Bayview Loan Servicing, LLC v. Alessi & Koenig, LLC

• Decision Date: 06 June 2013
• Docket Number: No. 2:13–CV–00164–RCJ–NJK.,2:13–CV–00164–RCJ–NJK.
• Citation: 962 F.Supp.2d 1222
• Parties: BAYVIEW LOAN SERVICING, LLC, Plaintiff, v. ALESSI & KOENIG, LLC et al., Defendants.
• Court: U.S. District Court — District of Nevada

962 F.Supp.2d 1222

BAYVIEW LOAN SERVICING, LLC, Plaintiff,

v.ALESSI & KOENIG, LLC et al., Defendants.

No. 2:13–CV–00164–RCJ–NJK.

United States District Court,

D. Nevada.

June 6, 2013.

Daniel I. Singer, Singer and Ventura LLP, San Diego, CA, Benjamin D. Petiprin, Law Offices of Les Zieve, Las Vegas, NV, for Plaintiff.

Howard C. Kim, Victoria Hightower, Diana S. Cline, Howard Kim & Associates, Henderson, NV, Benjamin D. Petiprin, Law Offices of Les Zieve, Las Vegas, NV, for Defendants.

ORDER

ROBERT C. JONES, District Judge.

This quiet title action arises out of the foreclosure of a lien for delinquent homeowner's association (“HOA”) fees. Pending before the Court are cross motions for summary judgment. For the reasons given herein, the Court grants Plaintiff's motion and denies Defendant's.

I. FACTS AND PROCEDURAL HISTORY

Third-party Defendant Jesus Simiano (“Borrower”) gave Third-party Defendant Silver State Financial Services (“Lender”) a promissory note for $176,000, secured by a deed of trust (“DOT”), to refinance real property located at 5124 Lost Canyon Dr., North Las Vegas, NV 89031 (the “Property”). (Compl. ¶ 9, Jan. 30, 2013, ECF No. 1; DOT 1–3, July 27, 2004, ECF No. 1, at 9). Mortgage Electronic Registration Systems, Inc. (“MERS”) was the beneficiary of the DOT and Lender's nominee for the purpose of transferring the beneficial interest in the promissory note. ( See DOT 1–3). MERS later assigned both its own interest in the DOT and Lender's interest in the promissory note to Plaintiff Bayview Loan Servicing, LLC (“Bayview”). (Compl. ¶ 10; see Assignment, Apr. 14, 2010, ECF No. 1, at 27).

Defendant Alessi & Koenig, LLC (“A & K”) later caused to be recorded a Notice of Delinquent Assessment (Lien) (“NODA”) against the Property on behalf of Defendant Hometown Ovation Owners Association (“HOOA”) based upon $3391.58 in delinquent fees, assessments, interest, late fees, service charges, and collection costs. (Compl. ¶ 13; see NODA, Feb. 6, 2012, ECF No. 1, at 29). A & K then caused to be recorded a Notice of Default and Election to Sell Under Homeowners Association Lien (“NOD”) against the Property on behalf of HOOA, alleging a total of $3541.58 in delinquencies. (Compl. ¶ 14; see NOD, Mar. 12, 2012, ECF No. 1, at 31). A & K then caused to be recorded a Notice of Trustee's Sale (“NOS”) as to the Property on behalf of HOOA, indicating a sale for December 5, 2012 based upon a total delinquency of $4386.06. (Compl. ¶ 15; see NOS, Oct. 22, 2012, ECF No. 1, at 33).

Bayview contacted A & K concerning the NOS, and A & K postponed the sale until January 16, 2013. (Compl. ¶ 16). Bayview alleges it tendered the full amount due to A & K several times before that date, but that A & K refused to accept payment. ( See id. ¶¶ 17–18). A & K sold the Property at the instruction of HOOA at the January 16, 2013 foreclosure sale to Defendant SFR Investments Pool 1, LLC (“SFR Pool 1”) or Defendant SFR Investments, LLC (“SFR”) (collectively, “SFR Defendants”) for approximately $10,000. ( Id. ¶¶ 19, 22). SFR later contacted Bayview and communicated its position that the sale had extinguished Bayview's DOT. ( Id. ¶ 23).

