjoin the 28 foreclosure. 7 Case 2:22-cv-02035-ART-BNW Document 32 Filed 09/27/23 Page 8 of 13 1 Courts across the country have reached a similar conclusion when 2 analyzing a functionally identical limitation on injunctive relief affecting actions 3 taken by the Federal Deposit Insurance Corporation (“FDIC”). See Cnty. of 4 Sonoma, 710 F.3d at 992 (analogizing 12 U.S.C. § 4617(f) to the statutory bar on 5 judicial review of the Federal Deposit Insurance Corporation’s actions taken as a 6 conservator or receiver). The relevant FDIC statute provides “no court may take 7 any action . . . to restrain or affect the exercise of powers or functions of the 8 [FDIC] as a conservator or a receiver.” 12 U.S.C. § 1821(j). Applying this provision, 9 the First, Fourth, and D.C. Circuits have all concluded that courts may not enjoin 10 the FDIC from foreclosing on a security it holds. See Telematics Int'l, Inc. v. NEMLC 11 Leasing Corp., 967 F.2d 703, 705 (1st Cir. 1992) (describing 12 U.S.C. § 1821(j) 12 as an “anti-injunction provision”); Tillman v. Resol. Tr. Corp., 37 F.3d 1032, 1036 13 (4th Cir. 1994) (also describing 12 U.S.C. § 1821(j) as an “anti-injunction 14 provision”); Freeman v. F.D.I.C., 56 F.3d 1394, 1399 (D.C. Cir. 1995) (holding that 15 12 U.S.C. § 1821(j) bars injunctive relief halting a foreclosure). 16 Plaintiff fails to persuasively argue that the statutory bar on injunctive 17 relief in 12 U.S.C. § 4617(f) should not apply here. First, Plaintiff argues that 18 Section 4617(f) should not apply because the FHFA is acting “ultra vires or in 19 some third capacity.” (ECF No. 22 at 4 (quoting Roberts v. Fed. Hous. Fin. Agency, 20 889 F.3d 397, 402 (7th Cir. 2018)).) But as demonstrated above, the FHFA is not 21 acting ultra vires but pursuant to its specific statutory authority as conservator 22 to preserve and conserve Freddie Mac’s assets and property. And Plaintiff 23 misrepresents the meaning of the term “third capacity” in Roberts. Rather than 24 acting through a third-party, as Plaintiff argues, the Roberts court instead means 25 acting as neither a conservator nor a receiver, but rather in some “third capacity.” 26 Roberts, 889 F.3d at 402. Here, the FHFA’s actions, while through third parties, 27 are within its powers or functions as a conservator and are thus protected by 28 Section 4617(f). 8 Case 2:22-cv-02035-ART-BNW Document 32 Filed 09/27/23 Page 9 of 13 1 Second, Plaintiff contends that HERA does not authorize FHFA to displace 2 or violate state property law, and that because its complaint alleges that state 3 law extinguished Freddie Mac’s interest in the property, Section 4617(f) cannot 4 protect the FHFA’s actions here. But both cases Plaintiff relies on for this 5 argument cut against its contentions. In Waterview Mgmt. Co. v. F.D.I.C., the 6 court held that Section 1821(j) barred equitable relief, although the regulated 7 entity may still be required to pay damages from outstanding claims. 105 F.3d 8 696, 700 n.2 (D.C. Cir. 1997). And in Jordan v. Nationstar Mortg., LLC, the court 9 did not even consider Section 4617(f)’s jurisdictional bar on equitable relief, but 10 rather determined that HERA did not preempt state foreclosure law in a class 11 action for damages based on Fannie Mae’s alleged violations of a state statute 12 prohibiting pre-foreclosure residential entry. 240 F. Supp. 3d 1114, 1128 (E.D. 13 Wash. 2017). 14 Because the FHFA is acting within its statutory powers as a conservator, 15 this Court lacks jurisdiction to enjoin Freddie Mac’s foreclosure sale of the 16 property. 12 U.S.C. § 4617(f); Cnty. of Sonoma, 710 F.3d at 994–95. In the 17 absence of jurisdiction to grant injunctive relief, the Court need not analyze 18 Plaintiff’s Emergency Motions under the Winter factors. Accordingly, Plaintiff’s 19 Emergency Motions for Temporary Restraining Order and Preliminary Injunction 20 are denied. 