The Bank of New York Mellon v. Sunrise Ridge Master Homeowners Association et al

Filing 85

ORDER that Bank of New York Mellon's 70 Renewed Motion for Summary Judgment is DENIED based on genuine issues of fact. SFR Investments Pool 1, LLC's 72 Renewed Motion for Summary Judgment is GRANTED in part and DENIED in part. This case is referred to the magistrate judge for a mandatory settlement conference. Signed by Judge Jennifer A. Dorsey on 9/4/2019. (Copies have been distributed pursuant to the NEF - SLD)

1

UNITED STATES DISTRICT COURT

2

DISTRICT OF NEVADA

3
4 The Bank of New York Mellon as Trustee for
the Certificateholders CWMBS, Inc., CHL
5 Mortgage Pass-through Trust 2005-HYB4,
Mortgage Pass-through certificates, Series
6 2005-HYB4,
7

Case No. 2:17-cv-00214-JAD-EJY

Plaintiff
v.

8
Sunrise Ridge Master Homeowners
9 Association; SFR Investments Pool 1, LLC;
and Nevada Association Services, Inc.,
10
Defendants
11 _____________________________________

Order Granting in Part and Denying in
Part Renewed Cross-Motions for
Summary Judgment
[ECF Nos. 70, 72]

12 ALL OTHER CLAIMS
13
The Bank of New York Mellon brings this action to challenge the effect of the 2013 non-

14

15 judicial foreclosure sale of a home on which it claims a deed of trust. 1 The bank sues the Sunrise
16 Ridge Master Homeowners Association, which conducted the foreclosure sale, and foreclosure17 sale purchaser SFR Investments Pool 1, LLC, seeking a declaration either that the sale was
18 invalid or that SFR purchased the property subject to the bank’s security interest. SFR
19 countersues to quiet title in its own name.
Both SFR and the bank now move for summary judgment on their quiet-title claims.

20

21 Although the bank may be able to establish at trial that the deed of trust survived the foreclosure
22 because its predecessor-in-interest’s tender satisfied the superpriority portion of the lien, genuine
23
1

ECF No. 1.

1 issues of fact preclude me from reaching that conclusion as a matter of law on this record. SFR
2 has demonstrated the failure of two of the bank’s subordinate quiet-title theories, however, so I
3 grant partial summary judgment on them. And with the trial issues narrowed, I refer this case to
4 a mandatory settlement conference with the magistrate judge.
5

Factual and Procedural Background

6

Patty Tan purchased the home at 3557 Chelsea Grove Street in Las Vegas, Nevada in

7 2005 with a loan from Universal American Mortgage Company, LLC, secured by a deed of trust
8 that designated Mortgage Electronic Registration Systems, Inc. (MERS) as the beneficiary. 2
9 MERS assigned that deed of trust “together with the note” to the Bank of New York Mellon in
10 April 2012. 3 The home is located in the Sunrise Ridge common-interest community and subject
11 to the declaration of covenants, conditions, and restrictions (CC&Rs) for the Sunrise Ridge
12 Master Homeowners Association (the HOA). 4
13

The Nevada Legislature gave homeowners’ associations a superpriorty lien against

14 residential property for certain delinquent assessments and established in Chapter 116 of the
15 Nevada Revised Statutes a non-judicial foreclosure procedure to enforce such a lien. 5 When the
16 assessments on the Tan home purportedly became delinquent, the HOA commenced non-judicial
17 foreclosure proceedings on it under Chapter 116 in February 2013. 6
18
19
20
21

2

ECF No. 70-1 at 2–3 (original deed of trust).

3

ECF No. 70-2 (assignment).

4

ECF No. 70-3 (recorded HOA governing documents).

5

Nev. Rev. Stat. § 116.3116; SFR Investments Pool 1 v. U.S. Bank (“SFR I”), 334 P.3d 408, 409
22 (Nev. 2014).
6

23

ECF No. 70-4 (notice of lien for delinquent assessments); ECF No. 70-5 (notice of default and
election to sell under homeowners association lien); ECF No. 70-7 (notice of foreclosure sale);
and ECF No. 70-9 (foreclosure deed).
2

1 A.

The HOA rejected the bank’s tender and foreclosed on the property.

