Deutsche Bank Nat'l Tr. Co. v. Saticoy Bay LLC Series 1236 Dusty Creek St.

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DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee for Trust 2003-NC2, Mortgage Pass-Through Certificates, Series 2003-NC2 agent of Morgan Stanley Dean Witter Capital I Inc., Plaintiff-Appellee, v. SATICOY BAY LLC SERIES 1236 DUSTY CREEK STREET, Defendant-Appellant, and DURANGO TRAILS HOMEOWNERS ASSOCIATION, INC.; HOMEOWNER ASSOCIATION SERVICES, INC., Defendants.

No. 20-15432

United States Court of Appeals, Ninth Circuit

November 23, 2022

NOT FOR PUBLICATION

Argued and Submitted November 16, 2022 San Jose, California

Appeal from the United States District Court for the District of Nevada D.C. No. 2:17-cv-01667-APG-EJY Andrew P. Gordon District Judge, Presiding Before: SCHROEDER, GRABER, and FRIEDLAND, Circuit Judges.

MEMORANDUM^[*]

Real property in Nevada was sold at a homeowners' association ("HOA") foreclosure sale after the homeowner failed to pay required HOA assessments. The holder of the first deed of trust, Deutsche Bank National Trust Co., sued the current owner of the property, seeking a declaration that its interest in the property survived the foreclosure sale. The district court awarded summary judgment to Deutsche Bank, and defendant Saticoy Bay LLC appealed. We have jurisdiction under 28 U.S.C. § 1291, and we review de novo the district court's grant of summary judgment, Travelers Prop. Cas. Co. v. ConocoPhilips Co., 546 F.3d 1142, 1145 (9th Cir. 2008). "We may affirm a district court's judgment on any ground supported by the record, whether or not the decision of the district court relied on the same grounds or reasoning we adopt." Atel Fin. Corp. v Quaker Coal Co., 321 F.3d 924, 926 (9th Cir. 2003). We affirm.

1. The Nevada Supreme Court recently held that the relevant statute of limitations is four years. U.S. Bank, N.A. v. Thunder Props., Inc., 503 P.3d 299, 304 (Nev. 2022). Deutsche Bank filed its complaint less than four years after the foreclosure sale, and its action is therefore timely.

2. Under Nevada law, an HOA lien consists of two parts: a "superpriority" portion and a "subpriority" portion. See U.S. Bank, N.A. v S. Highlands Cmty. Ass'n., 999 F.3d 1185, 1188 (9th Cir. 2021). Although the superpriority portion of the lien takes priority over the first deed of trust at the time of a foreclosure sale, see Nev. Rev. Stat. § 116.3116(2)-(3), the subpriority portion does not. Therefore, if a homeowner's default is cured as to the superpriority portion of the lien, a foreclosure on the remaining (subpriority) portion will not extinguish a first deed of trust. In such a situation, the sale is "void as to the holder of the first deed of trust." 9352 Cranesbill Tr. v. Wells Fargo Bank, N.A., 459 P.3d 227, 228 (Nev. 2020).

Deutsche Bank introduced evidence showing that the unpaid HOA assessments as of the recording of the Notice of Lien were $410. Saticoy Bay does not contest the accuracy of this figure but argues that the superpriority portion of the lien is always nine months' worth of HOA assessments-regardless of payments that the homeowner made. That is incorrect: Nevada...