United States District Court, D. Nevada
before the court is intervenor Bank of America, N.A.'s
(“BANA”) motion for summary judgment (ECF No.
110) and counter/cross-claimant SFR Investments Pool 1,
LLC's (“SFR”) motion for summary judgment
(ECF No. 111). Corresponding responses have been filed by
defendant Buena Vista Homeowners Association (“the
HOA”), BANA, and SFR. (ECF Nos. 112-14). Parties have
filed replies. (ECF Nos. 115, 119).
before the court is SFR's motion to certify a question of
law to Nevada's Supreme Court. (ECF No. 127). BANA filed
a response (ECF No. 130), and SFR filed a reply. (ECF No.
case involves the non-judicial foreclosure of the real
property at 7617 Amato Avenue, Las Vegas, Nevada (the
“property”) based on a homeowners'
association lien. Relevant to the instant analysis, on
October 17, 2011, “Mortgage Electronic Registration
Systems, Inc. . . . assigned its interest in the senior deed
of trust to BANA via an assignment of deed of trust.”
(ECF No. 110 at 4); see also (ECF No. 110-3).
subsequently assigned the senior deed of trust to Bayview
Loan Servicing, LLC ([“]Bayview[“]) via an
assignment of deed of trust recorded on February 18,
2014.” (ECF No. 110 at 4). However, Bayview then
reassigned the deed of trust back to BANA, and that
transaction was recorded on August 31, 2015. (Id.).
April 5, 2011, the HOA acted through its trustee, Nevada
Association Services, Inc. (“NAS”), to
“record a notice of delinquent assessment lien
against the property.” (Id.). On June 29,
2011, NAS recorded a notice of default on behalf of the HOA.
(ECF No. 110-7). “On June 30, 2011, after Buena Vista
recorded its notice of default, BANA requested the super
priority amount of Buena Vista's lien from NAS.”
(ECF No. 110 at 5).
responded by indicating an amount of $2, 900.25, but that
value did not itemize the balance on the super-priority lien.
(Id.). BANA calculated the super-priority amount for
itself and attempted tender of $571.50. (Id.).
However, NAS rejected that tender. (Id.).
December 12, 2011, NAS recorded a notice of foreclosure sale,
and the underlying property was sold on August 10, 2012.
(Id.). “SFR purchased the property at the sale
for $7, 000.” (Id.).
complaint was filed by Bayview on November 7, 2014. (ECF No.
1). On March 13, 2015, SFR filed an answer to the complaint
and asserted cross- and counterclaims for quiet title and
injunctive relief. (ECF No. 41).
October 29, 2015, BANA filed a motion to intervene in this
action, asserting the following: “BANA is the current
beneficiary of the first-recorded deed of trust on the
property . . . at issue in this case, by virtue of an
assignment of deed of trust from plaintiff [Bayview] to BANA,
dated August 24, 2015, ” that was recorded on August
31, 2015. (ECF No. 76 at 2). Magistrate Judge Foley granted
that motion on November 25, 2015. (ECF No. 78).
subsequently answered SFR's counterclaim and cross-claim
in intervention, asserting its own claims as follows: (1) a
declaratory judgment against SFR, HOA, and NAS setting aside
the foreclosure sale on constitutional and bankruptcy
grounds; (2) breach of Nevada Revised Statute
(“NRS”) 116.1113 against Buena Vista; (3)
wrongful foreclosure against Buena Vista and NAS; (4)
injunctive relief against SFR; and (5) unjust enrichment
against NAS. (ECF No. 79).
corresponding motion for summary judgment argues that its
tender was sufficient to redeem its senior position; the
foreclosure sale was commercially unreasonable; SFR is not a
bona fide purchaser; SFR Investments Pool 1, LLC
v. U.S. Bank, N.A., 334 P.3d 408 (2014), should not be
applied retroactively; the state-law grounds for the
foreclosure sale give way to federal interests; and NRS
chapter 116 is facially unconstitutional. (ECF No. 110).
motion for summary judgment asserts that the first deed of
trust was extinguished by the non-judicial foreclosure sale;
BANA should not enjoy an equitable remedy; title has vested
with SFR for lack of evidence showing fraud, unfairness, or
oppression; SFR is a bona fide purchaser; the
original borrower's interest is extinguished; FHA
insurance makes no difference in this case; and
plaintiff's lis pendens on the property should
be expunged. (ECF No. 111).
