Washington & Sandhill Homeowners Association v. Bank of America, N.A. et al
Filing
24
ORDER Granting 9 Motion to Dismiss. HOAs Complaint is dismissed with prejudice. Signed by Chief Judge Gloria M. Navarro on 9/25/2014. (Copies have been distributed pursuant to the NEF - SLR)
1
UNITED STATES DISTRICT COURT
2
DISTRICT OF NEVADA
3
4
WASHINGTON & SANDHILL
HOMEOWNERS ASSOCIATION,
5
Plaintiff,
vs.
6
7
8
9
10
11
BANK OF AMERICA, N.A., dba BAC
HOME LOANS SERVICING, L.P., a national
corporation; SHAUN DONOVAN;
SECRETARY OF HOUSING AND URBAN
DEVELOPMENT OF WASHINGTON D.C.
20410, a government entity; DOES I through
X; and ROE BUSINESS ENTITIES I through
X,
12
Defendants.
13
14
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
Case No.: 2:13-cv-01845-GMN-GWF
ORDER
Pending before the Court is the Motion to Dismiss (ECF No. 9) filed by Defendant Bank
15
of America, N.A., successor by merger to BAC Home Loans Servicing, L.P. fka Countrywide
16
Home Loans Servicing, L.P. (“BOA”) and Defendant Department of Housing and Urban
17
Development (“HUD”) (collectively “Defendants”) on November 15, 2013. Plaintiff
18
Washington & Sandhill Homeowners Association (“HOA”) filed their Response to the Motion
19
to Dismiss (ECF No. 12) on November 27, 2013, and Defendants filed their Reply (ECF No.
20
13) on December 9, 2013.
21
I.
22
BACKGROUND
This case arises out of a dispute between the parties over the effects of HOA’s
23
foreclosure on their “super-priority” interest in real property under Nevada Revised Statutes
24
§ 116.3116. The relevant facts are as follows:
25
Page 1 of 12
1
On May 1, 2008, Emiliano and Martha Renteria obtained title to a property located at
2
912 Swiss Street, Las Vegas, NV 89110 (the “Property”). (Grant, Bargain, and Sale Deed, ECF
3
No. 9-1.)1 The Renterias financed their purchase of the Property by obtaining a $147,387 loan
4
from IndyMac Bank, FSB (IndyMac) that was secured by a Deed of Trust on the Property.
5
(Deed of Trust, ECF No. 9-2.) The Deed of Trust named Mortgage Electronic Registration
6
Systems, Inc. (“MERS”) as the beneficiary and Fidelity Nation Title (“Fidelity”) as trustee
7
granted MERS standing to foreclose and to substitute a trustee under the deed. (Id.) The Deed
8
of Trust was also insured by HUD through the Single Family Mortgage Insurance Program.2
9
(Id. at 4–5, 7 ¶¶ 2–3, 18; see also Beltran Decl., ECF No. 23 (explaining the relationship of
10
HUD to the Deed of Trust).)
11
The Renterias defaulted on their loan in September of 2009 and a Notice of Breach and
12
Default and of Election to Cause Sale was recorded on the Property on February 11, 2010.
13
(Notice of Breach, ECF No. 9-3.) Then on April 14, 2010, MERS executed an Assignment of
14
Deed of Trust, assigning their interest under the Deed of Trust to BOA. (Assignment of Deed
15
16
The Court takes judicial notice of Exhibits A-Y (ECF Nos. 9-1–9-25) of Defendants’ Motion to Dismiss. See
Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986). Each of these documents is publicly recorded
in the Clark County Recorder’s office.
1
17
18
2
19
20
21
22
In Secretary of Housing & Urban Development v. Sky Meadow Association, the court explained the purpose
and process of this type of insurance as follows:
Under the Single Family Mortgage Insurance Program, HUD insures mortgages issued by
private lenders (commonly known as FHA insurance) on single family homes pursuant to a
congressional mandate to make decedent housing available to all citizens. 12 U.S.C. § 1709. By
insuring the mortgage, HUD encourages private lenders to make loans to individuals who would
not otherwise qualify for a loan. This program substantially increases the number of low to
moderate income families who can purchase a home. The regulations implementing the
program are found at 24 C.F.R. Part 203.
