Bank of America, N.A. v. Saticoy Bay LLC Series 164 Golden Crown et al

Filing 59

ORDER that BANA's 44 Motion for Summary Judgment is Denied. The HOA's 45 Motion for Summary Judgment is Granted. Saticoy Bay's 46 Motion for Summary Judgment is Granted. The HOA's 35 Motion to Dismiss is Denied as moot. Saticoy Bay shall prepare a proposed judgment consistent with this order and submit it to the court within 14 days for signature. Signed by Judge James C. Mahan on 3/2/2018. (Copies have been distributed pursuant to the NEF - SLD)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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BANK OF AMERICA, N.A.,

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Plaintiff(s),

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Case No. 2:16-CV-124 JCM (VCF)
ORDER

v.
SATICOY BAY LLC SERIES 164 GOLDEN
CROWN, et al.,
Defendant(s).

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Presently before the court is plaintiff Bank of America, N.A.’s (“BANA”) motion for

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summary judgment. (ECF No. 44). Defendant Saticoy Bay LLC Series 164 Golden Crown
(“Saticoy Bay”) (ECF No. 54) and defendant Paradise Hills Landscape Maintenance Association
(the “HOA”) (ECF No. 51) filed responses, to which BANA replied (ECF No. 56).
Also before the court is the HOA’s motion for summary judgment. (ECF No. 45). BANA

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filed a response (ECF No. 53), to which the HOA replied (ECF No. 55).
Also before the court is Saticoy Bay’s motion for summary judgment. (ECF No. 46). The

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HOA (ECF No. 50), and BANA (ECF No. 52) filed responses, and Saticoy Bay replied (ECF Nos.
57, 58).
Also before the court is the HOA’s motion to dismiss Saticoy Bay’s crossclaim. (ECF No.

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James C. Mahan
U.S. District Judge

35). Saticoy Bay filed a response (ECF No. 37), to which the HOA replied, (ECF No. 38).
I.

Facts

This case involves a dispute over property that was subject to a homeowners’ association
superpriority lien for delinquent assessment fees. On August 6, 2008, Nickolas Martinez and Tisha
Martinez (the “borrowers”) obtained a loan from ARK-LA-TEX Financial Services, LLC (the

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“originating lender”) to purchase property located at 164 Golden Crown Avenue, Henderson,

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Nevada, 89002 (the “property”). (ECF No. 44–1). The note was secured by a deed of trust,

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recorded on August 13, 2008, identifying Mortgage Electronic Registration Systems, Inc.

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(“MERS”) as beneficiary acting solely as nominee for lender and lender’s successors and assigns.

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Id. On September 24, 2014, MERS assigned the deed of trust to BANA. (ECF No. 44-5).
On April 12, 2011, defendant Homeowners Association Services, Inc. (“HAS”), acting on

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behalf of the HOA, recorded a notice of claim of lien-homeowner assessment. (ECF No. 44-6).

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On December 14, 2011, HAS, on behalf of the HOA, recorded a notice of default and

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election to sell under homeowners association lien. (ECF No. 44–7). The notice of default stated

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the amount due to the HOA was $573.03. Id.

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HAS, on behalf of the HOA, sent BANA a payoff demand, indicating an amount owed

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under the lien of 2,142.27. (ECF No. 44-13). On March 15, 2012, BANA’s prior counsel Miles,

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Bauer, Bergstrom & Winters, LLP (“MBBW”) sent the HOA trustee a letter and check in the

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amount of $472.50 to pay nine months of HOA assessments. Id. HAS rejected the payment. Id.

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On July 21, 2015, HAS recorded a notice of trustee’s sale, which stated the amount due to

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the HOA was $4,111.20. (ECF No. 44-8).

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On August 6, 2015, Saticoy Bay purchased the property at the foreclosure sale for

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$9,000.00. (ECF No. 44-9). A foreclosure deed in favor of Saticoy Bay was recorded on August

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26, 2015. (ECF No. 44-9).

