Bank of New York Mellon v. Mews Homeowners Association et al

Filing 66

ORDER. IT IS HEREBY ORDERED that 48 plaintiff BNY Mellon's countermotion for partial summary judgment is GRANTED. IT IS FURTHER ORDERED that 46 defendant Saticoy Bay, LLC's motion to dismiss is DENIED. IT IS FURTHER ORDERED that 61 defendant the Mews Homeowners Association's motion for summary judgment is GRANTED IN PART as to BNY Mellons claim for quiet title and declaratory relief. BNY Mellon's remaining claims for breach of NRS § 116.3116 and wrongf ul foreclosure are DISMISSED AS MOOT because they were contingent upon BNY Mellon's quiet title claim. The Clerk of the Court shall ENTER JUDGMENT in favor of BNY Mellon and against Saticoy Bay, LLC on its quiet title claim. It shall also ENTER JUDGMENT in favor of the Mews Homeowners Association and against BNY Mellon on its quiet title claim. Signed by Judge Kent J. Dawson on 9/9/2019. (Copies have been distributed pursuant to the NEF - ADR)

1
2
3
4

UNITED STATES DISTRICT COURT

5

DISTRICT OF NEVADA

6

***

7
8

THE BANK OF NEW YORK MELLON, as
Trustee,

ORDER
Plaintiff,

9
10
11

v.
THE MEWS HOMEOWNERS
ASSOCIATION, et al.,

12
13

Case No. 2:17-cv-00473-KJD-BNW

Defendants.
There are three motions pending before the Court. First is Defendant Saticoy Bay, LLC’s

14

motion to dismiss (#46). Plaintiff, Bank of New York Mellon, responded and simultaneously

15

moved for partial summary judgment (##47/48). Saticoy Bay replied (#49) and opposed BNY

16

Mellon’s motion for partial summary judgment (#50). Defendant, Mews Homeowners

17

Association, also moves for summary judgment (#61). BNY Mellon has responded (#63), and

18

Mews replied (#65).

19

This is a dispute over who holds the superior interest in real property located at 1218

20

Coach Lane in Las Vegas, Nevada. BNY Mellon and Saticoy Bay each claim the superior

21

interest—BNY Mellon by virtue of a lender’s deed of trust and Saticoy Bay by virtue of

22

nonjudicial foreclosure and sale. Mews and Homeowners Association Services facilitated the

23

nonjudicial foreclosure and trustee’s sale but do not claim any interest in the property. BNY

24

Mellon argues that its deed of trust survived Mews’ foreclosure because the bank tendered the

25

superpriority lien before foreclosure. The Court agrees. BNY Mellon has shown that its

26

predecessor in interest submitted valid tender before Mews’ foreclosure and sale and that Mews

27

foreclosed anyway. Therefore, BNY Mellon’s deed of trust survived, and Saticoy Bay took its

28

interest subject to BNY Mellon’s.

1

I.

Background

2

The parties mostly agree on the facts. In 2006, former-homeowner and non-party

3

Roosevelt McCullom purchased the Coach Lane property. Countrywide Home Loans financed

4

the purchase and secured its interest by recording a deed of trust against the property. Deed of

5

Trust, ECF No. 47 Ex. A. Countrywide eventually assigned the deed of trust to Deutsche Bank.

6

Assignment of DOT, ECF No. 47 Ex. B. The Coach Lane property is part of the Mews

7

Homeowners Association and is subject to the association’s Covenants, Conditions, and

8

Restrictions (“CC&Rs”). The CC&Rs required McCullom to pay monthly assessments for

9

shared maintenance and general community upkeep.

10

Eventually, McCollum fell behind on his assessments, which prompted Mews to initiate

11

foreclosure proceedings. In February of 2012, Mews’ agent, Homeowner Association Services,

12

recorded a Notice of Delinquent Assessment Lien against the Coach Lane property. ECF No. 47

13

Ex. C. The notice identified a delinquency of $1,242.00 and warned that the balance would

14

continue to increase monthly if not cured. Id. Neither McCullom nor BNY Mellon payed the

15

delinquency, so Homeowners Association Services recorded a Notice of Default and Election to

16

Sell under the deed of trust. ECF No. 47 Ex. D. That notice identified a past-due balance of

17

$1,523.94 plus additional costs and fees. Id.

