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Prof-2013-S3 Legal Title Trust V v. Saticoy Bay LLLC Series 6425 Extreme Shear

United States District Court, D. Nevada

June 17, 2019

PROF-2013-S3 LEGAL TITLE TRUST V, By U.S. Bank National Association as Legal Title Trustee, Plaintiff
v.
SATICOY BAY LLC SERIES 6425 EXTREME SHEAR, BOULDER RANCH MASTER ASSOCIATION, and HOMEOWNER ASSOCIATION SERVICES, INC. Defendants AND ALL RELATED COUNTERCLAIMS AND CROSS CLAIMS

          ORDER (1) GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT, (2) DENYING SATICOY'S MOTION FOR SUMMARY JUDGMENT, AND (3) GRANTING IN PART BOULDER RANCH'S MOTION FOR SUMMARY JUDGMENT [ECF NOS. 48, 49, 57]

          ANDREW P. GORDON UNITED STATES DISTRICT JUDGE

         Plaintiff PROF-2013-S3 (PROF) filed this lawsuit to determine whether its deed of trust still encumbers property located at 6425 Extreme Shear Avenue #101, Henderson, Nevada following a non-judicial foreclosure sale conducted by defendant Boulder Ranch Master Association (Boulder Ranch). ECF No. 22. PROF also asserts an unjust enrichment claim against Boulder Ranch; Boulder Ranch's foreclosure agent, defendant Homeowner Association Services, Inc. (HAS); and the current owner of the property, defendant Saticoy Bay LLC Series 6425 Extreme Shear (Saticoy). Id. Finally, PROF asserts other damages claims against Boulder Ranch and HAS. Id.

         Saticoy counterclaims for a declaration that the foreclosure sale extinguished the deed of trust. ECF No. 29. Saticoy also cross-claims against Boulder Ranch and HAS for fraudulent concealment and unjust enrichment. Id.

         PROF and Saticoy each move for summary judgment on their declaratory relief claims. Saticoy also moves for summary judgment on its misrepresentation and unjust enrichment cross-claims against Boulder Ranch. Boulder Ranch opposes Saticoy's motion and also moves for summary judgment on the cross-claims against it.

         The parties are familiar with the facts, and I will not repeat them here except where necessary to resolve the motions. Because PROF 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, PROF's damages claims against Boulder Ranch and HAS are moot. I therefore grant summary judgment in favor of PROF and against Saticoy and dismiss as moot PROF's damages claims (except unjust enrichment)[1] against Boulder Ranch and HAS. I grant Boulder Ranch's motion as to Saticoy's fraudulent misrepresentation claim and grant it in part as to Saticoy's unjust enrichment claim. I deny Saticoy's motion.

         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. Statute of Limitations

         Saticoy moves to dismiss PROF's declaratory relief claim, arguing a three-year limitation period applies. PROF responds that a five-year limitation period applies.

         I have previously ruled that the four-year catchall limitation period in § 11.220 applies to declaratory relief claims under Nevada Revised Statutes § 40.010 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). The HOA foreclosure sale took place on November 21, 2013, the trustee's deed upon sale was recorded on January 6, 2014, and PROF filed the complaint in this matter on June 29, 2017. ECF Nos. 1; 48-16. PROF's claim for a declaration that the deed of trust was not extinguished therefore is timely.[2]

         B. Tender

         PROF 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) PROF 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) PROF did not prove there were sufficient funds to cover the tender check; (5) HAS rejected the tender in good faith; and (6) PROF 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 BAC Home Loans Servicing, LP paid the superpriority amount in full. The monthly homeowners association (HOA) assessment was $37.50 per month and increased to $38.75 in 2011. ECF Nos. 48-14 at 13; 48-18 at 10. Prior to the HOA foreclosure sale, BAC tendered $348.75 to cover the superpriority amount. ECF No. 48-14 at 16-18. There is no evidence of nuisance abatement charges. There also is no evidence Boulder Ranch 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 PROF 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. PROF 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 PROF'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.”).

         PROF 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. Recording the Tender

         Saticoy argues that tender of the superpriority amount creates either an assignment or subrogation of the HOA lien, and an assignment or subrogation must be recorded to affect the rights of a bona fide purchaser like Saticoy. The Supreme Court of Nevada has rejected the argument that a tender must be recorded. Id. at 119-20. Although Saticoy contends the Supreme Court of Nevada erred in its analysis, it is the role of that court, not this court, to determine Nevada law. Rudin ...


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