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On January 22, 2016, BANA filed the underlying complaint, alleging six causes of action:

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(1) quiet title/declaratory judgment against the HOA and Saticoy Bay; (2) preliminary injunction

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against Saticoy Bay; (3) unjust enrichment against Saticoy Bay and the HOA; (4) wrongful

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foreclosure against the HOA; (5) negligence against the HOA; and (6) negligence per se against

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the HOA. (ECF No. 1).

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In an order dated February 21, 2017, the court dismissed BANA’s claims for unjust

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enrichment and negligence per se and noted that BANA must proceed with NRED mediation

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before the court could consider BANA’s wrongful foreclosure and negligence claims. (ECF No.

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James C. Mahan
U.S. District Judge

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In the instant motion, BANA, the HOA, and Saticoy Bay move for summary judgment as

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to the parties’ competing claims for quiet title. (ECF Nos. 44, 45, 46). Additionally, the HOA

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moves to dismiss Saticoy Bay’s crossclaim. (ECF No. 35).

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II.

Legal Standard

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The Federal Rules of Civil Procedure allow summary judgment when the pleadings,

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depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,

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show that “there is no genuine dispute as to any material fact and the movant is entitled to a

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judgment as a matter of law.” Fed. R. Civ. P. 56(a). A principal purpose of summary judgment is

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“to isolate and dispose of factually unsupported claims.” Celotex Corp. v. Catrett, 477 U.S. 317,

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323–24 (1986).

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For purposes of summary judgment, disputed factual issues should be construed in favor

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of the non-moving party. Lujan v. Nat’l Wildlife Fed., 497 U.S. 871, 888 (1990). However, to be

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entitled to a denial of summary judgment, the nonmoving party must “set forth specific facts

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showing that there is a genuine issue for trial.” Id.

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In determining summary judgment, a court applies a burden-shifting analysis. The moving

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party must first satisfy its initial burden. “When the party moving for summary judgment would

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bear the burden of proof at trial, it must come forward with evidence which would entitle it to a

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directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has

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the initial burden of establishing the absence of a genuine issue of fact on each issue material to

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its case.” C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000)

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(citations omitted).

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By contrast, when the nonmoving party bears the burden of proving the claim or defense,

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the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential

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element of the non-moving party’s case; or (2) by demonstrating that the nonmoving party failed

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to make a showing sufficient to establish an element essential to that party’s case on which that

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party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323–24. If the moving

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party fails to meet its initial burden, summary judgment must be denied and the court need not

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James C. Mahan
U.S. District Judge

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consider the nonmoving party’s evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159–

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60 (1970).

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If the moving party satisfies its initial burden, the burden then shifts to the opposing party

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to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith

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Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute, the

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opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient

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that “the claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing

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versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626,

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631 (9th Cir. 1987).

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In other words, the nonmoving party cannot avoid summary judgment by relying solely on

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conclusory allegations that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040,

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1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the

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pleadings and set forth specific facts by producing competent evidence that shows a genuine issue

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for trial. See Celotex, 477 U.S. at 324.

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At summary judgment, a court’s function is not to weigh the evidence and determine the

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truth, but to determine whether there is a genuine issue for trial. See Anderson v. Liberty Lobby,

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Inc., 477 U.S. 242, 249 (1986). The evidence of the nonmovant is “to be believed, and all

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justifiable inferences are to be drawn in his favor.” Id. at 255. But if the evidence of the

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nonmoving party is merely colorable or is not significantly probative, summary judgment may be

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granted. See id. at 249–50.

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III.

Discussion1

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Under Nevada law, “[a]n action may be brought by any person against another who claims

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an estate or interest in real property, adverse to the person bringing the action for the purpose of

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determining such adverse claim.” Nev. Rev. Stat. § 40.010. “A plea to quiet title does not require

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any particular elements, but each party must plead and prove his or her own claim to the property

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James C. Mahan
U.S. District Judge

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The 2015 Legislature revised Chapter 116 substantially. 2015 Nev. Stat., ch. 266. Except
where otherwise indicated, the references in this order to statutes codified in NRS Chapter 116 are
to the version of the statutes in effect in 2013–14, when the events giving rise to this litigation
occurred.
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in question and a plaintiff’s right to relief therefore depends on superiority of title.” Chapman v.

