Phh Mortgage Corporation v. Teal Petals Street Trust

• Court: Court of Appeals for the Ninth Circuit
• Decided: April 10, 2025
• Docket: 24-1880
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS APR 10 2025 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

PHH MORTGAGE CORPORATION, No. 24-1880 D.C. No. Plaintiff-ctr-defendant - 2:16-cv-02653-APG-NJK Appellee,

v. MEMORANDUM*

CORPOLO AVENUE TRUST, RESOURCES GROUP, LLC, SOUTHERN HIGHLANDS COMMUNITY ASSOCIATION, ALESSI & KOENIG, LLC, TRIANA HOMEOWNERS ASSOCIATION, REPUBLIC SILVER STATE DISPOSAL, FAISSAL AHMEAD,

Defendants,

TEAL PETALS STREET TRUST,

Defendant-ctr-claimant - Appellant.

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

Argued and Submitted March 31, 2025 Phoenix, Arizona

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: HAWKINS, FISHER**, and R. NELSON, Circuit Judges.

Teal Petals Street Trust (“Teal Petals”) appeals the district court’s summary

judgment order declaring void a foreclosure sale of the real property located at 3762

Corpolo Avenue in Las Vegas, Nevada (the “Property”) in a quiet title action brought

by Ocwen Loan Servicing, LLC (“Ocwen”). We have jurisdiction under 28 U.S.C.

§ 1291. We review de novo the grant of summary judgment, see CitiMortgage, Inc.

v. Corte Madera Homeowners Ass’n, 962 F.3d 1103, 1106 (9th Cir. 2020), and

affirm.

The district court correctly determined that the foreclosing homeowners

association (“HOA”) was obligated to but failed to send the statutorily required

notices to the Mortgage Electronic Registration Systems, Inc. (“MERS”). The

Nevada Supreme Court has determined that a deed of trust beneficiary is a “person[]

whose interests were subordinate” to the HOA’s super-priority lien, SFR Invs. Pool

1, LLC v. Bank of N.Y. Mellon, 422 P.3d 1248, 1252 (Nev. 2018), such that an HOA

must send the deed of trust beneficiary the requisite notices, Nationstar Mortg., LLC

v. Saticoy Bay LLC Series 2227 Shadow Canyon, 405 P.3d 641, 648 n.11 (Nev.

2017). It is undisputed that the deed of trust on the Property designates MERS as

** The Honorable D. Michael Fisher, United States Circuit Judge for the Court of Appeals, 3rd Circuit, sitting by designation.

2 24-1880 the beneficiary. Under Nevada law, that designation controls. See Edelstein v. Bank

of New York Mellon, 286 P.3d 249, 258–59 (Nev. 2012). Accordingly, the HOA

was obligated to send the relevant notices to MERS, and Teal Petals does not dispute

that the HOA failed to do so.

The undisputed record also demonstrates that MERS did not receive actual

notice from any other source and that Ocwen’s predecessor, GMAC Mortgage LLC

(“GMAC”), was prejudiced by the lack of notice to MERS. The district court did

not abuse its discretion by considering the declarations of Franklin Annand and

Benjamin Verdooren. See SEC v. Phan, 500 F.3d 895, 912–13 (9th Cir. 2007). This

evidence, which established that MERS had no record of the notices of lien, default,

or sale, was sufficient to rebut any presumption that the original lender, in its usual

course of business, forwarded the notices to MERS. See Nev. Rev. Stat.

§ 47.250(18)(c). The evidence also established that MERS forwarded to GMAC any

notices MERS received regarding the Property and that, upon receiving a notice of

default, GMAC would pay off the HOA lien. See U.S. Bank, Nat’l Ass’n ND v. Res.

Grp., LLC, 444 P.3d 442, 447 (Nev. 2019) (“At trial, U.S. Bank’s collection officer

testified that it was the bank’s practice, on receiving a Nevada notice of default, to

request payoff information and ‘pay the lien off . . . to protect our interest.’ . . . This

testimony, if credited, establishes the lack of notice and prejudice needed to void the

sale.”).

3 24-1880 Therefore, the district court permissibly determined that the foreclosure sale

was void and did not extinguish Ocwen’s deed of trust because the undisputed record

demonstrates that (1) the HOA did not substantially comply with the statutory notice

requirements; (2) MERS did not receive actual notice from another source; and (3)

Ocwen’s predecessor was prejudiced by the lack of notice. See id. at 447–48.

AFFIRMED.

4 24-1880