Federal Rules of Civil Procedure allow summary judgment when
the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any,
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). A principal purpose
of summary judgment is “to isolate and dispose of
factually unsupported claims . . . .” Celotex Corp.
v. Catrett, 477 U.S. 317, 323- 24 (1986).
purposes of summary judgment, disputed factual issues should
be construed in favor of the non-moving party. Lujan v.
Nat'l Wildlife Fed., 497 U.S. 871, 888 (1990).
However, to be entitled to a denial of summary judgment, the
non-moving party must “set forth specific facts showing
that there is a genuine issue for trial.” Id.
determining summary judgment, the court applies a
burden-shifting analysis. “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.” C.A.R. Transp. Brokerage Co. v. Darden
Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000).
Moreover, “[i]n 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.”
contrast, when the non-moving party bears the burden of
proving the claim or defense, the moving party can meet its
burden in two ways: (1) by presenting evidence to negate an
essential element of the non-moving party's case; or (2)
by demonstrating that the non-moving party failed to make a
showing sufficient to establish an element essential to that
party's case on which that party will bear the burden of
proof at trial. See Celotex Corp., 477 U.S. at
323-24. If the moving party fails to meet its initial burden,
summary judgment must be denied and the court need not
consider the non-moving party's evidence. See Adickes
v. S.H. Kress & Co., 398 U.S. 144, 159- 60 (1970).
moving party satisfies its initial burden, the burden then
shifts to the opposing party to establish that a genuine
issue of material fact exists. See Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986). To establish the existence of a factual dispute, the
opposing party need not establish a material issue of fact
conclusively in its favor. It is sufficient that “the
claimed factual dispute be shown to require a jury or judge
to resolve the parties' differing versions of the truth
at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec.
Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.
Ninth Circuit has held that information contained in an
inadmissible form may still be considered for summary
judgment if the information itself would be admissible at
trial. Fraser v. Goodale, 342 F.3d 1032, 1036 (9th
Cir. 2003) (citing Block v. City of Los Angeles, 253
F.3d 410, 418-19 (9th Cir. 2001) (“To survive summary
judgment, a party does not necessarily have to produce
evidence in a form that would be admissible at trial, as long
as the party satisfies the requirements of Federal Rules of
Civil Procedure 56.”)).
initial matter, BANA argues in its motion for summary
judgment that SFR Investments should not be applied
retroactively. (ECF No. 110).
Nevada Supreme Court has since applied the SFR
Investments holding in numerous cases that challenged
pre-SFR Investments foreclosure sales. See,
e.g., Centeno v. Mortg. Elec. Registration Sys.,
Inc., No. 64998, 2016 WL 3486378, at *2 (Nev. June 23,
2016); LN Mgmt. LLC Series 8301 Boseck 228 v. Wells Fargo
Bank, N.A., No. 64495, 2016 WL 1109295, at *1 (Nev. Mar.
18, 2016) (reversing 2013 dismissal of quiet-title action
that concluded contrary to SFR Investments,
reasoning that “the district court's decision was
based on an erroneous interpretation of the controlling
law”); Mackensie Family, LLC v. Wells Fargo Bank,
N.A., No. 65696, 2016 WL 315326, at *1 (Nev. Jan. 22,
2016) (reversing and remanding because “[t]he district
court's conclusion of law contradicts our holding in
SFR Investments Pool 1 v. U.S. Bank”). Thus,
SFR Investments applies to this case. Accordingly,
the court rejects BANA's argument as to this question.
Constitutional validity of sale
the property clause of the United States Constitution, only
“Congress shall have the power to dispose of and make
all needful rules and regulations respecting the territory or
other property belonging to the United States . . . .”
