Nationstar Mortgage LLC v. SFR Investments Pool 1, LLC

Filing 53

ORDER that summary judgment is granted in favor of Plaintiff andagainst Defendant, and Plaintiff shall SUBMIT a proposed form of judgment within 14 days. Signed by Judge Robert C. Jones on 08/08/2017. (Copies have been distributed pursuant to the NEF - KW)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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______________________________________
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NATIONSTAR MORTGAGE, LLC,
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Plaintiff,
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vs.
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SFR INVESTMENTS POOL 1, LLC,
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Defendant.
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2:15-cv-00583-RCJ-PAL
ORDER

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I.

FACTS AND PROCEDURAL HISTORY
This case arises out of a homeowners’ association foreclosure sale. John Ring purchased

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real property at 820 Peachy Canyon Circle, Unit #104, Las Vegas, Nevada, 89144 (“the

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Property”), giving Evergreen Moneysource Mortgage Co. (“Evergreen”) a $210,123 promissory

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note (“the Note”) and a deed of trust (“the DOT”) against the Property. (See Compl. 9–10, ECF

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No. 1). Dakota Condominiums Homeowners Association (“the CHOA”) sold the Property to

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SFR Investments Pool 1, LLC (“SFR”) at a non-judicial foreclosure sale for $9,200 on August

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10, 2012. (See id. ¶¶ 12–18). 1 Nationstar Mortgage, LLC (“Nationstar”) became the assignee of

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the DOT on March 26, 2013. (Id. ¶ 11).

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1 Although the Complaint states that “plaintiff” bought the Property, that is apparently a
typographical error. Nationstar clearly asserts an adverse interest in the Property as against the
buyer (SFR) based on SFR’s claim that the sale extinguished the DOT.
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Nationstar sued SFR in this Court to quiet title to the Property as to the validity of the

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sale and the continuing vitality of the DOT. SFR answered and filed a Counterclaim to quiet title

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in its favor and for a permanent injunction against foreclosure under the DOT. The parties filed

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cross motions for summary judgment, each party asking the Court for defensive summary

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judgment against the other’s claims and for offensive summary judgment on its own claims. The

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Court granted both motions in part and denied them both in part in April 2016, ruling that SFR

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was entitled to summary judgment against the Complaint as to the Shadow Wood issue, tender of

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the superpriority amount before sale, and the due process issue under the quiet title claim, and

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that Nationstar was entitled to summary judgment against the Counterclaim as to the bona fide

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purchaser issue. The Court ruled that the respective quiet title claims must be tried to a jury on

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the issues of lien priority (the comparative dates of recordation of the Declaration and the DOT),

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commercial unreasonableness of the sale, whether constitutional notice of the sale was given (as

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to SFR’s counterclaim), and whether the loan was FHA-insured at the time of the sale.
Nationstar asked the Court to reconsider summary judgment in part, arguing that in light

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of Bourne Valley, the Court’s previous ruling that Chapter 116 foreclosures did not implicate

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state action must be reconsidered. The Court granted the motion and ruled that notice remained

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factually disputed. SFR asked the Court to stay the case pending issuance of the mandate in

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Bourne Valley Court Tr. v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016), anticipating

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that the U.S. Supreme Court might grant certiorari in that case after the Nevada Supreme Court

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ruled contrary to the Court of Appeals as to the constitutionality of the notice scheme under

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Chapter 116. The Court refused to stay the case, and the Supreme Court has since denied

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certiorari.

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II.

DISCUSSION
The Court has since ruled that because Bourne Valley struck down the notice scheme as

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facially unconstitutional, actual or reasonable notice is inapposite. See Bank of N.Y. Mellon v.

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Ravenstar Invs., LLC, No. 3:17-cv-116, 2017 WL 2588088, at *3–4 (D. Nev. June 14, 2017)

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(Jones, J.). The Court will therefore quiet title in favor of Plaintiff under Bourne Valley.
There is no reason to await the Nevada Supreme Court’s ruling as to whether Chapter

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116 incorporated Nevada Revised Statutes section (“NRS”) 107.090 at the relevant time. The

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Nevada Supreme Court has already ruled to the contrary. See U.S. Bank., N.A. v. SFR Invs. Pool

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1, LLC, 124 F. Supp. 3d 1063, 1078–80 (D. Nev. 2015) (Jones, J.) (examining SFR Invs. Pool 1,

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LLC v. U.S. Bank, N.A., 334 P.3d 408, 411 (Nev. 2014)). And as the Court has noted in other

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cases, this Court and the Court of Appeals have both separately ruled that NRS 107.090 did not

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require notice to the deed of trust holder in a Chapter 116 sale at the relevant time. The Court of

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Appeals reasoned that incorporation would render part of the opt-in statutes superfluous. See

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Bourne Valley Court Tr., 832 F.3d at 1159. This Court had previously disagreed with that

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reasoning, see U.S. Bank., N.A., 124 F. Supp. 3d at 1079 n.3, but it would be bound even if it

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disagreed with the conclusion, which it does not. As the Court has noted in other cases, the later

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amendment of Chapter 116 to require notice in this context provides the most powerful of

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implications that the statute did not previously do so. See US Bank, N.A. v. SFR Invs. Pool 1,

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LLC, No. 3:15-cv-241, 2016 WL 4473427, at *5 n.1 (D. Nev. Aug. 24, 2016). The Court has

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also noted that Defendant’s proffered interpretation would require a court to make the

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nonsensical finding that a deed of trust is subordinate to itself. See id. at *5.

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CONCLUSION

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IT IS HEREBY ORDERED that summary judgment is granted in favor of Plaintiff and

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against Defendant, and Plaintiff shall SUBMIT a proposed form of judgment within fourteen

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(14) days.

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IT IS SO ORDERED.

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Dated this 9th day of August, 2017.

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_____________________________________
ROBERT C. JONES
United States District Judge

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