JPMorgan Chase Bank, N.A. v. SFR Investments Pool 1, LLC et al

Filing 64

ORDER. IT IS HEREBY ORDERED, ADJUDGED, and DECREED that 48 JPM's motion for summary judgment be, and the same hereby is, DENIED. IT IS FURTHER ORDERED that 51 SFR's motion for summary judgment be, and the same hereby is, GRANTED. < br>IT IS FURTHER ORDERED that 50 the HOA's motion for summary judgment be, and the same hereby is, GRANTED.IT IS FURTHER ORDERED that 49 the SFR's motion for partial summary judgment be, and the same hereby is, DENIED. IT IS FUR THER ORDERED that 61 the HOA's motion to extend time to file a response to JPM's motion for summary judgment be, and the same hereby is, DENIED as moot. The clerk shall enter judgment accordingly and close the case. Signed by Judge James C. Mahan on 2/26/2018. (Copies have been distributed pursuant to the NEF - MR)

1
2
3
4

UNITED STATES DISTRICT COURT

5

DISTRICT OF NEVADA

6

***

7

JP MORGAN CHASE BANK, N.A.,

8

Plaintiff(s),

9
10

Case No. 2:16-CV-2110 JCM (VCF)
ORDER

v.
SFR INVESTMENTS POOL 1 LLC, et al.,

11

Defendant(s).

12
13

Presently before the court is plaintiff JPMorgan Chase Bank, N.A.’s (“JPM”) motion for

14

summary judgment. (ECF No. 48). Defendant/counter-claimant SFR Investments Pool 1, LLC

15

(“SFR”) (ECF No. 53) and defendant Independence II Homeowners Association (the “HOA”)

16

(ECF No. 60) filed responses, to which JPM replied (ECF Nos. 58, 62).

17
18

Also before the court is the HOA’s motion for summary judgment. (ECF No. 50). JPM
(ECF No. 52) and SFR (ECF No. 56) filed responses.

19
20

Also before the court is SFR’s motion for summary judgment. (ECF No. 51). JPM filed a
response (ECF No. 54), to which SFR replied (ECF No. 59).

21
22

Also before the court is SFR’s motion for partial summary judgment. (ECF No. 49). JPM
filed a response (ECF No. 55), to which SFR replied (ECF No. 57).

23

Also before the court is the HOA’s motion to extend time to file a response to JPM’s motion

24

for summary judgment. (ECF No. 61).

25

I.

Facts

26

This case involves a dispute over property located at 9233 Nerone Avenue, Las Vegas,

27

Nevada 89148 (the “property”) that was subject to a homeowners’ association superpriority lien

28

for delinquent assessment fees. (ECF No. 1).

James C. Mahan
U.S. District Judge

1

On January 26, 2005, a grant, bargain, and sale deed evidencing the conveyance of the

2

property to Hilario Soto (“Soto”) was recorded. (ECF No. 1). On that same day, a deed of trust

3

securing a loan was recorded. Id. The deed of trust listed Soto as the borrower, Countrywide

4

Home Loans, Inc. as the lender, CTC Real Estate Services as trustee, and Mortgage Electronic

5

Registration Systems, Inc. (“MERS”) as beneficiary. Id.
On July 15, 2011, an assignment was recorded assigning the beneficial interest in the deed

6
7

of trust from MERS to JPM. (ECF No. 1).

8

On December 8, 2011, Nevada Association Services, Inc. (the “HOA agent”), on behalf of

9

the HOA, recorded a notice of delinquent assessment lien on the property. (ECF No. 1). On

10

January 30, 2012, the HOA agent, on behalf of the HOA, recorded a notice of default and election

11

to sell on the property. Id. On August 6, 2012, the HOA agent, on behalf of the HOA, recorded a

12

notice of trustee’s sale on the property. Id.

13

On September 7, 2012, the HOA agent conducted a foreclosure sale of the property on

14

behalf of the HOA. (ECF No. 1). SFR purchased the property at the foreclosure sale for $4,400.00,

15

and a foreclosure deed in favor of SFR was recorded on September 11, 2012. Id.

16

On September 7, 2016, JPM filed the underlying complaint against SFR and the HOA,

17

alleging three causes of action: (1) declaratory relief; (2) quiet title; and (3) unjust enrichment.

