Bank of America, N.A. v. Terraces at Rose Lake Homeowners Association et al

Filing 168

ORDER Granting 155 Motion for Partial Summary Judgment. Signed by Judge Gloria M. Navarro on 9/13/2021. (Copies have been distributed pursuant to the NEF - JQC)

Case 2:16-cv-01106-GMN-NJK Document 168 Filed 09/13/21 Page 1 of 8

1

UNITED STATES DISTRICT COURT

2

DISTRICT OF NEVADA

3

BANK OF AMERICA, N.A.,
4

Plaintiff,

5
6
7

vs.
TERRACES AT ROSE LAKE
HOMEOWNERS ASSOCIATION, et al.,

8

Defendants.

)
)
)
)
)
)
)
)
)

Case No.: 2:16-cv-01106-GMN-NJK
ORDER

9

Pending before the Court is the Motion for Partial Summary Judgment, (ECF No. 155),

10
11

filed by Plaintiff Bank of America, N.A. (“BANA”) in its capacity as servicer for a loan owned

12

by the Federal National Mortgage Association (“Fannie Mae”). Defendant SFR Investments

13

Pool 1, LLC (“SFR”) filed a Response, (ECF No. 158), and BANA filed a Reply, (ECF No.

14

159).1
For the reasons discussed below, the Court GRANTS BANA’s Partial Motion for

15
16

Summary Judgment.

17

I.

BACKGROUND

18

This case arises from a non-judicial foreclosure on real property located at 3420

19

Catherine Mermet Avenue, North Las Vegas, Nevada, 89091 (the “Property”), conducted by

20

Defendant Terraces at Rose Lake Homeowners Association (“HOA”) under NRS 116, due to

21

outstanding delinquent assessments owed against the Property. (See Deed of Trust (“DOT”),

22

Ex. 6 to BANA’s MSJ, ECF No. 155-6); (Foreclosure Deed, Ex. 13 to BANA’s MSJ, ECF No.

23

155-13). Prior to foreclosure, Engelbert Espinosa and Charito Espinosa (“Borrowers”)

24
25

1

The Court takes judicial notice of the matters of public record attached as exhibits in the respective parties’
motions. See Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986).

Page 1 of 8

Case 2:16-cv-01106-GMN-NJK Document 168 Filed 09/13/21 Page 2 of 8

1

purchased the Property in March 2007, by way of a loan amounting to $237,927.00 secured by

2

a Deed of Trust (“DOT”), recorded on March 15, 2007. (DOT, Ex. 6 to BANA’s MSJ). The

3

DOT identifies CTX Mortgage Company, LLC as the original lender. (Id.). In June 2007,

4

Fannie Mae purchased the loan, obtaining an ownership interest in the DOT. (Carr Dep. 21:10–

5

11, 30:14–31:3, Ex. 16 to BANA’s MSJ, ECF No. 155-16); (Curcio Decl. ¶ 5, Ex. 7 to

6

BANA’s MSJ, ECF No. 155-7). BANA then acquired an interest in the DOT through an

7

assignment in July 2010. (Assignment of DOT, Ex. 8 to BANA’s MSJ, ECF No. 155-8);

8

(Certificate of Merger, Ex. 9 to BANA’s MSJ, ECF No. 155-9).

9

BANA initiated this case by filing its Complaint, (ECF No. 1), seeking quiet title and

10

equitable relief associated with the foreclosure sale on the basis that the foreclosure sale did not

11

extinguish its DOT on the Property. On March 20, 2018, the Court granted summary judgment

12

to BANA because, under Bourne Valley Court Trust v. Wells Fargo Bank, N.A., 832 F.3d 1154

13

(9th Cir. 2016), the HOA “foreclosed under a facially unconstitutional notice scheme” and,

14

therefore, the “foreclosure cannot have extinguished” Fannie Mae’s DOT on the property.

15

(Order 9:24–10:4, ECF No. 104). The parties appealed that decision to the United States Court

16

of Appeals for the Ninth Circuit. While this case was pending on appeal, the Ninth Circuit held

17

in a different matter that Nevada’s homeowner’s association foreclosure scheme is not facially

18

unconstitutional because the decision in Bourne Valley was based on a construction of Nevada

19

law that the Nevada Supreme Court has since made clear was incorrect. See Bank of Am., N.A.

