U.S. Bank Nat'Lass'N v. Heritage Estates Homeowners Assocation

U.S. BANK NATIONAL ASSOCIATION, as Trustee for the Certificateholders ofHarborview Mortgage Loan Trust 2005-08, Mortgage Loan Pass-Through Certificates,Series 2005-08, Plaintiff, v. HERITAGE ESTATES HOMEOWNERS ASSOCATION, et al., Defendants.

Case No.: 2:16-cv-01385-GMN-CWH

UNITED STATES DISTRICT COURT DISTRICT OF NEVADA

January 28, 2019

ORDER

Pending before the Court is the Motion for Summary Judgment, (ECF No. 80), filed by SFR Investments Pool 1, LLC ("SFR"). Heritage Estates Homeowners Association ("HOA") and U.S. Bank National Association ("Plaintiff") filed Responses, (ECF Nos. 82, 88), and SFR filed a Reply, (ECF No. 89).

Also pending before the Court is Plaintiff's Motion for Summary Judgment, (ECF No. 87), to which SFR and HOA responded, (ECF Nos. 90, 93), and Plaintiff replied, (ECF No. 97)

Also before the Court is HOA's Motion for Summary Judgment, (ECF No. 92). SFR and Plaintiff filed Responses, (ECF Nos. 99, 104), and HOA filed a Reply, (ECF No. 107).¹

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

I. BACKGROUND

This case arises from the non-judicial foreclosure on real property located at 5928 Gulf Island Avenue, Las Vegas 89156 (the "Property"). (See Deed of Trust, Ex. A to Pl.'s Mot. Summ. J. ("MSJ"), ECF No. 87-1). On May 23, 2005, Tadeusz and Danuta Chorzepa ("Borrowers") purchased the Property by way of a loan in the amount of $215,000 secured by a deed of trust (the "DOT"). (Id.). Plaintiff gained beneficial interest in the DOT through an assignment recorded on October 20, 2011. (See Assignment, Ex. B. to Pl.'s MSJ, ECF No. 87-2).

Upon Borrowers' failure to stay current of their payment obligations, Nevada Association Services ("NAS"), on behalf of HOA, initiated foreclosure proceedings by recording a notice of delinquent assessment lien and a subsequent notice of default and election to sell. (See Notice of Delinquent Assessment Lien, Ex. D to Pl.'s MSJ, ECF No. 87-4); (Notice of Default, Ex. E to Pl.'s MSJ, ECF No. 87-5).

On December 17, 2012, the law firm Miles, Bauer, Bergstrom & Winters LLP ("Miles Bauer"), on behalf of Plaintiff's loan servicer, Bank of America, N.A. ("BANA"), sent a letter to NAS requesting a ledger identifying the amount of HOA's superpriority lien. (See Request for Accounting, Ex. 1 to Miles Aff., Ex. G to Pl.'s MSJ, ECF No. 87-7). Because NAS did not respond with the ledger or the amount of HOA's lien, BANA calculated what it determined to be the lien amount based upon an accounting ledger for another property in the community. (See Statement of Account, Ex. 2 to Miles Aff., ECF No. 87-7). Miles Bauer, on behalf of BANA, subsequently delivered a check to NAS for $845.73. (See Tender Letter, Ex. 3 to MilesAff., ECF No. 87-7); (see also Rock Jung Dep. 42:19-43:5, Ex. E to HOA's MSJ, ECF No. 92-5).

Notwithstanding the alleged tender, NAS proceeded with the foreclosure by recording a notice of foreclosure sale and subsequently foreclosing on the Property. (See Notice of Trustee's Sale, Ex. F to Pl.'s MSJ, ECF No. 87-6). On August 5, 2013, SFR recorded a foreclosure deed stating it purchased the Property for $17,000. (Foreclosure Deed, Ex. H to Pl.'s MSJ, ECF No. 87-8).

Plaintiff filed the instant Complaint on June 17, 2016, asserting the following causes of action arising from the foreclosure and subsequent sale of the Property: (1) quiet title; (2) breach of NRS 116.1113; (3) wrongful foreclosure; and (4) injunctive relief. (See Compl. ¶¶ 29-81). On August 25, 2016, SFR filed crossclaims and counterclaims against Plaintiff and Borrowers, respectively, for quiet title and injunctive relief. (See Answer 14:5-15:12, ECF No. 19).

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)). Aprincipal 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 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 gobeyond 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. 87); (SFR's Mot. Summ. J. ("SFR's MSJ"), ECF No. 80). Plaintiff argues that its first DOT continues to encumber the Property because: (1) the statute governing the foreclosure sale is facially unconstitutional;² (2) Plaintiff's loan servicer, BANA, satisfied the HOA superpriority lien by tendering payment of $845.73 to NAS; and (3) the Property's grossly inadequate sale price and corresponding irregularities in the foreclosure process were sufficiently unfair as to warrant the sale's invalidation. (See Pl.'s MSJ 7:4-9:8, 12:4-17:19, 23:24-27:13).

In turn, SFR asserts the HOA foreclosure sale was validly conducted and consequently caused the extinction of Plaintiff's DOT. (SFR's MSJ 15:13-19:17). SFR also argues that Plaintiff, as lienholder, is neither entitled to an equitable remedy nor a right of redemption. (Id. 18:23-20:12). Finally, SFR claims that its status as a bona fide purchase for value defeatsPlaintiff's argument and evidence demonstrating Plaintiff's purported tender. (SFR's Resp. to Pl.'s MSJ ("SFR's Resp.") 23:18-25:5, ECF No. 90).

HOA argues that Plaintiff's quiet title claim against it fails because HOA disclaims interest in the Property. (HOA's Mot. Summ. J. ("HOA's MSJ") 8:18-28, ECF No. 92). HOA further asserts that there is no basis to set aside the foreclosure sale because the sale complied with NRS Chapter 116, Plaintiff's purported tender was invalid because it only covered a portion of HOA's delinquency, NAS's rejection of Plaintiff's tender was in good faith, and Plaintiff cannot demonstrate that it suffered damages as a result of HOA's actions. (Id. 11:18-22:8).

A. Tender of the Superpriority Portion of HOA's Lien

Plaintiff claims that BANA's tender of the superpriority amount of HOA's lien to NAS renders the foreclosure sale invalid. (Pl.'s MSJ 12:4-14:12). SFR counters that the Court must disregard Plaintiff's evidence of tender because such evidence is inadmissible under the Federal Rules of Evidence and improper under the Federal Rules of Civil Procedure. (SFR's Resp. 4:25-6:11, ECF No. 90). Specifically, SFR moves to exclude Plaintiff's exhibits and affidavit purporting to demonstrate evidence of tender (collectively the "Miles Bauer Records") on the grounds that the exhibits have not been properly authenticated and Plaintiff failed to identify the...