Wells Fargo Bank, N.A. v. SFR Investments Pool 1, LLC et al

Filing 54

ORDER. IT IS HEREBY ORDERED, ADJUDGED, and DECREED that 43 Wells Fargo's motion for summary judgment be, and the same hereby is, DENIED. IT IS FURTHER ORDERED that 44 SFRs motion for summary judgment be, and the same hereby is, GRANT ED. IT IS FURTHER ORDERED that 41 the SFR's motion for partial summary judgment be, and the same hereby is, DENIED. The clerk shall enter judgment accordingly and close the case. Signed by Judge James C. Mahan on 3/1/2018. (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 WELLS FARGO BANK, N.A., 8 Plaintiff(s), 9 10 Case No. 2:16-CV-1788 JCM (NJK) ORDER v. SFR INVESTMENTS POOL 1, LLC, et al., 11 Defendant(s). 12 13 Presently before the court is plaintiff Wells Fargo Bank, N.A.’s (“Wells Fargo”) motion 14 for summary judgment. (ECF No. 43). Defendant/counter-claimant SFR Investments Pool 1, LLC 15 (“SFR”) filed a response (ECF No. 47), to which Wells Fargo replied (ECF No. 49). 16 17 Also before the court is SFR’s motion for summary judgment. (ECF No. 44). Wells Fargo filed a response (ECF No. 46), to which SFR replied (ECF No. 50). 18 Also before the court is the SFR’s motion for partial summary judgment. (ECF No. 41). 19 Wells Fargo filed a response (ECF No. 45), to which the SFR replied (ECF No. 48). 20 I. 21 22 Facts This case involves a dispute over real property located at 3138 Espanol Drive, Las Vegas, Nevada 89121 (the “property”). (ECF No. 1). 23 On May 31, 2005, a deed of trust listing Deanna Adler (“Adler”) as the borrower and 24 Greenpoint Mortgage Funding, Inc. (“Greenpoint”) as the lender was recorded. (ECF No. 1). The 25 deed of trust grants Greenpoint a security interest in the property to secure the repayment of a loan 26 to Adler in the amount of $207,900.00. Id. 27 28 James C. Mahan U.S. District Judge On or about February 1, 2011, Adler defaulted under the loan and deed of trust. (ECF No. 1). On or about August 5, 2011, the deed of trust was assigned to Wells Fargo, as evidenced 1 2 by the assignment of deed of trust recorded on September 2, 2011. (ECF No. 1). 3 On or about October 3, 2011, Nevada Association Services, Inc. (the “HOA agent”), on 4 behalf of Sunrise Villas V Homeowners Association (the “HOA”), recorded a notice of delinquent 5 assessment lien against the property. (ECF No. 1). On November 28, 2011, the HOA agent, on 6 behalf of the HOA, recorded a notice of default and election to sell under the homeowners 7 association lien against the property. Id. 8 On May 29, 2012, the HOA agent, on behalf of the HOA, recorded a notice of foreclosure 9 sale against the property. (ECF No. 1). On July 27, 2012, the HOA conducted a foreclosure sale. 10 Id. SFR purchased the property for $7,960.00 at the foreclosure sale. Id. On August 1, 2012, the 11 HOA agent recorded a foreclosure deed against the property. Id. 12 On July 27, 2016, Wells Fargo filed the underlying complaint against SFR alleging two 13 causes of action: (1) quiet title/declaratory judgment against all defendants and (2) unjust 14 enrichment against SFR. (ECF No. 1). On November 29, 2016, SFR filed a counter/crossclaim for quiet title and injunctive relief. 15 16 (ECF No. 17). In the instant motions, Wells Fargo and SFR both move for summary judgment in their 17 18 favor. (ECF Nos. 41, 43, 44). The court will address each as it sees fit. 19 II. Legal Standard 20 The Federal Rules of Civil Procedure allow summary judgment when the pleadings, 21 depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 22 show that “there is no genuine dispute as to any material fact and the movant is entitled to a 23 judgment as a matter of law.” Fed. R. Civ. P. 56(a). A principal purpose of summary judgment is 24 “to isolate and dispose of factually unsupported claims.” Celotex Corp. v. Catrett, 477 U.S. 317, 25 323–24 (1986). 26 For purposes of summary judgment, disputed factual issues should be construed in favor 27 of the non-moving party. Lujan v. Nat’l Wildlife Fed., 497 U.S. 871, 888 (1990). However, to be 28 James C. Mahan U.S. District Judge -2- 1 entitled to a denial of summary judgment, the nonmoving party must “set forth specific facts 2 showing that there is a genuine issue for trial.” Id. 3 In determining summary judgment, a court applies a burden-shifting analysis. The moving 4 party must first satisfy its initial burden. “When the party moving for summary judgment would 5 bear the burden of proof at trial, it must come forward with evidence which would entitle it to a 6 directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has 7 the initial burden of establishing the absence of a genuine issue of fact on each issue material to 8 its case.” C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) 9 (citations omitted). 