United States District Court, D. Nevada
U.S. BANK, N.A., Plaintiff,
SOUTHERN HIGHLANDS COMMUNITY ASSOCIATION, et al., Defendants.
J. Dawson United States District Judge.
the Court are three motions for summary judgment. The first
is a joint motion filed by Cross Defendants Bank of America
and Nationstar Mortgage, LLC and Plaintiff/Counter Defendant
U.S. Bank N.A. (#109). Defendants Southern Highlands Community
Association (HOA) and SFR Investments Pool 1, LLC have
responded (##117, 118), and the banks replied (#119).
a motion for summary judgment filed by Defendant Southern
Highlands Community Association (“HOA”). (#110).
The banks responded (#115), and the HOA replied (#120).
a motion for summary judgment filed by Defendant SFR
Investments Pool 1, LLC. (#111). The banks responded (#116),
and SFR replied (#121).
a quiet title action arising out of the non-judicial
foreclosure of 10702 La Crescenta Ct. in Las Vegas, Nevada.
U.S. Bank seeks a declaration that the HOA foreclosure did
not extinguish its deed of trust under two theories. First,
it claims that the HOA's foreclosure under NRS § 116
is invalid because the statute is unconstitutional. The crux
of this argument is that § 107.090's notice
requirements-as incorporated-do not adequately warn
subordinate lienholders that the HOA foreclosure threatened
to extinguish their deeds of trust. Alternatively, the bank
argues that the Court should set aside the HOA sale because
it was fraudulent or unfair and because the sale price was
grossly inadequate. SFR and the HOA moved separately for
summary judgment. Like U.S. Bank, SFR seeks to quiet title in
the property and requests a declaration that it purchased the
property free and clear of the bank's deed of trust. The
HOA seeks summary judgment on U.S. Bank's wrongful
foreclosure and breach of NRS § 116 claims. The HOA
argues that it complied with the provisions of § 116 and
did not wrongfully foreclose on the property. Both SFR and
the HOA argue that § 116 is constitutional and that the
HOA sale was not commercially unreasonable. The Court agrees
and therefore grants Southern Highlands Community
Association's and SFR Investments Pool's respective
motions. (##110, 111). Consequently, the Court denies U.S.
Bank's motion for summary judgment (#109).
March of 2007, non-party Jacqueline Hagerman purchased a home
at 10702 Crescenta Ct. in Las Vegas, Nevada. Countrywide Home
Loans financed the original sale for $444, 000 and secured a
deed of trust against the property. (#109, Exh. 1). That deed
of trust listed Hagerman as the borrower, Countrywide as the
lender, Recontrust Company as trustee, and Mortgage
Electronic Registration Systems, Inc. (MERS) as beneficiary
under the security instrument. Id. Over the life of
the loan the deed of trust went through multiple assignments.
Ultimately, it was assigned to U.S. Bank in April of 2013.
(#109, Exh. 3). Shortly thereafter, Hagerman defaulted on her
HOA assessments and mortgage obligations. (#1, at 4). At that
time, the unpaid principal balance on the loan totaled $400,
default prompted U.S. Bank and the HOA to initiate their
individual collections processes to recover the
delinquencies. The HOA acted first. On July 22, 2010, it
recorded a Notice of Delinquent Assessment lien on the
property through its appointed trustee Alessi and Koenig.
(#109, Exh. 4). That notice identified the HOA's
outstanding balance at $892.86, which included fees and late
charges. Id. Nearly four months later, Alessi
recorded a Notice of Default and Election to Sell to satisfy
the delinquent lien amount. (#109, Exh. 5). In that notice,
the HOA claimed a delinquency of $1, 879.77 and warned that
failure to pay that balance could result in the homeowner
losing her home. Id. Then in August of 2012, Alessi
recorded a Notice of Trustee's Sale, which was scheduled
for September 5, 2012. None of Alessi's recorded notices
specified the superpriority lien balance or alerted the bank
of the delinquent balance necessary to preserve its lien.