18

After receiving the Notice of Default and Election to Sell, BNY Mellon’s predecessor in

19

interest, Bank of America, retained the law firm Miles, Bauer, Bergstrom & Winters (Miles

20

Bauer) to ascertain and satisfy Mews’ superpriority lien. On September 5, 2012, Miles Bauer

21

sent Mews and Homeowners Association Services a letter requesting a ledger of the

22

association’s outstanding fees and assessments. ECF No. 47 Ex. G-1. The letter acknowledged

23

that Mews’ lien was “arguably senior to BANA’s first deed of trust” and that the bank would pay

24

that amount, “whatever it [was].” Id. Homeowners Association Services provided a ledger of

25

fees on the Coach Lane property, which identified the association’s monthly assessments as

26

$32.00. HOA Ledger, ECF No. 47 Ex. G-2. From that ledger, Bank of America determined that

27

nine months of assessments was $288.00. The bank then tendered a check for $909.67 to

28

Homeowners Association Services to cover nine months of missed assessments as well as

-2-

1

reasonable collection costs. ECF No. 47 Ex. G-3. Homeowners Association Services rejected the

2

check.

3

After returning Bank of America’s check, Homeowners Association Services proceeded

4

with its foreclosure. In February of 2014, the association recorded a Notice of Trustee’s Sale.

5

ECF No. 47 Ex. E. Eight months later, the association recorded a second Notice of Trustee’s

6

Sale. ECF No. 47 Ex. F. Homeowners Association Services sold the property to Saticoy Bay for

7

$20,300 at a trustee’s sale on October 30, 2014. Foreclosure Deed, ECF No. 47 Ex. I.

8
9

On February 14, 2017, BNY Mellon filed this case, seeking quiet title and a declaration
that its deed of trust survived the association’s foreclosure. It brought three causes of action split

10

between defendants Mews Homeowners Association, Saticoy Bay, LLC, and Homeowners

11

Association Services. BNY Mellon brought its first cause of action—quiet title and declaratory

12

relief—against every defendant. Its second and third causes of action—breach of NRS

13

§ 116.3116 and wrongful foreclosure, respectively—the bank brought against Mews and

14

Homeowner Association Services. The bank will only pursue those claims if the Court

15

determines that the association’s foreclosure extinguished its deed of trust. The bank’s final

16

cause of action is for injunctive relief against Saticoy Bay. See generally Am. Compl., ECF No.

17

24. Mews answered the complaint and asserted crossclaims for indemnity, contribution,

18

apportionment, breach of contract, and declaratory relief against Homeowners Association

19

Services. See Mews’ Answer, ECF No. 31. Homeowners Association Services has not

20

participated in the suit despite being properly served, and the Clerk of Court has entered default

21

against it. ECF No. 29.

22

In June of 2017, the parties stipulated to stay the case pending the final outcome of

23

Bourne Valley Court Tr. v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016), cert. denied,

24

--- U.S. ---, 137 S.Ct. 2296 (2017). After the Supreme Court denied certiorari, this Court lifted

25

the stay and allowed the parties to move to modify the discovery plan and scheduling order. If

26

the parties elected not to modify the scheduling order, the Court set a forty-five-day deadline on

27

dispositive motions. Order Lifting Stay 2–3, ECF No. 45. No party has moved to modify the

28

scheduling order or discovery plan. Instead, Saticoy Bay moved to dismiss and BNY Mellon and

-3-

1

Mews each moved for summary judgment. The parties’ motions are fully briefed, and the Court

2

turns to their merits.

3

II.

Legal Standard

4

The purpose of summary judgment is to avoid unnecessary trials by disposing of

5

factually unsupported claims or defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986);

6

Nw. Motorcycle Ass’n v. U.S. Dept. of Agric., 18 F.3d 1468, 1471 (9th Cir. 1994). It is available

7

only where the absence of material fact allows the Court to rule as a matter of law. Fed. R. Civ.