10 By contrast, when the nonmoving party bears the burden of proving the claim or defense, 11 the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential 12 element of the non-moving party’s case; or (2) by demonstrating that the nonmoving party failed 13 to make a showing sufficient to establish an element essential to that party’s case on which that 14 party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323–24. If the moving 15 party fails to meet its initial burden, summary judgment must be denied and the court need not 16 consider the nonmoving party’s evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159– 17 60 (1970). 18 If the moving party satisfies its initial burden, the burden then shifts to the opposing party 19 to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith 20 Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute, the 21 opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient 22 that “the claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing 23 versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 24 631 (9th Cir. 1987). 25 In other words, the nonmoving party cannot avoid summary judgment by relying solely on 26 conclusory allegations that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040, 27 1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the 28 James C. Mahan U.S. District Judge -3- 1 pleadings and set forth specific facts by producing competent evidence that shows a genuine issue 2 for trial. See Celotex, 477 U.S. at 324. 3 At summary judgment, a court’s function is not to weigh the evidence and determine the 4 truth, but to determine whether there is a genuine issue for trial. See Anderson v. Liberty Lobby, 5 Inc., 477 U.S. 242, 249 (1986). The evidence of the nonmovant is “to be believed, and all 6 justifiable inferences are to be drawn in his favor.” Id. at 255. But if the evidence of the 7 nonmoving party is merely colorable or is not significantly probative, summary judgment may be 8 granted. See id. at 249–50. 9 III. Discussion 10 A. Motions for Summary Judgment (ECF Nos. 43, 44) 11 As an initial matter, claim (2) of SFR’s counter/crossclaim (ECF No. 17) will be dismissed 12 without prejudice as the court follows the well-settled rule in that a claim for “injunctive relief” 13 standing alone is not a cause of action. See, e.g., In re Wal-Mart Wage & Hour Emp’t Practices 14 Litig., 490 F. Supp. 2d 1091, 1130 (D. Nev. 2007); Tillman v. Quality Loan Serv. Corp., No. 2:12- 15 CV-346 JCM RJJ, 2012 WL 1279939, at *3 (D. Nev. Apr. 13, 2012) (finding that “injunctive relief 16 is a remedy, not an independent cause of action”); Jensen v. Quality Loan Serv. Corp., 702 F. 17 Supp. 2d 1183, 1201 (E.D. Cal. 2010) (“A request for injunctive relief by itself does not state a 18 cause of action.”). 19 In SFR’s motion, it contends that summary judgment in its favor is proper because, inter 20 alia, the foreclosure sale extinguished Wells Fargo’s deed of trust pursuant to NRS 116.3116 and 21 SFR Investments. (ECF No. 44). SFR further contends that the foreclosure sale should not be set 22 aside because Wells Fargo has not shown fraud, unfairness, or oppression as outlined in Shadow 23 Wood Homeowners Assoc. v. N.Y. Cmty. Bancorp., Inc., 366 P.3d 1105 (Nev. 2016) (“Shadow 24 Wood”). (ECF No. 44). 25 Under Nevada law, “[a]n action may be brought by any person against another who claims 26 an estate or interest in real property, adverse to the person bringing the action for the purpose of 27 determining such adverse claim.” Nev. Rev. Stat. § 40.010. “A plea to quiet title does not require 28 any particular elements, but each party must plead and prove his or her own claim to the property James C. Mahan U.S. District Judge -4- 1 in question and a plaintiff’s right to relief therefore depends on superiority of title.” Chapman v. 2 Deutsche Bank Nat’l Trust Co., 302 P.3d 1103, 1106 (Nev. 2013) (citations and internal quotation 3 marks omitted). Therefore, for claimant to succeed on its quiet title action, it needs to show that 4 its claim to the property is superior to all others. See Breliant v. Preferred Equities Corp., 918 5 P.2d 314, 318 (Nev. 1996) (“In a quiet title action, the burden of proof rests with the plaintiff to 6 prove good title in himself.”). 