Bayview sued A & K, HOOA, and SFR Defendants in this Court on two causes of action: (1) Wrongful Foreclosure; and (2) Declaratory Relief.¹ A & K and HOOA jointly moved for defensive summary judgment against the wrongful foreclosure claim, and while that motion was pending, SFR Pool 1 filed its Answer, which included counterclaims and third-party claims for quiet title against Bayview, Borrower, and Lender. The Court granted the motion for summary judgment as against the wrongful foreclosure claim. The parties have now moved for summary judgment on their remaining quiet title claims.

II. LEGAL STANDARDS

A court must grant summary judgment when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Material facts are those which may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See id. A principal purpose of summary judgment is “to isolate and dispose of factually unsupported claims.” Celotex Corp. v. Catrett, 477 U.S. 317, 323–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In determining summary judgment, a court uses a burden-shifting scheme:

When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case.

C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir.2000) (citations and internal quotation marks omitted). In contrast, when the nonmoving party bears the burden of proving the claim or defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323–24, 106 S.Ct. 2548. If the moving party fails to meet its initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159–60, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).

If the moving party meets its initial burden, the burden then shifts to the opposing party to establish a genuine issue of material fact. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). To establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 631 (9th Cir.1987). In other words, the nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations unsupported by facts. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir.1989). Instead, the opposition must go beyond the assertions and allegations of the pleadings and set forth specific facts by producing competent evidence that shows a genuine issue for trial. SeeFed.R.Civ.P. 56(e); Celotex Corp., 477 U.S. at 324, 106 S.Ct. 2548.

At the summary judgment stage, a court's function is not to weigh the evidence and determine the truth, but to determine whether there is a genuine issue for trial. See Anderson, 477 U.S. at 249, 106 S.Ct. 2505. The evidence of the nonmovant is “to be believed, and all justifiable inferences are to be drawn in his favor.” Id. at 255, 106 S.Ct. 2505. But if the evidence of the nonmoving party is merely colorable or is not significantly probative,summary judgment may be granted. See id. at 249–50, 106 S.Ct. 2505.

III. ANALYSIS

In Nevada, HOAs have immediate liens against real property when HOA assessments or other costs against a unit become delinquent. SeeNev.Rev.Stat. § 116.3116(1). Under Nevada law, a lien for delinquent HOA assessments is not prior to “[a] first security interest on the unit recorded before the date on which the assessment sought to be enforced became delinquent,” id. § 116.3116(2)(b), except:

to the extent of any charges incurred by the association on a unit pursuant to NRS 116.310312 and to the extent of the assessments for common expenses based on the periodic budget adopted by the association pursuant to NRS 116.3115 which would have become due in the absence of acceleration during the 9 months immediately preceding institution of an action to enforce the lien....

Id.§ 116.3116(2) (unnumbered paragraph following subsection (2)(c) (emphases added)).² In other words, a first mortgage recorded before HOA assessments become delinquent is senior to an HOA lien, except to the extent of nine months of regular HOA dues immediately preceding the action to enforce the HOA lien and any HOA fees and costs related to exterior maintenance of the unit at issue or the removal or abatement of a public nuisance related to the unit at issue.³ It seems clear that the super-priority amount is unextinguished by foreclosure of a first mortgage, even if the first mortgage is otherwise senior under the first mortgage rule. The question is whether the foreclosure of an HOA lien including some super-priority amount extinguishes a first mortgage that has benefit of the first mortgage rule. The Court believes that the best interpretation of the statutes is that it does not.

Bayview's interpretation of the statute, with which the Court agrees, is that the first mortgage rule prevents a prior-recorded first mortgage from being extinguished by foreclosure of an HOA lien that contains a super-priority amount. Under this interpretation, an HOA lien arising before a first mortgage is recorded is senior to the first mortgage in all traditional respects, i.e., it survives a foreclosure of the first mortgage, and its own foreclosure extinguishes the first mortgage. But an HOA lien arising after a first mortgage is recorded operates unorthodoxly in relation to traditional liens. The super-priority amount is senior to an earlier-recorded first mortgage in the sense that it must be satisfied before a first mortgage upon its own foreclosure, but it is in parity with an earlier-recorded first mortgage with respect to extinguishment, i.e., the foreclosure of neither extinguishes the other.

In practice, two options...