There is no evidence that U.S. Bank attempted to tender
payment of the outstanding balance or otherwise satisfy the
lien. SFR purchased the property for $8, 200 at a public
auction on September 5, 2012. (#109, Exh. 7).
Bank then brought this action. At bottom, the bank seeks to
quiet title in the property. (#1, at 6). To do so, the bank
seeks a declaration that NRS § 116 violated its
procedural due process rights, which invalidates the
HOA's foreclosure. It also brought a wrongful foreclosure
claim and breach of NRS § 116 claim against the HOA. In
response, SFR asserted its own quiet-title claim against U.S.
Bank, Nationstar, and former-owner Jacqueline
Hagerman.(#13). In addition, SFR sought to enjoin
U.S. Bank from asserting an interest in the property and
claimed slander of title against the bank. Id. at
16-17. The Court then stayed the case following
the Ninth Circuit's decision in Bourne Valley Court
Trust v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir.
2016). (#75). The Court lifted the stay in October of 2018
and set the dispositive-motion deadline. (#79). Discovery has
since closed, and the parties have filed their respective
motions for summary judgment to which the Court now turns.
purpose of summary judgment is to avoid unnecessary trials by
disposing of factually unsupported claims or defenses.
Celotex Corp. v. Catrett, 477 U.S. 317, 323-24
(1986); Northwest Motorcycle Ass'n v. U.S. Dept. of
Agriculture, 18 F.3d 1468, 1471 (9th Cir. 1994). It is
available only where the absence of material fact allows the
Court to rule as a matter of law. Fed.R.Civ.P. 56(a);
Celotex, 477 U.S. at 322. Rule 56 outlines a burden
shifting approach to summary judgment. First, the moving
party must demonstrate the absence of a genuine issue of
material fact. The burden then shifts to the nonmoving party
to produce specific evidence of a genuine factual dispute for
trial. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986). A genuine issue of fact
exists where the evidence could allow “a reasonable
jury [to] return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). The Court views the evidence and draws all available
inferences in the light most favorable to the nonmoving
party. Kaiser Cement Corp. v. Fischbach & Moore,
Inc., 793 F.2d 1100, 1103 (9th Cir. 1986). Yet, to
survive summary judgment, the nonmoving party must show more
than “some metaphysical doubt as to the material
facts.” Matsushita, 475 U.S. at 586.
Bank seeks for summary judgment on its quiet title claim
arguing that (1) the HOA foreclosed under an unconstitutional
statute thereby preserving the bank's interest in the
property and (2) that even if NRS § 116 is
constitutional, the inherent unfairness of the sale coupled
with the property's sale price justify setting aside the
also seeks summary judgment on its own quiet-title claim and
argues that U.S. Bank lacks standing because it has not
provided evidence of the assignments of the deed of trust
sufficient to prove the bank's chain of title. It
continues that even if the bank has standing, NRS § 116
is both facially constitutional and constitutional as applied
to U.S. Bank. SFR contends that the bank received adequate
notice to apprise it of the risk to the bank's property
interest and to allow the bank to contest the sale. Finally,
SFR argues that U.S. Bank has not demonstrated the necessary
fraud, oppression, or unfairness that would justify equitably
setting aside the sale.
seeks summary judgment on U.S. Bank's wrongful
foreclosure and breach of NRS § 116 claims. Like SFR,
the HOA argues that § 116 is constitutional and that the
bank lacks standing to challenge the statute because it
received actual notice of the HOA-foreclosure sale. It
further argues that the foreclosure notices provided adequate
notice to the bank that its interest was at risk of
extinguishment. Relatedly, the HOA argues that the mortgage
protection clause in its CC&Rs did not prevent it from
foreclosing on its entire lien balance. It continues that,
despite the protections in the CC&Rs, it was not a breach
of § 116 to foreclose on its lien.
U.S. Bank's Motion for Summary Judgment
Court turns first to U.S. Bank motion because it presents two
threshold questions necessary to quite title. Namely, is NRS
§ 116 facially constitutional and was it
constitutionally applied to U.S. Bank? And second, was this
HOA sale so tainted by ...