SFR Invs. Pool 1 v. U.S. Bank

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SFR INVESTMENTS POOL 1, LLC, Plaintiff and Counter Defendant, v. U.S. BANK NATIONAL ASSOCIATION, AS LEGAL TITLE TRUSTEE FOR TRUMAN 2016 SC6 TITLE TRUST AND FIRST AMERICAN TRUSTEE SERVICING SOLUTIONS, LLC, Defendant and Counter Claimant.

No. 3:20-cv-00604-MMD-CSD

United States District Court, D. Nevada

January 23, 2024

ORDER

MIRANDA M. DU, CHIEF UNITED STATES DISTRICT JUDGE

I. SUMMARY

This is one of hundreds of cases filed in this district to quiet title following a foreclosure sale conducted by a homeowners' association under NRS § 116.3116, et seq. (the “HOA Sale”), specifically regarding 479 N. Sand Crane Circle, Sparks, NV 89436; Parcel No. 510-453-14 (the “Property”). (ECF No. 1 at 1.) Plaintiff and Counter Defendant SFR Investments Pool 1 LLC, who purchased the Property at the HOA Sale, filed it as a declaratory judgment action following Defendant U.S. Bank National Association, as legal Title Trustee for Truman 2016 SC6 Title Trust and First American Trustee Servicing Solutions, LLC's notice that it intended to foreclose on a Deed of Trust (“DOT”)^[1] that U.S. Bank contends encumbers the Property. (Id. at 8.) Before the Court are the parties' crossmotions for summary judgment. (ECF Nos. 69, 70.)^[2] The Court held a hearing on the competing motions on January 16, 2024 (the “Hearing”). (ECF Nos. 83 (setting hearing), 84 (hearing minutes).) As further explained below, the Court must resolve this case in U.S. Bank's favor because the excused tender doctrine applies, and the Court finds SFR's statute of limitations and laches arguments unpersuasive.

II. BACKGROUND

As SFR does not dispute the facts regarding the foreclosure proceedings that U.S. Bank presents in subsection I of its statement of facts (ECF No. 77 at 2), the Court incorporates those facts by reference here (ECF No. 70 at 2-4). The Court also takes judicial notice of the facts that U.S. Bank presents in that subsection because they are all supported by publicly recorded property records. (Id. at 5-6 (requesting the Court take judicial notice of those documents).) See also Harlow v. MTC Fin. Inc., 865 F.Supp.2d 1095, 1099 (D. Nev. 2012) (taking judicial notice of documents recorded in a county recorder's office).

SFR disputes the rest of the facts U.S. Bank presents in its motion and urges the Court not to take judicial notice of them. The Court will discuss further below (in Section III) the evidence supporting U.S. Bank's contention that “Alessi & Koenig, LLC (“A&K”), had a known policy to reject super-priority lien tenders from Bank of America, N.A., which was the prior record beneficiary of the Deed of Trust at the time of sale and U.S. Bank's predecessor-in-interest.” (ECF No. 70 at 2; see also id. at 4-5 (containing the disputed facts); ECF No. 77 at 2 (disputing these facts).)

The Court now turns to this case's procedural history. SFR filed an initial quiet title action in state court, claiming that the HOA Sale extinguished the DOT, shortly after it purchased the Property at the HOA Sale in 2013. (ECF No. 69 at 2.) See also SFR Investments Pool 1 v. Bank of America, et al., Case No. CV13-02750 (2nd Jud. Dist. Ct. Filed Dec. 31, 2013); https://www.washoecourts.com/Query/CaseInformation/CV13- 02750^[3] But SFR voluntarily dismissed that case in 2014 after the Nevada Supreme Court issued its decision in SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d 408 (Nev. 2014), believing that decision vindicated its position-rendering that initial lawsuit unnecessary. (ECF No. 69 at 2.) No defendants filed answers or asserted counterclaims in that case. See Bank of America, https://www.washoecourts.com/Query/CaseInformation/CV13-02750.

In 2016, Christiana Trust, a Division of Wilmington Savings Fund Society, FSB, not in its individual capacity but as Trustee of ARLP Trust 3, filed another quiet title case against SFR involving the Property. See Christiana Trust v. SFR Investments Pool 1, LLC, Case No. 2:16-cv-00684-GMN-CWH, ECF No. 1 (D. Nev. Filed Mar. 29, 2016).^[4]While Christiana Trust raised tender as an affirmative defense to SFR's counterclaims, see id., ECF No. 29 at 8, it was not addressed in the dispositive order initially resolving that case in Christiana Trust's favor, see id., ECF No. 102, suggesting that no party argued excused tender in any of the briefing leading to that order. The United States Court of Appeals for the Ninth Circuit ultimately found Christiana Trust lacked standing and dismissed that case without prejudice in April 2020, vacating Judge Navarro's order favorable to Christiana Trust. See id., ECF Nos. 119, 123. So neither of the first two cases resolved whether the DOT continued to encumber the Property following the HOA Sale.