18

(ECF No. 1). On February 28, 2017, the court dismissed JPM’s unjust enrichment claim. (ECF

19

No. 41).
On October 28, 2016, SFR filed a counter/crossclaim for quiet title and injunctive relief.

20
21

(ECF No. 16).
In the instant motions, JPM, the HOA, and SFR all move for summary judgment in their

22
23

favor. (ECF Nos. 48, 50, 51). The court will address each as it sees fit.

24

II.

Legal Standard

25

The Federal Rules of Civil Procedure allow summary judgment when the pleadings,

26

depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,

27

show that “there is no genuine dispute as to any material fact and the movant is entitled to a

28

judgment as a matter of law.” Fed. R. Civ. P. 56(a). A principal purpose of summary judgment is

James C. Mahan
U.S. District Judge

-2-

1

“to isolate and dispose of factually unsupported claims.” Celotex Corp. v. Catrett, 477 U.S. 317,

2

323–24 (1986).

3

For purposes of summary judgment, disputed factual issues should be construed in favor

4

of the non-moving party. Lujan v. Nat’l Wildlife Fed., 497 U.S. 871, 888 (1990). However, to be

5

entitled to a denial of summary judgment, the nonmoving party must “set forth specific facts

6

showing that there is a genuine issue for trial.” Id.

7

In determining summary judgment, a court applies a burden-shifting analysis. The moving

8

party must first satisfy its initial burden. “When the party moving for summary judgment would

9

bear the burden of proof at trial, it must come forward with evidence which would entitle it to a

10

directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has

11

the initial burden of establishing the absence of a genuine issue of fact on each issue material to

12

its case.” C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000)

13

(citations omitted).

14

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

15

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

16

element of the non-moving party’s case; or (2) by demonstrating that the nonmoving party failed

17

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

18

party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323–24. If the moving

19

party fails to meet its initial burden, summary judgment must be denied and the court need not

20

consider the nonmoving party’s evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159–

21

60 (1970).

22

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

23

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

24

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

25

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

26

that “the claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing

27

versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626,

28

631 (9th Cir. 1987).

James C. Mahan
U.S. District Judge

-3-

1

In other words, the nonmoving party cannot avoid summary judgment by relying solely on

2

conclusory allegations that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040,

3

1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the

4

pleadings and set forth specific facts by producing competent evidence that shows a genuine issue

5

for trial. See Celotex, 477 U.S. at 324.

6

At summary judgment, a court’s function is not to weigh the evidence and determine the

7

truth, but to determine whether there is a genuine issue for trial. See Anderson v. Liberty Lobby,

8

Inc., 477 U.S. 242, 249 (1986). The evidence of the nonmovant is “to be believed, and all

9

justifiable inferences are to be drawn in his favor.” Id. at 255. But if the evidence of the

10

nonmoving party is merely colorable or is not significantly probative, summary judgment may be

11

granted. See id. at 249–50.

12

III.

Discussion

13

A. Motions for Summary Judgment (ECF Nos. 48, 50, 51)

14

As an initial matter, claim (2) of SFR’s counter/crossclaim (ECF No. 16) will be dismissed

15

without prejudice as the court follows the well-settled rule in that a claim for “injunctive relief”

16

standing alone is not a cause of action. See, e.g., In re Wal-Mart Wage & Hour Emp’t Practices

17

Litig., 490 F. Supp. 2d 1091, 1130 (D. Nev. 2007); Tillman v. Quality Loan Serv. Corp., No. 2:12-

18

CV-346 JCM RJJ, 2012 WL 1279939, at *3 (D. Nev. Apr. 13, 2012) (finding that “injunctive relief

19

is a remedy, not an independent cause of action”); Jensen v. Quality Loan Serv. Corp., 702 F.

20

Supp. 2d 1183, 1201 (E.D. Cal. 2010) (“A request for injunctive relief by itself does not state a

21

cause of action.”).

22

In SFR’s motion, it contends that summary judgment in its favor is proper because, inter

23

alia, the foreclosure sale extinguished JPM’s deed of trust pursuant to NRS 116.3116 and SFR

24

Investments. (ECF No. 51). SFR further contends that the foreclosure sale should not be set aside

25

because JPM has not shown fraud, unfairness, or oppression as outlined in Shadow Wood

26

Homeowners Assoc. v. N.Y. Cmty. Bancorp., Inc., 366 P.3d 1105 (Nev. 2016) (“Shadow Wood”).

