Bank of America, N.A. v. Mesa Verde Homeowners Association et al

Filing 129

ORDER. IT IS HEREBY ORDERED, ADJUDGED, and DECREED that 116 BANA's motion for reconsideration be, and the same hereby is, GRANTED. IT IS FURTHER ORDERED that 126 BANA's motion to file supplemental authorities be, and the same hereby is, GRANTED. The clerk shall enter judgment accordingly and close the case. Signed by Judge James C. Mahan on 11/15/2018. (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., et al., 8 Plaintiff(s), 9 10 11 Case No. 2:16-CV-498 JCM (NJK) ORDER v. MESA VERDE HOMEOWNERS ASSOCIATION, et al., Defendant(s). 12 13 Presently before the court is plaintiff/counter defendant Bank of America, N.A.’s 14 15 16 17 (“BANA”) motion for reconsideration. (ECF No. 116). Defendants Mesa Verde Homeowners’ Association (“Mesa Verde”) and SFR Investments Pool 1, LLC (“SFR”) filed separate responses (ECF Nos. 121, 123), to which BANA replied (ECF No. 125). Also before the court is BANA’s motion to file supplemental authorities in support of its 18 19 20 21 22 23 24 25 26 27 28 James C. Mahan U.S. District Judge motion for reconsideration. (ECF No. 126). Mesa Verde and SFR filed a response. (ECF Nos. 127, 128). BANA did not file a reply and the time to do so has passed. I. Facts This action arises from a dispute over real property located at 4129 Thomas Patrick Avenue, North Las Vegas, Nevada 89032 (“the property”). (ECF No. 1). George and Juanita Bennett (“the Bennetts”) purchased the property on May 27, 2008. (ECF No. 89-1). The Bennetts financed the purchase with a loan in the amount of $215,761.00 from CTX Mortgage Company (“CTX Mortgage”). Id. CTX Mortgage secured the loan with a deed of trust, which names CTX Mortgage as the lender, Timothy Bartosh or William Naryka as the trustee, and Mortgage Electronic Registration Systems, Inc. (“MERS”) as the beneficiary as 1 nominee for the lender and lender’s successors and assigns. Id. On November 3, 2011, BANA 2 acquired all beneficial interest in the deed of trust via an assignment, which BANA recorded with 3 the Clark County recorder’s office. (ECF No. 89-3). 4 On May 9, 2010, Mesa Verde, through its agent defendant Alessi & Koenig, LLC 5 (“A&K”), recorded a notice of delinquent assessment lien (“the lien”) against the property for the 6 Bennetts’ failure to pay Mesa Verde in the amount of $920.00. (ECF No. 89-4). On August 5, 7 2010, Mesa Verde recorded a notice of default and election to sell pursuant to the lien, stating that 8 the amount due was $5,380.00 as of August 3, 2010. (ECF No. 89-5). 9 In an attempt to exercise its right of redemption, BANA requested from Mesa Verde the 10 superpriority amount of the lien. (ECF No. 89-7). On November 5, 2012, Mesa Verde provided 11 a payoff ledger of the Bennetts total amount due from October 2009 to December 2012. Id. The 12 payoff ledger shows an outstanding balance of $5,715.00 but does not state what portion of the 13 balance constitutes the superpriority portion of the lien. Id. The ledger also does not include 14 charges for maintenance and nuisance abatement. Id. The ledger does state, however, that Mesa 15 Verde’s monthly assessments against the property were $55.00. Id. 16 BANA used Mesa Verde’s ledger to calculate the superpriority amount as $495.00, the 17 sum of nine months of common assessments. Id. On November 29, 2012, BANA sent a letter and 18 a check in the amount of $1,575.00 to Mesa Verde. Id. The letter explained that the check was 19 the sum of nine of common assessment ($495.00) and what BANA determined to be reasonable 20 collection costs ($1,080.00). Id. Mesa Verde rejected the payment without explanation. Id. 21 On June 3, 2013, Mesa Verde recorded a notice of foreclosure sale against the property. 22 (ECF No. 92-7). On August 12, 2013, Mesa Verde sold the property in a nonjudicial foreclosure 23 sale to SFR in exchange for $20,000.00. (89-8). On August 13, 2013, SFR recorded the deed of 24 foreclosure with the Clark County recorder’s office. Id. 25 On March 8, 2016, BANA filed a complaint alleging four causes of action: (1) quiet 26 title/declaratory relief against all defendants; (2) breach of NRS 116.1113 against Mesa Verde and 27 A&K; (3) wrongful foreclosure against Mesa Verde and A&K; and (4) injunctive relief against 28 SFR. (ECF No. 1). On June 16, 2018, the court granted Mesa Verde and SFR’s motions for James C. Mahan U.S. District Judge -2- 1 summary judgment (ECF Nos. 92, 94), holding in part that BANA’s attempted tender was 2 insufficient to extinguish the superpriority lien. (ECF No. 111). 3 On September 13, 2018, the Nevada Supreme Court issued a ruling clarifying how courts 4 should apply NRS 116.3116 et seq. (“Chapter 116”)—the statute that Mesa Verde relied on when 5 it foreclosed on the property. Bank of America, N.A. v. SFR Invs. Pool 1, LLC, 427 P.3d 113 (Nev. 6 2018) (“Bank of America”). In light of this intervening change in controlling law, the court now 7 reconsiders its prior order pursuant to BANA’s motion for reconsideration (ECF No. 116). 