Bank of America, N.A. v. Mountain Gate Homeowners' Association et al

MOTION for Summary Judgment

D. Neb.October 27, 2016

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 MICHAEL F. BOHN, ESQ. Nevada Bar No.: 1641 mbohn@bohnlawfirm.com LAW OFFICES OF MICHAEL F. BOHN, ESQ., LTD. 376 E. Warm Springs Rd., Ste. 140 Las Vegas, Nevada 89119 (702) 642-3113/ (702) 642-9766 FAX Attorney for defendant Saticoy Bay LLC Series 6408 Hillside Brook 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. MOUNTAIN GATE HOMEOWNERS’ ASSOCIATION; SATICOY BAY LLC SERIES 6408 HILLSIDE BROOK; and HAMPTON & HAMPTON COLLECTIONS, LLC, Defendants. _______________________________________ SATICOY BAY LLC SERIES 6408 HILLSIDE BROOK, Counterclaimant, vs. BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING, LP, FKA COUNTRYWIDE HOME LOANS SERVICING, LP; Counterdefendant. CASE NO.: 2:16-CV-00540 MOTION FOR SUMMARY JUDGMENT 1 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 1 of 32 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 MOTION FOR SUMMARY JUDGMENT Defendant/counterclaimant Saticoy Bay LLC Series 6408 Hillside Brook, by and through its attorney, Michael F. Bohn, Esq. moves this court for summary judgment against the plaintiff and the granting of quiet title and declaratory relief to the defendant/counterclaimant. FACTS 1. Facts regarding the foreclosure sale Defendant/counterclaimant Saticoy Bay LLC Series 6408 Hillside Brook (“Saticoy Bay”) is the owner of real property commonly known as 6408 Hillside Brook Ave., Las Vegas, Nevada, 89130 (APN 125- 35-413-038). Defendant/counterclaimant acquired the property from Mountain Gate Homeowners Association at a foreclosure sale conducted on August 20, 2014 , as evidenced by the Foreclosure Deed recorded on December 3, 2014 as Instrument No. 201412030001580. A copy of the Foreclosure Deed is attached as Exhibit A. Plaintiff/counterdefendant Bank of America, N.A., successor by merger to BAC Home Loans Servicing, LP, fka Countrywide Home Loans Servicing, LP (“Bank of America”, or “Plaintiff”) is the assigned beneficiary of a deed of trust which was originally recorded as an encumbrance against the subject property on December 29, 2009. A copy of the deed of trust is Exhibit B. The assignment to Bank of America was recorded on March 21, 2012, as instrument # 201203210000112. A copy of the assignment is Exhibit C. On September 28, 2010, the foreclosure agent sent the former owner the pre-lien letter. A copy of the letter and the proof of mailing is Exhibit D. Prior to the foreclosure sale, the foreclosure agent recorded the notice of delinquent assessment lien on October 1, 2010. A copy of the lien is Exhibit E. On February 28, 2011, the foreclosure agent recorded a notice of default and election to sell under the lien for delinquent assessments. A copy of the Notice of Default is attached as Exhibit F. The foreclosure agent also mailed the notice to the former owner, Bank of America, and other interested parties. A copy of the proof of mailing for the Notice of Default is Exhibit G. 2 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 2 of 32 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 On July 9, 2014, the foreclosure agent recorded a notice of foreclosure sale. A copy of the Notice of Foreclosure Sale is attached as Exhibit H. The foreclosure agent also mailed a copy of the notice of sale to the former owner, Bank of America, and other interested parties. The proof of mailing is attached as Exhibit I. The foreclosure agent also posted the notice on the property and in three locations throughout Clark County. Copies of the Affidavit of Service and Affidavit of Posting Notice of Sale are Exhibit J. The foreclosure agent also published the notice of sale in the Nevada Legal News. A copy of the Affidavit of Publication is Exhibit K. These exhibits demonstrate that the plaintiff was on actual notice of the HOA foreclosure and failed to take any action to avoid a sale to its own detriment. As such, under the holding in the case of SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 130 Nev., Adv. Op. 75, 334 P.3d 408 (2014), the interests of Bank of America in the subject property are extinguished. Summary judgment should be granted in favor of the defendant/counterclaimant and this court should enter an order declaring that Bank of America’s deed of trust is extinguished, null and void and of no further force or effect. 2. Discovery conducted during litigation As part of their initial disclosures, defendant Hampton & Hampton Collections, LLC produced records regarding the foreclosure sale. Exhibits A and D through K were contained in foreclosure documents produced by this defendant During discovery in this case, the Plaintiff was served with interrogatories regarding Saticoy Bay’s status as a bona fide purchaser, and for proof of fraud, oppression or unfairness or irregularities regarding the noticing or the sale of the property. The plaintiff’s answers contained objections and were otherwise non-responsive. A copy of the responses to interrogatories is Exhibit L. The defendant propounded interrogatory 22: INTERROGATORY NO. 22: Identify all facts, information, and evidence of which you are aware that contradicts Plaintiff’s assertion that it was a bona fide purchaser for value at the Association foreclosure sale. The plaintiff’s response was: 3 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 3 of 32 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 Objection. This interrogatory is overly broad and unduly burdensome insofar as it seeks a categorization of all facts and is not temporally limited. BANA also objects to this request to the extent it violates the work product doctrine because it seeks information about mental impressions. Moreover, this interrogatory is premature as discovery is ongoing. This interrogatory improperly calls for a legal conclusion. Finally, this interrogatory makes no sense in that BANA is not contending it was a bona fide purchaser. Presuming Saticoy bay meant to inquire into evidence that it is not a bona fide purchaser, subject to and without waiving any objection, Saticoy Bay is a seasoned real estate investor who has purchased numerous properties at HOA foreclosure sales in Nevada and was aware of the pre-existing encumbrances against the property including the senior deed of trust at issue, and was aware of the uncertainty and risks associated with purchasing properties at HOA sales. Saticoy Bay knew or reasonably should have known BANA satisfied the HOA’s super-priority lien prior to the sale. BANA further denies HOA’s foreclosure sale was properly noticed or commercially reasonable and denies it was valid. The gross inadequacy of the consideration Saticoy Bay paid for what Saticoy Bay contends is free and clear title to the property put it on constructive notice of the commercial unreasonableness of the sale. Saticoy Bay took the property subject to and with notice of the recorded deed of trust, which was properly recorded against the property prior to the HOA foreclosure sale. Discovery is ongoing, and BANA reserves its right to supplement this response. The defendant propounded interrogatory 23: INTERROGATORY NO. 23: Identify all facts, information, and evidence of which you are aware which evidences any fraud, oppression or unfairness in regards to the association foreclosure sale. The plaintiff’s response was: Objection. This interrogatory is premature, improperly seeks legal reasoning, and violates the work product doctrine to the extent is seeks information related to mental impressions. Further, this interrogatory is overly broad and unduly burdensome insofar as it seeks a categorization of all facts. Subject to and without waiving any objection, BANA refers Saticoy to its Rule 26(a)(1) disclosures in this case, from which information responsive to this interrogatory can be derived or ascertained. BANA also incorporates the facts recited in response to Interrogatory NO. 22 as if fully restated here. BANA was not provided with proper notice HOA was attempting an alleged super-priority foreclosure sale or apprised of how it could protect its interest. BANA, through counsel, requested a ledger from the HOA, through its agent, Hampton, identifying the super-priority amount allegedly owed to the HOA. The HOA, through its agent Hampton, responded on March 27, 2014 providing a payoff statement indicating the super-priority amount of its lien was $765.00. On April 10, 2014, BANA through its agent, Miles Bauer, tendered the $765.00 super-priority amount to Hampton on behalf of Mountain Gate and extinguished the super- priority portion of Mountain Gate’s lien. To the extent any party claims the foreclosure extinguished BANA’ senior deed of trust, the foreclosure sale was not commercially reasonable based on, among other things, the gross inadequacy of the consideration Saticoy Bay paid - i.e., the sale of the property for a fraction of the loan balance or actual market value of the property - for what Saticoy Bay contends is free and clear title to the property. Further, BANA states the HOA’s acceptance of its tender of the full super-priority amount of the lien, followed by its foreclosure from an alleged super priority lien position, constitutes fraud, oppression, and unfairness. Additionally, the HOA’s CC&R’s contained a mortgage protection clause, representing to BANA, bidders at the HOA’s foreclosure sale 4 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 4 of 32 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 and the public at large that the HOA’s lien would not extinguish the first deed of trust. Discovery is ongoing, and BANA reserves its right to supplement this response. The defendant propounded interrogatory 25: INTERROGATORY NO. 25: Identify all facts, information, and evidence of which you are aware which evidences that the association foreclosure sale was not properly conducted. The plaintiff’s response was: Objection. This interrogatory is premature, improperly seeks legal reasoning, and violates the work product doctrine to the extent it seeks information related to mental impressions. Further, this interrogatory is overly broad and unduly burdensome insofar as it seeks a categorization of all facts. Subject to and without waiving any objections, BANA refers Saticoy Bay to BANA’s Rule 26(a)(1) disclosures in this case, from which information responsive to this interrogatory can be derived or ascertained. BANA also incorporates the fact recited in response to Interrogatories Nos. 22, 23, and 24 as if fully restated here. BANA was not provided with proper notice HOA was attempting an alleged super-priority foreclosure sale or apprised of how it could protect its interest. BANA through counsel, requested a ledger from the HOA, through its agent, Hampton, identifying the super-priority amount allegedly owed to the HOA. The HOA, through its agent Hampton, responded on March 27, 2014 providing a payoff statement indicating the super-priority amount its lien was $765.00. On April 10, 2014, BANA through its agent, Miles Bauer, tendered the $765.00 super-priority amount to Hampton on behalf of Mountain Gate and extinguished the super-priority portion of Mountain Gate’s lien. To the extent any party claims the foreclosure extinguished BANA’s senior deed of trust, the foreclosure sale was not commercially reasonable based on, among other things, the gross inadequacy of the consideration Saticoy Bay paid - i.e., the sale of the property for a fraction of the loan balance or actual market value of the property - for what