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Bank of America, N.A. v. Saticoy Bay LLC

United States District Court, D. Nevada

June 17, 2019

BANK OF AMERICA, N.A., Plaintiff



         Plaintiff Bank of America, N.A. filed this lawsuit to determine whether its deed of trust still encumbers property located at 10667 Olympic Pine Drive, Las Vegas, Nevada following a non-judicial foreclosure sale conducted by defendant Westwood Community Association. ECF No. 1. Bank of America also asserts various damages claims against Westwood. Id. Defendant Saticoy Bay LLC purchased the property at the foreclosure sale. Saticoy counterclaims for a declaration that the foreclosure sale extinguished the deed of trust. ECF No. 10. Westwood filed a third party complaint against its foreclosure agent, Terra West Collections Group, LLC, doing business as Assessment Management Services (AMS), for breach of contract, contractual and equitable indemnity, and contribution. ECF No. 21.

         Bank of America and Saticoy move for summary judgment on their declaratory relief claims. AMS moves for summary judgment on Westwood's contractual and equitable indemnity claim. The parties are familiar with the facts, and I will not repeat them here except where necessary to resolve the motions. Because Bank of America tendered the superpriority amount, it is entitled to judgment as a matter of law on its own declaratory relief claim and on Saticoy's counterclaims. And because the deed of trust was not extinguished, Bank of America's damages claims against Westwood are moot. I therefore grant summary judgment in favor of Bank of America and against Saticoy and dismiss Bank of America's damages claims against Westwood as moot. I grant AMS's motion because Westwood will not have to pay damages to Bank of America, so AMS has nothing to indemnify.

         I. 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).

         A. Tender

         Bank of America moves for summary judgment, arguing that it tendered the superpriority amount prior to the HOA sale. Saticoy raises a variety of arguments as to why tender did not extinguish the lien. Specifically, Saticoy contends that (1) Bank of America cannot resort to equity because it has an adequate remedy at law and failed to protect its interest prior to the sale; (2) tender creates either an assignment or subrogation that must be recorded to affect the rights of a bona fide purchaser like Saticoy; (3) the tender letter contained falsehoods and impermissible conditions; (4) Bank of America did not prove there were sufficient funds to cover the tender check; (5) Westwood rejected the tender in good faith; and (6) Bank of America has not properly authenticated or shown the admissibility of the evidence establishing the superpriority amount and 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.

         Here, no genuine dispute remains that Bank of America paid the superpriority amount in full. The monthly homeowners association (HOA) assessment was $100.00 per month. ECF Nos. 63-5 at 9-17; 63-6 at 8-9. Prior to the HOA foreclosure sale, Bank of America tendered $900.00 to cover the superpriority amount. Id. at 19-21. There is no evidence of nuisance abatement charges. There also is no evidence Westwood recorded a second notice of delinquent assessment lien that might have triggered a second superpriority lien. See Prop. Plus Investments, LLC v. Mortg. Elec. Registration Sys., Inc., 401 P.3d 728, 731-32 (Nev. 2017) (en banc). The superpriority lien therefore was extinguished, and the property remains subject to the deed of trust. Bank of Am., N.A., 427 P.3d at 121. I address below each of Saticoy's other challenges to the tender.

         1. Equity

         Saticoy contends that Bank of America cannot resort to equity because it has an adequate remedy at law, it failed to protect its interest prior to the sale, and Saticoy is a bona fide purchaser. Generally, a party cannot obtain an equitable remedy when it has an adequate remedy at law. Las Vegas Valley Water Dist. v. Curtis Park Manor Water Users Ass'n, 646 P.2d 549, 551 (Nev. 1982). However, Nevada Revised Statutes § 40.010, which allows for resolving disputes involving adverse interests in property, “essentially codified” Nevada's historical recognition “that courts retain the power to grant equitable relief from a defective foreclosure sale when appropriate . . . .” Shadow Wood HOA v. N.Y. Cmty. Bancorp, Inc., 366 P.3d 1105, 1111-12 (Nev. 2016) (en banc). Thus, while the availability of other remedies (both before and after the sale) may bear on the equities, a claim to set aside an allegedly defective foreclosure sale is necessarily an equitable one that will impact the various interests in the property and their relative priority. Bank of America seeks not just repayment of its loan, but the right to resort to this particular property as security for repayment. No. remedy at law could overturn the foreclosure sale and reinstate Bank of America's lien on the property. See Bank of Am., N.A. v. Diamond Fin., LLC, 42 N.E.3d 1151, 1156-57 (Mass. 2015) (concluding a legal remedy was inadequate because “money damages would not restore the plaintiff to its rightful senior position”); Bank of N.Y. Mellon v. Withers, 771 S.E.2d 762, 765 ( N.C. Ct. App. 2015) (“Due to land's unique nature, damage claims against individuals are an inadequate substitute for a first position lien on real property.”).

         Bank of America acted to protect its interest through the tender, and a valid tender discharges the superpriority lien “by operation of law.” Id. at 120. Finally, Saticoy's status as a bona fide purchaser in terms of weighing the equities is irrelevant because the tender rendered the HOA sale void as to the superpriority lien. Id. at 121.

         2. ...

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