23
24
25
Under the FHA insurance program, if the borrower defaults, the private lender may foreclose
and if the successful bidder, may convey the title to HUD. 24 C.F.R. §§ 203.355(a); 203.359(a).
The lender (mortgagee) then submits an insurance claim, known as a Single Family Application
for Insurance Benefits, for payment of its losses, as PNC did here. 24 C.F.R. § 203.65. HUD
then disposes of the property pursuant to its property disposition program. 24 C.F.R. part 291.
117 F. Supp. 2d 970, 973–74 (C.D. Cal. 2000).
Page 2 of 12
1
of Trusts, ECF No. 9-4.) A Certificate of Compliance with Nevada’s mediation foreclosure
2
program was recorded on May 21, 2010. (Cert. of Compliance, ECF No. 9-5.) After recording
3
several Notices of Sale that did not result in a sale of the Property, a Notice of Trustee’s Sale
4
was recorded on the Property on May 10, 2012, (May 2012 Notice of Trustee’s Sale, ECF No.
5
9-9), and the Property was foreclosed upon on July 2, 2012. (July 2012 Trustee’s Deed, ECF
6
No. 9-10.) Under the July 2012 Trustee’s Deed, BOA assumed title to the Property. (Id.)
7
However, on December 27, 2012, BOA rescinded the Trustee’s Deed, (Notice of Rescission,
8
ECF No. 9-11), and a new Notice of Trustee’s Sale was recorded on April 12, 2013, (April
9
2013 Notice of Trustee’s Sale, ECF No. 9-12), which led to a new foreclosure sale on May 3,
10
2013. (May 2013 Trustee’s Deed, ECF No. 9-13.) Under the May 2013 Trustee’s Deed, BOA
11
again assumed title to the Property. (Id.) Following this sale, BOA conveyed title to the
12
Property by grant deed to HUD on May 17, 2013. (HUD Deed, ECF No. 9-14.)
13
The Property, however, is subject to a set of Covenants, Conditions, and Restrictions
14
(“CC&Rs”) recorded by HOA, which require the payment of homeowners’ assessments to
15
HOA by the title holder of the Property. (CC&Rs, ECF No. 1-1); see also (Complaint ¶ 14,
16
ECF No. 1.) The Renterias appear to have failed to pay these assessments, and on February 22,
17
2010, HOA executed a Notice of Delinquent Assessment Lien on the Property. (Notice of
18
Delinquent Assessment Lien against Renterias, ECF No. 9-15.) HOA subsequently recorded a
19
Notice of Default and Elections to Sell on May 20, 2010, (Notice of Default, ECF No. 9-16),
20
and a Notice of Trustee’s Sale on March 20, 2012. (March 2012 Notice of Trustee’s Sale, ECF
21
No. 9-18.) HOA then purchased the Property at a foreclosure sale under the Delinquent
22
Assessment Lien on May 23, 2012, prior to BOA’s foreclosure sales of the Property on July 2,
23
2012 and May 3, 2013. (July 2012 Trustee’s Deed, ECF No. 9-10; May 2012 Trustee’s Deed,
24
ECF No. 9-19.) HOA subsequently recorded two Releases of Delinquent Assessment Lien on
25
July 24, 2012 and September 11, 2012. (Releases of Lien, ECF Nos. 9-20–9-21.)