Saticoy Bay contends is free and clear title to the property. Further, BANA states the HOA’s acceptance of its tender of the full super-priority amount of the lien, followed by its foreclosure from an alleged super priority lien position, constitutes fraud, oppression, and unfairness. Additionally, the HOA’s CC&R’s contained a mortgage protection clause, representing to BANA, bidders at the HOA foreclosure sale and the public at large that the HOA’s lien would not extinguish the first deed of trust. Discovery is ongoing, and BANA reserves its right to supplement this response. The defendant propounded interrogatory 26: INTERROGATORY NO. 26: Identify all facts, information, and evidence of which you are aware which evidences that the association foreclosure sale was not properly noticed. The plaintiff’s response was: Objection. BANA has already answered 25 interrogatories, which is the maximum permitted by Rule 33(a). The Plaintiff has no proof that the Saticoy Bay was not a bona fide purchaser. The plaintiff also has no proof of any fraud, oppression or unfairness, or that the sale was not properly noticed or 5 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 5 of 32 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 conducted. For this reason, the court should grant summary judgment granting quiet title to the defendant/counterclaimant. POINTS AND AUTHORITIES A. Summary judgment standard The Ninth Circuit in Northwest Motorcycle Ass’n v. U.S. Dept of Agriculture, 18 F.3d 1468, 1472 (9th Cir. 1994) held a “moving party is entitled to summary judgment as a matter of law where, viewing the evidence and the inferences arising therefrom in favor of the nonmovant, there are no genuine issues of material fact in dispute.” An issue is “genuine” if there is a sufficient evidentiary basis on which a reasonable fact-finder could find for the nonmoving party and a dispute is “material” if it could affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–49 (1986). In the case at bar, there are no genuine issues of material fact in dispute regarding the procedural aspects of the HOA sale or the outcome of the HOA foreclosure sale as it pertains to defendant Saticoy Bay’s purchase of the Property. Therefore, Saticoy Bay is entitled to judgment as a matter of law quieting title to the Property in Saticoy Bay’s name free and clear of plaintiff’s deed of trust. B. The bank is not entitled to relief against the bona fide purchaser Under both the Restatement and Nevada law, the plaintiff bank has no remedies against Saticoy Bay in regard to the foreclosure sale because any damages which the plaintiff may have sustained as a result of an alleged wrongful foreclosure can be compensated with money damages. The decision in the case of Shadow Wood Homeownwers Association v. New York Community Bank, 132 Nev. Adv. Op 5, 366 P.3d 1105 (2016) has limited application because Shadow Wood dealt with title divestment of the former owner. This case, however, deals with the extinguishment of the plaintiff’s security interest in the property. However, because Saticoy Bay is a bona fide purchaser, the sale cannot be set aside. In Shadow Wood, the Supreme Court referred to the Restatement (Third) of Prop.: Mortgages § 8.3. Comment ( b) recognizes that where the property has been purchased by a bona fide purchaser, “the real estate is unavailable” and that “price inadequacy” may be raised in a suit against the foreclosing 6 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 6 of 32 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 mortgagee for damages. Comment b states: On the other hand, where foreclosure is by power of sale, judicial confirmation of the sale is usually not required and the issue of price inadequacy will therefore arise only if the party attacking the sale files an independent judicial action. Typically this will be an action to set aside the sal; it may be brought by the mortgagor, junior lienholders, or the holders of other junior interests who are prejudiced by the sale. If the real estate is unavailable because title has been acquired by a bona fide purchaser, the issues of price inadequacy may be raised by the mortgagor or a junior interest holder in a suit against the foreclosing mortgagee for damages for wrongful foreclosure. This latter remedy, however, is not available based on gross price inadequacy alone. In addition, the mortgagee must be responsible for a defect in the foreclosure process of the type described in Comment c of this section. (emphasis added) A copy of Section 8.3 from the Restatement is attached as Exhibit M. This authority from the Restatement is consistent with Nevada law and the common law rule that there is no equity jurisdiction when a party has available to itself an adequate remedy at law. Back in 1868, the court in Sherman v. Clark 4 Nev. 138 (1868) the court stated: The writ is exclusively an equitable remedy. But equity is chary of its powers; it employs them only when the impotent or tardy process of the law does not afford that complete and perfect remedy or protection which the individual may be justly entitled to. When therefore it is shown that there is a complete and adequate remedy at law, equity will afford no assistance. “When a party has a remedy at law,” says Mr. Hilliard, “he cannot come into equity, unless from circumstances not within his control he could not avail himself of his legal remedy.” (Hill. Inj. sec. 23.) That full compensation can be had at law is the great rule for withholding the strong arm of the chancellor,” says Mr. Justice Thompson, in Pusey v. Wright, (31 Penn. 396.) See also Thompson v. Matthews (2 Edw. Ch. R. 213; 9 Paige, 323.) Before refusing its aid upon this ground, however, it must appear that the legal remedy is complete and adequate to afford the complainant full redress; but when that fact does appear, equity at once relinquishes all control over the case, and leaves the party to pursue his legal remedy. (Emphasis added) Likewise, in the case of Conley v. Chedic 6 Nev. 222 (1870) the court held: Equity will not take jurisdiction or interpose its powers when there is a full, complete and adequate remedy in the ordinary course of law; that is, when the wrong complained of may be fully compensated in damages, which can easily be ascertained, and it is not shown that a judgment at law cannot be satisfied by execution. (See Sherman v. Clark, 4 Nev. 138.) In Turley v. Thomas 31 Nev. 181, 101 P. 568 (1909) the court stated: Again, in a decision rendered last year, Hills v. McMunn, 232 Ill. 488, 83 N. E. 963, it is stated: “It is also contended that the case made by the bill and proofs shows no grounds for the interposition of a court of equity, and that if appellant has any remedy the law will afford adequate relief. In State v. Second Judicial District Court 49 Nev. 145, 241 P.317, 43 A.L.R. 1331 (1925), the 7 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 7 of 32 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 court stated: As to the contention that pursuant to paragraph 6 the court was authorized to make the appointment under its general equity jurisdiction, we need only say that where it does not appear, as in this case, that the plaintiff has no adequate remedy at law, a court of equity acquires no jurisdiction. In Washoe County v. City of Reno 77 Nev. 152, 360 P.2d 602 (1961), the court held that the fact that the judgment may not be collectable is not an issue to be considered. The court stated: During oral argument, counsel for respondents suggested that an action at law would not be adequate because it could not be enforced by a writ of execution against a county fund. Whether this be true or not, it is hardly to be supposed that an execution would be necessary in the event a judgment at law were obtained against the county in this type of case any more than a contempt proceeding would be required in the event a peremptory writ of mandamus were issued. In answer to this suggestion however it is necessary to say only that our concern is with the existence of a remedy and not whether it will be unproductive in this particular case, Hughes v. Newcastle Mutual Insurance Co., 13 U.C.Q.B. (Ont.) 153, or inconvenient, Gulf Research & Development Co. v. Harrison, 9 Cir., 185 F.2d 457, or ineffectual, United States ex rel. Crawford v. Addison, 22 How. 174, 63 U.S. 174, 16 L.Ed. 304. In Stewart v. Manget, 132 Fla. 498, 181 So. 370, in affirming an order dismissing a bill in equity on the ground that the plaintiff had an adequate remedy at law, the Florida Supreme Court cited with approval the following language from Tampa & G. C. R. Co. v. Mulhern, 73 Fla. 146, 74 So. 297, 299: ‘The inadequacy of a remedy at law to produce money is not the test of the applicability of the rule. All remedies, whether at law or in equity, frequently fail to do that; and to make that the test of equity jurisdiction would be substituting the result of a proceeding for the proceeding which is invoked to produce the result. The true test is, could a judgment be obtained in a proceeding at law, and not, would the judgment procure pecuniary compensation.’ (Emphasis added) The rule that equity will not be imposed is consistent with Nevada case law protecting the interests of a bona fide purchaser. Any defects in the sale gives the party damaged thereby a claim for money damages against the foreclosure agent. The Supreme Court in the Shadow Wood decision repeatedly stated the rule that the title of a bona fide purchaser will not be disturbed. This is consistent with the rule that equity won’t interfere when there is an adequate remedy at law. In discussing the bona fide purchaser doctrine the court stated: A subsequent purchaser is bona fide under common-law principles if it takes the property “for a valuable consideration and without notice of the prior equity, and without notice of facts which upon diligent inquiry would be indicated and from which notice would be 8 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 8 of 32 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 imputed to him, if he failed to make such inquiry.” Bailey v. Butner, 64 Nev. 1, 19, 176 P.2d 226, 234 (1947) (emphasis omitted); see also Moore v. De Bernardi, 47 Nev. 33, 54, 220 P. 544, 547 (1923) (“The decisions are uniform that the bona fide purchaser of a legal title is not affected by any latent equity founded either on a trust, [e]ncumbrance, or otherwise, of which he has no notice, actual or constructive.”). Although, as mentioned, NYCB might believe that Gogo Way purchased the property for an amount lower than the property's actual worth, that Gogo Way paid “valuable consideration” cannot be contested. Fair v. Howard, 6 Nev. 304, 308 (1871) (“The question is not whether the consideration is adequate, but whether it is valuable.”); see also Poole v. Watts, 139 Wash.App. 1018 (2007) (unpublished disposition) (stating that the fact that the foreclosure sale purchaser purchased the property for a “low price” did not in itself put the purchaser on notice that anything was amiss with the sale). 