27

(ECF No. 51).

28
James C. Mahan
U.S. District Judge

-4-

1

Under Nevada law, “[a]n action may be brought by any person against another who claims

2

an estate or interest in real property, adverse to the person bringing the action for the purpose of

3

determining such adverse claim.” Nev. Rev. Stat. § 40.010. “A plea to quiet title does not require

4

any particular elements, but each party must plead and prove his or her own claim to the property

5

in question and a plaintiff’s right to relief therefore depends on superiority of title.” Chapman v.

6

Deutsche Bank Nat’l Trust Co., 302 P.3d 1103, 1106 (Nev. 2013) (citations and internal quotation

7

marks omitted). Therefore, for claimant to succeed on its quiet title action, it needs to show that

8

its claim to the property is superior to all others. See Breliant v. Preferred Equities Corp., 918

9

P.2d 314, 318 (Nev. 1996) (“In a quiet title action, the burden of proof rests with the plaintiff to

10

prove good title in himself.”).

11

Section 116.3116(1) of the NRS gives an HOA a lien on its homeowners’ residences for

12

unpaid assessments and fines. Nev. Rev. Stat. § 116.3116(1). Moreover, NRS 116.3116(2) gives

13

priority to that HOA lien over all other liens and encumbrances with limited exceptions—such as

14

“[a] first security interest on the unit recorded before the date on which the assessment sought to

15

be enforced became delinquent.” Nev. Rev. Stat. § 116.3116(2)(b).

16

The statute then carves out a partial exception to subparagraph (2)(b)’s exception for first

17

security interests. See Nev. Rev. Stat. § 116.3116(2). In SFR Investment Pool 1 v. U.S. Bank, the

18

Nevada Supreme Court provided the following explanation:

19
20
21
22

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”).

23

Chapter 116 of the Nevada Revised Statutes permits an HOA to enforce its superpriority

24

lien by nonjudicial foreclosure sale. Id. at 415. Thus, “NRS 116.3116(2) provides an HOA a true

25

superpriority lien, proper foreclosure of which will extinguish a first deed of trust.” Id. at 419; see

26

also Nev. Rev. Stat. § 116.31162(1) (providing that “the association may foreclose its lien by sale”

27

upon compliance with the statutory notice and timing rules).

28
James C. Mahan
U.S. District Judge

-5-

1
2
3
4
5

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[.]
Nev. Rev. Stat. § 116.31166(1)(a)–(c).1 “The ‘conclusive’ recitals concern default, notice, and

6
publication of the [notice of sale], all statutory prerequisites to a valid HOA lien foreclosure sale
7
as stated in NRS 116.31162 through NRS 116.31164, the sections that immediately precede and
8
give context to NRS 116.31166.” Shadow Wood, 366 P.3d at 1110.
9
Based on Shadow Wood, the recitals therein are conclusive evidence that the foreclosure
10
lien statutes were complied with—i.e., that the foreclosure sale was proper. See id.; see also
11
Nationstar Mortg., LLC v. SFR Investments Pool 1, LLC, No. 70653, 2017 WL 1423938, at *2
12

(Nev. App. Apr. 17, 2017) (“And because the recitals were conclusive evidence, the district court

13
did not err in finding that no genuine issues of material fact remained regarding whether the
14
foreclosure sale was proper and granting summary judgment in favor of SFR.”). Therefore,
15

pursuant to SFR Investments, NRS 116.3116, and the recorded trustee’s deed upon sale in favor of

16
SFR, the foreclosure sale was proper and extinguished the first deed of trust.
17
18
19

Notwithstanding, and despite SFR’s contentions, the court retains the equitable authority
to consider quiet title actions when a HOA’s foreclosure deed contains statutorily conclusive
recitals. See Shadow Wood Homeowners Assoc., 366 P.3d at 1112 (“When sitting in equity . . .

20
courts must consider the entirety of the circumstances that bear upon the equities. This includes
21
considering the status and actions of all parties involved, including whether an innocent party may
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

be harmed by granting the desired relief.”). Accordingly, to withstand summary judgment in

2

SFR’s favor, JPM must raise colorable equitable challenges to the foreclosure sale or set forth

3

evidence demonstrating fraud, unfairness, or oppression.

