Bank of America, N.A. v. Aliante Master Association et alMOTION for Partial Summary JudgmentD. Neb.February 21, 20171 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A K E R M A N L L P 1 16 0 T O W N C E N T E R D R IV E , S U IT E 3 30 L A S V E G A S , N E V A D A 89 1 44 T E L .: (7 02 ) 6 34 -5 00 0 - F A X : (7 02 ) 38 0 -8 57 2 ARIEL E. STERN, ESQ. Nevada Bar No. 8276 WILLIAM S. HABDAS, ESQ. Nevada Bar No. 13138 AKERMAN LLP 1160 Town Center Drive, Suite 330 Las Vegas, NV 89144 Telephone: (702) 634-5000 Facsimile: (702) 380-8572 Email: ariel.stern@akerman.com Email: william.habdas@akerman.com Attorneys for Plaintiff Bank of America, N.A. UNITED STATES DISTRICT COURT DISTRICT OF NEVADA BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING, LP FKA COUNTRYWIDE HOME LOANS SERVICING, LP, Plaintiff, vs. ALIANTE MASTER ASSOCIATION; SATICOY BAY LLC SERIES 3237 PERCHING BIRD; and NEVADA ASSOCIATION SERVICES, INC., Defendants. Case No.: 2:16-cv-00962-MMD-CWH BANK OF AMERICA, N.A.'S MOTION FOR PARTIAL SUMMARY JUDGMENT Plaintiff Bank of America, N.A., successor by merger to BAC Home Loans Servicing, LP f/k/a Countrywide Home Loans Servicing, LP (BANA), moves for partial summary judgment on its first cause of action pursuant to Rule 56, on the grounds there is no genuine issue of material fact for trial and BANA is entitled to judgment as a matter of law. INTRODUCTION On July 25, 2014, defendant Saticoy Bay LLC Series 3237 Perching Bird (Saticoy) purchased property in North Las Vegas, Nevada at an HOA foreclosure sale conducted by Aliante Master Association (HOA) by its agent Nevada Association Services, Inc. (NAS) under NRS § 116.3116(2) (the State Foreclosure Statute). Defendants contend under the State Foreclosure Case 2:16-cv-00962-MMD-CWH Document 24 Filed 02/21/17 Page 1 of 8 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A K E R M A N L L P 1 16 0 T O W N C E N T E R D R IV E , S U IT E 3 30 L A S V E G A S , N E V A D A 89 1 44 T E L .: (7 02 ) 6 34 -5 00 0 - F A X : (7 02 ) 38 0 -8 57 2 Statute, the HOA foreclosure sale extinguished the senior deed of trust held by BANA, leaving Saticoy Bay with title free and clear of that deed of trust. But the Ninth Circuit has already ruled that the State Foreclosure Statute is facially unconstitutional because it allows a lender to be stripped of its property interest without requiring actual notice. Bourne Valley Court Trust v. Wells Fargo Bank, N.A., 832 F.3d 1154, 1156 (9th Cir. 2016). As a result, the HOA sale cannot have extinguished the deed of trust. The Court should grant summary judgment to BANA on its first claim for declaratory judgment. STATEMENT OF UNDISPUTED MATERIAL FACTS On or about July 29, 2010 Michelle and Jeff Ritters (borrowers) purchased the property located at 3237 Perching Bird Lane, North Las Vegas, Nevada 89084 (property) by way of a loan in the amount of $170,848.00 secured by a deed of trust (the senior deed of trust) recorded against the property on August 6, 2010. Exhibit 1. The senior deed of trust was assigned to BANA via an assignment of deed of trust recorded on January 11, 2016. Exhibit 2. On August 29, 2011, the HOA, through its agent NAS, recorded a notice of default and election to sell against the property. Exhibit 3. The notice states the amount due to the HOA was $2,157.41. The HOA foreclosed on the property on July 25, 2014 as reflected in a foreclosure deed recorded against