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JPMorgan Chase Bank, N.A. v. Las Vegas Development Group, LLC

United States District Court, D. Nevada

March 21, 2014

JPMorgan Chase Bank, N.A., Plaintiff,
v.
Las Vegas Development Group, LLC, et al., Defendants.

ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

ANDREW P. GORDON, District Judge.

Before the Court is Plaintiff/Counter-Defendant JPMorgan Chase, N.A.'s ("Chase") Motion for Summary Judgment. [Dkt. #11.] For the reasons discussed below, Chase's motion is denied.

I. BACKGROUND

This case arises under Nevada statutes granting "super priority" status to portions of liens recorded by Homeowners Associations ("HOA") for unpaid assessments for the immediately preceding nine-months. Darren and Mandi Weiss purchased the property at issue in this case (the "Property") and executed a Note secured by a Deed of Trust ("DOT") in favor of First Horizon Home Loans ("First Horizon Mortgage"). First Horizon Mortgage transferred all beneficial interest in the DOT to Chase.

In March 2012, a Notice of Delinquent Assessment Lien was recorded against the Property. This lien allegedly included assessments for common expenses due during the nine months immediately preceding recordation of the lien. In June 2012, a Notice of Default and Election to Sell Under Homeowners Association Lien was recorded. In October 2012, a Notice of HOA Lien Foreclosure Sale was recorded. The HOA foreclosed on its lien and LVDG bought the Property at a publicly-held foreclosure sale in March 2013. Thereafter, Chase sued LVDG for declaratory relief and quiet title. LVDG countersued for the same. Chase moves for summary judgment arguing the HOA foreclosure sale did not extinguish its DOT.

II. LEGAL STANDARDS

A. MOTIONS FOR SUMMARY JUDGMENT

The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the facts before the court. Nw. Motorcycle Ass'n v. U.S. Dep't of Agric., 18 F.3d 1468, 1471 (9th Cir. 1994). Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986). "Viewing the evidence in the light most favorable to the non-moving party, the moving party has the burden to show that there are no genuine issues of material fact, and that it is entitled to judgment as a matter of law." UMG Recordings, Inc., 718 F.3d at 1014 (internal quotations and citations omitted).

"When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case." C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted). If the moving party fails to meet its initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60 (1970).

III. DISCUSSION

Chase's summary judgment motion is based entirely on the legal argument that the statutes in Chapter 116 of the Nevada Revised Statutes create a payment priority for the HOA, rather than a lien priority. On that basis, Chase argues that, while the HOA may be entitled to a priority payment of a portion of its lien amount, the HOA's lien itself is not entitled to priority, so the foreclosure did not extinguish Chase's DOT. Chase's interpretation is belied by the plain language of the statute; thus, Chase's argument fails and the motion is denied.

The Nevada Supreme Court has not addressed the statutory provisions at issue here. "Where the state's highest court has not decided an issue, the task of the federal courts is to predict how the state high court would resolve it." Giles v. Gen. Motors Acceptance Corp., 494 F.3d 865, 872 (9th Cir. 2007) (quotation omitted). "In answering that question, this court looks for guidance' to decisions by intermediate appellate courts of the state and by courts in other jurisdictions."[1] Id. (quotation omitted).

The Court also looks to Nevada rules of statutory construction to determine the meaning of a Nevada statute. In re First T.D. & Inv., Inc., 253 F.3d 520, 527 (9th Cir. 2001). Under Nevada law, a court should construe a statute to give effect to the legislature's intent. Richardson Constr., Inc. v. Clark Cnty. Sch. Dist., 156 P.3d 21, 23 (Nev. 2007). If the statute's plain language is unambiguous, that language controls. Id. If the statute's language is ambiguous, the Court "must examine the statute in the context of the entire statutory scheme, reason, and public policy to effect a construction that reflects the Legislature's intent." Id.

NRS Chapter 116, Nevada's version of the Uniform Common-Interest Ownership Act, sets forth the statutory framework for common interest communities such as HOAs. Nev. Rev. Stat. § 116.001; A.B. 221, Summary of Legislation, 66th Leg. (Nev. 1991). Section 116.3116(1) allows the HOA to record a lien "for any construction penalty that is imposed against the unit's owner pursuant to NRS 116.310305, any assessment levied against that unit or any fines imposed against the unit's owner from the time the construction penalty, assessment or fine becomes due." Recording the HOA's declaration of CC&Rs "constitutes record notice and perfection of the lien. No further recordation of any claim of lien for assessment under this section is required." Id. at § 116.3116(5). Additionally, unless the HOA's CC&Rs provide otherwise, "any penalties, fees, charges, late charges, fines and interest charged pursuant to [§ ...


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