Court Opinion

ID: 9897461
Source: CourtListenerOpinion
Date Created: 2023-11-14 19:14:10.625775+00
Date Added: 2024-06-11T09:16:31.140242
License: Public Domain

'139 Nev., Advance Opinion   t-15
                       IN THE SUPREME COURT OF THE STATE OF NEVADA

                 DEUTSCHE BANK NATIONAL TRUST                           No. 84161
                 COMPANY, AS TRUSTEE, IN TRUST
                 FOR THE REGISTERED HOLDERS OF
                 MORGAN STANLEY ABS CAPITAL I
                 TRUST 2004-HES, MORTGAGE PASS-
                 THROUGH CERTIFICATES, SERIES
                                                                           F LE
                 2004-HE8,                                                 OCT 12 2023
                 Appellant,
                                                                          ELIZAB
                 vs.                                                   CLERK

                 FIDELITY NATIONAL TITLE                              BY
                                                                            IEF DEPUTY CLERK
                 INSURANCE COMPANY,
                 Respondent.

                           Appeal from a district court order granting a motion to dismiss,
                certified as final under NRCP 54(b), in an insurance matter.              Eighth
                Judicial District Court, Clark County; Adriana Escobar, Judge.
                           Affirmed.

                Wright, Finlay & Zak, LLP, and Darren T. Brenner and Lindsay D. Dragon,
                Las Vegas,
                for Appellant.

                McCormick, Barstow, Sheppard, Wayte & Carruth LLP and Scott M. Reddie
                and Michael A. Pintar, Fresno, California; Early Sullivan Wright Gizer &
                McRae LLP and Scott E. Gizer and Sophia S. Lau, Las Vegas,
                for Respondent.

                Hutchison & Steffen, PLLC, and Joseph C. Reynolds, Reno,
                for Amicus Curiae American Land Title Association.

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(1/1 19,17A
                     BEFORE THE SUPREME COURT, EN BANC)

                                                       OPINION
                     By the Court, CADISH, J.:
                                 In SFR Investments Pool 1, LLC u. U.S. Bank, N.A., we
                     recognized that NRS 116.3116 designates a portion of an HOA's lien for
                     assessment obligations as senior to a first deed of trust, and if this
                      superpriority piece" is foreclosed upon, it "extinguish[es] the first deed of
                     trust." 130 Nev. 742, 747, 334 P.3d 408, 412 (2014), superseded by statute
                     on other grounds as stated in Saticoy Bay LLC 9050 W Warm Springs 2079
                     v. Nev. Ass'n Serus., 135 Nev. 180, 444 P.3d 428 (2019). At issue in this
                     appeal is whether, following such a foreclosure, the first deed of trust holder
                     inaY recover for its loss of interest in the property by making a claim on its
                     title-insurance policy.   The underlying dispute arose when an insurer
                     denied coverage as to such a claim, prompting the first deed of trust holder
                     to file a complaint for breach of contract and related claims. The district
                     court dismissed the complaint, determining that there was no coverage and
                     that each of the claims fails as a matter of law.
                                 As the district. court reasoned, an HOA does not have an
                     existing, enforceable lien for assessment obligations until the assessment
                     obligation becomes due, but here the superpriority HOA assessment lien
                     that extinguished the insured's deed of trust arose post-policy, and the
                     losses resulting from the enforcement of that post-policy superpriority
                     assessment lien do not fall within the coverage provided under the title-

                           'The Honorable Patricia Lee, Justice, is disqualified and did not
                     participate in the decision of this matter.
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                  insurance policy that the insured relies on in its complaint. Because we
                  conclude that the insured's losses resulted from the enforcement of a
                  superpriority lien, governed exclusively by NRS 116.3116, the fact that the
                  HOA's covenants, conditions, and restrictions (CC&Rs) established the
                  assessment obligation that later became delinquent and enforceable by a
                  lien on the property does not create coverage under the policy. Accordingly,
                  we affirm the dismissal of the insured's claims.
                             FACTUAL AND PROCEDURAL BACKGROUND
                  Extinguishment of Deutsche Bank's deed of trust
                             Appellant Deutsche Bank National Trust Company obtained a
                  deed of trust to real property by assignment from nonparty New Century
                  Mortgage Corporation. This deed. of trust served as security for a loan
                  provided by New Century to nonparties James and Sharon Lutkin in May
                  2004. Respondent Fidelity National Title Insurance Company issued a
                  title-insurance policy to New Century a.nd its assigns. The Lutkins' real
                  property was part of Mira Vist.a Homeowners Association (Mira Vista
                  HOA), which was established pursuant to a declaration of CC&Rs recorded
                  in 1995. After the Lutkins became delinqUent on their annual HOA
                  assessments in 2011, Mira Vista HOA proceeded with a nonjudicial
                  foreclosure in August 2012, dt which nonparty G&P Investments
                  Enterprises, LLC purchased the property.           G&P sold the Property to
                  nonparty TRP Fund VI, LLC in Juiy 2016.
                             Shortly before TRP obtained title to the property, Deutsche
                  Bank sued G&P for a declaratory judgment that its deed of trust survived
                  the foreclosure. After being added as a party, TRP counterclaimed for quiet
                  title, arguing that the nonjudicial foreclosure of Mira Vista HOA's
                  assessment lien extinguished Deutsche Bank's interest in the property.

