Court Opinion

ID: 9391893
Source: CourtListenerOpinion
Date Created: 2023-05-03 16:00:44.179892+00
Date Added: 2024-06-11T17:18:30.247752
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                               MAY 3 2023
                    UNITED STATES COURT OF APPEALS                         MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

DEUTSCHE BANK NATIONAL TRUST                     No.   20-16141
COMPANY, as Trustee for Residential
Asset Securitization Trust 2006-A3CB             D.C. No.
Mortgage Pass-Through Certificates,              2:17-cv-02638-GMN-EJY
Series 2006-C,

              Plaintiff-counter-                 MEMORANDUM*
              defendant-Appellant,

 v.

ALIANTE MASTER ASSOCIATION,

              Defendant-Appellee,

SFR INVESTMENTS POOL 1, LLC,

              Defendant-counter-claimant-
              cross-claimant-Appellee,

 and

NEVADA ASSOCIATION SERVICES,
INC.,

              Defendant,

  v.

       *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
NORMAN R. FLEMENS; MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS, INC., as Nominee Beneficiary
for Meridias Capital, Inc.,

              Cross-claim-defendants.

                    Appeal from the United States District Court
                             for the District of Nevada
                    Gloria M. Navarro, District Judge, Presiding

                       Argued and Submitted April 13, 2023
                            San Francisco, California

Before: S.R. THOMAS and KOH, Circuit Judges, and RAKOFF,** District Judge.

      Deutsche Bank National Trust Company (“Deutsche”) appeals the district

court’s grant of summary judgment for SFR Investments Pool 1, LLC (“SFR”) and

Aliante Master Association (“Aliante”) and dismissal of certain claims as untimely

in an action alleging claims arising out of a nonjudicial foreclosure by the

homeowners association (“HOA”), Aliante, on real property in Nevada. We have

jurisdiction pursuant to 28 U.S.C. § 1291. We review de novo a district court’s

decision on cross motions for summary judgment and consider, “viewing the

evidence in the light most favorable to the nonmoving party, whether there are

genuine issues of material fact and whether the district court correctly applied the

      **
            The Honorable Jed S. Rakoff, United States District Judge for the
Southern District of New York, sitting by designation.
                                          2
relevant substantive law.” Csutoras v. Paradise High Sch., 12 F.4th 960, 965 (9th

Cir. 2021) (citation omitted). We also review de novo whether a claim is barred by

a statute of limitations, Bird v. Dep’t of Hum. Servs., 935 F.3d 738, 743 n.5 (9th

Cir. 2019), and a district court’s interpretation of state law, Platt v. Moore, 15 F.4th

895, 901 (9th Cir. 2021). We affirm in part, reverse in part, and remand for further

proceedings.1 Because the parties are familiar with the factual and procedural

history of the case, we need not recount it here.

      1.      The foreclosure sale is not void based on statutory notice defects,

because Deutsche did not make the necessary showing of prejudice to a party with

an interest in the deed of trust. U.S. Bank v. Res. Grp., LLC (“Resources Group

II”), 444 P.3d 442, 447–48 (Nev. 2019) (in order to void the sale, the notice

deficiency must prejudice an interested party). Indeed, Deutsche did not produce

evidence suggesting that any party would have acted to preserve the deed of trust if

Deutsche had received the proper notice.

      2.      The district court granted summary judgment for SFR on Deutsche’s

as-applied due process claim. However, the district court restricted its analysis to

whether the statutory scheme violated due process and did not separately consider

whether the notice given here met the constitutional requirement that the notice be

      1
          We also deny SFR’s motion to supplement its answering brief (Dkt. 82).
                                           3
“reasonably calculated to apprise” interested parties of the sale. See Mennonite Bd.

of Missions v. Adams, 462 U.S. 791, 798 (1983). We remand to the district court

for reconsideration of the as-applied due process challenge, including whether

Deutsche’s claim satisfies the state action element of a due process claim. See

Bourne Valley Ct. Tr. v. Wells Fargo Bank, 832 F.3d 1154, 1160 (9th Cir. 2016);

see also Saticoy Bay LLC Series 350 Durango 104 v. Wells Fargo Home

Mortgage, 388 P.3d 970, 973–74 (Nev. 2017).2

      3.     Aliante foreclosed on a valid superpriority portion of its lien. The

superpriority component of an HOA lien consists of “the last nine months of

unpaid HOA dues and maintenance and nuisance-abatement charges.” SFR Invs.

Pool 1, LLC v. U.S. Bank, 334 P.3d 408, 411 (Nev. 2014) (partially superseded on

other grounds). To foreclose on a superpriority lien, an HOA must provide a

notice of delinquent assessment lien that “states the amounts of assessments and

other sums which are due.” Nev. Rev. Stat. § 116.31162(1)(a) (West 2011).

