Bank of America, N.A. v. Valley View Meadows Homeowners Association, Inc. et al

Filing 35

ORDER. IT IS HEREBY ORDERED, ADJUDGED, and DECREED that 30 BANA's motion for summary judgment be, and the same hereby is, DENIED. IT IS FURTHER ORDERED that BANA's claims of breach of NRS § 116.1113 and wrongful foreclosure be, an d the same hereby are, DISMISSED as unexhausted, without prejudice. IT IS FURTHER ORDERED that BANA's claim for injunctive relief be, and the same hereby is, DISMISSED. Signed by Judge James C. Mahan on 7/5/17. (Copies have been distributed pursuant to the NEF - ADR)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 *** 7 BANK OF AMERICA, N.A., 8 Plaintiff(s), 9 10 11 Case No. 2:16-CV-275 JCM (CWH) ORDER v. VALLEY VIEW MEADOWS HOMEOWNERS ASSOCIATION, INC., et al, Defendant(s). 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Presently before the court is plaintiff Bank of America N.A.’s (“BANA”) motion for summary judgment as to “all claims in its complaint and on Premier One Holdings, Inc. and Lin & Yeh, Inc.’s counterclaims.”1 (ECF No. 30 at 2). Defendants Premier One Holdings, Inc. (“Premier”) and Lin & Yeh, Inc. (“LYI”) filed a response (ECF No. 31), and Valley View Meadows Homeowners Association (the “HOA”) joined that submission (ECF No. 32). BANA filed a reply. (ECF No. 34). I. Introduction The case involves the HOA foreclosure sale of the real property at 913 High Mountain Street, Henderson, Nevada (the “property”). (ECF Nos. 1, 30). On September 14, 2010, BAC Home Loans Servicing, LP (“BAC”) acquired the deed of trust created in connection with a purchase loan for the property. (ECF Nos. 30, 30-3). The HOA “recorded a notice of delinquent assessment lien in January 2010,” stating that a sum of $736.34 was owed to the HOA. (ECF No. 30 at 3). 27 28 1 James C. Mahan U.S. District Judge BANA is successor by merger to BAC Home Loans Servicing. (ECF No. 30-4). 1 2 On March 30, 2010, the HOA’s agent, Nevada Association Service, Inc. (“NAS”), recorded a notice of default and election to sell, indicating a liability of $1,824.34. (ECF No. 30-6). 3 On July 29, 2010, BAC’s counsel wrote a letter to NAS, offering tender of $180.00 for 4 what that letter acknowledged was then a purported $4,673.02 sum due. (ECF No. 30-9). On July 5 1, 2011, BAC merged into BANA. (ECF No. 30-4). 6 On August 22, 2011, NAS recorded a notice of foreclosure sale for the property, which 7 indicated an outstanding liability of $3,481.46.2 (ECF No. 30-7). NAS did not accept that offered 8 payment. (ECF No. 30). 9 10 Finally, a foreclosure deed was recorded by NAS in favor of Premier on March 11, 2013. (ECF No. 30-10). 11 BANA alleges the following claims: (1) quiet title/declaratory judgment as to all 12 defendants; (2) breach of Nevada Revised Statute (“NRS”) § 116.1113 against the HOA and NAS; 13 (3) wrongful foreclosure against the same; and (4) injunctive relief against Premier. (ECF No. 1). 14 On March 11, 2016, Premier and LYI filed an answer and counterclaim against BANA, 15 alleging claims of quiet title and declaratory relief. (ECF No. 13). 16 II. Legal Standard 17 The Federal Rules of Civil Procedure allow summary judgment when the pleadings, 18 depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 19 show that “there is no genuine dispute as to any material fact and the movant is entitled to a 20 judgment as a matter of law.” Fed. R. Civ. P. 56(a). A principal purpose of summary judgment is 21 “to isolate and dispose of factually unsupported claims.” Celotex Corp. v. Catrett, 477 U.S. 317, 22 323–24 (1986). 23 For purposes of summary judgment, disputed factual issues should be construed in favor 24 of the non-moving party. Lujan v. Nat’l Wildlife Fed., 497 U.S. 871, 888 (1990). However, to be 25 entitled to a denial of summary judgment, the nonmoving party must “set forth specific facts 26 showing that there is a genuine issue for trial.” Id. 27 28 2 James C. Mahan U.S. District Judge Another notice of foreclosure sale was recorded on February 12, 2013. (ECF No. 30-8). -2- 1 In determining summary judgment, a court applies a burden-shifting analysis. The moving 2 party must first satisfy its initial burden. “When the party moving for summary judgment would 3 bear the burden of proof at trial, it must come forward with evidence which would entitle it to a 4 directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has 5 the initial burden of establishing the absence of a genuine issue of fact on each issue material to 6 its case.” C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) 7 (citations omitted). 