21 B. MOTION TO DISMISS COUNT ONE OF THE COMPLAINT 22 Fed. R. Civ. P. 12(b)(6) allows for challenges based on a failure to state a 23 claim upon which relief can be granted. See Fed. R. Civ. P. 12(b)(6). To survive a 24 motion to dismiss, a complaint must contain sufficient factual matter to “state a 25 claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 26 (2009). But even a facially plausible claim may be dismissed under Fed. R. Civ. 27 P. 12(b)(6) for “lack of a cognizable legal theory.” Solida v. McKelvey, 820 F.3d 28 1090, 1096 (9th Cir. 2016). Thus, to survive a motion to dismiss a claim must be 9 Case 2:22-cv-02035-ART-BNW Document 32 Filed 09/27/23 Page 10 of 13 1 both facially plausible and legally cognizable. 2 Plaintiff’s NRS 106.240 claim cannot survive Defendants’ Motion to 3 Dismiss under the Supreme Court of Nevada’s recent decision interpreting NRS 4 106.240, LV Debt Collect, LLC. When the parties briefed this issue, the 5 relationship between a recorded Notice of Default and NRS 106.240’s ten-year 6 clock on lien termination was a contested issue. The Nevada Supreme Court’s 7 decision holding that a loan secured by real property does not become “wholly 8 due” for purposes of NRS 106.240 when a Notice of Default is recorded makes 9 Plaintiff’s claim fail as a matter of law. LV Debt Collect, LLC, 139 Nev. Adv. Op. at 10 1. 11 LV Debt Collect, LLC is factually similar to this case. The appellant in that 12 case, like Plaintiff here, acquired title through a HOA foreclosure sale and 13 originally litigated its quiet-title action on non-NRS 106.240 grounds. Id. Once 14 ten years passed after the appellee first recorded a Notice of Default in 2008, the 15 appellant amended its complaint to assert a declaratory relief claim based on NRS 16 106.240 Id. The appellant argued that language in the recorded Notice of Default 17 rendered the debt secured by the appellee’s deed of trust wholly due for purposes 18 of NRS 106.240, such that by 2018, the appellee’s deed of trust was extinguished 19 as a matter of law. Id. 20 The Nevada Supreme Court disagreed for three reasons, two of which are 21 relevant here. First, the court found that “a Notice of Default is not identified 22 in NRS 106.240 as a document that can render a secured loan ‘wholly due’ for 23 purposes of triggering the statute's 10-year time frame.” Id. at 5. Second, 24 “acceleration can only occur if its exercise is clear and unequivocal, and the 25 Notice of Default's purported acceleration language was not sufficiently clear and 26 unequivocal here.” Id. 27 The court observed that NRS 106.240 states that a debt becomes wholly 28 due only according to two things: “(1) the ‘terms thereof,’ referring to the mortgage 10 Case 2:22-cv-02035-ART-BNW Document 32 Filed 09/27/23 Page 11 of 13 1 or deed of trust, or (2) ‘any recorded written extension thereof.’” Id. at 3. “Thus, 2 when there is no recorded extension of the due date, the terms of the mortgage 3 or deed of trust dictate when the debt becomes wholly due.” Id. 4 The deed of trust at issue in LV Debt Collect, LLC contained a “discretionary 5 acceleration clause,” where the appellee had the option to accelerate full payment 6 of the note only after providing notice and the borrower’s failure to cure. Id. Thus, 7 while the “Notice of Default satisfied the notice-and-cure preconditions . . . [it] 8 could not itself accelerate the loan under the terms of the acceleration clause.” 