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LLC v. Bank of New York Mellon

Supreme Court of Nevada

August 2, 2018

SFR INVESTMENTS POOL 1, LLC; AND STAR HILL HOMEOWNERS ASSOCIATION, Appellants,
v.
THE BANK OF NEW YORK MELLON F/K/A THE BANK OF NEW YORK, AS TRUSTEE FOR THE CERTIFICATEHOLDERS OF THE CWABS, INC., ASSET-BACKED CERTIFICATES, SERIES 2006-6, Respondent.

          Certified question, pursuant to NRAP 5, in a quiet title action. Question answered.

          Alverson Taylor Mortensen & Sanders and Kurt R. Bonds and Adam R. Knecht, Las Vegas, for Appellant Star Hill Homeowners Association.

          Kim Gilbert Ebron and Howard Kim, Diana Cline Ebron, and Jacqueline A. Gilbert, Las Vegas, for Appellant SFR Investments Pool 1, LLC.

          Akerman LLP and Ariel E. Stern, Las Vegas, for Respondent.

          Legislative Counsel Bureau Legal Division and Brenda J. Erdoes, Legislative Counsel, and Kevin C. Powers, Chief Litigation Counsel, Carson City, for Amicus Curiae Nevada Legislature.

         BEFORE THE COURT EN BANC.

          OPINION

          CHERRY, J.

         This case comes before us as a certified question from the United States District Court for the District of Nevada, seeking an answer to "[w]hether NRS § 116.31168(1)'s incorporation of NRS § 107.090 required a homeowner's association to provide notices of default and/or sale to persons or entities holding a subordinate interest even when such persons or entities did not request notice, prior to the amendment that took effect on October 1, 2015." NRS 107.090, which governs trustee sales under a deed of trust, mandates notice to those holding subordinate interests. We conclude that, by requiring application of NRS 107.090 during the homeowners' association foreclosure process, NRS 116-31168(1)[1] required notice to be provided to all holders of subordinate security interests prior to a homeowners' association foreclosure sale and thus answer the question in the affirmative.

         FACTS AND PROCEDURAL HISTORY

         In 2010, former homeowners became delinquent on their homeowners' association dues, and appellant Star Hill Homeowners Association recorded a notice of delinquent assessments, notice of default, and election to sell in 2010. Star Hill recorded notices of sale in 2011 and 2012. On September 14, 2012, Star Hill held the nonjudicial foreclosure sale pursuant to NRS Chapter 116. It recorded a foreclosure deed transferring the property to the purchaser, SBW Investment, Inc. The deed recitals stated that Star Hill had complied with all statutory notice requirements in conducting the sale. On April 15, 2013, SBW transferred title of the property to appellant SFR Investments Pool 1, LLC.

         Respondent Bank of New York Mellon (BNYM) subsequently filed a complaint in the federal district court of Nevada, naming SFR and Star Hill as defendants and requesting a declaration that the foreclosure sale did not extinguish its deed of trust. BNYM alleged that the sale was void as violating due process because NRS Chapter 116 "lacks any pre-deprivation notice requirements." SFR answered the complaint and asserted a counterclaim, seeking the opposite declaration and to quiet title, alleging that BNYM was provided with the notice of default and sale. The federal district court then filed in this court its order certifying the question of law stated above.

         DISCUSSION

         NRAP 5 permits us to answer the certified question

         Preliminarily, we address BNYM's argument that we should not answer the certified question. Existing Nevada precedent does not fully resolve this legal question, and our answer may determine part of the underlying federal case. Thus, answering the question is appropriate. See SFR Invs. Pool 1, LLC v. Bank of New York Mellon, Docket No. 72931 (Order Accepting Certified Question, Directing Briefing and Directing Submission of Filing Fee, June 13, 2017) (citing NRAP 5(a) and Volvo Cars of N. Am., Inc. v. Ricci,122 Nev. 746, 750-51, 137 P.3d 1161, 1163-64 (2006)). Although BNYM contends that Bourne Valley Court Trust v. Wells Fargo Bank, N.A.,832 F.3d 1154 (9th Cir. 2016), resolved the question, the Ninth Circuit's interpretation of NRS 116.31168 does not stand in the way of our reaching the merits of the certified question.[2]See Owen v. United States,713 F.2d 1461, 1464 (9th Cir. 1983) (providing that a federal court's construction of a state statute is only binding in the continued absence of a contrary construction by that state's highest ...


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