8 By contrast, when the nonmoving party bears the burden of proving the claim or defense, 9 the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential 10 element of the non-moving party’s case; or (2) by demonstrating that the non-moving party failed 11 to make a showing sufficient to establish an element essential to that party’s case on which that 12 party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323–24. If the moving 13 party fails to meet its initial burden, summary judgment must be denied and the court need not 14 consider the nonmoving party’s evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159– 15 60 (1970). 16 If the moving party satisfies its initial burden, the burden then shifts to the opposing party 17 to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith 18 Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute, the 19 opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient 20 that “the claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing 21 versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 22 631 (9th Cir. 1987). 23 In other words, the nonmoving party cannot avoid summary judgment by relying solely on 24 conclusory allegations that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040, 25 1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the 26 pleadings and set forth specific facts by producing competent evidence that shows a genuine issue 27 for trial. See Celotex, 477 U.S. at 324. 28 James C. Mahan U.S. District Judge -3- 1 At summary judgment, a court’s function is not to weigh the evidence and determine the 2 truth, but to determine whether there is a genuine issue for trial. See Anderson v. Liberty Lobby, 3 Inc., 477 U.S. 242, 249 (1986). Nonmovant’s evidence is “to be believed, and all justifiable 4 inferences are to be drawn in his favor.” Id. at 255. But if the evidence of the nonmoving party is 5 merely colorable or is not significantly probative, summary judgment may be granted. See id. at 6 249–50. 7 III. 8 a. Plaintiff’s NRS 116.1113 and wrongful foreclosure claims 9 Subsection (1) of NRS 38.330 provides that “[u]nless otherwise provided by an agreement 10 of the parties, mediation must be completed within 60 days after the filing of the written claim.” 11 Nev. Rev. Stat. § 38.330(1). However, while NRS 38.330(1) explains the procedure for mediation, 12 NRS 38.310 is clear that no civil action may be commenced “unless the action has been submitted 13 to mediation.” NRS 38.310. Specifically, NRS 38.330(1) offers in relevant part: 14 15 16 17 Discussion If the parties participate in mediation and an agreement is not obtained, any party may commence a civil action in the proper court concerning the claim that was submitted to mediation. Any complaint filed in such an action must contain a sworn statement indicating that the issues addressed in the complaint have been mediated pursuant to the provisions of NRS 38.300 to 38.360, inclusive, but an agreement was not obtained. Nev. Rev. Stat. § 38.330(1) (emphasis added). Moreover, nothing in NRS 38.330 provides that 18 NRED’s failure to appoint a mediator within 60 days constitutes exhaustion, nor does the statute 19 place the burden on NRED to complete mediation within a specified period of time. 20 21 22 23 Next, under NRS 38.300(3), a civil action includes “an action for money damages or equitable relief,” but not “an action in equity for injunctive relief in which there is an immediate threat of irreparable harm, or an action relating to the title to residential property.” Violation of NRS 116.1113 is a “civil action[] as defined in NRS 38.300.” McKnight Family, L.L.P. v. Adept 24 Mgmt., 310 P.3d 555, 558 (Nev. 2013) (finding that a claim for violation of NRS 116.1113 was 25 properly dismissed for lack of compliance with NRS 38.310). 