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                 ultimately, title was quieted in TRP's favor, and•Deutsche Bank reconveyed
                 the deed of trust in a settlement.
                 Denial of coverage under the title.insurance policy
                                Around the same time as the TRP litigation, Deutsche Bank
                 submitted a claim under the Fidelity title-insurance policy seeking defense

                 and indemnification. The policy insures any losses "sustained or incurred
                 by the insured by reason of . . . [a]ny defect in or lien or encumbrance on the
                 title" or "Rlhe priority of any lien or encumbrance over the lien of the
                 insured mortgage [upon the title,]" among other situations.
                                The policy also incorporOes several standard provisions,
                 including the two endorsements at issue in this matter, developed by the
                 American Land Title Association (ALTA)2 and the California. Land Title
                 Association (CLTA), both trade associations comprised of title-insurance
                 agents, issuers, underwriters, and other entities. CLTA 115.2(2), the first
                 endorsement, insures losses sustained "by reason of . . . [t]he priority of any
                 lien for charges and assessments at Date of Policy in favor of any
                 [HON]       . over the lien of [the] insured mortgage." CLTA 100(1)(a), the
                 second endorsement, provides coVerage for losses sustained "by reason
                 of ... [t] he existence of any.... [CC&Rs} under which the lien of the
                 mortgage . . . can be cut off, subordinated, or otherwise impaired."
                 Moreover, CLTA 100(2)(a) covers losses sustained
                                by reason of . .. [a]ny future violations on the land
                                of any [CC&Rs] occurring prior to acquisition of
                                title to the estate or interest . . . by the insured,
                                provided such violations result in impairment ot
                                loss of the lien of the mortgage . . ., or result in
                                impairment or loss of the title to the estate or
                                interest . . . if the insured shall acquire such title in

                       2   ALTA is an amicus curiae in this matter.
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                            satisfaction of the indebtedness secured by the
                            insured maftgage.
                            However, the policy provides disclaimers stating that the

                endorsements are "made a part of the policy" and are "subject to all of the
                terms and provisions thereof and of any prior endorsements thereto." The
                disclaimers further provide that "[e]xcept to the extent expressly stated,"
                the endorsements "neither modif[y] any of the terms and provisions of the
                policy, nor... extend the effective date of the• policy and any prior
                endorsements, nor . . . increase the face amount thereof."
                            Ultimately, Fidelity denied Deutsche Bank's claim.         Fidelity

                Maintained that Mira Vista HOA did not record its assessment lien against
                the property until more than seven years i:After the date of policy. Moreover,
                because the events that resulted in the extinguishment of Deutsche Bank's
                interest in the property occurred after the date of policy, Fidelity concluded

                that the claim did not fall within the insuring provisions of the policy but,
                rather, fell within. the exclusions of the policY. Fidelity also determined that
                CLTA 100 did not provide coverage because no provision in the Mira Vista
                HOA's CC&Rs allowed for Mira Vista HOA's encumbrances to take priority
                over Deutsche Bank's lien. Fidelity explained. that Deutsche Bank's loss
                from the lack of priority instead resulted from (1) unpaid post-policy
                assessments, (2) the application of NRS 1.16.3116(2), and (3) this court's
                interpretation of NRS 116.3116(2). Fidelity concluded that CLTA 100 was
                not triggered because the priority of the HOA's assessment lien arose due
                to NRS 116.3116, not Mira Vista HOA's CC&Rs.
                            Deutsche    Bank    requested reconsideration of the         Claim,

                maintaining that because NRS 116.3116(9) deems the reCordation of an

                HOA's declaration of CC&Rs to constitute record notice and perfection of
                assessment liens enforced in the future, the assessment liens did not arise
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                post-policy.    For the same reason, Deutsche Bank asserted th.at CLTA
                115.2(2) and CLTA 100 afforded coverage.            Finally, Deutsche Bank

                maintain.ed that because Mira Vista HOA conducted the foreclosure in
                violation of the CC&Rs, the exclusion in Schedule B(10) for losses incurred
                by reason of the CC&Rs did not apply.
                Lawsuit challenging denial of coverage
                               After Fidelity did not respond to the request to reconsider its
                claim, Deutsche Bank filed the underlying complaint against Fidelity in the
                district court, asserting claims for declaratory judgment, breach of contract,
                breach of the covenant of good faith and fair dealing, deceptive trade
                practices, and unfair claims practices. Deutsche Bank alleged that CLTA
                100 and 115.2 cover the losses it suffered by the foreclosure of Mira Vista
                HOA's assessment lien because that lien and its superpriority status were
                created before the policy date by virtue of NRS 116.3116, which had been
                incorporated into the Mira Vista HOA CC&Rs by the statute in 1991 and
                by an amended declaration of CC&Rs recorded in 2000. Deutsche Bank
                alleged that trade manuals, which it attached to its complaint, confirmed
                that Fidelity and other insurers believed CLTA 100 and 115.2 applied to
                losses caused by the enforcement of a superpriority HOA assessment lien.
                Therefore, Deutsche Bank asserted., Fidelity's claim denial and refusal to
                defend or indemnify Deutsche Bank amounted to breach of the insurance
                contract and bad faith.
                               Deutsche Bank also contended that Fidelity violated the
                Nevada Deceptive Trade Practices Act (NDTPA), codified in NRS Chapter
                598, by denying Deutsche Bank's claim under CLTA 100 and 115.2, despite
                knowingly representing at the policy's issuance that those endorsements
                afforded coverage in such situations. Finally, Deutsche Bank asserted that
                Fidelity!s claims procedures violated several subsections of NRS 686A.310,
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                which specifically pertains to trade practices in the insurance business,
                based on the allegedly wrongful denial.
                Disrnissal of claims
                            Fidelity moved to dismiss under NRCP 12(b)(5), arguing that
                Deutsche Bank's claim.s failed for the same reasons it cited in denying
                Deutsche Bank's insurance claim. It also argued that no HOA assessment
                triggered CLTA 100(2)(a), as assessment obligations did not constitute
                future violations on the land of any CC&Rs. Because, in Fidelity's view, no
                potential for coverage existed, it argued that its claim denial did not. afford

                a basis for declaratory relief or amount to breach of the insurance contract,
                breach of the covenant of good faith and fair dealing, or a violation of unfair
                claims practices under NRS 686.A.310. As to the NDTPA claim, Fidelity
                asserted that Nevada law prohibits the assignment of NDTPA claims.
                            Deutsche Bank opposed, making the same arguments it made
                in seeking reconsideration of the claim denial. It also argued that its losses
                were covered by CLTA 100(1)(a) because they arose by reason of the
                existence of NRS 116.3116 and the CC&Rs in tandem as opposed to the
                former in isolation.   Alternatively, Deutsche .Bank maintained that the

