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Carrington Mortgage Services, LLC v. Saticoy Bay, LLC

United States District Court, D. Nevada

May 20, 2019

SATICOY BAY, LLC SERIES 6709 BRICK HOUSE, et al., Defendants



         This is a dispute over property located at 6709 Brick House Avenue in Las Vegas, Nevada. Plaintiff Carrington Mortgage Services, LLC intends to foreclose on its deed of trust encumbering the property because the former owner has stopped making mortgage payments. However, defendant Cactus Springs at Fairfax Village Homeowners Association previously foreclosed on its homeowners association (HOA) lien after the property owners did not pay their HOA assessments. Defendant Saticoy Bay, LLC Series 6709 Brick House purchased the property at the HOA foreclosure sale. Carrington seeks to determine adverse interests in the property, contending that the HOA foreclosure sale did not extinguish its deed of trust. Saticoy counterclaims to quiet title in itself.[1]

         Carrington and Saticoy each move for summary judgment. I grant Carrington's motion and deny Saticoy's motion because no genuine dispute remains that Carrington's predecessor tendered the superpriority amount prior to the HOA foreclosure sale. Consequently, Saticoy purchased the property subject to Carrington's deed of trust.


         Robert and Teresa Christie are the prior owners of the property. ECF No. 1-1. The property was encumbered by a deed of trust that eventually was transferred to Carrington. ECF Nos. 124-1, 124-3, 124-4. On September 20, 2011, Cactus Springs, through its agent Hampton & Hampton, LLC, sent a notice of delinquent assessment lien to the Christies because the Christies failed to pay HOA assessments. ECF Nos. 124-7 at 4; 127-6. In October 2011, Hampton recorded a notice of default and election to sell. ECF No. 124-5. In December 2011, Hampton advised Carrington's predecessor, Bank of America, that the payoff amount for the superpriority lien was $281.25. ECF No. 124-6 at 11-12. The next month, Bank of America paid $281.25 to Hampton for the superpriority lien. ECF Nos. 124-6 at 6; 124-8.

         More than two years later, Hampton recorded a second notice of default and election to sell on Cactus Springs' behalf. ECF Nos. 124-7 at 5; 124-9. In April 2015, Hampton recorded a notice of trustee's sale. ECF No. 124-11. The notice of sale referred back to the notice of delinquent assessment dated September 20, 2011. Id. The property was sold in June 2015 to Saticoy for $81, 200.00. ECF No. 124-12.

         II. ANALYSIS

         Summary judgment is appropriate if the movant shows “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), (c). A fact is material if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the non-moving party to set forth specific facts demonstrating there is a genuine issue of material fact for trial. Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 531 (9th Cir. 2000); Sonner v. Schwabe N. Am., Inc., 911 F.3d 989, 992 (9th Cir. 2018) (“To defeat summary judgment, the nonmoving party must produce evidence of a genuine dispute of material fact that could satisfy its burden at trial.”). I view the evidence and reasonable inferences in the light most favorable to the non-moving party. James River Ins. Co. v. Hebert Schenk, P.C., 523 F.3d 915, 920 (9th Cir. 2008).

         Under Nevada law, a “first deed of trust holder's unconditional tender of the superpriority amount due results in the buyer at foreclosure taking the property subject to the deed of trust.” Bank of Am., N.A. v. SFR Investments Pool 1, LLC, 427 P.3d 113, 116 (Nev. 2018) (en banc). To be valid, tender must be for “payment in full” and must either be “unconditional, or with conditions on which the tendering party has a right to insist.” Id. at 118.

         Here, no genuine dispute remains that Carrington's predecessor paid the superpriority amount in full. The superpriority lien therefore was extinguished, and Saticoy took title to the property subject to the deed of trust. Id. at 121.

         Saticoy raises several arguments as to why the deed of trust nevertheless should be extinguished. First, it argues that it is a bona fide purchaser for value. However, a “party's status as a [bona fide purchaser] is irrelevant when a defect in the foreclosure proceeding renders the sale void, ” and a “foreclosure sale on a mortgage lien after valid tender satisfies that lien is void, as the lien is no longer in default.” Id. Consequently, Saticoy's status as a bona fide purchaser is irrelevant.

         Saticoy next argues that even if the tender extinguished the superpriority lien related to the first notice of default, the HOA filed a second notice of default in 2014 and the HOA foreclosure sale was based on this second notice. Nevada Revised Statutes § 116.3116 “does not limit an HOA to one lien enforcement action or one superpriority lien per property forever.” Prop. Plus Investments, LLC v. Mortg. Elec. Registration Sys., Inc., 401 P.3d 728, 731 (Nev. 2017) (en banc). “Therefore, when an HOA rescinds a superpriority lien on a property, the HOA may subsequently assert a separate superpriority lien on the same property based on monthly HOA dues, and any maintenance and nuisance abatement charges, accruing after the rescission of the previous superpriority lien.” Id. at 731-32. “But to trigger a new superpriority lien, the HOA must commence a new enforcement action” by either “completing a prior enforcement action through foreclosure” or “recording a rescission of a prior lien.” Nationstar Mortg. LLC v. Saticoy Bay LLC Series 8920 El Diablo, No. 2:16-cv-00751-JCM-VCF, 2018 WL 1770127, at *6 (D. Nev. Apr. 12, 2018) (citing Prop. Plus Investments, LLC, 401 P.3d at 731-32).

         Here, the HOA never rescinded the September 2011 notice of lien, and the second notice of default states that is based on the September 2011 notice of lien. Carrington's predecessor had already paid off the superpriority portion of that lien. The filing of a second notice of ...

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