Nationstar Mortgage, LLC v. Sahara Sunrise Homeowners Association

• Court: District Court, D. Nevada
• Decided: August 7, 2023
• Docket: 2:15-cv-01597
• Status: Unknown

Opinion

2 UNITED STATES DISTRICT COURT 3

DISTRICT OF NEVADA 4

* * * 5 6 NATIONSTAR MORTGAGE, LLC, Case No. 2:15-cv-01597-MMD-NJK

7 Plaintiff, ORDER v. 8 SAHARA SUNRISE HOMEOWNERS 9 ASSOCIATION, et al.,

10 Defendants.

11 AND ALL RELATED CASES 12

13 I. SUMMARY 14 This dispute arises from the foreclosure sale (“HOA Sale”) of real property located 15 at 2670 Early Vista St., Las Vegas, NV, 89142 (“Property”) to satisfy a homeowners’ 16 association lien. (See, e.g., ECF Nos. 1 at 3, 90-9 at 2.) The Court previously granted 17 partial summary judgment to Plaintiff Nationstar Mortgage LLC that the HOA Sale did not 18 extinguish a deed of trust (the “DOT”) encumbering the Property now owned by Nationstar 19 (ECF No. 103 (“Summary Judgment Order”)), but later found that the HOA Sale 20 extinguished the DOT after the United States Court of Appeals for the Ninth Circuit vacated 21 the Summary Judgment Order and remanded to the Court. (ECF No. 127 (“Mandate 22 Order”).) Then the Ninth Circuit also vacated the Mandate Order and again remanded to 23 the Court to consider a broader range of arguments Nationstar presented. (ECF No. 133 24 (“Memo Dispo”).) Before the Court is Nationstar’s motion for summary judgment following 25 the Memo Dispo.1 (ECF Nos. 148, 150 (corrected image of motion, which the Court will 26 reference herein and refer to as the “Motion”).) Because the Court agrees with Nationstar 27

28 1Defendant River Glider Avenue Trust (“River Glider”) filed a response (ECF No. 153) and Nationstar filed a reply (ECF No. 156). 2 set aside under the equitable doctrine of judicial estoppel, and as further explained below, 3 the Court will grant Nationstar’s Motion. 4 II. BACKGROUND 5 The Court incorporates by reference the factual background of this case as recited 6 in the Summary Judgment Order, and does not repeat it here. (ECF No. 103 at 1-3.) The 7 facts detailed therein regarding the DOT and the HOA Sale have not changed. However, 8 the Court adds immediately below additional facts Nationstar presented in its Motion that 9 are pertinent to the Court’s discussion further below.2 10 The Early Vista Street Trust (“Early Vista”) purchased the Property at the HOA Sale 11 for $5,400. (ECF No. 150-13.) According to Matthew Lubawy, who performed a retroactive 12 appraisal report on the Property, as of February 8, 2012 (the date of the HOA Sale), the 13 market value of the Property was $84,000.00. (ECF No. 150-14.) Early Vista later 14 conveyed the Property to River Glider for ten dollars. (ECF No. 150-15.) 15 Eddie Haddad manages River Glider along with the Early Vista Street Trust, and is 16 their only employee. (ECF No. 150-16 at 11-13, 19-20.) Mr. Haddad does not dispute that 17 he is a sophisticated real estate investor. (Id. at 11.) By 2016, Mr. Haddad had purchased 18 somewhere between 50 and 1000 properties at sales like the HOA Sale. (Id. at 22.) Mr. 19 Haddad was aware of the possibility of litigation with banks like Nationstar each time he 20 purchased a property at sales like the HOA Sale. (Id.) Indeed, he said, “[i]f it’s an NRS 116 21 sale and there happens to be a deed of trust, automatically I’d be inclined to bid less 22 because of potential litigation costs.” (Id. at 17.) 23

