JPMorgan Chase Bank, Nat'l Ass'n v. SFR Invs. Pool 1, LLC

• Decision Date: 29 October 2020
• Docket Number: No. 77010,77010
• Parties: JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a National Association, Appellant, v. SFR INVESTMENTS POOL 1, LLC, a Nevada Limited Liability Company, Respondent.
• Court: Nevada Supreme Court

475 P.3d 52

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a National Association, Appellant,

v.SFR INVESTMENTS POOL 1, LLC, a Nevada Limited Liability Company, Respondent.

No. 77010

Supreme Court of Nevada.

FILED OCTOBER 29, 2020

Ballard Spahr LLP and Abran E. Vigil, Holly A. Priest, and Joel E. Tasca, Las Vegas; Ballard Spahr LLP and Matthew D. Lamb, Washington, D.C., for Appellant.

Kim Gilbert Ebron and Jacqueline A. Gilbert, Diana S. Ebron, and Caryn R. Schiffman, Las Vegas, for Respondent.

Fennemore Craig P.C. and Leslie Bryan Hart and John D. Tennert III, Reno, for Amicus Curiae Federal Housing Finance Agency.

BEFORE THE COURT EN BANC.

OPINION

By the Court, STIGLICH, J.:

We have previously held that the Federal Foreclosure Bar, 12 U.S.C. § 4617(j)(3), preempts NRS 116.3116 and prevents a homeowners' association (HOA) foreclosure sale from extinguishing a first deed of trust that secures a loan owned by the Federal Housing Finance Agency (FHFA) or by a federal entity under the FHFA's conservatorship. Saticoy Bay LLC Series 9641 Christine View v. Fed. Nat'l Mortg. Ass'n (Christine View), 134 Nev. 270, 272-74, 417 P.3d 363, 366-68 (2018). But we have yet to address what statute of limitations, if any, applies to an action brought to enforce the Federal Foreclosure Bar.

That is the question presented in this case. The answer is governed by the federal law that enacted the Federal Foreclosure Bar—the Housing and Economic Recovery Act (HERA). The HERA statute of limitations looks to whether the claim in the action sounds in contract or tort. Although the claims in the underlying action do not fit either category, we conclude that they are best described as sounding in contract for purposes of the HERA statute of limitations. HERA provides for a six-year statute of limitations for claims sounding in contract. Because the loan servicer commenced the action here within six years of the foreclosure sale, the date the parties agree triggered the running of the statute of limitations, we reverse the district court's summary judgment order. And because we also conclude that the loan servicer sufficiently demonstrated that a regulated entity under the FHFA's conservatorship owned the subject loan, we remand for the district court to enter judgment in favor of the loan servicer.

FACTS AND PROCEDURAL HISTORY

After the nonparty homeowners failed to pay their HOA assessments, the HOA held a foreclosure sale on March 1, 2013, at which respondent SFR Investments Pool 1, LLC, purchased the property. On November 27, 2013, appellant JPMorgan Chase Bank (Chase) filed a complaint seeking a declaration that the first deed of trust survived the sale and for quiet title. On February 2, 2016, Chase moved to amend its complaint to rely on the Federal Foreclosure Bar. After the district court granted the motion, Chase filed its amended complaint on March 9, 2016.

Both parties moved for summary judgment. Chase offered evidence that it was servicing the loan on behalf of Freddie Mac, which had been placed into an FHFA conservatorship in 2008, and argued that the first deed of trust therefore survived under the Federal Foreclosure Bar. The district court ultimately found that Chase adequately demonstrated that Freddie Mac owned the loan at the time of the foreclosure sale but that a three-year statute of limitations applied and Chase had missed that deadline by eight days because it did not mention the Federal Foreclosure Bar until it filed the amended complaint. The district court therefore entered summary judgment in favor of SFR, concluding that the foreclosure sale extinguished the deed of trust. Chase now appeals that decision, and the FHFA has filed an amicus brief in support of Chase's position.

DISCUSSION

The Federal Foreclosure Bar is part of HERA. See 12 U.S.C. § 4501 et seq. (HERA); Nationstar Mortg., LLC v. SFR Invs. Pool 1, LLC, 133 Nev. 247, 250-51, 396 P.3d 754, 757 (2017) (discussing HERA and the Federal Foreclosure Bar). HERA includes a statute-of-limitations provision that applies "to any action brought by the [FHFA]" and specifies the limitations period based on whether the action involves a contract claim or a tort claim:

[T]he applicable statute of limitations with regard to any action brought by the [FHFA] shall be—

(i) in the case of any contract claim, the longer of—

(I) the 6-year period beginning on the date on which the claim accrues; or

(II) the period applicable under State law; and

(ii) in the case of any tort claim, the longer of—

(I) the 3-year period beginning on the date on which the claim accrues; or

(II) the period applicable under State law.

