Nationstar Mortgage, LLC v. RAM LLC et al
Filing
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ORDER granting 100 Motion for Partial Summary Judgment; U.S. Bank shall file its motion for default judgment against Nevada Association Services within fourteen days of the entry of this order. Signed by Judge Kent J. Dawson on 6/5/2019. (Copies have been distributed pursuant to the NEF - JM)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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U.S. BANK, N.A., AS TRUSTEE FOR THE
BENEFIT OF HARBORVIEW 2005-16,
ORDER
Plaintiff,
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v.
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DESERT SHORES COMMUNITY
ASSOCIATION, et al.,
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Case No. 2:15-cv-1776-KJD-CWH
Defendants.
Before the Court is plaintiff U.S. Bank’s second motion for partial summary judgment
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(#100). Defendants MRT Assets, LLC (#103) and Desert Shores Community Association (#104)
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responded, and U.S. Bank replied (#106).
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This is a dispute over who holds superior title in a residential property located at 3001
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Treasure Island Rd., Las Vegas, NV 89128. The home is part of the Desert Shores Community
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Association and is subject to certain covenants, conditions, and restrictions (“CC&Rs”). The
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former owner of the property defaulted on his association and mortgage obligations, which
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prompted Desert Shores to foreclose on the property. U.S. Bank tried to halt the foreclosure by
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tendering payment for the superpriority portion of Desert Shore’s lien, but the association
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refused the payment. It then sold the property to RAM, LLC at a trustee sale, who later conveyed
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the property to MRT Assets.
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U.S. Bank1 now asks the Court to declare that its deed of trust survived Desert Shores’
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foreclosure because the bank tried to cure the superpriority lien before the trustee sale. If true,
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U.S. Bank’s holds the first deed of trust, and MRT Assets purchased the property subject to the
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U.S. Bank replaced the original plaintiff in this case, Nationstar Mortgage, by stipulation. Stip. to
Substitute, ECF No. 86. Unless necessary, the Court refers to plaintiff as U.S. Bank.
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bank’s interest. MRT Assets has counterclaimed for quiet title and a declaration that U.S. Bank’s
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tender did not save the bank’s interest from extinguishment. U.S. Bank is correct that its tender
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cured the superpriority portion of Desert Shores’ lien. As a result, the bank’s deed of trust
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survived foreclosure, and MRT Assets took the property subject to U.S. Bank’s interest. The
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Court therefore grants U.S. Bank’s motion for summary judgment.
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I.
Background
A. Factual History
Former owner and non-party, Hagob Palikyan purchased the home at 3001 Treasure
Island Rd. in 2005. Pl.’s Mot. Summ. J. Ex. A 2, ECF No. 100. Countrywide Home Loans
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financed the purchase and secured the loan with a deed of trust against the property. Id. The deed
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of trust was assigned to U.S. Bank in 2011. Id. Ex. B. Palikyan eventually fell behind on his
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mortgage and association assessments, which prompted Desert Shores to begin foreclosure
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proceedings. Id. Ex. C. Desert Shores—through Nevada Association Services—recorded a notice
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of delinquent assessment lien in June of 2012. Id. When Palikyan failed to cure the default,
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Nevada Association Services recorded a notice of default and election to sell. Id. Ex. D. Palikyan
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again failed to cure the default, and Nevada Association Services sold the property to RAM,
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LLC at a trustee sale for $10,100.00. Id. Ex. J. RAM then conveyed the property to MRT Assets
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by quitclaim deed. Id. Ex. K.
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U.S. Bank tried to cure the superpriority portion of Desert Shores’ lien before RAM, LLC
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purchased the property. The bank’s prior servicer, Bank of America, retained Miles, Bauer
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Bergstrom & Winters to work with Desert Shores to calculate and satisfy the outstanding
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delinquency. Id. Ex. E. Miles Bauer contacted Nevada Association Services in writing seeking
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the superpriority portion of the association’s delinquency. Id. Nevada Association Services did
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not respond. Id. Without the association’s help, the bank was forced to calculate the outstanding
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balance on its own. To do so, the bank consulted a ledger of fees from a different property in the
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Desert Shores Community Association. Id. It then remitted payment to Nevada Association
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Services for $977.27—nine months’ assessments plus late fees, and collection costs. Id. Nevada
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Association Services rejected the payment and returned the check to Miles Bauer. Id.