Page 3 of 12
1
On September 11, 2012, however, HOA recorded a Notice of Delinquent Assessment
2
Lien against BOA’s title to the Property. (Notice of Delinquent Assessment Lien against BOA,
3
ECF No. 9-22.)3 The notice demanded $4,983.00 from BOA as payment for HOA assessments
4
owed by the title holder of the Property. (Id.) HOA then recorded a Notice of Default and
5
Election to Sell against BOA’s title to the Property on November 13, 2012. (Notice of Default
6
against BOA, ECF No. 9-23.)4 Then on May 23, 2013, HOA recorded a Notice of Trustee’s
7
Sale against BOA, which states “[y]ou are in default under the Notice of Delinquent
8
Assessment LIEN, dated SEPTEMBER 11, 2012. Unless you take action to protect your
9
property, it may be sold at public sale. … The owner of [the Property] as of the date of the
10
recording of said lien is purported to be: BANK AMERICA, NA.” (May 2013 Notice of
11
Trustee Sale, ECF No. 9-24.) No foreclosure sale, however, occurred pursuant to this notice.
Additionally, on October 1, 2013, following BOA’s transfer of its title claim on the
12
13
Property to HUD, HOA recorded another Notice of Delinquent Assessment Lien against
14
HUD’s title to the Property. (Notice of Delinquent Assessment Lien against HUD, ECF No. 9-
15
25.)5 This notice demanded payment in the amount of $1,250.00 from HUD for HOA
16
assessments owed by the title holder of the Property. (Id.)
Following its demands for payments of assessments based upon BOA and HUD’s title in
17
18
the Property, HOA changed its position and determined that it was the true title holder on the
19
Property based upon the earlier foreclosure of its Delinquent Assessment Lien. HOA then
20
21
22
23
This Notice of Delinquent Assessment Lien states: “This Notice of Delinquent Assessment is being given
pursuant to … N.R.S. 116.3116 through 116.31168 et. Seq. … The reputed owner is: Bank of America N.A.”
Nevada Revised Statutes § 116.31162 provides: “the [HOA] may foreclose its lien by sale after all of the
following occur: (a) The [HOA] has mailed … to the unit’s owner … a notice of delinquent assessment which
states … the name of the record owner of the unit.”
3
24
4
25
This Notice of Default states: “Owner: Bank America NA.”
5
This Notice of Delinquent Assessment Lien states: “This Notice of Delinquent Assessment is being given
pursuant to … N.R.S. 116.3116 through 116.31168 et. Seq. … The reputed owner is: SECRETARY HOUSING
& URBAN DEV.”
Page 4 of 12
1
initiated the present action on October 9, 2013, seeking a declaration from this Court quieting
2
title to the Property in favor of HOA and awarding it monetary damages against BOA and
3
HUD for slander of title. (Complaint ¶¶ 47–140, ECF No. 1.)
4
The Court conducted a hearing (ECF No. 18) on February 28, 2014 to consider whether
5
this action should be stayed pending the answer of a certified question to the Supreme Court of
6
Nevada regarding the effects of HOA’s foreclosure on BOA’s interest in the Property. At the
7
hearing, counsel for Defendants argued that HUD’s presence in this case allowed this Court to
8
resolve the issues without waiting for an answer from the Supreme Court of Nevada. On July
9
31, 2014, the Court ordered (ECF No. 19) the parties to file supplemental briefing regarding the
10
applicability, or lack thereof, of the Property and Supremacy Clauses of the Constitution of the
11
United States due to the involvement of HUD in this case. Defendants filed their Brief (ECF
12
No. 20) on this issue on August 15, 2014, and HOA filed its Reply Brief (ECF No. 21) on
13
August 22, 2014.
14
II.
15
LEGAL STANDARD
Rule 12(b)(6) of the Federal Rules of Civil Procedure mandates that a court dismiss a
16
cause of action that fails to state a claim upon which relief can be granted. See North Star Int’l
17
v. Ariz. Corp. Comm’n, 720 F.2d 578, 581 (9th Cir. 1983). When considering a motion to
18
dismiss under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the
19
complaint does not give the defendant fair notice of a legally cognizable claim and the grounds
20
on which it rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering
21
whether the complaint is sufficient to state a claim, the Court will take all material allegations
22
as true and construe them in the light most favorable to the plaintiff. See NL Indus., Inc. v.
