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U.S. Bank N.A. v. Desert Shores Community Association

United States District Court, D. Nevada

June 5, 2019

U.S. BANK, N.A., AS TRUSTEE FOR THE BENEFIT OF HARBORVIEW 2005-16, Plaintiff,
v.
DESERT SHORES COMMUNITY ASSOCIATION, et al., Defendants.

          ORDER

          Kent J. Dawson United States District Judge

         Before the Court is plaintiff U.S. Bank's second motion for partial summary judgment (#100). Defendants MRT Assets, LLC (#103) and Desert Shores Community Association (#104) responded, and U.S. Bank replied (#106).

         This is a dispute over who holds superior title in a residential property located at 3001 Treasure Island Rd., Las Vegas, NV 89128. The home is part of the Desert Shores Community Association and is subject to certain covenants, conditions, and restrictions (“CC&Rs”). The former owner of the property defaulted on his association and mortgage obligations, which prompted Desert Shores to foreclose on the property. U.S. Bank tried to halt the foreclosure by tendering payment for the superpriority portion of Desert Shore's lien, but the association refused the payment. It then sold the property to RAM, LLC at a trustee sale, who later conveyed the property to MRT Assets.

         U.S. Bank[1] now asks the Court to declare that its deed of trust survived Desert Shores' foreclosure because the bank tried to cure the superpriority lien before the trustee sale. If true, U.S. Bank's holds the first deed of trust, and MRT Assets purchased the property subject to the bank's interest. MRT Assets has counterclaimed for quiet title and a declaration that U.S. Bank's tender did not save the bank's interest from extinguishment. U.S. Bank is correct that its tender cured the superpriority portion of Desert Shores' lien. As a result, the bank's deed of trust survived foreclosure, and MRT Assets took the property subject to U.S. Bank's interest. The Court therefore grants U.S. Bank's motion for summary judgment.

         I. Background

         A. Factual History

         Former owner and non-party, Hagob Palikyan purchased the home at 3001 Treasure Island Rd. in 2005. Pl.'s Mot. Summ. J. Ex. A 2, ECF No. 100. Countrywide Home Loans financed the purchase and secured the loan with a deed of trust against the property. Id. The deed of trust was assigned to U.S. Bank in 2011. Id. Ex. B. Palikyan eventually fell behind on his mortgage and association assessments, which prompted Desert Shores to begin foreclosure proceedings. Id. Ex. C. Desert Shores-through Nevada Association Services-recorded a notice of delinquent assessment lien in June of 2012. Id. When Palikyan failed to cure the default, Nevada Association Services recorded a notice of default and election to sell. Id. Ex. D. Palikyan again failed to cure the default, and Nevada Association Services sold the property to RAM, LLC at a trustee sale for $10, 100.00. Id. Ex. J. RAM then conveyed the property to MRT Assets by quitclaim deed. Id. Ex. K.

         U.S. Bank tried to cure the superpriority portion of Desert Shores' lien before RAM, LLC purchased the property. The bank's prior servicer, Bank of America, retained Miles, Bauer Bergstrom & Winters to work with Desert Shores to calculate and satisfy the outstanding delinquency. Id. Ex. E. Miles Bauer contacted Nevada Association Services in writing seeking the superpriority portion of the association's delinquency. Id. Nevada Association Services did not respond. Id. Without the association's help, the bank was forced to calculate the outstanding balance on its own. To do so, the bank consulted a ledger of fees from a different property in the Desert Shores Community Association. Id. It then remitted payment to Nevada Association Services for $977.27-nine months' assessments plus late fees, and collection costs. Id. Nevada Association Services rejected the payment and returned the check to Miles Bauer. Id.

         B. Procedural History

         U.S. Bank then brought this case to quiet title in the property. Compl., ECF No. 1. Desert Shores moved to dismiss because the parties had not yet mediated the foreclosure under NRS § 38.310. Def.'s Mot. to Dismiss, ECF No. 37. The Court granted the motion with leave to amend following the mediation. Order on Mot. to Dismiss, ECF No. 44. In the interim, the Court stayed the case pending the final determinations in Bourne Valley Ct. Tr. v. Wells Fargo Bank, 832 F.3d 1154 (9th Cir. 2016) and Saticoy Bay v. Wells Fargo Bank, 388 P.3d 970 (Nev. 2017). Order to Stay 1, ECF No. 78. The Court has since lifted the stay, and U.S. Bank has amended its complaint. First Am. Compl., ECF No. 90. The parties completed discovery and filed dispositive motions. Since then, U.S. Bank voluntarily dismissed RAM, LLC. Notice Vol. Dismissal, ECF No. 110. That leaves Desert Shores, MRT Assets, and Nevada Association Services[2] as defendants.

         II. Legal Standard

         The 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.

         III. Analysis

         U.S. Bank moves for summary judgment on its quiet title and declaratory relief claim against Desert Shores, MRT Assets, and Nevada Association Services. It makes three arguments in support: (1) that the bank's attempt to satisfy Desert Shores' superpriority lien before foreclosure constituted valid tender and preserved its deed of trust; (2) that Desert Shores foreclosed under an unconstitutional version of NRS § 116.3116 thereby preserving U.S. Bank's interest in the property; and (3) that the foreclosure is void because the foreclosure sale was commercially unreasonable. See generally Pl.'s Mot. Summ. J., ECF No. 100. U.S. Bank is correct ...


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