                CLTA 100(2)(a) endorsement provided coverage for post-policy violations of
                the CC&Rs that run with the land, such as the covenant to pay aSsessments.
                Because it asserted the policy afforded coverage, Deutsche Bank argued
                that its claims for breach of contract and breach of the covenant of good faith
                and fair dealing were viable. It also relied on Fidelity's internal documents
                in which Fidelity allegedly acknowledged coverage in such situations as
                rendering its claim denial wrongful and unreasonable.         Deutsche, Bank

                contended that its claim under NRS 686A.31.0 was viable, as insurers may
                be liable under that statute regardless of the existence of coverage under
                the pol.icy. Finally, Deutsche Bank asserted that the - NDTPA. claim was
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                    assignable, unlike personal-injury tort claims, because the tortious conduct
                    harmed property, not a person.
                                 After a hearing, the district court granted Fidelity's motion as
                    to all claims on the ground that no coverage existed under the policy because
                    NRS 116.3116 unambiguously provided that the Mira Vista HOA
                    assessment lien arose when it became delinquent in 2011 and, therefore,
                    constituted a post-policy lien outside the scope of the Fidelity policy.
                    Declining to look beyond the statute, the district court acknowledged that
                    the HOA's recording of its CC&Rs perfected the assessment lien, but it
                    reasoned that the lien nonetheless came into existence only if the
                    homeowner failed to timely pay the assessment.
                                The district court further concluded that neither of the
                    endorsements provided coverage. The court interpreted CLTA 115.2(2) as
                    providing coverage for losses suffered because of the priority of any lien for
                    charges or assessments only if the lien existed or arose at the date of policy,
                    and the HOA assessment lien arose post-policy when the annual
                    assessment became delinquent in 2011. Next, the district court reasoned
                    that because CLTA 100 did not expressly mention HOA assessment liens,
                    it did not cover losses from such liens. But, alternatively, even if CLTA 100
                    extended to HOA assessment liens, the• district court reasoned that
                    Deutsche Bank's losses did not arise by reason of the Mira Vista HOA's
                    CC&Rs but by reason of the provisions of NRS 116.3116. Therefore, neither
                    subsection of CLTA 100 was triggered. Further, the district court
                    determined that the homeowners' failure to pay the assessment did not
                    constitute a violation on the land and, therefore, did not fit within CLTA
                    100(2)(a). The district court rejected Deutsche Bank's proffered trade usage

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evidence because it conveyed an uncommunicated, subjective intent and
contradicted an unambiguous contract.
            Because it concluded that no coverage existed under the
Fidelity policy, the district court dismissed the declaratory judgment and
breach-of-contract claims. Although it noted that Fidelity's position was
"fairly debatable," it dismissed the bad-faith claim based on its coverage
determinations. Next, the district court determined that Deutsche Bank's
claim under NRS 686A.310 failed because there was no wrongful •denial of
coverage. Finally, the district court concluded that the prohibition against
the assignment of tort claims extended to the NDTPA claim. The court
denied Deutsche Bank leave to amend based on futility.            This appeal

followed.
                                DISCUSSION
Standard of review
            We review a dismissal under NRCP 12(b)(5) de novo.            Buzz

Stew, LLC v. City of North Las Vegas, 124 Nev. 224, 228, 181 P.3d 670, 672
(2008). Dismissal under NRCP 12(b)(5) is appropriate only "if it appears
beyond a doubt that [the plaintiff] could prove no set of facts" that, if true,
entitle the plaintiff to relief. Id. We accept all factual allegations in the
complaint as true and construe all inferences in its favor. Id. Although
 r
 [als a general rule" a court does "not consider matters outside the pleading
being attacked," it "may take into account matters of public record, orders,
items present in the record of the case, and •any exhibits attached to the
complaint when ruling on [an NRCP 12(b)(5)] motion to dismiss." Breliant
u. Preferred Equities Corp., 109 Nev. 842, 847, 858 P.2d 1258, 1261 (1993).
Fundamentals of a title-insurance policy
            Under Nevada law, title insurance is intended to insure against
loss or damage suffered by "defects in, or the unmarketability of, the title to

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                the property." NRS 681A.080(1). A title insurer agrees to indemnify the
                insured if the insured suffers a loss caused by defects or encumbrances on
                the title when ownership or interest is transferred to another. See Karl v.
                Commonwealth Land Title Ins. Co., 24 Cal. Rptr. 2d 912, 915 (Ct. App.
                1993).
                               The insurer issues a policy "on the basis of, and in reliance on,

                the quality of its own investigation" into a title. Quelirnane Co. u. Stewart
                Title Guar. Co., 960 P.2d 513, 521 (Cal. 1998).          Unlike other types of

                insurance, such a policy typically "does not insure against future events"

                and "is not forward looking."       Id.    Therefore, generally, title-insurance

                "policyholders are only protected against defects, liens or encumbrances in

                existence when they take title, and are not insured against defects which
                may arise later." Rosen v. Nations Title Ins. Co., 66 Cal. Rptr. 2d. 714, 720
                (Ct. App. 1997). To this end, the California Supreme Court has held that
                "there is no implied agreement [for an insurer] to go beyond the conditions
                existing at the time the policy is issued and to assume a general liability to
                indemnify against future incumbrances." Rice v. Taylor, 32 P.2d 381, 384
                (Cal. 1934).
                The claims for declaratory judgrnent, breach of contract, and breach of the
                covenant of good faith and fair dealing were properly dismissed
                               Deutsche   Bank     contends     that   three   of   the   policy's

                endorsements, CLTA 115.2, CLTA 100(1)(a), and CLTA 100(2)(a), provide
                coverage for its losses. We address each of those endorsements below.3

