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Bank of New York Mellon v. Southern Highlands Community Association

United States District Court, D. Nevada

February 22, 2018



         Presently before the court is defendant Southern Highlands Community Association's (the “HOA”) motion for summary judgment. (ECF No. 73). Plaintiff Bank of New York Mellon (“BNYM”) filed a response. (ECF No. 79).

         Also before the court is BNYM's motion for summary judgment. (ECF No. 74). The HOA (ECF No. 78) and SFR Investments Pool 1, LLC (“SFR”) (ECF No. 81) responded, to which BNYM replied (ECF Nos. 82, 85).

         Also before the court is defendant SFR's motion for summary judgment. (ECF No. 75). BNYM responded (ECF No. 80), to which SFR replied (ECF No. 84).

         I. Facts

         This case involves a dispute over real property located at 11545 Cantina Terlano Place, Las Vegas, Nevada 89141 (the “property”). On August 11, 2005, Salma Khan obtained a loan in the amount of $838, 150.00 to purchase the property, which was secured by a deed of trust recorded on October 10, 2005. (ECF No. 1).

         The deed of trust was assigned to BNYM via an assignment of deed of trust recorded on December 23, 2009. (ECF No. 1).

         On January 27, 2011, defendant Alessi & Koenig, LLC (“A&K”), acting on behalf of the HOA, recorded a notice of delinquent assessment lien, stating an amount due of $895.02. (ECF No. 1).

         On April 12, 2011, Khan recorded a loan modification agreement increasing the principal balance under the loan to $1, 000, 706.62. (ECF No. 1).

         On April 20, 2011, A&K recorded a notice of default and election to sell to satisfy the delinquent assessment lien, stating an amount due of $2, 161.47. (ECF No. 1). On September 8, 2011, A&K recorded a notice of trustee's sale, stating an amount due of $3, 709.87. (ECF No. 1). On July 11, 2012, SFR purchased the property at the foreclosure sale for $9, 200.00. (ECF No. 1). A trustee's deed upon sale in favor of SFR was recorded on July 24, 2012. (ECF No. 1).

         On May 25, 2016, BNYM filed the underlying complaint. (ECF No. 1). On October 12, 2016, BNYM filed an amended complaint, alleging seven causes of action: (1) quiet title/declaratory judgment against all defendants; (2) breach of NRS 116.1113 against A&K and the HOA; (3) wrongful foreclosure against A&K and the HOA; (4) injunctive relief against SFR; (5) deceptive trade practices against A&K and the HOA; (6) judicial foreclosure against Khan; and (7) alternative claim for breach of contract against Khan. (ECF No. 12).[1]

         On October 24, 2016, SFR filed an answer and counterclaim against BNYM for quiet title/declaratory relief and injunctive relief. (ECF No. 19).

         On July 3, 2017, the court dismissed claims (2) through (5) of BNYM's amended complaint (ECF No. 12), as well as claim (2) of SFR's counterclaim (ECF No. 19). (ECF No. 72). The court also denied SFR's motion for partial summary judgment (ECF No. 51) pursuant to Article III's prohibition against advisory opinions. Id.

         In the instant motions, the HOA, BNYM, and SFR each move the court to grant summary judgment in its favor as to the last remaining cause of action alleged in BNYM's amended complaint: quiet title/declaratory relief. The court will address each parties' motions as it sees fit. . . .

         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

         In the HOA and SFR's motions, they contend that summary judgment in their favor is proper because, inter alia, the foreclosure sale extinguished BNYM's deed of trust pursuant to NRS 116.3116 and SFR Investments. (ECF Nos. 73, 75). The HOA and SFR further contend that the foreclosure sale should not be set aside because the price paid at the foreclosure sale was commercially reasonable, the HOA complied with all notice requirements under NRS 116, BNYM 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”), and because BNYM failed to tender the super-priority portion of the lien. (ECF Nos. 73, 75). The court agrees.

         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) (internal quotation marks and citations omitted). Therefore, for plaintiff to succeed on its quiet title action, it needs to show that its claim to the property is superior to all others. See also 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 ...

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