23
Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).
24
25
“Generally, a district court may not consider any material beyond the pleadings in ruling
on a Rule 12(b)(6) motion . . . . However, material which is properly submitted as part of the
Page 5 of 12
1
complaint may be considered on a motion to dismiss.” Hal Roach Studios, Inc. v. Richard
2
Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citations omitted). Similarly,
3
“documents whose contents are alleged in a complaint and whose authenticity no party
4
questions, but which are not physically attached to the pleading, may be considered in ruling on
5
a Rule 12(b)(6) motion to dismiss” without converting the motion to dismiss into a motion for
6
summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Under Federal Rule
7
of Evidence 201, a court may take judicial notice of “matters of public record.” Mack v. S. Bay
8
Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the district court considers
9
materials outside of the pleadings, the motion to dismiss is converted into a motion for
10
summary judgment. See Fed. R. Civ. P. 12(d); Arpin v. Santa Clara Valley Transp. Agency, 261
11
F.3d 912, 925 (9th Cir. 2001).
12
III.
13
DISCUSSION
The underlying issue here is whether pursuant to Nevada Revised Statutes § 116.3116,
14
HOA’s May 23, 2012 foreclosure on the Property extinguished BOA’s first security interest,
15
rendering BOA’s subsequent foreclosure and claim to title invalid.6 (Complaint ¶¶ 26–29, 50–
16
70, ECF No. 1.) At the time of the February 28, 2014 hearing, whether the foreclosure of an
17
association’s interest that is given priority status under Nevada Revised Statutes § 116.3116
18
extinguishes a first security interest remained an open question that had not been directly
19
addressed by the Supreme Court of Nevada. Compare SFR Investments Pool 1, LLC v. Wells
20
Fargo Bank, N.A., No. 2:13-cv-01153-APG-PAL (D. Nev. July 25, 2013) (concluding that the
21
HOA had established a likelihood of succeeding on the merits of its claim that foreclosure of
22
23
24
25
Nevada Revised Statutes § 116.3116(2) provides that homeowners’ association liens are prior to all other liens
and encumbrances with certain exceptions. One such exception is for “[a] first security interest on the unit
recorded before the date on which the assessment sought to be enforced became delinquent.” Nev. Rev. Stat.
§ 116.3116(2)(b). However, under the so-called “super-priority” provision, the association’s lien is prior to a
first security interest “to the extent of” charges under § 116.310312 and assessments for common expenses under
§ 116.3115 “which would have become due in the absence of acceleration during the 9 months immediately
preceding institution of an action to enforce the lien.” Id.
6
Page 6 of 12
1
the super priority portion of the HOA lien extinguished a first recorded Deed of Trust) with
2
Bayview Loan Servicing, LLC v. Alessi & Koenig, LLC, No. 2:13-cv-00164-RCJ-NJK, 2013
3
WL 2460452 (D. Nev. June 6, 2013) (granting summary judgment in favor of lender’s assignee
4
and holding that the foreclosure of an HOA lien did not extinguish the first mortgage). On
5
September 18, 2014, however, the Supreme Court of Nevada ruled that HOA foreclosures of
6
their super-priority lien under § 116.3116 does extinguish a first deed of trust on the property.
7
SFR Investments Pool 1 v. U.S. Bank, 130 Nev. Adv. Op. 75, at *1 (2014). Accordingly,
8
several of BOA’s arguments in its Motion to Dismiss have now been explicitly rejected by the
9
Supreme Court of Nevada.