                      3An   endorsement to an insurance policy generally either "provide[s]
                affirmative coverage for facts that exist in a transaction which standard
                title insurance policies have not traditionally addressed" or "modif[ies] the
                effect of preprinted policy exclusions or exceptions." 1 Joyce Palomar, Title
                Insurance Law § 9:1 (2022 ed.); see also Frontier Oil Corp. u. RLI Ins. Co.,
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                            "Insurance policies are, of course, contracts, and they are
                treated like other contracts." Nautilus Ins. Co. v. Access Med., LLC, 137
                Nev. 96, 99, 482 P.3d 683, 687 (2021). Thus, we enforce the plain meaning

                of an insurance policy. Century Sur. Co. v. Casino W., Inc., 130 Nev, 395,
                398, 329 P.3d 614, 616 (2014). "And we consider the policy as a whole `to
                give reasonable and harmonious meaning to the entire policy." Id. (quoting
                Siggelkow v. Phoenix Ins. Co., 109 Nev. 42, 44, 846 P.2d 303, 304 (1993)).
                Nevertheless, "we interpret An insurance policy 'from the perspective of one
                not trained in law or in insurance, with the terms of the contract viewed in
                their plain, ordinary and popular sense." Id. (quoting Siggelkow, 109 Nev.
                at 44, 846 P.2d at 304). And our interpretation of the policy must avoid any
                "absurd or unreasonable result." Id.
                            Moreover, we broadly construe any clauses that provide
                coverage and narrowly construe any clauses that exclude coverage.           Id.

                While the insured bears the burden to prove coverage under a policy, Zurich
                Ain. Ins. Co. v. Ironshore Specialty Ins. Co., 137 Nev. 651, 656, 497 P.3d 625,
                630 (2021), we nevertheless require the insurer to draft a policy exclusion
                "so that it 'clearly and distinctly communicates to the insured the nature of
                the limitation" or the scope of.coverage, Century Sur. Co., 130 Nev. at 398,
                329 P.3d at 616 (quoting Griffin v. Old Republic Ins. Co., 122 Nev. 479, 485,
                133 P.3d 251, 255 (2006)). Additionally, in the face of ambiguity in the
                policy, we interpret the policy so as to "effectuate the insured's reasoAable
                expectations."   Id. ("We interpret 'ambiguities in an insurance contract

                against the drafter, which is typically the insurer.").

                63 Cal. Rptr. 3d 816, 838 (Ct. App. 2007) ("An endorsement can expand or
                restrict the coverage otherwise provided by the policy.")..
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                             Coverage under CLTA 715.2(2)
                                    Noting that CLTA 115.2(2) only covers losses resulting from the
                       enforcement of a superpriority lien that existed at the date of policy, the
                       parties disagree on how the policy's language applies.        Deutsche Bank

                       argues that coverage applies because the lien's priority existed at the date
                       of policy, whereas Fidelity contends that the lien itself must exist by the
                       date of policy. Further, Deutsche Bank contends that under NRS 116.3116
                       the lien's superpriority is established on the date of the recordation of the
                       HOA's declaration of CC&Rs, not the date of the delinquent assessment. It
                       asserts that CLTA 115.2(2) insured its losses because the recordation of
                       Mira Vista HOA's CC&Rs preceded the date of policy. By contrast. Fidelity
                       argues that under NRS 116.3116 a superpriority assessment lien does not
                       arise until the assessment becomes due and, likewise, does not obtain its
                       superpriority status until that time, both of which occurred here after the
                       date of policy.
                                    As noted, CLTA 115.2 insures losses sustained "by reason
                       of . . [t]he priority of any lien for charges or assessments at Date of Policy
                       in favor of any [HOA] . . . over the lien of [the] insured mortgage." A natural
                       reading of the endorsement is that rather than modifying the "priority"
                       language, the "at Date of Policy" language modifies the "any lien for charges
                       or assessments" language, as it more closely precedes the "at Date of Policy"
                       language. In other words, the applicability of CLTA 115.2 depends firstly
                       on the existence of an assessment lien at the date of policy. It depends
                       secondly on whether that assessment lien, if in existence at the date of
                       policy, has priority over the insured's mortgage under NRS 116.3116, and if
                       so, whether the foreclosure of the priority piece of that lien caused the
                       insured's losses. We must, therefore, interpret NRS 116.3116 to determine
                       when the statute gives rise to an assessrnent lien.
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lo,          r:?_1WP
                            We enforce the plain meaning of an unambiguous statute, see
                City of Reno v. Yturbide, 135 Nev. 113, 115-16, 440 P.3d 32, 35 (2019), and
                interpret sections "in harmony with the statute as a whole," Branch
                Banking & Tr. Co. v. Windhaven & Tollway, LLC, 131 Nev. 155, 158, 347
                P.3d 1038, 1040 (2015). In interpreting a uniform act, the official comments
                and the interpretations of other states that have enacted the act are
                persuasive. See SFR Invs. Pool 1, LLC v. U.S. Bank, N.A., 130 Nev. 742,
                744, 334 P.3d 408, 410 (2014). Only in the event of ambiguity, or language
                that gives rise to more than one reasonable interpretation, do we resort to
                external sources or the rules of statutory construction. See Univ. & Cmty.
                Coll. Sys. of Nev. v. Nevadans for Sound Gov't, 120 Nev. 712, 731, 100 P.3d
                179, 1.93 (2004).
                            In 1991,.the Nevada Legislature adopted the Uniform Common
                Interest Ownership Act (UCIOA), codified in NRS Chapter 116, to govern
                common-interest communities like HOAs. See Boulder Oaks Cmty. Ass'n v.
                B & J Andrews Enters., LLC, 125 Nev. 397, 404, 215 P.3d 27, 31 (2009). The
                UCIOA permits an HOA to assess d.ues on its homeowners' "units," i.e.,
                residences. See NRS 116.3102(1)(b); NRS 116.093 (defining "unit"). It also
                gives the HOA a lien on its homeowners' units for "any assessment levied
                against that unit or any fines imposed against the unit's owner from the
                time the . . . assessment or fine becomes due." NRS 116.3116(1); see caso id.
                ("If an assessment is payable in installments, the full arnount of the
                assessment is a lien from the time the first installment thereof becomes
                due."). Recordation of an HOA's "declaration" of CC&Rs "constitutes record
                notice and perfection of the lien. No further recordation of any claim of lien
                for assessment . . . is required." NRS 116.3116(9).