366 P.3d at 1115-6 (emphasis added) The plaintiff has adduced no evidence that would put Saticoy Bay on any kind of notice of any type of claim that the plaintiff bank may have. The court should therefore find that title is properly in the name of Saticoy Bay and that the plaintiff’s trust deed has been extinguished. Also noted in comment b to the Restatement, any claim the plaintiff bank has is not against Saticoy Bay but against the foreclosure agent. This is consistent with the case law. In the case of Moeller v. Lien, 25 Cal. App. 4th 822, 30 Cal. Rptr. 2d 777 (1994), the respondent allowed a trustee’s sale to go forward even though it had available cash deposits to pay off the loan. Id. at 828. The trial court set aside the sale because “[t]he value of the property was four times the amount of the debt/sales price.” Id. at 829. The Court of Appeals reversed the trial court’s order and stated: Thus as a general rule, a trustor has no right to set aside a trustee’s deed as against a bona fide purchaser for value by attacking the validity of the sale. (Homestead Savings v. Damiento, supra, 230 Cal. App. 3d at p. 436.) The conclusive presumption precludes an attack by the trustor on a trustee’s sale to a bona fide purchaser even though there may have been a failure to comply with some required procedure which deprived the trustor of his right of reinstatement or redemption. (4 Miller & Starr, supra, § 9:141, p. 463; cf. Homestead v. Damiento, supra, 230 Cal. App. 3d at p. 436.) The conclusive presumption precludes an attack by the trustor on the trustee’s sale to a bona fide purchaser even where the trustee wrongfully rejected a proper tender of reinstatement by the trustor. Where the trustor is precluded from suing to set aside the foreclosure sale, the trustor may recover damages from the trustee. (Munger v. Moore (1970) 11 Cal. App. 3d 1, 9, 11 [89 Cal. Rptr. 323].) Id. at 831-832. (emphasis added) This holding is consistent with Nevada case law. The Nevada Supreme Court has repeatedly held that equity jurisdiction does not exist when there exists an adequate remedy at law which may be compensated by a judgment for money damages. Any defects in the sale, and there are none in this case, 9 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 9 of 32 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 which may have damaged any party with an interest in the party may be compensated by money damages in a claim against the foreclosure agent. The plaintiff therefore has no claim for relief which may be granted against the purchaser, Saticoy Bay because it is a bona fide purchaser C. The Trust Deed has been Extinguished. In its decision in the case of SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 130 Nev., Adv. Op. 75, 334 P.3d 408 (2014), the Nevada Supreme Court stated: NRS 116.3116 gives a homeowners’ association (HOA) a superpriority lien on an individual homeowner’s property for up to nine months of unpaid HOA dues. With limited exceptions, this lien is “prior to all other liens and encumbrances” on the homeowner’s property, even a first deed of trust recorded before the dues became delinquent. NRS 116.3116(2). We must decide whether this is a true priority lien such that its foreclosure extinguishes a first deed of trust on the property and, if so, whether it can be foreclosed nonjudicially. We answer both questions in the affirmative and therefore reverse. 334 P.3d at 409. At the conclusion of its opinion, the Nevada Supreme Court stated: NRS 116.3116(2) gives an HOA a true superpriority lien, proper foreclosure of which will extinguish a first deed of trust. Because Chapter 116 permits nonjudicial foreclosure of HOA liens, and because SFR’s complaint alleges that proper notices were sent and received, we reverse the district court’s order of dismissal. In view of this holding, we vacate the order denying preliminary injunctive relief and remand for further proceedings consistent with this opinion. 334 P.3d at 419. Because the facts in the present case are substantially the same as the facts in SFR Investments Pool 1, LLC v. U.S. Bank, N.A., this Honorable Court should reach the same conclusion that the nonjudicial foreclosure arising from the HOA’s super priority lien extinguished the deed of trust held by the plaintiff bank on the date of sale. As a result, this Court should rule that the deed of trust held by plaintiff was extinguished by the HOA’s foreclosure sale. D. There is no requirement that the foreclosure agent obtain sums to satisfy junior liens. There is no authority for the proposition that a foreclosure agent must seek sufficient sums at foreclosure sale to satisfy the claims of junior lienholders. This was noted by Judge Pro in Bourne Valley Court Trust v.Wells Fargo Bank, 80 F. Supp. 3d 1131 (D. Nev. 2015). The decision addresses 10 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 10 of 32 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 commercial reasonableness and notes that there is no duty to obtain sums in excess of the sums necessary to satisfy the HOA lien. The Court stated: Wells Fargo next argues that even if the HOA foreclosure sale extinguished its first deed of trust on the property, the HOA foreclosure sale was “commercially unreasonable” and therefore was void. (Opp'n at 5–7.) Specifically, Wells Fargo argues the HOA foreclosure sale was not conducted in good faith because “the HOA made no effort to obtain the best price or to protect either Johnson or Wells Fargo” by selling the property for $4,145.00 when the assessed value of the property was $90,543.00. (Id. at 7.) Bourne Valley replies that Chapter 116 does not require an HOA foreclosure sale to be commercially reasonable. Bourne Valley further argues that the inadequacy of the price is not sufficient to void the HOA foreclosure sale when there is no evidence of fraud, procedural defects, or other irregularities in the conduct of the sale. The commercial reasonableness here must be assessed as of the time the sale occurred. Wells Fargo's argument that the HOA foreclosure sale was commercially unreasonable due to the discrepancy between the sale price and the assessed value of the property ignores the practical reality that confronted the purchaser at the sale. Before the Nevada Supreme Court issued SFR Investments, purchasing property at an HOA foreclosure sale was a risky investment, akin to purchasing a lawsuit. Nevada state trial courts and decisions from the United States District Court for the District of Nevada were divided on the issue of whether HOA liens are true priority liens such that their foreclosure extinguishes a first deed of trust on the property. SFR Investments, 334 P.3d at 412. Thus, a purchaser at an HOA foreclosure sale risked purchasing merely a possessory interest in the property subject to the first deed of trust. This risk is illustrated by the fact that title insurance companies refused to issue title insurance policies on titles received from foreclosures of HOA super priority liens absent a court order quieting title. (Mot. to Remand to State Court (Doc. # 6), Decl. of Ron Bloecker.) Given these risks, a large discrepancy between the purchase price a buyer would be willing to pay and the assessed value of the property is to be expected. Moreover, Wells Fargo does not point to any evidence or legal authority indicating the Court must void an HOA foreclosure sale because the purchaser bid only a fraction of the property's assessed value. Wells Fargo does not point to evidence of fraud or any other procedural defects or other irregularities in the conduct of the sale that would require the Court to void the sale, or any evidence indicating the HOA acted in bad faith by selling the property for an amount that would satisfy the unpaid assessments. Nor does Wells Fargo point to evidence or legal authority indicating that beyond selling the property to the highest bidder, the HOA was responsible for protecting Wells Fargo and Johnson's interests in addition to the homeowners' interests. See Carmen v. S.F. Unified Sch. Dist., 237 F.3d 1026, 1028–31 (9th Cir.2001) (stating that a court need not “comb the record” looking for a genuine issue of material fact if the party has not brought the evidence to the court's attention) (quotation omitted)). Thus, no genuine issue of material fact remains as to whether the HOA foreclosure sale was commercially unreasonable. Under the specific facts presented here, it was not. (emphasis added) Id. at 1135-1136. 11 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 11 of 32 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 In the case of BFP v. Resolution Trust Corporation, 511 U.S. 531, 548-49 (1994), the U.S. Supreme Court explained why the fair market value of a property sold at foreclosure or a “forced sale” is in fact the price said at the foreclosure sale: ...the fact that a piece of property is legally subject to forced sale, like any other fact bearing upon the property’s use or alienability, necessarily affects its worth. Unlike most other legal restrictions, however, foreclosure has the effect of completely redefining the market in which the property is offered for sale; normal free-market rules of exchange are replaced by the far more restrictive rules governing forced sales. Given this altered reality, and the concomitant inutility of the normal tool for determining what property is worth (fair market value), the only legitimate evidence of the property’s value at the time it is sold is the foreclosure-sale price itself. This BFP case is also cited in Restatement (Third) of Prop.: Mortgages § 8.3. The court should first consider that the Shadow Wood case was not an HOA lien extinguishment case. In Shadow Wood, the property owner was trying to set aside the foreclosure sale. Next, the position taken by most bank counsel ignores the requirement, set forth more than once in the Shadow Wood case, that there must be evidence of fraud, unfairness or oppression. As demonstrated by the authorities cited above, the plaintiff’s remedy for a wrongful foreclosure would be a claim for money damages against the foreclosure agent because the defendant is a bona fide purchaser. E. The plaintiff’s inactions must be viewed by the court The Supreme Court in both SFR and Shadow Wood noted that the defendant banks were responsible for their own damages. In SFR Investments Pool 1 v. U.S. Bank 130 Nev. Adv. Op. 75, 334 P.3d 408 (2014) the court said not once, but twice, that the price paid at the foreclosure sale was not an issue because the bank could simply have paid the super priority amount to preserve its interest in the property. The Court stated at page 414: U.S. Bank's final objection is that it makes little sense and is unfair to allow a relatively nominal lien—nine months of HOA dues—to extinguish a first deed of trust securing hundreds of thousands of dollars of debt. But as a junior lienholder, U.S. Bank could have paid off the SHHOA lien to avert loss of its security; it also could have established an escrow for SHHOA assessments to avoid having to use its own funds to pay delinquent dues. 1982 UCIOA § 3116 cmt. 1; 1994 & 2008 UCIOA § 3–116 cmt. 2. The inequity U.S. Bank decries is thus of its own making and not a reason to give NRS 116.3116(2) a singular reading at odds with its text and the interpretation given it by the authors and editors of the UCIOA. (emphasis added) 12 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 12 of 32 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 The Court also stated at page 418: U.S. Bank further complains about the content of the notice it received. It argues that due process requires specific notice indicating the amount of the superpriority piece of the lien and explaining how the beneficiary of the first deed of trust can prevent the superpriority foreclosure sale. But it appears from the record that specific lien amounts were stated in the notices, ranging from $1,149.24 when the notice of delinquency was recorded to $4,542.06 when the notice of sale was sent. The notices went to the homeowner and other junior lienholders, not just U.S. Bank, so it was appropriate to state the total amount of the lien. As U.S. Bank argues elsewhere, dues will typically comprise most, perhaps even all, of the HOA lien. See supra note 3. And from what little the record contains, nothing appears to have stopped U.S. Bank from determining the precise superpriority amount in advance of the sale or paying the entire amount and requesting a refund of the balance. Cf. In re Medaglia, 52 F.3d 451, 455 (2d Cir.1995) (“[I]t is well established that due process is not offended by requiring a person with actual, timely knowledge of an event that may affect a right to exercise due diligence and take necessary steps to preserve that right.”). (Emphasis added) In the case of Shadow Wood Homeownwers Association v. New York Community Bank, 132 Nev. Ad. Op. 5, 366 P.3d 1105 (2016), the Supreme Court stated other ways that a bank could protect itself. Against these inconsistencies, however, must be weighed NYCB's (in)actions. The NOS was recorded on January 27, 2012, and the sale did not occur until February 22, 2012. NYCB knew the sale had been scheduled and that it disputed the lien amount, yet it did not attend the sale, request arbitration to determine the amount owed, or seek to enjoin the sale pending judicial determination of the amount owed. The NOS included a warning as required by NRS 116.311635(3)(b): . . . . 