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

Filing 139

ORDER. IT IS HEREBY ORDERED, ADJUDGED, and DECREED that 132 BANA's motion for reconsideration be, and the same hereby is, GRANTED. IT IS FURTHER ORDERED that 136 BANA's motion to file supplemental authorities be, and the same h ereby is, GRANTED. IT IS FURTHER ORDERED that 137 BANA's amended motion to file supplemental authorities be, and the same hereby is, GRANTED. IT IS FURTHER ORDERED that 129 the court order filed on 7/17/17 and the same hereby is, VACATED. The clerk shall enter judgment accordingly. Signed by Judge James C. Mahan on 1/15/2019. (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-848 JCM (GWF) ORDER v. SONRISA HOMEOWNERS ASSOCIATION, et al., Defendant(s). 12 13 Presently before the court is plaintiff Bank of America, N.A.’s (“BANA”) motion for 14 15 16 17 reconsideration. (ECF No. 132). Defendants Sonrisa Homeowners’ Association (“Sonrisa”) and SFR Investments Pool 1, LLC (“SFR”) filed separate responses (ECF Nos. 133, 134), to which BANA replied (ECF No. 135). Also before the court is BANA’s motion to file supplemental authorities in support of its 18 19 20 motion for reconsideration. (ECF No. 136). Defendants have not filed a response and the time to do so has passed. Also before the court is BANA’s amended motion to file supplemental authorities in 21 22 23 24 25 26 27 28 James C. Mahan U.S. District Judge support of its motion for reconsideration. (ECF No. 137). SFR filed a response. (ECF No. 138). 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 1208 El Viento Court, Henderson, Nevada 89074 (“the property”). (ECF No. 1). Rick and Jennifer Watkins (“the Watkins”) purchased the property on April 21, 2010. (ECF No. 115-1). The Watkins financed the purchase with a loan in the amount of $152,192.00 1 from First Option Mortgage (“First Option”). Id. First Option secured the loan with a deed of 2 trust, which names First Option as the lender, Ticor Title of Nevada as the trustee, and Mortgage 3 Electronic Registration Systems, Inc. (“MERS”) as the beneficiary as nominee for the lender and 4 lender’s successors and assigns. Id. On April 23, 2012, BANA acquired all beneficial interest in 5 the deed of trust via an assignment, which BANA recorded with the Clark County recorder’s 6 office. (ECF No. 115-3). 7 On October 30, 2012, Sonrisa, through its agent defendant Nevada Association Services, 8 Inc. (“NAS”), recorded a notice of delinquent assessment lien (“the lien”) against the property for 9 the Watkins’ failure to pay Sonrisa in the amount of $1,565.73. (ECF No. 115-4). On January 4, 10 2013, Sonrisa recorded a notice of default and election to sell pursuant to the lien, stating that the 11 amount due was $2,765.43 as of January 1, 2013. (ECF No. 115-5). 12 In an attempt to exercise its right of redemption, BANA requested from Sonrisa the 13 superpriority amount of the lien. (ECF No. 115-7). Sonrisa did not reply to BANA’s request. Id. 14 BANA, thereby, used a payoff ledger for a different property in the same development to calculate 15 the superpriority amount as $1,125.00, the sum of nine months of assessments. Id. On April 18, 16 2013, BANA sent a letter and a check in that amount to Sonrisa. Id. The letter explained that the 17 check was the sum of nine months of common assessments and intended to pay off the 18 superpriority portion of the lien. Id. Sonrisa rejected the check without explanation. See id. 19 On August 13, 2013, Sonrisa recorded a notice of foreclosure sale against the property. 20 (ECF No. 58-6). On September 6, 2013, Sonrisa sold the property in a nonjudicial foreclosure sale 21 to SFR in exchange for $18,000. (ECF No. 115-8). On September 9, 2013, SFR recorded the deed 22 of foreclosure with the Clark County recorder’s office. Id. 23 On April 14, 2016, BANA filed a complaint, alleging four causes of action: (1) quiet 24 title/declaratory relief against SFR and Sonrisa; (2) breach of NRS 116.1113 against Sonrisa and 25 NAS; (3) wrongful foreclosure against Sonrisa and NAS; and (4) injunctive relief against SFR. 26 (ECF No. 1). On July 17, 2018, the court granted Sonrisa and SFR’s motions for summary 27 judgment (ECF Nos. 116, 117), holding in part that BANA’s attempted tender was insufficient to 28 extinguish the superpriority lien. (ECF No. 129). James C. Mahan U.S. District Judge -2- 1 On September 13, 2018, the Nevada Supreme Court issued a ruling clarifying how courts 2 should apply NRS 116.3116 et seq. (“Chapter 116”)—the statute that Sonrisa relied on when it 3 foreclosed on the property. See Bank of America, N.A. v. SFR Invs. Pool 1, LLC, 427 P.3d 113, 4 121 (Nev. 2018) (Bank of America). In light of this intervening change in controlling law, the 5 court now reconsiders its prior order pursuant to BANA’s motion for reconsideration (ECF No. 6 132). 7 II. Legal Standard 8 A motion for reconsideration “should not be granted, absent highly unusual 9 circumstances.” Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 880 10 (9th Cir. 2009). “Reconsideration is appropriate if the district court (1) is presented with newly 11 discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) 12 if there is an intervening change in controlling law.” School Dist. No. 1J v. ACandS, Inc., 5 F.3d 13 1255, 1263 (9th Cir. 1993); see Fed. R. Civ. P. 60(b). 14 Rule 59(e) “permits a district court to reconsider and amend a previous order,” however 15 “the rule offers an extraordinary remedy, to be used sparingly in the interests of finality and 16 conservation of judicial resources.” Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir. 2003) 17 (internal quotations omitted). A motion for reconsideration is also an improper vehicle “to raise 18 arguments or present evidence for the first time when they could reasonably have been raised 19 earlier in litigation.” Marlyn Nutraceuticals, 571 F.3d at 880. 20 III. Discussion 21 As a preliminary matter, the court will grant BANA motions to file supplemental 22 authorities (ECF Nos. 172, 174) pursuant to Local Rule 7-2(g) as the materials therein include new 23 mandatory authority on the application of Chapter 116. 24 BANA argues that, in light of the Nevada Supreme Court’s recent holding in Bank of 25 America, BANA tendered the superpriority portion of the lien and prevented the foreclosure sale 26 from extinguishing the deed of trust. (ECF Nos. 132, 137). The court agrees. 27 Under NRS 116.31166(1), the holder of a first deed of trust may pay off the superpriority 28 portion of an HOA lien to prevent the foreclosure sale from extinguishing the deed of trust. See James C. Mahan U.S. District Judge -3- 1 Nev. Rev. Stat. § 116.31166(1); see also SFR Investments, 334 P.3d at 414 (“But as a junior 2 lienholder, BOA could have paid off the SHHOA lien to avert loss of its security . . .”). The 3 superpriority portion of the lien consists of “the last nine months of unpaid HOA dues and 4 maintenance and nuisance-abatement charges,” while the subpriority piece consists of “all other 5 HOA fees or assessments.” 6 Homeowners Association v. Ikon Holdings, LLC, 373 P.3d 66 (Nev. 2016). SFR Investments, 334 P.3d at 411; Horizons at Seven Hills 7 In Bank of America, the Nevada Supreme Court held that a foreclosure sale did not 8 extinguish a first deed of trust when Bank of America, the holder of the deed of trust, used the 9 HOA’s representations to calculate and tender the sum of nine months of delinquent assessments. 10 Bank of America, N.A. v. SFR Invs. Pool 1, LLC, 427 P.3d 113, 121 (Nev. 2018) (Bank of America). 11 Although the superpriority portion of an HOA lien typically includes maintenance and nuisance 12 abatement charges, the court held that “Bank of America tendered the correct amount to satisfy 13 the superpriority portion of the lien . . . [because] the HOA did not indicate that the property had 14 any charges for maintenance or nuisance abatement.” Id. at 118. 15 As in Bank of America, Sonrisa has not indicated that the property had any charges for 16 maintenance or nuisance abatement. See Bank of America, 427 P.3d at 118. Thus, when BANA 17 sent a check for nine months of assessments to Sonrisa, it properly tendered the superpriority 18 portion of the lien. See (ECF No. 59-7). Indeed, it makes no difference that BANA relied on a 19 ledger from a different property subject to the same HOA common assessments to calculate the 20 amount of the superpriority portion of the lien, as BANA tendered an amount that undisputedly 21 represented nine months of assessments. See Bank of America, 427 P.3d at 118; see also Tyrone 22 & In-Ching, LLC v. U.S. Bank, N.A., 430 P.3d 533 (Nev. 2018); see also NV Eagles, LLC v. 23 Christiana Trust, 429 P.3d 1254 (Nev. 2018). 24 Therefore, the nonjudicial foreclosure sale did not extinguish the deed of trust. See Bank 25 of America, 427 P.3d at 121 (“It follows that after a valid tender of the superpriority portion of an 26 HOA lien, a foreclosure sale . . . cannot extinguish the first deed of trust”). 27 IV. 28 James C. Mahan U.S. District Judge Conclusion Accordingly, -4- 1 2 3 4 5 6 7 8 9 10 11 12 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that BANA’s motion for reconsideration (ECF No. 132) be, and the same hereby is, GRANTED. IT IS FURTHER ORDERED that BANA’s motion to file supplemental authorities (ECF No. 136) be, and the same hereby is, GRANTED. IT IS FURTHER ORDERED that BANA’s amended motion to file supplemental authorities (ECF No. 137) be, and the same hereby is, GRANTED. IT IS FURTHER ORDERED that the court order filed on July 17, 2017, (ECF No. 129) be, and the same hereby is, VACATED. The clerk shall enter judgment accordingly. DATED January 15, 2019. __________________________________________ UNITED STATES DISTRICT JUDGE 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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