Bank of Am., N.A. v. Lake Mead Court Homeowners' Ass'n, Case No.: 2:16-cv-00504-GMN-NJK

BANK OF AMERICA, N.A., Plaintiff, v. LAKE MEAD COURT HOMEOWNERS' ASSOCIATION, et al., Defendants.

Case No.: 2:16-cv-00504-GMN-NJK

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

January 15, 2019

ORDER

Pending before the Court are the Motions for Summary Judgment, (ECF Nos. 83, 84), filed by Plaintiff Bank of America, N.A. ("Plaintiff") and Defendant SFR Investments Pool 1, LLC ("SFR"). Plaintiff and SFR filed Responses, (ECF Nos. 91, 93), as well as Replies, (ECF Nos. 94, 96), to their respective Motions.¹

For the reasons that follow, Plaintiff's Motion for Summary Judgment is GRANTED and SFR's Motion for Summary Judgment is DENIED.

I. BACKGROUND

This case arises from the non-judicial foreclosure on real property located at 2092 Scanlon Ferry Court #103, Las Vegas, Nevada 89156 (the "Property"). (See Deed of Trust, Ex. A to Pl.'s Mot. Summ. J. ("Pl.'s MSJ"), ECF No. 83-1). On June 25, 2008, Carlos Nevarez ("Borrower") obtained a loan in the amount of $176,861.00 secured by a deed of trust (the"DOT") recorded on June 27, 2008. (Id.). On May 17, 2011, upon Borrower's failure to pay all amounts due, Lake Mead Homeowners' Association ("HOA"), through its agent Alessi and Koenig, LLC ("A&K"), initiated foreclosure proceedings against the Property by recording a notice of delinquent assessment and a subsequent notice of default and election to sell. (See Notice of Delinquent Assessment Lien, Ex. D to Pl.'s MSJ, ECF No. 83-4); (Notice of Default, Ex. E to Pl.'s MSJ, ECF No. 83-5).

Plaintiff obtained its interest in the DOT through an assignment of deed of trust recorded on June 20, 2011. (See Assignment, Ex. C to Pl.'s MSJ, ECF No. 83-3). On October 14, 2011, in an attempt to preserve its interest in the Property, Plaintiff requested an accounting ledger from A&K specifying the amount of HOA's superpriority lien. (Request for Accounting, Ex. 2 to Miles Bauer Aff., Ex. G to Pl.'s MSJ, ECF No. 83-7). Because A&K responded with a ledger omitting the superpriority amount, (see Account History Report, Ex. 2 to Miles Bauer Aff., ECF No. 83-7), Plaintiff calculated what it determined to be the lien amount and sent A&K a check for $1,098.00. (See Tender Letter, Ex. 3 to Miles Bauer Aff., ECF No. 83-7); (A&K's Confirmation of Receipt, Ex. 4 to Miles Bauer Aff., ECF No. 83-8).

On November 5, 2012, HOA, through A&K, continued with the foreclosure proceedings by recording a notice of trustee's sale. (See Notice of Trustee's Sale, Ex. F to Pl.'s MSJ, ECF No. 83-6). HOA foreclosed on the Property on December 5, 2012, and a trustee's deed upon sale was recorded in favor of SFR on December 10, 2012. (See Trustee's Deed Upon Sale, Ex. H to Pl.'s MSJ, 83-8).

On March 8, 2016, Plaintiff filed the instant action asserting causes of action against various parties associated with the foreclosure on the Property: (1) quiet title with a requested remedy of declaratory relief against all Defendants; (2) breach of NRS 116.1113 against HOA and A&K (3) wrongful foreclosure against HOA and A&K and (4) injunctive relief against SFR. (See Compl. ¶¶ 30-83, ECF No. 1). On May 14, 2016, SFR filed counter and crossclaimsagainst Plaintiff and Borrower for: (1) quiet title; and (2) injunctive relief. (SFR's Answer 13:8-14:17, ECF No. 32). In the instant Motions, Plaintiff and SFR seek summary judgment on their respective claims for quiet title. (See Pl.'s MSJ, ECF No. 83); (SFR's Mot. Summ. J. ("SFR's MSJ"), ECF No. 84).