12 U.S.C. § 4617(b)(12). When the facts are uncontroverted, as they are here, the application of a statute of limitations to bar a claim is a question of law that this court reviews de novo.¹ Holcomb Condo. Homeowners’ Ass'n v. Stewart Venture, LLC, 129 Nev. 181, 186-87, 300 P.3d 124, 128 (2013).

HERA's statute of limitation applies even if the FHFA and the entities it regulates are not parties

We first address the threshold question of whether HERA dictates the statute of limitations in this case. HERA's statute-of-limitations provision applies to actions brought by the FHFA. 12 U.S.C. § 4617(b)(12). Confronted with an argument that the provision thus did not apply to this action brought by Chase, the district court found that HERA's limitations provision applied regardless of whether the FHFA brought the action or was joined as a party. We agree with the district court.

As we have already held, a loan servicer such as Chase can raise the Federal Foreclosure Bar on the FHFA's behalf without joining the FHFA or the regulated entity that owns the loan as a party to the action. Nationstar, 133 Nev. at 251, 396 P.3d at 758. That is so because HERA allows the FHFA to authorize a loan servicer to act on its behalf by contracting with the loan servicer or relying on the regulated entity's contractual relationship with a loan servicer, such that the contractually authorized loan servicer has standing to take action to protect the FHFA's interests. See id. at 250, 396 P.3d at 757 (holding that the broad language "such action" in 12 U.S.C. § 4617(bX2XD) would include allowing contracted servicers to act to protect an asset owned by a regulated entity that is under an FHFA conservatorship). It thus follows that, when the contractually authorized loan servicer brings an action to protect the FHFA's interests as conservator of a regulated entity, the same statute of limitations would apply as if the FHFA had brought the action itself. See M & T Bank v. SFR Invs. Pool 1, LLC, 963 F.3d 854, 857-58 (9th Cir. 2020) (agreeing with the parties that HERA governs the statute of limitations that applies to an FHFA loan servicer's action raising the Federal Foreclosure Bar). We therefore hold that, regardless of whether the FHFA, Freddie Mac, or Fannie Mae is joined as a party, HERA's statute of limitations governs an action brought by a mortgage loan servicer to enforce the Federal Foreclosure Bar. Having determined that the timeliness of Chase's action is governed by HERA's statute-of-limitations provision, we must now determine the appropriate limitations period.

Chase's claims sound in contract, and therefore a six-year limitations period applies

The HERA statute-of-limitations provision asks whether the action brings a contract claim or a tort claim, 12 U.S.C. § 4617(b)(12), even "if neither description is a perfect fit."² M & T, 963 F.3d at 858 (recognizing that HERA's statute of limitations "applies to all [actions] brought by the FHFA as conservator," even though it bases the applicable limitations period on whether the action is contract- or tort-based); FHFA v. UBS Ams. Inc., 712 F.3d 136, 143-44 (2d Cir. 2013) (holding that Congress clearly intended HERA's statute of limitations provision "to apply to all [actions] brought by [the] FHFA as conservator" and that it "supplants any other time limitations that otherwise might have applied"); see also Nat'l Credit Union Admin. Bd. v. RBS Sec., Inc., 833 F.3d 1125, 1131 (9th Cir. 2016) (concluding that an identically worded statute made Congress's intent "clear that no other limitations period applie[d]" to the action brought).

One cannot dispute that no contract exists between SFR and Chase. And Chase's complaint neither alleged a breach of duty by SFR or any other party below, nor sought damages based on injury to a person or property, "two of the traditional hallmarks of a torts action." M & T, 963 F.3d at 858. The contract and tort descriptions thus are not a good fit for the claims in Chase's complaint. Faced with the same dilemma, the Ninth Circuit Court of Appeals has looked to "whether a claim is better characterized as sounding in contract or tort." Id. ; see also FHFA v. LN Mgmt. LLC, Series 2937 Barboursville, 369 F. Supp. 3d 1101, 1109 (D. Nev. 2019) (explaining the analysis as "perform[ing] the square-peg-in-round-hole task" of determining whether an action seeking to enforce the Federal Foreclosure Bar fell "into the contract or tort bucket"), vacated in part on other grounds on reconsideration, No. 2:17-cv-03006-JAD-EJY, 2019 WL 6828293 (D. Nev. Dec. 13, 2019).

After careful examination, we agree with the courts that have concluded that claims seeking to enforce the Federal Foreclosure Bar sound more in contract than in tort. The key distinction between a tort and a contract claim is whether the alleged harm could have been realized without a contract. Stanford Ranch, Inc. v. Md. Cas. Co., 89 F.3d 618, 625 (9th Cir. 1996). Despite the lack of a contract between SFR and Chase, "the quiet title claims [asserted by Chase] are entirely ‘dependent’ upon Freddie Mac's lien on the Property, an interest created by contract." M & T, 963 F.3d at 858 ; see also Ditech Fin. LLC v. SFR Invs. Pool 1, LLC, 380 F. Supp. 3d 1089, 1094 (D. Nev. 2019) ("At bottom, this action concerns the viability of [the] lien interests against the Propert[y]. As [the...