2

When the bank’s loan servicer, Bank of America, learned of the impending foreclosure,

3 its counsel, the law firm of Miles, Bauer, Bergstrom & Winters, LLP, sent a letter to the HOA
4 asking for “the HOA payoff ledger detailing the super-priority amount” of the HOA’s lien “by
5 providing a breakdown of nine (9) months of common HOA assessments in order for [Miles
6 Bauer] to calculate the super priority amount.” 7 Miles Bauer’s records contain no response to
7 that correspondence. 8 Miles Bauer consulted an account statement for a different property in
8 Sunrise Ridge, surmised from it that the HOA assessments were $126.00 each quarter in 2011,
9 and thus tendered nine months (three quarters) of those assessments to the HOA’s foreclosure
10 agent Nevada Association Services (NAS) in a $378 check. 9 In the letter to NAS that
11 accompanied that check, Miles Bauer explained that the amount was an estimate of the
12 superpriority portion of the HOA’s lien:
13

Despite your current refusal to provide HOA payoff ledgers, our
client still wishes to make a good-faith attempt to fulfill [its]
obligations as the 1st lienholder by tendering to NAS an accurate
estimate of the Super-Priority Amount. This good-faith estimate is
based on prior payoff ledgers provided by NAS to our firm
regarding the same HOA in question. Based on the most recent
HOA payoff ledger provided by NAS in regards to this particular
HOA, we estimate 9 months of common HOA assessments to be
$378.00.

14
15
16
17
18

Thus, enclosed you will find a cashier’s check made out to
NEVADA ASSOCIATION SERVICES in the sum of $378.00.
This is a non-negotiable amount and any endorsement of said
cashier’s check on your part, whether express or implied, will be
strictly construed as an unconditional acceptance on your part of
the facts stated herein and express agreement that [the Bank’s]
Super-Priority Amount obligations towards the HOA in regards to

19
20
21
22

7

ECF No. 70-6 at 15.

23

8

Id. at 3, ¶ 7.

9

Id.
3

1

the real property located at 3557 Chelsea Grove Street have now
been “paid in full.” 10

2
3 Miles Bauer’s records reflect that the check was rejected. 11 The HOA foreclosed on the property
4 on September 20, 2013. SFR was the winning bidder at $5,000. 12
5 B.

The bank and SFR move for summary judgment to quiet title in their favor.

6

As the Nevada Supreme Court held in SFR Investments Pool 1 v. U.S. Bank in 2014,

7 because NRS 116.3116(2) gives an HOA “a true superpriority lien, proper foreclosure of” that
8 lien under the non-judicial foreclosure process created by NRS Chapters 107 and 116 “will
9 extinguish a first deed of trust.” 13 The bank brings this action to save its deed of trust from
10 extinguishment, pleading claims for quiet title and injunctive relief. 14 SFR counterclaims for
11 quiet title and injunctive relief. 15
Discovery has closed, and the bank moves for summary judgment in its favor. 16 SFR

12

13 opposes the motion, but the HOA filed no response. 17 The bank offers three reasons why I must
14

16
17
18
19
20
21
22
23

10

Id. at 12.

11

15

ECF No. 70-9 at 2.

12

Id.

13

SFR I, 334 P.3d at 419.

14

ECF No. 1. The bank sued SFR, the HOA, and the HOA’s agent NAS, but NAS failed to
answer or otherwise defend, and default was entered against it. See ECF No. 38.

15

ECF No. 20 (SFR’s counterclaim). SFR also asserted these claims as cross-claims against
Tan, but Tan failed to answer or otherwise appear, and default was entered against her. ECF No.
54. To the extent that SFR now seeks summary judgment against Tan, see ECF No. 72 at 18,
¶ F, that relief is not available; SFR’s proper remedy against a defaulted party is a default
judgment.
16
ECF No. 46 (discovery order); ECF No. 70. Although the Bank’s complaint contains claims
against the HOA and NAS for breach of NRS 116.113 and wrongful foreclosure, its motion
ignores those claims and only addresses its quiet-title theories against SFR. Because no party
addresses these claims, I don’t either.
17

