Court Opinion

ID: 2831703
Source: CourtListenerOpinion
Date Created: 2015-08-27 20:01:22.960053+00
Date Added: 2024-06-11T11:31:44.475474
License: Public Domain

FILED
                            NOT FOR PUBLICATION
                                                                             AUG 27 2015
                     UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                           U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

KAL-MOR-USA, LLC, a Nevada limited                No. 13-16591
liability company,
                                                  D.C. No. 2:13-cv-00680-LDG-
              Plaintiff - Appellant,              VCF

 v.
                                                  MEMORANDUM*
BANK OF AMERICA, N.A.; et al.,

              Defendants - Appellees.

                   Appeal from the United States District Court
                            for the District of Nevada
                 Lloyd D. George, Senior District Judge, Presiding

                            Submitted August 10, 2015**
                              San Francisco, California

Before: REINHARDT, TASHIMA, and CALLAHAN, Circuit Judges.

      Appellant Kal-Mor-USA, LLC (“Kal-Mor-USA”) appeals the dismissal of

its suit to quiet title on a property located at 3047 Casey Drive, Unit 103, in Las

Vegas, Nevada. Because the parties are familiar with the facts and procedural

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
history, we do not restate them except as necessary to explain our decision. We

have jurisdiction under 28 U.S.C. § 1291, and we reverse and remand for further

proceedings.

      1.       The district court dismissed Kal-Mor-USA’s suit based on its

determination that a homeowner’s association’s (“HOA”) nonjudicial foreclosure

based on a super-priority lien under Nevada law does not extinguish a first security

deed of trust. However, the Nevada Supreme Court has since held in SFR

Investments Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d 408 (Nev. 2014), that an

HOA has a true super-priority lien on a property for nine months of unpaid

assessments, and foreclosure on this lien extinguishes all other interests in that

property. Accordingly, the district court’s dismissal, to the extent it was based on a

contrary interpretation of the Nevada HOA super-priority statutory scheme, was

erroneous. See, e.g., Olympic Sports Prods., Inc. v. Universal Athletic Sales

Co.,760 F.2d 910, 913 (9th Cir. 1985) (federal courts “are bound to follow the

decisions of a state’s highest court in interpreting that state’s law”) (citation

omitted).

      2.       Appellees argue that the dismissal of the suit was proper because,

inter alia, the HOA’s sale of the Casey Drive property was commercially

unreasonable. Nevertheless, “inadequacy of price, however gross, is not in itself a

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sufficient ground” for setting aside a sale as commercially unreasonable, because

“there must be in addition to proof of some element of fraud, unfairness, or

oppression as accounts for and brings about the inadequacy of price.” Brunzell v.

Woodbury, 449 P.2d 158, 159 (Nev. 1969) (citation omitted). Appellees have not

identified any ground aside from the low price which might render the sales

commercially unreasonable. Although the Nevada Supreme Court later held that

HOA super-priority lien foreclosures extinguish first deeds of trust, that holding

did not render the sales commercially unreasonable at the time the sales occurred.

      We accordingly REVERSE the district court’s dismissal and REMAND for

further proceedings. This remand is without prejudice to any constitutional

arguments the parties may make below, which the district court may address in the

first instance. We note that the State of Nevada or the Federal Housing Finance

Agency may wish to intervene in the proceedings below, in light of the possible

constitutional issues that the district court may address on remand.

      REVERSED AND REMANDED.

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