366 P.3d at 1114 The court in the Shadow Wood case also noted in footnote 7: Consideration of harm to potentially innocent third parties is especially pertinent here where NYCB did not use the legal remedies available to it to prevent the property from being sold to a third party, such as by seeking a temporary restraining order and preliminary injunction and filing a lis pendens on the property. See NRS 14.010; NRS 40.060. Cf. Barkley's Appeal. Bentley's Estate, 2 Monag. 274, 277 (Pa.1888) (“In the case before us, we can see no way of giving the petitioner the equitable relief she asks without doing great injustice to other innocent parties who would not have been in a position to be injured by such a decree as she asks if she had applied for relief at an earlier day.”). (emphasis added) The plaintiff bank had remedies available to it to protect its interests before the foreclosure sale and failed to avail itself of these remedies. It cannot now seek relief from this court, especially when it has failed to demonstrate fraud, oppression or unfairness. 13 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 13 of 32 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 F. There is a Statutory Conclusive Presumption that the HOA’s Foreclosure Sale was Properly Conducted. The detailed and comprehensive statutory requirements for a foreclosure sale are indicative of a public policy which favors a final and conclusive foreclosure sale as to the purchaser. See 6 Angels, Inc. v. Stuart-Wright Mortgage, Inc., 85 Cal. App. 4th 1279, 102 Cal. Rptr. 2d 711 (2011); McNeill Family Trust v. Centura Bank, 60 P.3d 1277 (Wyo. 2033); In re Suchy, 786 F.2d 900 (9th Cir. 1985); and Miller & Starr, California Real Property 3d §10:210. In the case of SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 130 Nev., Adv. Op. 75, 334 P.3d 408 (2014), the Court described the non-judicial foreclosure provisions of NRS Chapter 116 as “elaborate,” and therefore indicative of the public policy favoring the finality of a foreclosure sale. Additionally, there is a common law presumption that a foreclosure sale was conducted validly. Fontenot v. Wells Fargo Bank, 198 Cal. App. 4th 256, 129 Cal. Rptr. 3d 467 (2011); Moeller v. Lien 25 Cal. App. 4th 822, 30 Cal. Rptr. 2d 777 (1994); Burson v. Capps, 440 Md. 328, 102 A.3d 353 (2014); Timm v. Dewsnup 86 P.3d 699 (Utah 2003); Deposit Insurance Bridge Bank, N.A. Dallas v. McQueen, 804 S.W. 2d 264 (Tex. App. 1991); Myles v. Cox, 217 So.2d 31 (Miss. 1968); American Bank and Trust Co v. Price, 688 So.2d 536 (La. App. 1996); Meeker v. Eufaula Bank & Trust, 208 Ga. App. 702, 431 S.E. 2d 475 (Ga. App 1993). Nevada has a disputable presumption that “the law has been obeyed.” See NRS 47.250(16). This creates a disputable presumption that the foreclosure sale was conducted in compliance with the law. By statute, the recitals in the deed are sufficient and conclusive proof that the required notices were mailed by the HOA. The foreclosure deed, attached hereto as Exhibit A, recites in part: This conveyance is made pursuant to the powers granted to the Association and conferred upon the appointed trustee pursuant to Nevada Revised Statute 116.3115 et. seq. And Nevada Revised Statute 116.3116 through 116.31168 et. seq. and by the provisions of the Declaration of Covenants, Conditions, and Restrictions recorded on May 25, 2015 in Book Number 950525 as Document Number 00275, and any subsequent amendments thereto. Grantor complied with all applicable statutory requirements of the State of Nevada, and performed all duties required by such law, including the mailing of the Notice of Delinquent Assessment, Notice of Default and Election to Sell, and Notice of Sale. Said property was sold by Trustee and/or its agent(s) at a public auction on August 20, 2014 at the place named in the Notice of Trustee’s Sale, in the County of Clark, Nevada in which the property is situated. Grantee, being the highest bidder at such sale, purchased said property and paid to trustee the amount bid being Twenty One Thousand 14 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 14 of 32 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 One Hundred Dollars ($21,100.00) in lawful money of the United States of America, or by the satisfaction of the obligations then due and payable to the association claimant. The controlling statute, NRS 116.31166, provides in part: Foreclosure of liens: Effect of recitals in deed; purchaser not responsible for proper application of purchase money; title vested in purchaser without equity or right of redemption. 1. The recitals in a deed made pursuant to NRS 116.31164 of: (a) Default, the mailing of the notice of delinquent assessment, and the recording of the notice of default and election to sell; (b) The elapsing of the 90 days; and © The giving of notice of sale, are conclusive proof of the matters recited. 2. Such a deed containing those recitals is conclusive against the unit’s former owner, his or her heirs and assigns, and all other persons. The receipt for the purchase money contained in such a deed is sufficient to discharge the purchaser from obligation to see to the proper application of the purchase money. . . . (emphasis added) The recitals in the deed between the foreclosure agent and the purchaser at the foreclosure sale are conclusive from this statute, NRS116.31166. The sole exception would be in the case of fraud or other grounds for equitable relief. See Shadow Wood Homeownwers Association v. New York Community Bank, 132 Nev. Ad. Op. 5, 366 P.3d 1105 (2016). In addition to the recitals, the exhibits attached to the motion are additional proof that the notices were served. It is respectfully submitted that this court should find that the foreclosure deed received by the defendant at the time it obtained title to the Property is conclusive and sufficient proof that title is vested in defendant and not subject to attack from the plaintiff bank. G. Defendant is a bona fide purchaser The plaintiff in the answers to interrogatories fails to dispute that Saticoy Bay is a bona fide purchaser, objecting that to do so would require plaintiff to thus opine on legal and/or common law principles, only claiming that Saticoy Bay had notice of the deed of trust and of a purported tender. Shadow Wood discusses bona fide purchaser in detail. The many points contained in the decision can be summarized as: 1. A bona fide purchaser is without notice of any prior equity. 15 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 15 of 32 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 2. “The decisions are uniform” that the title of a bona fide purchaser is not affected by any matter of which he has no notice. 3. The bona fide purchaser must pay valuable consideration, not “adequate” consideration. 4. The fact that the foreclosure price may be “low” is not sufficient to put the purchaser on notice of any alleged defects with the sale. 5. The fact that the court retains equitable power to void the sale does deprive the purchaser of bona fide purchaser status. 6. The time to determine the status of bona fide purchaser is at the time of the sale. Saticoy Bay is a bona fide purchaser as a matter of law, and the law must protect its title as to all matters to which it does not have notice of. The concept of bona fide purchaser has more application in voluntary sales in which title is transferred by deed. In these cases, a purchaser takes subject to any matters which are recorded against the property. In HOA foreclosure cases, the bona fide purchaser doctrine rarely comes into play because all interests on the property other than prior existing debts and taxes are extinguished by the foreclosure. The purchaser would be precluded from bona fide purchaser status in HOA foreclosure cases only if there was some irregularity in the sale AND the purchaser knew of the irregularity. H. The plaintiff bank’s attempted tender does not affect defendant’s title. The plaintiff bank’s answers to interrogatories attempt to raise issues regarding tender and bona fide purchaser. Neither are properly supported by the evidence or the law. The proof of tender is a copy of a letter and a check which was sent but apparently rejected. This is not a proper tender. The concept of tender is discussed in the Restatement (Third) of Prop.: Mortgages §6.4 and persuasive California case law. The rules stated in the Restatement, (Third) of Mortgages, §6.4 regarding payment and discharge by persons not primarily liable on the debt are: § 6.4 Redemption from Mortgage by Performance or Tender . . . 