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Bank of New York Mellon v. SFR Investments Pool 1, LLC

United States District Court, D. Nevada

November 15, 2019

BANK OF NEW YORK MELLON, Plaintiff
v.
SFR INVESTMENTS POOL 1, LLC, et al., Defendants

          ORDER (1) GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT ON TENDER; (2) DENYING PLAINTIFF'S SECOND MOTION FOR SUMMARY JUDGMENT AS MOOT; (3) DENYING SFR'S MOTION FOR SUMMARY JUDGMENT; (4) GRANTING IN PART PECOS'S MOTION FOR SUMMARY JUDGMENT; AND (5) DISMISSING PLAINTIFF'S NEGLIGENCE CLAIMS AS MOOT [ECF NOS. 87, 89, 97, 99]

          ANDREW P. GORDON UNITED STATES DISTRICT JUDGE

         Plaintiff Bank of New York Mellon (BONY) sues to determine whether its deed of trust encumbering property located at 6305 Legend Falls Street in North Las Vegas, Nevada was extinguished by a nonjudicial foreclosure sale conducted by a homeowners association (HOA), defendant Pecos Park-Sunflower Homeowners Association (Pecos). Defendant SFR Investments Pool 1, LLC (SFR) purchased the property at the foreclosure sale. BONY seeks a declaration that its deed of trust still encumbers the property and it asserts damages claims against Pecos. SFR counterclaims for declaratory relief and to quiet title in itself.[1]

         The parties move for summary judgment on a variety of grounds. The parties are familiar with the facts so I do not repeat them here except where necessary. I grant BONY's motion and deny SFR's motion because no genuine dispute remains that BONY tendered the superpriority amount, thereby extinguishing the superpriority lien and rendering the sale void as to the deed of trust. I deny BONY's alternative motion for summary judgment as moot. I grant in part Pecos's motion because the sale will not be set aside, so it is no longer a proper party to BONY's declaratory relief claim and BONY cannot prevail on a wrongful foreclosure claim against Pecos. I dismiss as moot BONY's negligence claims against Pecos because those were explicitly pleaded in the alternative to the declaratory relief claim.

         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

         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 be either “unconditional, or with conditions on which the tendering party has a right to insist.” Id. at 118.

         BONY has met its burden of establishing that its prior servicer, Bank of America, N.A. (BANA), tendered the superpriority amount in full. The monthly HOA assessment was $35.25 per month. ECF No. 87-1 at 26. Prior to the HOA foreclosure sale, BANA tendered $317.25 to Pecos's foreclosure agent, Nevada Association Services, Inc. (NAS), to cover the superpriority amount of nine months of assessments. ECF No. 87-2 at 11-17. NAS refused to accept the check. Id. at 4, 17. 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 superpriority lien. None raises a genuine dispute precluding summary judgment.

         1. Evidentiary Challenges

         SFR contends BONY has presented no evidence that BANA was the prior servicer on the loan. It also argues that BONY cannot rely on Doug Miles' affidavit because BONY did not disclose him as a witness in discovery, and in any event Miles lacks knowledge to authenticate the documents attached to his affidavit and there is inadmissible hearsay within those documents. SFR thus argues BONY has not shown that it tendered the proper superpriority amount.[2]

         BONY responds that the ledger is authenticated by a custodian of records affidavit from NAS and that the ledger does not show any charges for maintenance or nuisance abatement, nor is there any other evidence of such charges. BONY argues Miles can authenticate the runner slip showing that the tender check was delivered to NAS because it is part of the records of law firm Miles Bauer Bergstrom Winters LLP (Miles Bauer) and qualifies as nonhearsay under the business records exception.

         SFR does not explain why it matters whether BANA was the prior servicer on the loan. Even if BANA was not the servicer, BANA could have satisfied the superpriority lien. Cf. Saticoy Bay LLC v. JPMorgan Chase Bank, No. 71246, 408 P.3d 558, 2017 WL 6597154, at *1 (Nev. 2017) (holding no superpriority lien remained after homeowner made payments sufficient to satisfy the superpriority amount and the HOA applied those payments to the ...


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