Bank of America, N.A. v. Regency Village Owner's Association, Inc. et al

MOTION for Summary Judgment

D. Neb.December 19, 2016

1 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 Edward D. Boyack, Esq. Nevada Bar No. 5229 Colli C. McKiever, Esq. Nevada Bar No. 13724 BOYACK ORME & TAYLOR 401 N. Buffalo Dr. #202 Las Vegas, NV 89145 ted@boyacklaw.com colli@boyacklaw.com Phone: 702-562-3415 Fax: 702-562-3570 Attorney for Regency Village Owner’s Association, Inc. UNITED STATES DISTRICT COURT DISTRICT OF NEVADA BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING, LP, F/K/A COUNTRYWIDE HOME LOANS SERVICING LP, Plaintiff, v. REGENCY VILLAGE OWNER’S ASSOCIATION, INC. a/k/a REGENCY VILLAGE MOBILE ESTATES; NEVADA ASSOCIATION SERVICES, INC,; CSCACQUISITION & HOLDING GROUP, LLC; OSCAR MARTINEZ-AVILEZ; MIRIAM MARTINEZ-AVILEZ, Defendants. Case No. 2:16-cv-00496 DEFENDANT REGENCY VILLAGE OWNER’S ASSOCIATION, INC.’S MOTION FOR SUMMARY JUDGMENT NOW COMES the Defendant, REGENCY VILLAGE OWNER’S ASSOCIATION, INC. through its counsel Edward D. Boyack, Esq. and Colli C. McKiever, Esq., of the law firm BOYACK ORME & TAYLOR, who hereby filed this Motion for Summary Judgment. This Motion is made pursuant to FRCP 56, the attached pleadings and papers including a Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 1 of 19 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Memorandum in Support of this Motion, and such further oral argument as the Court may hear. Dated this 19th day of December, 2016. BOYACK ORME AND TAYLOR BY: /s/ Edward D. Boyack Edward D. Boyack, Esq., Nevada Bar No. 5229 Colli C. McKiever, Esq. Nevada Bar No. 13724 BOYACK ORME & TAYLOR 401 N. Buffalo Dr. #202 Las Vegas, NV 89145 Phone: 702-562-3415 Fax: 702-562-3570 Attorney for Regency Village Owner’s Association, Inc. MEMORANDUM OF POINTS AND AUTHORITIES I. Introduction and Statement of Facts The Plaintiff’s claims all allegedly arise from the events surrounding the foreclosure of the residential property located at 104 Sir George Dr., Las Vegas, Nevada, 89110 within the Regency Village Owner’s Association, Inc. (“Regency Village” or “HOA”), then owned by Doris and Tara Bennett (“the Bennett’s”), and subject to deed of trust in favor of Bank of America, N.A. (“BANA”). On or about March 21, 2014, Regency Village foreclosed upon the subject property based upon the unpaid Association assessments. CSC Acquisition & Holding Group, LLC (“CSC”) was the highest bidder at the foreclosure sale. BANA, the Plaintiff, filed this Complaint seeking a determination by this Court that the bank’s Deed of Trust was not extinguished pursuant to the foreclosure sale. The Complaint names Regency Village Owner’s Association, Inc. as a Defendant to claims of Quiet Title, Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 2 of 19 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Declaratory Relief, Wrongful Foreclosure, and Breach of NRS 116.113. Nevada Association Services, Inc. (“NAS”), who served as the HOA Trustee, Oscar and Miriam Martinez-Avilezes, the current owners, and CSC, the purchaser, are also named Defendants in the action. As the property was sold to CSC by way of a properly noticed and conducted HOA foreclosure sale, Bank of America has no viable claims against Regency Village and this Court should, therefore, grant summary judgment in Regency Village ’s favor. The relevant facts are, to-wit: 1. On or about September 22nd, 2005, the Bennett’s executed a Deed of Trust as was originally recorded on October 6th, 2005 with the Clark County Recorder.1 2. On or about June 1, 2012, the Deed of Trust was assigned to Bank of America.2 3. A Notice of Delinquent Assessment Lien was filed by the collection agency, Nevada Association Services Inc., LLC (“NAS”), on behalf of the HOA on May 21, 2013.3 4. A Notice of Default and Election to Sell was recorded by NAS on behalf of the HOA on August 6, 2013.4 5. NAS, on behalf of Regency Village , recorded a Notice of Trustee’s Sale on January 28, 2014.5 6. The subject property was sold at a foreclosure sale on March 21, 2014 and, pursuant to said sale, a Trustee’s Deed was recorded by NAS on behalf of the HOA on March 24, 2014. The Foreclosure Deed named CSC as beneficiary, and listed the sale price at $4,800.00.6 1 Deed of Trust, Clark County Recorder Instrument No. 20051006-0006004, Ex. A 2 Assignment of Deed of Trust, Clark County Recorder Instrument No. 20120601-0003138 , Ex. B. 3 Notice of Delinquent Assessment Lien, Clark County Recorder Instrument No. 20130521-0003136, Ex. C 4 Notice of Default and Election to Sell, Clark County Recorder Instrument No. 20130806-0002683, Ex. D 5 Notice of Trustee’s Sale, Clark County Recorder Instrument No. 20140128-0000890. Ex. E. 6 Trustee’ Deed Upon Sale, Clark County Recorder Instrument No. 20140324-0000920, Ex. F. Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 3 of 19 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7. CSC subsequently transferred the property to Oscar and Miriam Martinez-Avilezes via a Quitclaim Deed on or about October 4, 2014.7 8. That the Bank of America did not submit money or otherwise tender the delinquent assessment payments for the subject property to the HOA. II. Legal Standard The Federal Rules of Civil Procedure provide: “A party against whom relief is sought may move at any time, with or without supporting affidavits, for summary judgment on all or part of the claim. Fed. R. Civ. Pro. 56(b). The rule further states: The judgment sought should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-51, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A material fact is one that, “under the governing substantive law ... could affect the outcome of the case.” Thrifty Oil Co. v. Bank of America Nat'l Trust & Savings Ass'n, 322 F.3d 1039, 1046 (9th Cir. 2003) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). There is no genuine issue of fact if the opposing party fails to offer evidence sufficient to establish the existence of an element essential to that party's case. Celotex, 477 U.S. at 322, 106 S.Ct. at 2552; Citadel Holding Corp. v. Roven, 26 F.3d 960, 964 (9th Cir.1994). A nonmoving party cannot avoid summary judgment by relying only on conclusions or allegations unsupported by factual evidence. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Where the party moving for summary judgment will not bear the burden of proof at trial, it 7 Quitclaim Deed, Clark County Recorder Instrument No. 20141002-0002010, Ex. G Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 4 of 19 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 may support submitting evidence to negate the plaintiff’s case or by merely “pointing out . . . that there is an absence of evidence to support the nonmoving party's case.” Cuzze v. Univ. & Cmty. College Sys., 123 Nev. 598, 603-604 (2007) (adopting Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)). In deciding upon a motion for summary judgment, all facts and all inferences must be viewed by the court in the light most favorable to the nonmoving party. See Amerson v. Clark Cnty.,995 F.Supp. 2d 1155,1159 (D. Nev. 2014) (citing Kaiser Cement Corp. v. Fischbach & Moore, lnc.,793 F.2d 1100, 1103 (9th Cir. 1986)). A motion for summary judgment will be granted if the moving party has demonstrated the absence of any issue of material fact and the right to judgment as a matter of law. Poller v. Columbia Broadcasting System, Inc., 386 U.S. 464, 82 S.Ct. 486, 7 L.Ed. at 458 (1962); Mutual Fund Investors, Inc. v. Putman Management Co., 553 F.2d 620 (9th Cir. 1977). III. Argument A. Bank of America’s Deed of Trust was extinguished by the foreclosure sale. The ability of an HOA foreclosure sale to extinguish a first deed of trust is set forth in NRS 116 and has been upheld by the Nevada Supreme Court. SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d 408 (Nev. 2014). In SFR, the Court found that NRS 116.3116(2) “gives an HOA true super-priority lien, proper foreclosure of which will extinguish a first deed of trust.” Id. at 412. (Court finding that “[a] trustee’s deed reciting compliance with the notice provisions of N.R.S. 116.31162 through N.R.S. 116.31168 ‘is conclusive’ as to the recitals ‘against the unit’s former owner, his or her heirs and assigns, and all other persons.’”). In this case before the Court, the prior homeowners, Tara and Doris Bennett, failed to timely pay assessments payments to the HOA and, due to that failure the HOA, through Nevada Association Services Inc, (“NAS”), caused to be filed the requisite notices to pursue a foreclosure Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 5 of 19 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 action upon the subject property.8 The HOA’s foreclosure of the assessment lien pursuant to N.R.S. 116.31162 through N.R.S. 116.31168 as evidenced by the filing of the Foreclosure Deed in favor of CSC establishes the Co-Defendant, CSC’s, ownership in the subject property and effectively eliminates the interest of Bank of America, N.A. (“BANA”). See Shadow Wood Homeowners Ass'n, Inc. v. New York Cmty. Bancorp, Inc., 366 P.3d 1105, 1116 (Nev. 2016) (en banc)(The Court finding that “if the association forecloses on its superpriority lien portion, the sale also would extinguish other subordinate interests in the property.”) Accordingly, because Regency Village complied with the provisions of NRS 116 and the recitals in the Foreclosure Deed are conclusive, BANA’s Deed of Trust was extinguished by operation of law. B. BANA’s Constitutional Challenges to the Statute fail. The Nevada Supreme Court has already interpreted the Nevada foreclosure statutes to be valid as applied to HOA foreclosures. See SFR Investments at 408. BANA relies upon the recently decided case of Bourne Valley Trust v. Wells Fargo Bank N.A., 2016 WL 4254983 (9th