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Deutsche Bank Nat’l Trust Co., 302 P.3d 1103, 1106 (Nev. 2013) (citations and internal quotation

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marks omitted). Therefore, for plaintiff to succeed on its quiet title action, it needs to show that

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its claim to the property is superior to all others. See also Breliant v. Preferred Equities Corp.,

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918 P.2d 314, 318 (Nev. 1996) (“In a quiet title action, the burden of proof rests with the plaintiff

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to prove good title in himself.”).

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Section 116.3116(1) of the Nevada Revised Statutes gives an HOA a lien on its

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homeowners’ residences for unpaid assessments and fines; moreover, NRS 116.3116(2) gives

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priority to that HOA lien over all other liens and encumbrances with limited exceptions—such as

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“[a] first security interest on the unit recorded before the date on which the assessment sought to

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be enforced became delinquent.” Nev. Rev. Stat. § 116.3116(2)(b).

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The statute then carves out a partial exception to subparagraph (2)(b)’s exception for first

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security interests. See Nev. Rev. Stat. § 116.3116(2). In SFR Investments Pool 1 v. U.S. Bank, the

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Nevada Supreme Court provided the following explanation:

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As to first deeds of trust, NRS 116.3116(2) thus splits an HOA lien into two pieces,
a superpriority piece and a subpriority piece. The superpriority piece, consisting of
the last nine months of unpaid HOA dues and maintenance and nuisance-abatement
charges, is “prior to” a first deed of trust. The subpriority piece, consisting of all
other HOA fees or assessments, is subordinate to a first deed of trust.
334 P.3d 408, 411 (Nev. 2014) (“SFR Investments”).

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Chapter 116 of the Nevada Revised Statutes permits an HOA to enforce its superpriority

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lien by nonjudicial foreclosure sale. Id. at 415. Thus, “NRS 116.3116(2) provides an HOA a true

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superpriority lien, proper foreclosure of which will extinguish a first deed of trust.” Id. at 419; see

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also Nev. Rev. Stat. § 116.31162(1) (providing that “the association may foreclose its lien by sale”

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upon compliance with the statutory notice and timing rules).

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James C. Mahan
U.S. District Judge

Subsection (1) of NRS 116.31166 provides that the recitals in a deed made pursuant to
NRS 116.31164 of the following are conclusive proof of the matters recited:
(a) Default, the mailing of the notice of delinquent assessment, and the recording
of the notice of default and election to sell;
(b) The elapsing of the 90 days; and
(c) The giving of notice of sale[.]

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Nev. Rev. Stat. § 116.31166(1)(a)–(c).2 “The ‘conclusive’ recitals concern default, notice, and

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publication of the [notice of sale], all statutory prerequisites to a valid HOA lien foreclosure sale

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as stated in NRS 116.31162 through NRS 116.31164, the sections that immediately precede and

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give context to NRS 116.31166.” Shadow Wood Homeowners Assoc. v. N.Y. Cmty. Bancorp., Inc.,

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366 P.3d 1105 (Nev. 2016) (“Shadow Wood”). Nevertheless, courts retain the equitable authority

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to consider quiet title actions when a HOA’s foreclosure deed contains statutorily conclusive

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recitals. See id. at 1112.

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Based on Shadow Wood, the recitals therein are conclusive evidence that the foreclosure

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lien statutes were complied with—i.e., that the foreclosure sale was proper. See id.; see also

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Nationstar Mortg., LLC v. SFR Investments Pool 1, LLC, No. 70653, 2017 WL 1423938, at *2

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(Nev. App. Apr. 17, 2017) (“And because the recitals were conclusive evidence, the district court

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did not err in finding that no genuine issues of material fact remained regarding whether the

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foreclosure sale was proper and granting summary judgment in favor of SFR.”). Therefore,

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pursuant to SFR Investments, NRS 116.3116, and the recorded trustee’s deed upon sale in favor of

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Saticoy Bay, the foreclosure sale was proper and extinguished the first deed of trust.

