CitiMortgage, Inc. v. Corte Madera Homeowners Ass'n
| Decision Date | 04 March 2022 |
| Docket Number | 2:16-cv-00398-JCM-GWF |
| Parties | CITIMORTGAGE, INC., Plaintiff, v. CORTE MADERA HOMEOWNERS ASSOCIATION; SUSAN PATCHEN; THE EAGLE AND THE CROSS LLC; NEVADA ASSOCIATION SERVICES, INC., Defendants. SUSAN PATCHEN; and THE EAGLE AND THE CROSS LLC, Counterclaimants, v. CITIMORTGAGE, INC.; and DOES 1 through 10, inclusive; ROE Corporations 1 through 10, inclusive, Counterdefendants. |
| Court | U.S. District Court — District of Nevada |
MELANIE D. MORGAN, ESQ., SCOTT R. LACHMAN, ESQ. AKERMAN LLP Attorneys for CitiMortgage, Inc.
GARRETT R. CHASE, ESQ., SHUMWAY VAN Attorneys for Susan Patchen and Eagle and the Cross LLC
On January 13, 2022, the Ninth Circuit issued a Mandate, which returned jurisdiction to this Court for proceedings consistent with the Ninth Circuit Court of Appeals' November 14, 2021, Memorandum. The Memorandum reversed this Court's July 27, 2020, Order that had granted summary judgment in favor of Susan Patchen (Patchen) and the Eagle and the Cross LLC (Eagle) (collectively Defendants). The Ninth Circuit concluded that CitiMortgage, Inc. (Citi) had standing to challenge a violation of the automatic bankruptcy stay and that there was such a violation of the stay.
The Court, having considered the Memorandum, the parties' stipulation, and good cause appearing, makes the following findings of fact, conclusions of law, and order.
1. This case involves the ownership to, and lien rights against, that certain real property located at 2517 Danborough Court, Unit 106, Las Vegas, NV 89106 (the Property).
2. On or about November 26, 2007, Kathy Horton (Horton) executed a deed of trust dated November 26, 2007 (the Deed of Trust) that listed Home Loan Center Inc. as the lender, and Mortgage Electronic Registration Systems Inc. (MERS), as the beneficiary. The Deed of Trust was recorded in the property records of Clark County, Nevada.
3. In a written assignment that was recorded on December 24, 2009, MERS assigned the Deed of Trust to Bank of America, N.A. (BANA). BANA assigned the Deed of Trust to Citi in a written assignment that was recorded on June 26, 2013.
4. On July 2, 2013, Nevada Association Services, Inc. (NAS) recorded a notice of delinquent assessment lien as agent of the HOA, stating that Horton had breached the CC&Rs by failing to pay her regular assessments and that the HOA claimed a lien on the Property.
5. The HOA, through NAS, then recorded a notice of default and election to sell on October 11, 2013.
6. Both notices were recorded while the automatic stay was in effect from Horton's bankruptcy case, which was filed on February 29, 2012 in the U.S. Bankruptcy Court for the District of Nevada. In re Horton, No. 12:12197-led.
7. In her chapter 7 petition, Horton listed the Property as an asset. She stated in her petition that she intended to surrender the Property to the bankruptcy estate and did not claim it as exempt.
8. The Property remained property of the estate until October 17, 2013, when the trustee's report stated that he abandoned the Property, and the bankruptcy court entered a final decree discharging the trustee and closing the case. In re Horton, No. 12:12197-led, ECF No. 26, 27. No. party ever sought or received relief from the automatic stay.
9. NAS continued with the foreclosure, recording a notice of sale in April 2014.
10. At the May 16, 2014, foreclosure, NAS sold the property to Patchen.
11. In March 2015, Patchen quitclaimed the property for zero dollars to Eagle, a limited liability company she owns and controls.
1. In accordance with the Memorandum, this Court adopts the Ninth Circuit's conclusion that the HOA's foreclosure sale was void because it was barred by the automatic stay resulting from Horton's bankruptcy.
2. Last year, the Ninth Circuit decided that the holder of a deed of trust may bring an action under Nevada's quiet title statutes (NRS 40.010) to obtain an order declaring a homeowners association foreclosure sale void on the basis that the sale violated the automatic bankruptcy stay. Bank of New York Mellon v. Enchantment at Sunset Bay Condo. Ass'n, 2 F.4th 1229, 1232 (9th Cir. 2021).
3. On the basis of Enchantment, the Ninth Circuit held in the Memorandum Opinion that Citi had standing to bring its quiet title claim based on the alleged bankruptcy stay violation.
4. The Ninth Circuit also decided that the Property was property of the bankruptcy estate because Horton did not claim the Property as exempt in her bankruptcy petition.
5. Accordingly, the Ninth Circuit determined that "[t]he recording of the notice of delinquent assessment lien and notice of default violated the automatic stay because the automatic stay prohibits 'any act to create, perfect, or enforce any lien against property of the estate." Mem Op. at 3 (quoting 11 U.S.C. § 362(a)(4)).
5. The Ninth Circuit cited Nevada law for the proposition that "the...
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