4

In its motion for summary judgment, JPM sets forth the following relevant arguments: (1)

5

the foreclosure sale was commercially unreasonable; (2) the foreclosure was void ab initio because

6

the NRS 116.3116 statute was facially unconstitutional pursuant to Bourne Valley Court Trust v.

7

Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016), cert. denied, No. 16-1208, 2017 WL

8

1300223 (U.S. June 26, 2017) (“Bourne Valley”) and thus actual notice is immaterial; and (3) SFR

9

is not a bona fide purchaser. (ECF Nos. 48, 54).

10

While the court will analyze JPM’s equitable challenges regarding its quiet title, the court

11

notes that the failure to utilize legal remedies makes granting equitable remedies unlikely. See Las

12

Vegas Valley Water Dist. v. Curtis Park Manor Water Users Ass’n, 646 P.2d 549, 551 (Nev. 1982)

13

(declining to allow equitable relief because an adequate remedy existed at law). Simply ignoring

14

legal remedies does not open the door to equitable relief.

15

1. Commercial Reasonability

16

JPM contends that summary judgment in its favor is appropriate because the sale of the

17

property for 3.9% of its fair market value is grossly inadequate as a matter of law. (ECF No. 54).

18

JPM further argues that the Shadow Wood court adopted the restatement approach, quoting the

19

opinion as holding that “generally a court is warranted in invalidating a sale where the price is less

20

than 20 percent of fair market value.” (ECF No. 54 at 12) (emphasis omitted).

21

JPM overlooks the reality of the foreclosure process. The amount of the lien—not the fair

22

market value of the property—is what typically sets the sales price. Further, JPM fails to set forth

23

sufficient evidence to show fraud, unfairness, or oppression so as to justify the setting aside of the

24

foreclosure sale.

25

NRS 116.3116 codifies the Uniform Common Interest Ownership Act (“UCIOA”) in

26

Nevada. See Nev. Rev. Stat. § 116.001 (“This chapter may be cited as the Uniform Common-

27

Interest Ownership Act”); see also SFR Investments, 334 P.3d at 410. Numerous courts have

28
James C. Mahan
U.S. District Judge

-7-

1

interpreted the UCIOA and NRS 116.3116 as imposing a commercial reasonableness standard on

2

foreclosure of association liens.2

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 JPM’s assertion 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’s 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); Foster v. Costco

22

2

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”).
-8-

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.”); 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 addition

6

to a grossly inadequate sale price to set aside a foreclosure sale, controls. See 639 P.2d at 530.

7

Nevada has not clearly defined what constitutes “unfairness” in determining commercial

8

reasonableness. The few Nevada cases that have discussed commercial reasonableness state,

9

“every aspect of the disposition, including the method, manner, time, place, and terms, must be

10

commercially reasonable.” Levers v. Rio King Land & Inv. Co., 560 P.2d 917, 920 (Nev. 1977).

11

This includes “quality of the publicity, the price obtained at the auction, [and] the number of

12

bidders in attendance.” Dennison v. Allen Grp. Leasing Corp., 871 P.2d 288, 291 (Nev. 1994)

13

(citing Savage Constr. v. Challenge–Cook, 714 P.2d 573, 574 (Nev. 1986)).

14

Nevertheless, JPM fails to set forth sufficient evidence to show fraud, unfairness, or

15

oppression so as to justify the setting aside of the foreclosure sale. JPM relies on the mortgage

16

protection clause contained within the CC&Rs as its only evidence of unfairness. (ECF No. 54).

17

JPM contends that the HOA’s CC&Rs expressly acknowledged that the HOA’s lien was

18

subordinate to the deed of trust. (ECF No. 54). Further, JPM argues misrepresentations contained

19

in the CC&Rs resulted in chilled bidding at the foreclosure sale. Id.

20

This exact argument was addressed and rejected by the court in SFR Investments Pool 1,

21

LLC v. U.S. Bank N.A., 130 Nev. Adv. Op. 75, 334 P.3d 408, 418-18 (2014). Language in the

22

CC&Rs has no impact on the superpriority lien rights granted by NRS 116. Id.

23

NRS 116.1104 provides that “[e]xcept as expressly provided in this chapter, its provisions

24

may not be varied by agreement, and rights conferred by it may not be waived.” Nev. Rev. Stat.