26 27 28 James C. Mahan U.S. District Judge Further, “[a] wrongful foreclosure claim challenges the authority behind the foreclosure, not the foreclosure act itself.” McKnight Family, L.L.P., 310 P.3d at 559 (citing Collins v. Union Fed. Sav. & Loan, 662 P.2d 610, 623 (Nev. 1983)). “The material issue in a wrongful foreclosure -4- 1 claim is whether ‘the trustor was in default when the power of sale was exercised.’” Turbay v. 2 Bank of Am., N.A., No. 2:12–CV–1367–JCM–PAL; 2013 WL 1145212, at *4 (quoting Collins, 3 662 P.2d at 623). “Deciding a wrongful foreclosure claim against a homeowners’ association 4 involves interpreting covenants, conditions or restrictions applicable to residential property.” 5 McKnight Family, L.L.P., 310 P.3d at 559. “This type of interpretation falls under NRS 38.310.” 6 Id. Additionally, NRS 38.310 applies to laws “contain[ing] conditions and restrictions applicable 7 to residential property.” Id. at 558. Therefore, plaintiff’s claim of wrongful foreclosure must be 8 mediated before this court may delve into its merits. 9 In sum, plaintiff’s claims for violation of NRS 116.1113 and unjust enrichment will be 10 dismissed as unexhausted for failure to mediate. 11 b. Plaintiff’s claim for injunctive relief 12 Despite plaintiff’s formulation of this request as a claim, injunctive relief is a remedy, not 13 a cause of action. See, e.g., Ajetunmobi v. Clarion Mortg. Capital, Inc., 595 Fed. Appx. 680, 684 14 (9th Cir. 2014) (citation omitted). Therefore, this claim will also be dismissed. 15 c. Declaratory relief/quiet title 16 In Nevada, “[a]n action may be brought by any person against another who claims an estate 17 or interest in real property, adverse to the person bringing the action for the purpose of determining 18 such adverse claim.” Nev. Rev. Stat. § 40.010. “A plea to quiet title does not require any particular 19 elements, but ‘each party must plead and prove his or her own claim to the property in question’ 20 and a ‘plaintiff’s right to relief therefore depends on superiority of title.” Chapman v. Deutsche 21 Bank Nat’l Trust Co., 302 P.3d 1103, 1106 (Nev. 2013) (quoting Yokeno v. Mafnas, 973 F.2d 803, 22 808 (9th Cir. 1992)). 23 Section 116.3116(1) of the NRS gives an HOA a lien on its homeowners’ residences for 24 unpaid assessments and fines. Nev. Rev. Stat. § 116.3116(1). Moreover, NRS 116.3116(2) gives 25 priority to that HOA lien over all other liens and encumbrances with limited exceptions—such as 26 “[a] first security interest on the unit recorded before the date on which the assessment sought to 27 be enforced became delinquent.” Nev. Rev. Stat. § 116.3116(2)(b). 28 James C. Mahan U.S. District Judge -5- 1 The statute then carves out a partial exception to subparagraph (2)(b)’s exception for first 2 security interests. See Nev. Rev. Stat. § 116.3116(2). In SFR Investment Pool 1 v. U.S. Bank, the 3 Nevada Supreme Court provided the following explanation: 4 5 6 7 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”). 8 Chapter 116 of the Nevada Revised Statutes permits an HOA to enforce its superpriority 9 lien by nonjudicial foreclosure sale. Id. at 415. Thus, “NRS 116.3116(2) provides an HOA a true 10 superpriority lien, proper foreclosure of which will extinguish a first deed of trust.” Id. at 419; see 11 also Nev. Rev. Stat. § 116.31162(1) (providing that “the association may foreclose its lien by sale” 12 upon compliance with the statutory notice and timing rules). 1. Insufficient tender 13 14 BANA did not tender the amount sent forth in the notice of default and election to sell, 15 which stated an amount due of $1,824.34. (ECF No. 30-6). Rather, BANA tendered a lesser 16 amount, specifically, $180.00. (ECF No. 30-9). 17 Under NRS 116.31166(1), the holder of a first deed of trust may pay off the superpriority 18 portion of an HOA lien to prevent the foreclosure sale from extinguishing that security interest. 19 See Nev. Rev. Stat. § 116.31166(1); see also SFR Investments, 334 P.3d at 414 (“But as a junior 20 lienholder, U.S. Bank could have paid off the SHHOA lien to avert loss of its security . . . .”); see 21 also, e.g., 7912 Limbwood Ct. Trust v. Wells Fargo Bank, N.A., et al., 979 F. Supp. 2d 1142, 1149 22 (D. Nev. 2013) (“If junior lienholders want to avoid this result, they readily can preserve their 23 security interests by buying out the senior lienholder’s interest.” (citing Carillo v. Valley Bank of 24 Nev., 734 P.2d 724, 725 (Nev. 1987); Keever v. Nicholas Beers Co., 611 P.2d 1079, 1083 (Nev. 25 1980))). 