20

v. Arlington W. Twilight Homeowners Ass’n, 920 F.3d 620, 624 (9th Cir. 2019) (recognizing

21

that Bourne Valley “no longer controls the analysis” in light of SFR Investments Pool1, LLC v.

22

Bank of New York Mellon, 422 P.3d 1248 (Nev. 2018)). This Court then indicated to the

23

Circuit that it would vacate its prior Order on summary judgment, and the Circuit remanded to

24

address the merits of BANA’s claims considering the later-decided authority. (Order, ECF No.

25

120); (Order of USCA, ECF No. 124).

Page 2 of 8

Case 2:16-cv-01106-GMN-NJK Document 168 Filed 09/13/21 Page 3 of 8

On remand, the Court granted SFR’s request for additional discovery under Federal Rule

1
2

of Civil Procedure 56(d). (Order 6:12–8:15, ECF No. 149). Now that the additional discovery

3

has concluded, BANA files its renewed Motion for Partial Summary Judgment.

4

II.

5

LEGAL STANDARD
The Federal Rules of Civil Procedure provide for summary adjudication when the

6

pleadings, depositions, answers to interrogatories, and admissions on file, together with the

7

affidavits, if any, show that “there is no genuine dispute as to any material fact and the movant

8

is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Material facts are those that

9

may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

10

(1986). A dispute as to a material fact is genuine if there is a sufficient evidentiary basis on

11

which a reasonable factfinder could rely to find for the nonmoving party. See id. “The amount

12

of evidence necessary to raise a genuine issue of material fact is enough ‘to require a jury or

13

judge to resolve the parties' differing versions of the truth at trial.’” Aydin Corp. v. Loral

14

Corp., 718 F.2d 897, 902 (9th Cir. 1983) (quoting First Nat’l Bank v. Cities Serv. Co., 391 U.S.

15

253, 288–89 (1968)). “Summary judgment is inappropriate if reasonable jurors, drawing all

16

inferences in favor of the nonmoving party, could return a verdict in the nonmoving party’s

17

favor.” Diaz v. Eagle Produce Ltd. P’ship, 521 F.3d 1201, 1207 (9th Cir. 2008) (citing United

18

States v. Shumway, 199 F.3d 1093, 1103–04 (9th Cir. 1999)). A principal purpose of summary

19

judgment is “to isolate and dispose of factually unsupported claims.” Celotex Corp. v. Catrett,

20

477 U.S. 317, 323–24 (1986).

21

In determining summary judgment, a court applies a burden-shifting analysis. “When

22

the party moving for summary judgment would bear the burden of proof at trial, it must come

23

forward with evidence which would entitle it to a directed verdict if the evidence went

24

uncontroverted at trial. In such a case, the moving party has the initial burden of establishing

25

the absence of a genuine issue of fact on each issue material to its case.” C.A.R. Transp.

Page 3 of 8

Case 2:16-cv-01106-GMN-NJK Document 168 Filed 09/13/21 Page 4 of 8

1

Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted). In

2

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

3

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

4

essential element of the nonmoving party’s case; or (2) by demonstrating that the nonmoving

5

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

6

on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323–

7

24. If the moving party fails to meet its initial burden, summary judgment must be denied and

8

the court need not consider the nonmoving party’s evidence. See Adickes v. S.H. Kress & Co.,

9

398 U.S. 144, 159–60 (1970).

10

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

11

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

12

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

13

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

14

sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the

15

parties’ differing versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors

16

Ass’n, 809 F.2d 626, 631 (9th Cir. 1987). However, the nonmoving party “may not rely on

17

denials in the pleadings but must produce specific evidence, through affidavits or admissible

18

discovery material, to show that the dispute exists,” Bhan v. NME Hosps., Inc., 929 F.2d 1404,

19

1409 (9th Cir. 1991), and “must do more than simply show that there is some metaphysical

20

doubt as to the material facts.” Orr v. Bank of America, 285 F.3d 764, 783 (9th Cir. 2002)

21

(internal citations omitted). “The mere existence of a scintilla of evidence in support of the

22

plaintiff's position will be insufficient.” Anderson, 477 U.S. at 252. In other words, the

23

nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations

24

that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989).

25

Page 4 of 8

Case 2:16-cv-01106-GMN-NJK Document 168 Filed 09/13/21 Page 5 of 8

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, 477 U.S. at 249.