Cir., August 12, 2016), as the basis of establishing that the Nevada foreclosure statute is unconstitutional. The determination by the Ninth Circuit Court of Appeals in the Bourne Valley case, finding NRS 116 facially unconstitutional, directly contradicts the decision by the Nevada Supreme Court in SFR Investments. "The constitutionality of a state statute is a question of law." Planned Parenthood of Idaho, Inc. v. Wasden, 376 F.3d 908, 920 (9th Cir. 2004) citing In re Kolb, 326 F.3d 1020, 1037 (9th Cir. 2003)(Court acknowledging that in “construing a state statute” the federal court’s “role is to interpret the law” as the state’s highest court would interpret the statute.) As this case is one of hundreds of cases filed concerning title to properties sold at 8 ECF No.1 at ¶17-19. Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 6 of 19 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 homeowner’s association lien foreclosure sale under NRS Chapter 116, it is imperative that the result of factually similar cases not be dictated primarily by where the matter is filed. The Supreme Court of the United States has long recognized the necessity that the outcome of litigation be essentially the same whether the case is filed in state or federal court as to preclude forum shopping. See Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938). "Where a federal court is exercising jurisdiction solely because of the diversity of citizenship of the parties, the outcome of the litigation in the federal court should be substantially the same, so far as legal rules determine the outcome of a litigation, as it would be if tried in a State court." Gasperini v Center for Humanities, Inc. 518 U.S. 415, 427-8 (1996); quoting Guaranty Trust Co. v. York 326 U.S. 99, 109 (1945).; see also Ragan v. Merchants Transfer & Warehouse Co.,337 U.S. 530, 533 (1949). Federal courts sitting in diversity jurisdiction hearing a matter involving state law have traditionally deferred to the supreme court of that state’s interpretation of the state statute. See Bernhardt v Polygraphic Co., 350 U.S. 198, 204 (1956) citing Guaranty Trust Co. V York, 326 U.S. 99, 108 (1945)(Court finding that a decision of the federal court should not “substantially affect the enforcement of the right as given by the State.”) As the Nevada Supreme Court has interpreted the foreclosure statute, finding that it does not violate the notice provisions of procedural due process, BANA’s claims that NRS 116 violates the due process clause contained within the Fourteenth Amendment of the United States Constitution and the Nevada Constitution are without merit. 1. BANA had Actual Notice of the HOA Foreclosure Sale BANA’s receipt of actual notice of the HOA foreclosure sale invalidates the bank’s allegation that it was deprived of procedural due process. A procedural due process claim Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 7 of 19 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 requires allegations of, "(1) a deprivation of a constitutionally protected liberty or property interest, and (2) a denial of adequate procedural protections." Brewster v. Bd. of Educ. of Lynwood Unified Sch. Dist., 149 F.3d 971, 982 (9th Cir. 1998). Additionally, the bank’s receipt of actual notice negates the claim that NRS 116 is facially unconstitutional. See Wiren v. Eide, 542 F.2d 757, 762 (9th Cir. 1976) (“receipt of actual notice deprives [appellant] of standing to raise the claim” that the statutory notice provisions violated due process). The key fact is that BANA had notice of the HOA’s foreclosure sale but chose to not take action to preserve its interest in the Deed of Trust. “[l]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 the necessary steps to preserve that right." SFR at 418, citing In re Medaglia, 52 F,3d 451,455 (2d Cir. 1995). Whether the notice requirements contained within NRS 116 are sufficient or not do not alter the fact that BANA was provided actual notice of the HOA foreclosure sale. A due process violation does not occur if actual notice is given to the interested party. See United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 272, 130 S.Ct. 1367, 1378 (2010)(no due process violation where the party in interest received actual notice.) Further, the Nevada statute does not require interested parties to opt-in. The provisions requiring notice to lenders are incorporated into NRS Chapter 116 by NRS 116.31168. Pursuant to SFR, "'[t]he 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."' SFR, 334 P .3d at 411. Accordingly, NRS 107.090 requires that copies of the notice of default and election to sell, and the notice of sale, be mailed to each “person with an interest or claimed interest” that is “subordinate” to the HOA’s super-priority lien. NRS 107.090(3)-(4). The currently applicable interpretation of NRS 116 as rendered by the Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 