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                               The UCIOA also establishes the priority of the HOA's
                assessment lien. As relevant here, NRS 116.3116(2)(b) grants the HOA's
                assessment lien priority over all other liens, except liens recorded before the
                HOA's declaration or a "first security interest . . . recorded" after the HOA's
                declaration but "before . . . the assessment . . . became delinquent," among
                others.      However, the statute grants the HOA's assessment lien
                “
                    superpriority" over a first securitv interest for "the last nine months of
                unpaid HOA dues and maintenance and nuisance-abatement charges."
                SFR Invs. Pool 1, 130 Nev. at 745, 334 P.3d at 411; see also NRS
                116.3116(3)(b).4 Thus, while "all other HOA fees or assessments" remain
                junior to a first deed of trust, an HOA's foreclosure on its "superpriority
                piece . . . extinguish[es] the first deed of trust." SFR Invs. Pool 1, 130 Nev.
                at 745, 747, 334 P.3d at 411, 412. Moreover, an HOA may not, in the
                provisions of its CC&Rs, vary or override the superpriority status granted
                by law. See NRS 116.1104 (prohibiting agreements purporting to vary
                pnwisions of the chapter); see also SFR Invs. Pool 1, 130 Nev. at 757-58, 334
                P.3d at 419 (concluding that a mortgage-savings clause in an HOA's CC&Rs
                that purported to subordinate the HOA's entire assessment lien to a first
                security interest did "not affect NRS 116.3116(2)'s application").
                              •We have not previously addressed the point when the
                assessment lien arises or attaches. Generally, a lien constitutes a "legal
                right or interest" of a creditor "in another's property, lasting usu[ally] until
                a debt or duty that it secures is satisfied." Lien, Black's Law Dictionary

                      "Although we discussed a prior version of NRS 116.3116 in SFR
                Investments, the relevant provisions of the statute have stayed
                substantially the same since 1991. See 1991 Nev. Stat., ch. 245, § 100, at
                568 (providing that an HOA a.ssessment lien is prior to a first security
                interest for the preceding six months of assessment obligations).
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                (11th ed. 2019); see 51 Am. Jur. 2d Liens § 1 ("A 'lien' is a security interest
                in property."). Thus, a lien "presupposes the existence of a debt. If there is
                no debt in the first instance, there is no need for a lien, so a lien cannot
                legally exist or attach."   51 Am. Jur. 2d Liens § 13 (footnote omitted)

                (emphasis added). A lien thus does not arise until the debt the lien seeks to
                secure arises.
                            Per NRS 116.3116(1), the HOA "has a lien" for any assessment
                "from the time the . . . assessment or fine becomes due." (Emphases added.)
                In other words, the point when the assessment becomes due (and goes
                unpaid) is the point when the HOA's assessment lien is created.           The

                statute's use of the phrase "has a lien" underscores that the HOA acquires
                the lien at the time the assessment becomes due. The same subsectión
                further provides that the assessment, if payable in installments as here, "is
                a lien from the time the first installment thereof becomes due."          NRS

                116.311.6(1) (ernphases added). Again, the use of "is a lien" a.nd the "from
                the time" the installment/assessment "becomes due" language indicates that
                the debt arises, and accordingly the assessment becomes an enforceable
                lien, when the first installment becomes due (here, annually). Further, the
                HOA has only three years from when assessments "become[ ] due" to enforce
                its "lien for unpaid assessments." See NRS 116.3116(10) (extinguishing an
                assessment lien unless a notice of default and election to sell. is filed or
                judicial proceedings are commenced within three years of the assessment
                becoming due). This provision supports that the creation of the assessment
                lien is not linked to its recordation and perfection; instead, it is linked,

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                  logically, to the assessment obligation which goes unpaid.5 Otherwise, this
                  provision would extinguish the assessment lien (purportedly arising when

                  the CC&Rs were recorded) three years following any assessment becoming
                  due, an absurd result that the Legislature clearly did not intend. In sum,
                  these considerations favor interpreting NRS 116.3116 to give rise to the
                  assessment lien when the assessment obligation becomes due, i.e., is levied
                  and owed.
                               Nevertheless, the comments to the UCIOA discuss that, as

                  early as 1994, amendments to the section of the uniform act that
                  corresponds with NRS 116.3116(1)6 "delete[d] the language 'from the time
                  the assessment or fine becomes due' . . . to make clear that the lien was
                  e.nforceable at the time the assessment became due'. . . . The deletion of the
                  language as suggested makes clear that the lien arises immediately
                  upon . . . recording of the declaration." Unif. Common Interest Ownership
                  Act § 3-17.6 cmt. 1, at 194-95 (Unif. Law Comm'n 2021). The comments add

                        5Generally speaking, the recordation and perfection of a lien does n.ot
                  create the lien but, rather, establishes its priority and enforceability against
                  other interests on a property. See generally Com. Credit Counseling Servs.,
                  Inc. v. W.W. Grainger, Inc., 840 N.E.2d 843, 848 (Ind. Ct. App. 2006) ("The
                  term 'attachment' encompasses creation of a security interest by execution
                  of a security agreement between the parties, while 'perfection' is an
                  additional step that makes the security interest effective against third
                  parties."). Thus, the provision in NRS 116.3116(9) stating that record notice
                  and perfection of the lien occurs at the recordation of the CC&Rs governs
                  the priority of the lien once it comes into existence, but it does not establish
                  the time of attachment of the lien, which is instead plainly described in NRS
                  116.3116(1). It also would not make sense to refer to a lien created when
                  the CC&Rs were recorded as a "lien for unpaid assessments." NRS
                  116.3116(10).

