Christiana Trust v. SFR Invs. Pool 1, LLC

CHRISTIANA TRUST, A DIVISION OF WILMINGTON SAVINGS FUND SOCIETY,FSB, as TRUSTEE of ARLP TRUST 3, Plaintiff, v. SFR INVESTMENTS POOL 1, LLC, et al., Defendants.

Case No.: 2:16-cv-00684-GMN-CWH

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

December 17, 2018

ORDER

Pending before the Court are the cross Motions for Summary Judgment, (ECF Nos. 66, 67), filed by Plaintiff Christiana Trust ("Plaintiff") and Defendant SFR Investments Pool 1, LLC ("SFR"). Defendants Preserve Homeowners Association ("HOA") and SFR (collectively "Defendants") filed Reponses to Plaintiff's Motion, (ECF Nos. 73, 74), to which Plaintiff filed Replies, (ECF Nos. 80, 81). As to SFR's Motion for Summary Judgment, Plaintiff filed a Response, (ECF No. 76), and SFR filed a Reply, (ECF No. 82).

Also pending before the Court is HOA's Motion for Summary Judgment, (ECF No. 68), to which Plaintiff filed a Response, (ECF No. 77), and HOA did not file a reply.

For the reasons discussed below, Plaintiff's Motion for Summary Judgment is GRANTED in part and DENIED in part, HOA's Motion is GRANTED in part and DENIED in part, and SFR's Motion for Summary Judgment is DENIED.

I. BACKGROUND

This case arises from the non-judicial foreclosure on real property located at 479 North Sand Crane Circle, Sparks, Nevada 89436 (the "Property"). (See Am. Compl. ¶ 1, ECF No. 13). Robert Salvador ("Borrower") purchased the Property by way of a loan in the amount of $263,112.00 secured by a deed of trust ("DOT") recorded on March 2, 2006. (See Deed of Trust, Ex. 2 to Pl.'s Mot. Summ. J. ("Pl.'s MSJ"), ECF No. 66-2). Plaintiff became beneficiary under the DOT on April 15, 2014, following a series of assignments. (See Deed of Trust Assignments, Exs. 3-5 to Pl.'s MSJ, ECF Nos. 66-3, 66-4, 66-5).

Upon Borrower's failure to pay all amounts due, HOA, through its agent Alessi & Koenig, LLC ("A&K"), initiated foreclosure proceedings against the Property by recording a notice of delinquent assessment lien on July 30, 2012. (See Notice of Lien, Ex. 7 to Pl.'s MSJ, ECF No. 66-7). On December 18, 2012, A&K recorded a notice of default and election to sell, and a subsequent notice of trustee's sale on July 12, 2013. (See Notice of Default, Ex. 11 to Pl.'s MSJ, ECF No. 66-11); (Notice of Sale, Ex. 12 to Pl.'s MSJ, ECF No. 66-12). The foreclosure sale occurred on October 24, 2013, at which SFR acquired the Property for $8,300.00, and recorded its interest in the same on October 31, 2013. (See Trustee's Deed Upon Sale, Ex. 8 to Pl's Mot. Partial Summ. J., ECF No. 59-8).

On July 26, 2016, Plaintiff filed its Amended Complaint asserting the following causes of action arising from the foreclosure and subsequent sale of the Property: (1) quiet title; (2) injunctive relief; (3) unjust enrichment; (4) equitable subrogation; (5) wrongful foreclosure; (6) negligence; (7) negligence per se; (8) breach of contract; (9) misrepresentation; and (10) tortious interference with contract. (See Am. Compl. ¶¶ 76-169). SFR subsequently filed an Answer asserting the following counterclaims against Plaintiff: (1) quiet tile; (2) injunctive relief; and (3) slander of title. (See Answer 20:3-22:9, ECF No. 20).

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 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. 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 issufficient 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 moves for summary judgment on its quiet title claim against SFR and wrongful foreclosure claim against HOA on the basis that the foreclosure did not comply with NRS Chapter 116, the Property sold for a grossly inadequate price, and the foreclosure process was otherwise tainted by fraud, oppression, and unfairness. (Pl's MSJ 7:18-13:28, ECF No. 66). SFR seeks summary judgment on its completing claim for quiet title asserting that the HOA foreclosure complied with the statutory requirements, the sale validly extinguished Plaintiff's DOT, and Plaintiff is not entitled to an equitable remedy or a right of redemption. (SFR's Mot. Summ. J. ("SFR's MSJ") 8:16-13:13, ECF No. 67). HOA moves for summary judgment on Plaintiff's wrongful foreclosure claim arguing that it complied with NRS Chapter 116 as it existed at the relevant time and there is no evidence establishing fraud, oppression, or unfairness in the foreclosure or sale. (HOA's Mot. Summ. J. ("HOA's MSJ") 9:18-10:9, ECF No. 68).

Prior to addressing the substance of these arguments, the Court first turns to the parties' dispute as to whether the Court is bound by the Ninth Circuit's holding in Bourne Valley Court Tr. v. Wells Fargo Bank, NA, 832 F.3d 1154 (9th Cir. 2016), cert. denied, No. 16-1208, 2017 WL 1300223 (U.S. June 26, 2017).

A. Constitutionality of the Foreclosure

In the Court's prior Order on Plaintiff's motion for partial summary judgment, the Court rejected Plaintiff's argument that Bourne Valley compels a finding that Plaintiff's DOT survived the foreclosure sale. (See Order 4:21-7:6, ECF No. 99). In Bourne Valley, the Ninth Circuit held that NRS 116.3116's notice provisions violated lenders' due process rights because the scheme "shifted the burden of ensuring adequate notice from the foreclosing homeowners' association to a mortgage lender." Bourne Valley, 832 F.3d at 1159. The Ninth Circuit, interpreting Nevada law, declined to adopt the petitioner's construction that NRS 107.090, read into NRS 116.31168(1), mandates that HOAs provide notice to lenders even absent a request. Id. According to the Bourne Valley Court, the absence of mandatory notice provisions rendered the scheme facially unconstitutional. Id. at 1158-60.

Bourne Valley's construction of Nevada law, upon which it based its holding of unconstitutionality, is "only binding in the absence of any subsequent indication from the [Nevada] courts that [the Ninth Circuit's] interpretation was incorrect." Owen v. United States, 713 F.2d 1461, 1464 (9th Cir. 1983). "[W]here the reasoning or theory of . . . prior circuit authority is clearly irreconcilable with the reasoning or theory of intervening higher authority, [a court] should consider itself bound by the later controlling authority. . . ." Miller v. Gammie, 335 F.3d 889, 892-893 (9th Cir. 2003). "[A] [s]tate's highest court is the final judicial arbiter of the meaning of state statutes." Sass v. California Bd. of Prison Terms, 461 F.3d 1123, 1129 (9th Cir. 2006) (citing Gurley v....