9 Id. 10 The Deed of Trust at issue in this case contains identical language in its 11 discretionary acceleration clause. Thus, by extension, none of the three Notices 12 of Default in this case could have accelerated the loan and made it “wholly due” 13 for the purposes of NRS 106.240’s ten-year clock. Plaintiff’s alternative argument, 14 that Defendants declared the loan wholly due before recording the First NOD, is 15 implausible on its face. See Daisy Tr. v. Fed. Nat'l Mortg. Ass'n, No. 21-15595, 16 2022 WL 874634 (9th Cir. Mar. 24, 2022) (stating “an unrecorded acceleration 17 notice . . . is legally irrelevant” when determining whether a loan is wholly due 18 under NRS 106.240). Even assuming this contention is true, the terms of the 19 Deed of Trust do not allow acceleration until after the lender has provided the 20 borrower with notice and an opportunity to cure. 21 Plaintiff’s claim fails for another, distinct reason: namely, even if recording 22 a Notice of Default could render a loan wholly due, none of the Notices of Default 23 in this case were sufficient to do so. In Nevada, “acceleration of a debt must ‘be 24 exercised in a manner so clear and unequivocal that it leaves no doubt as to the 25 lender's intention.’” Id. at 5 (quoting Clayton v. Gardner, 813 P.2d 997, 999 26 (1991). In LV Debt Collect, LLC, the court found that although the Notice of Default 27 stated that appellee “does hereby declare all sums secured [by the deed of trust] 28 immediately due and payable,” it also provided that the borrower could cure the 11 Case 2:22-cv-02035-ART-BNW Document 32 Filed 09/27/23 Page 12 of 13 1 default. LV Debt Collect, LLC, 139 Nev. Adv. Op. at 5. The conflicting language 2 made the Notice of Default not so clear and unequivocal, leaving doubt as to the 3 lender’s intention to accelerate the loan. Id. For that additional reason, the court 4 found that the Notice of Default could not trigger NRS 106.240’s ten-year clock. 5 Id. 6 The Notices of Default in this case contain the same conflicting language. 7 Each of the three Notices states that the lender “has declared and does hereby 8 declare all sums secured [by the deed of trust] immediately due and payable.” 9 (First NOD at 2; Second NOD at 4; Third NOD at 2.) Each of the three also states 10 that the lender may cure the default. (First NOD at 2; Second NOD at 3; Third 11 NOD at 3.) Thus, none of the Notices of Default were clear and unequivocal 12 enough to accelerate the loan and trigger NRS 106.240’s ten-year clock. LV Debt 13 Collect, LLC, 139 Nev. Adv. Op. at 5. 14 Additionally, Plaintiff alleges no facts supporting a “clear and unequivocal” 15 acceleration of the loan after the thirty-five-day cure periods expired. Plaintiff only 16 states that either the loan was accelerated when the Notices of Default were 17 recorded, or it was accelerated after the cure periods expired. Acceleration after 18 the cure periods expired relies on the conflicting language in the Notices of 19 Default, language that cannot accelerate a loan as a matter of law. Absent an 20 allegation of some other, independent action by Defendants accelerating the loan 21 in a clear and unequivocal way, Plaintiff’s claim is implausible on its face. 22 Plaintiff has not stated a plausible claim for relief under NRS 106.240. The 23 Court will therefore grant Defendants’ Motion to Dismiss Count One of the 24 Complaint. 25 III. CONCLUSION 26 The Court denies Plaintiff’s Emergency Motion for Temporary Restraining 27 Order (ECF No. 5) and Plaintiff’s Emergency Motion for Preliminary Injunction 28 (ECF No. 6). 12 Case 2:22-cv-02035-ART-BNW Document 32 Filed 09/27/23 Page 13 of 13 1 The Court grants Defendants’ Motion to Dismiss Count One of the 2 Complaint (ECF No. 20) and grants Plaintiff leave to amend its complaint to allege 3 a plausible claim for relief under NRS 106.240. 4 5 DATED THIS 27th day of September 2023. 6 7 8 ANNE R. TRAUM UNITED STATES DISTRICT JUDGE 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13
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