United States District Court, D. Nevada
JOHN R. KIELTY, Plaintiff,
FEDERAL HOME LOAN MORTGAGE CORP. et al., Defendants.
C. JONES United States District Judge
case arises out of a condominium unit owners' association
foreclosure sale and the attempts of the holders of a first
deed of trust to foreclose against the same unit thereafter.
Pending before the Court are three motions for summary
judgment and a motion to reconsider.
FACTS AND PROCEDURAL HISTORY
2004, Joel B. Edralin purchased real property at 2181 Hussium
St., Unit 108, Las Vegas, Nevada, 89108 (“the
Property”), giving a $145, 400 promissory note
(“the Note”) and deed of trust (“the
DOT”) to Charter Funding (“Charter”).
(See Compl. ¶¶ 2, 6, 13-14, ECF No. 1, at
10). A declaration of covenants, conditions, and restrictions
(“the CC&R”) was recorded by Counterdefendant
Rancho Lake Condominiums Unit-Owners Association (“the
CUOA”) before the DOT. (See Id. ¶¶
9-10). Edralin failed to pay unit assessments under the
CC&R, and the CUOA recorded a notice of assessment lien
on December 20, 2011, a notice of default and election to
sell on February 13, 2012, and a notice of foreclosure sale
on May 20, 2013, selling the Property to John R. Kielty at
auction on June 14, 2013 for an amount not specified in the
Complaint. (See Id. ¶¶ 18-24).
meantime, Edralin had also defaulted on the Note.
(Id. ¶ 33). On or about December 2, 2011,
Mortgage Electronic Registration Systems, Inc. recorded an
assignment of its interest in the DOT to Bank of America,
N.A. (“BOA”). (Id. ¶ 34). Another
assignment was recorded on March 20, 2013, transferring
BOA's interest to Nationstar Mortgage LLC
(“Nationstar”). (Id. ¶ 35). On or
about July 26, 2014 (after the CUOA sale), another assignment
was recorded transferring Nationstar's interest to
Federal Home Loan Mortgage Corp. (“Freddie Mac”).
(Id. ¶ 37). On or about July 31, 2014, American
Trustee Servicing Solutions, LLC (“ATSS”)
recorded a notice of default against the Property based on
Edralin's default on the Note, purporting to act on
behalf of Nationstar, although Nationstar had transferred its
interest to Freddie Mac. (Id. ¶¶ 40-41).
sued Freddie Mac, Nationstar, ATSS, and Edralin in state
court to quiet title to the Property in his favor and enjoin
any foreclosure based on the DOT, which Kielty argues was
extinguished by the CUOA sale. Freddie Mac removed. Freddie
Mac and Nationstar jointly answered and pleaded counterclaims
for quiet title against Kielty, wrongful foreclosure against
the CUOA, and declaratory and injunctive relief. Kielty
answered the Counterclaim. The Court granted the Federal
Housing Finance Agency's (“FHFA”) motion to
intervene as a Defendant. The CUOA answered the Counterclaim.
Neither ATSS nor Edralin have appeared. Kielty moved for
offensive summary judgment on his claims, Freddie Mac and
Nationstar moved for offensive summary judgment on their
counterclaims, and the CUOA moved for defensive summary
judgment against those counterclaims. The Court ruled:
The CUOA sale of June 14, 2013 was not preempted by 12 U.S.C.
§ 4617(j)(3), and the CUOA did not act in bad faith
under NRS 116.1113. The Court grants summary judgment to
Plaintiff and Counterdefendant and denies it to Defendants on
these points. The Court also grants summary judgment to
Plaintiff and Counterdefendant and denies it to Defendants as
to Defendants' counterclaim that Defendants'
predecessor-in-interest did not receive constitutionally
sufficient notice of the CUOA sale. As to Plaintiff's
claim that Defendants' predecessor-in-interest received
sufficient notice of the CUOA sale and as to whether the CUOA
sale may be equitably avoided or the deed of trust equitably
revived due to a grossly inadequate sales price and fraud,
unfairness, or oppression, those issues must be tried.
(Order, 11:3-12, ECF No. 67). Notably, the Court ruled that
the foreclosure under Chapter 116 did not itself implicate
the Due Process Clause of the Fourteenth Amendment, because
there had been no state action.
have asked the Court to reconsider and grant them summary
judgment on the due process issue in light of the Court of
Appeals' intervening contrary ruling in Bourne
Valley Court Tr. v. Wells Fargo Bank, N.A., 832
F.3d 1154 (9th Cir. 2016) (ruling that Chapter 116's
opt-in notice scheme is facially unconstitutional under the
Due Process Clause of the Fourteenth Amendment). Defendants
have separately moved for summary judgment on the issues of
tender, commercial unreasonableness, oppression, and the
retroactivity of SFR Investments Pool I v. U.S.
Bank, 334 P.3d 408 (Nev. 2014). Plaintiff has also moved
for summary judgment.
Court will reconsider the grant of offensive summary judgment
to Plaintiff under the Due Process Clause because of
Bourne Valley and will not grant summary judgment to
either side on the issue at this time. Plaintiff has adduced
evidence that Nationstar received a copy of the notice of
sale via certified mail on May 21, 2013, after it obtained
the Note and DOT and before the sale. (See Pl.'s
Mot. Summ. J. Ex. 11, ECF No. 85-11, at 8 (stamped receipt)).
This is some evidence of sufficient notice, but it is not
enough to eliminate all material questions of fact as to the
notice issue. The fact of a stamped receipt for some piece of
mail does not prove what the piece of mail was. The Court
will leave this issue to a jury. That is, it would leave the
issue to a jury if the present case could not be summarily
adjudicated on other grounds. Because it can be, see
infra, the Court declines to rule on the issue at this
Commercial Reasonableness and Oppression Under
Levers and Shadow Wood,
has done in other cases where a property is sold at auction
for a small fraction of an outstanding loan (here 15%), the
Court will leave these issues to a jury. See, e.g.,
U.S. Bank v. Countryside Homeowners Ass'n, No.
2:15-cv-1463, 2016 WL 3638112, at *6 (D. Nev. July 7, 2016)
(Jones, J.). That is, it would leave the issues to a jury if
the present case could not be summarily ...