SFR filed this case in October 2020, allegedly in response to U.S. Bank's initiation of foreclosure proceedings. (ECF No. 1 at 8.) SFR brings three claims against U.S. Bank.^[5](Id. at 8-10.) SFR's first claim against U.S. Bank is for declaratory relief that the HOA Sale extinguished the DOT. (Id. at 8-9.) SFR's second claim against U.S. Bank is for slander of title, contending that U.S. Bank's foreclosure notices filed against the Property contained false statements because the HOA Sale extinguished the DOT. (Id. at 9.) SFR's final claim against U.S. Bank is for wrongful foreclosure in the event U.S. Bank forecloses on the Property. (Id. at 10.)

When U.S. Bank answered SFR's Complaint, it asserted tender as one of its affirmative defenses and filed several counterclaims against SFR. (ECF No. 17 at 6, 814.) U.S. Bank's first counterclaim is for a declaration that the DOT continues to encumber the Property based on its allegations that the notices sent out regarding the HOA Sale were inadequate or otherwise violated U.S. Bank's due process rights. (Id. at 12-13.) U.S. Bank's second claim against SFR is for unjust enrichment, based on U.S. Bank's contention that, “U.S. Bank has been deprived of the benefit of its secured deed of trust by the actions of SFR.” (Id. at 13.) U.S. Bank's third claim against SFR is for equitable subrogation, seeking a declaration, “that U.S. Bank is the beneficiary of a first position Deed of Trust that encumbers the Property and is superior to the interest held by SFR and all other parties, if any.” (Id. at 13-14.)

SFR obtained a temporary restraining order and later a preliminary injunction prohibiting U.S. Bank from foreclosing on the Property until this case is resolved. (ECF Nos. 9, 15.) The case was later stayed pending the resolution of a potentially applicable decision of the Nevada Supreme Court (ECF Nos. 45, 46), then unstayed (ECF Nos. 53, 54), and reassigned to the Court (ECF No. 61). The parties filed the pending motions consistent with an updated scheduling order, once extended. (ECF Nos. 65, 68.) In sum, the propriety of the HOA Sale has not been finally adjudicated even though it happened in 2013.

III. DISCUSSION

U.S. Bank's core argument in both its motion and its response to SFR's motion is that the futility of tender doctrine described in 7510 Perla Del Mar Ave Tr. v. Bank of Am., N.A., 458 P.3d 348, 351 (Nev. 2020)-which the Court interchangeably refers to as the excused tender doctrine herein-applies here and rendered the HOA Sale void. The Court agrees. And as further explained below, the Court's agreement with U.S. Bank on this core argument resolves the rest of the parties' claims against each other. The Court begins by explaining why it may consider U.S. Bank's challenged exhibits, then disposes of SFR's statute of limitations and laches arguments, then turns to the application of the excused tender doctrine, and concludes by explaining how the resolution of the excused tender issue resolves the rest of the parties' claims against each other.

A. The Challenged Exhibits

U.S. Bank proffers four exhibits to support its contention that, in 2012, A&K (the HOA's agent who conducted the HOA Sale) had a policy of refusing to accept superpriority lien tenders, and U.S. Bank's predecessor-in-interest, Bank of America, N.A., knew about it. (ECF No. 70 at 4-5.) U.S. Bank initially asked the Court to take judicial notice of three of them, and maintains that request was proper, but alternatively contends in reply to SFR's contention that judicial notice of three of the exhibits would be improper that the Court can nonetheless consider them in this context because their contents could be presented in an admissible form at trial. (Id. at 5-6; see also ECF Nos. 77 at 6-7 (arguing judicial notice would be improper), 82 at 5-7 (replying that the Court can consider their contents regardless).) The Court agrees with U.S. Bank.

“[A]t the summary judgment stage, we do not focus on the admissibility of the evidence's form. We instead focus on the admissibility of its contents.” Sandoval v. Cnty. of San Diego, 985 F.3d 657, 666 (9th Cir. 2021), cert. denied sub nom. San Diego Cnty. v. Sandoval, 142 S.Ct. 711 (2021) (citation omitted). Indeed, the Court may consider inadmissible documents at summary judgment so long as their contents can be presented in a form that would be admissible at trial. See id.

The content of the challenged exhibits could be presented in a form that would be admissible at trial.^[6] Exhibit F is an arbitration brief that an attorney for A&K submitted in September 2012, Exhibit G is the non-binding arbitration award from that same arbitration, also from September 2012 Exhibit H is the sworn declaration of Rock Jung (an attorney employed by a law firm called Miles Bauer in 2012 and 2013), and Exhibit I consists of excerpts of trial testimony from David Alessi (the K in A&K) and Douglas Miles (the former managing partner of the Miles Bauer law firm). (ECF Nos. 70-6, 70-7, 70-8, 70-9.) All of these exhibits could either be...