ECF No. 77 (SFR’s response).
4

1 hold that the HOA foreclosure sale did not extinguish its deed of trust (1) the tender satisfied the
2 superpriority portion of the lien, so under the Nevada Supreme Court’s ruling in Bank of America
3 v. SFR Investments Pool 1, LLC (known as the Diamond Spur case), 18 SFR took the property
4 subject to the deed of trust; (2) the HOA foreclosed only on the subpriority portion of the lien, so
5 the deed of trust was unaffected; and (3) the sale must be set aside because the price was grossly
6 inadequate and the sale was unfair and oppressive. 19 SFR also moves for summary judgment,
7 arguing that the bank’s claims are governed by a three-year statute of limitations, and because
8 this action was filed more than three years after the foreclosure sale, it is time-barred. SFR also
9 offers a handful of reasons why the foreclosure sale validly extinguished the bank’s interest. 20 I
10 find that genuine issues of material fact preclude a definitive declaration for either party. But I
11 whittle down various issues to narrow the scope of trial, and I refer this case to the magistrate
12 judge for a mandatory settlement conference.
13

Discussion

14 A.

Standards for cross-motions for summary judgment

15

The principal purpose of the summary-judgment procedure is to isolate and dispose of

16 factually unsupported claims or defenses. 21 The moving party bears the initial responsibility of
17 presenting the basis for its motion and identifying the portions of the record or affidavits that
18 demonstrate the absence of a genuine issue of material fact. 22 If the moving party satisfies its
19
20
18

Bank of Amer. v. SFR Invs. Pool 1, LLC (“Diamond Spur”), 427 P.3d 113 (Nev. 2018).

19

22

ECF No. 70.

20

ECF Nos. 72, 77.

23

21

Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986).

22

Celotex, 477 U.S. at 323; Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001) (en banc).

21

5

1 burden with a properly supported motion, the burden then shifts to the opposing party to present
2 specific facts that show a genuine issue of material fact for trial. 23
3

Who bears the burden of proof on the factual issue in question is critical. When the party

4 moving for summary judgment would bear the burden of proof at trial (typically the plaintiff), “it
5 must come forward with evidence [that] would entitle it to a directed verdict if the evidence went
6 uncontroverted at trial.” 24 Once the moving party establishes the absence of a genuine issue of
7 fact on each issue material to its case, “the burden then moves to the opposing party, who must
8 present significant probative evidence tending to support its claim or defense.” 25 When instead
9 the opposing party would have the burden of proof on a dispositive issue at trial, the moving
10 party (typically the defendant) doesn’t have to produce evidence to negate the opponent’s claim;
11 it merely has to point out the evidence that shows an absence of a genuine material factual
12 issue. 26 The movant need only defeat one element of the claim to garner summary judgment on
13 it because “a complete failure of proof concerning an essential element of the nonmoving party’s
14 case necessarily renders all other facts immaterial.” 27
15
16
17
18

23

Fed. R. Civ. P. 56(e); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Auvil v. CBS
19 60 Minutes, 67 F.3d 816, 819 (9th Cir. 1995).
24
C.A.R. Transp. Brokerage Co. v. Darden Restaurants, Inc., 213 F.3d 474, 480 (9th Cir. 2000)
20 (quoting Houghton v. South, 965 F.2d 1532, 1536 (9th Cir. 1992) (citation and quotations
omitted)).
21 25
Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d 1551, 1558 (9th Cir.1991) (citation
omitted).
22
26

See, e.g., Lujan v. National Wildlife Fed’n, 497 U.S. 871, 885 (1990); Celotex, 477 U.S. at
23 323–24.
27

Celotex, 477 U.S. at 322.
6

1 B.

The bank’s claims are timely.

2

Before I consider the merits of the parties’ claims, I address SFR’s threshold argument

3 that the bank’s claims must be dismissed as untimely. 28 SFR argues that the bank’s claims are
4 governed by the three-year limitations period in NRS 11.190(3)(a). The bank responds that its
5 claims are timely because they are governed by a ten-year deadline or no deadline at all. 29 Both
6 parties are wrong, but the bank’s claims are nevertheless timely.
7

1.

