Nationstar Mortgage LLC v. Sfr Investments Pool 1, LLC

• Court: Court of Appeals for the Ninth Circuit
• Decided: July 7, 2022
• Docket: 20-16893
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 7 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

NATIONSTAR MORTGAGE LLC; No. 20-16893 FEDERAL NATIONAL MORTGAGE ASSOCIATION, D.C. No. 2:16-cv-02771-APG-NJK Plaintiffs-Appellees,

v. MEMORANDUM*

SFR INVESTMENTS POOL 1, LLC,

Defendant-Appellant,

and

SOUTHERN HIGHLANDS COMMUNITY ASSOCIATION; ALESSI & KOENIG, LLC,

Defendants.

Appeal from the United States District Court for the District of Nevada Andrew P. Gordon, District Judge, Presiding

Submitted April 13, 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: BADE and LEE, Circuit Judges, and CARDONE,*** District Judge.

SFR Investments Pool 1, LLC (“SFR”), appeals the district court’s denial of

its motions to compel and for discovery under Federal Rule of Civil Procedure

56(d) and the district court’s grant of partial summary judgment in favor of

Plaintiffs, the Federal National Mortgage Association (“Fannie Mae”) and

Nationstar Mortgage LLC. We have jurisdiction under 28 U.S.C. § 1291, and we

affirm.

This case arises from a homeowners’ association (“HOA”) foreclosure sale.

Section 116.3116 of the Nevada Revised Statutes gives a common-interest

community such as an HOA a superpriority lien for certain unpaid expenses and

allows an HOA to foreclose on such a lien and extinguish a first deed of trust. See

W. Sunset 2050 Tr. v. Nationstar Mortg., LLC, 420 P.3d 1032, 1033, 1035 (Nev.

2018). Under the Federal Foreclosure Bar, 12 U.S.C. § 4617(j)(3), property of the

Federal Housing Finance Administration (“FHFA”)—the conservator of Fannie

Mae—may not be subject to foreclosure without FHFA consent. Because the

Federal Foreclosure Bar preempts the Nevada HOA law, a Nevada HOA

foreclosure sale does not extinguish a deed owned by Fannie Mae, unless the

FHFA consents. See Berezovsky v. Moniz, 869 F.3d 923, 930–31 (9th Cir. 2017).

*** The Honorable Kathleen Cardone, United States District Judge for the Western District of Texas, sitting by designation.

2 In June 2007, 10932 Florence Hills Street, Las Vegas, Nevada (“the

Property”) was purchased by its original owner with a mortgage. Plaintiffs

contend that Fannie Mae acquired the mortgage in July 2007. The homeowner

later defaulted on his HOA assessments. In September 2012, the HOA foreclosed

on the Property and sold it to SFR.

In December 2016, Plaintiffs sued SFR to quiet title and for related relief. In

June 2020, Plaintiffs moved for partial summary judgment on their claim that the

HOA sale did not extinguish Fannie Mae’s interest in the Property. SFR then filed

a motion to compel production of the promissory note secured by the Property’s

deed, arguing that M & T Bank v. SFR Investments Pool 1, LLC, 963 F.3d 854 (9th

Cir. 2020), required Fannie Mae to produce the note to demonstrate its ownership

interest in the Property. SFR also requested discovery of the note and related

evidence under Federal Rule of Civil Procedure 56(d). The district court denied

SFR’s motions and granted Plaintiffs’ motion for partial summary judgment. SFR

appeals those rulings.

1. The district court did not abuse its discretion in denying SFR’s motions to

compel production and for discovery of the promissory note because the Nevada

Supreme Court has held that the note is not required to prove an ownership interest

in this context. See Daisy Tr. v. Wells Fargo Bank, N.A., 445 P.3d 846, 850 (Nev.

2019) (holding, in a similar case, that the note was not required because it “would

3 not help establish when Freddie Mac obtained ownership of the loan or that it

retained such ownership as of the date of the foreclosure sale”).

We reject SFR’s argument that M & T Bank requires production of the note.

SFR reads M & T Bank to hold that quiet title claims under the Federal Foreclosure

Bar sound in contract, so the contract that creates Fannie Mae’s ownership interest

in the Property—the note—must be produced. This is incorrect. M & T Bank

classified quiet title claims under the Federal Foreclosure Bar as contract claims

for purposes of the statute of limitations—it did not address the evidence required

to prove the ownership element of such claims. See 963 F.3d at 856 (holding that,

for purposes of the statute of limitations, quiet title claims are “better characterized

as sounding in contract”).

2. SFR’s motion for further discovery of evidence other than the note was also

properly denied because SFR failed to diligently pursue the requested evidence

during the discovery period. See Qualls ex. rel. Qualls v. Blue Cross of Cal., Inc.,

22 F.3d 839, 844 (9th Cir. 1994) (“We will only find that the district court abused

its discretion [in denying further discovery] if the movant diligently pursued its

previous discovery opportunities . . . .”).

3. Finally, the district court properly granted partial summary judgment for

Plaintiffs because they have sufficiently established that Fannie Mae had an

ownership interest in the Property at the time of foreclosure. Plaintiffs submitted

4 Fannie Mae’s business records documenting its purchase and maintenance of the

loan, a supporting declaration, and excerpts from Fannie Mae’s Single Family

Servicing Guide that define the agency relationship between Fannie Mae and its

loan servicers, which serve as the beneficiaries on deeds owned by Fannie Mae.

This Court and the Nevada Supreme Court have routinely found this combination

of evidence to be sufficient to establish ownership of a loan at the time of

foreclosure. See e.g., Berezovsky, 869 F.3d at 932–33; Daisy Tr., 445 P.3d at 850–

51; Nationstar Mortg. LLC v. Saticoy Bay LLC, Series 9229 Millikan Ave., 996

F.3d 950, 956 (9th Cir. 2021). Moreover, the record does not support SFR’s

assertion that Fannie Mae’s business records are unreliable.

AFFIRMED.