26 The superpriority lien portion, however, consists of “the last nine months of unpaid HOA 27 dues and maintenance and nuisance-abatement charges,” while the subpriority piece consists of 28 “all other HOA fees or assessments.” SFR Investments, 334 P.3d at 411 (emphasis added); see James C. Mahan U.S. District Judge -6- 1 also 7912 Limbwood Ct. Trust, 979 F. Supp. 2d at 1150 (“The superpriority lien consists only of 2 unpaid assessments and certain charges specifically identified in § 116.31162.”). BANA offered 3 $180.00 based on its calculation of the nine months of unpaid HOA dues, without adequately 4 accounting for the maintenance and nuisance-abatement charges. See (ECF No. 30 at 11, 30-9 at 5 13). BANA does not provide an adequate explanation for its selectivity of inputs when calculating 6 its proposed tender value. 7 BANA merely presumed, without adequate support, that the amount set forth in the notice 8 of default included more than the superpriority lien portion and that a lesser amount based on 9 BANA’s own calculations would be sufficient to preserve its interest in the property. See 10 generally, e.g., Nev. Rev. Stat. § 107.080 (allowing trustee’s sale under a deed of trust only when 11 a subordinate interest has failed to make good the deficiency in performance or payment for 35 12 days); Nev. Rev. Stat. § 40.430 (barring judicially ordered foreclosure sale if the deficiency is 13 made good at least 5 days prior to sale). Therefore, this argument fails. 14 There is also no “as applied” violation of due process as a result of the rejected tender. The 15 March 30, 2010, notice of default set forth an amount due of $1,824.34. (ECF No. 30-6). Rather 16 than tendering the full amount due so as to preserve its interest in the property and then later 17 seeking a refund of any difference, BANA elected to pay a lesser amount ($180.00) based on its 18 unwarranted assumption that the amount stated in the notice included more than what was due. 19 See SFR Investments, 334 P.3d at 418 (noting that the deed of trust holder can pay the entire lien 20 amount and then sue for a refund). Had BANA paid the amount set forth in the notice of default 21 ($1,824.34), the HOA’s interest would have been subordinate to the first deed of trust. See Nev. 22 Rev. Stat. § 116.31166(1). 23 After failing to use the legal remedies available to BANA to prevent the property from 24 being sold to a third party—for example, seeking a temporary restraining order and preliminary 25 injunction and filling a lis pendens on the property (see Nev. Rev. Stat. §§ 14.010, 40.060)— 26 BANA now seeks to profit from its own failure to follow the rules set forth in the statutes. See 27 generally, e.g., Barkley’s Appeal. Bentley’s Estate, 2 Monag. 274, 277 (Pa. 1888) (“In the case 28 before us, we can see no way of giving the petitioner the equitable relief she asks without doing James C. Mahan U.S. District Judge -7- 1 great injustice to other innocent parties who would not have been in a position to be injured by 2 such a decree as she asks if she had applied for relief at an earlier day.”); Nussbaumer v. Superior 3 Court in & for Yuma Cty., 489 P.2d 843, 846 (Ariz. 1971) (“Where the complaining party has 4 access to all the facts surrounding the questioned transaction and merely makes a mistake as to the 5 legal consequences of his act, equity should normally not interfere, especially where the rights of 6 third parties might be prejudiced thereby.”). 7 In sum, BANA’s arguments regarding tender are insufficient and unpersuasive. 2. Due process and NRS Chapter 116 8 9 BANA next argues that the HOA lien statute is facially unconstitutional because it “did not 10 mandate notice to mortgagees prior to its recent amendment.” (ECF No. 30 at 6). BANA further 11 posits that any factual disputes regarding actual notice are irrelevant pursuant to Bourne Valley 12 Court Trust v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016), cert. denied, No. 16-1208, 13 2017 WL 1300223 (U.S. June 26, 2017) (“Bourne Valley”); see also (ECF No. 30). 14 However, the Ninth Circuit actually held that NRS 116.3116’s “opt-in” notice scheme, 15 which required a HOA to alert a mortgage lender that it intended to foreclose only if the lender 16 had affirmatively requested notice, facially violated mortgage lenders’ constitutional due process 17 rights; plaintiff’s interpretation of that holding is overbroad. Bourne Valley, 832 F.3d at 1157–58. 