10
However, there are two other issues raised by Defendants in their Brief that they contend
11
resolve this case in their favor regardless of the statute’s effects. First, Defendants argue that
12
HOA waived its potential right to extinguish BOA’s interest when it recorded multiple notices
13
to Defendants acknowledging Defendants’ title to the Property and seeking assessment
14
payments based on their ownership. (BOA’s Brief 2:17-3:5, ECF No. 20.) Second, Defendants
15
argue that HUD’s involvement in this case implicates the Property and Supremacy Clauses of
16
the Constitution of the United States and prevents HOA was extinguishing BOA and HUD’s
17
interest under state law. (Id. 3:6-4:7.)
18
19
A. Waiver
In their Motion to Dismiss and Brief, Defendants argue that HOA’s acknowledgement of
20
their right to title and attempt to collect assessments based on that title are actions so
21
inconsistent with HOA’s present claims to have extinguished BOA’s secured interest and to
22
hold title to the Property free and clear that HOA has waived these claims. (Mot. to Dismiss
23
6:25-7:12, ECF No. 9; BOA’s Brief 2:17-3:5, ECF No. 20.)
24
25
Under Nevada law, “[w]aiver requires the intentional relinquishment of a known right.”
Nevada Yellow Cab Corp. v. Eighth Judicial Dist. Court ex rel. Cnty. of Clark, 152 P.3d 737,
Page 7 of 12
1
740 (Nev. 2007). Furthermore, “the waiver of a right may be inferred when a party engages in
2
conduct so inconsistent with an intent to enforce the right as to induce a reasonable belief that
3
the right has been relinquished.” (Id.)
4
Here, HOA purchased title to the Property on May 23, 2013 by foreclosing on its lien for
5
delinquent assessments. (May 2012 Trustee’s Deed, ECF No. 9-19.) Then, following BOA’s
6
foreclosure on the Property, HOA recorded three different documents asserting both BOA’s
7
title to the Property and HOA’s demand for payment of assessments from BOA based upon that
8
title. See (Notice of Delinquent Assessment Lien against BOA, ECF No. 9-22; Notice of
9
Default against BOA, ECF No. 9-23; May 2013 Notice of Trustee Sale, ECF No. 9-24.)
10
Additionally, after BOA transferred its interest in the Property to HUD, HOA then recorded
11
another document, this time asserting that HUD’s ownership of the Property obligated it to pay
12
assessments to HOA. (Notice of Delinquent Assessment Lien against HUD, ECF No. 9-25.)
13
It is illogical for one party to claim complete ownership over property while
14
simultaneously demanding payment from another for their ownership of the property during the
15
same time period. Accordingly, HOA’s payment demands from Defendants based on their
16
ownership of the Property are so inconsistent with HOA’s later claim to have extinguished
17
BOA’s secured interest that these demands could potentially induce a reasonable belief that the
18
right to extinguish BOA’s interest has been relinquished. See Reno Realty & Inv. Co. v.
19
Hornstein, 301 P.2d 1051, 1054 (Nev. 1956) (“Acceptance of rent clearly speaks an intent not
20
to terminate a lease. … [H]aving received rent after notice of it the lessor is precluded from
21
taking advantage of the forfeiture because it is a contradiction in terms to treat a man as a
22
tenant and then treat him as a trespasser.”) (internal quotations omitted).
23
Chapter 116, however, provides that the “rights conferred by it may not be waived,”
24
unless “expressly provided in this chapter.” Nev. Rev. Stat. § 116.1104. No section of the
25
statute appears to permit HOA’s waiver of its right to extinguish BOA’s secured interest. See
Page 8 of 12
1
SFR Investments Pool 1, 130 Nev. Adv. Op. 75, at *11 (quoting 7912 Limbwood Court Trust v.
2
Wells Fargo Bank, N.A., 979 F. Supp. 2d 1142, 1153 (D. Nev. 2013)) (“Nothing in NRS
3
116.3116 expressly provides for a waiver of the HOA’s right to a priority position for the
4
HOA’s super priority lien.”). Therefore, if HOA has a right to extinguish BOA’s interest under
5
the statute, it could not have waived that right, and Defendants’ waiver argument does not show
6
that their Motion to Dismiss should be granted.
