Bank of America, N.A. v. Arkham, LLC

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 22, 2021
• Docket: 18-17319
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS DEC 22 2021 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

BANK OF AMERICA, NA, FKA No. 18-17319 Countrywide Home Loans Servicing, LP, Successor by Merger to BAC Home Loans D.C. No. Servicing, LP, 2:16-cv-00407-JCM-CWH

Plaintiff-counter- defendant-Appellee, MEMORANDUM*

v.

ANN LOSEE HOMEOWNERS’ ASSOCIATION; NEVADA NEW BUILDS, LLC; JANET MARLENY GARCIA; ABSOLUTE COLLECTION SERVICES, LLC,

Defendants,

and

ARKHAM, LLC; ARKHAM XIII, LLC,

Defendants-counter- claimants-Appellants.

Appeal from the United States District Court for the District of Nevada James C. Mahan, District Judge, Presiding

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Submitted December 21, 2021** San Francisco, California

Before: O’SCANNLAIN, FERNANDEZ, and SILVERMAN, Circuit Judges.

Arkham, LLC and Arkham XIII, LLC (collectively, “Arkham”) appeal from

the summary judgment granted to Bank of America, N.A. in this quiet

title/declaratory judgment action. As the facts are known to the parties, we repeat

them only as necessary to explain our decision.

Nevada law “allows homeowners associations to pursue liens on members’

homes for unpaid assessments and charges.” CitiMortgage, Inc. v. Corte Madre

Homeowners Ass’n, 962 F.3d 1103, 1106 (9th Cir. 2020). “HOA liens are split

into superpriority and subpriority components; the superpriority component is prior

to all other liens, including first deeds of trust.” Id. Only two components of an

HOA lien enjoy superpriority over a first trust deed: “[1] charges for maintenance

and nuisance abatement, and [2] nine months of unpaid assessments.” Bank of

Am., N.A. v. SFR Invs. Pool 1, LLC, 427 P.3d 113, 117 (Nev. 2018) (en banc)

(“SFR Investments”); see Nev. Rev. Stat. § 116.3116(2) (2013).

“[A]n HOA can extinguish the first deed of trust by foreclosing on its

superpriority lien.” Bank of Am., N.A. v. Arlington W. Twilight Homeowners

** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2).

2 Ass’n, 920 F.3d 620, 622 (9th Cir. 2019) (per curiam). To avoid such

extinguishment, the holder of the first trust deed must pay the full superpriority

component of the HOA lien—that is, nine months of fees, along with any unpaid

maintenance or nuisance-abatement charges. See SFR Invs. Pool, 427 P.3d at 117.

“If the HOA’s ledger does not show any charges for maintenance or nuisance

abatement, a tender of nine months of HOA dues is sufficient.” Arlington W.,

920 F.3d at 623; SFR Invs. Pool, 427 P.3d at 118 (When “the HOA [does] not

indicate that the property had any charges for maintenance or nuisance abatement,”

the first trust deed holder pays “the full superpriority amount” when it pays nine

months of dues.).

The district court correctly concluded that these principles “control the . . .

analysis in this case.” It observed that Bank of America relied on the HOA’s

representations to calculate the value of nine months of assessments. It further

observed that the HOA never indicated there were any unpaid maintenance or

nuisance-abatement charges. Accordingly, Bank of America’s tender of nine

months of assessments was for the full superpriority portion of the HOA lien.

Arkham focuses its brief on a different aspect of Bank of America’s tender,

contending that the accompanying cover letter contained a “false and untrue

statement of law” that somehow nullified the tender. In essence, Arkham attacks

as “false” the letter’s statement that certain sums incurred under “paragraphs (j) to

3 (n)” of Nev. Rev. Stat. § 116.3102—the HOA lien statute—are potentially junior

to a first trust deed. Because “paragraph (j)” addresses (in part) maintenance and

nuisance-abatement charges, and despite Arkham’s admission that “there were no

maintenance and nuisance abatement charges,” Arkham apparently believes the

tender was invalid per se as it “was conditioned upon the mandatory acceptance of

a false and untrue statement of law.”

Arkham’s argument is meritless. It ignores crucial context: Bank of

America was disputing the HOA’s position that collection-related costs were

properly counted in the superpriority portion of the lien. Thus, Bank of America

quoted the HOA lien statute to argue that charges “pursuant to paragraphs (j) to

(n),” Nev. Rev. Stat. § 116.3116(1) (2013), were junior “to the extent the lien is for

fees and charges imposed for collection and/or attorney fees, collection costs, late

fees, service charges and interest.” This statement simply does not address the

issue of whether maintenance or nuisance-abatement charges can be part of the

superpriority portion of an HOA lien.

Further, Bank of America did not “condition” its tender on its alleged refusal

to pay for items in “paragraph (j).” The condition in Bank of America’s tender

cover letter was that “[a]cceptance of” Bank of America’s tender would “serve to

show that [Bank of America’s] Super-Priority Amount has been paid in full.”

Thus, as in SFR Investments, “Bank of America’s letter stated that acceptance of

4 the tender would satisfy the superiority portion of the lien, preserving Bank of

America’s interest in the property. Bank of America had a legal right to insist on

this.” SFR Invs., 427 P.3d at 607–08; see Arlington W., 920 F.3d at 623 (“Bank of

America was entitled to insist on the condition it imposed in its tender, which was

that acceptance would satisfy the HOA’s superpriority lien.”). Both here and in

SFR Investments, Bank of America paid the full amount reflected in the HOA’s

ledger, which in both cases did not include any maintenance or nuisance-abatement

charges. SFR Invs., 427 P.3d at 607. In other words, Bank of America paid what

the HOA’s ledger said it owed: $180.00 for nine months of dues and $0.00 for

maintenance and nuisance-abatement costs. “On the record presented, this was the

full superpriority amount.” See id.

AFFIRMED.