Title: Saticoy Bay, LLC Series 133 McLaren v. Green Tree Servicing LLC

State: nevada

Issuer: Nevada Supreme Court

Document:

436 Nev, Advance Opinion BS
IN THE SUPREME COURT OF THE STATE OF NEVADA

SATICOY BAY LLC SERIES 133 No. 78661
MCLAREN,

Appellant,

vs.

GREEN TREE SERVICING LLC; THE FILED

BANK OF NEW YORK MELLON, F/K/A
‘THE BANK OF NEW YORK, AS
SUCCESSOR TRUSTEE TO
JPMORGAN CHASE BANK, N.A., AS
‘TRUSTEE FOR THE
CERTIFICATEHOLDERS OF CWABS
MASTER TRUST, REVOLVING HOME
EQUITY LOAN ASSET BACKED
NOTES, SERIES 2004-T; AND
NATIONAL DEFAULT SERVICING
CORPORATION,

Respondents.

DEC 31 2020

    

 

Appeal from a district court judgment in a quiet title action.
Eighth Judicial District Court, Clark County; Jerry A. Wiese, Judge.
Affirmed.

Law Offices of Michael F. Bohn, Ltd., and Michael F. Bohn and Adam R.
‘Trippiedi, Henderson,
for Appellant.

Akerman LLP and Scott R. Lachman, Ariel E. Stern, and Natalie L.
Winslow, Las Vegas,
for Respondents.

pede dg

 
Fennemore Craig P.C. and Leslie Bryan Hart, Reno,
for Amicus Curiae Federal Housing Finance Agency.

 

BEFORE THE COURT EN BANC.

OPINION
By the Court, STIGLICH, J.

In this appeal, we consider the effect of conclusive deed recitals
pursuant to NRS 116.3166 on title disputes after a homeowners’
association (HOA) lien foreclosure sale. In particular, appellant Saticoy
Bay LLC Series 133 McLaren (Saticoy Bay) presents the following issue for
determination: When a party makes a valid pre-sale tender as to the
superpriority portion of an HOA’s lien, do recitals in a foreclosure deed
stating that the HOA’s lien was in default preclude the district court from
granting equitable relief? As a threshold matter, we clarify that a valid pre-
sale superpriority tender preserves the original deed of trust by operation
oflaw. Thus, we reject Saticoy Bay's suggestion that when the district court
finds that a valid tender preserved the deed of trust, it is granting equitable
relief. We further hold that the district court may find that a valid pre-sale
tender preserved the original deed of trust, despite NRS 116.3116
conclusive recitals of default in a foreclosure deed. Finally, we reject Saticoy
Bay's remaining contentions that the district court erred in finding that the

tender at issue here was valid and preserved the original deed of trust. We

therefore affirm the judgment of the district court.

 

 
BACKGROUND

‘The original homeowners of 133 McLaren Street in Henderson
(the property) executed a promissory note, secured by a deed of trust on the
property, in 2004. That deed of trust was assigned in 2013 to respondent
Green Tree Servicing, LLC (Green Tree). The original homeowners became
delinquent on their HOA assessments. After this default, Nevada
Association Services, Inc. (NAS) recorded a notice of delinquent assessment
lien against the property in January 2011 and a notice of default and
election to sell in September 2011, on behalf of the HOA.

In October 2011, Miles, Bauer, Bergstrom & Winters, LLP
(Miles Bauer), acting as agent for the deed of trust beneficiary's loan
servicer, sent a letter to NAS. Miles Bauer requested that NAS provide the
status of the foreclosure proceedings and indicated that the servicer
intended to satisfy the superpriority portion of the lien. NAS did not
respond. In December 2011, Miles Bauer sent another letter and a check
for $276.75 to NAS. The letter stated, in pertinent part: “This is a non-
negotiable amount and any endorsement of said cashier’s check on your
part, whether express or implied, will be strictly construed as an
unconditional acceptance on your part of the facts stated herein and express
agreement that [the servicer]’s financial obligations toward the HOA in
regards to the real property located at 133 McLaren Street have now been
‘paid in full." NAS refused the payment.