II. LEGAL STANDARD

The Federal Rules of Civil Procedure provide for summary adjudication when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Material facts are those that may affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. Id. "Summary judgment is inappropriate if reasonable jurors, drawing all inferences in favor of the nonmoving party, could return a verdict in the nonmoving party's favor." Diaz v. Eagle Produce Ltd. P'ship, 521 F.3d 1201, 1207 (9th Cir. 2008) (citing United States v. Shumway, 199 F.3d 1093, 1103-04 (9th Cir. 1999)). A principal purpose of summary judgment is "to isolate and dispose of factually unsupported claims." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).

In determining summary judgment, a court applies a burden-shifting analysis. "When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case." C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted). In contrast, when the nonmoving party bears the burden of proving the claim or defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate anessential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. Celotex Corp., 477 U.S. at 323-24. If the moving party fails to meet its initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60 (1970).

If the moving party satisfies its initial burden, the burden then shifts to the opposing party to establish that a genuine issue of material fact exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 631 (9th Cir. 1987). In other words, the nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations that are unsupported by factual data. Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the pleadings and set forth specific facts by producing competent evidence that shows a genuine issue for trial. Celotex Corp., 477 U.S. at 324.

At summary judgment, a court's function is not to weigh the evidence and determine the truth but to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 249. The evidence of the nonmovant is "to be believed, and all justifiable inferences are to be drawn in his favor." Id. at 255. But if the evidence of the nonmoving party is merely colorable or is not significantly probative, summary judgment may be granted. Id. at 249-50.

III. DISCUSSION

Plaintiff and SFR move for summary judgment on their competing quiet title claims. (See Pl.'s MSJ, ECF No. 83); (SFR's MSJ, ECF No. 84). Plaintiff argues that its first DOTcontinues to encumber the Property because: (1) the statute governing the foreclosure sale is facially unconstitutional; (2) Plaintiff's tender of $1098.00 to A&K extinguished HOA's superpriority lien; and (3) the Property's grossly inadequate sale price and corresponding irregularities in the foreclosure process render the sale invalid. (See Pl.'s MSJ 5:24-9:26, 12:25-15:10, 17:2-21:19).

In turn, SFR asserts that Plaintiff's quiet title claim is barred by the applicable statute of limitations. (SFR's MSJ 7:22-11:19, ECF No. 84). Even if the claim is not time-barred, SFR continues, the HOA foreclosure sale was valid and consequently caused the extinction of Plaintiff's DOT. (Id. 22:8-25:17). SFR also argues that Plaintiff is not entitled to an equitable remedy given SFR's status as a bona fide purchaser for value. (SFR's Resp. to Pl.'s MSJ ("SFR's Resp.") 28:11-30:19, ECF No. 93).

A. Statute of Limitations

SFR argues that Plaintiff's quiet title claim is time-barred because Plaintiff failed to file its Complaint within the applicable three-year limitations period. (SFR's MSJ 9:22-11:19). According to SFR, Plaintiff's claim concerns HOA's failure to comply with NRS 116.3116 and Nevada law prescribes a three-year limitations period for actions arising from statutory liability. (Id. 9:22-10:17).

Contrary to SFR's assertions, an action to quiet title in Nevada is subject to a five-year limitations period. Saticoy Bay LLC Series 2021 Gray Eagle Way v. JPMorgan Chase Bank, 388 P.3d 226, 232 (2017); see also US Bank Nat'l Ass'n for Merrill Lynch Mortg. Inv'rs Tr., No. 2:16-cv00866-GMN-PAL, 2018 WL 4705525, at *2 (D. Nev. Sept. 29, 2018); Weeping Hollow Ave. Tr. v. Spencer, 831 F.3d 1110, 1114 (9th Cir. 2016). For claims that arise from the non-judicial foreclosure on real property, the statute of limitations begins to accrue at the time of the foreclosure sale. Gray Eagle Way, 388 P.3d at 232; US Bank Nat'l Ass'n for MerrillLynch Mortg. Inv'rs Tr., 2018 WL 4705525, at *2; Bank of Am., N.A. v. Antelope Homeowners' Ass'n, No. 2:16-cv-00449-JCM-PAL, 2017 WL 421652, at *3 (D. Nev. Jan. 30, 2017).

Here, the foreclosure sale took place on December 5, 2012, and SFR recorded its interest in the Property on December 10, 2012. (See Trustee's Deed Upon Sale, Ex. H to Pl.'s MSJ, ECF No. 83-8). Plaintiff filed its Complaint in this action on March 8, 2016. (See Compl., ECF No. 1). Because Plaintiff initiated this action within five years of the foreclosure sale, Plaintiff's cause of action for quiet title is timely.

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