Carrington Mortgage Services v. Sfr Investments Pool 1, LLC

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 2, 2019
• Docket: 17-16554
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION DEC 02 2019 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

CARRINGTON MORTGAGE No. 17-16554 SERVICES, LLC, D.C. No. Plaintiff-Appellant, 2:15-cv-01377-JCM-NJK

v. MEMORANDUM* SFR INVESTMENTS POOL 1, LLC; et al.,

Defendants-Appellees.

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

Argued and Submitted November 13, 2019 Pasadena, California

Before: GRABER, BERZON, and CHRISTEN, Circuit Judges.

Appellant Carrington Mortgage Services, LLC (CMS) appeals the district

court’s order granting summary judgment to SFR Investments Pool 1, LLC and the

district court’s order dismissing CMS’s wrongful foreclosure claim against Oak

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Park Homeowners’ Association. We have jurisdiction pursuant to 28 U.S.C.

§ 1291, and we affirm in part and reverse in part. Because the parties are familiar

with the facts, we recite only those necessary to resolve the issues on appeal.

1. CMS relied on Bourne Valley Court Trust v. Wells Fargo Bank, NA,

832 F.3d 1154 (9th Cir. 2016), to argue that Nevada Revised Statute § 116.3116 is

facially unconstitutional. This argument is unavailing. The Nevada Supreme

Court subsequently decided SFR Investments Pool 1, LLC v. Bank of New York

Mellon, 422 P.3d 1248 (Nev. 2018) (en banc) (“Star Hill”), and rejected Bourne

Valley’s interpretation of § 116.3116’s notice provisions. Star Hill explained that

the statute incorporates the opt-in and mandatory notice provisions of Nevada

Revised Statute § 107.090. Id. at 1253. Accordingly, Bourne Valley no longer

controls. See Bank of Am., N.A. v. Arlington W. Twilight Homeowners Ass’n, 920

F.3d 620, 623–24 (9th Cir. 2019).

2. CMS’s argument that federal law preempts § 116.3116 is equally

without merit. We rejected the same argument in Arlington West. See 920 F.3d at

624. Nothing in Nevada’s foreclosure statute makes it “impossible for a private

party to comply with both state and federal law,” Crosby v. Nat’l Foreign Trade

Council, 530 U.S. 363, 372 (2000), nor does Nevada law “stand[] as an obstacle to

the accomplishment and execution of the full purpose and objectives of Congress,”

2 id. at 373 (quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941)), in creating the

federal mortgage insurance program.

3. The district court sua sponte dismissed CMS’s wrongful-foreclosure

claim against Oak Park for failure to mediate, pursuant to Nevada Revised Statute

§ 38.310. Although wrongful-foreclosure claims fall within the purview of §

38.310, see McKnight Family, LLP v. Adept Mgmt. Servs., Inc., 310 P.3d 555, 559

(Nev. 2013) (en banc), the district court erred by not affording CMS an opportunity

to respond to its intent to dismiss, see Reed v. Lieurance, 863 F.3d 1196, 1207 (9th

Cir. 2017). Nevertheless, the district court dismissed the claim without prejudice,

and that ruling allowed CMS an opportunity to amend its complaint and

demonstrate that the parties had, in fact, mediated. CMS did not take that

opportunity. Instead, it moved for reconsideration and immediately appealed the

district court’s order. A motion for reconsideration was not the proper vehicle for

CMS to present its proof that the parties had mediated. See, e.g., Kona Enters. Inc.

v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000) (“A Rule 59(e) motion may

not be used to raise arguments or present evidence for the first time when they

could reasonably have been raised earlier in the litigation.”). Thus, the district

court’s sua sponte dismissal was harmless.

3 4. CMS’s claim for equitable relief fails because CMS did not

sufficiently allege any causal nexus; that is, it did not allege how the fraud,

oppression, or unfairness accounted for or brought about the property’s inadequate

sale price. See Nationstar Mortg., LLC v. Saticoy Bay LLC Series 2227 Shadow

Canyon, 405 P.3d 641, 647 (Nev. 2017).

5. We conclude the district court erred by granting summary judgment to

SFR on its quiet title claim. Neither SFR nor CMS established that it was entitled

to judgment as a matter of law. A material factual dispute remains as to whether

Bank of America, CMS’s predecessor-in-interest, satisfied the superpriority

portion of Oak Park’s lien, and this factual dispute precluded summary judgment.

Nevada law provides a statutory presumption that foreclosure sales are

properly conducted and that the resulting deeds are valid. See Nev. Rev. Stat.

§ 47.250(16)–(18). CMS bore the burden of overcoming this presumption. See

Res. Grp., LLC v. Nev. Ass’n Servs., 437 P.3d 154, 156 (Nev. 2019) (en banc)

(“The burden of demonstrating that the delinquency was cured presale, rendering

the sale void, was on the party challenging the foreclosure, who failed to meet its

burden.”). Both parties point to the same ledger as proof that Bank of America did

or did not satisfy the superpriority portion of Oak Park’s lien. The district court

reasoned that CMS “merely presume[d]” that the amount set forth on the ledger

4 was more than the superpriority portion of the lien. But at oral argument before

our court, SFR conceded that the ledger does not include any line items identified

as “maintenance or nuisance-abatement” fees. Arlington West held that a similar

ledger alone sufficed to demonstrate that no maintenance or nuisance-abatement

fees were due. See 920 F.3d at 623. Here, however, CMS conceded that

qualifying costs, such as collection fees related to abatement, could conceivably be

included in the expenses itemized on the ledger. From the record available, we

cannot determine whether the superpriority portion of the lien was satisfied by the

tender. Therefore, we remand to the district court for further proceedings.

AFFIRMED IN PART, REVERSED IN PART AND REMANDED.