United States District Court, D. Nevada
U.S. BANK, N.A., Plaintiff,
SFR INVESTMENTS POOL 1, LLC, et al., Defendants.
J. DAWSON UNITED STATES DISTRICT JUDGE
before the Court is Defendant SFR Investments Pool 1,
LLC’s Motion for Summary Judgment (#68). Plaintiff U.S.
Bank filed a response in opposition (#73) to which Defendant
SFR replied (##76). Defendant White Horse Estates Homeowners
Association joined (#74) SFR’s motion.
before the Court is Plaintiff U.S. Bank’s Motion for
Summary Judgment (#72). Defendant SFR filed a response in
opposition (#75) to which Plaintiff replied (#77).
a quiet title action arising out of the non-judicial
foreclosure of real property located at 6353 Ebony Legends
Avenue, Las Vegas, Nevada 89131 (“the Property”).
U.S. Bank seeks a declaration that the White Horse Estates
Homeowners Association (“HOA”) foreclosure did
not extinguish its deed of trust under two theories. First,
the bank argues that the Court should set aside the HOA sale
because the sale price was grossly inadequate and because the
HOA acted unfairly while carrying out its pre-foreclosure
actions. Alternatively, it claims that the HOA’s
foreclosure under NRS § 116 is invalid because the
statute is unconstitutional. The bank’s principal
argument is that § 107.090’s notice
requirements-as incorporated-do not adequately warn
subordinate lienholders that an HOA foreclosure threatens to
extinguish their deeds of trust. SFR also moved for summary
U.S. Bank, SFR seeks to quiet title in the Property and
requests a declaration that it purchased the Property free
and clear of the bank’s deed of trust. SFR argues that
§ 116 is constitutional and that the HOA sale was not
commercially unreasonable. The Court agrees and therefore
grants SFR Investments Pool’s motion for summary
judgment (#68). Consequently, the Court denies U.S.
Bank’s motion for summary judgment (#72).
owner and non-party Tricia Thoen purchased the Property in
May 2005. (#68 at Ex. 5). Thoen financed the purchase with a
$479, 920.00 loan, secured by a deed of trust dated June 7,
2005. The deed of trust in favor of Meridias Capital, Inc.
contained a Planned Unit Development Rider, prepared by the
lender and signed by Thoen. (Id. at Ex. 7). The
Rider recognized the need to pay assessments to the HOA and
the ability of the lender to pay the assessments if Thoen
23, 2006, a deed was filed with the Clark County
Recorder’s office transferring Thoen’s interest
to Cross-Defendant MAT Holdings, LLC (“MAT”).
(Id. at Ex. 10). On April 1, 2009, MAT became
delinquent on payments on the deed of trust. On August 18,
2009, Recontrust Company, N.A., acting on behalf of
beneficiary recorded Notice of Default and Election to Sell.
On September 8, 2009, the deed of trust was assigned by
Mortgage Electronic Registration Systems, Inc. to BAC Home
Loans Servicing, LP. On July 27, 2010, Fidelity National
Title was substituted for Recontrust as trustee under the
deed of trust. On September 9, 2010, the HOA recorded Notice
of Delinquent Assessment Lien, which was released on April
28, 2011 after the HOA received payment for the entire
amount. On December 28, 2011, the HOA recorded a second
Notice of Delinquent Assessment Lien, stating that MAT owed
$2, 677.24 in past due assessments, late fees and interest.
On February 23, 2012, the HOA, through its agent Nevada
Association Services (“NAS”) recorded a Notice of
Default and Election to Sell under the second lien, stating
that MAT now owed $3, 854.72.
servicers of the loan at the time, Bank of America, N.A.
(“BANA”), offered to pay the super-priority
amount, including nine months of assessments. BANA’s
counsel contacted the HOA to pay the delinquent assessments.
BANA then paid the full amount of $3, 854.72. The HOA then
released the second lien on or about October 22, 2012. On or
about August 29, 2012, the first deed of trust was assigned
from BANA to Plaintiff U.S. Bank.
March 26, 2013, the Association, through its agent NAS,
recorded a third Notice of Delinquent Assessment Lien
(“the Operative Lien”). The Operative Lien stated
that MAT now owed $1, 429.58. On June 11, 2013, NAS, as agent
for the HOA, recorded a Notice of Default and Election to
Sell in order to satisfy the Operative Lien. The notice
stated that the amount due the HOA was $2, 740.49. (#68 at
Ex. 24). A Notice of Foreclosure Sale was recorded on or
about October 11, 2013. The foreclosure sale was scheduled
for November 1, 2013. Defendant SFR bid the highest amount at
the foreclosure sale. The Foreclosure Deed was recorded on
November 6, 2013 stating that the sale price was $25, 000.00.
The Deed estimated that the value of the Property was $308,
then brought this action. The bank primarily seeks to quiet
title in the Property. (#1 at 6). To do so, the bank seeks a
declaration that the HOA acted unfairly in its foreclosure
sale or NRS § 116 is facially unconstitutional, either
of which would invalidate the HOA’s foreclosure. In
response, SFR asserted its own quiet title claim against U.S.
Bank, MAT, and Meridias (#11). In addition, SFR sought to
enjoin U.S. Bank from asserting any interest in the Property.
The Court then stayed the case following the Ninth
Circuit’s decision in Bourne Valley Court Trust v.
Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016).
(#63). The Court lifted the stay in October of 2018 and set
the dispositive-motion deadline. (#67). Discovery has since
closed, and the parties have filed their respective motions
for summary judgment to which the Court now turns.
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); Northwest Motorcycle Ass’n v. U.S. Dept. of
Agriculture, 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.
Bank moves for summary judgment on its quiet title claim
arguing that (1) the inherent unfairness of the sale coupled
with the Property’s sale price justify setting aside
the HOA sale and (2) the HOA foreclosed under an
unconstitutional statute thereby preserving the bank’s
interest in the Property.
also seeks summary judgment on its own quiet title claim and
argues that U.S. Bank lacks standing because it has not
provided evidence of the assignments of the deed of trust
sufficient to prove the bank’s chain of title. It
continues that even if the bank has standing, NRS § 116
is both facially constitutional and constitutional as applied
to U.S. Bank. SFR contends that the bank received adequate
notice to apprise it of the risk to the bank’s property
interest and to allow the bank to contest the sale. Finally,
SFR argues that U.S. Bank has not demonstrated the necessary
fraud, oppression, or unfairness that would justify equitably
setting aside the sale.
U.S. Bank’s Motion ...