Carrington Mortgage Services v. Absolute Business Solutions, L

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 22, 2021
• Docket: 19-16836
• Status: Unpublished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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS DEC 22 2021 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

CARRINGTON MORTGAGE SERVICES, No. 19-16836 LLC, D.C. No. Plaintiff-Appellee, 2:15-cv-01862-JAD-BNW

v. MEMORANDUM* ABSOLUTE BUSINESS SOLUTIONS, LLC,

Defendant-Appellant,

and

ESTRELLA HOMEOWNERS' ASSOCIATION,

Defendant.

Appeal from the United States District Court for the District of Nevada Jennifer A. Dorsey, District Judge, Presiding

Submitted December 21, 2021** San Francisco, California

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

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Absolute Business Solutions, LLC (“Absolute”) appeals from the grant of

summary judgment to Carrington Mortgage Services, LLC (“Carrington”) in this

quiet title action. As the facts are known to the parties, we repeat them only as

necessary to explain our decision.

Nevada law “allows homeowners associations [HOAs] to pursue liens on

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

Madera 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 status: “[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) (hereinafter Diamond Spur); see

Nev. Rev. Stat. § 116.3116(2) (2012).

“[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 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 amount to the HOA—

that is, nine months of fees, along with any unpaid nuisance-abatement or

maintenance charges. See Diamond Spur, 427 P.3d at 117–18. “If the HOA’s ledger

does not show any charges for maintenance or nuisance abatement, a tender of nine

2 months of HOA dues is sufficient.” Arlington Twilight, 920 F.3d at 623; Diamond

Spur, 427 P.3d at 118.

The district court did not err in holding that Carrington’s tender preserved its

deed of trust. Absolute first argues that Carrington “fail[ed] to proffer any evidence

that the check was received” by the HOA. Absolute, however, explicitly waived this

argument in front of the district court and does not get to reprise it here. Lahr v. Nat’l

Transp. Safety Bd., 569 F.3d 964, 980 (9th Cir. 2009). Regardless, Carrington

presented evidence that it tendered the check, such as screenshots of its internal

tracking software indicating that the check was sent and photos of the returned and

voided check. Absolute, however, did not point to any evidence to rebut Carrington’s

assertions. Thus, there are no genuine issues of material fact as to whether the tender

was delivered to the HOA. Frudden v. Pilling, 877 F.3d 821, 828 (9th Cir. 2017).

Neither did the district court err in holding that Carrington’s tender was

proper. Absolute’s argument that the HOA had a good faith reason for rejecting the

tender is unavailing because “[a] plain reading” of the relevant statute confirms that

the amount of the tender was correct. Diamond Spur, 427 P.3d at 118; see also

Arlington Twilight, 920 F.3d at 623.

Absolute’s claim that the tender was invalid because it contained a

misstatement of law fares no better. Specifically, Absolute argues that the letter

accompanying the check stated that certain sums under paragraph (j) of Nev. Rev.

3 Stat. § 116.3102 did not have superpriority status. However, because paragraph (j)

references maintenance and nuisance-abatement charges—which do enjoy

superpriority status, Diamond Spur, 427 P.3d at 117—Absolute claims that the letter

contained a misstatement of law and that the tender was invalid because it required

the HOA to accept that misstatement.

This argument is unpersuasive because the letter only stated that the “fees and

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

service charges and interest”—and not the maintenance and nuisance-abatement

charges—were junior to Carrington’s deed. Additionally, as Absolute concedes,

there were no such charges due in this case. Finally, even if the letter did misstate

the law, it did not require the HOA to accept that misstatement as part of the tender.

Instead, the letter insisted that the acceptance of the tender would be construed as an

acknowledgment that the superpriority amount was paid off. Carrington “had a legal

right to insist on this” condition and the tender was not invalidated by its presence.

Diamond Spur, 427 P.3d at 117–18.

Finally, the district court was not required to balance the equities, as Absolute

argues, because “[a] party’s status as a [bona fide purchaser] is irrelevant when a

defect in the foreclosure proceeding renders the sale void,” as the tender did in this

case. Diamond Spur, 427 P.3d at 121; see also Saticoy Bay LLC Series 133 McLaren

4 v. Green Tree Servicing LLC, 478 P.3d 376, 379 (Nev. 2020).1

AFFIRMED.

1 The parties’ motion to substitute party is denied. Stipulated Motion to Substitute Party, ECF No. 9 (Jan. 14, 2020). The court construes this motion as a motion to substitute a party “for any reason other than death” under Fed. R. App. P. 43(b). The motion is denied because it does not appear that the parties served the nonparty. Fed. R. App. P. 25; 43. Additionally, since the nonparty “has not had its day in . . . court,” it would be “unfair” to grant this motion. McComb v. Row River Lumber Co., 177 F.2d 129, 130 (9th Cir. 1949).