                        6UniformCommon Interest Ownership Act § 3-116(a) corresponds
                  with NRS 116.3116(1).
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                that "[a]s a result of this deletion, it is clear that in the absence of an
                exception in a title insurance policy for [assessments], a title insurer would
                be liable for post-insurance obligations which have a priority established
                prior to the time the policy was issued." Id. at 195. Of significance, the
                "from the time the .. . assessment or fine becomes due" language in NRS
                116.3116(1) has never been amended by the Nevada Legislature and thus
                remains susceptible to the interpretation we have thus far described.'
                           BaSed on NRS 11.6.3116's plain language and interpreting its
                sections in harmony with the statute as a whole, while considering official
                comments of the UCIOA in tandem with the version of the statute in effect
                in Nevada, we conclude that the assessment lien arise§ when the
                assessment obligation becomes due, i.e., is levied and owed. We
                acknowledge, as does Fidelity, that the HOA has a perfected inchoate lien
                from the time it records the CC&Rs. However, the inchoate lien does net
                become an existing, enforceable lien against a particular unit until
                assessments are due and unpaid. Our conclusion is based on interpretation
                of this particular statutory scheme, and we thus offer no opinion regarding
                when liens arise in other contexts and potential title-insurance coverage for
                such liens.

                       "Our Legislature has not amended NRS 116.3116(1) despite the
                UCIOA commenters' recommendation to do so nearly 30 years ago. It is not
                our role to rnake changes to statutes the Legislature has not elected to
                make, and we are aware of no authority for the proposition that we should
                interpret a uniform act based on comments written after the pertinent
                statute was adopted in Nevada. Moreover, to the extent the motivation for
                this proposed edit to the portion of the uniform act corresponding to
                subsection (1) of' NRS 116.3116 was to prevent confusion regarding the
                priority of HOA liens, the provisions of subsections (2) and (3) specifically
                address those priorities, and our decision today does not change the law in
                that. regard.
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                             Here, Mira Vista HOA began the enforcement of its assessment
                lien in December 2011, meaning that the assessment obligation likely arose
                in the preceding month.         The superpriority piece included only the

                preceding nine months of assessment obligations. Thus, the assessment
                lien that ultimately extinguished Deutsche Bank's deed of trust did not
                exist until roughly seven years after the date of the policy, and by
                consequence, those losses do not fall within the scope of CLTA 115.2(2).
                             Even    assuming    CLTA 115.2(2)       requires    only   that   the

                assessment lien's priority status exist at the date of the policy, the outcome
                remains the same. The relevant "priority" in CLTA 115.2 refers to the
                superpriority piece of an assessment lien that may jeopardize the first

                security interest on the property.       True, under NRS 116.3116(9), the

                assessment lien, once created, is automatically deemed recorded and
                perfected as of the date the declaration of CC&Rs was recorded. However,
                its priority over a first deed of trust is an entirely different matter. As we
                explained in SFR Investments, NRS 116.3116 divides the assessment lien
                into superpriority and subpriority pieces. 130 Nev. at 745, 334 P.3d at 411.
                The superpriority piece that threatens the first security interest on the
                property exists only for the unpaid assessments for the nine months
                preceding the recording of a notice of default.          Id.    By contrast, the

                subpriority piece exists for all other unpaid assessments. lc/. Indeed, the
                starting point is that the assessment lien is junior to a first security interest.
                ld. at 745, 334 P.3d at. 410 ("If subsection 2 [now subsection 3] ended there,
                a first deed of trust would have complete priority over an HOA lien.").
                            Applying this understanding of NRS 116.3116, Mira Vista
                HOA's assessment lien attained superpriority status only when the lien
                arose in 2011 and a notice of default was recorded. Because the priority of

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                    Mira Vista HOA's assessment lien that caused the losses claimed by
                    Deutsche Bank arose roughly seven years after the policy date, CLTA 115.2
                    would not apply to insure Deutsche Bank's losses even if it was interpreted
                    to depend on the priority of the lien—rather than the existence of the lien—
                    at the date of the policy. Accordingly, there is no coverage for Deutsche
                    Bank under CLTA 115.2(2).
                          Coverage under CLTA 100(1)(a)
                                As detailed, CLTA 100(1)(a) provides coverage for losses
                    sustained "by reason of . . . the existence of any . . . [CC&Rs] under which
                    the lien of the mortgage ... can be cut off, subordinated, or otherwise
                    impaired." Under this endorsement, it does not suffice that a covenant
                    imposes an assessment obligation enforceable as a lien. The language
                    "under which the lien of the mortgage . . can be cut off, subordinated, or
                    otherwise impaired" creates a restrictive clause that modifies "CC&Rs."
                    The plain meaning of this clause requires some aspect of the at-issue
                    CC&Rs—here, the covenant for maintenance assessments--to cut off,
                    subordinate, or impair the insured's mortgage. However, no language in
                    the pertinent covenant gives the HOA that authority. To the contrary, the
                    covenant expressly "subordina.te[s]" its lien "to the lien of any Eligible
                    Mortgage upon any Lot." Although this mortgage-savings clause remains
                    unaffected by NRS 116.3116, see SFR Inus. Pool 1, 130 Nev. at 757-58, 334
                    13.3d at 41.9, the clause supports the conclusion that the covenant itself does
                    not provide for the subordination or impairment of Deutsche Bank's deed of
                    trust. Thus, that covenant does not come within the plain meanine of CLTA
                    100(1)(a).
                                 Deutsche   Bank     alleges that    the   enforcement     of the
                    superpriority piece of Mira Vista HOA's assessment lien caused its losses.

