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U.S. Bank, National Association v. Resources Group, LLC

Supreme Court of Nevada

July 3, 2019

U.S. BANK, NATIONAL ASSOCIATION ND, A NATIONAL ASSOCIATION, Appellant,
v.
RESOURCES GROUP, LLC, Respondent.

          Appeal from a judgment certified as final under NRCP 54(b) in a judicial foreclosure/quiet title action. Eighth Judicial District Court, Clark County; Timothy C. Williams, Judge.

          Eglet Adams and Thomas Neal Beckom, Las Vegas; McCarthy & Holthus, LLP, and Kristin A. Schuler-Hintz, Las Vegas, for Appellant.

          Law Offices of Michael F. Bohn, Ltd., and Michael F. Bohn, Henderson, for Respondent.

          BEFORE PICKERING, PARRAGUIRRE and CADISH, JJ.

          OPINION

          PICKERING, J.

         This is a homeowners' association (HOA) lien foreclosure dispute. The HOA did not give the first deed of trust holder the notice of default Nevada law requires to foreclose a superpriority lien. Despite this failure, the district court held that the lien foreclosure sale extinguished the first deed of trust and quieted title in favor of the foreclosure sale buyer's successor. The district court found the first deed of trust holder was not entitled to notice at the address specified in the deed of trust, which was error. We vacate and remand for the district court to decide whether, given this notice defect, the first deed of trust holder deserves relief from the sale.

         I.

         Appellant U.S. Bank held a note secured by a publicly recorded first deed of trust on a home in a Nevada common interest community. The homeowner/borrower defaulted on his HOA dues, whereupon the HOA initiated lien foreclosure proceedings under NRS Chapter 116.[1] The HOA's agent, Alessi & Koenig, gave the homeowner proper notice of default and notice of sale and attempted to give U.S. Bank notice of default and notice of sale as well. But Alessi & Koenig misread U.S. Bank's deed of trust and sent the notice of default to another, unaffiliated entity, which evidently did not forward it to U.S. Bank. As a result, U.S. Bank did not receive the notice of default. Alessi & Koenig's records suggest it mailed the notice of sale, as distinguished from the notice of default, to U.S. Bank at the address specified for it in the deed of trust, but U.S. Bank's files do not show that it received either the notice of default or the notice of sale.

         Alessi & Koenig set the HOA lien foreclosure sale to occur 33 days after it recorded the notice of sale. When no one appeared at the sale, Alessi & Koenig orally continued it for approximately 60 days. Neither the homeowner nor U.S. Bank attended the rescheduled sale. Respondent Resources Group, LLC's principal, Iyad Eddie Haddad, acquired the property at the rescheduled sale for $5, 331. The district court did not make a finding as to the property's fair market value, but the record suggests the bid price represented 10% to 15% of the property's fair market value. Haddad initially took title in the name of a trust he had created to acquire this particular property, then had the trust transfer the property to Resources Group.

         The homeowner passed away, and his estate defaulted on the j loan the U.S. Bank deed of trust secured. Several months after the HOA lien foreclosure sale, U.S. Bank commenced judicial foreclosure proceedings against the homeowner's estate on its deed of trust. Later, after it discovered the HOA sale, U.S. Bank added Resources Group as a defendant. Asserting that the HOA lien foreclosure sale had extinguished U.S. Bank's first deed of trust, Resources Group answered and counterclaimed for a judgment quieting title in itself.

         The district court conducted a bench trial and ruled for Resources Group. It held that the HOA lien foreclosure sale extinguished U.S. Bank's deed of trust, leaving U.S. Bank nothing to judicially foreclose. The district court reasoned that U.S. Bank was not entitled to notice of default because it had not requested it from the HOA and that, alternatively, Alessi & Koenig gave adequate notice, even though the notice did not reach U.S. Bank. U.S. Bank appeals.

         II.

         U.S. Bank presses us to invalidate the HOA foreclosure sale because the person conducting the sale, Alessi & Koenig, failed to mail it i the notice of default at the address specified for it in its deed of trust as NRS 116.31168 and NRS 107.090 require. U.S. Bank further argues that the notice defect renders the sale void under Title Insurance & Trust Co. v. Chicago Title Insurance Co.,97 Nev. 523, 634 P.2d 1216 (1981), or at least voidable under Golden v. Tomiyasu,79 Nev. 503, 387 P.2d 989 (1963), and its progeny. We review the district court's legal conclusions de novo but give deference to its factual findings ...


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