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Bank of New York Mellon v. The Mews Homeowners Association

United States District Court, D. Nevada

September 9, 2019

THE BANK OF NEW YORK MELLON, as Trustee, Plaintiff,


          Kent J. Dawson United States District Judge

         There are three motions pending before the Court. First is Defendant Saticoy Bay, LLC's motion to dismiss (#46). Plaintiff, Bank of New York Mellon, responded and simultaneously moved for partial summary judgment (##47/48). Saticoy Bay replied (#49) and opposed BNY Mellon's motion for partial summary judgment (#50). Defendant, Mews Homeowners Association, also moves for summary judgment (#61). BNY Mellon has responded (#63), and Mews replied (#65).

         This is a dispute over who holds the superior interest in real property located at 1218 Coach Lane in Las Vegas, Nevada. BNY Mellon and Saticoy Bay each claim the superior interest-BNY Mellon by virtue of a lender's deed of trust and Saticoy Bay by virtue of nonjudicial foreclosure and sale. Mews and Homeowners Association Services facilitated the nonjudicial foreclosure and trustee's sale but do not claim any interest in the property. BNY Mellon argues that its deed of trust survived Mews' foreclosure because the bank tendered the superpriority lien before foreclosure. The Court agrees. BNY Mellon has shown that its predecessor in interest submitted valid tender before Mews' foreclosure and sale and that Mews foreclosed anyway. Therefore, BNY Mellon's deed of trust survived, and Saticoy Bay took its interest subject to BNY Mellon's.

         I. Background

         The parties mostly agree on the facts. In 2006, former-homeowner and non-party Roosevelt McCullom purchased the Coach Lane property. Countrywide Home Loans financed the purchase and secured its interest by recording a deed of trust against the property. Deed of Trust, ECF No. 47 Ex. A. Countrywide eventually assigned the deed of trust to Deutsche Bank. Assignment of DOT, ECF No. 47 Ex. B. The Coach Lane property is part of the Mews Homeowners Association and is subject to the association's Covenants, Conditions, and Restrictions (“CC&Rs”). The CC&Rs required McCullom to pay monthly assessments for shared maintenance and general community upkeep.

         Eventually, McCollum fell behind on his assessments, which prompted Mews to initiate foreclosure proceedings. In February of 2012, Mews' agent, Homeowner Association Services, recorded a Notice of Delinquent Assessment Lien against the Coach Lane property. ECF No. 47 Ex. C. The notice identified a delinquency of $1, 242.00 and warned that the balance would continue to increase monthly if not cured. Id Neither McCullom nor BNY Mellon payed the delinquency, so Homeowners Association Services recorded a Notice of Default and Election to Sell under the deed of trust. ECF No. 47 Ex. D. That notice identified a past-due balance of $1, 523.94 plus additional costs and fees. Id.

         After receiving the Notice of Default and Election to Sell, BNY Mellon's predecessor in interest, Bank of America, retained the law firm Miles, Bauer, Bergstrom & Winters (Miles Bauer) to ascertain and satisfy Mews' superpriority lien. On September 5, 2012, Miles Bauer sent Mews and Homeowners Association Services a letter requesting a ledger of the association's outstanding fees and assessments. ECF No. 47 Ex. G-1. The letter acknowledged that Mews' lien was “arguably senior to BANA's first deed of trust” and that the bank would pay that amount, “whatever it [was].” Id Homeowners Association Services provided a ledger of fees on the Coach Lane property, which identified the association's monthly assessments as $32.00. HOA Ledger, ECF No. 47 Ex. G-2. From that ledger, Bank of America determined that nine months of assessments was $288.00. The bank then tendered a check for $909.67 to Homeowners Association Services to cover nine months of missed assessments as well as reasonable collection costs. ECF No. 47 Ex. G-3. Homeowners Association Services rejected the check.

         After returning Bank of America's check, Homeowners Association Services proceeded with its foreclosure. In February of 2014, the association recorded a Notice of Trustee's Sale. ECF No. 47 Ex. E. Eight months later, the association recorded a second Notice of Trustee's Sale. ECF No. 47 Ex. F. Homeowners Association Services sold the property to Saticoy Bay for $20, 300 at a trustee's sale on October 30, 2014. Foreclosure Deed, ECF No. 47 Ex. I.

         On February 14, 2017, BNY Mellon filed this case, seeking quiet title and a declaration that its deed of trust survived the association's foreclosure. It brought three causes of action split between defendants Mews Homeowners Association, Saticoy Bay, LLC, and Homeowners Association Services. BNY Mellon brought its first cause of action-quiet title and declaratory relief-against every defendant. Its second and third causes of action-breach of NRS § 116.3116 and wrongful foreclosure, respectively-the bank brought against Mews and Homeowner Association Services. The bank will only pursue those claims if the Court determines that the association's foreclosure extinguished its deed of trust. The bank's final cause of action is for injunctive relief against Saticoy Bay. See generally Am. Compl., ECF No. 24. Mews answered the complaint and asserted crossclaims for indemnity, contribution, apportionment, breach of contract, and declaratory relief against Homeowners Association Services. See Mews' Answer, ECF No. 31. Homeowners Association Services has not participated in the suit despite being properly served, and the Clerk of Court has entered default against it. ECF No. 29.

         In June of 2017, the parties stipulated to stay the case pending the final outcome of Bourne Valley Court Tr. v. Wells Fargo Bank, N. A., 832 F.3d 1154 (9th Cir. 2016), cert. denied, --- U.S. ---, 137 S.Ct. 2296 (2017). After the Supreme Court denied certiorari, this Court lifted the stay and allowed the parties to move to modify the discovery plan and scheduling order. If the parties elected not to modify the scheduling order, the Court set a forty-five-day deadline on dispositive motions. Order Lifting Stay 2-3, ECF No. 45. No. party has moved to modify the scheduling order or discovery plan. Instead, Saticoy Bay moved to dismiss and BNY Mellon and Mews each moved for summary judgment. The parties' motions are fully briefed, and the Court turns to their merits.

         II. Legal Standard

         The purpose of summary judgment is to avoid unnecessary trials by disposing of factually unsupported claims or defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986); Nw. Motorcycle Ass'n v. U.S. Dept. of Agric., 18 F.3d 1468, 1471 (9th Cir. 1994). It is available only where the absence of material fact allows the Court to rule as a matter of law. Fed.R.Civ.P. 56(a); Celotex, 477 U.S. at 322. Rule 56 outlines a burden shifting approach to summary judgment. First, the moving party must demonstrate the absence of a genuine issue of material fact. The burden then shifts to the nonmoving party to produce specific evidence of a genuine factual dispute for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). A genuine issue of fact exists where the evidence could allow “a reasonable jury [to] return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court views the evidence and draws all available inferences in the light most favorable to the nonmoving party. Kaiser Cement Corp. v. Fischbach & Moore, Inc., 793 F.2d 1100, 1103 (9th Cir. 1986). Yet, to survive summary judgment, the nonmoving party must show more than “some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 586.

         Where parties have filed competing motions for summary judgment, the Court must review each motion on its own merits. Fair Housing Council of Riverside Cty., Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001). In reviewing each motion, the Court views the evidence and makes all available inference in favor non-moving party. See Kaiser Cement Corp., 793 F.2d at 1103. At bottom, a party does not prevail on summary judgment solely because the other party did not prevail. See Riverside Two, 249 F.3d at 1136.

         III. ...

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