8 of 19 9 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 Nevada Supreme Court held that the lender’s due process rights are not violated where the foreclosure on an HOA super priority lien extinguishes all junior liens, including a first deed of trust recorded prior to the notice of delinquent assessments, thereby upholding the constitutionality of the foreclosure statute. SFR Investments, 334 P.3d at 418. Because BANA received actual notice of Regency Village ’s foreclosure sale, BANA had the opportunity to protect its Deed of Trust but elected not to take such action. The actual notice provided to BANA negated BANA’s argument that a due process violation occurred. Therefore, BANA’s claim that it was damaged by the purportedly facially unconstitutional statute fails as a matter of law. 2. The HOA is not a state actor. BANA argues that the HOA foreclosure sale equates to a deprivation of property under the Due Process clause of the 14th Amendment of the United States Constitution. A violation of due process or deprivation of BANA’s property must be caused by a state action and a state actor. JP Morgan Chase Bank v SFR Investment Pool 1, Case No. 2:14-cv-02080-RFB (D. Nev. July 28, 2016)(“The Fourteenth Amendment protects citizens from unlawful action by the government, but does not regulate the conduct of private individuals or entities.”) citing Apao v Bank of New York, 324 F.3d 1091, 1093 (9th Cir. 2003). Due process protections do not extend to private actor’s private conduct. Am. Mfr. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 50, 119 S.Ct. 977 (1999). Rather, the actor must be performing functions that are traditionally and exclusively performed by the government. Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 158 (1978). “Embedded in our Fourteenth Amendment jurisprudence is a dichotomy between state action, which is subject to scrutiny under the Amendment's Due Process Clause, and private conduct, against which the Amendment affords no shield, no matter how unfair that conduct may be.” Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 9 of 19 10 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 National Collegiate Athletic Association v. Tarkanian, 488 U.S. 179, 191 (1988) citing Shelley v. Kraemer, 334 U.S. 1, 13 (1948). Otherwise the Fourteenth Amendment does not address "private conduct abridging individual rights." Id., citing Burton v. Wilmington Parking Authority, 365 U.S. 715, 722 (1961). The "State is responsible for the [ ... ] act of a private party when the State, by its law, has compelled the act." Adickes v. S.H Kress & Co. 398 U.S. 144, 170 (1970). The HOA foreclosure sale, in which the bank received actual notice of the proceeding, does not implicate procedural due process issues. 3. BANA’s Facial Challenge to NRS 116 is not valid. In order to successfully challenge the constitutionality of a statute, it must be established that no circumstances exist under which the statute would be valid. U.S. v Salerno, 481 U.S. 739, 745 (1987). “Statutes are presumed to be valid, and the challenger bears the burden of showing that a statute is unconstitutional.” Flamingo Paradise Gaming, LLC v. Chanos, 125 Nev. 502, 509, 217 P.3d 546, 551 (Nev. 2009). (quoting Silvar v. Dist. Ct., 122 Nev. 289, 292, 129 P.3d 682, 684 (Nev. 2006)). In order to succeed on a facial challenge of NRS 116, BANA must establish that there is, “no set of circumstances under which the statute would be valid.” Deja vu Showgirls v State Dept. of Tax, 334 P.3d 392, 398 (Nev. 2014). It has already been determined that NRS 116 is not unconstitutional on its face as at least one set of circumstances exist under which the statute is valid. The Nevada Supreme Court, considering a facial challenge to NRS 116, found, "[t]o the extent U.S. Bank argues that a statutory scheme that gives an HOA a super- priority lien that can be foreclosed non-judicially, thereby extinguishing an earlier filed deed of trust, offends due process, the argument is a nonstarter." SFR Investments at 418. Based upon the Nevada Supreme Court’s determination that at least one set of circumstances exist in which the statute is valid, BANA’s argument contesting the validity of the statute on its face must fail. Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 10 of 19 11 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 C. The Foreclosure Sale was Commercially Reasonable. There is no requirement of commercial reasonableness in HOA non-judicial foreclosure sales conducted pursuant to NRS 116, but even if there was, the sale was commercially reasonable. First, the foreclosure price was sufficient. Secondly, there is no evidence that the sale price was the result of fraud, oppression or unfairness. Lastly, Nevada has found that low sales price alone is never enough to unwind a sale. NRS § 116.31164 and 116.31166 and supporting provisions lack any requirement that the sale be “commercial reasonable.” See Pro-Max Corp. V. Feenstra, 117 Nev. 90, 95, 16 P.3d 1074, 1077-78 (2001) (“where the language of a statute is plain and unambiguous and its meaning clear and unmistakable, there is no room for construction, and the courts are not permitted to search for its meaning beyond the statute itself.”) When evaluating the commercial reasonableness of a sale, the Nevada Supreme Court has already determined that an allegation of inadequate sales price alone is insufficient to set aside a foreclosure sale: “There must also be a showing of fraud, unfairness, or oppression.” Shadow Wood Homeowners Association, Inc. v. New York Community Bancorp, Inc., P.3d 1105, 1112 (Nev. 2016) (citing Long v. Towne, 98 Nev. 11, 13, 639 P.2d 528, 530 (1982)); see Golden v. Tomiyasu, 79 Nev. 503, 518, 387 P.2d 989, 997 (1963) (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.” (Internal citations omitted). A panel of the Nevada Supreme Court recently reiterated the Shadow Wood decision stating in an unpublished opinion that “a low sales price is not a basis for voiding a foreclosure Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 11 of 19 12 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 sale absent ‘fraud, unfairness, or oppression...” Centeno v. JPMorgan Chase Bank, N.A., Case No. 67365 (Nev. Mar. 18, 2016).9 1. The foreclosure price of the property was sufficient. The entirety of the circumstances surrounding the sale of the property must be considered to analyze the sufficiency of the sales price of the property. As the court in Bourne Valley Court Trust v. Wells Fargo Bank, N.A., 80 F.Supp.3d 1131 (D.Nev. 2015) recognized, when assessing commercial reasonableness of an association sale, the material facts affecting the specific market at the time must be considered, including the split in the courts as to the interpretation of NRS 116.3116(2), and whether there was evidence of fraud, oppression or unfairness. “Before the Nevada Supreme Court issued SFR Investments purchasing property at an HOA foreclosure sale was a risky investment, akin to purchasing a lawsuit…. a purchaser at an HOA foreclosure sale risked purchasing merely a possessory interest in the property subject to the first deed of trust. . . . 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.” Bourne Valley Court Trust v. Wells Fargo Bank, N.A., 80 F. Supp. 3d 1131, 1136 (D. Nev. 2015). Even if the price obtained was lower than the amount that BANA claims the property should have sold for, that is not determinative of the issue. A central concept to the analysis of commercial reasonableness deals with looking at whether there was a conduct in the sale process that led to the low price, not simply comparing price to value. See Iama Corp. V. Wham, 99 Nev. 730, 735-738, 669 P.2d 1076, 1079 (1983) (must look to the sale process, i.e., “whether proper 9 Centeno v. JPMorgan Chase Bank, N.A., Case No. 67365 (Nev. Mar. 18, 2016), Unpublished Opinion, Ex. J. Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 12 of 19 13 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 notice was given, whether the bidding was competitive, and whether the sale was conducted pursuant to...normal procedures”). 2. BANA has presented no evidence of fraud, unfairness or oppression. It is well settled that inadequate sales price alone is insufficient to set aside a foreclosure sale; “there must also be a showing of fraud, unfairness, or oppression.” Shadow Wood, 366 P.3d at 1105, (citing Long, 98 Nev. At 13, 639 P.2d at 530); see Golden, 79 Nev. 504, 514, 387 P.2d at 995 (“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.” (Internal citations omitted). The facts presented by BANA there are no allegations of fraud, oppression or unfairness that brought about any inadequacy in price. Further, the considering the context of the transaction, including: the uncertainty of the law at the time of the sale; the compliance with the noticing requirements; and the lack of any factual allegations of fraud, unfairness or oppression; the sale was commercially reasonable and the HOA is entitled to summary judgment. D. BANA’s Claim for Wrongful Foreclosure is without merit. "An action for the tort of wrongful foreclosure will lie if the trustor or mortgagor can establish that at the time the power of sale was exercised or the foreclosure occurred, no breach of condition or failure of performance existed on the mortgagor's or trustor' s part which would have authorized the foreclosure or exercise of the power of sale." Larson v. Homecomings Fin., LLC, 680 F. Supp. 2d 1230, 1237 (D. Nev. 2009) (citing Collins v. Union Federal Sav. & Loan Ass'n, 99 Nev. 284, 662 P.2d 610, 623 (1983)). "The material issue of fact in a wrongful foreclosure claim is whether the trustor was in default when the power of sale was exercised." Id. The facts Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 