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Notwithstanding, the court retains the equitable authority to consider quiet title actions

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when a HOA’s foreclosure deed contains statutorily conclusive recitals. See Shadow Wood

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Homeowners Assoc., 366 P.3d at 1112 (“When sitting in equity . . . courts must consider the

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The statute further provides as follows:

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2. Such a deed containing those recitals is conclusive against the unit's
former owner, his or her heirs and assigns, and all other persons. The receipt for the
purchase money contained in such a deed is sufficient to discharge the purchaser
from obligation to see to the proper application of the purchase money.

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3. The sale of a unit pursuant to NRS 116.31162, 116.31163 and 116.31164
vests in the purchaser the title of the unit's owner without equity or right of
redemption.

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Nev. Rev. Stat. § 116.31166(2)–(3).
James C. Mahan
U.S. District Judge

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entirety of the circumstances that bear upon the equities. This includes considering the status and

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actions of all parties involved, including whether an innocent party may be harmed by granting the

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desired relief.”). Accordingly, to withstand summary judgment in Saticoy Bay and the HOA’s

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favor, BANA must raise colorable equitable challenges to the foreclosure sale or set forth evidence

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demonstrating fraud, unfairness, or oppression.

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In its motion for summary judgment, BANA sets forth the following relevant arguments:

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(1) BANA offered to pay the superpriority portion of the lien, which adequately preserved the first

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deed of trust ; (2) the foreclosure sale is invalid because NRS Chapter 116 is facially

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unconstitutional pursuant to Bourne Valley Court Trust v. Wells Fargo Bank, N.A., 832 F.3d 1154

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(9th Cir. 2016), cert. denied, No. 16-1208, 2017 WL 1300223 (U.S. June 26, 2017) (“Bourne

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Valley”); and (3) the foreclosure sale was commercially unreasonable. (ECF No. 44). The court

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will address each in turn.

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While the court will analyze BANA’s equitable challenges regarding its quiet title, the

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court notes that the failure to utilize legal remedies makes granting equitable remedies unlikely.

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See Las Vegas Valley Water Dist. v. Curtis Park Manor Water Users Ass’n, 646 P.2d 549, 551

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(Nev. 1982) (declining to allow equitable relief because an adequate remedy existed at law).

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Simply ignoring legal remedies does not open the door to equitable relief.
1. Rejected Tender Offer

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BANA argues that its tender of the superpriority amount on March 15, 2012, prior to the

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foreclosure sale preserved the first priority of the deed of trust. (ECF No. 44). BANA thus

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maintains that Saticoy Bay took title to the property subject to BANA’s deed of trust. Id.

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The court disagrees. BANA did not tender the amount sent forth in the notice of default

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or the payoff demand. (ECF No. 44). Rather, BANA tendered $472.50,3 an amount it calculated

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to be sufficient. Id.

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BANA’s motion for summary judgment argues that MBBW’s “letter stated, ‘As a show
of good faith, our client has authorized us to make payment to you in the amount of
$2,1362.60 . . .” (ECF No. 44 at 12) (citing (ECF No. 44-13). The MBBW letter attached to
plaintiff’s motion does not contain this language, and unequivocally states that BANA has
authorized MBBW to pay only $472.50. (ECF No. 44-13).
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James C. Mahan
U.S. District Judge

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Under NRS 116.31166(1), the holder of a first deed of trust may pay off the superpriority

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portion of an HOA lien to prevent the foreclosure sale from extinguishing that security interest.

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See Nev. Rev. Stat. § 116.31166(1); see also SFR Investments, 334 P.3d at 414 (“But as a junior

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lienholder, U.S. Bank could have paid off the SHHOA lien to avert loss of its security . . . .”); see

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also, e.g., 7912 Limbwood Ct. Trust v. Wells Fargo Bank, N.A., et al., 979 F. Supp. 2d 1142, 1149

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(D. Nev. 2013) (“If junior lienholders want to avoid this result, they readily can preserve their

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security interests by buying out the senior lienholder’s interest.” (citing Carillo v. Valley Bank of

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Nev., 734 P.2d 724, 725 (Nev. 1987); Keever v. Nicholas Beers Co., 611 P.2d 1079, 1083 (Nev.

