Bank of America, N.A. v. Solera at Stallion Mountain Unit Owners' Association

Opinion

3 BANK OF AMERICA, N.A., ) 4 ) Plaintiff, ) Case No.: 2:16-cv-00286-GMN-GWF 5 vs. ) ) ORDER 6 SOLERA AT STALLION MOUNTAIN ) 7 HOMEOWNERS ASSOCIATION, et al., ) ) 8 Defendants. )

9 10 Pending before the Court is the Motion for Partial Summary Judgment, (ECF No. 64), 11 filed by Plaintiff Bank of America, N.A. (“BANA”). Defendant and Counterclaimant NV 12 Eagles, LLC (“NV Eagles”) filed a Response, (ECF No. 65), and BANA filed a Reply, (ECF 13 No. 69). 14 Also pending before the Court is the Motion for Summary Judgement, (ECF No. 66), 15 filed by NV Eagles. BANA filed a Response, (ECF No. 70), and NV Eagles filed a Reply, 16 (ECF No. 71). 17 For the reasons discussed below, the Court GRANTS BANA’s Motion for Partial 18 Summary Judgment and DENIES NV Eagles’ Motion for Summary Judgment. 20 This case arises from the non-judicial foreclosure sale of real property located at 6061 21 Fox Creek Avenue, Las Vegas, Nevada 89122 (the “Property”). (See Deed of Trust (“DOT”), 22 Ex. A to BANA’s MSJ, ECF No. 64-1). On August 24, 2007, Catherine Samoska 23 (“Borrower”) obtained a loan from BANA in the amount of $283,386.00, secured by a DOT 24 identifying BANA as the beneficiary. (Id.). The DOT was recorded on August 27, 2001. (Id.). 25 1 On September 14, 2009, upon Borrower’s failure to stay current on her loan obligations, 2 BANA recorded a Notice of Default and Election to Sell Under Deed of Trust (“Notice of 3 Default”) declaring all sums “immediately due and payable.” (Notice of Default and Election to 4 Sell, Ex. 4 to NV Eagles’ MSJ, ECF No. 66-4). BANA subsequently recorded two recissions 5 of the Notice of Default, one on March 8, 2011, and one on October 12, 2018. (See 2011 6 Recission, Ex. 8 to NV Eagles’ MSJ, ECF No. 66-8); (2018 Recission, Ex. A to BANA’s 7 Reply, ECF No. 69-1). BANA never foreclosed on the Property. 8 On November 1, 2010, upon Borrower’s failure to stay current on the payment of her 9 homeowners’ association assessments, Solera at Stallion Mountain Unit Owners’ Association, 10 (“HOA”), initiated foreclosure proceedings on the Property through its agent, Nevada 11 Association Services, Inc. (“NAS”) by recording a Notice of Delinquent Assessment Lien. (See 12 Notice of Delinquent Assessment Lien, Ex. B to BANA’s MSJ, ECF No. 64-2). On December 13 21, 2010, NAS subsequently recorded a Notice of Default and Election to Sell. (Notice of 14 Default, Ex. C to BANA’s MSJ, ECF No. 64-3). On August 22, 2011, NAS recorded a Notice 15 of Trustee Sale. (Notice of Trustee Sale, Ex. D to BANA’s MSJ, ECF No. 64-4). 16 On September 12, 2011, BANA, through its counsel Miles, Bauer, Bergstrom & Winters, 17 LLP (“Miles Bauer”), sent a letter to NAS offering to pay the superpriority amount owed on the 18 HOA’s lien. (Miles Bauer Aff., Ex. E to BANA’s Resp., ECF No. 64-5). NAS responded with 19 a full accounting that itemized the amounts Borrower owed. (See Accounting, Ex. 2 to Miles 20 Bauer Aff., ECF No. 64-5). The accounting indicated that nine months of common assessment 21 fees of $300.00, without any maintenance or nuisance or abatement charges, made the 22 superpriority portion of HOA’s lien $900.00. (See id.). On October 20, 2011, Miles Bauer