25

§ 116.1104; see also Bayview Loan Servicing, LLC v. SFR Investments Pool 1, LLC, No. 2:14-

26

CV-1875-JCM-GWF, 2017 WL 1100955, at *9 (D. Nev. Mar. 22, 2017) (discussing the reasoning

27

in ZYZZX2); JPMorgan Chase Bank, N.A. v. SFR Investments Pool 1, LLC, 200 F. Supp. 3d 1141,

28
James C. Mahan
U.S. District Judge

-9-

1

1168 (D. Nev. 2016) (holding that an HOA’s failure to comply with its CC&Rs does not set aside

2

a foreclosure sale, due to NRS 116.1104).

3

Accordingly, JPM’s commercial reasonability argument fails as a matter of law as it failed

4

to set forth evidence of fraud, unfairness, or oppression. See, e.g., Nationstar Mortg., LLC, No.

5

70653, 2017 WL 1423938, at *3 n.2 (“Sale price alone, however, is never enough to demonstrate

6

that the sale was commercially unreasonable; rather, the party challenging the sale must also make

7

a showing of fraud, unfairness, or oppression that brought about the low sale price.”).
2. Due Process

8
9

JPM argues that the HOA lien statute is facially unconstitutional because it does not

10

mandate notice to deed of trust beneficiaries. (ECF No. 48). JPM further contends that any factual

11

issues concerning actual notice are irrelevant pursuant to Bourne Valley Court Trust v. Wells Fargo

12

Bank, N.A., 832 F.3d 1154 (9th Cir. 2016) (“Bourne Valley”). (ECF No. 48).

13

JPM has failed to show that Bourne Valley is applicable to its case. Despite JPM’s

14

erroneous interpretation to the contrary, Bourne Valley did not hold that the entire foreclosure

15

statute was facially unconstitutional. At issue in Bourne Valley was the constitutionality of the

16

“opt-in” provision of NRS Chapter 116, not the statute in its entirety. Specifically, the Ninth

17

Circuit held that NRS 116.3116’s “opt-in” notice scheme, which required a HOA to alert a

18

mortgage lender that it intended to foreclose only if the lender had affirmatively requested notice,

19

facially violated mortgage lenders’ constitutional due process rights. Bourne Valley, 832 F.3d at

20

1157–58.

21

unconstitutionally shifted the notice burden to holders of the property interest at risk—not NRS

22

Chapter 116 in general. See id. at 1158.

As identified in Bourne Valley, NRS 116.31163(2)’s “opt-in” provision

23

The holding in Bourne Valley provides little support for JPM as JPM’s contentions are not

24

predicated on an unconstitutional shift of the notice burden, which required it to “opt in” to receive

25

notice. JPM does not argue that it lacked notice, actual or otherwise, of the event that affected the

26

deed of trust (i.e., the foreclosure sale), in fact, JPM acknowledges receipt of actual notice. (ECF

27

No. 51, Ex. A-7). Rather, JPM merely complains about the content of the recorded notices. (See,

28

e.g., ECF No. 1 at 4).

James C. Mahan
U.S. District Judge

- 10 -

1

Furthermore, JPM confuses constitutionally mandated notice with the notices required to

2

conduct a valid foreclosure sale. Due process does not require actual notice. Jones v. Flowers,

3

547 U.S. 220, 226 (2006). Rather, it requires notice “reasonably calculated, under all the

4

circumstances, to apprise interested parties of the pendency of the action and afford them an

5

opportunity to present their objections.” Mullane v. Central Hanover Bank & Trust Co., 339 U.S.

6

306, 314 (1950); see also Bourne Valley, 832 F.3d at 1158.

7

“[T]he Due Process Clause protects only against deprivation of existing interests in life,

8

liberty, or property.” Serra v. Lappin, 600 F.3d 1191, 1196 (9th Cir. 2010); see also, e.g., Spears

9

v. Spears, 596 P.2d 210, 212 (Nev. 1979) (“The rule is well established that one who is not

10

prejudiced by the operation of a statute cannot question its validity.”). To establish a procedural

11

due process claim, a claimant must show “(1) a deprivation of a constitutionally protected liberty

12

or property interest, and (2) a denial of adequate procedural protections.” Brewster v. Bd. of Educ.

13

of Lynwood Unified Sch. Dist., 149 F.3d 971, 982 (9th Cir. 1998).