3

The evidence of the nonmovant is “to be believed, and all justifiable inferences are to be drawn

4

in his favor.” Id. at 255. But if the evidence of the nonmoving party is merely colorable or is

5

not significantly probative, summary judgment may be granted. See id. at 249–50.

6

III.

DISCUSSION
BANA moves for summary judgment on its quiet title and declaratory relief claims,

7
8

asserting that 12 U.S.C. § 4617(j)(3) (the “Federal Foreclosure Bar”) requires the Court to find

9

that the HOA’s foreclosure sale failed to extinguish Fannie Mae’s DOT on the Property.

10

(BANA’s MSJ 10:4–17:22, ECF No. 155).2 To counter, SFR argues that: (1) BANA’s §

11

4617(j)(3) claim is time-barred; and (2) the Federal Foreclosure Bar should not protect Fannie

12

Mae’s DOT in this action. (SFR’s Resp. 1:22–25, ECF No. 128).3

13

A. Statute of Limitations

14

SFR claims that BANA’s quiet title claim under the Federal Foreclosure Bar is time-

15

barred because BANA did not file its Complaint until four years after the sale of the Property.

16

(SFR’s Resp. 7:17–26). However, in a prior Order, this Court already determined that BANA’s

17

claim in this case is timely because the Ninth Circuit has held that the statute of limitations for

18

a quiet title claim arising from the Federal Foreclosure Bar is six years. M&T Bank v. SFR

19

Investments Pool 1, LLC, 963 F.3d 854, 858 (9th Cir. 2020); (Order 5:23–6:11, ECF No. 149).

20
21
22
23
24
25

2

In the alternative, BANA argues that the HOA’s superpriority lien was extinguished when the mortgagee
tendered the superpriority amount to HOA’s agent, Alessi & Koenig, LLC, thus preserving its DOT. (BANA’s
MSJ 17:23–19:4, ECF No. 155). However, because the Court grants summary judgment in favor of BANA
based on the Federal Foreclosure Bar claim, the Court need not address BANA’s alternative argument.
3

SFR also requested that the Court stay this case until the Supreme Court decided M&T Bank and Collins v.
Mnuchin, No. 19-422 (filed Sept. 25, 2019). However, both cases have since been decided. The Supreme Court
denied the petition for writ of certiorari in M&T Bank, and Collins has no discernable impact on the present case.
See SFR Investments Pool 1, LLC v. M&T Bank, No. 20-908, __S. Ct. __, 2021 WL 1602655 (2021); Collins v.
Yellin, 141 S. Ct. 1761 (2021).

Page 5 of 8

Case 2:16-cv-01106-GMN-NJK Document 168 Filed 09/13/21 Page 6 of 8

1

The Court finds no basis to depart from its ruling, especially when considering that the

2

Supreme Court denied SFR’s petition for writ of certiorari in M&T Bank. See SFR Investments

3

Pool 1, LLC v. M&T Bank, No. 20-908, __S. Ct. __, 2021 WL 1602655 (2021).

4

B. Federal Foreclosure Bar

5

BANA asks the Court to find that 12 U.S.C. § 4617(j)(3) preempts any Nevada law that

6

otherwise would permit a foreclosure of an HOA lien to extinguish Fannie Mae’s property

7

interest while it is under the Federal Housing Finance Agency’s (“FHFA’s”) conservatorship.4

8

The Federal Foreclosure Bar prohibits foreclosures of federally owned or controlled property

9

“without the consent of the [Federal Housing Finance Agency].” 12 U.S.C. § 4617(j)(3)

10

(2012); see Saticoy Bay, LLC, Series 2714 Snapdragon v. Flagstar Bank, FSB, 699 F. App’x

11

658 (9th Cir. 2017); Skylights LLC v. Fannie Mae, 112 F. Supp. 3d 1145 (D. Nev. 2015). The

12

Ninth Circuit’s decision in Berezovsky v. Moniz, 869 F.3d 923, 932 (9th Cir. 2017), confirmed

13

that the Federal Foreclosure Bar preserves the property interests of the FHFA, including a

14

government-sponsored enterprise of the Agency such as Fannie Mae, from an HOA’s

15

foreclosure sale under NRS 116.3116, if that sale occurred without the affirmative consent of

16

the Agency. Id. at 927-32.
Here, BANA has presented evidence of business records supported by an employee

17
18

declaration to certify that Fannie Mae purchased the loan in 2007, as well as evidence of Fannie

19

Mae’s Single-Family Selling Guide and Fannie Mae’s Single-Family Servicing Guide, which