24 2River Glider does not dispute any of the facts described in this section, nor does it object to the admissibility or authentication of any of the exhibits from which these facts 25 are taken. (ECF No. 153 at 3.) Nationstar also requests that the Court take judicial notice of exhibits A, B, C, E, F, G, H, I, J, L, M, O, Q, S, Y, Z, AA, BB, and CC filed with its Motion. 26 (ECF No. 150 at 8.) As all of these documents are either recorded property records or court filings, the Court grants Nationstar’s request and takes judicial notice of all of them. 27 See Harris v. Cnty. of Orange, 682 F.3d 1126, 1132 (9th Cir. 2012) (“We may take judicial notice of undisputed matters of public record, including documents on file in federal or 28 state courts.”) (citations omitted); Mulato v. Wells Fargo Bank, N.A., 76 F. Supp. 3d 929, 941 (N.D. Cal. 2014) (taking judicial notice of recorded documents regarding a property). 2 Koenig (the Sahara Sunrise Homeowners Association’s agent)’s policy was to reject 3 payments sent from Nationstar’s predecessor-in-interest’s Bank of America, N.A. 4 (“BANA”)’s (ECF Nos. 150-4 at 12, 150-5 at 2) counsel Miles Bauer (see, e.g., ECF No. 5 150-24 at 2) to pay off superpriority liens held by Alessi and Koenig’s clients (ECF No. 6 150-20 at 34-45). Indeed, that was Mr. Alessi’s best recollection as to what happened with 7 the Property. (ECF No. 150-21 at 2 (including the case caption for this case and identifying 8 Mr. Alessi as Alessi and Koenig’s Fed. R. Civ. P. 30(b)(6) witness), 12-13, 27-29 9 (explaining how all interactions between Alessi and Koenig and Miles Bauer went during 10 the time period in which the HOA Sale occurred).) 11 BANA was aware that Alessi and Koenig’s policy in 2012 was to reject any checks 12 sent by Miles Bauer in an attempt to pay off the superpriority portion of homeowners’ 13 association liens. (ECF No. 150-23 at 23.) Similarly, Rock Jung, a Miles Bauer attorney 14 who sent many payoff demands to Alessi and Koenig on BANA’s behalf, was aware that 15 Alessi and Koenig’s policy in 2012 was to reject any checks he sent in in an attempt to 16 pay off the superpriority portion of homeowners’ association liens—indeed, Alessi and 17 Koenig sent him a general letter saying as much. (Id. at 34, 39 (“From what I recall, this 18 was a letter from Alessi and Koenig that was a blanket general letter, if you will, just stating 19 that they will not be able to accept the payment that we made to satisfy the super priority 20 lien because it only included assessments and not their additional fees and costs and that 21 they would actually be losing money or the HOA would be losing money if they only 22 accepted the nine months’ worth of assessments that was tendered.”).) 23 River Glider filed for Chapter 11 bankruptcy later in 2012. (ECF No. 150-25 at 4.) 24 Mr. Haddad filed the bankruptcy petition on River Glider’s behalf. (Id.) Mr. Haddad listed 25 the Property as an asset on one of its bankruptcy schedules, noting it was subject to a 26 $208,000.00 secured claim. (Id. at 11.) Mr. Haddad otherwise stated in the schedules that 27 CMG Mortgage had a first mortgage on the Property. (Id. at 15.) The schedules conclude 28 with Mr. Haddad’s signature affirming his agreement with this statement: “I, the Registered 2 that I have read the foregoing summary and schedules, consisting of 17 sheets, and that 3 they are true and correct to the best of my knowledge, information, and belief.” (Id. at 26.) 4 Later in that same bankruptcy proceeding, Mr. Haddad filed a motion to use cash 5 collateral where he stated that he acquired title to the properties at issue in that case— 6 including the Property—“subject to the first mortgage lien on the properties.” (ECF No. 7 150-26 at 3.) The bankruptcy court granted that motion. (ECF No. 150-27.) River Glider 8 also stated in two subsequent filings in that bankruptcy proceeding that the Property was 9 encumbered by the DOT. (ECF Nos. 150-28 at 3, 150-29 at 10.) 10 III. DISCUSSION 11 While Nationstar raises several arguments in its Motion, the Court is alternatively 12 persuaded by its excused tender and judicial estoppel arguments, so the Court includes 13 only its analysis of those two arguments below. 14 A. Excused Tender 15 In pertinent part, Nationstar argues that the HOA Sale was void under the excused 16 tender doctrine because Alessi and Koenig had a known policy of rejecting all tender 17 attempts at the time of the HOA Sale that BANA was aware of.3 (ECF Nos. 150 at 15-17, 18 156 at 3.) River Glider counters that Nationstar’s argument is unsupported and 19 overinclusive because it means that any HOA Sale conducted by Alessi and Koenig during 20 the period where Alessi and Koenig had a policy of rejecting all tender offers was invalid. 21 (ECF No. 153 at 9-12.) The Court agrees with Nationstar. 22 /// 23 24 3In reply Nationstar presents its excused tender argument within the Shadow 25 Canyon framework for equitable relief (ECF No. 156 at 2-6), but presents it as a distinct legal argument in its Motion (ECF No. 150 at 15-17). The Court does not analyze the 26 excused tender argument within the Shadow Canyon framework because “the voiding of the foreclosure sale as to the superpriority portion of the lien is ultimately the result of the 27 operation of law and not equitable relief.” Bank of Am., N.A. v. Bernini Dr Tr., Case No. 2:16-cv-00474-APG-BNW, 2020 WL 1044005, at *2 (D. Nev. Mar. 3, 2020), aff’d sub nom. 28 Bank of Am., N.A. v. Alessi & Koenig, LLC, 840 F. App’x 217 (9th Cir. 2021) (“Bernini Dr.”) (citation omitted). 2 two conditions are satisfied: (1) the homeowners’ association agent had a "known policy 3 of rejecting any payment for less than the full lien amount[;]” and (2) “Miles Bauer and the 4 Bank had knowledge of this business practice[.]” 7510 Perla Del Mar Ave Tr. v. Bank of 5 Am., N.A., 458 P.3d 348, 351 (Nev. 2020). (See also ECF Nos. 150 at 15, 153 at 10, 156 6 at 3 (agreeing this is the test).) 7 Both conditions are satisfied here. At the time of the HOA Sale, Alessi and Koenig 8 had a policy of rejecting any tender offers that did not include all of the fees that Alessi 9 and Koenig added on to superpriority liens. (ECF No. 150-21 at 2 (including the case 10 caption for this case and identifying Mr. Alessi as Alessi and Koenig’s Fed. R. Civ. P. 11 30(b)(6) witness), 12-13, 27-29 (explaining how all interactions between Alessi and Koenig 12 and Miles Bauer went during the time period in which the HOA Sale occurred).) Miles 13 Bauer and BANA were aware of this policy at the time of the HOA Sale. (ECF No. 150-23 14 at 23, 34, 39.) The HOA Sale accordingly did not extinguish the DOT. See Perla Del Mar, 15 458 P.3d at 351-52; see also Bank of Am., N.A. v. Lakeview Owners’ Ass’n, Case No. 16 2:16-cv-00635-APG-BNW, 2020 WL 4586861, at *2 (D. Nev. Aug. 7, 2020), aff’d, Case 17 No. 20-16626, 2021 WL 5359580 (9th Cir. Nov. 17, 2021) (applying Perla Del Mar and 18 finding that a deed of trust was not extinguished by a homeowners’ association foreclosure 19 sale); Bernini Dr., 2020 WL 1044005, at *2 (same). 20 River Glider’s argument that the evidence Nationstar proffered to support its 21 argument on this point is not specifically about the Property is unpersuasive because 22 “evidence from other matters can[] be used to support a position in a different matter.” U.S. 23 Bank Nat’l Ass’n, Tr. to Wachovia Bank, N.A. v. SFR Invs. Pool 1, LLC, 464 P.3d 125 24 (Table), 2020 WL 3003017, at *1 (Nev. 2020); see also id. (“We conclude that under these 25 circumstances, this evidence is sufficient to demonstrate that NAS had a ‘known policy of 26 reject[ion]’ sufficient to excuse formal tender under 7510 Perla Del Mar Avenue Trust.”). 27 And River Glider’s argument that it is a bona fide purchaser (ECF No. 153 at 6-9) is 28 irrelevant because “status as a [bona fide purchaser] is irrelevant when a defect in the 2 (citation omitted). 3 B. Judicial Estoppel 4 Nationstar also argues that River Glider is judicially estopped from taking the 5 position that the HOA Sale extinguished the DOT in this case because it took the 6 position—to its benefit—that the DOT continued to encumber the Property in its 7 bankruptcy proceeding. (ECF Nos. 150 at 17-20, 156 at 4-6.) River Glider counters that it 8 did not make any binding factual statements in its bankruptcy petition because it is 9 relatively easy to amend bankruptcy filings and it filed its bankruptcy petition before the 10 Nevada Supreme Court issued its decision in SFR Invs. Pool 1 v. U.S. Bank, 334 P.3d 11 408, 409 (Nev. 2014), holding modified by Saticoy Bay LLC Series 350 Durango 104 v. 12 Wells Fargo Home Mortg., a Div. of Wells Fargo Bank, N.A., 388 P.3d 970 (Nev. 2017) 13 finding that NRS § 116.3116 creates a “true priority lien such that its foreclosure 14 extinguishes a first deed of trust on the property[,]” so River Glider’s statements in its 15 bankruptcy petition that it owned the Property subject to the DOT were based on its 16 understanding at the time that later turned out to be incorrect. (ECF No. 153 at 12-16.) 17 The Court again agrees with Nationstar. 18 “Judicial estoppel is an equitable doctrine that precludes a party from gaining an 19 advantage by asserting one position, and then later seeking an advantage by taking a 20 clearly inconsistent position.”5 Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 782 21