13 of 19 14 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 are undisputed that the HOA had the right to foreclose upon its lien because the prior owners failed to timely pay assessments upon the property.10 Under Chapter 116 of the Nevada Revised Statutes, an associations CC&R’s must establish an associations ability to impose assessments in order for the association to be entitled to collect the same.11 NRS 116.3102 allows for an HOA to “collect assessments for common expenses” as the HOA has designated in the governing declarations of the community, namely the CC&R’s. The CC&R’s, through the statutory grant of authority, govern the establishment and imposition of the assessments against the property owners within the association. The CC&R’s provide the authority to the HOA to impose and enforce the rules of the community and to establish and collect the assessments of the Association. See NRS 116.3102. Due to the prior owners’ failure to pay the HOA assessments, the HOA was entitled to foreclose upon the property. The bank has failed to set forth a cause of action for wrongful foreclosure, and, therefore, the HOA is entitled to summary judgment. E. The HOA did not Breach any Duty under NRS 116.1113. There is an obligation to act in good faith is implicit in the performance of every contractual obligation pursuant to NRS Chapter 116. "Good faith," means honesty in fact and the observance of reasonable commercial standards of fair dealing. NRS 104.120l(t). However, the bank does not assert that it was a party to a contract with the HOA. Therefore, this is where the analysis on the claim of the breach of the HOA’s duty of good faith should end as the HOA does not owe the bank a duty pursuant to the statute. However, to the extent that BANA set forth allegations that the HOA or the HOA’s 10 ECF No. 1 at ¶ 10-11 11 Regency Village ’s Covenants, Conditions and Restrictions (CC&R’s), Ex. I. Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 14 of 19 15 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 Trustee failed to provide the exact super-priority amount of the assessment lien as a basis of the breach of good faith, there is no requirement of such disclosure. The fact that a notice does not identify a super-priority amount is of no consequence because NRS Chapter 116 gives lienholders notice that the HOA may have a super-priority interest that could extinguish their security interests. See SFR Investments at 418. Just as the Nevada Supreme Court found in SFT, nothing in this case stopped BANA “from determining the precise superpriority amount in advance of the sale or paying the entire amount and requesting a refund of the balance.” Id. This issue that that the notices did not containing the exact superpriority amount is without merit as it was already decided by the Nevada Supreme Court, Regency Village is entitled to summary judgment as a matter of law. Further, BANA also raises the claim that the HOA’s CC&R’s represent that the HOA’s assessment lien would be subordinate to BANA’s Deed of Trust. Specifically, as to statues pertaining to NRS 116, Nevada law provides that , "provisions may not be varied by agreement, and rights conferred by it may not be waived . . . [e]xcept as expressly provided in Chapter 116.” NRS 116.1104. There is no explicit language in NRS 116.3116 that allows the waiver of the HOA’s super-priority position for the HOA’s super-priority assessment lien. SFR Investments at 419, citing 7912 Limbwood Court Trust v Wells Fargo Bank, 979 F. Supp. 2d 1142, 1153 (D.Nev. 2013). The Nevada Supreme Court has invoked the statute when analyzing the applicability of the mortgage savings clause and found the clause in that instance “does not affect NRS 116.3116(2)'s application…”. SFR Investments at 419; See Boulder Oaks Cmty. Ass'n v. B & J Andrews Enters., LLC, 125 Nev. 397, 407, 215 P.3d 27, 34 (2009) (“holding that a CC&Rs clause that created a statutorily prohibited voting class was void and unenforceable”). Clearly under Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 15 of 19 16 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 Nevada statutory law the HOA cannot alter the HOA’s position as the right to collect pursuant to the assessment lien, despite the interpretation by the bank of the CC&R’s to the contrary. F. BANA did not Tender. There was no payment or offer to pay money to the HOA by BANA. The bank merely alleges that the HOA would have rejected any tender or attempted tender and any efforts to that end would have been futile.12 There is case law in Nevada and the Ninth Circuit defining a tender. A tender, by definition, must be an unconditional offer to pay. See Hepburn & Dundas v. Auld, 5 U.S. 321(1803); Davidge v Simmons, 266 F. 1018, 1019 (D.C. 1920). Tender has four requisite elements: “(1) An unconditional offer to perform, coupled with a manifested ability to carry out the offer, (2) A