18 The facially unconstitutional provision, as identified in Bourne Valley, exists in NRS 19 116.31163(2). 20 unconstitutionally shifts the notice burden to holders of the property interest at risk. See id. See id. at 1158. At issue in that case was the “opt-in” provision that 21 To state a procedural due process claim, a claimant must allege “(1) a deprivation of a 22 constitutionally protected liberty or property interest, and (2) a denial of adequate procedural 23 protections.” Brewster v. Bd. of Educ. of Lynwood Unified Sch. Dist., 149 F.3d 971, 982 (9th Cir. 24 1998). BANA has satisfied the first element as a deed of trust is a property interest under Nevada 25 law. See Nev. Rev. Stat. § 107.020 et seq.; see also Mennonite Bd. of Missions v. Adams, 462 U.S. 26 791, 798 (1983) (stating that “a mortgagee possesses a substantial property interest that is 27 significantly affected by a tax sale”). However, BANA fails on the second prong. 28 James C. Mahan U.S. District Judge -8- 1 Due process does not require actual notice. Jones v. Flowers, 547 U.S. 220, 226 (2006). 2 Rather, it requires notice “reasonably calculated, under all the circumstances, to apprise interested 3 parties of the pendency of the action and afford them an opportunity to present their objections.” 4 Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950); see also Bourne Valley, 5 832 F.3d at 1158. 6 Here, adequate notice was given to the interested parties prior to extinguishing a property 7 right. In fact, BANA acknowledges having received the notice of default. (ECF No. 30-9 at 6) 8 (“This letter is written in response to your Notice of Default with regard to the HOA assessments 9 purportedly owed on the above described real property . . . .”). As a result, the notice of trustee’s 10 sale was sufficient notice to cure any constitutional defect inherent in NRS 116.31163(2) as it put 11 BANA on notice that its interest was subject to pendency of action and offered all of the required 12 information. See also Spears v. Spears, 596 P.2d 210, 212 (Nev. 1979) (“The rule is well 13 established that one who is not prejudiced by the operation of a statute cannot question its 14 validity.”). 15 Further, BANA does not dispute receiving actual notice of the foreclosure sale, but merely 16 that “actual notice does not change the analysis.” (ECF No. 30 at 8). As discussed above, this 17 assertion is incorrect. See Mullane, 339 U.S. at 314. 3. Commercial unreasonability 18 19 BANA contends that judgment in its favor is appropriate because the sale of the property 20 for under 7% of its alleged fair market value is grossly inadequate as a matter of law. (ECF No. 21 30 at 14). BANA further argues that the Shadow Wood court adopted the restatement approach, 22 quoting the opinion as holding that “[w]hile gross inadequacy cannot be precisely defined in terms 23 of a specific percentage of fair market value, generally a court is warranted in setting aside a sale 24 where the price is less than 20 percent of fair market value.” (ECF No. 30 at 12) (emphasis 25 omitted). 26 NRS 116.3116 codifies the Uniform Common Interest Ownership Act (“UCIOA”) in 27 Nevada. See Nev. Rev. Stat. § 116.001 (“This chapter may be cited as the Uniform Common- 28 Interest Ownership Act”); see also SFR Investments, 334 P.3d at 410. Numerous courts have James C. Mahan U.S. District Judge -9- 1 interpreted the UCIOA and NRS 116.3116 as imposing a commercial reasonableness standard on 2 foreclosure of association liens.3 3 In Shadow Wood, the Nevada Supreme Court held that an HOA’s foreclosure sale may be 4 set aside under a court’s equitable powers notwithstanding any recitals on the foreclosure deed 5 where there is a “grossly inadequate” sales price and “fraud, unfairness, or oppression.” 366 P.3d 6 at 1110; see also Nationstar Mortg., LLC v. SFR Invs. Pool 1, LLC, 184 F. Supp. 3d 853, 857–58 7 (D. Nev. 2016). 