the property on July 29, 2014. Exhibit 4. The foreclosure deed reflects a sales price of $33,000. Id. REQUEST FOR JUDICIAL NOTICE BANA respectfully requests the court take judicial notice of the publicly recorded instruments cited in the statement of undisputed facts. Facts derived from the publicly available records of the Clark County Recorder are judicially noticeable. See Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861, 866 & n.1 (9th Cir. 2004) (court may take judicial notice of the records of state agencies and other undisputed matters of public record under Fed. R. Evid. 201); Harlow v. MTC Fin. Inc., 865 F. Supp. 2d 1095, 1097 (D. Nev. 2012) ("When ruling on a motion for summary judgment, the Court may take judicial notice of matters of public record, including recorded documents."). Case 2:16-cv-00962-MMD-CWH Document 24 Filed 02/21/17 Page 2 of 8 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A K E R M A N L L P 1 16 0 T O W N C E N T E R D R IV E , S U IT E 3 30 L A S V E G A S , N E V A D A 89 1 44 T E L .: (7 02 ) 6 34 -5 00 0 - F A X : (7 02 ) 38 0 -8 57 2 LEGAL STANDARD In evaluating a motion for summary judgment, courts must view all facts and draw all inferences in the light most favorable to the nonmoving party. See Amerson v. Clark Cty., 995 F. Supp. 2d 1155, 1159 (D. Nev. 2014) (citing Kaiser Cement Corp. v. Fischbach & Moore, Inc., 793 F.2d 1100, 1103 (9th Cir. 1986)). Summary judgment shall be granted if the moving party demonstrates the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Zoslow v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir. 1982). ARGUMENT The Ninth Circuit’s recent Bourne Valley ruling that the State Foreclosure Statute is facially unconstitutional is dispositive of BANA's declaratory judgment cause of action in this case. See Bourne Valley Court Trust v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016). Because the HOA Sale at issue here was conducted under the same statute, the HOA Sale could not have extinguished the Deed of Trust. Bourne Valley upheld a facial challenge to the State Foreclosure Statute and found that its “‘opt-in’ notice scheme” “facially violated mortgage lenders’ constitutional due process rights.” 832 F.3d at 1160. This means that the State Foreclosure Statute is now void and unenforceable against anyone. Platinum Sports Ltd. v. Snyder, 715 F.3d 615, 617 (6th Cir. 2013) (citing Broadrick v. Oklahoma, 413 U.S. 601, 613 (1973) ("A successful facial attack invalidates a law in all of its applications, 'forbidding' any enforcement of it."). In particular, the State Foreclosure Statute incorporated such a scheme prior to October 1, 2015, when a statutory amendment became effective. Id. Here, the HOA Sale at issue took place in July 2014, more than a year before the amendment’s effective date, and was subject to the unconstitutional opt-in notice scheme. Thus, Bourne Valley controls, meaning that the State Foreclosure Statute is unenforceable, and the HOA Sale cannot-did not-extinguish the Deed of Trust. In a recent case, another court in this District evaluated almost identical facts and similar claims-an entity who purchased a property at an HOA foreclosure sale conducted pursuant to the Case 2:16-cv-00962-MMD-CWH Document 24 Filed 02/21/17 Page 3 of 8 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A K E R M A N L L P 1 16 0 T O W N C E N T E R D R IV E , S U IT E 3 