production of the subject matter of the contract, (3) The property tendered must not be less than what is due, and (4) If greater, there must be no demand for the return of the excess.” Guy F. Atkinson Co. of California and Subsidiaries v. C.I.R., 814 F.2d 1388, 1393 (9th Cir. 1987). The bank did not allege that any payment was actually attempted or that money was given to the HOA for the assessment payments. Additionally, the Nevada law limits who can actually tender payment, as “a tender by a stranger to the contract is invalid.” McCall v Carlson, 172 P.2d 171, 183 (Nev. 1946). The bank’s speculation as to what would have occurred if the bank had attempted to tender the assessment payment to the HOA is irrelevant. The bank did not tender, as factually admitted by the bank in the Complaint, and as supported by the legal authority defining tender. Therefore , the HOA is entitled to summary judgment of the bank’s claim. / / / / 12 ECF No. 1 at ¶ 26. Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 16 of 19 17 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 G. BANA Failed to Act to Prevent the HOA Foreclosure Sale. BANA ‘s Complaint seeks a finding by this court that its Deed of Trust remains a lien upon the premises and further asserts allegations that it is entitled to recover monetary damages for the HOA foreclosing upon the property. What BANA glaringly fails to allege is why it did not take action to prevent the HOA foreclosure sale. Unlike the purchaser at the foreclosure sale that is arguing to own the premises free and clear of the bank’s lien, the HOA does not have that same benefit riding on the outcome of this litigation. Rather, because the Bennett’s failed to timely pay the HOA assessments to Regency Village as the assessments become due and owing to the Association, the Association took action to recover the past due assessment amounts owed upon the property. The bank even acknowledged that it received actual notice of the HOA’s intent to foreclose upon the premises, as BANA states that it caused to have sent to NAS a letter requesting the total of the assessment arrearages owed just prior to the filing of the Notice of Delinquent Assessment lien.13 However, that is where any attempt by the bank to protect its interest in the Deed of Trust ended. BANA argues that it’ s lien was preserved due to the aforementioned letter it caused to have sent potentially offering to pay an amount of money to the HOA that the bank now claims would have satisfied the super-priority amount.14 BANA is now making arguments that the payment BANA did not make but was willing to send to the HOA should qualify to satisfy the super-priority portion of the lien. The underlying issue that BANA never addresses is that BANA obviously knew of the upcoming HOA foreclosure sale in plenty of time prior to the sale date to take steps to protect its interest, such as attend the foreclosure sale, pay the entire amount demanded in the Notice of Delinquent Assessment lien and later demand a refund of any 13 Miles Bauer Correspondence, Exhibit H. 14 ECF No. 1 ¶ 25-26. Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 17 of 19 18 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 excess amount paid, seek to enjoin the sale, or bid on the property at the foreclosure auction. Instead, BANA failed to take action until BANA commenced this litigation over two years after the foreclosure sale was conducted. As a general rule, a party cannot recover damages for losses that a reasonable effort could have avoided. Conner v. Southern Nevada Paving, 103 Nev. 353, 355, 741 P.2d 800, 801 (Nev. 1987). As the bank undeniably received notices of the HOA foreclosure sale, as proven by BANA’s correspondence that it alleges constitutes a tender of the super-priority amount to the HOA, the bank had plenty of opportunity to prevent the foreclosure sale. The Nevada Supreme Court has taken the position that, to preserve the interest in the property, the holder of a deed of trust cannot merely do nothing, even if it believes it has satisfied the super-priority portion of the HOA' s lien. See Shadow Wood Homeowners Ass'n, Inc. v. New York Cmty. Bancorp, Inc., 366 P.3d 1105 (Nev. 2016) (en banc). Because the HOA does not agree that the overture of just sending a letter to the HOA Trustee is enough to satisfy the super-priority lien, the bank cannot rely upon that letter to preserve its interest. It is clear that the bank must act to protect its security interest. Accordingly, because Regency Village complied with the provisions of NRS 116 and BANA, despite having actual notice of the HOA’s foreclosure action, did nothing to protect its interest, BANA’s Deed of Trust was extinguished by operation of law. IV. Conclusion Despite receiving notice of the impending foreclosure proceedings, BANA failed to pay the assessments to stop the foreclosure process and failed to attend or bid at the foreclosure