8 II. Legal Standard 9 A motion for reconsideration “should not be granted, absent highly unusual 10 circumstances.” Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 880 11 (9th Cir. 2009). “Reconsideration is appropriate if the district court (1) is presented with newly 12 discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) 13 if there is an intervening change in controlling law.” School Dist. No. 1J v. ACandS, Inc., 5 F.3d 14 1255, 1263 (9th Cir. 1993); see Fed. R. Civ. P. 60(b). 15 Rule 59(e) “permits a district court to reconsider and amend a previous order,” however 16 “the rule offers an extraordinary remedy, to be used sparingly in the interests of finality and 17 conservation of judicial resources.” Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir. 2003) 18 (internal quotations omitted). A motion for reconsideration is also an improper vehicle “to raise 19 arguments or present evidence for the first time when they could reasonably have been raised 20 earlier in litigation.” Marlyn Nutraceuticals, 571 F.3d at 880. 21 III. Discussion 22 As a preliminary matter, the court will grant BANA motion to file supplemental authorities 23 (ECF No. 126) pursuant to Local Rule 7-2(g) as the authorities include new mandatory authority 24 on the application of Chapter 116. 25 BANA argues that, in light of the Nevada Supreme Court’s recent holding in Bank of 26 America, BANA tendered the superpriority portion of the lien and prevented the foreclosure sale 27 from extinguishing the deed of trust. (ECF Nos. 116, 126). The court agrees. 28 James C. Mahan U.S. District Judge -3- 1 Under NRS 116.31166(1), the holder of a first deed of trust may pay off the superpriority 2 portion of an HOA lien to prevent the foreclosure sale from extinguishing the deed of trust. See 3 Nev. Rev. Stat. § 116.31166(1); see also SFR Investments, 334 P.3d at 414 (“But as a junior 4 lienholder, BOA could have paid off the SHHOA lien to avert loss of its security . . .”). The 5 superpriority portion of the lien consists of “the last nine months of unpaid HOA dues and 6 maintenance and nuisance-abatement charges,” while the subpriority piece consists of “all other 7 HOA fees or assessments.” 8 Homeowners Association v. Ikon Holdings, LLC, 373 P.3d 66 (Nev. 2016). SFR Investments, 334 P.3d at 411; Horizons at Seven Hills 9 In Bank of America, the Nevada Supreme Court held that a foreclosure sale did not 10 extinguish a first deed of trust when Bank of America, the holder of the deed of trust, used the 11 HOA’s representations to calculate and tender the sum of nine months of delinquent assessments. 12 Bank of America, N.A. v. SFR Invs. Pool 1, LLC, 427 P.3d 113, 121 (Nev. 2018). Although the 13 superpriority portion of an HOA lien typically includes maintenance and nuisance abatement 14 charges, the court held that “Bank of America tendered the correct amount to satisfy the 15 superpriority portion of the lien . . . [because] the HOA did not indicate that the property had any 16 charges for maintenance or nuisance abatement.” Id. at 118. 17 The Nevada Supreme Court’s holding in Bank of America controls the court’s analysis in 18 this case. Like Bank of America, where Bank of America relied on the HOA’s representations to 19 calculate nine months of assessments, BANA relied on Mesa Verde’s ledger to calculate nine 20 months of assessments. See id. at 118; (ECF No. 89-7). Further, Mesa Verde, like the HOA in 21 Bank of America, did not indicate that the property had any charges for maintenance or nuisance 22 abatement. See Bank of America, 427 P.3d at 118; (ECF No. 89-7). Thus, when BANA sent a 23 check for nine months of assessments and reasonable collection costs to Mesa Verde, it properly 24 tendered the superpriority portion of the lien. Therefore, the nonjudicial foreclosure sale did not 25 extinguish the deed of trust. See id. at 121 (“It follows that after a valid tender of the superpriority 26 portion of an HOA lien, a foreclosure sale . . . cannot extinguish the first deed of trust”). 27 ... 28 ... James C. Mahan U.S. District Judge -4- 1 IV. Conclusion 2 Accordingly, 3 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that BANA’s motion for 4 5 6 reconsideration (ECF No. 116) be, and the same hereby is, GRANTED. IT IS FURTHER ORDERED that BANA’s motion to file supplemental authorities (ECF No. 126) be, and the same hereby is, GRANTED. 7 The clerk shall enter judgment accordingly and close the case. 8 DATED November 15, 2018. 9 10 __________________________________________ UNITED STATES DISTRICT JUDGE 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 -5-

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