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Guild Mortgage Co. v. Prestwick Court Trust

United States District Court, D. Nevada

February 14, 2018

PRESTWICK COURT TRUST, et al., Defendants.


         Presently before the court is defendant/counterclaimant Prestwick Court Trust's (“Prestwick”) motion for summary judgment. (ECF No. 70). Plaintiff/counter defendant Guild Mortgage Company (“Guild”) filed a response and counterclaim for summary judgment (ECF No. 75), to which Prestwick replied (ECF No. 84).

         Also before the court is defendant Canyon Crest Master Association's (the “HOA”) motion for summary judgment. (ECF No. 74). Guild filed a response. (ECF No. 77).

         Also before the court is Guild's motion for summary judgment. (ECF No. 76). Prestwick filed a response (ECF No. 83), to which the HOA joined (ECF No. 86), and to which Guild replied (ECF No. 87).

         I. Facts

         The present case involves a dispute over real property located at 247 Prestwick Court, Mesquite, Nevada 89027 (the “property”). (ECF No. 1).

         On November 29, 2011, Mesquite 52 LLC deeded the property to Anibal C. Estrada (“Estrada”). (ECF No. 1). Estrada obtained a mortgage loan in the amount of $180, 285.00 from Guild, using the property as collateral. (ECF No. 75). The loan was insured by Federal Housing Administration (“FHA”). Id. Estrada granted Guild a deed of trust, which Guild subsequently recorded. (ECF No. 1).

         Estrada then became delinquent on his HOA assessments. (ECF No. 75). On or about December 21, 2012, the HOA filed a notice of delinquent assessment lien in the amount of $1, 253.27 via its foreclosure agent, Alessi & Koenig, LLC (“Alessi & Koenig”). (ECF No. 1).

         On May 6, 2013, Alessi & Koenig then filed a notice of default and election to sell under homeowners association lien, claiming a lien in the amount of $2, 469.81. Id. Alessi & Koenig mailed copies of the notice of default and election to sell to Estrada, MERS, Guild, and other interested parties. (ECF No. 70).

         On October 10, 2013, Alessi & Koenig recorded a notice of foreclosure sale, claiming a lien in the amount of $4, 538.40. Id.; (ECF No. 1). Copies of the notice of foreclosure sale were mailed to Estrada, Guild, and other interested parties. Id. The notice of sale was also published in the Nevada Legal News. Id.

         On November 6, 2013, Alessi & Koenig conducted the public foreclosure sale of the property. Id. Prestwick purchased the property for $20, 100.00 at the foreclosure sale. Id. On November 18, 2013, Alessi & Koenig recorded a trustee's deed upon sale conveying the property to Prestwick. (ECF No. 74).

         After the foreclosure sale extinguished the deed of trust, MERS executed an assignment of deed of trust assigning all beneficial interest and all rights accrued or to accrue under the deed of trust to Guild. (ECF No. 70).

         On February 12, 2015, Guild filed the underlying complaint against the HOA and Prestwick, alleging six causes of action: (1) declaratory relief regarding the facial unconstitutionality of NRS 116; (2) declaratory relief that the foreclosure sale amounted to an unconstitutional taking under NRS 116; (3) the transfer to Prestwick was voidable under NRS 112.190; (4) declaratory relief that the HOA sale was commercially unreasonable and therefore void; (5) declaratory relief that the HOA sale was unconstitutional as it was preempted by federal law; (6) and quiet title. (ECF No. 1).

         On February 22, 2017, the court denied both Prestwick (to which the HOA joined) (ECF No. 43) and Guild's (ECF No. 40) motions for summary judgment. (ECF No. 53). On March 8, 2017, Magistrate Judge Ferenbach granted the parties' stipulation to reopen and extend discovery.

         In the instant motion, Prestwick again moves for summary judgment against Guild seeking quiet title and declaratory relief in its favor. (ECF No. 70). The HOA (ECF No. 74) and Guild (ECF No. 76) each also filed motions for summary judgment.

         II. Legal Standard

         The 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 a 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).

         For 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 nonmoving party must “set forth specific facts showing that there is a genuine issue for trial.” Id.