8

P. 56(a); Celotex, 477 U.S. at 322. Rule 56 outlines a burden shifting approach to summary

9

judgment. First, the moving party must demonstrate the absence of a genuine issue of material

10

fact. The burden then shifts to the nonmoving party to produce specific evidence of a genuine

11

factual dispute for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587

12

(1986). A genuine issue of fact exists where the evidence could allow “a reasonable jury [to]

13

return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

14

(1986). The Court views the evidence and draws all available inferences in the light most

15

favorable to the nonmoving party. Kaiser Cement Corp. v. Fischbach & Moore, Inc., 793 F.2d

16

1100, 1103 (9th Cir. 1986). Yet, to survive summary judgment, the nonmoving party must show

17

more than “some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 586.

18

Where parties have filed competing motions for summary judgment, the Court must

19

review each motion on its own merits. Fair Housing Council of Riverside Cty., Inc. v. Riverside

20

Two, 249 F.3d 1132, 1136 (9th Cir. 2001). In reviewing each motion, the Court views the

21

evidence and makes all available inference in favor non-moving party. See Kaiser Cement Corp.,

22

793 F.2d at 1103. At bottom, a party does not prevail on summary judgment solely because the

23

other party did not prevail. See Riverside Two, 249 F.3d at 1136.

24
25
26

III.

Analysis
A. BNY Mellon’s Partial Motion for Summary Judgment

BNY Mellon brought the following claims against Saticoy Bay: (1) quiet title and

27

declaratory relief and (2) injunctive relief. As an initial matter the bank’s cause of action for

28

preliminary or permanent injunctive relief is not itself a cause of action. It is a remedy. See In re

-4-

1

Wal-Mart Wage and Hour Emp. Pract. Litig., 490 F. Supp. 2d 1091, 1130 (D. Nev. 2007).

2

Accordingly, the Court dismisses that “claim.”

3

BNY Mellon argues that Miles Bauer’s 2012 tender cured Mews’ superpriority lien and

4

protected the bank’s deed of trust from the association’s foreclosure. Alternatively, the bank

5

argues that Mews’ foreclosure is void because the association foreclosed under an

6

unconstitutional version of NRS § 116.3116(2). Finally, BNY Mellon argues that if tender did

7

not save its deed of trust and NRS § 116.3116(2) was constitutional, the sale must be set aside

8

because the inadequate sales price of the property coupled with fraud, unfairness, and oppression

9

in the foreclosure process rendered the foreclosure inequitable. Because BNY Mellon cured the

10

lien before Mews could foreclose, Mews’ foreclosure was void as to the bank’s deed of trust, and

11

Saticoy Bay took its interest the property subject to BNY Mellon’s interest. Therefore, the Court

12

need not reach BNY Mellon’s constitutional or equitable arguments.

13

The Nevada Supreme Court has confirmed that a party’s valid tender before foreclosure

14

discharges an association’s superpriority lien and voids the foreclosure as to the tendering party’s

15

deed of trust. Bank of America, N.A. v. SFR Invs. Pool 1, LLC, 427 P.3d 113, 121 (Nev. 2018)

16

(“Diamond Spur”). Tender is “valid” if it is payment in full and unconditional, or with conditions

17

that the tendering party has a right to request. Id. at 117–118. Diamond Spur presented facts

18

nearly identical to these. There, Bank of America calculated nine months of assessments and

19

tendered a check for that amount before foreclosure. The bank’s letter to the association

20

accompanying its tender included certain conditions, including a “paid-in-full” condition,

21

whereby the association’s acceptance of tender would satisfy all of the bank’s financial

22

obligations to the association. Id. at 118. Like here, the association rejected the check and

23

foreclosed. The association argued that the bank’s tender was incomplete because it did not

24

include payment for nuisance and abatement fees and that the tender was impermissibly

25

conditional due to the paid-in-full language in the tender letter. Id. at 117–18.