16 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 16 of 32 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 (e) A performance in full of the obligation secured by a mortgage, or a performance that is accepted by the mortgagee in lieu of payment in full, by one who holds an interest in the real estate subordinate to the mortgage but is not primarily responsible for performance, does not extinguish the mortgage, but redeems the interest of the person performing from the mortgage and entitles the person performing to subrogation to the mortgage under the principles of §7.6. Such performance may not be made until the obligation secured by the mortgage is due, but may be made at or after the time the obligation is due but prior to foreclosure. (f) Upon receipt of performance as provided in Subsection (e), the mortgagee has a duty to provide to the person performing, within a reasonable time, an appropriate assignment of the mortgage in recordable form. If the mortgagee fails to do so upon reasonable request, the person performing may obtain judicial relief ordering the mortgage assigned and, unless the mortgagee acted in good faith in rejecting the request, awarding against the mortgagee any damages resulting from the delay. (g) An unconditional tender of performance in full by a person described in Subsection (e), even if rejected by the mortgagee, if kept good has the effect of performance under Subsections (e) and (f) above. (emphasis added) A photocopy of this section from the Restatement is attached as Exhibit N. Comment d to this section states in part: Tender of payment rejected by mortgagee. Under Subsection ©, a mortgage is extinguished by mere tender of full payment by the person primarily responsible for payment, even if the mortgagee rejects it. the tender must be kept good in the sense that the person making the tender must continue at all times to be ready, willing, and able to make the payment. If the payor brings an action to have the mortgage cancelled, the money must be paid into the court to keep the tender good. The tender must be unconditional. However, the payor’s demand that the mortgagee return the mortgagor’s promissory note, mark it “paid,” or execute a discharge of the mortgage is not a condition of the sort that will invalidate the tender. See Illustration 5. The next section of comment (d) to this section explains the significance of recording notice of the tender: The rule extinguishing the mortgage when a tender is rejected has only limited modern significance. The reason is that mortgages are virtually always recorded, and the payor derives little benefit, merely from the theoretical extinction of the mortgage if it is in fact still present, and apparently undischarged in the public records. A tender or purported tender needs to be recorded to put third persons, such as bidders at foreclosure sales, on notice of any issue with the payment of the super priority portion of the lien. This is especially true when the bank pays or attempts to pay the super priority knowing that the property is 17 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 17 of 32 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 going to foreclosure sale. And because the bank is contending that the tender is a payment, the fact of the tender must be recorded. Nevada statutes are consistent with the rules set forth in the Restatement to require the recording of a notice of satisfaction of a lien that has been performed by a party to put third persons on notice of the satisfaction. I. Nevada statutes require that notice of satisfaction must be recorded. NRS 116.1108 provides: Supplemental general principles of law applicable. The principles of law and equity, including the law of corporations and any other form of organization authorized by law of this State, the law of unincorporated associations, the law of real property, and the law relative to capacity to contract, principal and agent, eminent domain, estoppel, fraud, misrepresentation, duress, coercion, mistake, receivership, substantial performance, or other validating or invalidating cause supplement the provisions of this chapter, except to the extent inconsistent with this chapter. There are no provisions contained in Chapters 106, 111 or 116 which provides that notice of payment of the super priority portion of the lien would NOT be subject to the recording laws of this state. Under Nevada law, interests in property must be recorded. An unrecorded interest in property is void against a subsequent purchaser if the subsequent purchaser’s interest is first duly recorded. Tae-Si Kim v. Kearney, 838 F. Supp. 2d 1077, 1087-1088 (D. Nev. 2012). To give effect to this public policy, the legislature has crafted a statutory scheme which sets forth the legal requirements for recording assignments, transfers or other conveyances of an interest in real property. Specifically, in the context of this case, “conveyances” must be recorded, or else they will have zero effect on a subsequent purchaser: NRS 111.315 Recording of conveyances and instruments: Notice to third persons. Every conveyance of real property, and every instrument of writing setting forth an agreement to convey any real property, or whereby any real property may be affected, proved, acknowledged and certified in the manner prescribed in this chapter, to operate as notice to third persons, shall be recorded in the office of the recorder of the county in which the real property is situated or to the extent permitted by NR 105.010 to 105.080, inclusive, in the Office of the Secretary of State, but shall be valid and binding between the parties thereto without such record. NRS 111.325 Unrecorded conveyances void as against subsequent bona fide purchaser for value when conveyance recorded. 18 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 18 of 32 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 Every conveyance of real property within this State hereafter made, which shall not be recorded as provided in this chapter, shall be void as against any subsequent purchaser, in good faith and for valuable consideration, of the same real property, or any portion thereof, where his or her own conveyance shall be first duly recorded. (Emphasis added) Thus, the question becomes whether the payment of the super priority portion of the lien constitutes a “conveyance” under NRS Chapter 111. It does. NRS 111.010(1) defines “conveyance” very broadly to include anything affecting title to the property: NRS 111.010 Definitions. As used in this chapter: 1. “Conveyance” shall be construed to embrace every instrument in writing, except a last will and testament, whatever may be its form, and by whatever name it may be known in law, by which any estate or interest in lands is created, alienated, assigned or surrendered. (emphasis added) Payment can be construed as either “assignment” of the lien or a surrender of the lien, and therefore a “conveyance” that is required to be recorded. The holder of a junior mortgage or encumbrance who pays or advances money to pay the debt secured by the prior mortgage or encumbrance is generally entitled to be subrogated to the rights of the senior encumbrancer. See Restatement, 2nd of Mortgages, §7.6; American Sterling Bank v. Johnny Management LV, INC., 126 Nev. 423, 245 P.3d 535 (2010); Houston v. Bank of America 119 Nev. 485, 78 P.3d 71 (2003). This rule is particularly important where a foreclosure of a senior lien will erase the security interest of a junior lien. Thus, at the threat of foreclosure, a junior lienor is entitled, even without express contractual authority, to reinstate the loan by making a payment sufficient to cure the default or to pay of the senior lien and become subrogated to the rights of the senior lienholder as against the owner of the property. See Restatement, 2nd of Mortgages, §7.6; American Sterling Bank v. Johnny Management LV, INC., 126 Nev. 423, 245 P.3d 535 (2010); Houston v. Bank of America 119 Nev. 485, 78 P.3d 71 (2003). This is exactly what occurs when a lender, such as plaintiff bank purportedly pays or tenders the super priority portion of an HOA ’s lien. The lender becomes subrogated to the rights of the HOA. However, the lien is not extinguished. A subrogated claim is not in any way diminished or extinguished 19 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 19 of 32 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 by the subrogation; it is merely taken over by another who stands in the place of the original claimant. Pep’E v. McCarthy, 249 A.D.2d 286, 287, 672 N.Y.S.2d 350 (2d Dept. 1998). See Restatement, 2nd of Mortgages, §6.4(e). Payment by the guarantor is treated not as creating a new debt and extinguishing the original debt, but as preserving the original debt and merely substituting the guarantor for the creditor. Putnam v. C.I.R., 352 U.S. 82 (1956). Subrogation is broadly defined as the substitution of one person in the place of another with reference to a lawful claim or right. St. Paul Fire and Marine Insurance Co. v. Employers Insurance Company of Nevada 122 Nev. 991, 146 P.3d 258 (2006). It is a right which is purely derivative, Gulf Ins. Co. v. TIG Ins. Co., 103 Cal Rptr. 2d 305 (2d Dist. 2001), and it permits a party who has been required to satisfy a loss created by a third party’s wrongful act to step into the shoes of the loser and pursue recovery from the responsible wrongdoer. Fireman’s Fund Ins. Co. v. Maryland Casualty Co., 26 Cal. Rptr. 2d 762 (Cal. App. 4th Dist. 1994); Browder v. U.S. Fidelity & Guar. Co., 893 P.2d 132 (Colo. 1995). Stated another way, it is a substitution of one person in place of another with reference to a lawful claim, demand or right, so that he who is substituted succeeds to the rights of the other in relation to a debt or claim, and its rights, remedies or securities. See Arguello v. Sunset Station, Inc., 127 Nev. Adv. Op. 29, 252 P.3d 206 (2011); Subrogation is a device adopted by equity which applies in a great variety of cases and is broad enough to include every instance in which one party pays a debt for which another is primarily liable, and which in equity and good conscience should have been discharged by the latter. Laffranchini v. Clark 39 Nev. 48, 153 P. 250 (1915). “Equitable” or “legal” subrogation is given a liberal application. Laffranchini v. Clark 39 Nev. 48, 153 P. 250 (1915); St. Paul Fire & Marine Ins. Co. v. Murray Guard, Inc., 37 S.W.3d 180 (Ark. 2001). It applies where one who has discharged the debt of another may, under certain circumstances, succeed to the rights and position of the satisfied creditor if: (1) payment must have been made by the subrogee to protect his or her own interest; (2) the subrogee must not have acted as a volunteer; (3) the debt paid must have been one for which the subrogee was not primarily liable; (4) the entire debt must have been paid; and (5) subrogation must not work any injustice to the rights of others. Sehremelis v. Farmers & Merchants Bank, 7 Cal Rptr. 2d 903, 17 U.C.C. Rep. Serv. 2d 831 (Cal. App. 2nd Dist. 1992); Dade 20 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 20 of 32 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 County School Bd. v. Radio Station WQBA, 731 S. 2d 638 (Fla. 1999); Wilshire Servicing Corp. v. Timber Ridge Partnership, 743 N.E.2d 1173 (Ind. Ct. App. 2001). Comment (g) to §6.4 of the Restatement provides in part: The second distinction, mentioned above, is that redemption by a person who is not primarily responsible for payment of the debt does not extinguish the mortgage, but rather assigns both the mortgage and the debt to the payor by operation of law under the doctrine of subrogation; See §7.6. In cases of this sort, the payoff has paid, not out of duty, but to protect a real estate interest from foreclosure. Thus, the payoff is entitled to reimbursement from whomever is primarily responsible for payment, and can enforce the mortgage against that person to aid in collection of the reimbursement. Subrogation in this context helps prevent the unjust enrichment of the party who is primarily responsible at the expense of the payor. See §7.6, Illustrations 1 and 2. Since the mortgage is not extinguished, and since the payor has actually paid or tendered the balance owing to protect his or her interest, the accrual of interest on the balance ceases in favor of the mortgagee but continues unabated in favor of the payor. (emphasis added) In this case, the deed of trust contains provisions for payment of obligations by the lender and subrogation of rights in favor of the lender. The deed of trust provides that any payment made by the bank becomes additional debt secured by the deed of trust. The payment or tender of assessments by the plaintiff bank subrogates the plaintiff to the super priority portion lien of the HOA. Because it is an assignment of an interest in real property it must be recorded to be effective as to subsequent purchasers. The recording of the assignment of the lien is required because when the purchaser bids on the property he or she is relying on the information contained in the public records when determining whether or not to bid on the property and how much to pay for the property. In order words, the purchaser needs to know what he or she is buying. J. If tender discharges a lien, it must be recorded to be effective. If the tender of payment by the plaintiff bank is not viewed as the basis for equitable subrogation and instead is viewed as extinguishing the superpriority lien, the payment must still be recorded, because an extinguishment or surrender of the debt owed by the lien is a “conveyance” and includes extinguishment or discharge of the lien. The purported satisfaction of the superpriority portion of the HOA’s lien is a surrender or release of the HOA’s senior position. Blacks Law Dictionary defines surrender and release as: 21 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 21 of 32 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 Surrender, n. (15c) 1. The act of yielding to another’s power or control. 