Bank of N.Y. Mellon v. SFR Invs. Pool 1, LLC

THE BANK OF NEW YORK MELLON FKA

THE BANK OF NEW YORK, AS TRUSTEE FOR THE

CERTIFICATEHOLDERS OF THE CWABS, INC.

ASSET-BACKED CERTIFICATES, SERIES 2004-7, Plaintiff, v. SFR INVESTMENTS POOL 1, LLC;

MONTAGNE MARRON COMMUNITY ASSOCIATION;

ALESSI & KOENIG, LLC, Defendants.

SFR INVESTMENTS POOL 1, LLC, Counter/Cross Claimant. v. THE BANK OF NEW YORK FKA THE

BANK OF NEW YORK AS TRUSTEE FOR

THE CERTIFICATEHOLDERS OF THE

CWABS, INC., ASSET-BACKED CERTIFICATES, SERIES 2004-7;

and JOHN EDWARD BOSTAPH, JR., Counter/Cross Defendants.

Case No.: 2:16-cv-00847-GMN-DJA

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

February 25, 2021

ORDER

Pending before the Court is the Motion for Summary Judgment, (ECF No. 84), filed by Defendant Montagne Marron Community Association ("HOA"). Plaintiff Bank of New York Mellon, FKA Bank of New York, as Trustee for the Certificateholders of the CWABS, Inc. Asset-Backed Certificates, Series 2004-7 ("BNYM") filed a Response, (ECF No. 88), and HOA filed a Reply, (ECF No. 94).

Also pending before the Court is the Motion for Partial Summary Judgment, (ECF No. 85), filed by BNYM. Defendant HOA and SFR Investments Pool 1, LLC ("SFR") filed Responses, (ECF Nos. 89, 91). BNYM filed a Reply, (ECF No. 93).

Also pending before the Court is the Motion for Summary Judgment, (ECF No. 86), filed by Defendant SFR. BNYM filed a Response, (ECF No. 87), and SFR filed a Reply, (ECF No. 92).

For the reasons discussed below, the Court GRANTS BNYM's Motion for Partial Summary Judgment and DENIES SFR's and HOA's Motions for Summary Judgment.

I. BACKGROUND

This case arises from the non-judicial foreclosure sale of the real property located at 10949 Sospel Place, Las Vegas, NV 89141-3813 (the "Property"). (Deed of Trust ("DOT"), Ex. A to BNYM's Mot. Partial Summ. J., ECF No. 85-1).¹ On July 14, 2004, John Edward Bostaph, Jr. ("Bostaph") financed his purchase of the Property by way of a $302,400.00 loan secured by a DOT identifying Mortgage Electronic Registration Systems, Inc. ("MERS") as the beneficiary. (Id. at 2-3). The DOT was recorded on July 20, 2004. (Id.). In 2012, MERS assigned its interest to BNYM. (Assignment of DOT, Ex. C to BNYM's Mot. Partial Summ. J., ECF No. 85-3).

On July 26, 2010, upon Bostaph's failure to stay current on his loan obligations, HOA initiated foreclosure proceedings on the Property through its agent, Alessi & Koenig, LLC ("Alessi & Koenig"). (Notice of Delinquent Assessment Lien, Ex. D to BNYM's Mot. Partial Summ. J., ECF No. 85-4). On September 28, 2009, HOA via Alessi & Koenig recorded a Notice of Default and Election to Sell. (Notice of Default and Election to Sell, Ex. E to BNYM's Mot. Partial Summ. J., ECF No. 85-5). HOA recorded a Notice of Sale on March 31, 2010. (Notice of Trustee's Sale recorded March 31, 2010, Ex. H to BNYM's Mot. Partial Summ. J., ECF No. 85-8). On September 22, 2011, HOA recorded another Notice of Sale. (Notice of Trustee's Sale recorded September 22, 2011, Ex. I to BNYM's Mot. Partial Summ. J., ECF No. 85-9).

On October 19, 2011, HOA, through Alessi & Koenig, proceeded with the foreclosure sale, selling the Property at an auction to itself for $11,343.10. (Trustee's Deed Upon Sale, Ex. J to BNYM's Mot. Partial Summ. J., ECF No. 85-10). HOA then issued a quitclaim deed transferring title to SFR on April 8, 2013. (Quitclaim Deed, Ex. S to BNYM's Mot. Partial Summ. J., ECF No. 85-19).

Plaintiff BNYM filed its Complaint on April 14, 2016, asserting the following causes of action arising from the foreclosure and sale of the Property: (1) quiet title/declaratory relief against SFR and HOA; (2) breach of NRS 116.1113 against HOA and Alessi & Koenig; (3) wrongful foreclosure against HOA and Alessi & Koenig; and (4) injunctive relief against SFR. (Compl. ¶¶ 27-67, ECF No. 1).

On April 18, 2018, the Court granted BNYM's Motion for Partial Summary Judgment. (Order Granting Summ. J., ECF No. 54). Following Defendant SFR's Notice of Appeal, the Court vacated its previous order for having relied on Bourne Valley Court Trust v. Wells Fargo Bank, N.A., which had been repudiated by the Nevada Supreme Court in the interim. (Order Vacating Prior Order, ECF No. 59). The Ninth Circuit ultimately reversed the Court's judgment, finding that Nevada's HOA foreclosure scheme is not facially unconstitutional because the court's decision in Bourne Valley no longer controls in light of SFR Investments Pool 1, LLC v. Bank of New York Mellon. (Order of USCA, Ninth Circuit, ECF No. 65). Following the Ninth Circuit's decision to reverse and remand this Court's prior judgment, the parties filed the instant Motions for Summary Judgment. (HOA's Mot. Summ. J., ECF No. 84); (BNYM's Mot. Partial Summ. J., ECF No. 85); (SFR's Mot. Summ. J., ECF No. 86).

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. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is a sufficient evidentiary basis on which a reasonable fact-finder could rely to find for the nonmoving party. See id. "The amount of evidence necessary to raise a genuine issue of material fact is enough 'to require a jury or judge to resolve the parties' differing versions of the truth at trial.'" Aydin Corp. v. Loral Corp., 718 F.2d 897, 902 (9th Cir. 1983) (quoting First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968)). "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 an essential 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. See 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. See 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. See 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). However, the nonmoving party "may not rely on denials in the pleadings but must produce specific evidence, through affidavits or admissible discovery material, to show that the dispute exists," Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991), and "must do more than simply show that there is some metaphysical doubt as to the material facts." Orr v. Bank of America, 285 F.3d 764, 783 (9th Cir. 2002) (internal citations omitted). "The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient." Anderson, 477 U.S. at 252. In other words, the nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations that are unsupported by factual data. See 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. See 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. See 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. See id. at 249-50.

III. DISCUSSION

In its Motion, BNYM seeks summary judgment on four grounds. First, BNYM argues that HOA's failure to provide statutory notice pursuant to NRS Chapter 116 voids the HOA foreclosure sale. (See BNYM's Mot. Partial Summ. J. 6:16-8:13). Second, BNYM contends that tender was futile because Alessi and Koenig would have rejected any check delivered by BANA that purported to satisfy BANA's obligations to the HOA. (Id. 8:14-10:18). Third, BNYM asserts that equity warrants setting...