30 L A S V E G A S , N E V A D A 89 1 44 T E L .: (7 02 ) 6 34 -5 00 0 - F A X : (7 02 ) 38 0 -8 57 2 State Foreclosure Statute contended that the sale extinguished a first deed of trust. See Las Vegas Dev. Grp., LLC v. Steven, No. 2:15-CV-01128-RCJ-CWH, 2016 WL 7115989 (D. Nev. Dec. 6, 2016). The court dismissed the purchaser’s claims, holding that “[t]he Bourne Valley ruling is enough to settle the quiet title and declaratory judgment claims in favor of [the entity with an interest in the deed of trust] as a matter of law as to the HOA’s foreclosure. The HOA’s foreclosure did not extinguish [the deed of trust] against the Property.” Id. at *2. This Court should hold the same here. To the extent that defendants argue that this Court should follow the non-binding rulings in Bank of America, N.A. v. SFR Investments Pool I, LLC, Case No. 2:15-cv-1768- JCM-CWF, ECF No. 88 (D. Nev. Feb. 14, 2017) and Nationstar Mortg. v. Berezovsky et al., No. 2:15-cv-00909-JCM- CWH, ECF No. 65 (D. Nev. Feb. 13, 2017), defendants’ contention misses the mark and misconstrues the current status of the law. In those cases, the court found that Bank of America and Nationstar, respectively, did not have standing to launch a facial challenge to the State Foreclosure Statute. But, here, BANA is not making a fresh facial challenge; the Ninth Circuit has already upheld a facial challenge and found the State Foreclosure Statute unconstitutional, meaning it is now void and unenforceable against anyone going forward-including BANA. See Ezell v. Chicago, 651 F.3d 684, 698 (7th Cir. 2011) ("In a facial challenge . . . the claimed constitutional violation inheres in the terms of the statute, not in its application. The remedy is necessarily directed at the statute itself and must be injunctive and declaratory; a successful facial attack means the statute is wholly invalid and cannot be applied to anyone."). There is no question that BANA has Article III standing to seek relief from a statute already deemed unconstitutional and unenforceable by the Ninth Circuit because (1) it has demonstrated an injury-the potential loss of its lien-due to the HOA's foreclosure, which was conducted pursuant to the facially unconstitutional statute; (2) BANA’s injury is a direct result of the HOA’s foreclosure; and (3) this Court can redress BANA's injury by entering a judgment that the HOA's foreclosure did not extinguish BANA's lien because it was conducted under an unconstitutional statute. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560- 61 (1992). Further, to the extent defendants suggest that this Court should ignore Bourne Valley because there is a chance it might be reversed by the Supreme Court, this argument similarly fails. As of the Case 2:16-cv-00962-MMD-CWH Document 24 Filed 02/21/17 Page 4 of 8 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A K E R M A N L L P 1 16 0 T O W N C E N T E R D R IV E , S U IT E 3 30 L A S V E G A S , N E V A D A 89 1 44 T E L .: (7 02 ) 6 34 -5 00 0 - F A X : (7 02 ) 38 0 -8 57 2 date of this filing, the Bourne Valley plaintiff has not petitioned the U.S. Supreme Court for a writ of certiorari. Even if it had, grants of certiorari are rare, and the submission of a petition does not affect the binding nature of the underlying decision. See Leigh v. Salazar, No. 3:11-CV-00608-HDM, 2012 WL 2367823, at *1 n.1 (D. Nev. June 21, 2012). On November 4, the Ninth Circuit