IWhile Miles Bauer's letter stated that it was sending a cashier's
check, it was a standard check. Green Tree's predecessor arrived at this
amount by using information it had on file for a different property belonging

 

 
‘The HOA proceeded with the foreclosure sale, after which the
property was sold to Saticoy Bay. The foreclosure deed conveying the
property to Saticoy Bay contained recitals pursuant to NRS 116.3166,
including that “(dJefault occurred as set forth in a Notice of Default and
Election to Sell ... which was recorded in the office of the recorder of {Clark
County].”

Saticoy Bay brought an action to quiet title, and Green Tree
counterclaimed for the same. Following a bench trial, the district court
entered judgment for Green Tree, finding that the first deed of trust had not
been extinguished because there had been a valid tender. Saticoy Bay
appealed, and the Federal Housing Finance Agency filed an amicus brief
supporting Green Tree’s position. The court of appeals affirmed. We
granted Saticoy Bay's subsequent petition for review under NRAP 40B, and
‘we now issue this opinion addressing its arguments.

STANDARD OF REVIEW

Findings of fact are given deference and will not be set aside
unless they are clearly erroneous or not supported by substantial evidence.
Sowers v. Forest Hills Subdiv., 129 Nev. 99, 105, 294 P.3d 427, 432 (2013).
Conclusions of law are reviewed de novo. Dewey v. Redev. Agency of Reno,
119 Nev. 87, 93, 64 P.3d 1070, 1075 (2003).

to the same HOA. Whether this amount was sufficient to cover the
superpriority portion of the lien is not disputed in this appeal.

 

 
DISCUSSION

Saticoy Bay argues that the district court erred in granting
what it characterizes as equitable relief because the recitals in the
foreclosure deed conclusively prove that the superpriority portion of the
HOA’s lien was in default at the time of the sale. In addition, Saticoy Bay
makes three other arguments in support of its contention that the district
court erred in finding that a valid tender by Green Tree's predecessor
prevented the deed of trust from being extinguished by the HOA foreclosure
sale,

Conclusive recitals of default in a foreclosure deed do not prevent a valid pre-
sale tender from preserving a deed of trust

Saticoy Bay argues that the tender by Green Tree's predecessor
could not preserve the original deed of trust because the foreclosure deed
contained recitals that are conclusive according to NRS 116.3166. We
disagree.

As it read at the time of the underlying events of this action,
NRS 116.31166(1) (2013) stated that certain recitals in a deed pursuant to.
NRS 116.3164 “are conclusive proof of the matters recited.” The
enumerated recitals are “(a) [d]efault, the mailing of the notice of delinquent
assessment, and the recording of the notice of default and eleetion to sell;
(b) [t]he elapsing of the 90 days; and (c) [t]he giving of notice of sale.” Id.

Nothing in the text of NRS 116.1166 rules out the possibility,
however, that a default can subsequently be deemed to have been cured by

avalid pre-sale tender. Indeed, this court has defined a tender as a payment
that “operates to discharge a lien or cure a default.” Bank of Am., N.A. v.

 

 
SFR Invs. Pool 1, LLC, 184 Nev. 604, 606, 427 P.3d 113, 117 (2018)
(emphasis added).

Moreover, we have never accepted the proposition that NRS
116.3116 recitals are dispositive of every conceivable issue in a quiet title
action. For instance, in Shadow Wood Homeowners Association v. New York
Community Bancorp, Inc., this court held that the district court has
equitable power to invalidate a foreclosure sale despite such recitals. 132
Nev. 49, 57-60, 366 P.3d 1105, 1110-12 (2016). There, we declined to give
NRS 116,31166 a “breathtakingly broad” and unprecedented reading that
would allow a deed recital to “conclusively establish{] a default justifying
foreclosure when, in fact, no default occurred.” Id. at 57, 366 P.3d at 1110
(internal quotation marks omitted). While that portion of Shadow Wood
was arguably dictum, our reasoning was sound, and we adopt it here. Thus,
we now expressly hold that NRS 116.31166's deed recitals do not “render! |
such deeds unassailable.” Id. at 51, 366 P.3d at 1107.