22 4River Glider is not a bona fide purchaser in any event. The DOT was recorded. (ECF No. 150-1 at 2 (including stamp from Clark County Recorder indicating it was 23 recorded).) And the DOT includes a footer indicating it is a ‘Nevada – Single Family – Fannie Mae/Freddy Mac UNIFORM INTEREST WITH MERS.’ (Id.) The DOT further 24 includes the provision that it may be “sold one or more times without prior notice to Borrower.’ (Id. at 14; see also id. at 14-15.) River Gilder thus had record notice of the DOT 25 and is accordingly not a bona fide purchaser. See Nationstar Mortg. LLC v. Travertine Lane Tr., Case No. 19-17197, 2022 WL 1486830, at *2 (9th Cir. May 11, 2022) (finding 26 that the defendant had record notice of a deed of trust and was accordingly not a bona fide purchaser when these same three conditions existed). 27 5“Under Nevada law, courts retain discretion to set aside a foreclosure sale if two 28 circumstances are present: (1) an unreasonably low sales price, and (2) fraud, unfairness, 2 to prevent a party from gaining an advantage by taking inconsistent positions, but also 3 because of ‘general consideration[s] of the orderly administration of justice and regard for 4 the dignity of judicial proceedings,’ and to ‘protect against a litigant playing fast and loose 5 with the courts.”’ Id. (citations omitted). 6 The evidence before the Court shows that River Glider took clearly inconsistent 7 positions before the bankruptcy court and this Court. River Glider took the position with 8 the bankruptcy court that a first mortgage encumbered the Property in its bankruptcy 9 petition, and has taken the position before this Court that it owns the Property free and 10 clear of the DOT. (ECF No. 150-25 at 4, 11, 15; ECF No. 150-26 at 3; ECF No. 150-28 at 11 3; ECF No. 150-29 at 10 (stating to the bankruptcy court that its interest in the Property 12 was subject to a security interest.).) River Glider gained an unfair advantage from that 13 position both because it was able to maintain the bankruptcy in the first place, and more 14 specifically because the bankruptcy court granted its motion to use cash collateral—rent 15 it was collecting on the Property. (ECF No. 150-27.) In contrast, River Glider has been 16 arguing throughout years of litigation in this case that the HOA Sale extinguished the DOT 17 so that it may own the Property free and clear of the DOT. Moreover, Mr. Haddad was 18 aware of the possibility of litigation with banks like Nationstar each time he purchased a 19 property at sales like the HOA Sale. (ECF No. 150-16 at 22.) Indeed, he said, “[i]f it’s an 20 NRS 116 sale and there happens to be a deed of trust, automatically I’d be inclined to bid 21 less because of potential litigation costs.” (Id. at 17.) This fatally undermines River Glider’s 22

