United States District Court, D. Nevada
J. Dawson, United States District Judge.
the Court are three motions for summary judgment. The first
was filed by defendants and counterclaimants, the Edward
Kielty Trust, Abigail Sarceno Avila, Maria Aguirre, Ever
Atilio Lozano-Membreno, Zoila Angelica Membreno, and Edward
and Mary Kielty (ECF No. 96). Plaintiff, the Bank of New
York Mellon, responded (ECF No. 106), and the Trust
defendants replied (ECF No. 110).
the Bank of New York Mellon moved for summary judgment (ECF
No. 97). Both the Edward Kielty Trust defendants and
co-defendant Hillcrest at Summit Hills Homeowners Association
responded (ECF Nos. 103, 104). BNY Mellon replied (ECF No.
Hillcrest at Summit Hills Homeowner Association moved for
summary judgment (ECF No. 98). BNY Mellon responded (ECF No.
105), and Hillcrest replied (ECF No. 115).
BNY Mellon and the Edward Kielty Trust claim an interest in a
home located at 2216 Calm Sea Avenue in Las Vegas, Nevada.
BNY Mellon claims that it holds the superior interest in the
property by virtue of a lender's deed of trust. The Trust
argues that it purchased the property free and clear of the
bank's interest after a lawful nonjudicial foreclosure
extinguished the lender's deed of trust. Hillcrest, on
the other hand, does not claim an interest in the property.
Rather, Hillcrest seeks vindication that its foreclosure was
lawful and that it did not deceive BNY Mellon during the
Mellon contends that Hillcrest's foreclosure did not
extinguish its property interest because the bank's
predecessor-in-interest tendered the superpriority lien
balance before foreclosure. Hillcrest rejected that payment.
Although proper foreclosure of a superpriority lien
extinguishes even a lender's first deed of trust, tender
of the outstanding superpriority lien before the foreclosure
preserves that interest. That is what happened here. BNY
Mellon tendered the entire superpriority balance before
foreclosure. Hillcrest's agent, Nevada Association
Services, rejected that payment and foreclosed anyway.
Because BNY Mellon cured Hillcrest's superpriority lien,
the association could only foreclose on the subpriority piece
of its lien, which it then conveyed to the Edward Kielty
Trust. As a result, the Trust took the property subject to
BNY Mellon's valid deed of trust. Accordingly, the Court
grants BNY Mellon's motion for summary judgment against
the Edward Kielty Trust, denies the Trust's countermotion
for summary judgment and denies as moot the bank's
remaining claims against Hillcrest.
facts in this case follow a familiar pattern of nonjudicial
foreclosures. In 2001, nonparty Denise Hookfin purchased the
home at 2216 Calm Sea Avenue for $111, 000. See Deed
of Sale, ECF No. 96-B. Six years later, Hookfin refinanced
the property. The refinance deed of trust listed Hookfin as
borrower, Mortgage Solutions Management, Inc. as lender, and
Mortgage Electronic Registration Systems, Inc.
(“MERS”) as beneficiary under the deed of trust.
See Deed of Trust 1-2, ECF No. 96-C. MERS later
assigned its interest to plaintiff BNY Mellon, who brought
this suit. Corp. Assignment of DOT, ECF No. 96-D.
the time of sale to present, the property has been part of
the Hillcrest at Summit Hills Homeowner Association and is
subject to the association's Covenants, Conditions, and
Restrictions (“CC&Rs”). See
Hillcrest CC&Rs, ECF No. 96-A. Among those conditions was
the owner's responsibility to pay monthly assessments for
general upkeep and shared community maintenance. Id.
at 15. At some point, Hookfin fell behind on her assessments.
That prompted Hillcrest to begin collection actions against
Hookfin. In October of 2011, Hillcrest's agent, Taylor
Association Management, recorded a Notice of Delinquent
Assessment Lien against the property. See Assessment
Lien, ECF No. 96-E. The lien identified Hookfin's total
outstanding balance as $890.00. Id. Of the total
balance, $445.00 was “assessments, interest costs and
penalties in arrears, ” and the other $445.00
constituted “collection and lien costs.”
Hookfin did not pay the outstanding balance, Hillcrest began
foreclosure proceedings against the property. In April of
2012, Hillcrest's new agent, Nevada Association Services,
recorded a Notice of Default and Election to Sell.
See Notice of Default, ECF No. 96-F. In the six
months between Hillcrest's delinquent assessment lien and
its notice of default, Hookfin's outstanding balance
ballooned to $2, 478.60. Id. Failure to satisfy that
balance, the notice stated, could cause Hookfin to lose her
home. Id. In addition to recording the notice,
Nevada Association Services sent the notice certified mail to
Hookfin, MERS, and BNY Mellon. See Certified Mail
Log, ECF No. 98-C. Neither Hookfin, nor any other interested
party, paid the $2, 478.60 balance, which caused Hillcrest to
record a Notice of Foreclosure Sale. ECF No. 96-G. That
notice scheduled the foreclosure sale for February 1, 2013,
though the actual sale did not occur until May of 2013.
See Foreclosure Deed, ECF No. 96-J. The notice also
warned that all rights and interests in the property would be
sold to the highest bidder unless Hookfin satisfied the
outstanding assessment balance of $4, 595.27. Id. at
that time, BNY Mellon's predecessor in interest, Bank of
America, retained the law firm of Miles, Bauer, Bergstrom
& Winters (“Miles Bauer”) to ascertain and
satisfy the bank's portion of the outstanding lien
balance. On February 11, 2013, attorney Rock K. Jung
contacted Nevada Association Services by letter and requested
an accounting of the outstanding lien balance. The letter
acknowledged that the superpriority portion of the
association's outstanding lien was “arguably
senior” to the bank's interest. Id. at 7.
However, the bank argued that the superpriority balance only
equaled to nine-months' worth of community assessments.
With that understanding, Miles Bauer requested an account
ledger detailing nine-months of common assessments on the
property and agreed to pay that amount “whatever it
[was].” Id. Nevada Association Services did
not produce the nine-month ledger, leaving Bank of America to
calculate the outstanding superpriority balance on its own.
The bank did so by referencing a statement of account from a
different property in the Hillcrest Association. Borrowing
from that ledger, Bank of America calculated the
superpriority lien to be $630.00 ($70 per month for nine
months). Stmt. of Acct., ECF No. 97-F Ex. 3. It then sent
Nevada Association Services a check for that amount. A letter
accompanying that check read:
Despite your current refusal to provide HOA payoff ledgers,
[Bank of America] still wishes to make a good-faith attempt
to fulfill [its] obligations as the 1st lienholder by
tendering to NAS an accurate estimate of the Super-Priority
Amount. . . Enclosed you will find a cashier's check made
out to NEVADA ASSOCIATION SERVICES in the sum of $630.00.
This is a non-negotiable amount and any endorsement of said
cashier's check on your part, whether express or implied,
will be strictly construed as an unconditional acceptance . .
. and express agreement that [the bank's] Super-Priority
obligations towards the HOA . . . have now been “paid
Id. at 13. Hillcrest was undeterred by the
bank's offer to pay nine-months' worth of
assessments. It returned the check and proceeded to
foreclosure. On May 3, 2013, Nevada Association Services sold
the property a trustee's sale to the Edward ...