Opinion
Case No.: 2:15-cv-01325-RCJ-NJK
04-11-2017
ABSOLUTE BUSINESS SOLUTIONS, INC., a Delaware Corporation, Plaintiff, v. MORTGAGE ELECTRONIC REGISTRATION SYSTEM, an Illinois Corporation; BANK OF AMERICA, N.A., AS SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING, LP, a Texas Corporation; IRMA MENDEZ, an individual; FEDERAL NATIONAL MORTGAGE ASSOCIATION, a government sponsored enterprise; DOES 1 through 25 inclusive; and ROE CORPORATIONS, 1 through X, inclusive, Defendants. ALESSI & KOENIG, LLC, a Nevada Limited Liability Company, Plaintiff in Intervention, v. IRMA MENDEZ, an Individual; JAMES M. McCORD, an Individual; BANK OF AMERICA, N.A., AS SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING, LP, FKA COUNTRYWIDE HOME LOANS SERVICING, LP, a national banking association; CROSSBOX, an unknown entity; FEDERAL NATIONAL MORTGAGE ASSOCIATION, a government sponsored enterprise; DOE INDIVIDUALS I through X, inclusive; and ROE CORPORATIONS, I through X, inclusive, Defendants in Intervention. and FEDERAL HOUSING FINANCE AGENCY, as Conservator or Federal National Mortgage Association, Intervenor. FEDERAL NATIONAL MORTGAGE ASSOCIATION; and FEDERAL HOUSING FINANCE AGENCY, as Conservator of Federal National Mortgage Association, Counterclaimants, v. ABSOLUTE BUSINESS SOLUTIONS, INC., Counter-Defendant.
WRIGHT, FINLAY & ZAK, LLP Dana Jonathon Nitz, Esq. Nevada Bar No. 0050 Christina V. Miller, Esq. Nevada Bar No. 12448 7785 W. Sahara Avenue, Suite 200 Las Vegas, NV 89117 Tel: (702) 475-7964; Fax: (702) 946-1345 dnitz@wrightlegal.net; cmiller@wrightlegal.net Attorneys for Defendant/Defendant-in-Intervention/Counterclaimant Federal National Mortgage Association Leslie Bryan Hart, Esq. (SBN 4932) John D. Tennert, Esq. (SBN 11728) FENNEMORE CRAIG, P.C. 300 E. Second St., Suite 1510 Reno, Nevada 89501 Tel: 775-788-2228 Fax: 775-788-2229 lhart@fclaw.com; jtennert@fclaw.com Attorneys for Intervenor/Counterclaimant Federal Housing Finance Agency
WRIGHT, FINLAY & ZAK, LLP
Dana Jonathon Nitz, Esq.
Nevada Bar No. 0050
Christina V. Miller, Esq.
Nevada Bar No. 12448
7785 W. Sahara Avenue, Suite 200
Las Vegas, NV 89117
Tel: (702) 475-7964; Fax: (702) 946-1345
dnitz@wrightlegal.net; cmiller@wrightlegal.net
Attorneys for Defendant/Defendant-in-Intervention/Counterclaimant Federal National Mortgage Association Leslie Bryan Hart, Esq. (SBN 4932)
John D. Tennert, Esq. (SBN 11728)
FENNEMORE CRAIG, P.C.
