Bank of Am., N.A. v. SFR Invs. Pool 1, LLC

BANK OF AMERICA, N.A.,SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING,LP F/K/A COUNTRYWIDE HOMES LOANS SERVICING, LP, Appellant, v. SFR INVESTMENTS POOL 1, LLC, ANEVADA LIMITED LIABILITY COMPANY, Respondent.

No. 70501

COURT OF APPEALS OF THE STATE OF NEVADA

May 31, 2017

ORDER OF REVERSAL AND REMAND

Appellant Bank of America, N.A., appeals from a district court summary judgment in a real property action.¹ Eighth Judicial District Court, Clark County; Valerie Adair, Judge.

Bank of America, N.A., held a first deed of trust on the subject property, which respondent SFR Investments Pool 1, LLC, purchased at a homeowners' association (HOA) foreclosure sale conducted pursuant to NRS Chapter 116 after the homeowner failed to pay HOA assessments. See NRS 116.3116²-.31168; Saticoy Bay LLC Series 350 Durango 104 v. Wells Fargo Home Mortg., 133 Nev. ___, ___, 388 P.3d 970, 971 (2017) (recognizing that the statutory scheme grants HOAs superpriority liens for unpaid assessments and allows HOAs to nonjudicially foreclosure on those liens). After SFR purchased the property, litigation ensued with Bank of America and SFR both claiming title to the property. The district court ultimately granted summary judgment in SFR's favor, finding that the sale was conducted properly and that the HOA's foreclosure on its superpriority lien extinguished Bank of America's deed of trust on the property. This appeal followed.

Bank of America first argues that the statutory scheme allowing HOA foreclosures to extinguish first deeds of trust is facially unconstitutional because it allows parties like Bank of America to be deprived of their property without due process. However, the Nevada Supreme Court's recent opinion in Saticoy Bay specifically addressed this argument and held that the statutory scheme does not implicate due process because no state actor is involved in the HOA's foreclosure of its superpriority lien. See 133 Nev. at ___, 388 P.3d at 972-73 (recognizing that for due process to apply a state actor must be involved and concluding that the nonjudicial foreclosure process in NRS Chapter 116 does notinclude any state actor, thus the statutory scheme does not violate due process). Accordingly, this argument does not provide a basis to overturn the grant of summary judgment in SFR's favor.

Next, Bank of America argues that it provided appropriate tender of the superpriority lien amount to protect its first deed of trust and that the HOA improperly rejected that tender. SFR responds that the tender was not proper because it was conditional in nature. The district court agreed with SFR and concluded that the tender was conditional in nature, requiring the HOA to waive its possible right to additional amounts when the applicable law regarding what could be included in a superpriority lien was unsettled, and therefore was not sufficient to protect Bank of America's interest in the property.

Having reviewed the tender given by Bank of America, we conclude that, to the extent it was conditional, Bank of America had a right to insist on the given condition. See, e.g., Dull v. Dull, 674 P.2d 911, 913 (Ariz. Ct. App. 1983) ("A tender is not conditional . . . if the condition is one which the person making the tender has a legal right to insist upon."); McGehee v. Mata, 330 So. 2d 248, 249 (Fla. Dist. Ct. App. 1976) (same); Fresk v. Kraemer, 99 P.3d 282, 286-87 (Or. 2004) (same).³ Bank of America's tender indicated that it represented nine months' worth of HOA assessments and that the HOA's acceptance of the tender would act as a complete resolution of the HOA's superpriority lien. And the supreme court has confirmed that the pre-2015 version of NRS 116.3116 limited theHOA's superpriority lien amount to the amount which Bank of America offered: "an amount equal to the common expense assessments due during the nine months before foreclosure." Horizons at Seven Hills Homeowners Ass'n v. Ikon Holdings, LLC, 132 Nev. ___, ___ n.2, 373 P.3d 66, 67 n.2, 72 (2016).⁴ Thus, Bank of America had a right to insist that acceptance of the nine months' worth of HOA assessments would result in the satisfaction of the HOA's superpriority lien as that condition comported with the law. See Dull, 674 P.2d at 913; McGehee, 330 So. 2d at 249; Fresk, 99 P.3d at 286-87. Accordingly, the district court's finding that Bank of America's tender was insufficient solely because it was conditional is incorrect.

Despite our conclusion that the conditional nature of Bank of America's tender did not render it insufficient, that does not end our inquiry. Rather, to conclude that Bank of America's tender was sufficient, we must also be able to determine that the amount of the tender was sufficient to fully satisfy the superpriority lien. See generally 15 Richard A. Lord, Williston on Contracts § 47:1 (4th ed. 2017) (providing that valid tender in a contract scenario requires an offer to pay the amount due). Because the district court stopped its inquiry once it found that the tenderwas conditional, it did not reach the issue of whether the amount of the tender was sufficient to satisfy the superpriority portion of the lien.

Without a finding regarding the sufficiency of the amount of the tender, a genuine issue of material fact remains as to whether Bank of America's tender was proper and the HOA's rejection of the offered tender was improper, such that the offer of tender satisfied the superpriority lien. See, e.g., Hohn v. Morrison, 870 P.2d 513, 516-17 (Colo. App. 1993) (providing that a proper tender that is rejected without justification may invalidate a lien on real property); SFR Invs. Pool 1, LLC v. U.S. Bank, N.A., 130 Nev. ___, ___, 334 P.3d 408, 414 (2014) (providing that a holder of the first deed of trust can pay off the superpriority lien to avert its loss of security under the HOA foreclosure statutes); Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029 (2005) (providing the standard for summary judgment). We therefore must reverse and remand that issue to the district court for it to decide in the first instance. See Ryan's Express Transp. Servs., Inc. v. Amador Stage Lines, Inc., 128 Nev. 289, 299, 279 P.3d 166, 172 (2012) ("An appellate court is not particularly well-suited to make factual determinations in the first instance."). And based on the district court's determination as to tender, the court may need to reweigh the remaining equitable considerations. See Shadow Wood Homeowners Ass'n v. N.Y. Cmty. Bancorp, Inc., 132 Nev. ___, ___, 366 P.3d 1105, 1114 (2016) (recognizing that one of the relevant considerations in deciding an equitable challenge to an HOA foreclosure sale is the purported tender of the superpriority lien and providing that "courts must consider the entirety of the circumstances that bear upon the equities" (emphasis added)); see also La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V., 762 F.3d 867, 880 (9th Cir. 2014) (cited with approval in Shadow Wood for theproposition that remand to the district court for reconsideration of its decision regarding an equitable remedy was appropriate when the district court failed to consider a fact relevant to the weighing of equities). Accordingly, we

ORDER the judgment of the district court REVERSED AND REMAND this matter to the district court for...