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1980))).

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The superpriority lien portion, however, consists of “the last nine months of unpaid HOA

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dues and maintenance and nuisance-abatement charges,” while the subpriority piece consists of

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“all other HOA fees or assessments.” SFR Investments, 334 P.3d at 411 (emphasis added); see

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also 7912 Limbwood Ct. Trust, 979 F. Supp. 2d at 1150 (“The superpriority lien consists only of

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unpaid assessments and certain charges specifically identified in § 116.31162.”).

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BANA merely presumed, without adequate support, that the amount set forth in the notice

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of default and the payoff demand included more than the superpriority lien portion and that a lesser

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amount based on BANA’s own calculations would be sufficient to preserve its interest in the

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property. See generally, e.g., Nev. Rev. Stat. § 107.080 (allowing trustee’s sale under a deed of

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trust only when a subordinate interest has failed to make good the deficiency in performance or

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payment for 35 days); Nev. Rev. Stat. § 40.430 (barring judicially ordered foreclosure sale if the

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deficiency is made good at least 5 days prior to sale).

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The notice of default recorded December 14, 2011, set forth an amount due of $573.03.

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(ECF No. 44-7). The payoff demand, included in BANA’s exhibits, set forth an amount due of

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$2,142.27. (ECF No. 44-13). Rather than tendering the amount due at the time of the payoff

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demand so as to preserve its interest in the property and then later seeking a refund of any

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difference, BANA elected to pay a lesser amount based on its unwarranted assumption that the

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amount stated in the demand included more than what was due. See SFR Investments, 334 P.3d at

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418 (noting that the deed of trust holder can pay the entire lien amount and then sue for a refund).

James C. Mahan
U.S. District Judge

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After failing to use the legal remedies available to BANA to prevent the property from

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being sold to a third party—for example, seeking a temporary restraining order and preliminary

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injunction and filling a lis pendens on the property (see Nev. Rev. Stat. §§ 14.010, 40.060)—

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BANA now seeks to profit from its own failure to follow the rules set forth in the statutes. See

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generally, e.g., Barkley’s Appeal. Bentley’s Estate, 2 Monag. 274, 277 (Pa. 1888) (“In the case

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before us, we can see no way of giving the petitioner the equitable relief she asks without doing

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great injustice to other innocent parties who would not have been in a position to be injured by

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such a decree as she asks if she had applied for relief at an earlier day.”); Nussbaumer v. Superior

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Court in & for Yuma Cty., 489 P.2d 843, 846 (Ariz. 1971) (“Where the complaining party has

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access to all the facts surrounding the questioned transaction and merely makes a mistake as to the

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legal consequences of his act, equity should normally not interfere, especially where the rights of

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third parties might be prejudiced thereby.”).

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Based on the foregoing, BANA has failed to sufficiently establish that it tendered a

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sufficient amount prior to the foreclosure sale so as to render Saticoy Bay’s title subject to BANA’s

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deed of trust.
2. Due Process

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BANA argues that the HOA lien statute is facially unconstitutional because it does not

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mandate notice to deed of trust beneficiaries. (ECF No. 44). BANA further contends that any

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factual issues concerning actual notice are irrelevant pursuant to Bourne Valley Court Trust v.

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Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016) (“Bourne Valley”). (ECF No. 44).

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BANA has failed to show that Bourne Valley is applicable to its case. Despite BANA’s

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erroneous interpretation to the contrary, Bourne Valley did not hold that the entire foreclosure

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statute was facially unconstitutional. At issue in Bourne Valley was the constitutionality of the

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“opt-in” provision of NRS Chapter 116, not the statute in its entirety. Specifically, the Ninth

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Circuit held that NRS 116.3116’s “opt-in” notice scheme, which required a HOA to alert a

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mortgage lender that it intended to foreclose only if the lender had affirmatively requested notice,

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facially violated mortgage lenders’ constitutional due process rights. Bourne Valley, 832 F.3d at

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1157–58.

