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Bank of America, N.A. v. Woodcrest Homeowners Association

United States District Court, D. Nevada

August 21, 2019

BANK OF AMERICA, N.A., Plaintiff



         Plaintiff Bank of America, N.A. sues to determine whether its deed of trust still encumbers property located at 6541 Pleasant Plains Way in Las Vegas, Nevada, following a non-judicial foreclosure sale conducted by the homeowners association (HOA), defendant Woodcrest Homeowners Association (Woodcrest). Defendant 6541 Pleasant Wy Trust (Trust) purchased the property at the HOA foreclosure sale. Bank of America seeks a declaration that the deed of trust was not extinguished by the HOA foreclosure sale.[1] The Trust counterclaims to quiet title in itself free and clear of the deed of trust. ECF No. 19.

         The parties each move for summary judgment. I deny Bank of America's motion, grant in part Woodcrest's and the Trust's motions, and reopen discovery for a period of 60 days for the parties to develop evidence related to Bank of America's tender attempt and whether payment was excused or would have been futile. / / / /

         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. “Quiet Title”

          Woodcrest argues Bank of America cannot assert a claim to “quiet title” because it is only a lienholder and thus cannot establish good title in itself. Under Nevada Revised Statutes § 40.010, an “action may be brought by any person against another who claims an estate or interest in real property, adverse to the person bringing the action, for the purpose of determining such adverse claim.” “Thus, any person claiming an interest in the property may seek to determine adverse claims, even if that person does not have title to or possession of the property.” Nationstar Mortg. LLC v. Amber Hills II Homeowners Ass'n, No. 2:15-cv-01433-APG-CWH, 2016 WL 1298108, at *3 (D. Nev. Mar. 31, 2016). Accordingly, it is not fatal to Bank of America's declaratory relief claim that it asserts a lien interest rather than title to the property.

         B. Adequate Remedy at Law

         The Trust argues Bank of America cannot resort to equity because it has an adequate remedy at law. 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., 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, [2] 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.”).

         C. Tender

         Bank of America contends that its offer to pay the superpriority amount qualifies as a tender that discharged the superpriority lien, or its offer to pay combined with the response from Woodcrest's foreclosure agent, Absolute Collection Services, Inc. (Absolute), operates as a tender. Alternatively, Bank of America argues the former homeowner made payments sufficient to discharge the superpriority amount.

         The Trust and Woodcrest contend that an offer to pay without actual payment does not constitute a valid tender and that Bank of America thereafter did nothing to protect its interest despite Absolute telling Bank of America additional steps it could take. The Trust also argues Bank of America has not presented evidence showing the prior homeowner's payments were allocated toward the superpriority portion of the HOA's lien.

         Tender is an affirmative defense that Bank of America bears the burden of proving. Res. Grp., LLC as Tr. of E. Sunset Rd. Tr. v. Nev. Ass'n. Servs., Inc., 437 P.3d 154, 158 (Nev. 2019) (en banc) (“Payment of a debt is an affirmative defense, which the party asserting has the burden of proving.”). “A valid tender of payment operates to discharge a lien or cure a default.” Bank of Am., N.A. v. SFR Investments Pool 1, LLC, 427 P.3d 113, 117 (Nev. 2018) (en banc) (quotation omitted). For tender to be valid, it must be (1) “payment in full” and (2) either unconditional or “with conditions on which the tendering party has a right to insist.” Id. at 118. “The only legal conditions which may be attached to a valid tender are either a receipt for full payment or a surrender of the obligation.” Id. (quotation omitted).

         “[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.

         1. Bank of ...

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