Branch Banking and Trust Company v. Rossal et al, No. 2:2012cv01298 - Document 72 (D. Nev. 2015)

Court Description: ORDER GRANTING Plaintiff's 65 Motion to Dismiss. IT IS FURTHER ORDERED that Plaintiff's 67 Motion for Summary Judgment is GRANTED with respect to Plaintiff's deficiency claim. IT IS FURTHER ORDERED that Plaintiff's [6 8] Motion for a Deficiency Judgment Hearing is GRANTED. The Court will set a hearing to determined the fair market value of the property at the time it was sold. Signed by Judge Miranda M. Du on 9/29/15. (Copies have been distributed pursuant to the NEF - PS)
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Branch Banking and Trust Company v. Rossal et al Doc. 72 1 2 3 4 5 UNITED STATES DISTRICT COURT 6 DISTRICT OF NEVADA 7 *** 8 9 BRANCH BANKING AND TRUST COMPANY, ORDER Plaintiff, 10 11 Case No. 2:12-cv-01298-MMD-GWF v. Motion to Dismiss dkt. no. 65; dkt. FELICIANO ROSSAL, et al., dkt. no. 68.) 12 Defendants. 13 14 15 16 I. SUMMARY In September 2014, the Court denied, without prejudice, a motion for summary judgment filed by Plaintiff Branch Banking and Trust Company . (Dkt. no. 64.) 17 and Feliciano Rossal had filed for 18 bankruptcy several months earlier, which stayed this case with respect to them. (See 19 dkt. nos. 58, 59, 62.) Defendant Onelia Rossal, however, did not file for bankruptcy or 20 oppose the motion for summary judgment. (Dkt. no. 62.) Concerned about the possibility 21 of creating prejudicial effects by deciding the motion for summary judgment during the 22 stay, and in light of the fact that Onelia Rossal had not opposed the motion, the Court 23 denied the motion, but gave Plaintiff leave to reassert it. (Dkt. no. 64.) 24 Plaintiff has since filed the three motions pending before the Court: a Motion for 25 Voluntary Dismissal of Defendant Feliciano Rossal (dkt. no. 65), a Motion for Summary 26 Judgment against Onelia Rossal (dkt. no. 67), and a Motion for a Deficiency Judgment 27 Hearing (dkt. no. 68). Defendants have not responded to these pending motions. For the 28 reasons discussed below, the motions are granted. 1 II. BACKGROUND 2 A. Factual Background 3 On December 12, 2005, Defendants Feliciano Rossal and Onelia Rossal 4 t of 5 $281,000.00 and delivered it to Colonial Bank, N.A. (Dkt. no. 67 ¶ 1.) The Note was 6 secured by a Deed of Trust that encumbered real property in Clark County, Nevada . (Id. ¶ 2.) 7 ote. (Id. ¶ 3.) 8 At some point thereafter, Colonial Bank, N.A., was converted from a national 9 banking association into a state-chartered bank. (Id. ¶ 4.) Colonial Bank, an Alabama 10 banking corporation, became its successor. (Id.) In August 2009, Alabama state officials 11 closed Colonial Bank; 12 the receiver. (Id. ¶ 5.) The FDIC, in turn, assigned its rights under the Note, Deed of 13 Trust, and other loan documents to Plaintiff BB&T. (Id. ¶¶ 6 7.) was named 14 The Borrowers defaulted on the Note in December 2010. (Id. ¶ 8.) At a non- 15 Plaintiff purchased the Property through a credit 16 bid of $144,000.00. (Id. ¶ 9.) The sale only partially compensated for the 17 outstanding balance. (Id. ¶ 10.) 18 B. Procedural Background 19 Plaintiff initiated this lawsuit on July 23, 2012, alleging a deficiency against the 20 Borrowers, a breach of guaranty against the Guarantor, and a breach of the covenant of 21 good faith and fair dealing against the Borrowers and the Guarantor. (Dkt. no. 1.) 22 Defendants filed a motion to dismiss for lack of standing in September 2012 (dkt. no. 7), 23 which the Court denied. (Dkt. no. 31.) The parties then filed several motions for summary 24 judgment. (Dkt. nos. 33, 34, 35, 39.) In April 2 .1 (Dkt. no. 54.) 