United States District Court, D. Nevada
January 4, 2017
NATIONSTAR MORTGAGE, LLC, Plaintiff,
HOMETOWN WEST II HOMEOWNERS ASSOCIATION et al., Defendants.
C. JONES United States District Judge.
case arises out of a homeowner's association foreclosure
sale. Pending before the Court are a Motion to Reconsider
(ECF No. 54) and a Motion to Certify a Question of Law to
Nevada's Supreme Court (ECF No. 55).
FACTS AND PROCEDURAL HISTORY
2003, Third-Party Defendant David M. Holleb purchased real
property at 3208 Bradford Hill Ave., North Las Vegas, Nevada,
89031 (“the Property”), giving the lender a
promissory note in the amount of $242, 400 (“the
Note”), secured by a first deed of trust (“the
DOT”) against the Property. (See Compl.
¶¶ 8, 13, ECF No. 1). Plaintiff Nationstar
Mortgage, LLC (“Nationstar”) became the
beneficiary of the DOT by assignment in 2012. (See
Id. ¶ 14). Holleb defaulted on both the Note and
his obligations to Defendant Hometown West II Homeowners
Association (“the HOA”), and the HOA conducted a
foreclosure sale on August 13, 2013 at which Defendant SFR
Investments Pool I, LLC (“SFR”) purchased the
Property for $13, 000. (Id. ¶¶ 15, 17-29).
sued the HOA and SFR in this Court for: (1) quiet title; (2)
violation of the duty of good faith under Nevada Revised
Statutes section (“NRS”) 116.1113; and (3)
wrongful foreclosure. SFR filed counterclaims and third-party
claims for quiet title and slander of title.
moved to dismiss the Complaint for failure to exhaust
administrative remedies, and the Court denied the motion
because the affirmative defense of non-exhaustion did not
appear on the face of the Complaint. The Court noted that it
would be inclined to grant summary judgment in part if the
HOA could show that Nationstar had not sought mediation (as
required under state law) as to Nationstar's claim that
the HOA failed to apply the CC&R in good faith under NRS
moved for offensive summary judgment on its own claims and
for defensive summary judgment against SFR's
counterclaims. The HOA moved for defensive summary judgment
against Nationstar's claims. SFR moved for offensive
summary judgment on its counterclaims and third-party claims
and for defensive summary judgment against Nationstar's
claims. The Court granted offensive summary judgment to
Nationstar on its claim against the HOA under NRS 116.1113
and defensive summary judgment against SFR's
counterclaims for quiet title and slander of title. The Court
granted SFR offensive summary judgment on its third-party
claims against Holleb and RMC and defensive summary judgment
against Nationstar's claim for quiet title insofar as
that claim was based on the Due Process Clause of the
Fourteenth Amendment. The Court denied the HOA's motion.
After those summary judgment rulings, Nationstar's claim
for wrongful foreclosure against the HOA and its claim for
quiet title against SFR under Shadow Wood and
Levers remained for trial.
asked the Court to reconsider its grant of offensive summary
judgment to Nationstar on the claim under NRS 116.1113. The
Court declined to reconsider. It could not be said the Court
committed clear error in interpreting NRS 116.1206 not to be
retroactive to CC&R provisions the pre-date it, because
there is no controlling authority on the question.
Nationstar has asked the Court to reconsider its grant of
defensive summary judgment to the HOA and SFR against
Nationstar's claim for quiet title insofar as that claim
was based on the Due Process Clause of the Fourteenth
Amendment. The Court grants the motion based on the
intervention of contrary binding authority. See Bourne
Valley Court Tr. v. Wells Fargo Bank, N.A., 832 F.3d
1154, 1160 (9th Cir. 2016) (holding that Chapter 116's
notice scheme is facially unconstitutional under the Due
Process Clause of the Fourteenth Amendment). Judgment has not
yet been entered in this case, and Rule 60(b)(6) permits
case-by-case reconsideration based on an intervening change
in law even where judgment has been entered (assuming, of
course, that the district court has not lost jurisdiction due
to a pending appeal). See Phelps v. Alameida, 569
F.3d 1120, 1132-33 (9th Cir. 2009). Relief is warranted in
this case where the change in the law is clearly applicable,
the change is determinative of certain claims, and the case
remains in a pretrial posture. There is no basis not to
reconsider the Court's ruling in the face of certain
reversal on appeal (absent the Supreme Court's highly
improbable grant of a petition for certiorari and subsequent
reversal in the Bourne Valley case).
SFR asks the Court to certify the following question to the
Nevada Supreme Court: “Does NRS 116.31168(1)'s
incorporation of NRS 107.090 require homeowners'
associations to provide notices of sale to banks even when a
bank does not request notice?” The Court will not
certify the question. As the Court has ruled in a previous
case after careful analysis of the language of the statute,
the statute's legislative history, and the Nevada Supreme
Court's own language interpreting the statute's
operation, the answer is “no.” See U.S. Bank,
N.A. v. SFR Invs. Pool 1, LLC, 124 F.Supp.3d 1063,
1079-80 (D. Nev. 2015) (citing SFR Invs. Pool 1, LLC v.
U.S. Bank, N.A., 334 P.3d 408, 411 (Nev. 2014)). The
Court of Appeals has since ruled in accord. See Bourne
Valley Court Tr., 832 F.3d at 1159 (reasoning that NRS
116.31168's incorporation of NRS 107.090(3)-(4) would
render NRS 116.31163 and 116.311635 superfluous). Absent
intervening, contrary, binding authority, i.e., from the U.S.
or Nevada Supreme Courts, this Court is bound by the Court of
Appeals' rulings as to Nevada law. See Mohamed v.
Uber Techs., Inc., 836 F.3d 1102, 1111 (9th Cir. 2016).
notice is inapposite here, because a facially unconstitional
law is void, and the HOA was therefore simply without power
to extinguish Plaintiff's interest via the sale under
Chapter 116. See Journigan v. Duffy, 552 F.3d 283,
289 (9th Cir. 1977). And any conclusive presumption of notice
under state law would itself be facially infirm under the Due
Process Clause. Reasonable notice under the Due Process
Clause is a factual inquiry “under all the
circumstances” that cannot be obviated by legal
presumptions under state (or federal) law. See Jones v.
Flowers, 547 U.S. 220, 226-27 (2006) (quoting
Mullane v. Cent. Hanover Bank & Tr. Co., 339
U.S. 306, 314 (1950)); Mennonite Bd. of Missions v.
Adams, 462 U.S. 791, 799 (1983); see also United
States v. Simmons, 476 F.3d 33, 36-37 (9th Cir. 1973)
(holding that regulations establishing irrebuttable or
conclusive presumptions of receipt of mailed notices violate
due process). A statute that explicitly disregards the actual
factual circumstances of notice in favor of a conclusive
presumption would be facially infirm under the Due Process
Clause, at least where the thing to be noticed is an
impending loss of property rights.
HEREBY ORDERED that the Motion to Reconsider (ECF No. 54) is
GRANTED. Within fourteen (14) days, Plaintiff shall submit
either a proposed form of judgment or a notice of its intent
to prosecute the remaining claims for wrongful foreclosure
and/or the Shadow Wood and Levers issues.
FURTHER ORDERED that the Motion to Certify a Question of Law
to Nevada's Supreme Court (ECF No. 55) is DENIED.
 The fourth cause of action for
injunctive relief is not an independent cause of
 The second cause of action for
injunctive relief is not an independent cause of action.
Also, although titled “crossclaims, ” the claims
against Holleb and Realty Mortgage Corp. (“RMC”)
are in substance third-party claims because they are not
brought against the HOA (SFR's only