2. The giving up of a right or claim. Because the satisfaction of a lien is a form of conveyance, surrender or discharge, NRS 111.315 requires that the plaintiff bank’s satisfaction be recorded in order to be effective as to plaintiff. Likewise, NRS 111.325, makes it abundantly clear that an unrecorded satisfaction of lien on the part of the plaintiff is void against a subsequent purchaser, such as defendant/counterclaimant. (Emphasis added) Additionally, to the extent that the purported tender is claimed to have worked to discharge or extinguish the HOA’s lien, such a discharge or release must also be recorded in the office of the county recorder. Separate and apart from “conveyances,” all discharges of liens must be recorded. NRS 106.260 Discharge and assignment: Marginal entries; discharge or release must be recorded when mortgage or lien recorded by microfilm. 1. Any mortgage or lien, that has been or may hereafter be recorded, may be discharged or assigned by an entry on the margin of the record thereof, signed by the mortgagee or the mortgagee’s personal representative or assignee, acknowledging the satisfaction of or value received for the mortgage or lien and the debt secured thereby, in the presence of the recorder or the recorder’s deputy, who shall subscribe the same as a witness, and such entry shall have the same effect as a deed of release or assignment duly acknowledged and recorded. Such marginal discharge or assignment shall in each case be properly indexed by the recorder. 2. In the event that the mortgage or lien has been recorded by a microfilm or other photographic process, a marginal release may not be used and a duly acknowledged discharge or release of such mortgage or lien must be recorded. (emphasis added) It has been established that the super-priority lien under NRS 116.3116(2) is a true priority lien and is superior to a first deed of trust. SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d at 412-414. The Nevada Supreme Court relied, in part, on the holding in 7912 Limbwood Court Trust v. Wells Fargo Bank, N.A., 979 F. Supp. 2d 1142, 1149 (D. Nev. 2013). Limbwood recognizes that in order to avoid the extinguishment of the first deed of trust, the first deed of trust holder needs to pay the HOA to obtain the priority position. NRS 111.325 mandates that any claimed interest on the part of the plaintiff bank is void as a matter of law. The purpose of recording documents is to provide notice to all persons of the recording party’s interest in the property. An unrecorded or other instrument required to be recorded is not valid and effective against a bona fide purchaser. 22 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 22 of 32 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 As shown above, whether regarded as an assignment, subrogation or subordination, an instrument must be recorded with the Clark County Recorder’s office in order to be effective as to subsequent purchasers, such as defendant/counterclaimant. Plaintiff bank does not allege nor can it show any evidence that Bank of America recorded this property interest. The purported tender of payment of the super-priority interest is void as a property interest as a matter of law against the foreclosure deed to defendant/counterclaimant because evidence of the payment was not recorded in accordance with Nevada’s recording laws. As a result of Bank of America’s failure to record any evidence of this property interest prior to the date that the foreclosure deed was recorded, the property interest created by the plaintiff bank or its predecessor’s payment is void as against the foreclosure deed issued in this. This analysis is consistent with the recent amendment to the statute by the Nevada Legislature which requires recording of evidence of the payments and announcement of the payment at the auction, prior to bidding. K. Any change in priority must be recorded. Further, because the purported tender of payment would have the effect of changing the priority of the HOA’s lien, versus the deed of trust, it is required to be recorded as well. NRS 106.220 Filing and recording of instruments subordinating or waiving priority of mortgages or deeds of trust; constructive notice; effect of unrecorded instruments. 1. Any instrument by which any mortgage or deed of trust of, lien upon or interest in real property is subordinated or waived as to priority, must, in case it concerns only one or more mortgages or deeds of trust of, liens upon or interests in real property, together with, or in the alternative, one or more mortgages of, liens upon or interests in personal property or crops, the instruments or documents evidencing or creating which have been recorded prior to March 27, 1935, be recorded in the office of the recorder of the county in which the property is located, and from the time any of the same are so filed for record operates as constructive notice of the contents thereof to all persons. The instrument is not enforceable under this chapter or chapter 107 of NRS unless and until it is recorded. 2. Each such filing or recording must be properly indexed by the recorder. (Emphasis added) Thus, in order to be effective, a satisfaction of lien must be recorded. A foreclosure agent has a duty to act impartially and in good faith. By analogy, NRS 107.028(5), involving the duties of a trustee under a deed of trust provides in part: The trustee does not have a fiduciary obligation to the grantor or any other person having an interest in the property which is subject to the deed of trust. The trustee shall act 23 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 23 of 32 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 impartially and in good faith with respect to the deed of trust and shall act in accordance with the laws of this State. A rebuttable presumption that a trustee has acted impartially and in good faith exists if the trustee acts in compliance with the provisions of NRS 107.080. (emphasis added) As verified by the affidavit of Iyad Haddad filed herewith, if the HOA or foreclosure agent had advised plaintiff and the other bidders that the HOA had received and rejected a payment tendered by Bank of America to satisfy in full the HOA’s superpriority lien, defendant/counterclaimant would not have bid $21,100.00 to purchase the Property. L. Notice to third parties is of utmost significance The court in Shadow Wood Homeownwers Association v. New York Community Bank, 132 Nev. Adv. Op 5, 366 P.3d 1105 (2016) defined a bona fide purchaser as: A subsequent purchaser is bona fide under common-law principles if it takes the property “for a valuable consideration and without notice of the prior equity, and without notice of facts which upon diligent inquiry would be indicated and from which notice would be imputed to him, if he failed to make such inquiry.” Bailey v. Butner, 64 Nev. 1, 19, 176 P.2d 226, 234 (1947) In summarizing the evidence regarding the lack of notice to the putative bona fide purchaser, the court in Shadow Wood stated: . . . .And NYCB points to no other evidence indicating that Gogo Way had notice before it purchased the property, either actual, constructive, or inquiry, as to NYCB's attempts to pay the lien and prevent the sale, or that Gogo Way knew or should have known that Shadow Wood claimed more in its lien than it actually was owed, especially where the record prevents us from determining whether that is true. Lennartz v. Quilty, 191 Ill. 174, 60 N.E. 913, 914 (Ill.1901) (finding a purchaser for value protected under the common law who took the property without record or other notice of an infirmity with the discharge of a previous lien on the property). Because the evidence does not show Gogo Way had any notice of the pre-sale dispute between NYCB and Shadow Wood, the potential harm to Gogo Way must be taken into account and further defeats NYCB's entitlement to judgment as a matter of law. Notice to potential third party bidders who could otherwise claim status of a bona fide purchaser is critical to this court’s evaluation of this case. The plaintiff bank or its predecessor had actual knowledge that the property was in foreclosure and that third persons could likely bid on the property. For the nominal cost of recording a notice at $17.00 for the first page with the county recorder, the plaintiff bank or its predecessor could have simply recorded a one page notice with the recorder and put the world on notice. 24 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 24 of 32 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 In evaluating the equities between the various parties, the court should keep in mind that the plaintiff bank had a simple and inexpensive method to notify the world, including plaintiff bank, of its payment and preservation of its deed of trust. The plaintiff bank failed to do so, and the equities should weigh in favor of Saticoy Bay as the bona fide purchaser without knowledge of the tender. M. Shadow Wood’s limited application supports judgment in the purchaser’s favor The so called “20%” rule from the Restatement stated in Shadow Wood has no application in this case because Saticoy Bay is a bona fide purchaser, there are no irregularities regarding the sale, and if there were any irregularities, equity would not interfere because the party harmed would have a claim against the foreclosing agent. However, because the price paid is raised as an issue,, Saticoy Bay will address it here and show that it has no application without a showing of “fraud, oppression or unfairness as accounts for and brings about the inadequacy of price” In three instances before the court’s reference to the Restatement in the Shadow Wood case, the Court reiterates, without contradiction or criticism, the standard that a foreclosure sale will not be set aside absent fraud, oppression or unfairness which results in an inadequate sales price. The first citation to the fraud, oppression or unfairness standard specifically reaffirms the standards as set forth in both the Long and Golden cases. The court’s first reference to the standard was: Shadow Wood and Gogo Way maintain that, under NRS 116.31166, recitals such as these bar any post-sale challenge regardless of basis, whether it disputes the HOA's compliance with the statutory default, notice, and timing requirements or, as here, seeks to set aside the sale for equity-based reasons. If true, this interpretation would call into question this court's statement in Long v. Towne, that a common-interest community association's nonjudicial foreclosure sale may be set aside, just as a power-of-sale foreclosure sale may be set aside, upon a showing of grossly inadequate price plus “fraud, unfairness, or oppression.” 