8 foreclosure sale for an inadequate price is not enough to set aside that sale; there must also be a 9 showing of fraud, unfairness, or oppression.” Id. at 1112; see also Long v. Towne, 639 P.2d 528, 10 530 (Nev. 1982) (“Mere inadequacy of price is not sufficient to justify setting aside a foreclosure 11 sale, absent a showing of fraud, unfairness or oppression.” (citing Golden v. Tomiyasu, 387 P.2d 12 989, 995 (Nev. 1963) (stating that, while a power-of-sale foreclosure may not be set aside for mere 13 inadequacy of price, it may be if the price is grossly inadequate and there is “in addition proof of 14 some element of fraud, unfairness, or oppression as accounts for and brings about the inadequacy 15 of price” (internal quotation omitted)))). In other words, “demonstrating that an association sold a property at its 16 Despite BANA’s suggestion to the contrary, the Shadow Wood court did not adopt the 17 restatement. In fact, nothing in Shadow Wood suggests that the Nevada Supreme Court adopted, 18 or had the intention to adopt, the restatement. Compare Shadow Wood, 366 P.3d at 1112–13 (citing 19 the restatement as secondary authority to warrant use of the 20% threshold test for grossly 20 inadequate sales price), with St. James Village, Inc. v. Cunningham, 210 P.3d 190, 213 (Nev. 2009) 21 (explicitly adopting § 4.8 of the Restatement in specific circumstances); and Foster v. Costco 22 3 23 24 25 26 27 28 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 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”). - 10 - 1 Wholesale Corp., 291 P.3d 150, 153 (Nev. 2012) (“[W]e adopt the rule set forth in the Restatement 2 (Third) of Torts: Physical and Emotional Harm section 51.”); and Cucinotta v. Deloitte & Touche, 3 LLP, 302 P.3d 1099, 1102 (Nev. 2013) (affirmatively adopting the Restatement (Second) of Torts 4 section 592A). Because Nevada courts have not adopted the relevant section(s) of the restatement 5 at issue here, the Long test—which requires a showing of fraud, unfairness, or oppression in 6 addition to a grossly inadequate sale price to set aside a foreclosure sale—controls. See 639 P.2d 7 at 530. 8 Here, BANA does not argue how the sale was a product of unfairness, fraud, or oppression 9 except for its theory that the purportedly unjustified rejection of tender was sufficient to satisfy 10 Long. (ECF No. 30). As discussed above, BANA has failed to show that it made a sufficient 11 attempt at tender in this case. Therefore, BANA’s commercial unreasonability argument is 12 unpersuasive. 13 4. Supremacy clause 14 Under the property clause of the United States Constitution, only “Congress shall have the 15 power to dispose of and make all needful rules and regulations respecting the territory or other 16 property belonging to the United States . . . .” U.S. Const. Art. IV, § 3, cl. 2. The supremacy 17 clause provides that the “Constitution . . . shall be the supreme law of the land . . . .” U.S. Const. 18 Art. VI, cl. 2. “State legislation must yield under the Supremacy Clause of the Constitution to the 19 interests of the federal government when the legislation as applied interferes with the federal 20 purpose or operates to impede or condition the implementation of federal policies and programs.” 21 Rust v. Johnson, 597 F.2d 174, 179 (9th Cir. 1979). 22 In Rust, the Ninth Circuit held that a city’s foreclosure on property insured by the Federal 23 National Mortgage Association was invalid under the supremacy clause. The court reasoned that 24 upholding the sale “would run the risk of substantially impairing the Government’s participation 25 in the home mortgage market and of defeating the purpose of the National Housing Act.” Id. 26 On this basis, courts consistently apply federal law, ignoring conflicting state law, when 27 determining rights related to federally owned and insured loans. United States v. Stadium 28 Apartments, Inc., 425 F.2d 358, 362 (9th Cir. 1970) (holding that federal law applies to mortgages James C. Mahan U.S. District Judge - 11 - 1 insured by the Federal Housing Administration (“FHA”) “to assure the protection of the federal 2 program against loss, state law to the contrary notwithstanding”); see also United States v. Victory 3 Highway Vill., Inc., 662 F.2d 488, 497 (8th Cir. 1981) (citing Ninth Circuit case law) (“We note 4 that federal law, not [state] law, governs the rights and liabilities of the parties in cases dealing 5 with the remedies available upon default of a federally held or insured loan.”). Foreclosure on 6 federal property is prohibited where it interferes with the statutory mission of a federal agency. 