7
B. HUD’s Insurance of the Mortgage on the Property
8
At the February 28, 2014 hearing and in their Brief, Defendants’ counsel argued that this
9
case should not be stayed pending a certified question to the Supreme Court of Nevada because
10
the involvement of a federal entity, HUD, necessitates dismissal of HOA’s claims. (BOA’s
11
Brief 3:6-4:7, ECF No. 20.) Therefore, HUD’s interest in this case could entitle Defendants to
12
dismissal of this case despite the recent holding of the Supreme Court of Nevada in SFR
13
Investments Pool 1.
14
Under the Property Clause of the Constitution of the United States, only “Congress has
15
the Power to dispose of and make all needful Rules and Regulations respecting the Territory or
16
other Property belonging to the United States.” U.S. CONST. art. IV, § 3, cl. 2. Accordingly,
17
title to United States’ property can only be divested by an Act of Congress. Beaver v. United
18
States, 350 F.2d 4, 8 (9th Cir. 1965). Moreover, “[s]tate legislation must yield under the
19
supremacy clause of the Constitution to the interests of the federal government when the
20
legislation as applied interferes with the federal purpose or operates to impede or condition the
21
implementation of federal policies and programs.” Rust v. Johnson, 597 F.2d 174, 179 (9th Cir.
22
1979). “In this manner, the supremacy clause seeks to avoid the introduction of the disparity,
23
confusion, and conflict which would follow if the Government’s general authority is subject to
24
local controls.” Id. (citing United States v. Allegheny Cnty., 322 U.S. 174, 183 (1944)).
25
Page 9 of 12
1
In their brief on the issue, Defendants assert that HUD’s interest in the Property is
2
protected by the Property Clause, which would prevent HOA from foreclosing on the Property
3
and extinguishing the mortgage. (BOA Brief 3:6-4:7, ECF No. 20). HOA, however, argues that
4
its foreclosure was against the private interests of the Renterias and BOA, and that this case is
5
distinguishable from all the cases relied upon by BOA because the federal property interest
6
here did not arise until after HOA’s foreclosure and extinguishment of the mortgage. (HOA’s
7
Brief 3:3-7:17, ECF No. 21.) Therefore, because HOA’s earlier foreclosure extinguished
8
BOA’s interest in the Property, HOA claims BOA never could have transferred its interest to
9
HUD in the first place. (Id.)
10
However, though title to the Property was not conveyed to HUD until after HOA’s
11
foreclosure, (HUD Deed, ECF No. 9-14); (May 2012 Trustee’s Deed, ECF No. 9-19), BOA’s
12
mortgage interest in the property was already insured by HUD at the time of the foreclosure.
13
(Deed of Trust at 4–5, 7 ¶¶ 2–3, 18, ECF No. 9-2.) It is settled law in the Ninth Circuit that a
14
title or mortgage interest in real property held by a federal agency is federal property protected
15
by the Constitution. See Rust, 597 F.2d at 179 (A party “cannot take any action … against
16
property which would have the effect of reducing or destroying the value of a federally held
17
purchase-money mortgage lien.”); see also Sky Meadow Ass’n, 117 F. Supp. 2d at 978 (“[A]
18
mortgage interest retained by [a federal agency is] a federal property interest.… In absence of
19
express congressional authority, the Supremacy Clause barred the foreclosure sale.”). While no
20
court appears to have ever directly addressed the question of whether a federal agency’s
21
insurance of a mortgage creates a federal property interest protected by the Constitution, under
22
the FHA insurance program, mortgagees must take action within a limited time after a default
23
and, if they purchase the property at the foreclosure, mortgagees must then convey title to
24
HUD. 24 C.F.R. §§ 203.355(a), 203.359(a). Therefore, because a mortgagee must act on
25
default and then must convey title to HUD should it purchase the property, it would not be a
Page 10 of 12
1
significant extension of the Property Clause’s protection to hold that HUD’s insurance of a
2
mortgage under the FHA insurance program created a federal property interest that can only be
3
divested by an act of Congress. However, this Court need not make such finding in order to
4
rule in this case.