26

The Nevada Supreme Court disagreed. It found that the bank’s tender was both “in-full”

27

and not impermissibly conditional. Payment in full, according to NRS § 116.3115, includes nine

28

months of unpaid assessments and nuisance and abatement fees, if such fees exist. Id. at 117.

-5-

1

Because there was no evidence that Bank of America owed nuisance and abatement fees, its

2

tender of nine months’ unpaid assessments constituted payment in full. Id. Likewise the tender

3

was not impermissibly conditional because Bank of America had a right to insist upon the

4

conditions it included in its tender. By tendering payment prior to the foreclosure, the bank

5

voided the association’s foreclosure as to the superpriority lien. The association, therefore, could

6

not convey the property free from Bank of America’s deed of trust, and any subsequent

7

purchaser took its interest subject to the bank’s. Id. at 121.

8
9

The facts here are nearly identical to Diamond Spur, and the result is the same. Miles
Bauer tendered the entire superpriority balance two years before Mews’ foreclosure. As

10

Diamond Spur made clear, the superpriority portion only includes up to nine months assessments

11

plus nuisance or abatement charges. There is no evidence that BNY Mellon owed nuisance or

12

abatement fees here, so its failure to tender nuisance and abatement fees does not make its tender

13

incomplete. If anything, BNY Mellon overpaid because it included certain collection costs that it

14

deemed reasonable on top of nine months of assessments. The statute did not require the bank to

15

pay those costs to preserve its deed of trust. Overpayment aside, BNY Mellon’s tender preserved

16

its deed of trust. Mews could not convey the property free of the bank’s deed of trust. Therefore,

17

Saticoy Bay took its interest subject to BNY Mellon’s.

18

Saticoy Bay argues that BNY Mellon’s tender did not preserve its deed of trust for

19

several reasons, none of which are persuasive in light of Diamond Spur. First, Saticoy Bay

20

contends that summary judgment is inappropriate at this stage because it has not conducted

21

enough discovery to determine whether Homeowners Association Services rejected the bank’s

22

tender in good faith. Under Rule 56(d), the Court may allow additional time for discovery or it

23

may defer considering a motion for summary judgment if a nonmoving party cannot present facts

24

to support its opposition. Fed. R. Civ. P. 56(d). Here however, the Court need not delay the

25

inevitable. This record is clear that Miles Bauer calculated and tendered the superpriority lien

26

amount before foreclosure. At that point, the bank cured the association’s lien and was required

27

to do nothing more. Additionally, Miles Bauer and Homeowners Association Services

28

exchanged correspondence related to the ledger and outstanding balances. Had Homeowners

-6-

1

Association Services rejected the tender in good faith, it could have communicated its reasoning

2

to Miles Bauer before foreclosing. It did not. Instead, Homeowners Association Services

3

returned the check without explanation. Additional discovery will not change the fact that the

4

bank cured Mews’ superpriority lien.

5

Saticoy Bay also argues that Miles Bauer’s tender did not discharge Mews’ lien because

6

(1) the tender assigned an interest in BNY Mellon, which subordinated the bank’s interest to the

7

association’s and required recording; (2) the tender was impermissibly conditional; and (3) the

8

association’s rejection was in good faith. The Nevada Supreme Court has explicitly rejected

9

Saticoy Bay’s first two arguments, and there is no evidence supporting the third.

10

Tender of a superpriority lien does not operate as an assignment, nor does it subrogate the

11

rights of the tendering party to the rights of the association. Diamond Spur, 427 P.3d at 119

12

citing NRS § 111.315. Tender of the superpriority lien “does not alienate, create, assign, or

13

surrender an interest in land.” Id. at 119. It preserves a pre-existing interest, which allows the

14

holder of the deed of trust to protect its legitimate interest and avoid foreclosure. Id. at 119–20.