         In determining summary judgment, a court applies a burden-shifting analysis. The moving party must first satisfy its initial burden. “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. In 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.” C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted).

         By contrast, when the nonmoving 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 nonmoving 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 nonmoving party's evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159- 60 (1970).

         If the 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, 631 (9th Cir. 1987).

         In other words, the nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the pleadings and set forth specific facts by producing competent evidence that shows a genuine issue for trial. See Celotex, 477 U.S. at 324.

         At summary judgment, a court's function is not to weigh the evidence and determine the truth, but to determine whether there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The evidence of the nonmovant is “to be believed, and all justifiable inferences are to be drawn in his favor.” Id. at 255. But if the evidence of the nonmoving party is merely colorable or is not significantly probative, summary judgment may be granted. See Id. at 249-50.

         III. Discussion[1]

         In Prestwick's motion, it contends that summary judgment in its favor is proper because, inter alia, the foreclosure sale extinguished Guild's deed of trust pursuant to NRS 116.3116 and SFR Investments. (ECF No. 70). Prestwick further contends that the foreclosure sale should not be set aside because Guild has not shown fraud, unfairness, or oppression as outlined in Shadow Wood Homeowners Assoc. v. N.Y. Cmty. Bancorp., Inc., 366 P.3d 1105 (Nev. 2016) (“Shadow Wood”), Prestwick is a bona fide purchaser, Guild failed to protect its interest in advance of the foreclosure sale, and because due process concerns were not implicated. (ECF No. 70). The court agrees. As the claims set forth in the HOA's motion for summary judgment align with those asserted in Prestwick's, a finding in favor of Prestwick's motion means the same for the HOA's.

         Under Nevada law, “[a]n action may be brought by any person against another who claims an estate or interest in real property, adverse to the person bringing the action for the purpose of determining such adverse claim.” Nev. Rev. Stat. § 40.010. “A plea to quiet title does not require any particular elements, but each party must plead and prove his or her own claim to the property in question and a plaintiff's right to relief therefore depends on superiority of title.” Chapman v. Deutsche Bank Nat'l Trust Co., 302 P.3d 1103, 1106 (Nev. 2013) (citations and internal quotation marks omitted). Therefore, for claimant to succeed on its quiet title action, it needs to show that its claim to the property is superior to all others. See Breliant v. Preferred Equities Corp., 918 P.2d 314, 318 (Nev. 1996) (“In a quiet title action, the burden of proof rests with the plaintiff to prove good title in himself.”).

         Section 116.3116(1) of the NRS gives an HOA a lien on its homeowners' residences for unpaid assessments and fines. Nev. Rev. Stat. § 116.3116(1). Moreover, NRS 116.3116(2) gives priority to that HOA lien over all other liens and encumbrances with limited exceptions-such as “[a] first security interest on the unit recorded before the date on which the assessment sought to be enforced became delinquent.” Nev. Rev. Stat. § 116.3116(2)(b).

         The statute then carves out a partial exception to subparagraph (2)(b)'s exception for first security interests. See Nev. Rev. Stat. § 116.3116(2). In SFR Investment Pool 1 v. U.S. Bank, the Nevada Supreme Court provided the following explanation:

As to first deeds of trust, NRS 116.3116(2) thus splits an HOA lien into two pieces, a superpriority piece and a subpriority piece. The superpriority piece, consisting of the last nine months of unpaid HOA dues and maintenance and nuisance-abatement charges, is “prior to” a first deed of trust. The subpriority piece, consisting of all other HOA fees or assessments, is subordinate to a first deed of trust.

334 P.3d 408, 411 (Nev. 2014) (“SFR Investments”).

         Chapter 116 of the Nevada Revised Statutes permits an HOA to enforce its superpriority lien by nonjudicial foreclosure sale. Id. at 415. Thus, “NRS 116.3116(2) provides an HOA a true superpriority lien, proper foreclosure of which will extinguish a first deed of trust.” Id. at 419; see also Nev. Rev. Stat. § 116.31162(1) (providing that “the association may foreclose its lien by sale” upon compliance with the statutory notice and timing rules).

         Subsection (1) of NRS 116.31166 provides that the recitals in a deed made pursuant to NRS 116.31164 of the following are ...

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