denied a petition for rehearing Bourne Valley en banc and a companion motion to stay the mandate pending a petition for certiorari to the U.S. Supreme Court. See Orders, Bourne Valley, No. 15-15233 (ECF Nos. 69, 75). The Ninth Circuit then issued the mandate on December 14. See Mandate, Bourne Valley, No. 15-15233 (ECF No. 76). At that time, the decision became binding on this Court. See Hart v. Massanari, 266 F.3d 1155, 1170 (9th Cir. 2001) (A federal court of appeals decision “binds all [federal district] courts within a particular circuit.” (internal citation omitted)). Finally, the Nevada Supreme Court’s recent decision in Saticoy Bay LLC Series 350 Durango 104 v. Wells Fargo Home Mortg., --- P.3d ---, 2017 WL 398426 (Nev. Jan. 26, 2017) does not compel a different result. That decision rejected a facial challenge to the State Foreclosure Statute, but did so entirely based on its interpretation of federal law, holding that there was no state action to satisfy a challenge to the statute under the Due Process Clause. Accordingly, Saticoy Bay/Durango contradicts the Ninth Circuit’s decision in Bourne Valley on an issue of federal law, and has no effect here. The “decision of [a state’s highest court] construing the Constitution of the United States . . . is not binding upon the federal courts,” and this Court is bound by the Ninth Circuit’s ruling on federal law, not the Nevada Supreme Court’s. Watson v. Estelle, 886 F.2d 1093, 1095 (9th Cir. 1989); see also Sw. Offset, Inc. v. Hudco Pub. Co., 622 F.2d 149, 152 (5th Cir. 1980) (Fifth Circuit was not bound by the Texas Supreme Court’s federal due process analysis); Doelamo v. Karl-Heinz, No. 2:14-CV-0339-RCJ, 2014 WL 2197640, at *3 (D. Nev. May 27, 2014) (rejecting the argument that the district court was bound to follow a state’s highest court’s interpretation that a state law did not violate the due process clause of the Fourteenth Amendment). Case 2:16-cv-00962-MMD-CWH Document 24 Filed 02/21/17 Page 5 of 8 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A K E R M A N L L P 1 16 0 T O W N C E N T E R D R IV E , S U IT E 3 30 L A S V E G A S , N E V A D A 89 1 44 T E L .: (7 02 ) 6 34 -5 00 0 - F A X : (7 02 ) 38 0 -8 57 2 In sum, Bourne Valley controls BANA’s first claim for declaratory relief, which turns on whether the HOA Sale extinguished the Deed of Trust. If the Court grants BANA summary judgment on those claims, its remaining theories would then be moot.1 CONCLUSION BANA respectfully requests the court grant this motion and declare the HOA sale did not extinguish BANA's deed of trust and the deed of trust continues to encumber the property. DATED February 21, 2017. AKERMAN LLP /s/ William S. Habdas Ariel E. Stern, Esq. Nevada Bar No. 8276 William S. Habdas, Esq. Nevada Bar No. 13138 1160 Town Center Drive, Suite 330 Las Vegas, Nevada 89144 Attorneys for Plaintiff Bank of America, N.A. 1 BANA reserves its right to assert its other theories should this court deny this motion or if an order granting this motion is overturned on appeal. Case 2:16-cv-00962-MMD-CWH Document 24 Filed 02/21/17 Page 6 of 8 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A K E R M A N L L P 1 16 0 T O W N C E N T E R D R IV E , S U IT E 3 30 L A S V E G A S , N E V A D A 89 1 44 T E L .: (7 02 ) 6 34 -5 00 0 - F A X : (7 02 ) 38 0 -8 57 2 CERTIFICATE OF SERVICE I HEREBY CERTIFY that I am an employee of Akerman LLP, and that on