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                    However, NRS 116.3116 created the superpriority piece, as well as the
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                ability to enforce that piece and extinguish a first secuiity interest. Without
                the statute, an HOA's assessment lien, if foreclosed upon, does not precede
                and extinguish a first security interest. See SFR Invs. Pool 1, 130 Nev. at
                745, 334 P.3d at 410.         This interpretation finds support in our
                characterization of NRS Chapter 116 as "creat[ing] . . . statutory liens," the
                enforcement of which remain "governed by statute." Bank of Am., N.A. v.
                SFR lnvs. Pool 1, LLC, 134 Nev. 604, 611, 427 P.3d 113, 120 (2018)
                (emphasis added). In so stating, we cited with approval secondary authority
                explaining that statutory liens are "limited in operation, extent; and effect
                by [the] terms" of the statute and are enforceable "only in the circumstances
                provided for in the legislation." 53 C.J.S. Liens § 14; accord 51 Am. Jur. 2d
                Liens § 54; see also Bank of Am., 134 Nev. at 610, 427 P.3d at 120. Because
                the superpriority assessment lien here constitutes a statutory lien, only
                NRS 116.3116 governs its creation and effect. It follows that the precise
                injury Deutsche Bank sustained arose not by the existence of a Mira Vista
                HOA CC&R, buf by the existence of NRS 116.3116. Accordingly, CLTA
                100(1)(a) did not cover Deutsche Bank's losses here because (1) there was
                not a CC&R that cut off, impaired, or subordinated Deutsche Bank's deed
                of trust, and (2) the superpriority assessment lien that ultimately
                extinguished Deutsche Ba.nk's deed of trust was a product of NRS 116.3116.
                      Coverage under CLTA 100(2)(a)
                            As mentioned, CLTA 100(2)(a) insures losses sustained "by
                reason of . . . [a]ny future violations on the land of any fCC&Rs] occurring
                prior to acquisition of title to the estate or interest .. by the insured,
                provided such violations result in impairment or loss of the lien of the
                rnortgage . .. , or result in impairment or loss of the title to the estate or
                interest ... if the insured shall acquire such title in satisfaction of the
                indebtedness secured by the insured mortgage." The applicability of this
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                endorsement presupposes that the losses resulted from a future violation of
                a CC&R, although other caveats exist. However, as we discussed above, the
                losses resulting from the extinguishment of Deutsche Bank's deed of trust
                occurred because NRS 116.3116 created a statutory lien for HOA
                assessments comprised of a superpriority portion that, when foreclosed on,
                extinguishes a first security interest. Again, without this statute, the
                failure to pay the assessment obligations, even if resulting in an assessment
                lien by virtue of the declaration of the CC&Rs, would nOt extinguish a first
                security interest. Therefore, the losses arose by reason of NRS 116.3116.
                Because the losses did not arise by reason of a violation of a CC&R, the
                policy does not provide coverage under CLTA 100(2)(a).8
                            Accordingly, we affirm the court's dismissal of the claims for
                declaratory judgment and breach of contract, as the policy does not provide
                coverage for Deutsche Bank's losses resulting from the enforcement of the
                superpriority portion of an HOA assessment lien. We likewise affirm the
                district court's dismissal of the claim for breach of the covenant of good faith
                and fair dealing because Fidelity had a reasonable basis to deny coverage
                under the policy based on NRS 116.3116 and the language of the
                endorsements.    See Arn. Excess Ins. Ce. u. MGM Grand Hotels, Inc., 102

                Nev. 601, 605, 729 P.2d 1352, 1354-55 (1986) (providing that breach of the
                covenant of good faith and fair dealing occurs if the insurer acts with "an
                actual or implied awareness of the absence of a reasonable basis for denying
                [the] benefits of the policy"). For similar reasons, we conclude that the
                district court properly rejected Deutsche Bank's claim that Fidelity

                      8Because we determine that the endorsements do not cover Deutsche
                Bank's losses, we do not need to consider the effect of the policy's exclusions
                on those endorsements.
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                                                      21
                breached its duty to defend Deutsche Bank in the litigation with TRP. An
                insurer's obligation under an insurance policy containing a duty to defend
                "is triggered whenever the potential. for indemnification arises, and it
                continues until this potential for indemnification ceases." Nautilus Ins. Co.
                u. Access Med., LLC, 137 Nev. 96, 99, 482 P.3d 683, 687 (2021). However, if
                the facts known to the insurer do not show any possibility of coverage, then
                there is no duty to defend. Id. at 100, 482 P.3d at 688. Our discussion above
                shows that there has never been a potential for coverage based on the
                undisputed facts of this case. Thus, the duty to defend did not arise.
                The claim for unfair claims practices was properly dismissed°
                            Deutsche Bank contends that it stated a claim for relief under
                NRS 686A.310 because Fidelity improperly denied coverage, and regardless
                of whether coverage ultimately exists, the statute subjects an insurer to
                liability for improperly handling claims.
                            NRS 686A.310 prohibits insurers from engaging in certain
                "unfair practice[sr in handling its insureds' claims. An insurer who violates
                any of the subsections therein "is liable to its insured for any damages
                sustained by the insured as a result of the commission of any act" that
                constitutes "an unfair practice." NRS 686A.310(2).