25 26 /// 27 /// 28 1 Ms. Rossal has not obtained replacement counsel and is proceeding pro se. 2 The next month, in May 2014, 1 notified the Court 2 that they had filed for bankruptcy. (Dkt. nos. 58, 59, 62.) The Court heard oral argument 3 on the pending motions for summary judgment and for a deficiency hearing on 4 September 23, 2014. (Dkt. no. 64.) Onelia Rossal did not appear for the hearing. In light 5 of her absence and the recent bankruptcy filings, the Court denied 6 judgment motions without prejudice, and denied 7 hearing as moot. (Id.) 8 which the Court granted. (Dkt. nos. 70, 71.) August 2015, The Court now addresses 9 rted Motion for Summary Judgment 10 and Motion for a Deficiency Judgment Hearing (dkt. nos. 67, 68) 11 Motion to Dismiss Defendant Feliciano Rossal (dkt. no. 65). 12 III. MOTION TO DISMISS 13 Plaintiff seeks voluntary dismissal of Plaintiff Feliciano Rossal without prejudice 14 under Rule 41 of the Federal Rules of Civil Procedure. (Dkt. no. 65.) Rule 41 allows for 15 a)(2). 16 will not be prejudiced, or 17 Stevedoring Servs. of Am. v. Armilla Int’l B.V., 889 F.2d 18 919, 921 (9th Cir. 1989) (citation omitted). Feliciano Rossal was active in this lawsuit 19 before he filed for bankruptcy. However, in light of the current stay, the Court finds that 20 voluntary dismissal would not prejudice or unfairly affect Mr. Rossal. The Court therefore 21 grants the Motion to Dismiss (dkt. no. 65). Defendant Feliciano Rossal is terminated from 22 this case. 23 IV. MOTION FOR SUMMARY JUDGMENT 24 According to Plaintiff, the undisputed facts demonstrate that it is entitled to a 25 deficiency judgment against Onelia Rossal. Plaintiff asserts that Ms. Rossal defaulted on 26 her loan, that the 27 Ms. Rossal is responsible for paying that balance. Plaintiff further argues that a provision 28 of -deficiency statutes, formerly codified at NRS § 40.459(1)(c), cannot bar 3 it is preempted by federal law. (Dkt. no. 67 at 6-7; 10-13.) 1 2 3 The Court agrees. A. Legal Standard 4 The purpose of summary judgment is to avoid unnecessary trials when there is 5 no dispute as to the facts before the court. Nw. Motorcycle Ass’n v. U.S. Dep’t of Agric., 6 7 shows that there is no genuine dispute as to any material fact and the movant is entitled 8 see Celotex Corp. v. Catrett, 477 9 U.S. 317, 322 10 on which a reasonable fact-finder could find for the nonmoving party and a dispute is 11 Anderson v. 12 Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). Where reasonable minds could differ 13 on the material facts at issue, however, summary judgment is not appropriate. See id. at 14 250-51 15 16 Aydin Corp. v. Loral Corp., 718 F.2d 897, 902 (9th Cir. 1983) (quoting First Nat’l 17 Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968)). In evaluating a summary 18 judgment motion, a court views all facts and draws all inferences in the light most 19 favorable to the nonmoving party. Kaiser Cement Corp. v. Fishbach & Moore, Inc., 793 20 F.2d 1100, 1103 (9th Cir. 1986). 21 The moving party bears the burden of showing that there are no genuine issues 22 of material fact. Zoslaw v. MCA Distrib. Corp. 23 order to carry its burden of production, the moving party must either produce evidence 24 25 the nonmoving party does not have enough evidence of an essential element to carry its 26 ultimate burden Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 27 t 28 4 Anderson 1 2 not rely on denials in the pleadings but must produce specific evidence, through 3 Bhan v. NME 4 Hosps., Inc. 5 Orr v. Bank of Am., 285 6 F.3d 764, 783 (9th Cir. 2002) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 7 475 U.S. 574, 586 (1986) Anderson, 477 U.S. at 252. 