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Bank of New York Mellon v. Green Valley South Owners Association No. 1

United States District Court, D. Nevada

September 13, 2019

THE BANK OF NEW YORK MELLON, as Trustee, Plaintiff,
v.
GREEN VALLEY SOUTH OWNERS ASSOCIATION NO. 1, et al., Defendants.

          ORDER

          Kent J. Dawson, United States District Judge

         Pending before the Court are cross-motions for summary judgment filed by plaintiff Bank of New York Mellon (#46) and defendant SFR Investments Pool 1, LLC (#48). The parties have filed their respective responses and replies.

         BNY Mellon seeks declaratory relief that its deed of trust on a property located at 2856 Belleza Lane in Henderson, Nevada, survived Green Valley South Owners Association's nonjudicial foreclosure. The bank claims that its predecessor-in-interest tendered the superpriority portion of Green Valley's lien before foreclosure, which cured the superpriority lien and voided the foreclosure as to the bank's deed of trust. Alternatively, BNY Mellon argues the foreclosure was unconstitutional or that equity requires the Court to set aside Green Valley's sale. SFR Investments purchased the property at Green Valley's trustee's sale and counterclaimed for the opposite declaration, namely that Green Valley's foreclosure and trustee's sale extinguished BNY Mellon's deed of trust and that SFR Investments purchased the property free and clear of the bank's interest. Both BNY Mellon and SFR Investments move for summary judgment on their respective quiet title claims. Because BNY Mellon has demonstrated that its predecessor-in-interest validly tendered the superpriority priority portion of Green Valley's lien before foreclosure, Green Valley's foreclosure did not extinguish the bank's deed of trust. As a result, SFR Investments purchased the property subject to BNY Mellon's deed of trust.

         I. Background

         The parties agree on the basic facts. In 2006, cross-defendant Dennis Carroll purchased a home located at 2856 Belleza Lane, in Henderson, Nevada. 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. 2. The deed of trust listed Dennis Carroll as borrower, Countrywide as lender, and Mortgage Electronic Services (“MERS”) as beneficiary under the deed of trust. Id. MERS later assigned the deed of trust to plaintiff BNY Mellon. See Assignment, ECF No. 47 Ex. 3.

         The Belleza Lane property is part of the Green Valley South Owners Association and is subject to the association's Covenants, Conditions, and Restrictions (“CC&Rs”). The CC&Rs required Carroll to pay monthly assessments for shared maintenance and general community upkeep. Carroll eventually fell behind on his assessments, which caused the association to initiate foreclosure proceedings. On September 2, 2011, Green Valley's agent Nevada Association Services recorded a Notice of Delinquent Assessment Lien against the property. ECF No. 47 Ex. 4. The notice identified the total past-due amount as $818.70, which included late fees, collection costs, and interest. Id. Neither Carroll nor BNY Mellon satisfied the outstanding balance. So, on November 2, 2011, Nevada Association Services recorded a Notice of Default and Election to Sell. ECF No. 47, Ex. 5. That notice identified the past-due amount as $1, 813.50 and warned that failure to pay the delinquency could result in foreclosure. Id.

         After receiving the Notice of Default and Election to Sell, BNY Mellon's predecessor-in-interest, Bank of America, retained law firm Miles, Bauer, Bergstrom & Winters to cure the superpriority lien. On January 24, 2012, Miles Bauer requested a payoff ledger from Nevada Association Services. Its letter acknowledged that a portion of Green Valley's lien was senior to the existing deed of trust and offered to satisfy that amount “whatever it [was].” ECF No. 46 Ex. 9-2. Nevada Association Services refused to respond to Miles Bauer's letter and did not provide a payoff ledger. Having not received a payoff ledger, Bank of America calculated nine months of assessments by referencing a statement of account from a different property in the Green Valley South Owners Association. Bank of America determined that nine months of assessments totaled $73.50, and on February 16, 2012, Miles Bauer sent Nevada Association Services a check for that amount. The association rejected the check.

         After rejecting Miles Bauer's check, Nevada Association Services proceeded with its foreclosure. On April 25, 2012, the association recorded a Notice of Foreclosure Sale. ECF No. 47 Ex. 6. Four months later, SFR Investments purchased the property at Nevada Association Services' trustee's sale. SFR Investments recorded a foreclosure deed referencing the trustee's sale on September 12, 2012. ECF No. 47 Ex. 7.

         On July 25, 2017, BNY Mellon brought this suit against Green Valley South Owners Association and SFR Investments. Its sole cause of action sought declaratory relief and quiet title. Compl. 6, ECF No. 1. BNY Mellon has since voluntarily dismissed Green Valley. ECF No. 26. SFR Investments answered the bank's complaint and filed its own quiet title cross-claim and counterclaim against former owner Dennis Carroll and BNY Mellon. Answer, ECF No. 33. Discovery has closed, and BNY Mellon and SFR Investments both move for summary judgment.

         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. Analysis

         BNY Mellon argues that Miles Bauer's $73.50 offer of tender prior to Green Valley's foreclosure preserved its deed of trust from extinguishment. If not, the bank argues that Green Valley's foreclosure was void because the association foreclosed under an unconstitutional version of NRS § 116.3116(2). SFR Investments counters that BNY Mellon's claims are untimely, that Miles Bauer's tender was invalid for various reasons, and that equity favors SFR Investments because it was an innocent third-party ...


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