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Bank of America, N.A. v. Madeira Canyon Homeowners' Association

United States District Court, D. Nevada

November 13, 2019

BANK OF AMERICA, N.A., Plaintiff



         Plaintiff Bank of America, N.A. sues to determine whether its deed of trust still encumbers property located at 2601 Vendange Place in Henderson, Nevada following a non-judicial foreclosure sale conducted by the homeowners association (HOA), defendant Madeira Canyon Homeowners' Association (Madeira). Defendant Vendange Place Trust (Vendange Trust) purchased the property at the HOA foreclosure sale and then transferred it to defendant Paradise Harbor Place Trust (Paradise Trust). Bank of America asserts a declaratory relief claim against all defendants and damages claims against Madeira and its foreclosure agent, defendant Nevada Association Services, Inc. (NAS). Paradise Trust counterclaims for declaratory relief and to quiet title.

         All parties[1] 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 the defendants' motions and grant Bank of America's motion because (1) Bank of America's declaratory relief claim is timely and (2) NAS failed to mail required notices to the deed of trust's beneficiary and Bank of America was prejudiced by that failure, rendering the sale void as to the deed of trust. I dismiss Bank of America's damages claims against Madeira and NAS as moot.

         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).

         A. Declaratory Relief

         The Trusts, Madeira, and Bank of America move for summary judgment on Bank of America's declaratory relief claim. The parties raise a variety of arguments. I address only those that are necessary to resolve the pending motions.

         1. Statute of Limitations

         The Trusts and Madeira argue that Bank of America's declaratory relief claim is time-barred, and Madeira also argues Bank of America should be barred by the doctrine of laches. The HOA foreclosure sale took place on June 8, 2012. ECF No. 56-3 at 2. The complaint was filed on March 2, 2016. ECF No. 1. Consequently, if the limitation period is four or more years, the complaint is timely. Although the parties advocate for either a three- or five-year limitation period under Nevada law, I have previously ruled that the four-year catchall limitation period in Nevada Revised Statutes § 11.220 applies to claims brought by a lienholder seeking to determine whether an HOA sale extinguished its deed of trust. See Bank of America, N.A. v. Country Garden Owners Ass'n, 2:17-cv-01850-APG-CWH, 2018 WL 1336721, at *2 (D. Nev. Mar. 14, 2018). Because Bank of America's declaratory relief claims were brought within four years of the HOA sale, they are timely.

         As for laches, Bank of America's suit sounds in equity because it seeks to resolve competing claims to interests in property. See Shadow Wood HOA v. N.Y. Cmty. Bancorp, 366 P.3d 1105, 1111 (Nev. 2016) (en banc) (stating that a person seeking to quiet title under Nevada Revised Statutes § 40.010 may invoke the court's equitable powers to resolve competing claims to title). “Laches is an equitable time limitation on a party's right to bring suit, . . . resting on the maxim that one who seeks the help of a court of equity must not sleep on his rights.” Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 835 (9th Cir. 2002) (quotations and internal citation omitted). The “laches determination is made with reference to the limitations period for the analogous action at law. If the plaintiff filed suit within the analogous limitations period, the strong presumption is that laches is inapplicable.” Id. Laches is an affirmative defense that “requires proof of (1) lack of diligence by the party against whom the defense is asserted, and (2) prejudice to the party asserting the defense.” In re Beaty, 306 F.3d 914, 926 (9th Cir. 2002). (quotation omitted).

         Bank of America filed this action within the limitation period for its declaratory relief claim, so there is a strong presumption that laches does not apply. Madeira has not overcome that strong presumption because it has presented no evidence of prejudice. Additionally, Madeira argues Bank of America knew of the sale but failed to act. However, as discussed below, there is no evidence Bank of America had actual notice of the sale before it took place. Rather, the evidence shows that NAS failed to mail the notice of default and the notice of sale to the beneficiary of record for the deed of trust, who would have forwarded those notices to Bank of America had it received them. And Bank of America has presented evidence that if it had received the notices, it would have attempted tender, meaning it would have taken action to protect its interest. I therefore deny the defendants' motions for summary judgment on the declaratory relief claims on the basis of either the statute of limitations or laches.

         2. Adequate Remedy at Law

         The Trusts argue Bank of America cannot resort to equity because it can sue NAS for damages, so it has an adequate remedy at law. Bank of America responds that property is ...

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