8

The first step in assessing the timeliness of a claim is to identify its nature. To evaluate

Sorting the bank’s claims

9 claims, “we must look at the substance of the claims, not just the labels used.” 30 The bank
10 pleads two causes of action against SFR. The first of these claims is labeled “Quiet
11 Title/Declaratory Judgment Against All Defendants,” and its purpose is to obtain a declaration
12 “that the HOA sale did not extinguish the senior deed of trust.” 31 This requested equitable relief
13 makes the bank’s claim the type of quiet-title claim recognized by the Nevada Supreme Court in
14 Shadow Wood Homeowners Association, Inc. v. New York Community Bancorp—an action
15 “seek[ing] to quiet title by invoking the court’s inherent equitable jurisdiction to settle title
16 disputes.” 32 The resolution of such a claim is part of “[t]he long-standing and broad inherent
17
18
19

21

28

ECF No. 72.

29

20

ECF No. 76.

30

Nevada Power Co. v. Eighth Jud. Dist. Court of Nevada ex rel. Cty. of Clark, 102 P.3d 578,
586 (Nev. 2004).
22
31
ECF No. 1 at 6–10.
23 32
Shadow Wood Homeowners Ass’n, Inc. v. New York Cmty. Bancorp, 366 P.3d 1105, 1110–
1111 (Nev. 2016).
7

1 power of a court to sit in equity and quiet title, including setting aside a foreclosure sale if the
2 circumstances support” it. 33
3

The bank’s other claim against SFR is its fourth cause of action, entitled “Injunctive

4 Relief against SFR.” 34 Injunctive relief is a remedy, not an independent cause of action. This
5 remedy is only available for a meritorious substantive claim, and the only such claim that the
6 bank pleads against SFR is the quiet-title claim. So I construe this final claim as a prayer for
7 injunctive relief in conjunction with its equitable quiet-title claim and not as a separate cause of
8 action.
9

2.

10

The bank’s quiet-title claim is subject to a four-year limitations period.

SFR argues that the bank’s claim is subject to the three-year statute of limitations in NRS

11 11.090(3)(a). 35 That statute governs actions “upon a liability created by statute, other than a
12 penalty or forfeiture.” 36 But the bank’s claim is not an action upon a liability created by statute;
13 it is an equitable action to determine adverse interests in real property, as codified in NRS
14 40.010. 37 Section 40.010 does not create liability, and a party cannot impose liability upon
15 another through that statute. Rather, the statute allows for a proceeding to determine adverse
16 claims to property. So NRS 11.090(3)(a) does not apply.
17

The bank takes the sweeping position that its claim is “not subject to a statute of

18 limitations” based on the Nevada Supreme Court’s opinion in Facklam v. HSBC Bank. 38 But
19
33

20
21
22

Id. at 1112.

34

ECF No. 1 at 13.

35

See ECF No. 72 at 8–11.

36

Nev. Rev. Stat. § 11.190(3)(a).

37

See Shadow Wood, 366 P.3d at 1111 (recounting that “NRS 40.010 essentially codified the
23 court’s existing equity jurisprudence” (comma omitted)).
38

ECF No. 76 at 3.
8

1 Facklam has no application here. In Facklam, 39 the Court merely held that non-judicial
2 foreclosure actions are not subject to the statutes of limitation in NRS Chapter 11 because those
3 time bars apply only to judicial actions, and a non-judicial foreclosure is not a judicial action. 40
4 So “lenders are not barred from foreclosing on mortgaged property merely because the statute of
5 limitations for contractual remedies on the note has passed.” 41 This case, however, is not a non6 judicial foreclosure action—it’s a lawsuit seeking equitable relief, so it falls under the “civil
7 action” umbrella and is subject to the limitations periods in NRS Chapter 11. 42
8

The bank argues alternatively that if a limitation period applies, its claim is governed by

9 NRS § 106.240, which states that a lien created by a recorded deed of trust “shall at the
10 expiration of 10 years after the debt secured by the mortgage or deed of trust according to the
11 terms thereof or any recorded written extension thereof become wholly due, terminate, and it
12 shall be conclusively presumed that the debt has been regularly satisfied and the lien
13 discharged.” 43 But this section “creates a conclusive presumption that a lien on real property is
14 extinguished ten years after the debt becomes due,” it is not a statute of limitation. 44 So the
15 bank’s claim is not governed by a ten-year deadline either.
16

With no squarely applicable limitations statute for the bank’s claim, I am left with the

17 catch-all four-year deadline in NRS 11.220, which states that “[a]n action for relief, not
18
19

Facklam v. HSBC Bank, 401 P.3d 1068, 1071 (Nev. 2017).