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B. Procedural History
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U.S. Bank then brought this case to quiet title in the property. Compl., ECF No. 1. Desert
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Shores moved to dismiss because the parties had not yet mediated the foreclosure under NRS
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§ 38.310. Def.’s Mot. to Dismiss, ECF No. 37. The Court granted the motion with leave to
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amend following the mediation. Order on Mot. to Dismiss, ECF No. 44. In the interim, the Court
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stayed the case pending the final determinations in Bourne Valley Ct. Tr. v. Wells Fargo Bank,
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832 F.3d 1154 (9th Cir. 2016) and Saticoy Bay v. Wells Fargo Bank, 388 P.3d 970 (Nev. 2017).
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Order to Stay 1, ECF No. 78. The Court has since lifted the stay, and U.S. Bank has amended its
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complaint. First Am. Compl., ECF No. 90. The parties completed discovery and filed dispositive
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motions. Since then, U.S. Bank voluntarily dismissed RAM, LLC. Notice Vol. Dismissal, ECF
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No. 110. That leaves Desert Shores, MRT Assets, and Nevada Association Services2 as
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defendants.
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II.
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Legal Standard
The purpose of summary judgment is to avoid unnecessary trials by disposing of
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factually unsupported claims or defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986);
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Northwest Motorcycle Ass’n v. U.S. Dept. of Agriculture, 18 F.3d 1468, 1471 (9th Cir. 1994). It
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is available only where the absence of material fact allows the Court to rule as a matter of law.
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Fed. R. Civ. P. 56(a); Celotex, 477 U.S. at 322. Rule 56 outlines a burden shifting approach to
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summary judgment. First, the moving party must demonstrate the absence of a genuine issue of
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material fact. The burden then shifts to the nonmoving party to produce specific evidence of a
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genuine factual dispute for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
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574, 587 (1986). A genuine issue of fact exists where the evidence could allow “a reasonable
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jury [to] return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S.
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242, 248 (1986). The Court views the evidence and draws all available inferences in the light
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most favorable to the nonmoving party. Kaiser Cement Corp. v. Fischbach & Moore, Inc., 793
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Although U.S. Bank served Nevada Association Services with a summons and a copy of its first amended
complaint on January 7, 2019, the entity has not answered or participated in the suit in any way. The Clerk of the
Court entered a notice of default against Nevada Association Services on March 26, 2019. Clerk’s Entry of Default,
ECF No. 108.
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F.2d 1100, 1103 (9th Cir. 1986). Yet, to survive summary judgment, the nonmoving party must
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show more than “some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 586.
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III.
Analysis
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U.S. Bank moves for summary judgment on its quiet title and declaratory relief claim
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against Desert Shores, MRT Assets, and Nevada Association Services. It makes three arguments
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in support: (1) that the bank’s attempt to satisfy Desert Shores’ superpriority lien before
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foreclosure constituted valid tender and preserved its deed of trust; (2) that Desert Shores
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foreclosed under an unconstitutional version of NRS § 116.3116 thereby preserving U.S. Bank’s
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interest in the property; and (3) that the foreclosure is void because the foreclosure sale was
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commercially unreasonable. See generally Pl.’s Mot. Summ. J., ECF No. 100. U.S. Bank is
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correct that its tender preserved its deed of trust from extinguishment. Because the Court can
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grant summary judgment on that basis alone, it need not reach the bank’s other arguments.
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Nevada law allows homeowners associations to charge their members monthly
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maintenance dues and fees. When a homeowner falls behind on those assessments, the
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association may record a lien against the property for the delinquent balance. See NRS
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§ 116.3116(1) (2015). The association’s lien divides into two pieces: a superpriority portion and
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a subpriority portion. SFR Invs. Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d 408, 411 (Nev. 2014)
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(“SFR 1”). The superpriority portion is limited to nine months of unpaid assessments and any
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nuisance-abatement fees. Id. citing NRS § 116.3116(2). That portion of the association’s lien is
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superior to all other encumbrances—including a lender’s deed of trust. See NRS
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§ 116.3116(3)(b); SFR 1, 334 P.3d at 412. Thus, failure to satisfy the association’s superpriority
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lien results in the extinguishment of the first deed of trust. SFR 1, 334 P.3d at 419. The
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subpriority piece includes the remaining delinquent balance. It does not receive superpriority
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position. Id. at 411.
