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Deutsche Bank National Trust Co. v. Pacific Sunset Village Homeowners Association

United States District Court, D. Nevada

September 30, 2019

DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee for the Holders of Harborview 2005-14 Trust, Plaintiff,
v.
PACIFIC SUNSET VILLAGE HOMEOWNERS ASSOCIATION, et al., Defendants.

          ORDER

          Kent J. Dawson, United States District Judge

         Presently before the Court is Defendants Saticoy Bay, LLC Series 2995 E. Sunset Road Unit 103's and 2995 E. Sunset Rd. Un. 103 Trust's Motion for Summary Judgment (#62). Plaintiff (“Deutsche Bank”) filed a response in opposition (#70) to which Defendants replied (#73).

         Also, before the Court is Plaintiff Deutsche Bank's Motion for Summary Judgment (#63). Defendant Pacific Sunset Village Homeowners Association (“Pacific Sunset”) filed a response in opposition (#64). Defendants Saticoy Bay, LLC Series 2995 E. Sunset Road Unit 103 (“Saticoy Bay”) and 2995 E. Sunset Rd. Un. 103 Trust (“the Trust”) also filed a response in opposition (#65). Plaintiff replied (#69/71).

         I. Facts

         On or about May 3, 2005, Lisa Galanti purchased property located at 2995 East Sunset Road #103, Las Vegas, Nevada 89120 (“the Property”). This purchase was made by way of a loan in the amount of $168, 000.00 evidenced by a note and secured by a deed of trust (“senior deed of trust”), which was recorded on May 23, 2005. The senior deed of trust was eventually assigned to Deutsche Bank. The Property was subject to Pacific Sunset's Declaration of Covenants, Conditions and Restrictions and Reservation of Easements (“the CC&Rs”) which required payment of assessments.

         On March 27, 2012, Pacific Sunset Village Homeowners' Association, through its agent, Nevada Association Services, Inc. (“NAS”), recorded a notice of delinquent assessment lien. The notice indicated that the amount owed to PACIFIC SUNSET was $1, 943.50, which includes late fees, collection fees and interest in the amount of $843.50.

         On May 10, 2012, Pacific Sunset, through its agent NAS, recorded a notice of default and election to sell to satisfy the delinquent assessment lien in the amount of $3, 179.50. The notice did not specify the superpriority amount claimed by Pacific Sunset. Thereafter, on January 9, 2013, Pacific Sunset through its agent NAS, recorded a notice of trustee's sale, which was scheduled for February 1, 2013. The notice stated that the amount due to Pacific Sunset was $5, 077.67 but did not identify the superpriority amount claimed by Pacific Sunset.

         On June 13, 2012, Bank of America, N.A., the servicer of the loan at the time, requested a ledger from Pacific Sunset, through the HOA's agent NAS, to identify the superpriority amount allegedly owed to Pacific Sunset and offered to pay that amount. Pacific Sunset did not provide a payoff amount. On January 9, 2013, NAS recorded a notice of foreclosure sale. Foreclosure sale was conducted on February 1, 2013. The Trust purchased the Property at the sale for $5, 790.00. On June 25, 2014, the Property was sold to Saticoy Bay. Deutsche Bank then filed the present action on September 14, 2016. The parties have each filed summary judgment seeking a declaration as to whether Pacific Sunset's foreclosure extinguished Deutsche Bank's lien or whether Saticoy Bay's predecessor in interest, the Trust, purchased the property subject to the lien. Defendants have also moved to dismiss this action based on the statute of limitations.

         II. Standard for Summary Judgment

         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.

         III. Analysis

         Plaintiff has filed for summary judgment on its claims and the opposing parties have filed for summary judgment on the claims against them. For the reasons stated below, the Court finds that Deutsche Bank's deed of trust was extinguished by Pacific Sunset's foreclosure of its superpriority lien. Therefore, Deutsche Bank's motion for summary judgment is denied and Defendants' motions for summary judgment are granted.

         A. Statute of Limitations

         Before reaching the merits of Deutsche Bank's motion, Saticoy Bay and Pacific Sunset urge the Court to deny this action as untimely. Defendants argue that Deutsche Bank's quiet title and declaratory relief claims are subject to a three-year statute of limitations, which began accrual at the time Pacific Sunset foreclosed- February 1, 2013. If a three-year statute of limitations applies, the bank had until February 1, 2016 to bring its claims. Deutsche Bank filed its complaint on September 14, 2016. Accordingly, Defendants argue that Deutsche Bank's claims are time-barred. The crux of Defendants' argument is that Deutsche Bank's claims are not true quiet title claims because the bank never actually held title in the property. The bank is actually bringing an action to enforce rights regarding satisfaction of a superpriority lien which is a right created by statute. According to NRS § 11.190, the applicable statute of limitations for liability created under statute is three years. NRS § 11.090(3)(a). Defendants, therefore, claim that Deutsche Bank's claims are time-barred.

         Defendants are incorrect. Admittedly, courts in this district disagree on the appropriate statute of limitations for this type of claim. Deutsche Bank does not allege that it ever held title. Rather, the bank uses the quiet title claim as a vehicle to assert the validity of its preexisting interest in the Property. Despite the district's split, no Court has found that a three-year statute of limitations is appropriate for these claims. They disagree whether a four-year or a five-year limitations period applies.[1] The disagreement boils down to whether a claim in the context of a nonjudicial foreclosure constitutes a claim to recover property under NRS § 11.080.[2] If so, a five-year limitations period applies. Both the Ninth Circuit and the Nevada Supreme Court have applied a five-year statute of limitations to these actions. See Weeping Hollow Ave. Tr. v. Spencer, 831 F.3d 1110, 1114 (9th Cir. 2016) (party may bring claim challenging the HOA foreclosure within five years of the sale); Las Vegas Dev. Grp., LLC v. Blaha, 416 P.3d 233, 237 (Nev. 2018) (a claim “seeking to quiet title . . . is governed by NRS § 11.080, which provides for a five-year statute of limitations”).

         Nevertheless, a minority of courts have determined that § 11.080 does not apply to this type of quiet title claim because the bank or lender never actually held title-nor do these banks claim to have ever held title. See U.S. Bank, N.A. v. SFR Invs. Pool 1, LLC, 376 F.Supp.3d 1085, 1089-91 (D. Nev. 2019). Those courts have found that NRS § 11.220's so-called “catch-all” provision imposes a four-year statute of limitations because the bank cannot recover property to which it never held title. See NRS § 11.220 (where the Nevada Revised Statutes are silent regarding a statute of limitations, a four-year period applies).

         In any event, the Court need not resolve this dispute here. Deutsche Bank's claims are timely under either § 11.220's four-year catch-all provision or § 11.080's five-year period for recovery of real property. At the latest, Deutsche Bank's claims began accrual on February 1, 2013, when NAS recorded the trustee's deed upon sale. See G & H Assocs. v. Ernest W. Hahn, Inc., 934 P.2d 229, 233 (Nev. 1997) (accrual begins when the plaintiff first knew or should have known of the injury). Deutsche Bank brought this suit in September of 2016-less than four years from the date of accrual. Therefore, the Court need not definitively decide whether Deutsche Bank's quiet title claim is subject to a four-year ...


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