James C. Mahan
U.S. District Judge

As identified in Bourne Valley, NRS 116.31163(2)’s “opt-in” provision

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unconstitutionally shifted the notice burden to holders of the property interest at risk—not NRS

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Chapter 116 in general. See id. at 1158.

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Further, the holding in Bourne Valley provides little support for BANA as BANA’s

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contentions are not predicated on an unconstitutional shift of the notice burden, which required it

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to “opt in” to receive notice. BANA does not argue that it lacked notice, actual or otherwise, of

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the event that affected the deed of trust (i.e., the foreclosure sale), in fact, BANA does not dispute

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that it received the foreclosure notices. (ECF No. 53 at 4–7).

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Furthermore, BANA confuses constitutionally mandated notice with the notices required

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to conduct a valid foreclosure sale. Due process does not require actual notice. Jones v. Flowers,

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547 U.S. 220, 226 (2006). Rather, it requires notice “reasonably calculated, under all the

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circumstances, to apprise interested parties of the pendency of the action and afford them an

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opportunity to present their objections.” Mullane v. Central Hanover Bank & Trust Co., 339 U.S.

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306, 314 (1950); see also Bourne Valley, 832 F.3d at 1158.

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“[T]he Due Process Clause protects only against deprivation of existing interests in life,

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liberty, or property.” Serra v. Lappin, 600 F.3d 1191, 1196 (9th Cir. 2010); see also, e.g., Spears

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v. Spears, 596 P.2d 210, 212 (Nev. 1979) (“The rule is well established that one who is not

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prejudiced by the operation of a statute cannot question its validity.”). To establish a procedural

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due process claim, a claimant must show “(1) a deprivation of a constitutionally protected liberty

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or property interest, and (2) a denial of adequate procedural protections.” Brewster v. Bd. of Educ.

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of Lynwood Unified Sch. Dist., 149 F.3d 971, 982 (9th Cir. 1998).

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BANA has satisfied the first element as a deed of trust is a property interest under Nevada

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law. See Nev. Rev. Stat. § 107.020 et seq.; see also Mennonite Bd. of Missions v. Adams, 462 U.S.

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791, 798 (1983) (stating that “a mortgagee possesses a substantial property interest that is

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significantly affected by a tax sale”). However, BANA fails on the second prong.

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Due process does not require actual notice. Jones v. Flowers, 547 U.S. 220, 226 (2006).

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Rather, it requires notice “reasonably calculated, under all the circumstances, to apprise interested

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parties of the pendency of the action and afford them an opportunity to present their objections.”

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James C. Mahan
U.S. District Judge

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Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950); see also Bourne Valley,

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832 F.3d at 1158.

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Here, adequate notice was given to the interested parties prior to extinguishing a property

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right. The HOA has provided proof of mailing for the notice of default and the notice of

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foreclosure sale to BANA and other interested parties. (ECF No. 45). As a result, the notice of

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trustee’s sale was sufficient notice to cure any constitutional defect inherent in NRS 116.31163(2)

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as it put BANA on notice that its interest was subject to pendency of action and offered all of the

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required information.
3. Commercial Reasonability

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BANA contends that judgment in its favor is appropriate because the sale of the property

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for 4% of its alleged fair market value is grossly inadequate as a matter of law. (ECF No. 44).

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BANA also contends it can establish evidence of fraud, unfairness, or oppression. Id. However,

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BANA overlooks the reality of the foreclosure process. The amount of the lien—not the fair

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market value of the property—is what typically sets the sales price.

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BANA further argues that the Shadow Wood court adopted the restatement approach,

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quoting the opinion as holding that “[w]hile gross inadequacy cannot be precisely defined in terms

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of a specific percentage of fair market value, generally . . . a court is warranted in invalidating a

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sale where the price is less than 20 percent of fair market value . . . .” (ECF No. 44 at 13).