Accordingly, deed recitals pursuant to NRS 116.3116 do not
insulate the circumstances attested to in the recitals from review by courts
in appropriate cases. Applying the foregoing principles, we conclude that
the district court properly found that the tender by Green Tree’s predecessor
preserved the original deed of trust such that Saticoy Bay took the property
subject to Green Tree’s interest, notwithstanding the recital of default in
the foreclosure deed. Stated another way, the recital of default could not
prevent the preservation of the deed of trust when, in fact, a valid tender
cured the default.

Further, we reject Saticoy Bay’s argument that the district

court was required to weigh the equities before finding a valid tender,

 

 
While a court’s authority to look beyond a foreclosure deed in a quiet title
action is an inherent equitable power, see Shadow Wood, 132 Nev. at 57,
366 P.3d at 1111, a valid tender cures a default “by operation of law”—that
is, without regard to equitable considerations. See Bank of Am., 134 Nev.
at 610, 427 P.3d at 120 (emphasis added).

‘The valid tender by Green Tree's predecessor preserved the original deed of
trust

Saticoy Bay next claims that it did not take title subject to the
first deed of trust because (1) the tender of the superpriority portion of the
HOA’s lien was improperly conditional and therefore invalid; (2) NAS had
a good-faith basis for rejecting the tender; and (3) any tender would merely
assign the superpriority lien to the servicer, not extinguish it. We disagree
and uphold the district court's finding that a valid tender preserved the first,
deed of trust.

In Bank of America, N.A. v. SFR Investments Pool 1, LLC, this
court concluded that “a first deed of trust holder’s unconditional tender of
the superpriority amount due results in the buyer at the foreclosure taking
the property subject to the deed of trust.” 134 Nev. at 605, 427 P.3d at 116.
A conditional tender is valid so long as the only conditions are ones “on
which the tendering party has a right to insist.” Id. at 607, 427 P.3d at 118.

‘This case is controlled by Bank of America. Here, as in Bank of
America, Miles Bauer tendered a payment for nine months of HOA
assessments, and the HOA rejected this tender. The letter from Miles
Bauer contained identical language as the letter in Bank of America, which
this court found to be not impermissibly conditional, but rather containing

conditions the servicer could insist upon as of right. See id. at 607-08, 427

 

 
P.8d at 118. As such, under Bank of America, the tender in this matter was
not improperly conditional.

Saticoy Bay's argument that NAS had a good-faith basis for
rejecting the tender likewise fails. An alleged good-faith basis for rejecting
a timely, complete tender is not relevant because, as noted above, the tender
itself cures the default “by operation of law.” See id. at 610, 427 P.3d at 120.

Finally, we reject Saticoy Bay's contention that a tender of
payment for a superpriority lien does not satisfy the lien, but rather assigns
the lien to the party proffering the tender. Under this novel argument, the
superpriority foreclosure sale was sufficient to extinguish the first deed of
trust because a superpriority lien was still in existence—albeit held by
Green Tree's predecessor, the same party that held the deed of trust. This
argument fails under Bank of America, which explicitly held that
“{tlendering the superpriority portion of an HOA lien does not create,
alienate, assign, or surrender an interest in land.” Id. at 609, 427 P.3d at
119 (emphasis added). Rather, when the holder of a deed of trust or its
agent tenders payment, we explained, it “preserves” its interest in the
property. Id. (emphasis in original)?

CONCLUSION

Having concluded that a valid tender cured the default as to the

superpriority portion of the HOA’s lien, we affirm the district court's

 

2Green Tree also raises an argument under the Federal Foreclosure
Bar. Because we hold that Green Tree’s deed of trust was preserved on
other grounds, we need not discuss this alternative argument.

 

 
judgment that Saticoy Bay took title subject to Green Tree's first deed of

 

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