300 E. Second St., Suite 1510
Reno, Nevada 89501
Tel: 775-788-2228 Fax: 775-788-2229
lhart@fclaw.com; jtennert@fclaw.com
Attorneys for Intervenor/Counterclaimant Federal Housing Finance Agency FEDERAL NATIONAL MORTGAGE ASSOCIATION'S AND FEDERAL HOUSING FINANCE AGENCY'S JOINT MOTION TO SUBSTITUTE AND JOIN AS COUNTER-DEFENDANT JOEL A. STOKES AND SANDRA F. STOKES AS TRUSTEES OF THE JIMIJACK IRREVOCABLE TRUST, PURSUANT TO FED. R. CIV. P. 25(c)
Intervenor Defendant/Defendant-in-Intervention/Counterclaimant, Federal National Mortgage Association ("Fannie Mae"), by and through its counsel of record, Dana Jonathon Nitz, Esq., and Christina V. Miller, Esq., of the law firm Wright, Finlay & Zak, LLP and Intervenor Defendant/Counterclaimant, Federal Housing Finance Agency ("FHFA"), by and through its counsel of record, Leslie Bryan Hart, Esq. and John D. Tennert, Esq., of the law firm Fennemore Craig, P.C., jointly submits this Motion to Substitute and Join as Counter-Defendant Joel A. Stokes and Sandra F. Stokes as Trustees of the Jimijack Irrevocable Trust, Pursuant to Fed. R. Civ. P. 25(c) ("Motion"), in order to substitute, in part, and join, in part, the current record owner of the subject property, Joel A. Stokes and Sandra F. Stokes as Trustees of the Jimijack Irrevocable Trust (collectively referred to herein as "Jimijack Trust").
MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
FHFA and Fannie Mae seek relief from this Court to substitute Jimijack Trust in place and stead of Plaintiff Absolute Business Solutions, Inc. ("ABS") with respect to the Quiet Title and Declaratory Relief causes of action alleged in Fannie Mae's Answer and Counterclaim [ECF No. 9] and the Quiet Title, Declaratory Relief and Preliminary Injunction causes of action alleged in FHFA's Answer and Counterclaim [ECF No. 18], and (ii) to join Jimijack Trust as a Counter-Defendant with respect to Fannie Mae's Counterclaim for Unjust Enrichment [ECF No.9]. Jimijack Trust is the current owner of record of the subject property, and, consequently, any quiet title judgment in this action should be entered against the current record owner.
This case involves the validity of a homeowner's association foreclosure sale on February 26, 2014 (the "HOA Sale") against the real property commonly described as 3416 Casa Alto Ave., Las Vegas, Nevada 89031 and designated by APN: 124-29-314-081 ("Property"). ABS is the third-party entity that purchased the Property as at the HOA Sale. ABS filed the instant action seeking to quiet title in its favor. As discussed in further detail below, since litigation commenced, ownership of the Property has allegedly been transferred to Jimijack Trust. As such, Jimijack Trust is the proper party-in-interest to the pending litigation and should be substituted in place and stead of ABS as to Fannie Mae's Counterclaims for Quiet Title and Declaratory Relief and FHFA's Counterclaims for Quiet Title, Declaratory Relief and Preliminary Injunction. Further, because Jimijack Trust enjoys the benefits of funds and resources expended to preserve the Property by Fannie Mae's loan servicer, Seterus, Inc. ("Seterus"), Jimijack Trust is also a proper party-in-interest in relation to Fannie Mae's counterclaim for Unjust Enrichment and Fannie Mae respectfully requests that the Court join Jimijack Trust as a Counter-Defendant to that cause of action. Fannie Mae and FHFA respectfully request that the case caption is then amended accordingly.
STATEMENT OF FACTS
a. The Mendez Loan
Fannie Mae is the current beneficiary of record under the Deed of Trust signed by Irma Mendez (hereinafter "Mendez"), recorded on April 8, 2005 (hereinafter, the "Deed of Trust"), and which encumbers the Property and secures repayment of a promissory note.
The Deed of Trust executed by Mendez identified KH Financial L.P. as the Lender, Equity Title of Nevada as the Trustee, Mortgage Electronic Registration Systems, Inc. ("MERS") as beneficiary acting solely as a nominee for Lender and Lender's successors and assigns, and secured a loan in the amount of $252,792.00 (hereinafter the "Mendez Loan"). On October 22, 2009, a Corporation Assignment of Deed of Trust to BAC Home Loans Servicing, LP FKA Countrywide Home Loans Servicing LP ("BANA") was recorded against the Property. On November 13, 2014, a Corporate Assignment of Deed of Trust to Fannie Mae was recorded against the Property.