7 Section 116.3116(1) of the NRS gives an HOA a lien on its homeowners’ residences for 8 unpaid assessments and fines. Nev. Rev. Stat. § 116.3116(1). Moreover, NRS 116.3116(2) gives 9 priority to that HOA lien over all other liens and encumbrances with limited exceptions—such as 10 “[a] first security interest on the unit recorded before the date on which the assessment sought to 11 be enforced became delinquent.” Nev. Rev. Stat. § 116.3116(2)(b). 12 The statute then carves out a partial exception to subparagraph (2)(b)’s exception for first 13 security interests. See Nev. Rev. Stat. § 116.3116(2). In SFR Investment Pool 1 v. U.S. Bank, the 14 Nevada Supreme Court provided the following explanation: 15 16 17 18 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”). 19 Chapter 116 of the Nevada Revised Statutes permits an HOA to enforce its superpriority 20 lien by nonjudicial foreclosure sale. Id. at 415. Thus, “NRS 116.3116(2) provides an HOA a true 21 superpriority lien, proper foreclosure of which will extinguish a first deed of trust.” Id. at 419; see 22 also Nev. Rev. Stat. § 116.31162(1) (providing that “the association may foreclose its lien by sale” 23 upon compliance with the statutory notice and timing rules). 24 25 26 27 28 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[.] -5- 1 Nev. Rev. Stat. § 116.31166(1)(a)–(c).1 “The ‘conclusive’ recitals concern default, notice, and 2 publication of the [notice of sale], all statutory prerequisites to a valid HOA lien foreclosure sale 3 as stated in NRS 116.31162 through NRS 116.31164, the sections that immediately precede and 4 give context to NRS 116.31166.” Shadow Wood, 366 P.3d at 1110. 5 Based on Shadow Wood, the recitals therein are conclusive evidence that the foreclosure 6 lien statutes were complied with—i.e., that the foreclosure sale was proper. See id.; see also 7 Nationstar Mortg., LLC v. SFR Investments Pool 1, LLC, No. 70653, 2017 WL 1423938, at *2 8 (Nev. App. Apr. 17, 2017) (“And because the recitals were conclusive evidence, the district court 9 did not err in finding that no genuine issues of material fact remained regarding whether the 10 foreclosure sale was proper and granting summary judgment in favor of SFR.”). Therefore, 11 pursuant to SFR Investments, NRS 116.3116, and the recorded trustee’s deed upon sale in favor of 12 SFR, the foreclosure sale was proper and extinguished the first deed of trust. 13 Notwithstanding, and despite SFR’s contentions, the court retains the equitable authority 14 to consider quiet title actions when a HOA’s foreclosure deed contains statutorily conclusive 15 recitals. See Shadow Wood Homeowners Assoc., 366 P.3d at 1112 (“When sitting in equity . . . 16 courts must consider the entirety of the circumstances that bear upon the equities. This includes 17 considering the status and actions of all parties involved, including whether an innocent party may 18 be harmed by granting the desired relief.”). Accordingly, to withstand summary judgment in 19 SFR’s favor, Wells Fargo must raise colorable equitable challenges to the foreclosure sale or set 20 forth evidence demonstrating fraud, unfairness, or oppression. 21 22 23 1 24 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. 25 26 27 28 The statute further provides as follows: 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. Nev. Rev. Stat. § 116.31166(2)–(3). James C. Mahan U.S. District Judge -6- 1 In its motion for summary judgment, Wells Fargo sets forth the following relevant 2 arguments: (1) the foreclosure sale was commercially unreasonable; (2) the foreclosure was void 3 ab initio because the NRS 116.3116 statute was facially unconstitutional pursuant to Bourne Valley 4 Court Trust v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016), cert. denied, No. 16-1208, 5 2017 WL 1300223 (U.S. June 26, 2017) (“Bourne Valley”) and thus actual notice is immaterial; 6 and (3) SFR is not a bona fide purchaser. (ECF Nos. 43, 46). 