15

Because tender is not an assignment of land, tender of the superpriority lien does not subrogate

16

the bank’s interest to the association’s interest. Similarly, because tender does not “alienate,

17

create, assign, or surrender” a property interest, the tendering party need not record its tender or

18

keep it good. Id. To the contrary, “after tendering the superpriority portion of an HOA lien to

19

preserve its interest as first deed of trust holder . . . a party need only be ready and willing to pay

20

to keep the tender good.” Id. at 121. It follows that § 116 does not require payment in cashier’s

21

check or other guaranteed funds. See id. at 120–21, Chinatown St. Tr. v. Bank of America, N.A.,

22

No. 74545-COA, 2018 WL 6609590 (Nev. Ct. App. Dec. 7, 2018). Here, Miles Bauer’s tender

23

was not an assignment of in interest in real property, and its failure to record the tender or pay by

24

cashier’s check did not invalidate the tender.

25

Likewise, the conditions included in Miles Bauer’s letter did not invalidate its tender. A

26

tendering party may only include conditions that it has a right to insist upon. Diamond Spur, 427

27

P.3d at 118. Acceptable conditions are limited to “receipt of full payment or a surrender of the

28

obligation.” Id. at 118 citing Heath v. L.E. Schwartz & Sons, Inc., 416 S.E.2d 113, 114–15 (Ga.

-7-

1

App. 1992). Here, Saticoy Bay takes issue with Miles Bauer’s payment-in-full language and

2

other alleged “false statements” in the tender letter. For example, Miles Bauer’s letter excerpted

3

several sections of NRS § 116 rather than quote the entire subsection of the statute. The letter

4

then states that the association’s acceptance of tender would be “an unconditional acceptance on

5

[the association’s] part of the facts state [t]herein.” Tender Letter, ECF No. 48 Ex. G-3. Saticoy

6

Bay argues that accepting tender would mean it agreed with Miles Bauer’s incomplete

7

statements of the law, which it did not. Def.’s Resp. to Mot. Summ. J. 7, ECF No. 50. However,

8

none of the “false statements” that Saticoy Bay disputes were conditions of its acceptance. They

9

were merely excerpted statements of law or fact. The only condition included in Miles Bauer’s

10

letter was the paid-in-full condition that cured the bank’s financial obligations to the association.

11

Diamond Spur explicitly allowed such a condition. Therefore, Miles Bauer’s tender letter was

12

not impermissibly conditional.

13

In sum, there is no genuine issue of material fact that BNY Mellon’s predecessor in

14

interest, Bank of America, tendered the superpriority portion of Mews Homeowners

15

Association’s lien before the association foreclosed. The bank’s tender was not an assignment of

16

rights and did not subrogate the bank to the rights of the association. Likewise, Miles Bauer was

17

not required to record its tender, keep it good, or pay with guaranteed funds or cashiers check. As

18

a result, Homeowners Association Services’ foreclosure was void as to its superpriority lien, and

19

BNY Mellon’s deed of trust survived. Saticoy Bay took its interest subject to the bank’s deed of

20

trust. Therefore, the Court grants BNY Mellon’s motion for summary judgment and denies

21

Saticoy Bay’s motion to dismiss.

22
23

B. Mews Homeowners Association’s Motion for Summary Judgment
Having granted judgment on BNY Mellon’s quiet title and declaratory relief claims

24

against Saticoy Bay, the Court turns to BNY Mellon’s claims against the Mews Homeowners

25

Association and the association’s own motion for summary judgment. BNY Mellon brought the

26

following claims against Mews: (1) quiet title and declaratory relief; (2) breach of NRS

27

§ 116.1113; and (3) wrongful foreclosure. BNY Mellon alleged its breach of NRS § 113.1113

28

and wrongful foreclosure claims in the alternative. See Pl.’s Resp. to Mot. Summ. J. 2, ECF No.

-8-

1
2

63.
Mews seeks summary judgment on BNY Mellon’s quiet title claim because it is untimely

3

and because the association does not claim any interest in the property. Turning first to the

4

timeliness of BNY Mellon’s claim, Mews contends that the claim is time-barred because the

5

accrual began on September 27, 2012, yet BNY Mellon filed its complaint more than four years

6

later on February 14, 2017. According to Mews, the statute of limitations began to run on

7

September 27, 2012 when the bank sent the tender letter. At that point, the association contends,

8

BNY Mellon knew that it could lose its deed of trust by foreclosure.