A true and correct copy of the Deed of Trust recorded with the Clark County Recorder's Office as Book and Instrument Numbers 20050408-0004993 is attached to ECF No. 9 as Exhibit B. All other recordings stated hereafter are recorded in the same manner. This Court may take judicial notice of publicly recorded documents. FRE 201(b); United States v. Howard, 381 F.3d 873, 876n.1 (9th Cir. 2004).
A true and correct copy of the Corporate Assignment of Deed of Trust recorded as Book and Instrument Number 20091022-0000409, is attached to ECF No. 9 as Exhibit C.
A true and correct copy of the Corporate Assignment of Deed of Trust recorded as Book and Instrument Number 20141113-0003739, is attached to ECF No. 9 as Exhibit D.
b. The Foreclosure Sale
Public records show that on March 13, 2013, a Notice of Delinquent Assessment (Lien) was recorded against the Property by Alessi & Koenig, LLC (the "HOA Trustee") on behalf of the Fiesta Del Norte Homeowners Association (the "HOA"). Public records show that a Notice of Default and Election to Sell Under Homeowners Association Lien was recorded against the Property by the HOA Trustee on behalf of the HOA on June 13, 2013. Public records show that on July 5, 2013, a second Notice of Default and Election to Sell Under Homeowners Association Lien was recorded against the Property by the HOA Trustee on behalf of the HOA. Public records show that on December 20, 2013, a Notice of Trustee's Sale was recorded against the Property by the HOA Trustee on behalf of the HOA.
A true and correct copy of the Notice of Delinquent Assessment (Lien) recorded as Book and Instrument Number 20130313-0004837, is attached to ECF No. 9 as Exhibit E.
A true and correct copy of the Notice of Default and Election to Sell Under Homeowners Association Lien recorded as Book and Instrument Number 20130613-0001806 is attached to ECF No. 9 as Exhibit F.
A true and correct copy of the second Notice of Default and Election to Sell Under Homeowners Association Lien recorded as Book and Instrument Number 20130705-0000952 is attached to ECF No. 9 as Exhibit G.
A true and correct copy of the Notice of Trustee's Sale recorded as Book and Instrument Number 20131220-0001348, is attached to ECF No. 9 as Exhibit H.
Pursuant to that Notice of Trustee's Sale, a non-judicial foreclosure sale occurred on February 26, 2014. The HOA Trustee recorded a Trustee's Deed Upon Sale whereby ABS acquired its interest, if any, in the Property for $20,600.00. The Foreclosure Deed was recorded on March 3, 2014.
A true and correct copy of the Trustee's Deed Upon Sale recorded as Book and Instrument Number 20140303-0003787, is attached to ECF No. 9 as Exhibit I.
On September 15, 2015, a Quitclaim Deed from BAS to Jimijack Trust was recorded against the Property.
A true and correct copy of the Quitclaim Deed recorded as Book and Instrument Number 201509150002030, is attached hereto as Exhibit 1.
c. Pending Litigation
On March 17, 2014, ABS filed its Complaint for Quiet Title and Declaratory Relief against BANA and Mendez, among others, in State Court, Case No. A-14-697792-C. [ECF No. 3-2]. Fannie Mae intervened as a Defendant on June 4, 2015 by stipulation of the parties and removed the action to United States District Court for the District of Nevada on July 13, 2015 [ECF No. 1]. On August 21, 2015, Fannie Mae filed its Answer and Counterclaim, asserting counterclaims against ABS for Declaratory Relief, Quiet Title and Unjust Enrichment. [ECF No.9]. On September 23, 2015, FHFA intervened as a Defendant [ECF No. 17] and filed its Answer and Counterclaim, on September 24, 2015, asserting counterclaims against ABS for Quiet Title, Declaratory Relief and Preliminary Injunction. [ECF No. 18].