23 tendered $900.00 to NAS, on BANA’s behalf, to “satisfy its obligations to the HOA as a holder 24 of a first deed of trust against the [P]roperty.” (Miles Bauer Letter, Ex. 3 to Miles Bauer Aff., 25 ECF No. 64-5). 1 Despite Miles Bauer’s tender, HOA, through NAS, proceeded with the foreclosure and 2 sold the Property to Defendant Underwood Partners, LLC (“Underwood”) for $10,000.00 on 3 April 19, 2013; Underwood recorded the foreclosure deed on May 21, 2013. (Foreclosure 4 Deed, Ex. F to BANA’s MSJ, ECF No. 64-6). On September 18, 2013, Underwood transferred 5 the Property to NV Eagles, who recorded the deed on October 18, 2013. (Sale Deed, Ex. H to 6 BANA’s MSJ, ECF No. 64-8). 7 BANA initiated this lawsuit, asserting the following claims against NV Eagles: (1) quiet 8 title with the requested remedy of declaratory judgment; and (2) injunctive relief. (Compl. 9 ¶¶ 31–58, 73–79, ECF No. 1). NV Eagles filed a counterclaim also asserting a claim for 10 declaratory judgment of quiet title against BANA. (Countercl. ¶¶ 21–26, ECF No. 7). In the 11 instant Motions, (ECF Nos. 64, 66), BANA and NV Eagles seek summary judgment on their 12 respective quiet title claims. 14 The Federal Rules of Civil Procedure provide for summary adjudication when the 15 pleadings, depositions, answers to interrogatories, and admissions on file, together with the 16 affidavits, if any, show that “there is no genuine dispute as to any material fact and the movant 17 is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Material facts are those that 18 may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 19 (1986). A dispute as to a material fact is genuine if there is a sufficient evidentiary basis on 20 which a reasonable fact-finder could rely to find for the nonmoving party. See id. “The amount 21 of evidence necessary to raise a genuine issue of material fact is enough ‘to require a jury or 22 judge to resolve the parties’ differing versions of the truth at trial.’” Aydin Corp. v. Loral

23 Corp., 718 F.2d 897, 902 (9th Cir. 1983) (quoting First Nat’l Bank v. Cities Serv. Co., 391 U.S. 24 253, 288–89 (1968)). “Summary judgment is inappropriate if reasonable jurors, drawing all 25 inferences in favor of the nonmoving party, could return a verdict in the nonmoving party’s 1 favor.” Diaz v. Eagle Produce Ltd. P’ship, 521 F.3d 1201, 1207 (9th Cir. 2008) (citing United 2 States v. Shumway, 199 F.3d 1093, 1103–04 (9th Cir. 1999)). A principal purpose of summary 3 judgment is “to isolate and dispose of factually unsupported claims.” Celotex Corp. v. Catrett, 4 477 U.S. 317, 323–24 (1986). 5 In determining summary judgment, a court applies a burden-shifting analysis. “When 6 the party moving for summary judgment would bear the burden of proof at trial, it must come 7 forward with evidence which would entitle it to a directed verdict if the evidence went 8 uncontroverted at trial. In such a case, the moving party has the initial burden of establishing 9 the absence of a genuine issue of fact on each issue material to its case.” C.A.R. Transp. 10 Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted). In 11 contrast, when the nonmoving party bears the burden of proving the claim or defense, the 12 moving party can meet its burden in two ways: (1) by presenting evidence to negate an 13 essential element of the nonmoving party’s case; or (2) by demonstrating that the nonmoving 14 party failed to make a showing sufficient to establish an element essential to that party’s case 15 on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323– 16 24. If the moving party fails to meet its initial burden, summary judgment must be denied and 17 the court need not consider the nonmoving party’s evidence. See Adickes v. S.H. Kress & Co., 18 398 U.S. 144, 159–60 (1970). 19 If the moving party satisfies its initial burden, the burden then shifts to the opposing 20 party to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. 21 Zenith Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute, 22 the opposing party need not establish a material issue of fact conclusively in its favor. It is

23 sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the 24 parties’ differing versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors 25 Ass’n, 809 F.2d 626, 631 (9th Cir. 1987). However, the nonmoving party “may not rely on 1 denials in the pleadings but must produce specific evidence, through affidavits or admissible 2 discovery material, to show that the dispute exists,” Bhan v. NME Hosps., Inc., 929 F.2d 1404, 3 1409 (9th Cir. 1991), and “must do more than simply show that there is some metaphysical 4 doubt as to the material facts.” Orr v. Bank of America, 285 F.3d 764, 783 (9th Cir. 2002) 5 (internal citations omitted). “The mere existence of a scintilla of evidence in support of the 6 plaintiff's position will be insufficient.” Anderson, 477 U.S. at 252. In other words, the 7 nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations 8 that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). 9 Instead, the opposition must go beyond the assertions and allegations of the pleadings and set 10 forth specific facts by producing competent evidence that shows a genuine issue for trial. See 11 Celotex Corp., 477 U.S. at 324. 12 At summary judgment, a court’s function is not to weigh the evidence and determine the 13 truth but to determine whether there is a genuine issue for trial. See Anderson, 477 U.S. at 249. 14 The evidence of the nonmovant is “to be believed, and all justifiable inferences are to be drawn 15 in his favor.” Id. at 255. But if the evidence of the nonmoving party is merely colorable or is 16 not significantly probative, summary judgment may be granted. See id. at 249–50. 18 A. Quiet Title 19 BANA and NV Eagles move for summary judgment on their competing quiet title 20 claims. (BANA’s MSJ 2:1–4, ECF No. 64); (NV Eagles’ MSJ 5:4–7, ECF No. 66). BANA 21 argues that its first DOT continues to encumber the Property because it satisfied the HOA 22 superpriority lien by tendering payment of $900.00 to NAS. (BANA’s MSJ, Argument, 3:26–

