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Bank of America, N.A. v. Boulder Creek Homeowners Association

United States District Court, D. Nevada

March 30, 2019



          Gloria M. Navarro, Chief Judge

         Pending before the Court is the Motion for Summary judgment, (ECF No. 55), filed by Plaintiff Bank of America, N.A. (“Plaintiff”). Defendants SFR Investments Pool 1, LLC (“SFR”) and Boulder Creek Homeowners Association (“HOA”) filed Responses, (ECF Nos. 57, 58), and Plaintiff filed a Reply, (ECF No. 61). Also before the Court is SFR's Motion for Summary Judgment, (ECF No. 54). Plaintiff filed a Response, (ECF No. 56), and SFR filed a Reply, (ECF No. 62).[1] For the reasons stated herein, Plaintiff's Motion for Summary Judgment is GRANTED.

         I. BACKGROUND

         This case arises from the non-judicial foreclosure on real property located at 964 San Carlos Creek Lane, Henderson, Nevada 89002 (the “Property”). (See Deed of Trust, Ex. A to Pl.'s MSJ, ECF No. 55-1). On or about September 15, 2009, Petelo Vake and Alisi Vake (“Borrowers”) refinanced the Property with a loan in the amount of $290, 515.00, secured by a dead of trust (the “DOT”). (Id.). Plaintiff gained beneficial interest in the DOT through an assignment recorded on July 13, 2011. (See Assignment, Ex. C to Pl.'s MSJ, ECF No. 55-3); (Merger, Ex. D to Pl.'s MSJ, ECF No. 55-4). Upon Borrowers' failure to stay current on their payment obligations, Nevada Association Services (“NAS”), on behalf of HOA, initiated foreclosure proceedings by recording a notice of delinquent assessment lien and a subsequent notice of default and election to sell. (See Notice of Delinquent Assessment Lien, Ex. J to Pl.'s MSJ, ECF No. 55-10).

         On May 22, 2014, law firm Miles, Bauer, Bergstrom & Winters LLP (“Miles Bauer”), on behalf of Plaintiff, sent a letter to NAS requesting the amount of HOA's superpriority lien. (See Request for Accounting ¶ 6, Ex. 1 to Miles Aff., ECF No. 55-12). NAS responded with a ledger detailing the amount of HOA's lien. (See Statement of Account, Ex. 2 to Miles Aff.). Miles Bauer, on behalf of BANA, subsequently delivered a check to NAS for $315.00 based on the provided ledger, purportedly representing nine months' worth of HOA assessments. (See Tender Letter, Ex. 3 to Miles Aff.).

         Notwithstanding the alleged tender, NAS proceeded with the foreclosure by recording a notice of foreclosure sale and subsequently foreclosing on the Property. (See Foreclosure Deed, Ex. M to Pl.'s MSJ, ECF No. 69-13). On July 29, 2014, SFR recorded a foreclosure deed, stating that it purchased the Property for $36, 000. (Id.).

         Plaintiff filed the instant Complaint on March 15, 2016, asserting the following causes of action arising from the foreclosure and subsequent sale of the Property: (1) quiet title; (2) breach of NRS 116.1113; (3) wrongful foreclosure; and (4) injunctive relief. (See Compl. ¶¶ 32-85, ECF No. 1).


         The Federal Rules of Civil Procedure provide for summary adjudication 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 judgment as a matter of law.” Fed.R.Civ.P. 56(a). Material facts are those that may affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. Id. “Summary judgment is inappropriate if reasonable jurors, drawing all inferences in favor of the nonmoving party, could return a verdict in the nonmoving party's favor.” Diaz v. Eagle Produce Ltd. P'ship, 521 F.3d 1201, 1207 (9th Cir. 2008) (citing United States v. Shumway, 199 F.3d 1093, 1103-04 (9th Cir. 1999)). 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).

         In determining summary judgment, a court applies a burden-shifting analysis. “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). In 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 nonmoving 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. 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. 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. 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. 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. Celotex Corp., 477 U.S. at 324.

         At summary judgment, a court's function is not to weigh the evidence and determine the truth; it is to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 249. 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. Id. at 249-50.


         Plaintiff moves for summary judgment on its quiet title and declaratory relief claims, asserting that Bourne Valley Court Tr. v. Wells Fargo Bank, NA, 832 F.3d 1154 (9th Cir. 2016), cert. denied, 137 S.Ct. 2296, 198 L.Ed.2d 726 (2017), compels the Court to hold that the HOA foreclosure sale did not extinguish Plaintiff's DOT. (Pl.'s MSJ 9:11-14:6, ECF No. 55). Plaintiff also argues that summary judgment is warranted because Plaintiff properly tendered the superpriority HOA lien prior to the foreclosure sale, thus eliminating the superpriority status of the HOA's lien. (Id. 6:10-9:10). Additionally, Plaintiff argues that NRS 116 is preempted because the loan is FHA insured. (Id. 23:19-26:2).

         SFR conversely seeks summary judgment on the basis that Bourne Valley is not controlling authority, and Plaintiff is otherwise not entitled to an equitable remedy. (SFR's MSJ 6:20-12:25, ECF No. 54). SFR also opposes Plaintiff's Motion by arguing, inter alia, that Plaintiff's purported tender did not satisfy HOA's superpriority lien, Plaintiff's tender contained impermissible conditions rendering it invalid, Plaintiff lacks standing, and preemption does not apply. (See SFR's Resp. 4:23-30:17, ECF No. 58). The Court's discussion below first addresses the constitutionality of the foreclosure sale.

         A. Constitutionality of the Foreclosure

         In Bourne Valley, the Ninth Circuit held that NRS 116.3116's notice provisions violated lenders' due process rights because the scheme “shifted the burden of ensuring adequate notice from the foreclosing homeowners' association to a mortgage lender.” Bourne Valley, 832 F.3d at 1159. The Ninth Circuit, interpreting Nevada law, declined to embrace the appellant's argument that NRS 107.090, read into NRS 116.31168(1), mandates that HOAs provide notice to lenders even absent a request. Id. Accordingly, the absence of mandatory notice provisions rendered the statutory scheme facially unconstitutional. Id. at 1158-60.

         Bourne Valley's construction of Nevada law is “only binding in the absence of any subsequent indication from the [Nevada] courts that [the Ninth Circuit's] interpretation was incorrect.” Owen v. United States, 713 F.2d 1461, 1464 (9th Cir. 1983). “[W]here the reasoning or theory of . . . prior circuit authority is clearly irreconcilable with the reasoning or theory of intervening higher authority, [a court] should consider itself bound by the later controlling authority. . . .” Miller v. Gammie, 335 F.3d 889, 892-893 (9th Cir. 2003). “[A] [s]tate's highest court is the final judicial arbiter of the meaning of state statutes.” Sass v. California Bd. of Prison Terms, 461 F.3d 1123, 1129 (9th Cir. 2006) (citing Gurley v. Rhoden, 421 U.S. 200, ...

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