98 Nev. at 13, 639 P.2d at 530 (citing Golden v. Tomiyasu, 79 Nev. 503, 514, 387 P.2d 989, 995 (1963) (stating that, while a power-of-sale foreclosure may not be set aside for mere inadequacy of price, it may be if the price is grossly inadequate and there is “in addition proof of some element of fraud, unfairness, or oppression as accounts for and brings about the inadequacy of price” (internal quotation omitted))). 366 P.3d at 1110. The second reference reaffirms the court’s equitable power to set aside a foreclosure sale in the limited instances when an inadequate price is accompanied by fraud, oppression or unfairness, and cites the Nevada and California case law that discusses these requirements: 25 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 25 of 32 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 While not directly addressing the preemption argument Shadow Wood and Gogo Way make as to NRS 116.31166, our post-NRS 107.030(8) cases reaffirm that courts retain the power, in an appropriate case, to set aside a defective foreclosure sale on equitable grounds. See Golden v. Tomiyasu, 79 Nev. at 514, 387 P.2d at 995 (adopting the California rule that “inadequacy of price, however gross, is not in itself a sufficient ground for setting aside a trustee's sale legally made; there must be in addition proof of some element of fraud, unfairness, or oppression as accounts for and brings about the inadequacy of price” (quoting Oller v. Sonoma Cty. Land Title Co., 137 Cal.App.2d 633, 290 P.2d 880, 882 (Cal.Ct.App.1955))); McLaughlin v. Mut. Bldg. & Loan Ass'n, 57 Nev. 181, 191, 60 P.2d 272, 276 (1936) (noting that, in the context of an action to recover possession of a property after a trustee sale, “[h]ad the conduct of the trustee and respondent, in connection with the sale, been accompanied by any actual fraud, deceit, or trickery, a more serious question would be presented”); see also Nev. Land & Mortg. Co. v. Hidden Wells Ranch, Inc., 83 Nev. 501, 504, 435 P.2d 198, 200 (1967) (“In the proper case, the trial court may set aside a trustee's sale upon the grounds of fraud or unfairness.”). And, cases elsewhere to have addressed comparable conclusive-or presumptive-effect recital statutes confirm that such recitals do not defeat equitable relief in a proper case; rather, such recitals are “conclusive, in the absence of grounds for equitable relief.” Holland v. Pendleton Mortg. Co., 61 Cal.App.2d 570, 143 P.2d 493, 496 (Cal.Ct.App.1943) (emphasis added); see Bechtel v. Wilson, 18 Cal.App.2d 331, 63 P.2d 1170, 1172 (Cal.Ct.App.1936) (distinguishing between a challenge to the sufficiency of pre-sale notice, which was precluded by the conclusive recitals in the deed, and an equity-based challenge based upon the alleged unfairness of the sale); compare 1 Grant S. Nelson, Real Estate Finance Law, supra, § 7:23, at 986–87 (“After a defective power of sale foreclosure has been consummated, mortgagors and junior lienholders in virtually every state have an equitable action to set aside the sale.”) (footnotes omitted), with id. § 7:22, at 980–82 (noting that “[m]any states have attempted to enhance the stability of power of sale foreclosure titles by enacting a variety of presumptive statutes ”), and 6 Baxter Dimaway, Law of Distressed Real Estate, § 64:161 (2015) (noting that a trustee's deed recital can be overcome on a showing of actual fraud). 366 P.3d at 1110. The third reiteration of the standard is in the paragraph immediately before the reference to the Restatement. The court, having twice stated the standards of an inadequate price as the result of fraud, oppression and unfairness, therein begins its review of these standards. The first element reviewed is the standard for inadequate price, which contains a limited reference to the Restatement. The reference to the Restatement must therefore be read in context with the prior paragraph which is the beginning of the court’s analysis of each of the elements required for the court to invoke its equitable powers. The full, two paragraph citation reads: The question remains whether NYCB demonstrated sufficient grounds to justify the district court in setting aside Shadow Wood's foreclosure sale on NYCB's motion for summary judgment. Breliant v. Preferred Equities Corp., 112 Nev. 663, 669, 918 P.2d 314, 318 (1996) (stating the burden of proof rests with the party seeking to quiet title in its favor). As discussed above, demonstrating that an association sold a property at its foreclosure sale for an inadequate price is not enough to set aside that sale; there 26 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 26 of 32 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 must also be a showing of fraud, unfairness, or oppression. Long, 98 Nev. at 13, 639 P.2d at 530. NYCB failed to establish that the foreclosure sale price was grossly inadequate as a matter of law. NYCB compares Gogo Way's purchase price, $11,018.39, to the amount NYCB bought the property for at its foreclosure sale, $45,900.00. Even using NYCB's purchase price as a comparator, and adding to that sum the $1,519.29 NYCB admits remained due on the superpriority lien following NYCB's foreclosure sale, Gogo Way's purchase price reflects 23 percent of that amount and is therefore not obviously inadequate. See Golden, 79 Nev. at 511, 387 P.2d at 993 (noting that even where a property was “sold for a smaller proportion of its value than 28.5%,” it did not justify setting aside the sale); see also Restatement (Third) of Prop.: Mortgages § 8.3 cmt. b (1997) (stating that while “[g]ross inadequacy cannot be precisely defined in terms of a specific percentage of fair market value[, g]enerally ... a court is warranted in invalidating a sale where the price is less than 20 percent of fair market value and, absent other foreclosure defects, is usually not warranted in invalidating a sale that yields in excess of that amount”). (emphasis added) 366 P.3d at 1112 A examination of the Restatement shows that the entirety of comment b to section 8.3 actually favors the purchaser’s position because it is specific to legal proceedings occurring post foreclosure when a bona fide purchaser acquires title to the real property. A portion of comment a to Section 8.3 notes that “close judicial scrutiny of the sale price is more justifiable when the price is being employed to calculate the amount of a deficiency judgment context.” The “Reporters’ Note” portion of the Restatement contained on page 590 states in part: All jurisdictions take the position that mere inadequacy of the foreclosure sale price, not accompanied by other defects in the foreclosure process, will not automatically invalidate a sale. (case citations omitted) The Shadow Wood case cites to the case of Golden v. Tomiyasu 79 Nev. 503, 387 P.2d 989 (1963). The Golden case and the Shadow Wood case both cite to the case of Oller v. Sonoma County Land Title Company 137 Cal. App 2d 633, 290 P.2d 880 (1955). Both the Golden case and the Oller case cite to the case of Schroeder v. Young, 161 U.S. 334, 16 S. Ct. 512, 40.L .Ed 721 (1896). The U.S. Supreme Court cited examples of irregularities which may affect the sale. The court stated: ‘While mere inadequacy of price has rarely been held sufficient in itself to justify setting aside a judicial sale of property, courts are not slow to seize upon other circumstances impeaching the fairness of the transaction as a cause for vacating it, especially if the inadequacy be so gross as to shock the conscience. If the sale has been attended by any irregularity, as if several lots have been sold in bulk where they should have been sold separately, or sold in such manner that their full value could not be realized; if bidders have been kept away; if any undue advantage has been taken to the prejudice of the owner 27 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 27 of 32 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 of the property, or he has been lulled into a false security; or if the sale has been collusively or in any other manner conducted for the benefit of the purchaser, and the property has been sold at a greatly inadequate price,-the sale may be set aside, and the owner may be permitted to redeem.’ The requirements for relief from a foreclosure sale when the property has been purchased by a third party in the Restatement, as well as Shadow Wood, Long and Golden is inadequacy of the price, and fraud, oppression and unfairness causing the inadequacy of price. At no time in the Shadow Wood opinion did court use any language to question the validity of the standards or overturn the court’s prior rulings. Many bank attorneys are selectively citing the 20% language of the Restatement cited by the court in Shadow Wood to argue that sales price alone is sufficient to set aside the sale. However, on March 18, 2016, the Supreme Court issued an unpublished decision in the case of Centeno v. JPMorgan Chase Bank, docket no. 67365. A copy of the decision is attached as Exhibit O. The case involved the denial of an injunction based on the Supremacy Clause and because of a commercially unreasonable sales price. The Supreme Court addressed the commercially reasonable argument, stating: ....Similarly, this court’s reaffirmation in Shadow Wood Homeownwers Association v. New York Community Bank, 132 Nev. Ad. Op. 5, P.3d (2016) , that a low sales price is not a basis for voiding a foreclosure sale absent “fraud, unfairness, or oppression,” undermines the second basis for the district court’s decision. Here, the plaintiff has failed to show any instances of fraud, oppression or unfairness in regards to the foreclosure sale. Absent any showing of fraud, oppression or unfairness, there are no grounds to set aside the foreclosure sale or declare that the deed of trust has survived the sale. The motion for summary judgment should be granted in favor of Saticoy Bay. N. The foreclosure statutes are constitutional Pursuant to NRS 116.3116(2), the deed of trust held by plaintiff is “subordinate” to the HOA’s super priority lien. As a result, NRS 107.090 (as incorporated by NRS 116.31168(1)) required that copies of both the notice of default (NRS 107.090(3)) and the notice of sale (NRS 107.090(4)) be mailed by the HOA to Bank of America as the holder of an interest “subordinate” to the HOA’s super priority lien. In SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 130 Nev., Adv. Op. 75, *21-22, 334 P.3d 408, 418 (2014), the Nevada Supreme Court adopted this interpretation of the statute by stating: 28 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 28 of 32 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 In view of the fact that the “requirements of law” include compliance with NRS 116.31162 through NRS 116.31168 and, by incorporation, NRS 107.090, see NRS 116.31168(1), we conclude that U.S. Bank’s due process challenge to the lack of adequate notice fails, at least at this early stage of the proceeding. (emphasis added) NRS 116.31166(1) states that the recitals in the foreclosure deed are “conclusive proof” that copies of both the notice of default and election to sell, and the notice of foreclosure sale, were mailed to the plaintiff as required by statute. The plaintiff has produced no evidence disproving the recitals. The complaint alleges that the statute requires notice to a lender only if the lender first requests notice. This allegation ignores the express provisions of NRS 107.090, as incorporated by NRS 116.31168(1), that require