7 See United States v. Lewis Cnty., 175 F.3d 671, 678 (9th Cir. 1999) (holding that the state could 8 not foreclose on federal Farm Service Agency property for non-payment of taxes). 9 Indeed, federal district courts in this circuit have set aside HOA foreclosure sales on 10 supremacy clause grounds in cases involving federally insured loans. Saticoy Bay LLC, Series 11 7342 Tanglewood Park v. SRMOF II 2012-1 Trust, No. 2:13-cv-1199-JCM-VCF, 2015 WL 12 1990076, at *1 (D. Nev. Apr. 30, 2015); see also Sec’y of Hous. & Urban Dev. v. Sky Meadow 13 Ass’n, 117 F. Supp. 2d 970, 982 (C.D. Cal. 2000) (voiding HOA’s non-judicial foreclosure on 14 HUD property, quieting title in HUD’s favor based on property and supremacy clauses); Yunis v. 15 United States, 118 F. Supp. 2d 1024, 1027, 1036 (C.D. Cal. 2000) (voiding HOA’s non-judicial 16 foreclosure sale of property purchased under veteran’s association home loan guarantee program); 17 Wash. & Sandhill Homeowners Ass’n v. Bank of Am., N.A., No. 2:13-cv-01845-GMN-GWF, 2014 18 WL 4798565, at *6 (D. Nev. Sept. 25, 2014) (holding that property and supremacy clauses barred 19 foreclosure sale where mortgage interest was federally insured). 20 The single-family mortgage insurance program allows FHA to insure private loans, 21 expanding the availability of mortgages to low-income individuals wishing to purchase homes. 22 See Sky Meadow Ass’n, 117 F. Supp. 2d at 980–81 (discussing program); Wash. & Sandhill 23 Homeowners Ass’n, 2014 WL 4798565, at *1 n.2 (same). If a borrower under this program 24 defaults, the lender may foreclose on the property, convey title to HUD, and submit an insurance 25 claim. 24 C.F.R. 203.355. HUD’s property disposition program generates funds to finance the 26 program. See 24 C.F.R. § 291.1. 27 However, the instant claims to quiet title are not directed at FHA. See (ECF Nos. 1, 13). 28 Therefore, this court finds that plaintiff does not have standing to assert this claim under the James C. Mahan U.S. District Judge - 12 - 1 supremacy clause. See, e.g., JPMorgan Chase Bank, N.A. v. SFR Investments Pool 1, LLC, 200 2 F. Supp. 3d 1141, 1162–64 (D. Nev. 2016); Freedom Mortg. Corp. v. Las Vegas Dev. Grp., LLC, 3 106 F. Supp. 3d 1174, 1177 (D. Nev. 2015); see also Bank of America, N.A. v. Hollow de Oro 4 Homeowners Association, et al., No. 2:16-CV-675-JCM-VCF, 2017 WL 936633, at *3 (D. Nev. 5 Mar. 9, 2017). 5. Retroactivity of SFR Investments 6 7 Finally, BANA argues that SFR Investments should not be applied retroactively. (ECF No. 8 30). The Nevada Supreme Court has since applied the SFR Investments holding in numerous cases 9 that challenged pre-SFR Investments foreclosure sales. See, e.g., Centeno v. Mortg. Elec. 10 Registration Sys., Inc., No. 64998, 2016 WL 3486378, at *2 (Nev. June 23, 2016); LN Mgmt. LLC 11 Series 8301 Boseck 228 v. Wells Fargo Bank, N.A., No. 64495, 2016 WL 1109295, at *1 (Nev. 12 Mar. 18, 2016) (reversing 2013 dismissal of quiet-title action that concluded contrary to SFR 13 Investments, reasoning that “the district court’s decision was based on an erroneous interpretation 14 of the controlling law”); Mackensie Family, LLC v. Wells Fargo Bank, N.A., No. 65696, 2016 WL 15 315326, at *1 (Nev. Jan. 22, 2016) (reversing and remanding because “[t]he district court’s 16 conclusion of law contradicts our holding in SFR Investments Pool 1 v. U.S. Bank”). Thus, SFR 17 Investments applies to this case. 18 IV. Conclusion 19 In sum, BANA has failed to show that it is entitled to quiet title in its favor. Additionally, 20 BANA’s claims of breach of NRS § 116.1113, wrongful foreclosure, and injunctive relief will be 21 dismissed. 22 Accordingly, 23 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that BANA’s motion for 24 summary judgment (ECF No. 30) be, and the same hereby is, DENIED. 25 IT IS FURTHER ORDERED that BANA’s claims of breach of NRS § 116.1113 and 26 wrongful foreclosure be, and the same hereby are, DISMISSED as unexhausted, without prejudice. 27 ... 28 ... James C. Mahan U.S. District Judge - 13 - 1 2 3 4 5 IT IS FURTHER ORDERED that BANA’s claim for injunctive relief be, and the same hereby is, DISMISSED. DATED July 5, 2017. __________________________________________ UNITED STATES DISTRICT JUDGE 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 James C. Mahan U.S. District Judge - 14 -

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