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NRS 116.3116 codifies the Uniform Common Interest Ownership Act (“UCIOA”) in

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Nevada. See Nev. Rev. Stat. § 116.001 (“This chapter may be cited as the Uniform Common-

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Interest Ownership Act”); see also SFR Investments, 334 P.3d at 410. Numerous courts have

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interpreted the UCIOA and NRS 116.3116 as imposing a commercial reasonableness standard on

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foreclosure of association liens.4

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James C. Mahan
U.S. District Judge

See, e.g., Bayview Loan Servicing, LLC v. Alessi & Koenig, LLC, 962 F. Supp. 2d 1222, 1229
(D. Nev. 2013) (“[T]he sale for $10,000 of a Property that was worth $176,000 in 2004, and which
was probably worth somewhat more than half as much when sold at the foreclosure sale, raises
serious doubts as to commercial reasonableness.”); SFR Investments, 334 P.3d at 418 n.6 (noting
bank’s argument that purchase at association foreclosure sale was not commercially reasonable);
Thunder Props., Inc. v. Wood, No. 3:14-cv-00068-RCJ-WGC, 2014 WL 6608836, at *2 (D. Nev.
Nov. 19, 2014) (concluding that purchase price of “less than 2% of the amounts of the deed of
trust” established commercial unreasonableness “almost conclusively”); Rainbow Bend
Homeowners Ass’n v. Wilder, No. 3:13-cv-00007-RCJ-VPC, 2014 WL 132439, at *2 (D. Nev.
Jan. 10, 2014) (deciding case on other grounds but noting that “the purchase of a residential
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1

In Shadow Wood, the Nevada Supreme Court held that an HOA’s foreclosure sale may be

2

set aside under a court’s equitable powers notwithstanding any recitals on the foreclosure deed

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where there is a “grossly inadequate” sales price and “fraud, unfairness, or oppression.” 366 P.3d

4

at 1110; see also Nationstar Mortg., LLC v. SFR Invs. Pool 1, LLC, 184 F. Supp. 3d 853, 857–58

5

(D. Nev. 2016).

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foreclosure sale for an inadequate price is not enough to set aside that sale; there must also be a

7

showing of fraud, unfairness, or oppression.” Id. at 1112; see also Long v. Towne, 639 P.2d 528,

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530 (Nev. 1982) (“Mere inadequacy of price is not sufficient to justify setting aside a foreclosure

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sale, absent a showing of fraud, unfairness or oppression.” (citing Golden v. Tomiyasu, 387 P.2d

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989, 995 (Nev. 1963) (stating that, while a power-of-sale foreclosure may not be set aside for mere

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inadequacy of price, it may be if the price is grossly inadequate and there is “in addition proof of

12

some element of fraud, unfairness, or oppression as accounts for and brings about the inadequacy

13

of price” (internal quotation omitted)))).

In other words, “demonstrating that an association sold a property at its

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The Shadow Wood court did not adopt the restatement. Compare Shadow Wood, 366 P.3d

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at 1112–13 (citing the restatement as secondary authority to warrant use of the 20% threshold test

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for grossly inadequate sales price), with St. James Village, Inc. v. Cunningham, 210 P.3d 190, 213

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(Nev. 2009) (explicitly adopting § 4.8 of the Restatement in specific circumstances); Foster v.

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Costco Wholesale Corp., 291 P.3d 150, 153 (Nev. 2012) (“[W]e adopt the rule set forth in the

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Restatement (Third) of Torts: Physical and Emotional Harm section 51.”); Cucinotta v. Deloitte &

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Touche, LLP, 302 P.3d 1099, 1102 (Nev. 2013) (affirmatively adopting the Restatement (Second)

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of Torts section 592A). Because Nevada courts have not adopted the relevant section(s) of the

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restatement at issue here, the Long test, which requires a showing of fraud, unfairness, or

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oppression in addition to a grossly inadequate sale price to set aside a foreclosure sale, controls.

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See 639 P.2d at 530.