U.S. Const. Art. IV, § 3, cl. 2. The supremacy clause
provides that the “Constitution . . . shall be the
supreme law of the land . . . .” U.S. Const. Art. VI,
cl. 2. “State legislation must yield under the
Supremacy Clause of the Constitution to the interests of the
federal government when the legislation as applied interferes
with the federal purpose or operates to impede or condition
the implementation of federal policies and programs.”
Rust v. Johnson, 597 F.2d 174, 179 (9th Cir. 1979).
Rust, the Ninth Circuit held that a city's
foreclosure on property insured by the Federal National
Mortgage Association was invalid under the supremacy clause.
The court reasoned that upholding the sale “would run
the risk of substantially impairing the Government's
participation in the home mortgage market and of defeating
the purpose of the National Housing Act.” Id.
basis, courts consistently apply federal law, ignoring
conflicting state law, when determining rights related to
federally owned and insured loans. United States v.
Stadium Apartments, Inc., 425 F.2d 358, 362 (9th Cir.
1970) (holding that federal law applies to mortgages insured
by the Federal Housing Administration (“FHA”)
“to assure the protection of the federal program
against loss, state law to the contrary
notwithstanding”); see also United States v.
Victory Highway Vill., Inc., 662 F.2d 488, 497 (8th Cir.
1981) (citing Ninth Circuit case law) (“We note that
federal law, not [state] law, governs the rights and
liabilities of the parties in cases dealing with the remedies
available upon default of a federally held or insured
loan.”). Foreclosure on federal property is prohibited
where it interferes with the statutory mission of a federal
agency. See United States v. Lewis Cnty., 175 F.3d
671, 678 (9th Cir. 1999) (holding that the state could not
foreclose on federal Farm Service Agency property for
non-payment of taxes).
federal district courts in this circuit have set aside HOA
foreclosure sales on supremacy clause grounds in cases
involving federally insured loans. Saticoy Bay LLC,
Series 7342 Tanglewood Park v. SRMOF II 2012-1 Trust,
No. 2:13-cv-1199-JCM-VCF, 2015 WL 1990076, at *1 (D. Nev.
Apr. 30, 2015); see also Sec'y of Hous. & Urban
Dev. v. Sky Meadow Ass'n, 117 F.Supp.2d 970, 982
(C.D. Cal. 2000) (voiding HOA's non-judicial foreclosure
on HUD property, quieting title in HUD's favor based on
property and supremacy clauses); Yunis v. United
States, 118 F.Supp.2d 1024, 1027, 1036 (C.D. Cal. 2000)
(voiding HOA's non-judicial foreclosure sale of property
purchased under veteran's association home loan guarantee
program); Wash. & Sandhill Homeowners Ass'n v.
Bank of Am., N.A., No. 2:13-cv-01845-GMN-GWF, 2014 WL
4798565, at *6 (D. Nev. Sept. 25, 2014) (holding that
property and supremacy clauses barred foreclosure sale where
mortgage interest was federally insured).
single-family mortgage insurance program allows FHA to insure
private loans, expanding the availability of mortgages to
low-income individuals wishing to purchase homes. See Sky
Meadow Ass'n, 117 F.Supp.2d at 980-81 (discussing
program); Wash. & Sandhill Homeowners Ass'n,
2014 WL 4798565, at *1 n.2 (same). If a borrower under this
program defaults, the lender may foreclose on the property,
convey title to HUD, and submit an insurance claim. 24 C.F.R.
203.355. HUD's property disposition program generates
funds to finance the program. See 24 C.F.R. §
the instant claims to quiet title are not directed at FHA.
See (ECF Nos. 41, 79). Therefore, this court finds
that plaintiff does not have standing to assert this claim
under the supremacy clause. See, e.g., JPMorgan
Chase Bank, N.A. v. SFR Investments Pool 1, LLC, 200
F.Supp.3d 1141, 1162-64 (D. Nev. 2016); Freedom Mortg.
Corp. v. Las Vegas Dev. Grp., LLC, 106 F.Supp.3d 1174,
1177 (D. Nev. 2015); see also Bank of America, N.A. v.
Hollow de Oro Homeowners Association, et al., No.
2:16-CV-675-JCM-VCF, 2017 WL 936633, at *3 (D. Nev. Mar. 9,