426 P.3d 593 (Nev. 2018), 71405, Wells Fargo Bank, N.A. v. Radecki
|Citation:||426 P.3d 593, 134 Nev.Adv.Op. 74|
|Opinion Judge:||STIGLICH, J.:|
|Party Name:||WELLS FARGO BANK, N.A., as Trustee ON BEHALF OF the HOLDERS OF THE HARBORVIEW MORTGAGE LOAN TRUST MORTGAGE LOAN PASS-THROUGH CERTIFICATES, SERIES 2006-12, Appellant, v. Tim RADECKI, Respondent.|
|Attorney:||Ballard Spahr LLP and Sylvia O. Semper and Abran E. Vigil, Las Vegas; Ballard Spahr LLP and Anthony C. Kaye, Salt Lake City, Utah, for Appellant. The Wright Law Group and John Henry Wright, Las Vegas, for Respondent.|
|Judge Panel:||We concur: Douglas, C.J., Cherry, J., Gibbons, J., Pickering, J., Hardesty, J., Parraguirre, J.|
|Case Date:||September 13, 2018|
|Court:||Supreme Court of Nevada|
[Copyrighted Material Omitted]
Appeal from a judgment, following a bench trial, in an action to quiet title. Eighth Judicial District Court, Clark County; James Crockett, Judge.
Ballard Spahr LLP and Sylvia O. Semper and Abran E. Vigil, Las Vegas; Ballard Spahr LLP and Anthony C. Kaye, Salt Lake City, Utah, for Appellant.
The Wright Law Group and John Henry Wright, Las Vegas, for Respondent.
BEFORE THE COURT EN BANC.
This appeal requires us to consider the competing interests of the purchaser of a property at a homeowners association foreclosure sale and the beneficiary of a deed of trust on that property at the time of the sale. See SFR Invs. Pool 1, LLC v. U.S. Bank, N.A, (SFR I ), 130 Nev. 742, 758, 334 P.3d 408, 419 (2014) (holding that valid foreclosure of an HOA superpriority lien extinguishes a first deed of trust).
After a bench trial, the district court determined that appellant Wells Fargo Bank, N.A.s deed of trust was extinguished by a valid foreclosure sale. On appeal, Wells Fargo argues that the foreclosure sale should have been invalidated on equitable grounds, the foreclosure sale constituted a fraudulent transfer under the Uniform Fraudulent Transfer Act (UFTA), and that the foreclosure deed failed to transfer ownership of the property.
We disagree on all three points. We agree with the district courts conclusion that there was no "unfairness or irregularity" in the foreclosure process, see
Golden v. Tomiyasu, 79 Nev. 503, 515, 387 P.2d 989, 995 (1963), so the district court correctly rejected Wells Fargos equitable argument. UFTA does not apply because regularly conducted, noncollusive foreclosure sales are exempt from that statute. Lastly, we agree with the district courts conclusion that an irregularity in the foreclosure deed upon sale does not invalidate the foreclosure as a whole. Accordingly, we affirm.
FACTS AND PROCEDURAL HISTORY
This case concerns competing rights to 2102 Logston Drive, North Las Vegas (the Property). In 2006, in exchange for a $196,000 loan, a homeowner encumbered the Property with a Deed of Trust (DOT). That DOT was eventually assigned to appellant Wells Fargo.
The Property is located within the Cambridge Heights planned community (the HOA) and is subject to the HOAs Covenants, Conditions, and Restrictions (CC&Rs). Those CC&Rs obligated the Property owner to pay monthly assessments and authorized the HOA to impose a lien upon the Property in the event of nonpayment.
By 2012, the homeowner had defaulted on both the loan and the HOA payments. The HOA recorded a Notice of Delinquent Assessment and a Notice of Default. Then, before the HOA recorded a Notice of Foreclosure sale, Wells Fargo sued for judicial foreclosure on the property. Wells Fargo secured a default judgment against both the homeowner and the HOA. The written judgment declared that Wells Fargos DOT "is superior to all right, title, interest, lien, equity or estate of the Defendants with the exception of any super priority lien rights held by any Defendant pursuant to NRS 116.3116. "
The HOA then conducted a foreclosure sale pursuant to NRS 116.3116. The winning bidder at that sale was respondent Tim Radecki, who purchased the property for $4,000. The declaration of value associated with the sale indicated that the tax value of the property was $56,197.
Radecki moved to intervene in Wells Fargos foreclosure suit. The district court granted that motion and held a bench trial to determine whether Radecki or Wells Fargo had superior title to the Property. In its judgment following trial, the district court
rejected Wells Fargos arguments as to why the foreclosure sale should be invalidated and held that Wells Fargos DOT was extinguished pursuant to SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 130 Nev. 742, 334 P.3d 408 (2014). Thus, the district court quieted title in favor of Radecki.
Wells Fargo appeals.
Wells Fargo raises numerous issues, some of which this court has conclusively decided in our HOA foreclosure jurisprudence.1 Three of Wells Fargos arguments are novel: (1) Wells Fargo argues that the actions of the HOA and the intent of the purchaser at the foreclosure indicate "unfairness or irregularity" in the foreclosure process, rendering the foreclosure invalid, (2) Wells Fargo argues that the foreclosure constituted a "fraudulent transfer" under the Uniform Fraudulent Transfer Act, and (3) Wells Fargo argues that the foreclosure deed failed to convey the property to Radecki.
After a bench trial, this court reviews the district courts legal conclusions de novo. Weddell v. H 20, Inc., 128 Nev. 94, 101, 271 P.3d 743, 748 (2012). The district courts factual findings will be left undisturbed unless they are clearly erroneous or not supported by substantial evidence. Id.
There was not unfairness or irregularity in the foreclosure process
Wells Fargo argues that the foreclosure sale should be invalidated due to the low purchase price coupled with "evidence of unfairness or irregularity" in the foreclosure process. See Golden v. Tomiyasu, 79 Nev. 503, 515, 387 P.2d 989, 995 (1963). Wells Fargo first argues that the HOA "intentionally evaded the judicial process and went forward with the HOA sale despite defaulting" in Wells Fargos judicial foreclosure proceeding. The HOAs actions, Wells Fargo contends, "suggest[ ] a race to complete a [foreclosure] sale before the [district] Court could issue a foreclosure judgment." This argument ignores the fact that Wells Fargos default judgment explicitly stated that Wells Fargos DOT was superior to all other interests "with the exception of any super priority lien rights held by any Defendant pursuant to NRS 116.3116." (Emphasis added.) NRS 116.31162 authorized the HOA to nonjudicially foreclose on that superpriority lien. To the extent the HOA "race[d]" to foreclose on that lien, it was entitled to do so.
Wells Fargo additionally argues that Radecki was not a bona fide purchaser (BFP) because he "admittedly had knowledge of Wells Fargos competing interest" and "he was aware of the legal and title issues surrounding HOA foreclosure sales." Radecki cannot possibly be a BFP, Wells Fargo argues, because Radecki himself did not believe he was acquiring title to the property. Thus, Wells Fargo concludes, it is unfair to award unencumbered title to Radecki.
We agree with the district court that Radecki had no obligation to establish BFP status. The BFP doctrine provides an equitable remedy to protect innocent purchasers from an otherwise defective sale; it does not provide an equitable basis to invalidate an otherwise valid sale. See 25 Corp. v. Eisenman Chem. Co., 101 Nev. 664, 675, 709 P.2d 164, 172 (1985) ("The bona fide doctrine protects a subsequent purchasers title against...
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