40

Id. at 1070.

41

20

39

Id.

21

42

23

43

Nev. Rev. Stat. § 106.240.

44

Pro-Max Corp. v. Feenstra, 16 P.3d 1074, 1077 (Nev. 2001).

See Nev. Rev. Stat. § 11.010 (providing that “Civil actions can only be commenced within the
periods prescribed in this chapter, after the after the cause of action shall have accrued, except
22
where a different limitation is prescribed by statute.”).

9

1 hereinbefore provided for, must be commenced within 4 years after the cause of action shall have
2 accrued.” 45 Because the foreclosure sale occurred on September 20, 2013, and this action was
3 filed less than four years later on January 25, 2017, the bank’s claim is timely. So, to the extent
4 that SFR moves for summary judgment on the basis of timeliness, the motion is denied.
5 C.

The bank has not established that it tendered the full superpriority amount.

6

Though its quiet-title claim is timely, the bank has not shown that it is entitled to

7 summary judgment in its favor. The bank’s lead summary-judgment argument is that its loan
8 servicer’s tender of $378 before the foreclosure sale satisfied the full superpriority amount,
9 preserving its deed of trust under the Nevada Supreme Court’s holding in Diamond Spur. In that
10 case, the Nevada Supreme Court held that the tender of the full superpriority portion of an
11 HOA’s lien “cure[s] the default,” so “the HOA’s foreclosure on the entire lien result[s] in a void
12 sale as to the superpriority portion.” The net result of such a tender is that the “first deed of trust
13 remain[s] after foreclosure” and the foreclosure-sale buyer purchases the property subject to the
14 deed of trust. 46
15

In Diamond Spur, Miles Bauer contacted the HOA to get clarification on the

16 superpriority amount due for a particular home. Based on the information received from the
17 HOA, it tendered nine months’ worth of assessments to the HOA. 47 And just as in this case, the
18 HOA rejected the payment and sold the property at foreclosure to SFR. 48 The Nevada Supreme
19 Court explained that a valid tender typically requires payment in full, but for purposes of
20 satisfying an HOA’s superpriority lien and thus saving a deed of trust from extinguishment under
21
45

22

Nev. Rev. Stat. §11.220.

46

Diamond Spur, 427 P.3d at 121.

23

47

Id. at 116.

48

Id. at 116–17.
10

1 the version of Nevada’s foreclosure statute that was in effect in 2013, the bank needed to pay the
2 two components of the superpriority portion of the lien only: “charges for maintenance and
3 nuisance abatement, and nine months of unpaid assessments.” 49 Because the bank properly
4 calculated nine months’ worth of assessments based on the HOA’s information, “and the HOA
5 did not indicate that the property had any charges for maintenance or nuisance abatement,” the
6 Court found that, “[o]n the record presented, this was the full superpriority amount.” 50
7

Unlike the bank in Diamond Spur, however, plaintiff has not shown that it satisfied the

8 full superpriority amount of the HOA’s lien on this property. Because the HOA did not respond
9 to Miles Bauer’s request for account information, Miles Bauer could only estimate the two
10 components of the superpriority portion of the lien. 51 The only information that Miles Bauer had
11 was an account statement for another property within the Sunrise Ridge HOA that showed that
12 the assessments on that property in 2010 were $132/quarter, and in 2011 were $126/quarter. 52
13 Even if I assume that the assessments remained $126/quarter in 2012 and 2013, and Miles Bauer
14 thus accurately calculated the nine months (three quarters) of assessments using that figure ($126
15 x 3 = $378), the bank has not established that there were no charges for maintenance or nuisance
16 abatement on this property that went unsatisfied by the $378 payment. The bank thus has not
17 met its burden to show that it tendered the full superpriority portion of the lien. This genuine
18
19
20
21
22

49

Id. (citing 116.3116(2) and SFR I, 334 P.3d at 412).

