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Bank of America N.A. v. SFR Investments Pool 1, LLC

United States District Court, D. Nevada

November 13, 2019

BANK OF AMERICA, N.A., Plaintiff
SFR INVESTMENTS POOL 1, LLC, et al., Defendants



         Plaintiff Bank of America, N.A. sues to determine whether a deed of a trust still encumbers property located at 9375 New Utrecht Street in Las Vegas following a non-judicial foreclosure sale conducted by the homeowners association (HOA), defendant Monterey Square at Mountain's Edge Homeowners Association (Monterey Square). Defendant SFR Investments Pool 1, LLC (SFR) purchased the property from Monterey Square after the foreclosure sale. Bank of America asserts a declaratory relief claim against all defendants and damages claims against Monterey Square, who filed a third party complaint against its foreclosure agent, Alessi & Koenig LLC (Alessi). SFR counterclaims for declaratory relief and to quiet title.[1]

         All parties[2] move for summary judgment, raising a variety of arguments. The parties are familiar with the facts so I do not repeat them here except where necessary. I deny SFR's motion and grant Bank of America's motion because no genuine dispute remains that Bank of America tendered the superpriority amount and thus the HOA foreclosure sale is void as to the deed of trust. I grant in part Monterey Square's motion because the sale will not be set aside, so it is no longer a proper party to Bank of America's declaratory relief claim. I dismiss as moot Bank of America's damages claims against Monterey Square and Monterey Square's third party claims against Alessi.

         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).

         Under Nevada law, a “first deed of trust holder's unconditional tender of the superpriority amount due results in the buyer at foreclosure taking the property subject to the deed of trust.” Bank of Am., N.A. v. SFR Investments Pool 1, LLC, 427 P.3d 113, 116 (Nev. 2018) (en banc). To be valid, tender must be for “payment in full” and must either be “unconditional, or with conditions on which the tendering party has a right to insist.” Id. at 118.

         Bank of America has met its burden of establishing it paid the superpriority amount in full. The monthly homeowners association (HOA) assessment was $58 per month. ECF No. 101-6 at 12. Prior to the HOA foreclosure sale, Bank of America tendered $522 to Alessi to cover the superpriority amount of nine months of assessments. Id. at 15-20. SFR has presented no contrary evidence in response. Consequently, no genuine dispute remains that the superpriority lien was extinguished and the property remains subject to the deed of trust. Bank of Am., N.A., 427 P.3d at 121.

         SFR raises several arguments as to why tender did not extinguish the deed of trust. None raises a genuine dispute precluding summary judgment.

         A. Evidentiary Challenges

         SFR contends the Alessi documents attached to the affidavit of Adam Kendis, a paralegal for the law firm Miles, Bauer, Bergstrom & Winters, LLP (Miles Bauer), are unauthenticated and inadmissible hearsay because Kendis is not a custodian of records for Alessi. It also argues the Alessi letter is hearsay within hearsay because it contains information that Alessi obtained from Monterey Square. It also contends that because neither Kendis nor Alessi actually worked for Monterey Square, neither can attest to what the superpriority amount actually was. SFR also asserts that the Kendis affidavit is suspect because Bank of America's attorneys have access to Miles Bauer's database, which they could have altered. Bank of America responds that Kendis need not be a custodian of records to authenticate the documents attached to his affidavit or to satisfy the business records exception and that Kendis has adequately authenticated the documents.

         Bank of America has presented sufficient proof from which a reasonable jury could find the ledger from Alessi “is what its proponent claims.” Fed.R.Evid. 901(a). Kendis states he has personal knowledge of Miles Bauer's procedures for creating and maintaining its business records and he sets forth the prerequisites for the business records exception to hearsay. ECF No. 101-6 at 2; Fed.R.Evid. 803(b). The business records exception does not require that the custodian of records for the business that created the document be the one to authenticate it. See MRT Const. Inc. v. Hardrives, Inc., 158 F.3d 478, 483 (9th Cir. 1998). Rather, someone from another business (like Miles Bauer) who relied upon the accuracy of the business record may properly authenticate it. Id. Miles Bauer's records show it requested the superpriority amount from Alessi and Alessi responded by providing the ledger, which Miles Bauer then used to calculate the superpriority amount for its tender. Id. at 6-16.

         Additionally, Alessi's Rule 30(b)(6) witness, David Alessi, was questioned about the ledger at his deposition. ECF No. 101-13 at 7-8. As Mr. Alessi stated, the superpriority amount could be determined by looking at the ledger, identifying the monthly assessment amount, and multiplying that by nine months. Id. Bank of America thus has presented evidence of the superpriority amount. Although SFR contends this is hearsay because Alessi must have obtained that information from Monterey Square, Bank of America need not present the evidence in admissible form at summary judgment. Fraser v. Goodale, 342 F.3d 1032, 1036 (9th Cir. 2003) (“At the summary judgment stage, we do not focus on the admissibility of the evidence's form. We instead focus on the admissibility of its contents.”). Bank of America could call a witness from Monterey Square to identify the monthly assessment amount. Because the evidence could be presented in admissible ...

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