copies of both the notice of default and the notice of sale to be mailed to holders of “subordinate” interests even if they do not record or mail to the HOA a request for notice. In SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 130 Nev., Adv. Op. 75, 334 P.3d 408 (2014), the Nevada Supreme Court painstakingly analyzed each of the foreclosure requirements in NRS Chapter 116 and called the statutory scheme “elaborate.” Rejecting U.S. Bank’s claim that there was a due process violation, the Nevada Supreme Court stated: “The provisions of NRS 107.090,” governing notice to junior lienholders and others in deed-of-trust foreclosure sales, “apply to the foreclosure of an association's lien as if a deed of trust were being foreclosed.” NRS 116.31168(1). The HOA must provide the homeowner notice of default and election to sell; it also must notify “[e]ach person who has requested notice pursuant to NRS 107.090 or 116.31168” and “[a]ny holder of a recorded security interest encumbering the unit's owner's interest who has notified the association, 30 days before the recordation of the notice of default, of the existence of the security interest.” NRS 116.31163(1), (2). The homeowner must be given at least 90 days to pay off the lien. NRS 116.31162. If the lien is not paid off, then the HOA may proceed to foreclosure sale. Id. Before doing so, the HOA must give notice of the sale to the owner and to the holder of a recorded security interest if the security interest holder “has notified the association, before the mailing of the notice of sale of the existence of the security interest.” NRS 116.311635(1)(b)(2); see NRS 107.090(3)(b), (4) (requiring notice of default and notice of sale to “[e]ach other person with an interest whose interest or claimed interest is subordinate to the deed of trust”. (Emphasis added) 334 P.3d at 411. The express language in NRS 107.090(3)(b) that requires that notice be mailed to holders of interests “subordinate” to the HOA’s lien even if the holder of the interest does not request it. NRS 116.31168 provides in part: 29 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 29 of 32 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 Foreclosure of liens: Requests by interested persons for notice of default and election to sell; right of association to waive default and withdraw notice or proceeding to foreclose. 1. The provisions of NRS 107.090 apply to the foreclosure of an association’s lien as if a deed of trust were being foreclosed. The request must identify the lien by stating the names of the unit’s owner and the common-interest community. (emphasis added) NRS 107.090 provides in part: Request for notice of default and sale: Recording and contents; mailing of notice; request by homeowners’ association; effect of request. 1. As used in this section, “person with an interest” means any person who has or claims any right, title or interest in, or lien or charge upon, the real property described in the deed of trust, as evidenced by any document or instrument recorded in the office of the county recorder of the county in which any part of the real property is situated. 2. A person with an interest or any other person who is or may be held liable for any debt secured by a lien on the property desiring a copy of a notice of default or notice of sale under a deed of trust with power of sale upon real property may at any time after recordation of the deed of trust record in the office of the county recorder of the county in which any part of the real property is situated an acknowledged request for a copy of the notice of default or of sale. The request must state the name and address of the person requesting copies of the notices and identify the deed of trust by stating the names of the parties thereto, the date of recordation, and the book and page where it is recorded. 3. The trustee or person authorized to record the notice of default shall, within 10 days after the notice of default is recorded and mailed pursuant to NRS 107.080, cause to be deposited in the United States mail an envelope, registered or certified, return receipt requested and with postage prepaid, containing a copy of the notice, addressed to: (a) Each person who has recorded a request for a copy of the notice; and (b) Each other person with an interest whose interest or claimed interest is subordinate to the deed of trust. 4. The trustee or person authorized to make the sale shall, at least 20 days before the date of sale, cause to be deposited in the United States mail an envelope, registered or certified, return receipt requested and with postage prepaid, containing a copy of the notice of time and place of sale, addressed to each person described in subsection 3. (emphasis added) In State v. Steven Daniel P. (In re Steven Daniel P.), 129 Nev., Adv. Op. 73, 309 P.3d 1041, 1046 (2013), the Nevada Supreme Court applied the concept of incorporating a statute by reference in the context of NRS Chapter 62C and stated: The United States Supreme Court has held that “[w]here one statute adopts the particular provisions of another by a specific and descriptive reference to the statute or provisions adopted, the effect is the same as though the statute or provisions adopted had been 30 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 30 of 32 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 incorporated bodily into the adopting statute.” Hassett v. Welch, 303 U.S. 303, 314 (1938) (quoting 2 J.G. Sutherland & John Lewis, Statutes and Statutory Construction 787 (2d ed. 1904)); see also State ex rel. Walsh v. Buckingham, 58 Nev. 342, 349, 80 P.2d 910, 912 (1938) (“A statute by reference made a part of another law becomes incorporated in it and remains so as long as the former is in force.”) Consequently, the provisions of NRS 107.090 must be read as if they were “incorporated bodily” into NRS Chapter 116. CONCLUSION The HOA’s foreclosure sale extinguished both the plaintiff’s deed of trust, and its interest in the subject property. As conclusively evidenced by the recitals in the foreclosure deed, the HOA’s foreclosure sale complied with all requirements of Nevada law. The recitals are supported by documentation to show the notices went out. The plaintiff has not produced any evidence to show that the defendant is not a bona fide purchaser, and has failed to demonstrate any fraud, oppression or unfairness to justify setting aside the foreclosure sale. Further, plaintiff bank failed to record anything putting potential purchasers, such as defendant/counterclaimant, on notice of its alleged tender Accordingly, it is respectfully requested that this Court enter an order granting the defendant/counterclaimant’s motion for summary judgment on its counterclaim for quiet title and declaratory relief and quieting title to the Property in the name of the defendant, free and clear of all liens and encumbrances and forever enjoining plaintiff from asserting any estate, title, right, interest, or claim to the property adverse to the defendant/counterclaimant. DATED this 27th day of October, 2016 LAW OFFICES OF MICHAEL F. BOHN, ESQ., LTD. By: / s / Michael F. Bohn, Esq. / Michael F. Bohn, Esq. 376 E. Warm Springs Road, Ste. 140 Las Vegas, Nevada 89119 Attorney for defendant/counterclaimant 31 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 31 of 32 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 CERTIFICATE OF SERVICE I hereby certify that on this 27th day of October, 2016, I electronically transmitted the above MOTION FOR SUMMARY JUDGMENT to the Clerk’s Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to all counsel in this matter; all counsel being registered to receive Electronic Filing and/or served a copy via U.S. mail, postage prepaid addressed to the following parties: Ariel E. Stern, Esq. Miles N. Clark, Esq. AKERMAN LLP 1160 Town Center Drive, Suite 330 Las Vegas, Nevada 89144 Attorney for plaintiff JAY HAMPTON, ESQ. MILES HAMPTON, ESQ. HAMPTON &HAMPTON, P.C. 880 Seven Hills Drive, Ste. 200 Henderson, Nevada 89052 Telephone: (702) 736-1820 Facsimile: (702) 736-1850 Attorneys for Defendant Hampton Collections, LLC Joseph P. Garin, Esq. J. William Ebert, Esq. H. Sunny Jeong, Esq. LIPSON, NEILSON, COLE, SELZTER & GARIN, P.C. 9900 Covington Cross Dr., Suite 120 Las Vegas, NV 89144 Attorneys for Defendant Mountain Gate Homeowners Association /s/ Marc Sameroff / An employee of the LAW OFFICES OF MICHAEL F. BOHN, ESQ., LTD. 32 Case 2:16-cv-00540-JCM-NJK Document 66 Filed 10/27/16 Page 32 of 32 Case 2:16-cv-00540-JCM-NJK Document 66-1 Filed 10/27/16 Page 1 of 3 Case 2:16-cv-00540-JCM-NJK Document 66-1 Filed 10/27/16 Page 2 of 3 Case 2:16-cv-00540-JCM-NJK Document 66-1 Filed 10/27/16 Page 3 of 3 EXHIBIT A EXHIBIT A MSJ000001 Case 2:16-cv-00540-JCM-NJK Document 66-2 Filed 10/27/16 Page 1 of 5 MSJ000002 Case 2:16-cv-00540-JCM-NJK Document 66-2 Filed 10/27/16 Page 2 of 5 MSJ000003 Case 2:16-cv-00540-JCM-NJK Document 66-2 Filed 10/27/16 Page 3 of 5 MSJ000004 Case 2:16-cv-00540-JCM-NJK Document 66-2 Filed 10/27/16 Page 4 of 5 MSJ000005 Case 2:16-cv-00540-JCM-NJK Document 66-2 Filed 10/27/16 Page 5 of 5 EXHIBIT B EXHIBIT B MSJ000006 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 1 of 16 MSJ000007 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 2 of 16 MSJ000008 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 3 of 16 MSJ000009 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 4 of 16 MSJ000010 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 5 of 16 MSJ000011 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 6 of 16 MSJ000012 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 7 of 16 MSJ000013 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 8 of 16 MSJ000014 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 9 of 16 MSJ000015 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 10 of 16 MSJ000016 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 11 of 16 MSJ000017 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 12 of 16 MSJ000018 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 13 of 16 MSJ000019 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 14 of 16 MSJ000020 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 15 of 16 MSJ000021 Case 2:16-cv-00540-JCM-NJK Document 66-3 Filed 10/27/16 Page 16 of 16 EXHIBIT C EXHIBIT C MSJ000022 Case 2:16-cv-00540-JCM-NJK Document 66-4 Filed 10/27/16 Page 1 of 3 MSJ000023 Case 2:16-cv-00540-JCM-NJK Document 66-4 Filed 10/27/16 Page 2 of 3 MSJ000024 Case 2:16-cv-00540-JCM-NJK Document 66-4 Filed 10/27/16 Page 3 of 3 EXHIBIT D EXHIBIT D MSJ000025 Case 2:16-cv-00540-JCM-NJK Document 66-5 Filed 10/27/16 Page 1 of 6 HH0163 MSJ000026 Case 2:16-cv-00540-JCM-NJK Document 66-5 Filed 10/27/16 Page 2 of 6 HH0164 MSJ000027 Case 2:16-cv-00540-JCM-NJK Document 66-5 Filed 10/27/16 Page 3 of 6 HH0165 MSJ000028 Case 2:16-cv-00540-JCM-NJK Document 66-5 Filed 10/27/16 Page 4 of 6 HH0166 MSJ000029 Case 2:16-cv-00540-JCM-NJK Document 66-5 Filed 10/27/16 Page 5 of 6 HH0167 MSJ000030 Case 2:16-cv-00540-JCM-NJK Document 66-5 Filed 10/27/16 Page 6 of 6 EXHIBIT E EXHIBIT E MSJ000031 Case 2:16-cv-00540-JCM-NJK Document 66-6 Filed 10/27/16 Page 1 of 3 MSJ000032 Case 2:16-cv-00540-JCM-NJK Document 66-6 Filed 10/27/16 Page 2 of 3 MSJ000033 Case 2:16-cv-00540-JCM-NJK Document 66-6 Filed 10/27/16 Page 3 of 3 EXHIBIT F EXHIBIT F MSJ000034 Case 2:16-cv-00540-JCM-NJK Document 66-7 Filed 10/27/16 Page 1 of 3 MSJ000035 Case 2:16-cv-00540-JCM-NJK Document 66-7 Filed 10/27/16 Page 2 of 3 MSJ000036 Case 2:16-cv-00540-JCM-NJK Document 66-7 Filed 10/27/16 Page 3 of 3