this 21st day of February, 2017 and pursuant to FRCP 5, I caused to be served a true and correct copy of the foregoing BANK OF AMERICA, N.A.'S MOTION FOR PARTIAL SUMMARY JUDGMENT, via this Court's CM/ECF electronic filing system as follows: Michael F. Bohn, Esq. LAW OFFICE OF MICHAEL F. BOHN 376 East Warm Springs Road, Suite 140 Las Vegas, Nevada 89119 Attorneys for Saticoy Bay LLC Series 3237 Perching Bird Christopher V. Yergensen NEVADA ASSOCIATION SERVICES, INC. 6224 West Desert Inn Road Las Vegas, Nevada 89146 Attorneys for Nevada Association Services, Inc. James W. Pengilly Elizabeth Lowell Chad D. Fuss PENGILLY LAW FIRM 1995 Village Center Circle, Ste. 190 Las Vegas, Nevada 89134 Attorneys for Aliante Master Association /s/ William S. Habdas An employee of AKERMAN LLP Case 2:16-cv-00962-MMD-CWH Document 24 Filed 02/21/17 Page 7 of 8 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A K E R M A N L L P 1 16 0 T O W N C E N T E R D R IV E , S U IT E 3 30 L A S V E G A S , N E V A D A 89 1 44 T E L .: (7 02 ) 6 34 -5 00 0 - F A X : (7 02 ) 38 0 -8 57 2 INDEX OF EXHIBITS TO BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING , LP F/K/A COUNTRYWIDE HOME LOANS SERVICING, LP'S MOTION FOR PARTIAL SUMMARY JUDGMENT CASE NO. 2:16-cv-00962-MMD-CWH Exhibit 1 Deed of Trust Recorded on August 6, 2010 Exhibit 2 Deed of Trust Assignment to BANA Recorded on January 11, 2016 Exhibit 3 Notice of Default Recorded on August 29, 2011 Exhibit 4 Foreclosure Deed Recorded on July 29, 2014 Case 2:16-cv-00962-MMD-CWH Document 24 Filed 02/21/17 Page 8 of 8 EXHIBIT 1 Deed of Trust Recorded on August 6, 2010 Case 2:16-cv-00962-MMD-CWH Document 24-1 Filed 02/21/17 Page 1 of 13 Case 2:16-cv-00962-MMD-CWH Document 24-1 Filed 02/21/17 Page 2 of 13 Case 2:16-cv-00962-MMD-CWH Document 24-1 Filed 02/21/17 Page 3 of 13 Case 2:16-cv-00962-MMD-CWH Document 24-1 Filed 02/21/17 Page 4 of 13 Case 2:16-cv-00962-MMD-CWH Document 24-1 Filed 02/21/17 Page 5 of 13 Case 2:16-cv-00962-MMD-CWH Document 24-1 Filed 02/21/17 Page 6 of 13 Case 2:16-cv-00962-MMD-CWH Document 24-1 Filed 02/21/17 Page 7 of 13 Case 2:16-cv-00962-MMD-CWH Document 24-1 Filed 02/21/17 Page 8 of 13 Case 2:16-cv-00962-MMD-CWH Document 24-1 Filed 02/21/17 Page 9 of 13 Case 2:16-cv-00962-MMD-CWH Document 24-1 Filed 02/21/17 Page 10 of 13 Case 2:16-cv-00962-MMD-CWH Document 24-1 Filed 02/21/17 Page 11 of 13 Case 2:16-cv-00962-MMD-CWH Document 24-1 Filed 02/21/17 Page 12 of 13 Case 2:16-cv-00962-MMD-CWH Document 24-1 Filed 02/21/17 Page 13 of 13 EXHIBIT 2 Deed of Trust Assignment to BANA Recorded on January 11, 2016 Case 2:16-cv-00962-MMD-CWH Document 24-2 Filed 02/21/17 Page 1 of 3 Case 2:16-cv-00962-MMD-CWH Document 24-2 Filed 02/21/17 Page 2 of 3 Case 2:16-cv-00962-MMD-CWH Document 24-2 Filed 02/21/17 Page 3 of 3 EXHIBIT 3 Notice of Default Recorded on August 29, 2011 Case 2:16-cv-00962-MMD-CWH Document 24-3 Filed 02/21/17 Page 1 of 3 Case 2:16-cv-00962-MMD-CWH Document 24-3 Filed 02/21/17 Page 2 of 3 Case 2:16-cv-00962-MMD-CWH Document 24-3 Filed 02/21/17 Page 3 of 3 EXHIBIT 4 Foreclosure Deed Recorded on July 29, 2014 Case 2:16-cv-00962-MMD-CWH Document 24-4 Filed 02/21/17 Page 1 of 4 ASSESSOR'S COPY Case 2:16-cv-00962-MMD-CWH Document 24-4 Filed 02/21/17 Page 2 of 4 ASSESSOR'S COPY Case 2:16-cv-00962-MMD-CWH Document 24-4 Filed 02/21/17 Page 3 of 4 ASSESSOR'S COPY Case 2:16-cv-00962-MMD-CWH Document 24-4 Filed 02/21/17 Page 4 of 4