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Property Plus Investments, LLC v. Mortgage Electronic Registration Systems, Inc.

Supreme Court of Nevada

September 14, 2017

PROPERTY PLUS INVESTMENTS, LLC, A NEVADA LIMITED LIABILITY COMPANY, Appellant,
v.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., AN ILLINOIS CORPORATION; AND CHRISTIANA TRUST, A DIVISION OF WILMINGTON SAVINGS FUND SOCIETY, FSB, NOT IN ITS INDIVIDUAL CAPACITY BUT AS TRUSTEE OF ARLP TRUST 3, IN C/0 ALTISOURCE ASSET MANAGEMENT CORPORATION, Respondents.

         Appeal from a district court order granting summary judgment in a quiet title action involving HOA superpriority liens. Eighth Judicial District Court, Clark County; Linda Marie Bell, Judge.

          Kim Gilbert Ebron and Jacqueline A. Gilbert and Diana Cline Ebron, Las Vegas; Kang & Associates, PLLC, and Patrick W. Kang and Erica D. Loyd, Las Vegas, for Appellant.

          Wright, Finlay & Zak, LLP, and Dana Jonathon Nitz, Edgar C. Smith, and Christopher A.J. Swift, Las Vegas, for Respondents.

         BEFORE THE COURT EN BANC.

          OPINION

          GIBBONS, J.

         In this appeal from a district court summary judgment in a quiet title action involving superpriority liens, we hold that an HOA is not limited to only one superpriority lien under NRS 116.3116 per parcel of property forever. Rather, when an HOA rescinds a superpriority lien on a property, the HOA may subsequently assert a separate superpriority lien on the same property based on monthly assessments, and any maintenance and nuisance abatement charges, accruing after the rescission of the previous superpriority lien. Additionally, we conclude that an HOA lien survives bankruptcy even though the homeowner's personal obligation is extinguished upon a Chapter 7 discharge. Accordingly, we reverse the district court's order granting summary judgment and remand this matter for further proceedings because factual issues remain with respect to whether the HOA's second lien included monthly assessments that accrued after the rescission of its first lien.

         FACTS AND PROCEDURAL HISTORY

         This case arises from conflicting claimed interests in the real property located at 8787 Tom Noon Avenue, No. 101, Las Vegas, Nevada (Tom Noon property).[1] The Tom Noon property is subject to the covenants, conditions, and restrictions (CC&Rs) of, among others, High Noon at Arlington Ranch Homeowners Association (High Noon), which were recorded on March 25, 2004. Megan Sulliban purchased the property on April 27, 2007. To finance the purchase, Sulliban borrowed from Bank of America $215, 000, repayment of which was secured by a deed of trust recorded on April 30, 2007. Although Bank of America remained the loan servicer, on April 7, 2014, the deed of trust was assigned to Christiana Trust, respondent in this matter along with Mortgage Electronic Registration Systems, Inc.

         The 2010 lien

         On April 8, 2010, High Noon recorded a notice of lien for unpaid assessments (the 2010 lien). On July 1, 2010, High Noon recorded a default for its lien.

         Bank of America hired counsel, Miles, Bergstrom & Winters, LLP (MBW), to negotiate with High Noon's counsel, Alessi & Koenig, LLC (AK), to protect the deed of trust. Seeking to satisfy the superpriority amount of the 2010 lien, around August 16, 2010, MBW sent to AK a letter requesting the amount of the superpriority portion of the 2010 lien. Based on the statement of account it received from AK in response to its inquiry, on September 23, 2010, MBW sent to AK a $522 check intended to satisfy the maximum nine months of $58 common assessments. In an accompanying letter, MBW indicated that High Noon's accepting the check would constitute payment in full. The payment was ultimately rejected, and around October 30, 2010, Bank of America received the returned check. AK provided no correspondence with the returned check, although AK had sent a letter to MBW, dated September 8, 2010, indicating that AK could not accept partial payment as payment in full based on a district court case it interpreted to allow for an HOA's lien to include collection costs.

         On August 25, 2010, Sulliban entered into a payment plan agreement with AK. On June 22, 2011, AK informed Sulliban that she defaulted under that agreement and at that time owed $412.78 for a past-due balance. AK later received a $459.76 check from Sulliban on July 21, 2011, although that payment is not accounted for on High Noon's statement for Sulliban's account. High Noon released the 2010 lien on August 11, 2011. The 2012 lien

         On July 20, 2012, High Noon recorded a second notice of lien for unpaid assessments (the 2012 lien). On October 31, 2012, High Noon recorded a default for its lien.

         On December 19, 2012, Sulliban filed for Chapter 7 bankruptcy. Sulliban listed High Noon as a creditor holding a secured claim of $1, 877.01. This amount reflected the amount listed as unpaid debt on the notice of lien for the 2012 lien, although the notice of default for the same identified ...


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