sale. The HOA, through the HOA Trustee, provided the proper notices to the bank, and acted in accordance with NRS 116 in order to obtain money for the delinquent assessments through Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 18 of 19 19 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 proceedings. Based upon the foregoing Regency Village is entitled to summary judgment as a matter of law. BOYACK ORME AND TAYLOR BY: /s/ Edward D. Boyack Edward D. Boyack, Esq. Nevada Bar No. 5229 Colli C. McKiever, Esq. Nevada Bar No. 13724 BOYACK ORME & TAYLOR 401 N. Buffalo Dr. #202 Las Vegas, NV 89145 Attorney for Regency Village Owner’s Association, Inc. CERTIFICATE OF SERVICE I certify that I am an employee of Boyack Orme & Taylor, and that on this 19th day of December, 2016, I served a true and correct copy of the foregoing DEFENDANT REGENCY VILLAGE OWNER’S ASSOCIATION’S MOTION FOR SUMMARY JUDGMENT as follows: __ by placing same to be deposited for mailing in the United States Mail, in a sealed envelope upon which first class postage was prepaid in Las Vegas, Nevada _X__ via electronic means by operation of the Court’s electronic filing system, upon each party in the case who is registered as an electronic case filing user with the Clerk ___ via facsimile ___ via hand delivery By: /s/ Carmen Eassa An Employee of Boyack Orme & Taylor Case 2:16-cv-00496-GMN-CWH Document 32 Filed 12/19/16 Page 19 of 19 Case 2:16-cv-00496-GMN-CWH Document 32-1 Filed 12/19/16 Page 1 of 9 Case 2:16-cv-00496-GMN-CWH Document 32-1 Filed 12/19/16 Page 2 of 9 Case 2:16-cv-00496-GMN-CWH Document 32-1 Filed 12/19/16 Page 3 of 9 Case 2:16-cv-00496-GMN-CWH Document 32-1 Filed 12/19/16 Page 4 of 9 Case 2:16-cv-00496-GMN-CWH Document 32-1 Filed 12/19/16 Page 5 of 9 Case 2:16-cv-00496-GMN-CWH Document 32-1 Filed 12/19/16 Page 6 of 9 Case 2:16-cv-00496-GMN-CWH Document 32-1 Filed 12/19/16 Page 7 of 9 Case 2:16-cv-00496-GMN-CWH Document 32-1 Filed 12/19/16 Page 8 of 9 Case 2:16-cv-00496-GMN-CWH Document 32-1 Filed 12/19/16 Page 9 of 9 Case 2:16-cv-00496-GMN-CWH Document 32-2 Filed 12/19/16 Page 1 of 3 Case 2:16-cv-00496-GMN-CWH Document 32-2 Filed 12/19/16 Page 2 of 3 Case 2:16-cv-00496-GMN-CWH Document 32-2 Filed 12/19/16 Page 3 of 3 Case 2:16-cv-00496-GMN-CWH Document 32-3 Filed 12/19/16 Page 1 of 2 Case 2:16-cv-00496-GMN-CWH Document 32-3 Filed 12/19/16 Page 2 of 2 Case 2:16-cv-00496-GMN-CWH Document 32-4 Filed 12/19/16 Page 1 of 3 Case 2:16-cv-00496-GMN-CWH Document 32-4 Filed 12/19/16 Page 2 of 3 Case 2:16-cv-00496-GMN-CWH Document 32-4 Filed 12/19/16 Page 3 of 3 Case 2:16-cv-00496-GMN-CWH Document 32-5 Filed 12/19/16 Page 1 of 3 Case 2:16-cv-00496-GMN-CWH Document 32-5 Filed 12/19/16 Page 2 of 3 Case 2:16-cv-00496-GMN-CWH Document 32-5 Filed 12/19/16 Page 3 of 3 Case 2:16-cv-00496-GMN-CWH Document 32-6 Filed 12/19/16 Page 1 of 4 Case 2:16-cv-00496-GMN-CWH Document 32-6 Filed 12/19/16 Page 2 of 4 Case 2:16-cv-00496-GMN-CWH Document 32-6 Filed 12/19/16 Page 3 of 4 Case 2:16-cv-00496-GMN-CWH Document 32-6 Filed 12/19/16 Page 4 of 4 Case 2:16-cv-00496-GMN-CWH Document 32-7 Filed 12/19/16 Page 1 of 3 Case 2:16-cv-00496-GMN-CWH Document 32-7 Filed 12/19/16 Page 2 of 3 Case 2:16-cv-00496-GMN-CWH Document 32-7 Filed 12/19/16 Page 3 of 3 Case 2:16-cv-00496-GMN-CWH Document 32-8 Filed 12/19/16 Page 1 of 5 Case 2:16-cv-00496-GMN-CWH Document 32-8 Filed 12/19/16 Page 2 of 5 Case 2:16-cv-00496-GMN-CWH Document 32-8 Filed 12/19/16 Page 3 of 5 Case 2:16-cv-00496-GMN-CWH Document 32-8 Filed 12/19/16 Page 4 of 5 Case 2:16-cv-00496-GMN-CWH Document 32-8 Filed 12/19/16 Page 5 of 5 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 1 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 2 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 3 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 4 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 5 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 6 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 7 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 8 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 9 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 10 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 11 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 12 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 13 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 14 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 15 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 16 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-9 Filed 12/19/16 Page 17 of 17 Case 2:16-cv-00496-GMN-CWH Document 32-10 Filed 12/19/16 Page 1 of 5 Case 2:16-cv-00496-GMN-CWH Document 32-10 Filed 12/19/16 Page 2 of 5 Case 2:16-cv-00496-GMN-CWH Document 32-10 Filed 12/19/16 Page 3 of 5 Case 2:16-cv-00496-GMN-CWH Document 32-10 Filed 12/19/16 Page 4 of 5 Case 2:16-cv-00496-GMN-CWH Document 32-10 Filed 12/19/16 Page 5 of 5