Although the recorded notice of lien only referenced the borrower’s subpriority

debt from violations and related collection costs, the borrower was delinquent on

      2
         Deutsche has standing to raise the due process issue as the successor-in-
interest of the beneficiary of the deed of trust at the time of the foreclosure sale.
See Sprint Commc’ns Co. v. APCC Servs., Inc., 554 U.S. 269, 285 (2008).
                                            4
his common assessment fees at the time of the original notice,3 and Aliante later

sent an additional notice to the borrower encompassing the superpriority

assessment fees. Aliante also timely instituted proceedings to enforce the lien,

because it provided notice to the borrower less than three years after the

assessments became due. See id. § 116.3116(5); Saticoy Bay LLC Series 2021

Gray Eagle Way v. JPMorgan Chase Bank, 388 P.3d 226, 231 (Nev. 2017).

      4.     We remand appellant’s claim that the sale is voidable under equity

because there may be a genuine issue of material fact. See Nationstar Mortg., LLC

v. Saticoy Bay LLC Series 2227 Shadow Canyon (“Shadow Canyon”), 405 P.3d

641, 643 (Nev. 2017). A sale is voidable under equity and may therefore be set

aside “if the totality of the circumstances demonstrates that the sale itself was

affected by fraud, unfairness, or oppression.” U.S. Bank v. White Horse Ests.

Homeowners Ass’n, 987 F.3d 858, 864 (9th Cir. 2021) (alteration made) (citations

and internal quotation marks omitted). Because the sales price was

low—approximately five percent of the property’s fair market value—Deutsche

need only produce “slight evidence of fraud, unfairness, or oppression that affected

      3
       Deutsche has not shown error in the district court’s determination that the
contemporaneous ledgers not reflecting this delinquency failed to establish a
genuine issue of material fact on this point.
                                           5
the sale.” See id.; see also Resources Group II, 444 P.3d at 449 (sales price

between ten and fifteen percent of fair market value was “grossly inadequate”).

      It appears that the district court did not apply this lenient standard. Rather, it

found that Deutsche “cannot establish that the sale was affected by fraud,

unfairness, or oppression” because Deutsche “has not established that [the] HOA's

failure to send notice to MERS constitutes unfairness [a]ffecting the sale by

resulting in . . . chilled bidding.” Therefore, we remand to the district court to

clarify whether—after a balancing of the equities and under the totality of the

circumstances—Deutsche produced slight evidence that it was “confused or

otherwise prejudiced” by “fraud, unfairness or oppression” that affected the sale.

See Shadow Canyon, 405 P.3d at 650; see also Res. Grp., LLC v. Nev. Ass’n Servs.,

Inc., 437 P.3d 154, 160 (Nev. 2019) (“[C]ourts sitting in equity are required to

analyze the totality of the circumstances when determining whether to set aside an

HOA foreclosure sale on equitable grounds.”). On remand, the district court

should also consider SFR’s bona fide purchaser status in the first instance. See

Friedman v. AARP, Inc., 855 F.3d 1047, 1057 (9th Cir. 2017) (noting that, as a

general rule, this court “do[es] not consider an issue not passed upon below”).

      5.     The district court correctly granted summary judgment on Deutsche’s

contract-based claims. Even assuming both that Deutsche’s contract claims remain

                                           6
viable when Chapter 116’s provisions are nonwaivable and that the covenants,

conditions, and restrictions (“CC&Rs”) constitute an enforceable contract,

Deutsche is not an intended third-party beneficiary of the CC&Rs. “To obtain

[intended third-party beneficiary] status, there must clearly appear a promissory

intent to benefit the third party . . . , and ultimately it must be shown that the third

party’s reliance thereon is foreseeable.” Lipshie v. Tracy Inv. Co., 566 P.2d 819,

824–25 (Nev. 1977). The limited references to lenders in the CC&Rs do not

demonstrate the necessary “promissory intent to benefit the third party.” Id. at 824.

      6.     The district court dismissed Deutsche’s unjust enrichment,

negligence, negligence per se, misrepresentation, and wrongful foreclosure claims

as untimely based on an accrual date of the foreclosure sale. During the pendency

of this appeal, the Nevada Supreme Court held that “an HOA foreclosure

sale—standing alone—does not sufficiently call the bank’s deed of trust into

question to trigger the statute of limitations” in a quiet title action. U.S. Bank v.

Thunder Props., Inc. (“Thunder Properties”), 503 P.3d 299, 307 (Nev. 2022). We

                                            7
remand for the district court to reconsider the accrual date of these claims in light

of Thunder Properties.4

      AFFIRMED IN PART, REVERSED IN PART, and REMANDED.

      4
         Untimeliness under Thunder Properties does not present alternative
grounds to affirm the district court’s grant of summary of judgment for SFR and
Aliante on the quiet title claims. Thunder Properties held that a four-year statute
of limitations applies to quiet title claims. 503 P.3d at 305–06. However, “some
affirmative action” on the buyer’s part, in addition to the foreclosure sale, is
required to trigger the limitations period. Id. at 306. SFR and Aliante have not
made that showing on the existing record. However, we do not preclude the
district court from examining that question in the first instance on remand.
                                           8