Yuichi v. Federal Home Loan Mortgage Corporation et al, No. 2:2016cv00206 - Document 26 (D. Nev. 2016)

Court Description: ORDER granting ECF No. 19 Motion to Dismiss; giving Plaintiff 15 days to file amended complaint. Signed by Judge Miranda M. Du on 9/21/2016. (Copies have been distributed pursuant to the NEF - KR)
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Yuichi v. Federal Home Loan Mortgage Corporation et al Doc. 26 1 2 3 4 5 UNITED STATES DISTRICT COURT 6 DISTRICT OF NEVADA 7 *** 8 9 MIYAYAMA YUICHI, an individual, Plaintiff, 10 11 12 13 Case No. 2:16-cv-00206-MMD-CWH ORDER v. MTC FINANCIAL INC., dba TRUSTEE CORPS, a California corporation; FEDERAL HOME LOAN MORTGAGE CORPORATION, a federally chartered corporation; and DOES 1-5, inclusive, 14 Defendants. 15 16 I. SUMMARY 17 Plaintiff purchased property encumbered by a first deed of trust and seeks to halt 18 non-judicial foreclosure proceedings. Before the Court Federal Home Loan Mortgage 19 Corporation’s (“Freddie Mac”) Motion to Dismiss (“Motion”). (ECF No. 19.) Plaintiff has 20 opposed (ECF No. 20) and Freddie Mac has replied (ECF No. 21). For the reasons 21 discussed below, the Motion is granted. 22 II. BACKGROUND 23 The following facts are taken primarily from the Complaint and the briefs relating 24 to Plaintiff’s motion for a temporary restraining order. On October 9, 2014, Plaintiff 25 acquired his interest in a residential real property located at 9404 Amber Valley Lane in 26 Las Vegas (“the Property”) from Indian Home Program, LLC, Series III. (ECF No. 1-1 at 27 4, 11.) Since then, he has spent a significant amount of money on improvements to the 28 Property. (Id. at 7-8.) The Property is encumbered by a deed of trust to National City Dockets.Justia.com 1 Mortgage to secure a mortgage loan to the previous owner, Dennis Del Re. (ECF No. 2 12-1.) A subsequent deed of trust (“DOT”) was recorded in August 2004 to secure a 3 loan by National City Mortgage.1 (ECF No. 12-2.) 4 On September 30, 2013, Defendant MTC Financial Inc. dba Trustee Corps 5 (“MTC” or “Trustee Corps”), as substitute trustee under the DOT, recorded a Notice of 6 Breach and Default and Election to Sale (“NOD”). (ECF No. 12-3.) 7 On March 10, 2014, Indian Homes recorded a Bankruptcy Trustee’s quitclaim 8 deed (“BT Quitclaim Deed”). (ECF No. 12-4.) Indian Homes conveyed the Property to 9 Plaintiff on October 9, 2014. (ECF No. 1-1 at 11.) 10 Shortly before Plaintiff acquired the Property, Trustee Corps recorded a Notice of 11 Trustee’s Sale (“NOTS”) on September 23, 2014. (ECF No. 12-5.) After Plaintiff 12 acquired the Property, on November 19, 2015, Trustee Corps recorded a new Notice of 13 Trustee’s Sale for December 30, 2015. (ECF No. 12-7.) An assignment of the DOT to 14 Freddie Mac was also recorded on November 19, 2015. (ECF No. 12-8.) Plaintiff 15 alleges that Freddie Mac “holds the mortgage loan encumbering the subject real 16 property.” (ECF No. 1-1 at 5.) On December 28, 2015, Plaintiff initiated this action in state court. (ECF No. 1-1.) 17 18 Freddie Mac removed the action and has moved for dismissal. (ECF Nos. 1, 19.) 19 III. LEGAL STANDARD 20 A court may dismiss a plaintiff’s complaint for “failure to state a claim upon which 21 relief can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pleaded complaint must 22 provide “a short and plain statement of the claim showing that the pleader is entitled to 23 relief.” Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). 24 While Rule 8 does not require detailed factual allegations, it demands more than “labels 25 26 27 28 1 The Court takes judicial notice of the publicly recorded documents in connection with the Property and referenced in this section of the Order. See Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 866 n.1 (9th Cir. 2004) (the court may take judicial notice of the records of state agencies and other undisputed matters of public record under Fed. R. Evid. 201). 2 1 and conclusions” or a “formulaic recitation of the elements of a cause of action.” 2 Ashcroft v. Iqbal, 556 US 662, 678 (2009) (quoting Twombly, 550 U.S. at 555) (internal 3 quotation marks omitted). “Factual allegations must be enough to raise a right to relief 4 above the speculative level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to 5 dismiss, a complaint must contain sufficient factual matter to “state a claim to relief that 6 is plausible on its face.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570) 7 (internal quotation marks omitted). 