7 While the court will analyze Wells Fargo’s equitable challenges regarding its quiet title, 8 the court notes that the failure to utilize legal remedies makes granting equitable remedies unlikely. 9 See Las Vegas Valley Water Dist. v. Curtis Park Manor Water Users Ass’n, 646 P.2d 549, 551 10 (Nev. 1982) (declining to allow equitable relief because an adequate remedy existed at law). 11 Simply ignoring legal remedies does not open the door to equitable relief. 1. Commercial Reasonability 12 13 Wells Fargo contends that summary judgment in its favor is appropriate because the sale 14 of the property for 9.95% of its fair market value is grossly inadequate as a matter of law. (ECF 15 No. 46). Wells Fargo further argues that the Shadow Wood court adopted the restatement 16 approach, quoting the opinion as holding that “generally a court is warranted in invalidating a sale 17 where the price is less than 20 percent of fair market value.” (ECF No. 46 at 18-19) (emphasis 18 omitted). 19 Wells Fargo overlooks the reality of the foreclosure process. The amount of the lien—not 20 the fair market value of the property—is what typically sets the sales price. Further, Wells Fargo 21 fails to set forth sufficient evidence to show fraud, unfairness, or oppression so as to justify the 22 setting aside of the foreclosure sale. 23 NRS 116.3116 codifies the Uniform Common Interest Ownership Act (“UCIOA”) in 24 Nevada. See Nev. Rev. Stat. § 116.001 (“This chapter may be cited as the Uniform Common- 25 Interest Ownership Act”); see also SFR Investments, 334 P.3d at 410. Numerous courts have 26 interpreted the UCIOA and NRS 116.3116 as imposing a commercial reasonableness standard on 27 foreclosure of association liens.2 28 2 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 -7- 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 3 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). 6 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, 8 530 (Nev. 1982) (“Mere inadequacy of price is not sufficient to justify setting aside a foreclosure 9 sale, absent a showing of fraud, unfairness or oppression.” (citing Golden v. Tomiyasu, 387 P.2d 10 989, 995 (Nev. 1963) (stating that, while a power-of-sale foreclosure may not be set aside for mere 11 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 14 Despite Wells Fargo’s assertion to the contrary, the Shadow Wood court did not adopt the 15 restatement. In fact, nothing in Shadow Wood suggests that the Nevada Supreme Court’s adopted, 16 or had the intention to adopt, the restatement. Compare Shadow Wood, 366 P.3d at 1112–13 (citing 17 the restatement as secondary authority to warrant use of the 20% threshold test for grossly 18 inadequate sales price), with St. James Village, Inc. v. Cunningham, 210 P.3d 190, 213 (Nev. 2009) 19 (explicitly adopting § 4.8 of the Restatement in specific circumstances); Foster v. Costco 20 Wholesale Corp., 291 P.3d 150, 153 (Nev. 2012) (“[W]e adopt the rule set forth in the Restatement 21 (Third) of Torts: Physical and Emotional Harm section 51.”); Cucinotta v. Deloitte & Touche, 22 LLP, 302 P.3d 1099, 1102 (Nev. 2013) (affirmatively adopting the Restatement (Second) of Torts 23 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”). 24 25 26 27 28 James C. Mahan U.S. District Judge -8- 1 section 592A). Because Nevada courts have not adopted the relevant section(s) of the restatement 2 at issue here, the Long test, which requires a showing of fraud, unfairness, or oppression in addition 3 to a grossly inadequate sale price to set aside a foreclosure sale, controls. See 639 P.2d at 530. 4 Nevada has not clearly defined what constitutes “unfairness” in determining commercial 5 reasonableness. The few Nevada cases that have discussed commercial reasonableness state, 6 “every aspect of the disposition, including the method, manner, time, place, and terms, must be 7 commercially reasonable.” Levers v. Rio King Land & Inv. Co., 560 P.2d 917, 920 (Nev. 1977). 8 This includes “quality of the publicity, the price obtained at the auction, [and] the number of 9 bidders in attendance.” Dennison v. Allen Grp. Leasing Corp., 871 P.2d 288, 291 (Nev. 1994) 10 (citing Savage Constr. v. Challenge–Cook, 714 P.2d 573, 574 (Nev. 1986)). 