8 9 Finally, the Court notes that Ms. Rossal is proceeding pro se. Even as a pro se 10 litigant, Ms. Rossal must comply with the applicable procedural rules. Ghazali v. Moran, 11 46 F.3d 52, 54 (9th Cir. 1995) (per curiam). The Court cannot, however, grant the Motion 12 solely because Ms. Rossal failed to file an opposition brief. Rather, as noted above, the 13 Court will grant summary judgment only where a party shows that no genuine dispute of 14 material fact exists, and where that party is entitled to judgment as a matter of law. Fed. 15 R. Civ. P. 56(a); see Henry v. Gill Indus., Inc., 983 F.2d 943, 950 (9th Cir. 1993) 16 (affirming grant of summary judgment because moving party demonstrated that a claim 17 was frivolous, but noting that the district court had erred in granting summary judgment 18 for non- 19 B. Discussion 20 Section 40.455(1) of the Nevada Revised Statutes allows creditors to obtain 21 22 balance remaining due to the judgment creditor or the beneficiary of the deed of t 23 NRS § 40.455(1), amended by 2015 Nev. Stat., Ch. 518, Sec. 8 (Westlaw). Here, 24 Plaintiff offers undisputed evidence to establish such a deficiency. First, Plaintiff offers a 25 signed copy of the Note, in which Ms. Rossal (along with Feliciano Rossal) agreed to 26 pay a principal amount of $281,000 between December 2005 and December 2010. (Dkt. 27 no. 67 at 23-24.) Plaintiff has also reproduced a copy of the corresponding Deed of 28 Trust, which lists Colonial Bank, N.A., as the lender and beneficiary. (Id. at 26-42.) Next, 5 1 Plaintiff offers a copy of an assignment from the FDIC to Plaintiff; the document assigns 2 to Plaintiff all of the to and interests in deeds of trust, promissory notes, 3 y its predecessors] . . . as of 4 Id. at 5 consideration of the sum of [$10.00], and other good Id.) 6 hibits also include an allonge assigning Promissory Note from the FDIC to Plaintiff on August 14, 2009. (Id. at 59.) 7 8 Finally, Plaintiff reproduces 9 for a credit bid of $144,000 at a t 10 s Deed, which indicates that the Property was sold on February 29, 2012. (Id. at 61-63.) Together, these documents suggest that the balance remaining due to Plaintiff 11 exceeds the amount produced by the trustee sale. (See id. at 21 (declaration of Peter 12 Nugent, a Senior Vice President of Plaintiff, noting that the total indebtedness under the 13 Note on February 29, 2012, was $243,037.27).) Under the plain language of NRS 14 § 40.455(1), Plaintiff has demonstrated a deficiency. 15 in February 2012, however, NRS § 40.459(1)(c) 16 limited the amount that a successor creditor could recover through 17 18 19 20 21 a deficiency judgment. Subsection (1)(c) then2 read: If the person seeking the judgment acquired the right to obtain the judgment from a person who previously held that right, [a deficiency judgment could be limited to] the amount by which the amount of the consideration paid for that right exceeds the fair market value of the property sold at the time of sale or the amount for which the property was actually sold, whichever is greater. 22 2011 Nev. Stat. 1743. Under this provision, a successor creditor could only recover the 23 difference between the consideration it paid for the right to a deficiency judgment and 24 the actual sale price or fair market value of a property. Thus, unless a successor creditor 25 26 27 2 Section 40.459 was amended and reorganized in May 2015.See 2015 Nev. Stat., Ch. 149, Sec. 1 (Westlaw) (codified as amended at NRS § 40.459). Subsection (1)(c) now appears in NRS § 40.459(3) 28 6 1 2 sale value, Subsection (1)(c) foreclosed the successor creditor from recovering a 3 deficiency. 