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Nevada has not clearly defined what constitutes “unfairness” in determining commercial

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reasonableness. The few Nevada cases that have discussed commercial reasonableness state,

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property free and clear of all encumbrances for the price of delinquent HOA dues would raise
grave doubts as to the commercial reasonableness of the sale under Nevada law”); Will v. Mill
Condo. Owners’ Ass’n, 848 A.2d 336, 340 (Vt. 2004) (discussing commercial reasonableness
standard and concluding that “the UCIOA does provide for this additional layer of protection”).

28
James C. Mahan
U.S. District Judge

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“every aspect of the disposition, including the method, manner, time, place, and terms, must be

2

commercially reasonable.” Levers v. Rio King Land & Inv. Co., 560 P.2d 917, 920 (Nev. 1977).

3

This includes “quality of the publicity, the price obtained at the auction, [and] the number of

4

bidders in attendance.” Dennison v. Allen Grp. Leasing Corp., 871 P.2d 288, 291 (Nev. 1994)

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(citing Savage Constr. v. Challenge–Cook, 714 P.2d 573, 574 (Nev. 1986)).

6

Nevertheless, BANA fails to set forth sufficient evidence to show fraud, unfairness, or

7

oppression so as to justify the setting aside of the foreclosure sale. BANA relies on its repeated

8

assertion that merely offering to tender the superpriority amount is sufficient to show fraud,

9

unfairness, or oppression. However, as was discussed in the previous section, the amount due on

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the date of BANA’s tender was set forth in the notice of default and/or the payoff demand from

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HAS. Rather than tendering the noticed amount under protest so as to preserve its interest and

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then later seeking a refund of the difference in dispute, BANA chose to merely offer to tender

13

$472.50, the purported superiority amount.

14

Accordingly, BANA’s commercial reasonability argument fails as a matter of law as it

15

failed to set forth evidence of fraud, unfairness, or oppression. See, e.g., Nationstar Mortg., LLC,

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No. 70653, 2017 WL 1423938, at *3 n.2 (“Sale price alone, however, is never enough to

17

demonstrate that the sale was commercially unreasonable; rather, the party challenging the sale

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must also make a showing of fraud, unfairness, or oppression that brought about the low sale

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price.”).
4. Bona Fide Purchaser Status

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Because the court concludes that BANA failed to properly raise any equitable challenges

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to the foreclosure sale, the court need not address the parties’ arguments regarding whether Saticoy

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Bay was a bona fide purchaser for value. See Nationstar Mortg., LLC, No. 70653, 2017 WL

24

1423938, at *3 n.3.

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IV.

Conclusion

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In light of the aforementioned, the court finds that BANA has failed to raise a genuine

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dispute so as to preclude summary judgment in favor of the HOA and Saticoy Bay on both

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BANA’s quiet title claim and Saticoy Bay’s quiet title claim. Nor has BANA established that it is

James C. Mahan
U.S. District Judge

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entitled to summary judgment in its favor. BANA did not tender the amount provided in the notice

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of default or notice of foreclosure sale, as statute and the notices themselves instructed, and did

3

not meet its burden to show that no genuine issues of material fact existed regarding the proper

4

amount of the HOA’s lien or constitutionally sufficient notice.

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As the court will grant summary judgment in favor of the HOA and Saticoy Bay, the

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HOA’s cross-motion to dismiss (ECF No. 35) is moot. Therefore, the court will deny the motion.

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, and DECREED that BANA’s motion for

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summary judgment (ECF No. 44) be, and the same hereby is, DENIED.
IT IS FURTHER ORDERED that the HOA’s motion for summary judgment (ECF No. 45)
be, and the same hereby is, GRANTED.
IT IS FURTHER ORDERED that Saticoy Bay’s motion for summary judgment (ECF No.
46) be, and the same hereby is, GRANTED.
IT IS FURTHER ORDERED that the HOA’s motion to dismiss (ECF No. 35) be, and the
same hereby is, DENIED as moot.
IT IS FURTHR ORDERED that Saticoy Bay shall prepare a proposed judgment consistent
with this order and submit it to the court within fourteen (14) days for signature).
DATED March 2, 2018.
__________________________________________
UNITED STATES DISTRICT JUDGE

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James C. Mahan
U.S. District Judge

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