9

Mews’ date of accrual is incorrect. A cause of action accrues when a party is injured and

10

may seek relief. Petersen v. Bruen, 792 P.2d 18, 20 (Nev. 1990). Nevada has adopted the

11

discovery rule, which extends the start of accrual to when the plaintiff knew of the injury or

12

reasonably should have known of the injury. G & H Assocs. v. Ernest W. Hahn, Inc., 934 P.2d

13

229, 233 (Nev. 1997). However, Nevada law requires that the plaintiff suffer an actual injury

14

before it may bring suit. When Miles Bauer sent its tender letter, only the possibility of injury

15

existed. The association had not yet foreclosed, and BNY Mellon’s deed of trust still encumbered

16

the property. BNY Mellon’s quiet title claim began accrual when Saticoy Bay purchased the

17

property and recorded its interest. Only then would BNY Mellon suffer an injury upon which it

18

could bring this suit. That date was December 9, 2014. Foreclosure Deed, ECF No. 48 Ex. I.

19

BNY Mellon brought its claim February 14, 2017, less than three years after the foreclosure.

20

Therefore, the claim is timely.

21

As for the merits of BNY Mellon’s quiet title claim against Mews, that claim fails

22

because there is no dispute between the parties as to who holds superior title. Although a claim

23

for quiet title does not have specific elements, it does require an actual dispute over the parties’

24

interests in the property. See Chapman v. Deutsche Bank Nat’l Tr. Co., 302 P.3d 1103, 1106

25

(Nev. 2013). Mews does not assert an interest in the Coach Lane property. To the contrary, the

26

only way a quiet title dispute could arise between BNY Mellon and Mews Homeowners

27

Association is if the Court were to set aside the foreclosure sale, which the Court need not do

28

because BNY Mellon’s deed of trust survived that sale. Therefore, because Mews denies any

-9-

1

interest in the property, the Court grants its motion for summary judgment on BNY Mellon’s

2

quiet title claim.

3

That leaves BNY Mellon’s two remaining claims for wrongful foreclosure and breach of

4

NRS § 116.3116 against Mews. Because those claims were contingent upon the Court finding

5

that Mews’ foreclosure extinguished BNY Mellon’s deed of trust, they are now moot. Therefore,

6

the Court dismisses BNY Mellon’s claims for breach of NRS § 116.3116 and wrongful

7

foreclosure against Mews Homeowners Association.

8

IV.

Conclusion

9

Accordingly, IT IS HEREBY ORDERED that plaintiff BNY Mellon’s countermotion for

10

partial summary judgment (#48) is GRANTED. The Court declares that BNY Mellon’s deed of

11

trust in the property located at 1218 Coach Lane in Las Vegas, Nevada survived the Mews

12

Homeowners Association’s foreclosure and that Saticoy Bay, LLC took its interest in that

13

property subject to BNY Mellon’s deed of trust.

14
15
16

IT IS FURTHER ORDERED that defendant Saticoy Bay, LLC’s motion to dismiss (#46)
is DENIED;
IT IS FURTHER ORDERED that defendant the Mews Homeowners Association’s

17

motion for summary judgment (#61) is GRANTED IN PART as to BNY Mellon’s claim for

18

quiet title and declaratory relief. BNY Mellon’s remaining claims for breach of NRS § 116.3116

19

and wrongful foreclosure are DISMISSED AS MOOT because they were contingent upon BNY

20

Mellon’s quiet title claim.

21

The Clerk of the Court shall ENTER JUDGMENT in favor of BNY Mellon and against

22

Saticoy Bay, LLC on its quiet title claim. It shall also ENTER JUDGMENT in favor of the

23

Mews Homeowners Association and against BNY Mellon on its quiet title claim.

24

Dated this 9th day of September, 2019.

25
26
27

_____________________________
Kent J. Dawson
United States District Judge

28

- 10 -