23 5:4). In contrast, NV Eagles asserts that it owns the Property free and clear of BANA’s DOT 24 because the foreclosure deed contains the required statutory recitals, providing clear title to the 25 purchaser. (NV Eagles’ MSJ 6:22–24). 1 Under NRS 116.3116, the holder of a first deed of trust may pay off the superpriority 2 portion of an HOA lien to prevent the foreclosure sale from extinguishing the deed of trust. See 3 SFR Invs. Pool 1 v. U.S. Bank, 334 P.3d 408, 414 (Nev. 2014). The superpriority portion of the 4 lien consists of “the last nine months of unpaid HOA dues and maintenance and nuisance- 5 abatement charges,” while the subpriority piece consists of “all other HOA fees or 6 assessments.” Id. at 411; Horizons at Seven Hills Homeowners Ass’n v. Ikon Holdings, LLC, 7 373 P.3d 66, 70–74 (Nev. 2016). “[A] first deed of trust holder’s unconditional tender of the 8 superpriority amount due results in the buyer at foreclosure taking the property subject to the 9 deed of trust.” Bank of Am., N.A. v. SFR Invs. Pool 1, LLC, 427 P.3d 113, 116 (Nev. 2018) (en 10 banc). In addition to full tender of the superpriority amount, “valid tender must be 11 unconditional, or with conditions on which the tendering party has a right to insist.” Id. 12 Here, BANA points to evidence indicating that at the time of NAS’s recordation of the 13 notice of delinquent assessment lien, the monthly common assessments were $300.00. (See 14 Accounting, Ex. 2 to Miles Bauer Aff.). The statement of account also shows that HOA had 15 not assessed any maintenance or nuisance abatement charges at the time of BANA’s payment. 16 (Id.). Thus, HOA’s superpriority lien was limited to the sum of nine months’ common 17 assessments totaling $900.00. (See Miles Bauer Letter, Ex. 3 to Miles Bauer Aff.). Finally, 18 BANA has introduced evidence that Miles Bauer, on BANA’s behalf, sent NAS a check for 19 $900.00, which NAS refused to accept. (See Miles Bauer Aff. ¶¶ 9–10). Consequently, because 20 BANA’s payment satisfied HOA’s superpriority lien, BANA’s attempted payment cured the 21 default as to that portion of HOA’s lien. 22 NV Eagles, for its part, fails to put forth evidence creating a genuine issue of fact as to

23 BANA’s points. (See NV Eagles’ MSJ, Statement of Facts, 2:19–5:7). Instead, NV Eagles 24 argues that the HOA foreclosure sale was proper and extinguished the DOT because, under 25 NRS 116.31166, the foreclosure deed recitals are conclusive as to “(a) Default, the mailing of 1 the notice of delinquent assessment, and the recording of the notice of default and election to 2 sell; (b) the elapsing of 90 days; and (c) The giving of notice of sale.” (Id. 6:25–8:7). 3 However, the fact that certain deed recitals are accorded conclusive effect under NRS 116.3116 4 does not conclusively defeat equitable relief in a quiet title action. See Shadow Wood 5 Homeowners Association, Inc. v. New York Community Bancorp. Inc., 366 P.3d 1105, 1112 6 (Nev. 2016) (rejecting that NRS 116.31166 defeats, as a matter of law, actions to quiet title). 7 Accordingly, the deed recitals alone do not entitle NV Eagles to summary judgment. See id. 8 Additionally, NV Eagles claims Nevada’s ancient mortgage statute, NRS 106.240, 9 terminates any lien created by BANA’s DOT. NRS 106.240 provides: 10 The lien heretofore or hereafter created of any mortgage or deed of trust upon any real property, appearing of record, and not otherwise satisfied and discharged of record, shall 11 at the expiration of 10 years after the debt secured by the mortgage or deed of trust according to the terms thereof or any recorded written extension thereof become wholly 12 due, terminate, and it shall be conclusively presumed that the debt has been regularly 13 satisfied and the lien discharged.

