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The Bank of New York Mellon v. Nevada Association Services, Inc.

United States District Court, D. Nevada

June 10, 2019

THE BANK OF NEW YORK MELLON, Plaintiff
v.
NEVADA ASSOCIATION SERVICES, INC.; PARKSIDE VILLAGE HOMEOWNERS' ASSOCIATION; and WILLISTON INVESTMENT GROUP LLC, Defendants

          ORDER (1) GRANTING IN PART PARKSIDE'S MOTIONS; (2) DENYING BANK OF NEW YORK MELLON'S MOTION; AND (3) GRANTING IN PART WILLISTON'S MOTION [ECF NOS. 44, 48, 51, 52]

          ANDREW P. GORDON UNITED STATES DISTRICT JUDGE

         This is a dispute over whether a deed of trust still encumbers property located at 8124 Jasmine Hollow Court, Las Vegas, Nevada. Plaintiff Bank of New York Mellon (BONY) seeks a judicial determination that its deed of trust still encumbers the property following a non-judicial foreclosure sale conducted by defendant Parkside Village Homeowners' Association after the prior property owners failed to pay homeowners association (HOA) assessments. Defendant Williston Investment Group LLC purchased the property at the HOA foreclosure sale.

         BONY seeks a declaration that the deed of trust was not extinguished because the HOA and its foreclosure agent, defendant Nevada Association Services, Inc. (NAS), failed to provide proper notice of the sale; the HOA foreclosure statute as it existed at the time of the HOA sale was unconstitutional; BONY's predecessor offered to pay the superpriority lien prior to the sale; and the sale should be set aside on equitable grounds. BONY also asserts damages claims against Parkside and NAS for breach of Nevada Revised Statutes § 116.1113, wrongful foreclosure, and deceptive trade practices. Williston counterclaims for a declaration that the HOA sale extinguished the deed of trust.

         Parkside moves to dismiss and for summary judgment. Williston and BONY also move for summary judgment. The parties are familiar with the facts, and I will not repeat them here except where necessary to resolve the motions. I grant in part Williston and Parkside's motions. I deny BONY's motion.

         I. LEGAL STANDARDS

         In considering a motion to dismiss, “all well-pleaded allegations of material fact are taken as true and construed in a light most favorable to the non-moving party.” Wyler Summit P'ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998). However, I do not assume the truth of legal conclusions merely because they are cast in the form of factual allegations. See Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994). A plaintiff must make sufficient factual allegations to establish a plausible entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). Such allegations must amount to “more than labels and conclusions, [or] a formulaic recitation of the elements of a cause of action.” Id. at 555.

         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).

         II. ANALYSIS

         A. Determining Adverse Interests in Property

         Count one of BONY's complaint and Williston's counterclaim seek to determine whether BONY's deed of trust was extinguished by the HOA foreclosure sale. The parties raise numerous issues regarding this claim, including the applicable statute of limitations, tender, whether the sale was for a superpriority or subpriority amount, whether the sale should be equitably set aside, due process, and who are proper parties to the claim.

         1. Statute of Limitations

         Parkside argues BONY's claim is untimely because it is subject to either a 45- or 60-day limitation period under Nevada Revised Statutes § 107.080. Williston contends BONY's claim is untimely because it is subject to a three-year limitation period as either a claim for liability created by statute or as equivalent to wrongful foreclosure. BONY contends its claim is not subject to any limitation period or alternatively is subject to a 5- or 10-year limitation period.

         I have previously ruled that the four-year catchall limitation period in Nevada Revised Statutes § 11.220 applies to claims brought by a lienholder seeking to determine whether an HOA sale extinguished its deed of trust. See Bank of Am., N.A. v. Country Garden Owners Ass'n, No. 2:17-cv-01850-APG-CWH, 2018 WL 1336721, at *2 (D. Nev. Mar. 14, 2018). In doing so, I rejected arguments similar to those Williston and BONY make for shorter or longer periods. Parkside provides no authority for the proposition that the timelines in § 107.080 apply to a challenge to an HOA foreclosure sale under Chapter 116. That section refers to foreclosures of deeds of trust, not HOA liens. Nev. Rev. Stat. § 107.080(1). I therefore apply the four-year catchall limitation period to this claim.

         The HOA sale was conducted on March 16, 2012, and the deed upon sale was recorded on February 1, 2013. ECF No. 50-9. BONY filed this lawsuit on February 23, 2016. ECF No. 1. Thus, even using the earlier date of the HOA sale, BONY's claim is timely. Accordingly, I deny Parkside and Williston's motions based on the statute of limitations as to this claim.

         2. Tender

         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. “[A] promise to make a payment at a later date or once a certain condition has been satisfied cannot constitute a valid tender.” Bank of Am., N.A. v. Thomas Jessup, LLC Series VII, 435 P.3d 1217, 1219 (Nev. 2019) (holding that an “offer to pay the yet-to-be-determined superpriority amount was not sufficient to constitute a valid tender”). But tender is excused if the payment would not have been accepted. Id. at 1220 (holding that tender was excused where testimony established the HOA's agent would have rejected tender).

         Here, no genuine dispute remains that Bank of America's letter did not constitute tender because Bank of America offered to pay the superpriority amount in the future once that amount was determined, but it did not tender payment.[1] ECF No. 50-8. BONY argues that tender is nevertheless excused because NAS would not have accepted the payment if it had been made. BONY does not present deposition testimony, affidavits, admissions, or answers to interrogatories in which NAS or Parkside state whether they would (or would not) have accepted payment on this property if Bank of America had tendered payment.

         Instead, BONY relies on a brief filed in an arbitration proceeding to which NAS was a party. See ECF Nos. 50-12; 50-13. That brief, which NAS joined in September 2012, made arguments about when a superpriority lien was triggered, what was included in the superpriority lien, and whether lienholders could pay off the superpriority amount. Viewing the facts in the light most favorable to Williston and Parkside on BONY's motion for summary judgment, questions of fact remain about whether NAS would have accepted tender. The brief was filed six months after the HOA foreclosure sale in this case. Thus, it may or may not reflect NAS's position generally or in particular with respect to this property during the time period leading up to the March 2012 sale. Additionally, neither the brief nor NAS's joinder specifically states that NAS would have automatically rejected a tender of nine months' worth of assessments for this property during the relevant timeframe.[2]

         However, viewing the facts in the light most favorable to BONY, a genuine dispute remains as to whether tender would have been futile. A reasonable jury could conclude that NAS would not have accepted payment of nine months' worth of assessments and instead would have accepted payment of only the total amount of the HOA's lien based on NAS's position six months later that the ...


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