50

Id. at 118.

51

Id. at 117 (“[T]he superpriority portion of an HOA lien includes only charges for maintenance
23 and nuisance abatement, and nine months of unpaid assessments.”).
52

ECF No. 70-6 at 9.
11

1 issue of fact about whether there were charges for maintenance or nuisance abatement on this
2 property precludes summary judgment in favor of any party. 53
3
4

D.

Issues of fact prevent summary judgment in favor of the bank on its theory that the
HOA sold only the subpriority portion of the lien.

5

The bank also claims that it is entitled to summary judgment in its favor because the

6 HOA foreclosed on the subpriority portion of its lien only. 54 It suggests that statements made by
7 loan servicer Bank of America in a 2011 mediation proceeding before the Nevada Real Estate
8 Division demonstrate that this foreclosure sale was only on the subpriority portion of the HOA’s
9 lien. The bank’s argument is far too undeveloped for me to apply estoppel or any other doctrine
10 to so hold as a matter of law. At best, and if I generously presume that Bank of America’s 2011
11 representations were related to this case, the bank has merely created an issue of fact because the
12 foreclosure deed reflects that the HOA attempted to foreclose on the entire lien. 55
13 E.

SFR is entitled to summary judgment on the bank’s Shadow Canyon theory.

14

The parties cross-move for summary judgment on the bank’s tertiary theory that the sale

15 should be set aside because the sale price was grossly inadequate and the sale was plagued by
16 fraud, unfairness, or oppression. The bank contends that the sale of the property for 3% of its
17 value, plus the HOA’s inclusion in its CC&Rs of a mortgage-protection clause, combine to
56
18 compel the court to set aside the sale. This price-plus-irregularities theory is grounded upon

19
20

53

SFR argues in its own motion that, by operation of SFR I and deed recitals, the deed of trust
was extinguished. See ECF No. 72 at 15–18. But a valid tender will trump those arguments.
21 See Diamond Spur, 427 P.3d at 121.
22

54

ECF No. 70 at 6–7.

55

See ECF No. 70-9 at 2 (stating that the HOA “does hereby grant and convey, but without
23 warranty expressed or implied . . . all its right, title[,] and interest in and to” the property).
56

ECF No. 70 at 8–10.
12

1 the Nevada Supreme Court’s holding in Nationstar Mortg. LLC v. Saticoy Bay LLC Series 2227
2 Shadow Canyon that, although inadequacy in price alone will not justify setting aside a
3 foreclosure sale, “where the inadequacy of the price is great, a court may grant relief based on
4 slight evidence of fraud, unfairness, or oppression” that affected the sale. 57 SFR argues that
5 mortgage-protection clauses cannot prevent an HOA foreclosure sale under NRS Chapter 116
6 from extinguishing a deed of trust and that the bank has not shown that the sale price was
7 inadequate for this “forced sale.” 58
8

Even if I were to agree with the bank that the foreclosure-sale price was grossly

9 inadequate, it has failed to satisfy its burden on summary judgment because the record contains
10 no evidence “that the sale was affected by fraud, unfairness, or oppression.” 59 The sole
11 irregularity that the bank points to is the HOA’s mortgage-protection clause in its CC&Rs, which
12 states that “no lien created under this Article 9, nor the enforcement of any provision of this
13 Declaration shall defeat or render invalid the rights of the beneficiary under any Recorded first
14 deed of trust.” 60 But the Nevada Supreme Court has acknowledged the powerlessness of
15 mortgage-protection clauses against the preclusive effect of NRS 116.3116. In SFR I, the
16 Nevada Supreme Court found that such mortgage-protection clauses do “not affect NRS
17 116.3116(2)’s application” because Chapter 116’s provisions, which give HOAs true
18 superpriority liens, cannot be waived or varied. 61 The bank thus has no valid basis to show that
19
20

57

Nationstar Mortg. LLC v. Saticoy Bay LLC Series 2227 Shadow Canyon, 405 P.3d 641, 646–
21 47 (Nev. 2017).
58
ECF No. 77 at 25.
22 59
Id. at 651.
23

60

ECF No. 70-3 at 59, § 9.8.