4 The remaining issue in this case, then, is whether Subsection (1)(c) applies to 5 Plaintiff. Plaintiff contends that Subsection (1)(c) interferes with the federal statutory 6 scheme through which the FDIC protects the assets of failed banks. (Dkt. no. 67 at 10- 7 13.) According to Plaintiff, this federal scheme preempts Subsection (1)(c) under the 8 Supremacy Clause of the United States Constitution, such that Subsection (1)(c) cannot 9 See id. (quoting U.S. Const. art. VI, cl. 2)); see Chae 10 v. SLM Corp. 11 Congress enacts a statute that explicitly pre-empts state law; (2) state law actually 12 conflicts with federal law; or (3) federal law occupies a legislative field to such an extent 13 that it is reasonable to conclude that Congress left no room for state regulation in that 14 Tocher v. City of Santa Ana, 219 F.3d 1040, 1045 (9th Cir. 2000))). 15 In April 2015, the Nevada Supreme Court addressed this issue, concluding that 16 federal law specifically, the federal Financial Institutions Reform, Recovery and , 12 U.S.C. § 1811 et seq. 17 preempts Subsection 18 (1)(c) from applying to deficiency actions brought by a creditor to which the FDIC has 19 transferred a loan. Munoz v. Branch Banking, 348 P.3d 689, 692 93 (Nev. 2015). There, 20 just as in this case, the plaintiff creditor had obtained rights to a loan from the FDIC, 21 which had previously assumed the loan while acting as the receiver of a failed bank. Id. 22 at 690 91. After n 23 24 ect assets, the court further stated that [t]o assist the FDIC in carrying out this duty, federal law provides special status t 25 Id. at 26 a 27 deficiency judgment that exceeds what they paid for the loan. Id. Accordingly, the court 28 7 Id. (quoting Fed. 1 2 Deposit Ins. Corp. v. Newhart, 892 F.2d 47, 50 (8th Cir. 1989)). 3 The Court is persuaded by this reasoning and applies it here. Plaintiff obtained its 4 rights to the loan from the FDIC. The FDIC, in turn, acquired the loan in its role as a 5 receiver pursuant to FIRREA. Because Subsection (1)(c), as interpreted by the Nevada 6 no more than the 7 consideration it paid to acquire the loan, the Court finds that Subsection (1)(c) does not 8 s that federal law 9 preempts Subsection (1)(c) from imposing such a limitation. The Court will therefore 10 11 Ms. Rossal.3 12 V. MOTION FOR DEFICIENCY JUDGMENT HEARING 13 14 value as of the date it was sold. (Dkt. no. 67 at 14-15.) Because the Court grants 15 a hearing. 16 V. CONCLUSION 17 The Court notes that Plaintiff made several arguments and cited to several cases 18 not discussed above. The Court has reviewed these arguments and cases and 19 determines that they do not warrant discussion as they do not affect the outcome of the 20 motions. 21 It is ordered 22 It is further ordered that 23 granted 24 for Summary Judgment (dkt. no. 67) is /// 25 26 27 28 3 orward, commonplace breach of contract does not specifically allege a breach of contract claim. (See dkt. no. 1.) The Court will not grant summary judgment on a claim that has not been alleged. Nevertheless, the Court finds that Plaintiff is entitled to judgment as a matter of law on the deficiency claim, and will grant summary judgment on that basis. 8 1 It is further ordered that 2 no. 68) is granted. The Court will set a hearing to determine the fair market value of the 3 Property at the time it was sold. 4 DATED THIS 29th day of September 2015. 5 6 MIRANDA M. DU UNITED STATES DISTRICT JUDGE 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9