957 F.3d 943
9th Cir.2020Background
- Kit Dansker obtained a Fannie Mae–owned mortgage in 2003 and died in 2009; no Nevada probate proceeding was opened and no personal representative was appointed.
- A Nevada HOA foreclosed on the property in 2013 and sold it to LN Management; FHFA (as conservator of Fannie Mae) and Fannie Mae never consented to the sale.
- LN Management filed a quiet-title action naming Dansker (deceased) and JPMorgan Chase (loan servicer); Chase removed to federal court asserting diversity and fraudulent joinder.
- LN sought substitution of the “Estate of Kit Dansker” but did not identify or join a legally appointed personal representative.
- The district court denied substitution, found diversity existed, granted dismissal under then-controlling Ninth Circuit precedent, and denied FHFA/Fannie summary judgment on the Federal Foreclosure Bar; on appeal the Ninth vacated, held a dead person cannot be sued, found diversity proper at removal, and held the Federal Foreclosure Bar applies.
Issues
| Issue | Plaintiff's Argument (LN) | Defendant's Argument (JPM/FHFA/Fannie) | Held |
|---|---|---|---|
| 1) Can a deceased person be sued or joined in federal court? | LN proceeded against Dansker (named as a party) and sought substitution of her estate. | Defendants argued a dead person has no legal existence and cannot be a party. | The court held a dead person cannot be sued or joined in their own right; prior citizenship of a dead person is irrelevant. |
| 2) Was there original diversity jurisdiction at removal? | LN argued removal never established diversity because it had attempted to join an in-state (deceased) defendant. | Defendants argued the deceased had no citizenship for §1332 purposes, so diversity existed. | The court held diversity existed at removal because a deceased individual is not a citizen for §1332. |
| 3) Should the district court have allowed substitution of the estate or a representative? | LN argued substitution or amendment should have been permitted (identified a purported daughter to be served). | Defendants and district court stressed no probate, no appointed representative, and that an 'estate' is not a legal entity. | The court held the district court did not abuse its discretion in denying substitution: an estate must be sued through a properly appointed representative, which LN failed to identify or procure. |
| 4) Does the Federal Foreclosure Bar (HERA) bar the HOA sale? | LN contested application or sufficiency of proof that FHFA/Fannie held a protectable interest at sale. | FHFA/Fannie argued the Federal Foreclosure Bar applies even if not record beneficiary, and their evidence can prove the interest. | The court held the Federal Foreclosure Bar applies here (FHFA/Fannie may prove interest with admissible evidence), which is fatal to LN's quiet-title claim; judgment vacated and remanded consistent with that holding. |
Key Cases Cited
- Berezovsky v. Moniz, 869 F.3d 923 (9th Cir. 2017) (treatment of Federal Foreclosure Bar and evidentiary showing of federal entities' interests)
- Fed. Home Loan Mortg. Corp. v. SFR Invs. Pool 1, LLC, 893 F.3d 1136 (9th Cir. 2018) (Federal Foreclosure Bar applies even when federal entity is not the record beneficiary)
- Bourne Valley Court Tr. v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016) (prior Ninth Circuit ruling on HOA foreclosure due process later declined by Nevada Supreme Court)
- SFR Invs. Pool 1, LLC v. U.S. Bank, 334 P.3d 408 (Nev. 2014) (Nevada Supreme Court held HOA foreclosure can extinguish a mortgage)
- SFR Invs. Pool 1, LLC v. Bank of New York Mellon, 422 P.3d 1248 (Nev. 2018) (Nevada Supreme Court clarified procedural protections and declined to follow Bourne Valley)
- In re Montierth, 354 P.3d 648 (Nev. 2015) (Nevada precedent on proof of mortgage interests relevant to Federal Foreclosure Bar)
- Mizukami v. Buras, 419 F.2d 1319 (5th Cir. 1969) (rule that substitution under Rule 25 is unavailable when defendant predeceased the filing)
- Esposito v. United States, 368 F.3d 1271 (10th Cir. 2004) (permitting substitution under Rule 17 for a deceased plaintiff in limited circumstances)
- House v. Mitra QSR KNE LLC, [citation="796 F. App'x 783"] (4th Cir. 2019) (deceased plaintiff lacks Article III standing; a suit by a dead person is a nullity)