As this Court is aware, there are two other pending and related lawsuits concerning the HOA Sale. The first-filed action, 2:15-cv-00314-RCJ-NLK (the "First Action"), was brought by Mendez against the HOA, the HOA Trustee, ABS, Amir Hujjutallah (a purported principal of ABS) and the HOA's community manager. The latest-filed action, Case No. 2:16-cv-01077-RCJ-NJK (the "Third Action"), was filed by Mendez against Wright, Finlay & Zak, LLP ("WFZ"), Seterus, Fannie Mae and Jimijack Trust. Mendez alleged non-quiet title causes of action against WFZ, Seterus and Fannie Mae, but alleged quiet title against Jimijack Trust.
The three actions were reassigned to Judge Robert Jones on July 8, 2016 [ECF No. 53] and, on December 9, 2016 during Calendar Call in matter 2:15-cv-00314, were subsequently consolidated for the purpose of trial [ECF No. 62].
II. THIS COURT SHOULD SUBSTITUTE AND JOIN JIMIJACK TRUST AS THE CURRENT RECORD OWNER OF THE PROPERTY, PURSUANT TO FED. R. CIV. P. 25(c)
Fed. R. Civ. P. 25(c) permits a person to make a motion to substitute party in any case "[i]f an interest is transferred...." In these circumstances, "the action may be continued by or against the original party, unless the court, on motion, orders the transferee to be substituted in the action or joined with the original party." As this Court has previously explained:
The most significant feature of Rule 25(c) is that it does not require that anything be done after an interest has been transferred. The action may be continued by or against the original party, and the judgment will be binding on his successor in interest even though he is not named. An order of joinder is merely a discretionary determination by the trial court that the transferee's presence would facilitate the conduct of litigation.Campbell v. Estate of Kilburn, 2014 U.S. Dist. LEXIS 99463, at *3-4 (D. Nev. July 21, 2014) (citing In re Bernal, 207 F.3d 595, 598 (9th Cir. 2000) (quoting 7C Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, FEDERAL PRACTICE AND PROCEDURE § 1958 (2d Ed. 1986)). In other words, this Court is vested with broad discretion to grant a motion for substitution pursuant to Fed. R. Civ. P. 25(c) if the Court believes that transferee's presence would facilitate the conduct of litigation. See Luxliner P.L. Exp. Co. v. RDI/Luxliner, Inc., 13 F.3d 69, 72 (3rd Cir. 1993) (citing Froning's, Inc. Johnston Feed Service, Inc., 568 F.2d 108, 110 (8th Cir. 1978); 7C WRIGHT & MILLER § 1958 at 557; 3B Moore, MOORE'S FEDERAL PRACTICE § 25.08 at 25-58-25-63 (1993)).
Fannie Mae and FHFA submit that good cause exists to substitute and join Jimijack as a Counter-Defendant, as described above, pursuant to Fed. R. Civ. P. 25(c). Jimijack Trust is a party to the Third Action and its predecessor-in-interest, ABS, is involved in the instant action, as well as the First Action. Further, the request to substitute and join Jimijack Trust cannot come as a surprise to Jimijack Trust, nor should be construed to prejudice Jimijack Trust, as the Property was quitclaimed to Jimijack in September 2015, approximately 18 months after ABS initiated quiet title litigation concerning the Property. ABS and Jimijack Trust are represented by the same counsel. Jimijack Trust knew, or at the very minimum had record knowledge, that there was pending litigation concerning title to the Property, by virtue of the Lis Pendens recorded against the Property on behalf of ABS on March 31, 2014 and on behalf of Fannie Mae on September 1, 2015, and should have moved of its own accord to substitute in place of ABS as Plaintiff in the above-identified action.
In addition, Jimijack Trust should be joined as a Counter-Defendant with ABS as to Fannie Mae's Unjust Enrichment counterclaim because it currently benefits from any funds and resources expended to preserve the condition and value of the Property, expended from the time that Jimijack Trust obtained its interest in the Property through resolution of the pending litigation. Unlike the quiet title and declaratory relief claims, however, the relevant property interest underlying Fannie Mae's Unjust Enrichment counterclaim is distinct and unrelated to whether the Deed of Trust is deemed extinguished by the HOA Sale or not. To the extent ABS received value pursuant to Seterus' payment of taxes and insurance on the Property after the HOA Sale, Jimijack Trust will now continue to receive such benefit going forward as Seterus continues to pay taxes and insurance. Accordingly, it is appropriate to name both ABS and Jimijack Trust as Counter-Defendants to Fannie Mae's Counterclaim for Unjust Enrichment.