11 Nevertheless, Wells Fargo fails to set forth sufficient evidence to show fraud, unfairness, 12 or oppression so as to justify the setting aside of the foreclosure sale. Wells Fargo relies on the 13 mortgage protection clause contained within the CC&Rs as its only evidence of unfairness. (ECF 14 No. 46). Wells Fargo contends that the HOA’s CC&Rs operated to prevent the foreclosure sale 15 from conveying an interest not subject to the deed of trust. (ECF No. 46). 16 This exact argument was addressed and rejected by the court in SFR Investments Pool 1, 17 LLC v. U.S. Bank N.A., 130 Nev. Adv. Op. 75, 334 P.3d 408, 418-18 (2014). Language in the 18 CC&Rs has no impact on the superpriority lien rights granted by NRS 116. Id. 19 NRS 116.1104 provides that “[e]xcept as expressly provided in this chapter, its provisions 20 may not be varied by agreement, and rights conferred by it may not be waived.” Nev. Rev. Stat. 21 § 116.1104; see also Bayview Loan Servicing, LLC v. SFR Investments Pool 1, LLC, No. 2:14- 22 CV-1875-JCM-GWF, 2017 WL 1100955, at *9 (D. Nev. Mar. 22, 2017) (discussing the reasoning 23 in ZYZZX2); JPMorgan Chase Bank, N.A. v. SFR Investments Pool 1, LLC, 200 F. Supp. 3d 1141, 24 1168 (D. Nev. 2016) (holding that an HOA’s failure to comply with its CC&Rs does not set aside 25 a foreclosure sale, due to NRS 116.1104). 26 Accordingly, Wells Fargo’s commercial reasonability argument fails as a matter of law as 27 it failed to set forth evidence of fraud, unfairness, or oppression. See, e.g., Nationstar Mortg., 28 LLC, No. 70653, 2017 WL 1423938, at *3 n.2 (“Sale price alone, however, is never enough to James C. Mahan U.S. District Judge -9- 1 demonstrate that the sale was commercially unreasonable; rather, the party challenging the sale 2 must also make a showing of fraud, unfairness, or oppression that brought about the low sale 3 price.”). 4 2. Due Process 5 Wells Fargo argues that the HOA lien statute is facially unconstitutional because it does 6 not mandate notice to deed of trust beneficiaries. (ECF No. 43). Wells Fargo further contends 7 that any factual issues concerning actual notice are irrelevant pursuant to Bourne Valley Court 8 Trust v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016) (“Bourne Valley”). (ECF No. 43). 9 Wells Fargo has failed to show that Bourne Valley is applicable to its case. Despite Wells 10 Fargo’s erroneous interpretation to the contrary, Bourne Valley did not hold that the entire 11 foreclosure statute was facially unconstitutional. 12 constitutionality of the “opt-in” provision of NRS Chapter 116, not the statute in its entirety. 13 Specifically, the Ninth Circuit held that NRS 116.3116’s “opt-in” notice scheme, which required 14 a HOA to alert a mortgage lender that it intended to foreclose only if the lender had affirmatively 15 requested notice, facially violated mortgage lenders’ constitutional due process rights. Bourne 16 Valley, 832 F.3d at 1157–58. As identified in Bourne Valley, NRS 116.31163(2)’s “opt-in” 17 provision unconstitutionally shifted the notice burden to holders of the property interest at risk— 18 not NRS Chapter 116 in general. See id. at 1158. At issue in Bourne Valley was the 19 Furthermore, Wells Fargo confuses constitutionally mandated notice with the notices 20 required to conduct a valid foreclosure sale. Due process does not require actual notice. Jones v. 21 Flowers, 547 U.S. 220, 226 (2006). Rather, it requires notice “reasonably calculated, under all the 22 circumstances, to apprise interested parties of the pendency of the action and afford them an 23 opportunity to present their objections.” Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 24 306, 314 (1950); see also Bourne Valley, 832 F.3d at 1158. 25 “[T]he Due Process Clause protects only against deprivation of existing interests in life, 26 liberty, or property.” Serra v. Lappin, 600 F.3d 1191, 1196 (9th Cir. 2010); see also, e.g., Spears 27 v. Spears, 596 P.2d 210, 212 (Nev. 1979) (“The rule is well established that one who is not 28 prejudiced by the operation of a statute cannot question its validity.”). To establish a procedural James C. Mahan U.S. District Judge - 10 - 1 due process claim, a claimant must show “(1) a deprivation of a constitutionally protected liberty 2 or property interest, and (2) a denial of adequate procedural protections.” Brewster v. Bd. of Educ. 3 of Lynwood Unified Sch. Dist., 149 F.3d 971, 982 (9th Cir. 1998). 