                      °Deutsche Bank also claims Fidelity engaged in deceptive trade
                practices. Deutsche Bank argues, without analysis, that the general
                prohibition against the assignment of tort claims is not implicated by a
                claim for deceptive trade practices. Without citing to authority, it contends
                that, in any event, it suffered injury or damages as a result of Fidelity's
                deceptive trade practices as evidenced by internal manuals. We reject these
                arguments as they are not properly supported. See Edwards v. Emperor's
                Garden Rest., 122 Nev. 317, 330 n.38, 130 P.3d 1280, 1288 n.38 (2006)
                (declining to address argurnents unsupported by relevant authority or
                cogent argument). And more fundamentally, Deutsche Bank does not
                establish any knowingly false representation on the part of Fidelity.
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                                   Although nothing in the statute limits its application to an
                       affirmative finding of coverage under the policy, Deutsche Bank's
                       allegations draw on the internal manuals to argue that Fidelity
                       misrepresented coverage under the policy and wrongfully denied coverage.
                       For example, Deutsche Bank alleges that Fidelity's denial of coverage
                       violated NRS 686.A.310(1)(a), (1)(c), and (1)(e), under which insurers are
                       prohibited from misrepresenting facts related to coverage, failing to
                       promptly investigate and process claims, and failing to- settle claims when
                       the insurer's liability has become reasonably clear, respectively.       But
                       Fidelity did not improperly deny coverage under the policy, and the internal
                       manuals do not show that Fidelity made prior representations, let alone
                       misrepresentations, of the existence of coverage.
                                   Additionally, Deutsche Bank ignores pertinent language in the
                       statute. For instance, in stating that Fidelity's coverage denial by itself
                       failed to effectuate a prompt, fair, and equitable settlement of the claim,
                       Deutsche Bank ignores the qualifying language "in which liability of the
                       insurer has become reasonably clear."       See NRS 686A.310(1)(e).      But
                       Fidelity's liability did not become reasonably clear because the policY did
                       not cover Deutsche Bank's losses. As another example, Deutsche Bank's
                       allegations that Fidelity violated subsection (1)(c) hinge simply on the
                       denial of coverage without any connection to the standards used in the
                       "investigation" and "processing" of the claim.      See NRS 686A.310(1)(c).
                       Deutsche Bank does not even suggest that Fidelity failed to properlY
                       investigate or process the claim; it only disputes the outcome of that
                       investigation and process. Yet another example is Deutsche Bank's claim
                       that Fidelity improperly required it to bring this litigation by denying
                       coverage in violation of subsection (1)(f), as Deutsche Bank fails to explain

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                   how the subsection even applies where the insurer never "offer[ed]
                   substantially less than the amounts ultimately recovered in actions brought
                   by such insuredll, when the insured [ has] made clairns for amounts
                   reasonably similar to the amounts ultimately recovered." See NRS
                   686A.310(1)(0.
                               Finally, Deutsche Bank contends that Fidelity's failure to
                   respond to its request for reconsideration of the claim denial violated
                   subsections (1)(d), (1)(e), and (1)(n) of NRS 686A.310. However, Deutsche
                   Bank cites no authority that these subsections pertain to an internal appeal
                   of a claim denial or require an insurer to entertain a request for
                   reconsideration.   Nothing in their plain language indicates that these
                   subsections apply, requiring instead prompt denial or affirmance of the
                   claim, a reasonable explanation of such denial or affirmance, and fair
                   processes in the settlement of the claim. There is no suggestion that
                   Fidelity's first denial did not comply with these requirements. Thus, even
                   assuming NRS 686A.310 applies regardless of any affirmative coverage
                   under the policy, and even accepting the allegations in Deutsche Bank's
                   complaint as true, it failed to state a claim for relief under NRS 686A.310.
                   Accordingly, we affirm the district court's dismissal of the claim.'"

                          '°Deutsche Bank asserts that it should have been granted leave to
                   amend to add waiver and estoppel allegations because Fidelity is
                   attempting to rely on reasons for denying the claim that were not raised
                   during the claim denial. Deutsche Bank would also add facts to bolster its
                   extra-contractual allegations. We disagree as in the insurance context,
                   "there is a well established doctrine that waiver and/or estoppel cannot be
                   used to extend the coverage or scope of the policy." Prirne Ins. Syndicate,
                   Inc. u. Darnaso, 471 F. Supp. 2d 1087, 1098 (D. Nev. 2007) (quoting Walker
                   v. Arn. Ice Co., 254 F. Supp. 736, 741 (D.D.C. 1966)). Also, Deutsche Bank
                   has not stated what additional facts it would allege that would lead to a
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                                                        24
                                                     COATCLUS1ON
                                  The applicability of the at-issue endorsements in the title-
                       insurance policy depends on the interpretation of NRS 116.3116, which is
                       unambiguous.      Under that statute, an HOA's lien for assessment
                       obligations arises when the assessrnent obligation becomes due. Moreover,
                       NRS 116.3116 determines the superpriority of the HOA's assessment lien
                       over the first security interest by reference to the assessment obligation and
                       when it becomes due. Applying this understanding of NRS 116.3116 to the
                       allegations in the complaint, the assessment lien that extinguished
                       Deutsche Bank's deed of trust arose roughly seven years after the date of
                       policy. Because the CLTA 115.2 endorsement insures losses resulting from
                       the priority of assessment liens in existence at the date of the policy, this
                       post-policy lien does not fall within the endorsement's scope.
                                    We also conclude that without NRS 116.3116, which created a
                       statutory lien comprised of a superpriority piece, as well as the ability to
                       enforce that piece and extinguish a first security interest, the enforcement
                       of the HOA's assessment lien would not extinguish a first security interest.
                       Therefore, the injury alleged arose not by the existence of an HOA's CC&R
                       or a violation of a CC&R, but by the existence of NRS 116.3116. Because
                       only the statute creates the HOA's superpriority assessment lien and drives
                       the ensuing extinguishment of a first security interest, the CLTA 100
                       endorsement does not provide Coverage for Deutsche Bank's losses. Nor can
                       it be said that a future violation on the land of a CC&R cauSed the loss
                       under CLTA 100(2)(a), when, again, only the statute allows for the HOA to
                       extinguish a first deed of trust by enforcernent of its superpriority

                       different result, nor did it attach a proposed amended complaint.
                       Accordingly, amendment would be futile under these circumstances.
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                                                            25
10) I947A
                    assessment lien.      Accordingly, operation of NRS 116.3116 precludes
                    coverage under the title-insurance policy endorsements CLTA 115.2 and
                    CLTA 100.
                                  Accordingly, we affirm the district court's order dismissing
                    Deutsche Bank's complaint.

                                                                                    J.
                                                         Cadish

                    We concur:

                    Stiglich

                    Pickering

                                                    J.
                    Herndon

                                                    J.
                     arraguirre

                    Bell

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