20

govern the relationship between Fannie Mae and its loan servicers. (Carr Dep. 21:10–11,

21

30:14–31:3, Ex. 16 to BANA’s MSJ); (Ex. A to Curcio Decl., Ex. 7 to BANA’s MSJ); (Curcio

22

Decl. ¶ 5, Ex. 7 to BANA’s MSJ); (Servicing Guide, Ex. 1 to BANA’s MSJ, ECF No. 155-1);

23

(Selling Guide, Ex. 2 to BANA’s MSJ, ECF No. 155-2). This evidence is materially the same

24
25

4

The FHFA is the conservator for Fannie Mae and the Federal Home Loan Mortgage Corporation (“Freddie
Mac”).

Page 6 of 8

Case 2:16-cv-01106-GMN-NJK Document 168 Filed 09/13/21 Page 7 of 8

1

as the evidence deemed sufficient in Berezovsky to invoke the Federal Foreclosure Bar. The

2

evidence confirms that Fannie Mae had an interest in the Property at the time of the HOA

3

foreclosure sale, the FHFA did not affirmatively consent to extinguishment, and BANA, as the

4

loan servicer, can assert the protections of the Federal Foreclosure Bar in this case. Therefore,

5

the Court finds that the HOA’s foreclosure sale did not extinguish Fannie Mae’s interest in the

6

Property, and the DOT continues to encumber it.

7

Nonetheless, SFR raises several arguments questioning the authenticity of the records,

8

sufficiency of the agency relationship, and consent to extinguishment. Specifically, SFR

9

argues: (1) BANA must produce the wet-ink promissory note and MSSC/Lender Contract; (2)

10

the Bank must prove Fannie Mae’s power to “enforce its interest under the security

11

instrument;” (3) BANA’s evidence violates the best evidence rule; (4) BANA must produce an

12

original agreement establishing an agency relationship with Fannie Mae; (5) BANA’s business

13

records and declaration are not admissible to show a servicing relationship; and (6) the FHFA

14

impliedly consented to the DOT’s extinguishment. (SFR’s Resp. 9:3–19:14). This Court, as

15

well as the Ninth Circuit, has explicitly and repeatedly rejected each of these arguments. See,

16

e.g., Ditech Fin., LLC v. SFR Invs. Pool 1, LLC, 380 F. Supp. 3d 1089, 1094–95 (D. Nev.

17

2019); BANK OF AMERICA, N.A., Plaintiff v. PUEBLO AT SANTE FE CONDOMINIUM

18

ASSOCIATION, INC., et al., Defendants. Additional Party Names: Keynote Properties, LLC,

19

No. 2:16-CV-01199-GMN-CWH, 2019 U.S. Dist. LEXIS 48832, 2019 WL 1338385, at *4 (D.

20

Nev. Mar. 25, 2019) (business records showing that Fannie Mae purchased the property

21

sufficiently establish an ownership interest); Bank of Am., N.A. v. Palm Hills Homeowners

22

Ass’n, Inc., No. 216-CV-00614-APG-GWF, 2019 U.S. Dist. LEXIS 30955, 2019 WL 958378,

23

at *2 (D. Nev. Feb. 27, 2019) (requiring affirmative action by the FHFA to consent to

24

extinguishment); Williston Inv. Grp., LLC v. JP Morgan Chase Bank, NA, 736 F. App’x 168,

25

169 (9th Cir. 2018) (denying similar arguments); Berezovsky v. Moniz, 869 F.3d at 932 (“An

Page 7 of 8

Case 2:16-cv-01106-GMN-NJK Document 168 Filed 09/13/21 Page 8 of 8

1

agency relationship exists if the note owner has the ability to reclaim the deed of trust from the

2

beneficiary by ordering that the beneficiary make an assignment”). SFR has not satisfied its

3

burden of providing, or pointing to, any evidence that raises more than a “metaphysical doubt

4

as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586,

5

106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). Accordingly, the Court grants summary judgment in

6

favor of BANA.

7

IV.

8
9
10

CONCLUSION
IT IS HEREBY ORDERED that BANA’s Partial Motion for Summary Judgment,

(ECF No. 155), is GRANTED.
13
DATED this _____ day of September, 2021.

11
12
13
14

Gloria M. Navarro, District Judge
United States District Court

15
16
17
18
19
20
21
22
23
24
25

Page 8 of 8