8 In Iqbal, the Supreme Court clarified the two-step approach district courts are to 9 apply when considering motions to dismiss. First, a district court must accept as true all 10 well-pleaded factual allegations in the complaint; however, legal conclusions are not 11 entitled to the assumption of truth. Id. at 679. Mere recitals of the elements of a cause of 12 action, supported only by conclusory statements, do not suffice. Id. at 678. Second, a 13 district court must consider whether the factual allegations in the complaint allege a 14 plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiff’s 15 complaint alleges facts that allow a court to draw a reasonable inference that the 16 defendant is liable for the alleged misconduct. Id. at 678. Where the complaint does not 17 permit the court to infer more than the mere possibility of misconduct, the complaint has 18 “alleged — but it has not shown — that the pleader is entitled to relief.” Id. at 679 19 (quoting Fed. R. Civ. P. 8(a)(2)) (internal quotation marks and alteration omitted). When 20 the claims in a complaint have not crossed the line from conceivable to plausible, the 21 complaint must be dismissed. Twombly, 550 U.S. at 570. A complaint must contain 22 either direct or inferential allegations concerning “all the material elements necessary to 23 sustain recovery under some viable legal theory.” Twombly, 550 U.S. at 562 (quoting 24 Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984)). 25 Generally, a court may not consider any material beyond the pleadings in ruling 26 on a Rule 12(b)(6) motion to dismiss. U.S. v. Ritchie, 342 F.3d 903, 907 (9th Cir.2003). 27 One exception to this rule is where, as here, a court take judicial notice of “matters of 28 /// 3 1 public record.” See Lee v. Los Angeles, 250 F.3d 668, 688–89 (9th Cir.2001) (internal 2 citations omitted). 3 IV. DISCUSSION 4 The Complaint asserts three claims for violations of NRS § 107.080, declaratory 5 relief, and unjust enrichment. (Dkt. no. 1-1 at 5-8.) Freddie Mac seeks to dismiss all 6 three claims. The Court will address each claim in turn. 7 A. Violations of NRS § 107.080 8 The Complaint alleges that NRS 107.080(3) and (4)(a) require “Defendants to 9 provide notice of default and election to sell and/or notice of trustee sale to all persons 10 with an interest in the property, including Plaintiff” and Defendants failed to provide 11 Plaintiff with notice of trustee sale.2 (ECF NO. 1-1 at 5 (emphasis omitted).) Freddie 12 Mac points to the express language of statute to argue that it complied with Nevada’s 13 statutory requirements. 14 The procedures for conducting a trustee’s foreclosure sale are set forth in NRS 15 § 107.080. To commence a foreclosure, the beneficiary, the successor in interest of the 16 beneficiary, or the trustee must execute and record a notice of default and election to 17 sell. NRS § 107.080(2)(c). A copy of the notice of default and election to sell must be 18 mailed by registered mail or certified mail with return receipt requested to “the grantor 19 or, to the person who holds the title of record on the date the notice of default and 20 election to sell is recorded, and, if the property is operated as a facility licensed under 21 chapter 449 of NRS, to the State Board of Health, at their respective addresses, if 22 known, otherwise to the address of the trust property. NRS § 107.080(3). The trustee or 23 24 25 26 27 28 2 In response to the Motion, Plaintiff contends that the Complaint should be construed to allege that Freddie Mac violated NRS § 17.080(3)(a) by failing to include in the NOD a description of “the deficiency in performance or payment,” which deprived him of the opportunity to cure the default. (ECF No. 20 at 6.) However, the NOD did identify the deficiency as “including but not limited to, the obligations set forth in that certain Promissory Note with a face amount of $207,000.00.” (ECF No. 12-3 at 1.) The unpaid balance is identified in the NOTS. (ECF No. 12-7.) Moreover, it is not clear to the Court that Plaintiff has standing to challenge the content of the NOD when he was not among the parties entitled to notice under NRS § 17.080(3)(a). 4 1 other person authorized to make the sale must wait at least three months after 2 recording the notice of default and election to sell before the sale may proceed. 3 NRS § 107.080(2)(e). After the three month period, the trustee must give notice of the 4 time and place of the sale to the following: “each trustor, any other person entitled to 5 notice pursuant to this section and, if the property is operated as a facility licensed 6 under chapter 449 of NRS, the State Board of Health, by personal service or by mailing 7 the notice by registered or certified mail to the last known address of the trustor and any 8 other person entitled to such notice pursuant to this section.” NRS § 107.080(4)(a). 