Ditech Financal LLC v. American West Village II Owners Association
2:17-cv-02164
D. Nev.Apr 27, 2018Background
- Property at 8829 Cornwall Glen Ave., Las Vegas was subject to a deed of trust on a loan owned by Fannie Mae; Ditech was the loan servicer.
- HOA (American West Village II Owners Association), through NAS, recorded delinquent assessment lien, notice of default, and conducted a non-judicial foreclosure sale on May 9, 2017.
- Saticoy Bay purchased the property at the HOA sale and received a foreclosure deed in July 2017.
- Plaintiffs (Ditech and Fannie Mae) sued to quiet title and obtain declaratory relief, alleging the HOA sale could not extinguish Fannie Mae’s deed of trust because FHFA, as conservator, did not consent to foreclosure under 12 U.S.C. § 4617(j)(3).
- Lower-court motions: plaintiffs moved for summary judgment; Saticoy Bay moved to dismiss. The court resolved both.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 12 U.S.C. § 4617(j)(3) (the "federal foreclosure bar") prevents the HOA foreclosure from extinguishing Fannie Mae's deed of trust | Federal foreclosure bar preempts state law and protects Fannie Mae's interest because FHFA, as conservator, succeeded to Fannie Mae's rights and did not consent to foreclosure | HOA sale valid under Nevada law; no admissible evidence Fannie Mae held an interest on sale date | Held for plaintiffs: federal foreclosure bar prevents extinguishment; plaintiffs entitled to summary judgment on quiet title/declaratory relief |
| Whether Ditech (servicer) has standing to assert the federal foreclosure bar on behalf of Fannie Mae | Ditech, as Fannie Mae’s servicer/agent, may assert federal preemption to protect Fannie Mae’s interest | Saticoy Bay disputed standing and sufficiency of proof of Fannie Mae’s interest | Held for plaintiffs: servicer has standing to assert preemption; Ditech can press the claim |
| Whether plaintiffs presented sufficient evidence of Fannie Mae's interest at time of sale | Business records and supporting declaration established Fannie Mae’s acquisition/servicing history | Saticoy Bay offered no evidence to contradict plaintiffs and argued records were insufficient | Held for plaintiffs: court relied on business records (per Berezovsky) and found no material dispute |
| Whether Saticoy Bay's motion to dismiss plaintiffs' claims should be granted | N/A (plaintiffs opposed dismissal) | Argued claims fail to state a claim | Held: motion to dismiss denied as summary judgment resolved quiet title/declaratory claims in plaintiffs' favor |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- Lujan v. National Wildlife Federation, 497 U.S. 871 (summary judgment: construe facts for nonmoving party)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (summary judgment burden-shifting)
- T.W. Electric Service, Inc. v. Pacific Electric Contractors Ass'n, 809 F.2d 626 (showing factual dispute for trial)
- C.A.R. Transp. Brokerage Co. v. Darden Restaurants, Inc., 213 F.3d 474 (movant’s burden when it would bear trial burden)
- Adickes v. S.H. Kress & Co., 398 U.S. 144 (summary judgment standards)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard and two-step test)
- Starr v. Baca, 652 F.3d 1202 (post-Iqbal pleading guidance)
- Berezovsky v. Moniz, 869 F.3d 923 (Ninth Circuit: business records and servicer evidence suffice to establish conservator-protected interest)
- Skylights LLC v. Fannie Mae, 112 F. Supp. 3d 1145 (D. Nev. 2015) (federal foreclosure bar preempts state law HOA foreclosure)