NATIONSTAR MORTGAGE LLC V. 4039 MEADOW FOXTAIL DR. TRUST

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 21, 2022
• Docket: 20-15842
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS DEC 21 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

NATIONSTAR MORTGAGE LLC, No. 20-15842

Plaintiff-Appellee, D.C. No. 2:17-cv-01586-RFB-NJK v.

4039 MEADOW FOXTAIL DR. TRUST; MEMORANDUM* SATICOY BAY LLC SERIES 4039 MEADOW FOXTAIL DR.,

Defendants-Appellants,

and

SUNRISE RIDGE MASTER HOMEOWNERS ASSOCIATION; NEVADA ASSOCIATION SERVICES, INC.,

Defendants.

Appeal from the United States District Court for the District of Nevada Richard F. Boulware II, District Judge, Presiding

Submitted December 5, 2022** Pasadena, California

* 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). Before: KELLY,*** IKUTA, and CHRISTEN, Circuit Judges.

Plaintiff Nationstar Mortgage, LLC (Nationstar) filed suit against 4039

Meadow Foxtail Dr. Trust (Meadow Foxtail) and Saticoy Bay LLC, Series 4039

Meadow Foxtail Dr. (Saticoy Bay) (collectively, Defendants) seeking quiet title, a

declaratory judgment that its deed of trust survived the foreclosure sale of the

property at issue, and an injunction against Saticoy Bay selling or transferring the

property. Plaintiff also raised claims that the foreclosure sale violated section

116.1113 of the Nevada Revised Statutes and of wrongful foreclosure. The district

court granted Nationstar’s motion for summary judgment as to the quiet title claim

and Defendants’ motions for summary judgment as to the other claims. Only the

quiet title claim is at issue on appeal. We have jurisdiction under 28 U.S.C. §

1291. We review de novo the order granting Nationstar’s motion for summary

judgment, Riley’s Am. Heritage Farms v. Elsasser, 32 F.4th 707, 719 (9th Cir.

2022), and we affirm.

We assume the parties’ familiarity with the facts and do not recite them here.

Defendants argue that the statute of limitations has expired, that Nationstar’s claim

for relief is barred by res judicata and collateral estoppel, and that the foreclosure

sale extinguished Nationstar’s deed of trust.

*** The Honorable Paul J. Kelly, Jr., United States Circuit Judge for the U.S. Court of Appeals for the Tenth Circuit, sitting by designation.

2 1. Statute of Limitations. The district court found that Defendants waived

any statute of limitations defense as to the quiet title claim. We agree. Defendants

failed to raise their statute of limitations defense in any of their responsive

pleadings or summary judgment briefing. See, e.g., Weil v. Elliott, 859 F.3d 812,

815 (9th Cir. 2017) (explaining that an affirmative defense “may be forfeited if not

timely raised”). Additionally, Defendants have not addressed the waiver issue in

their opening brief, and have thereby waived it on appeal. See, e.g., McKay v.

Ingleson, 558 F.3d 888, 891 n.5 (9th Cir. 2009).

2. Preclusion. Defendants argue that Nationstar’s claim is barred by res

judicata (claim preclusion) and collateral estoppel (issue preclusion) because the

district court dismissed, without prejudice, Nationstar’s similar complaint in a

separate action. “The preclusive effect of a federal-court judgment is determined

by federal common law.” Taylor v. Sturgell, 553 U.S. 880, 891 (2008); accord

Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508 (2001) (“[F]ederal

common law governs the claim-preclusive effect of a dismissal by a federal court

sitting in diversity.”). The Supreme Court has made clear that, except in

exceptional cases, “the federally prescribed rule of decision [is] the law that would

be applied by state courts in the State in which the federal diversity court sits.”

Semtek Int’l Inc., 531 U.S. at 507–08. Here, Nevada law preclusion principles

apply.

3 Under Nevada law, claim preclusion requires a “final judgment [that] is

valid” and issue preclusion requires that “the initial ruling must have been on the

merits and have become final.” Five Star Cap. Corp. v. Ruby, 194 P.3d 709, 713

(Nev. 2008). The Nevada Supreme Court has held that a dismissal without

prejudice is not a final judgment: “[T]he requirement of a valid final judgment . . .

does not include a case that was dismissed without prejudice or for some reason

(jurisdiction, venue, failure to join a party) that is not meant to have preclusive

effect.” Id. at 713 n.27. Because the dismissal of Nationstar’s previous action was

without prejudice, it was not a final judgment and lacks preclusive effect.

3. Valid Tender. There is no dispute that attorneys for Bank of America

N.A. (BANA), Nationstar’s predecessor in interest, sent the HOA’s agent a check

for the superpriority portion of the lien prior to the foreclosure sale, but the agent

refused this offer of tender. Defendants present several arguments that BANA’s

tender of the superpriority amount should not operate to preserve BANA’s deed to

trust, but all of these arguments are foreclosed by Nevada law.

First, payment of the superpriority portion did not need to be recorded in

order to preserve the deed of trust. “A valid tender of payment operates to

discharge a lien or cure a default.” Bank of America, N.A. v. SFR Invs. Pool 1,

LLC (Diamond Spur), 427 P.3d 113, 117 (2018) (en banc). “Tendering the

superpriority portion of an HOA lien does not create, alienate, assign, or surrender

4 an interest in land. Rather, it preserves a pre-existing interest, which does not

require recording.” Id. at 119 (emphasis omitted).

Second, Defendants argue the “conditional” nature of BANA’s tender

rendered it ineffective. Defendants do not elaborate on what conditions

accompanied the tender, but to the extent BANA specified that acceptance of the

tender would satisfy the superpriority portion of the lien, the Nevada Supreme

Court has rejected Defendants’ argument. Id. at 118 (“Bank of America’s letter

stated that acceptance of 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.”).

Third, Defendants’ contention that Saticoy Bay is protected as a transferee

of a bona fide purchaser (BFP) is without merit. “A party’s status as a BFP is

irrelevant when a defect in the foreclosure proceeding renders the sale void.” Id. at

121. “Because a trustee has no power to convey an interest in land securing a note

or other obligation that is not in default, a purchaser at a foreclosure sale of that

lien does not acquire title to that property interest.” Id. Therefore, BANA’s first

deed of trust remained after the foreclosure sale. Id.

Finally, Defendants’ reliance on Shadow Wood Home Owners Ass’n, Inc. v.

N.Y. Cmty. Bancorp., Inc., 366 P.3d 1105 (Nev. 2016) (en banc) is misplaced.

Shadow Wood did not concern a valid tender of the superpriority portion of an

5 HOA lien, and its holding (that a court can grant equitable relief from a defective

HOA lien foreclosure sale when, for instance, the sale is marred by fraud,

unfairness, or oppression) is inapplicable because the question here is not whether

an equitable basis exists to set aside a foreclosure, but rather whether Nationstar’s

valid tender preserved its deed of trust. See id. at 1107. By contrast, Diamond

Spur is squarely on point. Pursuant to Diamond Spur, tender of the superpriority

portion of a lien is valid despite the HOA’s rejection of the payment and in

Diamond Spur the Nevada Supreme Court gave no indication that it is necessary to

weigh the equities when determining whether a tender was valid. See Diamond

Spur, 427 P.3d at 117–18.

AFFIRMED.