9 Plaintiff contends that NRS § 107.080(3) requires that the NOD be sent to him as 10 the titleholder of record and the grantor’s successor. (ECF No. 20 at 6-8.) However, his 11 argument does not find support in the statute. NRS § 107.080(3) requires that the NOD 12 be sent “to the grantor, or to the person who holds the title of record on the date the 13 notice of default and election to sell is recorded.” But Plaintiff did not hold the title to the 14 Property at the time the NOD was recorded on September 30, 2013, or when the first 15 NOTS was recorded on September 23, 2014.3 Nor is Plaintiff covered within the group 16 who must be given notice under NRS § 107.080(4)(a), which includes “any other person 17 entitled to notice pursuant to this section.” Plaintiff does not show how he would fall 18 among this catch-all group. 19 Plaintiff asserts policy arguments for why NRS § 107.080(3) should be construed 20 to require that the NOD and NOT must be provided to the “current record title holder.” 4 21 (ECF No. 20 at 8-10.) However, NRS § 107.080(3) is unambiguous in identifying the 22 parties who are entitled to notice: the grantor or the title holder on the date the NOD is 23 recorded. 24 /// 25 26 27 28 3 Indeed, Plaintiff acquired the Property in October 2014, more than a year after the NOD was recorded. Plaintiff thus should have had at least constructive notice of the recorded NOD and the first NOTS at the time that he acquired the Property. 4 Plaintiff also alleges that Freddie Mac violated his constitutional due process rights. This claim is not asserted in the Complaint and it is not clear whether such a claim may be asserted against Defendants. 5 The Court agrees with Freddie Mac that Plaintiff’s claim for violations of NRS § 1 2 107.080(3) should be dismissed. 3 B. Declaratory Relief 4 Plaintiff seeks a declaration that the Property “cannot be sold without providing 5 him with a reasonable opportunity to cure the default on the loan encumbering the 6 property.” (ECF No. 1-1 at 6.) Plaintiff relies on Title Insurance and Trust Co. v. Chicago 7 Title Insurance Co., 634 P.2d 1216 (Nev. 1981) to argue that as the title holder, he has 8 a right to cure the default.5 (ECF No. 20 at 14.) In that case, the Nevada Supreme Court 9 found that a vendee of the grantor of the deed of trust, who had purchased real property 10 from the borrower and grantor of the deed of trust, was a “successor in interest” 11 pursuant to NRS § 107.080(3).6 The court found that by including a “successor in 12 interest” in NRS § 107.080(3) shows that “the legislature intended that a purchaser of 13 real estate who is a grantor of a deed of trust should have a reasonable opportunity to 14 cure a default or deficiency before the property may be sold by the trustee, and that 15 such opportunity should be extended to one who holds under such a grantor.” Id. at 16 1218. 17 Here, Plaintiff has no contractual relationship with the borrower, Mr. Del Re, such 18 that he may be deemed Mr. Del Re’s successor in interest. Plaintiff acquired the 19 Property via a quitclaim deed from Indian Homes, whose interest in the Property was 20 subject to the DOT. (ECF No. 12-4.) Absent a legal relationship with Mr. Del Re or 21 Freddie Mac, Plaintiff cannot show that Freddie Mac must be compelled to give him the 22 opportunity to cure the default. 23 5 24 25 26 27 28 Plaintiff also relies on NRS § 107.080(3)(a) which requires the NOD to describe the deficiency. (ECF No. 20 at 14.) Again, Plaintiff’s contention that the NOD failed to describe the deficiency or payment is factually inaccurate. See discussion supra at n. 2. 6 The “successor in interest” language was removed from NRS § 107.080(3) in a 1989 amendment to the statute. 1989 Nev. Stat. 1770-71. Rather than requiring that a notice of default and election to sell be mailed to a grantor’s successor in interest, the 1989 amendment provides that the mailing may be directed to “the person who holds the title of record on the date the notice of default and election to sell is recorded.” 1989 Nev. Stat. 1771. This language appears in the current version of the statute. 6 1 Plaintiff asserts that he seeks declaratory relief “on information and belief, that 2 any encumbrance on the subject property was satisfied by the mortgage insurance.” 3 (ECF No. 20 at 14.) This allegation is not raised in the Complaint. Even if it was properly 4 raised, Plaintiff cannot seek declaratory relief without asserting a viable claim. 5 C. Unjust Enrichment 6 “The phrase ‘unjust enrichment’ is used in law to characterize the result or effect 7 of a failure to make restitution of, or for, property or benefits received under such 8 circumstances as to give rise to a legal or equitable obligation to account therefor.” 