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Bourne Valley Court Trust v. Wells Fargo Bank, N.A.

United States District Court, D. Nevada

January 23, 2015

BOURNE VALLEY COURT TRUST, Plaintiff,
v.
WELLS FARGO BANK, N.A., et al., Defendants

For Bourne Valley Court Trust, Plaintiff: Michael F. Bohn, LEAD ATTORNEY, Law Office of Michael F. Bohn, Las Vegas, NV.

For Wells Fargo Bank, N.A., Defendant: Chelsea Crowton, Wright, Finlay & Zak, LLP, Las Vegas, NV.

ORDER

PHILIP M. PRO, United States District Judge.

Presently before the Court is Plaintiff Bourne Valley Court Trust's Motion for Summary Judgment (Doc. #45), filed on September 26, 2014. Defendant Wells Fargo Bank, N.A. filed an Opposition (Doc. #48) on November 3, 2014. Plaintiff Bourne Valley Court Trust filed a Reply (Doc. #51) on December 1, 2014.

I. BACKGROUND

This case involves a dispute over whether a foreclosure sale conducted by a homeowners' association (" HOA" ) to collect unpaid HOA assessments extinguishes all junior liens, including a first deed of trust. The property at issue, located at 410 Horse Pointe Avenue, Las Vegas, Nevada, previously was owned by Defendant Renee Johnson. (Mot. for Summ. J. (Doc. #45) [" MSJ" ], Ex. 2 at 1.) The property was subject to a first deed of trust recorded in 2006, which identified Plaza Home Mortgage, Inc. as the lender. (Def. Wells Fargo Bank, N.A.'s Req. for Judicial Notice (Doc. #25) [" Req. for Judicial Notice" ], Ex. B at 1.) On March 7, 2011, Plaza Home Mortgage, Inc. assigned the deed of trust to Defendant Wells Fargo Bank, N.A. (" Wells Fargo" ). (Req. for Judicial Notice, Ex. C at 1.) Later that same date, Plaza Home Mortgage, Inc. recorded a notice of default and election to sell based on Defendant Johnson's deed of trust. (Req. for Judicial Notice, Ex. D.)

The property is subject to Covenants, Conditions and Restrictions (" CC& Rs" ) recorded in 2000 by The Parks Homeowners Association (" The Parks" ). (Def. Wells Fargo Bank, N.A.'s Opp'n to Pl.'s Mot. for Summ. J. (Doc. #48) [" Opp'n" ], Ex. B.) In August of2011, The Parks recorded a notice of delinquent assessment lien with respect to Johnson's property, and in October of 2011, The Parks initiated an HOA foreclosure sale of the property pursuant to Nevada Revised Statutes § 116.3116 et seq. to recover unpaid HOA assessments. (Req. for Judicial Notice, Ex. F, Ex. G.) The sale was conducted on May 7, 2012, at which Horse Pointe Avenue Trust purchased the property for $4,145.00. (MSJ, Ex. 2.) The HOA foreclosure deed was recorded with the Clark County Recorder on May 29, 2012. (Id.) The HOA foreclosure deed states that the foreclosure sale was conducted in compliance with all applicable notice requirements. (Id. at 1.) The same date, a grant deed from Horse Pointe Avenue Trust to Plaintiff Bourne Valley Court Trust (" Bourne Valley" ) was recorded with the Clark County Recorder. (MSJ, Ex. 1.) According to Wells Fargo, at the time of the HOA foreclosure sale, the property's assessed value was $90,543.00. (Opp'n, Ex. A.)

Bourne Valley brought suit in Nevada state court on January 16, 2013, asserting claims for quiet title and declaratory relief against Defendants. (Pet. for Removal (Doc. #1), Ex. A at 5-8, Ex. D at 4-6.) According to Bourne Valley, the foreclosure deed extinguished Wells Fargo's deed of trust and vested clear title in Bourne Valley, leaving Wells Fargo nothing to foreclose. (Id.) Defendant MTC Financial Inc. removed the action to this Court on April 17, 2013. (Pet. for Removal.)

Bourne Valley now moves for summary judgment on its claims, arguing Nevada Revised Statutes § 116.3116 and SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d 408 (Nev. 2014), provide an HOA with a lien for nine months' worth of unpaid HOA assessments that is superior to the first deed of trust, commonly referred to as the " super priority lien." Bourne Valley further argues that SFR Investments clarifies that under § 116.3116, foreclosure of an HOA super priority lien extinguishes all junior liens, including a first deed of trust. Bourne Valley therefore contends that Wells Fargo's first deed of trust was extinguished by the HOA foreclosure sale and that title to the property should be quieted in Bourne Valley's name.

Wells Fargo responds that Bourne Valley is not entitled to summary judgment because it does not provide evidence indicating that the HOA sale complied with the notice requirements of Nevada Revised Statues Chapter 116. Wells Fargo further argues that the HOA foreclosure sale was commercially unreasonable and therefore was void. Wells Fargo also argues Bourne Valley is not a bona fide purchaser because it purchased the property with knowledge of the previously-recorded CC& Rs, which contain a mortgage protection clause stating that a lender's deed of trust cannot be extinguished by an HOA foreclosure sale to satisfy a lien for delinquent assessments. Finally, Wells Fargo argues that because Bourne Valley does not provide evidence the HOA complied with all statutory notice requirements, Bourne Valley has not demonstrated that constitutional due process requirements were met.

Bourne Valley replies that the recitals in the trustee's deed upon sale stating there was compliance with all statutory notice requirements are conclusive proof that the HOA complied with the notice requirements. Bourne Valley further argues that Wells Fargo does not provide any evidence indicating it did not receive the required statutory notices. Regarding Wells Fargo's argument that the HOA foreclosure sale was commercially unreasonable, Bourne Valley replies that Chapter 116 does not require an HOA foreclosure sale to be commercially reasonable. Bourne Valley further argues that the inadequacy of the price is not sufficient to void the HOA foreclosure sale when there is no evidence of fraud, procedural defects, or other irregularities in the conduct of the sale. As for Wells Fargo's mortgage protection clause argument, Bourne Valley replies that the clause is unenforceable to the extent that it attempts to limit the super priority lien given to the HOA under § 116.3116. Finally, regarding Wells Fargo's due process argument, Bourne Valley replies that no state action is involved in a nonjudicial HOA foreclosure sale. Bourne Valley further argues the trustee's deed reciting compliance with all applicable notice requirements is conclusive proof that statutory notice requirements were met, and hence Wells Fargo received all process that was due.

II. DISCUSSION

Summary judgment is appropriate if the pleadings, the discovery and disclosure materials on file, and any affidavits " show[] that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a), (c). A fact is " material" if it might affect the outcome of a suit, as determined by the governing substantive law. Anderson v. Liberty Lobby, Inc.,477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue is " genuine" if sufficient evidence exists such that a reasonable fact finder could find for the non-moving party. Villiarimo v. Aloha Island Air, Inc.,281 F.3d 1054, 1061 (9th Cir. 2002). Initially, the moving party bears the burden of proving there is no genuine issue of material fact. Leisek v. Brightwood Corp.,278 F.3d 895, 898 (9th Cir. 2002). After the moving party meets its burden, the burden ...


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