23 or oppression that affected the sale.” U.S. Bank, N.A., Tr. for Banc of Am. Funding Corp. Mortg. Pass-Through Certificates, Series 2005-F v. White Horse Ests. Homeowners 24 Ass’n, 987 F.3d 858, 863 (9th Cir. 2021) (“White Horse”) (citing Nationstar Mortg., LLC v. Saticoy Bay LLC Series 2227 Shadow Canyon, (“Shadow Canyon”) 405 P.3d 641, 648 25 (Nev. 2017)). Here, there is no question the sales price was unreasonably low, as Early Vista purchased the Property for about seven percent of fair market value. (Compare ECF 26 No. 150-13 with ECF No. 150-14.) “Because of that low purchase price [of 8% fair market value], [Nationstar] must produce only slight evidence of fraud, unfairness, or oppression 27 that affected the sale.” White Horse, 987 F.3d at 864. The Court accordingly moves straight to step two of the Shadow Canyon analysis, evaluating whether Nationstar’s 28 judicial estoppel argument constitutes the sort of slight unfairness required to set the HOA Sale aside. 1 || argument that it “did not have the benefit of the SFR Decision prior to 2014.” (ECF No. 2 || 153 at 14.) And more broadly, both elements of judicial estoppel are accordingly satisfied. 3 || See Hamilton, 270 F.3d at 782 (explaining the two elements). 4 The Court will not let River Glider play fast and loose. The Court alternatively uses 5 || its equitable power to set aside the HOA Sale under the judicial estoppel doctrine. 6 || IV. CONCLUSION 7 The Court notes that the parties made several arguments and cited to several cases 8 || not discussed above. The Court has reviewed these arguments and cases and determines Q || that they do not warrant discussion as they do not affect the outcome of the issues before 10 || the Court. 11 It is therefore ordered that Nationstar’s motion for summary judgment (ECF No. 12 || 148) is granted. 13 It is further ordered that the HOA Sale did not extinguish Nationstar’s DOT on the 14 || Property. 15 It is further ordered that, considering the Court's finding directly above, Nationstar’s 16 || claims against the Sahara Sunrise Homeowners Association are dismissed as moot. 17 The Clerk of Court is directed to enter judgment accordingly and close this case. 18 DATED THIS 3” Day of August 2023. 19

21 □□□□□□□□□□□□□□□□□□□□□□ CHIEF UNITED STATES DISTRICT JUDGE

23 24 25 26 27 28