9 Leasepartners Corp. v. Robert L. Brooks Trust Dated Nov. 12, 1975, 942 P.2d 182, 187 10 (Nev. 1997). “Unjust enrichment occurs when ever [sic] a person has and retains a 11 benefit which in equity and good conscience belongs to another.” Id. (quotations and 12 citation omitted). 13 Plaintiff asserts a claim for unjust enrichment, but it is not entirely clear what 14 benefits Defendants purportedly retained that belongs to him. Plaintiff alleges that he 15 has invested in making improvements to the Property and paying expenses on the 16 Property. (ECF No. 1-1 at 8.) He alleges that because “Defendants’ deed of trust has 17 been paid in full through the original trustor’s mortgage insurance,” they are not entitled 18 to seek foreclosure and should not be allowed to retain the proceeds of the sale. (Id.) 19 (ECF No. 1-1 at 8.) He further asserts that Defendants would be unjustly enriched if 20 they are allowed to retain the proceeds of the sale on the Property. (Id.) 21 To the extent the recovery that Plaintiff seeks is to prevent foreclosure or to 22 prohibit Defendants from keeping the proceeds of the sale, such recovery is not 23 available under a claim for unjust enrichment. “The doctrine of unjust enrichment or 24 recovery in quasi contract applies to situations where there is no legal contract but 25 where the person sought to be charged is in possession of money or property which in 26 good conscience and justice he should not retain but should deliver to another [or 27 should pay for].” Leasepartners Corp., 942 P.2d at 187 (citing Lipshie v. Tracy Inv. Co., 28 566 P.2d 819, 824 (1977) (“To permit recovery by quasi-contract where a written 7 1 agreement exists would constitute a subversion of contractual principles.”)). Defendants 2 are not unjustly enriched at Plaintiff’s expense and did not retain a benefit that belongs 3 to Plaintiff. 4 Freddie Mac argues that Plaintiff’s claim is barred by the voluntary payment 5 doctrine, citing to Nevada Ass’n Services, Inc. v. Dist. Ct., 338 P.3d 1250 (Nev. 2014). 6 In that case, the Nevada Supreme Court explained the doctrine as follows: 7 The voluntary payment doctrine is an affirmative defense that “provides that one who makes a payment voluntarily cannot recover it on the ground that he was under no legal obligation to make the payment.” Best Buy Stores v. Benderson-Wainberg Assocs., 668 F.3d 1019, 1030 (8th Cir.2012) (internal quotations omitted). “The ‘voluntary’ in the voluntary payment doctrine does not entail the mere payment of the bill or fee.” Putnam v. Time Warner Cable of Se. Wis., 255 Wis.2d 447, 649 N.W.2d 626, 632 (2002). Instead, it considers “the willingness of a person to pay a bill without protest as to its correctness or legality.” Id. at 633. This doctrine serves to promote the “policy goals of certainty and stability” in transactions. Berrum v. Otto, 127 Nev. ––––, –––– n. 5, 255 P.3d 1269, 1273 n. 5 (2011). 8 9 10 11 12 13 14 Id. at 1253-54. This doctrine does not apply to the situation here where Plaintiff is not 15 claiming that he made payments to Defendants and now seeks recovery of that 16 payment. 17 To the extent Plaintiff’s unjust enrichment claim is for recovery of money spent on 18 improvements to the Property, Plaintiff may be able to state a colorable claim depending 19 on the circumstances under which those improvements were made. Because of the 20 scant allegations relating to the improvements to the Property and expenses paid 21 relating to the Property, the Court cannot find that “[t]here is no unjust enrichment.” See 22 Bonneville Power Admin. V. Washington Public Power Supply Sys., 956 F.2d 1497, 23 1505 (9th Cir. 1992). The Court will therefore dismiss Plaintiff’s unjust enrichment claim 24 with leave to amend. 25 V. CONCLUSION The Court notes that the parties made several arguments and cited to several 26 27 cases not discussed above. The Court has reviewed these arguments and cases and 28 /// 8 1 determines that they do not warrant discussion as they do not affect the outcome of 2 Freddie Mac’s Motion. 3 It is therefore ordered that Freddie Mac’s Motion to Dismiss (ECF No. 19) is 4 granted. Plaintiff’s first two claims for violation of NRS § 107.080 and for declaratory 5 relief are dismissed with prejudice. Plaintiff’s third claim for unjust enrichment is 6 dismissed without prejudice and with leave to amend. Should Plaintiff wish to amend his 7 Complaint, he has fifteen (15) days to file an amended complaint to assert a claim for 8 unjust enrichment to cure the deficiencies identified in this Order. Failure to file an 9 amended complaint will result in dismissal of the third claim for unjust enrichment with 10 11 prejudice. DATED THIS 21st day of September 2016. 12 13 MIRANDA M. DU UNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9