14 NV Eagles has produced evidence that on September 14, 2009, BANA accelerated the 15 mortgage on the Property, requiring the remaining balance to become wholly due. (See Notice 16 of Default and Election to Sell, Ex. 4 to NV Eagles’ MSJ). Because BANA never subsequently 17 foreclosed on the Property, and more than ten years have passed since BANA accelerated the 18 mortgage, NV Eagles claims that, under NRS 106.240, BANA’s DOT has been extinguished. 19 (NV Eagles’ MSJ 10:16–19). However, the Nevada Supreme Court recently indicated that a 20 recission of a Notice of Default and Election to Sell recorded before the ten-year period’s 21 expiration “effectively cancel[s] the acceleration.” Glass v. Select Portfolio Servicing, Inc., No. 22 78325, 2020 WL 3604042, at *1 (Nev. July 1, 2020). 23 In the present case, BANA rescinded its Notice of Default both on March 8, 2011, and 24 on October 12, 2018. (See 2018 Rescission, Ex. A to BANA’s Reply); (2011 Recission, Ex. 8 25 1 to NV Eagles’ MSJ). 1 As such, BANA cancelled the acceleration, and the DOT was not 2 extinguished under NRS 106.240. See Glass, 2020 WL 3604042, at *1. See also Bank of 3 America N.A. v. Estrella III Homeowner’s Association, No.2:16-cv-02835-APG-DJA, 2020 4 WL 419004, at *3 (D. Nev. Jul. 21, 2020) (finding that a recission to a notice of default cancels 5 the acceleration for the purposes of NRS 106.240). Therefore, the HOA’s foreclosure sale was 6 invalid to the extent that it caused the extinguishment of the DOT. While the sale remains 7 intact, BANA’s DOT continues to encumber the Property, and NV Eagles’ interest is subject to 8 this encumbrance. 9 In light of this holding, NV Eagles cannot prevail even if the Court were to find it was a 10 bona fide purchaser for value. See Bank of Am., N.A. c. SFR Invs. Pool 1, LLC, 427 P.3d 113, 11 121 (Nev. 2018) (en banc) (“Because a trustee has no power to convey an interest in land 12 securing a note or other obligation that is not in default, a purchaser at a foreclosure sale of that 13 lien does not acquire title to that property interest.”). Accordingly, the Court grants summary 14 judgment in favor of BANA with respect to its quiet title claim. 15 // 16 17 1 NV Eagles claims that neither the 2011 Recission nor the 2018 Recission decelerated the debt. First, NV Eagles argues that the 2011 Recission was not proper because it did not explicitly decelerate the debt. (See NV 18 Eagles’ MSJ 10:5–25 (citing Cadle Co. II, Inc. v. Fountain, No. 49488, 2009 WL 1470032, at *2 (Nev. Feb. 26, 2009) (“deceleration, when appropriate, must be clearly communicated by the lender/holder of the note to the 19 obligor”))). However, the 2011 Recission states that BANA does “rescind, cancel and withdraw said Declaration of Default and Demand for Sale and said Notice of Breach and Election to Cause Sale;” the Nevada Supreme 20 Court found almost identical language to be an appropriate recission and deceleration of a debt. See Glass v. Select Portfolio Servicing, Inc., No. 78325, 2020 WL 3604042, at *1 (Nev. July 1, 2020) (language that the party 21 “does hereby rescind, cancel and withdraw the Notice of Default and Election to Sell” cancelled the acceleration). Second, while NV Eagles does not dispute that the 2018 Recission explicitly decelerated the debt, 22 NV Eagles asserts that the 2018 Recission is still inadmissible evidence because BANA did not provide the document during discovery in violation of Federal Rules of Civil Procedure 26(a), 26(e), and 37(c). (See 23 generally NV Eagles’ Reply, ECF No. 71). However, because the 2018 Recission was recorded with the Clark County Recorder and is a publicly available document, the Court takes judicial notice of the 2018 Recission. See 24 Fed. R. Evid. 201 (Judicial Notice of Adjudicative Facts); Disabled Rights Action Committee v. Las Vegas Events, Inc., 375 F.3d 861, n.1 (9th Cir. 2004) (“[the court] may take judicial notice of the records of state 25 agencies and other undisputed matters of public record”); (2018 Recission, Ex. A to BANA’s Reply, ECF No. 69-1). As such, both the 2011 and 2018 Recissions indicate that BANA rescinded its Notice of Default, cancelling the acceleration. 1 B. BANA’s Remaining Claim for Injunctive Relief 2 With regards to BANA’s request for preliminary injunction pending a determination by 3 the Court concerning the parties’ respective rights and interest, the Court’s grant of summary 4 judgment for BANA moots this claim, and it is therefore dismissed. (See Compl. ¶¶ 73–79). 6 IT IS HEREBY ORDERED that BANA’s Motion for Partial Summary Judgment, 7 (ECF No. 64), is GRANTED. 8 IT IS FURTHER ORDRED that NV Eagles’ Motion for Summary Judgement, (ECF 9 No. 66), is DENIED. 10 IT IS FURTHER ORDERED that BANA’s claim for injunctive relief is DISMISSED 11 with prejudice. 12 The Clerk of the Court is ordered to close the case. 13 DATED this _1_1___ day of January, 2021. 14 15 ___________________________________ Gloria M. Navarro, District Judge 16 United States District Court 17 18 19 20 21 22 23 24 25