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However, the Nevada Supreme Court has clarified that a lender may preserve its deed of
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trust against extinguishment when it tenders the superpriority amount before foreclosure. Bank
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of America, N.A. v. SFR Invs. Pool 1, LLC, 427 P.3d 113, 118 (Nev. 2018) (“SFR 2”). SFR 2
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presents facts similar this case. There, Bank of America held the deed of trust on a home in a
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common interest community subject to certain CC&Rs. Id. at 116. When the prior homeowner
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defaulted on his monthly assessments, the association foreclosed on the property and sold it at a
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trustee sale. Id. Before the sale, Bank of America contacted the association to request the
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outstanding superpriority lien balance and offer payment. Id. Based upon the association’s
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representations, the bank tendered a check for $720, or nine months of assessments. Id. The
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association rejected the tender and proceeded with the foreclosure. Id. The association claimed
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that it rejected Bank of America’s tender in good faith because the tender was conditional. Id. at
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117. The Nevada Supreme Court rejected that argument. It held that tender preserved a deed of
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trust from extinguishment so long as the tender was for the entire amount of the lien and did not
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include any conditions the lender was not authorized to include. Id.
That is the case here. U.S Bank’s tender was valid because it satisfied the entire
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superpriority amount and did not include any conditions that it did not have authority to request.
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Turning first to the amount of the check, U.S. Bank made every reasonable effort to satisfy the
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superpriority portion of Desert Shore’s lien. When Nevada Association Services refused to
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disclose the outstanding delinquency, the bank calculated the delinquency itself using a ledger
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from another property within the Desert Shores common interest community.3 The ledger
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identified the monthly assessment amount as $59.40. Pl.’s Mot. Summ. J. Ex. E-2. U.S. Bank
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then multiplied the monthly assessment amount by nine according to NRS § 116.3116(3)(b)’s
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guidance on superpriority liens. Then, U.S. Bank included nine late fees, which the ledger
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identified as $10 per month, and included an additional $352.67 in collection fees. Id. In all, the
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bank issued a check for $977.27. Id.
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Neither Desert Shores nor MRT Assets disputes U.S. Bank’s check did not cure the
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superpriority portion of Desert Shores’ lien. Rather, MRT Assets argues that U.S. Bank’s tender
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is not valid because it “did not elect to send the precise super-priority amount.” MRT Asset’s
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Resp. to Mot. Summ. J 6, ECF No. 103. The crux of the argument is that U.S. Bank’s calculation
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of collection fees created confusion over the association’s right to foreclose. Id. Setting aside that
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The bank referenced the ledger of 3008 Treasure Island Road. The disputed property in this case is
located at 3001 Treasure Island Road.
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Nevada Association Services refused to provide the “precise super-priority amount” despite the
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bank’s efforts, neither Desert Shores nor MRT Assets have presented evidence that the bank
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omitted a charge that it should have paid.
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If anything, U.S. Bank overpaid. NRS § 116.3116 restricted the superpriority lien to nine
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months of assessments and any nuisance and abatement charges. There is no evidence that there
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were any nuisance and abatement fees owed. That would leave U.S. Bank owing only nine
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months of assessments and late fees, which its check satisfied. For good measure, the bank
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included collections costs that it deemed reasonable. Therefore, there is no genuine issue of
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material fact surrounding the sufficiency of U.S. Bank’s tender.
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In sum, U.S. Bank’s valid tender cured the superpriority portion of Desert Shores’ lien
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and preserved its deed of trust. See SFR 2, 427 P.3d at 121. Desert Shores only foreclosed on the
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subpriority portion of its lien and could not convey full title to the property to MRT Assets. As a
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result, MRT Assets acquired the property subject to U.S. Bank’s deed of trust. Therefore, the
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Court grants U.S. Bank’s motion for summary judgment on its quiet title claim against Desert
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Shores, MRT Assets, and Nevada Association Services.
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IV.
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Accordingly, IT IS HEREBY ORDERED that U.S. Banks’s motion for summary
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Conclusion
judgment (#100) is GRANTED.
The Court declares that the Desert Shores non-judicial foreclosure and subsequent sale of
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the property located at 3001 Treasure Island Rd., Las Vegas, NV 89128 did not extinguish U.S.
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Bank’s first deed of trust. It also declares that any interest MRT Assets claims in the property is
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subject to U.S. Bank’s deed of trust.
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IT IS FURTHER ORDERED that U.S. Bank shall file its motion for default judgment
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against Nevada Association Services within fourteen days of the entry of this order.
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Dated this 5th day of June, 2019.
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_____________________________
Kent J. Dawson
United States District Judge
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