III. CONCLUSION
Based upon the foregoing, FHFA and Fannie Mae respectfully request that the Court order Jimijack Trust to substitute into the case in place of ABS as Counter-Defendant to Fannie Mae's Counterclaims for Quiet Title and Declaratory Relief and FHFA's Counterclaims for Quiet Title, Declaratory Relief and Preliminary Injunction. Further, Fannie Mae requests that Jimijack Trust be joined as a Counter-Defendant with ABS to Fannie Mae's Counterclaim for Unjust Enrichment. Lastly, Fannie Mae and FHFA respectfully request that the case caption is amended accordingly.
DATED this 17th day of January, 2017. WRIGHT, FINLAY & ZAK, LLP /s/ Christina V. Miller, Esq.
Dana Jonathon Nitz, Esq. (SBN 0050)
Christina V. Miller, Esq. (SBN 12448)
7785 W. Sahara Ave., Suite 200
Las Vegas, NV 89117
Tel: 702-475-7964 Fax 702-946-1345
dnitz@wrightlegal.net
cmiller@wrightlegal.net
Attorneys for Federal National Mortgage Association
FENNEMORE CRAIG, P.C.
/s/ Leslie Bryan Hart, Esq.
Leslie Bryan Hart, Esq. (SBN 4932)
John D. Tennert, Esq. (SBN 11728)
300 E. Second St., Suite 1510
Reno, Nevada 89501
Tel: 775-788-2228 Fax: 775-788-2229
lhart@fclaw.com
jtennert@fclaw.com
Attorneys for Federal Housing Finance Agency IT IS SO ORDERED this 11th day of April, 2017. /s/_________
ROBERT C. JONES
CERTIFICATE OF SERVICE
Pursuant to Fed. R. Civ. P. 5(b) and Electronic Filing Procedure IV(B), I certify that on the 17th day of January, 2017, a true and correct copy of FEDERAL NATIONAL MORTGAGE ASSOCIATION'S AND FEDERAL HOUSING FINANCE AGENCY'S JOINT MOTION TO SUBSTITUTE AND JOIN AS COUNTER-DEFENDANT JOEL A. STOKES AND SANDRA F. STOKES AS TRUSTEES OF THE JIMIJACK IRREVOCABLE TRUST, PURSUANT TO FED. R. CIV. P. 25(c) was transmitted electronically through the Court's e-filing electronic notice system to the attorney(s) associated with this case. If electronic notice is not indicated through the court's e-filing system, then a true and correct paper copy of the foregoing document was delivered via U.S. Mail. Darren T. Brenner darren.brenner@akerman.com Vatana Lay vatana.lay@akerman.com Irma Mendez centuryhomes90@gmail.com Joseph Y. Hong yosuphonglaw@gmail.com Matthew I. Knepper matthew.knepper@akerman.com Steven T. Loizzi, Jr steve@nrs116.com Dana Jonathon Nitz dnitz@wrightlegal.net Leslie Bryan Hart lhart@fclaw.com John Tennert jtennert@fclaw.com
Notice has been delivered by other means to:
Crossbox James M. McCord
/s/ Brandon Lopipero
An Employee of Wright, Finlay & Zak, LLP
INDEX OF EXHIBITS
| ExhibitNo. | Description of Exhibit | Page No.'s |
|---|---|---|
| 1 | Quitclaim Deed, recorded on September 15, 2015, as Bookand Instrument Number 201509150002030 | 4 |
Exhibit 1
Quitclaim Deed
Exhibit 1
Quitclaim Deed
Exhibit 1
Quitclaim Deed
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