G & P Investment Enterprises, LLC v. Wells Fargo Bank, N.A.
199 F. Supp. 3d 1266
D. Nev.2016Background
- In 2004 George H. Barney III obtained a Wells Fargo loan secured by a deed of trust on 3414 Manzano Circle; Freddie Mac purchased the loan on November 23, 2004, with Wells Fargo servicing.
- The HOA recorded a delinquent assessment lien in March 2012, a notice of default in April 2012, and foreclosed on the superpriority lien on July 31, 2013; G&P purchased the property at the HOA sale and recorded the foreclosure deed.
- G&P sued in Nevada state court seeking quiet title and declaratory relief, asserting the HOA sale extinguished prior interests; defendants removed the case and Wells Fargo, Freddie Mac, and FHFA counterclaimed.
- Defendants moved for summary judgment arguing 12 U.S.C. § 4617(j)(3) (HERA) prevents FHFA property from being extinguished by foreclosure without FHFA consent; plaintiff cross-moved relying on Nevada law (NRS 116.3116) and SFR Investments.
- The court found Freddie Mac held the loan before the HOA foreclosure (supported by a Freddie Mac affidavit and MIDAS printout) and that FHFA, as conservator, had not consented to extinguishment.
- Holding: FHFA’s statutory protection under § 4617(j)(3) preempts the HOA foreclosure’s effect; the HOA sale did not extinguish Freddie Mac’s deed of trust. Defendants’ motion granted; plaintiff’s motion denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an HOA superpriority foreclosure extinguished the first deed of trust | SFR and NRS 116.3116 govern; HOA foreclosure extinguishes prior deed of trust | HERA § 4617(j)(3) prevents extinguishment of FHFA property without FHFA consent | The HOA sale did not extinguish Freddie Mac's deed of trust because FHFA did not consent |
| Whether Freddie Mac held an interest at time of HOA sale | Freddie Mac/FHFA lacked proof of ownership at foreclosure | Freddie Mac owned the loan since 2004; FHFA succeeded to its rights as conservator | Court credited Freddie Mac affidavit and system records showing ownership at time of sale |
| Whether § 4617(j)(3) preempts Nevada HOA foreclosure law | NRS 116.3116 controls and SFR requires extinguishment | § 4617(j)(3) bars foreclosure/attachment of FHFA property without consent, preempting state law | § 4617(j)(3) applied and prevented extinguishment; federal statute supersedes state law in this context |
| Entitlement to summary judgment | G&P contends no genuine issue and is entitled under SFR/NRS | Defendants contend they are entitled because federal law protects Freddie Mac/FHFA interests | Court granted defendants summary judgment and denied G&P's cross-motion |
Key Cases Cited
- SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d 408 (Nev. 2014) (Nevada Supreme Court holding HOA superpriority foreclosure can extinguish a first deed of trust under state law)
- Skylights LLC v. Byron, 112 F. Supp. 3d 1145 (D. Nev. 2015) (applying § 4617(j)(3) to bar HOA foreclosure from extinguishing conservator-held interests)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standard; movant may meet burden by showing nonmoving party lacks sufficient evidence)