5
The Ninth Circuit has previously held that federal rather than state law applies in cases
6
involving FHA insured mortgages “to assure the protection of the federal program against loss,
7
state law to the contrary notwithstanding.” United States v. Stadium Apartments, Inc., 425 F.2d
8
358, 362 (9th Cir. 1970) (using federal law to override state law right of redemption to insure
9
that FHA was reimbursed on its guarantee of a mortgage); United States v. View Crest Garden
10
Apartments, Inc., 268 F.2d 380, 383 (9th Cir. 1959) (“[T]he federal policy to protect the
11
treasury and to promote the security of federal investment which in turn promotes the prime
12
purpose of the Act—to facilitate the building of homes by the use of federal credit—becomes
13
predominant. Local rules limiting the effectiveness of the remedies available to the United
14
States for breach of a federal duty cannot be adopted.”); see also United States v. Victory
15
Highway Vill., Inc., 662 F.2d 488, 497 (8th Cir. 1981) (“federal law, not [state] law, governs
16
the rights and liabilities of the parties in cases dealing with the remedies available upon default
17
of a federally held or insured loan.”). Therefore, in situations where a mortgage is insured by a
18
federal agency under the FHA insurance program,7 state laws cannot operate to undermine the
19
federal agency’s ability to obtain title after foreclosure and resell the property. Accordingly,
20
even though HOA would generally be able to conduct a foreclosure pursuant to Nevada
21
Revised Statutes § 116.3116 that would extinguish a first secured interest, such a foreclosure in
22
this case would “operate[] to impede or condition the implementation of federal policies and
23
24
25
7
In United States v. Pastos the Ninth Circuit limited its prior holding in Stadium Apartments to FHA insured
loans, finding the federal interest in those loan “distinguishable from the SBA and FmHA cases” because the
federal interest in the case of SBA and FMHA loans did not override the interest of the individual states. 781
F.2d 747, 752 (9th Cir. 1986).
Page 11 of 12
1
programs” and therefore “must yield under the supremacy clause of the Constitution to the
2
interests of the federal government.” Rust, 597 F.2d at 179.
3
Because a homeowners association’s foreclosure under Nevada Revised Statutes §
4
116.3116 on a Property with a mortgage insured under the FHA insurance program would have
5
the effect of limiting the effectiveness of the remedies available to the United States, the
6
Supremacy Clause bars such foreclosures sales. See Stadium Apartments, 425 F.2d at 362–67;
7
View Crest Garden Apartments, 268 F.2d at 382–83; see also Rust, 597 F.2d at 179 (“To
8
sustain the action … in this case, we would run the risk of substantially impairing the
9
Government’s participation in the home mortgage market and of defeating the purpose of the
10
National Housing Act. [E]ngaging in a valid state function … does not render conduct
11
constitutional or allow [a party] to sell property without protecting the federal interest.
12
Accordingly, we hold that the foreclosure … was invalid under the supremacy clause of the
13
United States Constitution.”) (internal citations omitted). Therefore, HOA’s March 20, 2012
14
foreclosure was invalid under the United States Constitution. As a result, HOA’s claims for
15
quite title and slander of title—which are premised on this foreclosure’s extinguishment of the
16
FHA insured mortgage interest—must be dismissed.
17
IV.
18
19
CONCLUSION
IT IS HEREBY ORDERED that Defendants’ Motion to Dismiss (ECF No. 9) is
GRANTED. HOA’s Complaint (ECF No. 1) is dismissed with prejudice.
20
The Clerk of the Court shall enter judgment accordingly and close the case.
21
25
DATED this _____ day of September, 2014.
22
23
24
___________________________________
Gloria M. Navarro, Chief Judge
United States District Judge
25
Page 12 of 12
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?