61

SFR, 334 P.3d at 419.
13

1 the mortgage-protection clause in these CC&Rs rose to the level of fraud, unfairness, or
2 oppression that justifies setting aside the foreclosure sale. SFR is therefore entitled to summary
3 judgment in its favor on this quiet-title theory.
4 F.

The bank’s due-process-violation theory fails as a matter of law.

5

The bank’s complaint contains a fourth quiet-title theory: “NRS 116’s scheme of HOA

6 super priority foreclosure” violated the bank’s due-process rights. 62 Although the bank does not
7 seek summary judgment on this theory, SFR does. 63
8

For a couple of years, mortgage lenders caught in this foreclosure quagmire relied on a

9 Ninth Circuit panel’s 2016 ruling in Bourne Valley Court Trust v. Wells Fargo Bank that the
10 version of Chapter 116 under which this foreclosure sale was conducted “facially violated
11 mortgage lenders’ constitutional due process rights.” 64 But Bourne Valley assumed an
12 interpretation of Chapter 116 that the Nevada Supreme Court has since rejected, 65 and the Ninth
13 Circuit has expressly acknowledged that Bourne Valley is no longer good law. 66 It is now well14 established that the version of Chapter 116 that existed at the time of this foreclosure sale did not
15 violate mortgagees’ due-process rights. 67 Indeed, the bank did not even offer an argument in
16
17
18
19

62

ECF No. 1 at 8.

63

Compare ECF No. 70 with ECF No. 72.

64

20

Bourne Valley Court Trust v. Wells Fargo Bank, 832 F.3d 1154, 1160 (9th Cir. 2016).

65

SFR Invs. Pool 1, LLC v. Bank of New York Mellon, 422 P.3d 1248, 1253 (Nev. 2018).

21

66

22

67

Bank of Am., N.A. v. Arlington W. Twilight Homeowners Ass’n, 920 F.3d 620, 624 (9th Cir.
2019).

See id. (“we conclude that Nev. Rev. Stat. § 116.3116 et seq. is not facially unconstitutional on
the basis of an impermissible opt-in notice scheme.”). Because I grant summary judgment on
23
this theory based on this reason, I do not reach SFR’s additional state-actor and standing
arguments. See ECF No. 72 at 12–13.
14

1 response to SFR’s motion on this point. 68 Because the portion of the bank’s quiet-title claim
2 based on this due-process-violation theory fails as a matter of law, I grant SFR’s motion for
3 summary judgment in its favor on this theory.
4

Conclusion

5

The net effect of these competing summary-judgment motions is that the bank’s four

6 quiet-title theories are narrowed down to two for trial: tender and subpriority-sale. Because the
7 parties likely know whether the bank will, in fact, be able to prove one of those theories at trial, I
8 refer this case to the magistrate judge for a mandatory settlement conference.
9

IT IS THEREFORE ORDERED that Bank of New York Mellon’s Renewed Motion for

10 Summary Judgment [ECF No. 70] is DENIED based on genuine issues of fact;
11

IT IS FURTHER ORDERED that SFR Investments Pool 1, LLC’s Renewed Motion for

12 Summary Judgment [ECF No. 72] is GRANTED in part and DENIED in part. SFR is
13 entitled to partial summary judgment on the bank’s price-plus-irregularities and due-process14 violation theories; those theories will not proceed to trial.
15

IT IS FURTHER ORDERED that this case is referred to the magistrate judge for a

16 mandatory settlement conference. The parties’ obligation to file their proposed joint pretrial
17 order is tolled until ten days after the settlement conference.
18

Dated: September 4, 2019

19

_________________________________
_______
_ __
___________
__
__ _
U.S. District Judge Jennifer A. Dorsey
t Judge Jennifer A.
udg
if
ifer

20
21
22
23
68

See ECF No. 76 at 2, n.2.
15