4 Here, Wells Fargo has satisfied the first element as a deed of trust is a property interest 5 under Nevada law. See Nev. Rev. Stat. § 107.020 et seq.; see also Mennonite Bd. of Missions v. 6 Adams, 462 U.S. 791, 798 (1983) (stating that “a mortgagee possesses a substantial property 7 interest that is significantly affected by a tax sale”). However, Wells Fargo fails to satisfy the 8 second prong. 9 Adequate notice was given to the interested parties prior to extinguishing a property right. 10 In fact, Wells Fargo acknowledges having received notice. (ECF No. 44, Ex. A-15). As a result, 11 the notice of trustee’s sale was sufficient notice to cure any constitutional defect inherent in NRS 12 116.31163(2), as it put Wells Fargo on notice that its interest was subject to pendency of action 13 and offered all of the required information. 14 Accordingly, Wells Fargo challenge based on due process and Bourne Valley fails as a 15 matter of law, and Wells Fargo’s motion for summary judgment will be denied as it relates to these 16 grounds. 3. Bona Fide Purchaser Status 17 18 Because the court concludes that Wells Fargo failed to properly raise any equitable 19 challenges to the foreclosure sale, the court need not address Wells Fargo’s argument that SFR 20 was not a bona fide purchaser for value. See, e.g., Nationstar Mortg., LLC, No. 70653, 2017 WL 21 1423938, at *3 n.3. 22 B. Partial Motion for Summary Judgment (ECF No. 41). 23 In the instant motion, SFR moves for an order that “post-Bourne Valley [Court Trust v. 24 Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016)], under the Return Doctrine, NRS Chapter 25 116’s ‘notice scheme’ ‘returns’ to its 1991 version.” (ECF No. 41).3 26 27 The “return doctrine” provides that an unconstitutional statute is no law and the previous constitutional version of the law is revived when it is struck down. See, e.g., We the People Nev. ex rel. Angle v. Miller, 192 P.3d 1166, 1176 (Nev. 2008). 3 28 James C. Mahan U.S. District Judge - 11 - 1 In essence, SFR requests that this court issue an advisory opinion, which Article III 2 prohibits. See, e.g., Calderon v. Ashmus, 523 U.S. 740, 745–46 (1998). Specifically, the United 3 States Supreme Court has held, in relevant part, as follows: 4 [T]he Article III prohibition against advisory opinions reflects the complementary constitutional considerations expressed by the justiciability doctrine: Federal judicial power is limited to those disputes which confine federal courts to a rule consistent with a system of separated powers and which are traditionally thought to be capable of resolution through the judicial process. 5 6 7 Flast v. Cohen, 392 U.S. 83, 97 (1968). Accordingly, the court will deny SFR’s motion for partial summary judgment. (ECF No. 8 9 41). 10 IV. Conclusion 11 Based on the foregoing, SFR has sufficiently shown that it is entitled to summary judgment 12 (ECF No. 44) on its quiet title claim against Wells Fargo. Pursuant to SFR Investments, NRS 13 Chapter 116, and the trustee’s deed upon sale, the foreclosure sale extinguished the deed of trust. 14 Wells Fargo has failed to raise any genuine issues to preclude summary judgment in SFR’s favor. 15 Therefore, the court will grant SFR’s motion for summary judgment (ECF No. 44). 16 Further, Wells Fargo has failed to set forth a sufficient equitable challenge to the 17 foreclosure sale. Therefore, Wells Fargo’s motion for summary judgment (ECF No. 43) on its 18 quiet title and declaratory relief claims against SFR will be denied. 19 Accordingly, 20 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that Wells Fargo’s motion for 21 summary judgment (ECF No. 43) be, and the same hereby is, DENIED. IT IS FURTHER ORDERED that SFR’s motion for summary judgment (ECF No. 44) be, 22 23 and the same hereby is, GRANTED. IT IS FURTHER ORDERED that the SFR’s motion for partial summary judgment (ECF 24 25 No. 41) be, and the same hereby is, DENIED. 26 ... 27 ... 28 ... James C. Mahan U.S. District Judge - 12 - 1 The clerk shall enter judgment accordingly and close the case. 2 DATED February 27, 2018. 3 4 __________________________________________ UNITED STATES DISTRICT JUDGE 5 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 - 13 -

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