14

Here, JPM has satisfied the first element as a deed of trust is a property interest under

15

Nevada law. See Nev. Rev. Stat. § 107.020 et seq.; see also Mennonite Bd. of Missions v. Adams,

16

462 U.S. 791, 798 (1983) (stating that “a mortgagee possesses a substantial property interest that

17

is significantly affected by a tax sale”). However, JPM fails to satisfy the second prong.

18

Adequate notice was given to the interested parties prior to extinguishing a property right.

19

In fact, JPM acknowledges having received both the notice of default and the notice of sale.

20

(ECF No. 51, Ex. A-7). As a result, the notice of trustee’s sale was sufficient notice to cure any

21

constitutional defect inherent in NRS 116.31163(2), as it put JPM on notice that its interest was

22

subject to pendency of action and offered all of the required information.

23
24
25

Accordingly, JPM challenge based on due process and Bourne Valley fails as a matter of
law, and JPM’s motion for summary judgment will be denied as it relates to these grounds.
3. Bona Fide Purchaser Status

26

Because the court concludes that JPM failed to properly raise any equitable challenges to

27

the foreclosure sale, the court need not address JPM’s argument that SFR was not a bona fide

28

purchaser for value. See, e.g., Nationstar Mortg., LLC, No. 70653, 2017 WL 1423938, at *3 n.3.

James C. Mahan
U.S. District Judge

- 11 -

1

B. Partial Motion for Summary Judgment (ECF No. 49).

2

In the instant motion, SFR moves for an order that “post-Bourne Valley [Court Trust v.

3

Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016)], under the Return Doctrine, NRS Chapter

4

116’s ‘notice scheme’ ‘returns’ to its 1991 version.” (ECF No. 49).3

5

In essence, SFR requests that this court issue an advisory opinion, which Article III

6

prohibits. See, e.g., Calderon v. Ashmus, 523 U.S. 740, 745–46 (1998). Specifically, the United

7

States Supreme Court has held, in relevant part, as follows:

8

[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.

9
10
11

Flast v. Cohen, 392 U.S. 83, 97 (1968).
Accordingly, the court will deny SFR’s motion for partial summary judgment. (ECF No.

12
13

49).

14

IV.

Conclusion

15

Based on the foregoing, SFR has sufficiently shown that it is entitled to summary judgment

16

(ECF No. 51) on its quiet title and declaratory relief claims against JPM. Pursuant to SFR

17

Investments, NRS Chapter 116, and the trustee’s deed upon sale, the foreclosure sale extinguished

18

the deed of trust. JPM has failed to raise any genuine issues to preclude summary judgment in

19

SFR’s favor. Therefore, the court will grant SFR’s motion for summary judgment (ECF No. 51).

20

In turn, the court will also grant the HOA’s motion for summary judgment, as the court finds the

21

foreclosure sale was conducted in accordance with Nevada law. (ECF No. 50).

22

Further, JPM has failed to set forth a sufficient equitable challenge to the foreclosure sale.

23

Therefore, JPM’s motion for summary judgment (ECF No. 48) on its quiet title and declaratory

24

relief claims against SFR will be denied.

25

...

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

- 12 -

1

Accordingly,

2

IT IS HEREBY ORDERED, ADJUDGED, and DECREED that JPM’s motion for

3
4
5
6
7
8
9

summary judgment (ECF No. 48) be, and the same hereby is, DENIED.
IT IS FURTHER ORDERED that SFR’s motion for summary judgment (ECF No. 51) be,
and the same hereby is, GRANTED.
IT IS FURTHER ORDERED that the HOA’s motion for summary judgment (ECF No. 50)
be, and the same hereby is, GRANTED.
IT IS FURTHER ORDERED that the SFR’s motion for partial summary judgment (ECF
No. 49) be, and the same hereby is, DENIED.

10

IT IS FURTHER ORDERED that the HOA’s motion to extend time to file a response to

11

JPM’s motion for summary judgment (ECF No. 61) be, and the same hereby is, DENIED as moot.

12

The clerk shall enter judgment accordingly and close the case.

13

DATED February 26, 2018.

14
15

__________________________________________
UNITED STATES DISTRICT JUDGE

16
17
18
19
20
21
22
23
24
25
26
27
28
James C. Mahan
U.S. District Judge

- 13 -