U.S. Bank, N.A. v. Thunder Props., Inc.

• Decision Date: 01 May 2020
• Docket Number: No. 17-16399,17-16399
• Citation: 958 F.3d 794
• Parties: U.S. BANK, N.A., AS TRUSTEE FOR the SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST MORTGAGE LOAN ASSET-BACKED CERTIFICATES SERIES 2006-BC4, Plaintiff-Appellant, v. THUNDER PROPERTIES, INC., Defendant-Appellee, and Westland Real Estate Development and Investments, Defendant.
• Court: U.S. Court of Appeals — Ninth Circuit

958 F.3d 794

U.S. BANK, N.A., AS TRUSTEE FOR the SPECIALTY UNDERWRITING AND RESIDENTIAL FINANCE TRUST MORTGAGE LOAN ASSET-BACKED CERTIFICATES SERIES 2006-BC4, Plaintiff-Appellant,

v. THUNDER PROPERTIES, INC., Defendant-Appellee,andWestland Real Estate Development and Investments, Defendant.

No. 17-16399

United States Court of Appeals, Ninth Circuit.

Filed May 1, 2020

ORDER

GOULD, Circuit Judge, Presiding:

Pursuant to Rule 5 of the Nevada Rules of Appellate Procedure, we certify to the Nevada Supreme Court the questions of law set forth in Part II of this order. The answers to these questions "may be determinative of the cause" pending before this court, and there appears to be "no controlling precedent in the decisions of the [Nevada] Supreme Court or Court of Appeals." Nev. R. App. P. 5(a).

Further proceedings in this court are stayed pending the result of certification, and submission remains withdrawn pending further order.

I.

Plaintiff-Appellant, U.S. Bank, N.A., as Trustee for the Specialty Underwriting and Residential Finance Trust Mortgage Loan Asset-Backed Certificates Series 2006-BC4 ("U.S. Bank"), will be the appellant before the Nevada Supreme Court. Counsel for U.S. Bank are Ariel E. Stern, Melanie D. Morgan, and Rex D. Garner, Akerman LLP, 1635 Village Center Circle, Suite 200, Las Vegas, Nevada 89134.

Defendant-Appellee, Thunder Properties, Inc. ("Thunder"), will be the respondent before the Nevada Supreme Court. Counsel for Thunder are Roger P. Croteau and Timothy E. Rhoda, Roger P. Croteau and Associates, Ltd., 9120 West Post Road, Suite 100, Las Vegas, Nevada 89148.

II.

The questions of law we certify are:

(1) When a lienholder whose lien arises from a mortgage for the purchase of a property brings a claim seeking a declaratory judgment that the lien was not extinguished by a subsequent foreclosure sale of the property, is that claim exempt from statute of limitations under City of Fernley v. Nevada Department of Taxation , 132 Nev. 32, 366 P.3d 699 (2016) ?

(2) If the claim described in (1) is subject to a statute of limitations:

(a) Which limitations period applies?

(b) What causes the limitations period to begin to run?

We recognize that the Nevada Supreme Court may, in its discretion, reword the certified questions.

Progressive Gulf Ins. Co. v. Faehnrich , 627 F.3d 1137, 1140 (9th Cir. 2010).

III.

This case arises out of a Nevada statutory scheme that permits a homeowners association ("HOA") to attach a lien with partial superpriority status to a homeowner’s property. See Nev. Rev. Stat. § 116.3116. "The portion of the lien with superpriority status consists of the last nine months of unpaid HOA dues and any unpaid maintenance and nuisance-abatement charges." Bank of Am., N.A. v. Arlington W. Twilight Homeowners Ass’n , 920 F.3d 620, 622 (9th Cir. 2019). "With a few exceptions, the superpriority portion is superior to all other liens on the property, including the first deed of trust held by the mortgage lender," which "means that an HOA can extinguish the first deed of trust by foreclosing on its superpriority lien." Id.

In 2006, Michelle and Bryan Rodriguez purchased a property in Cold Springs, Nevada, by means of a loan secured by a deed of trust on the property. The deed of trust was assigned to U.S. Bank in 2009. By February 2010, the Rodriguezes had fallen behind on their HOA assessments, and the HOA recorded a notice of delinquent assessment and claimed a superpriority lien against the property under Nevada Revised Statutes § 116.3116 for the amount owed. The debt was not satisfied and the HOA proceeded with a foreclosure sale, recording its election to sell the property in April 2010, selling the property in February 2011, and recording the sale on the same day it occurred. The buyer later sold the property to Westland Real Estate Development and Investments, which transferred its interest in the property to Thunder.

In August 2016, U.S. Bank sued Thunder in the United States District Court for the District of Nevada. U.S. Bank sought a declaratory judgment that, because of alleged constitutional and statutory infirmities in the foreclosure process, the foreclosure sale is either void or at least U.S. Bank’s interest in the Cold Springs property had survived the foreclosure sale, such that "Thunder acquired the property subject to U.S. Bank’s senior deed of trust."¹

The district court granted Thunder’s motion to dismiss U.S. Bank’s claim for declaratory relief. It concluded that U.S. Bank was "seek[ing] to quiet title," so the five-year statute of limitations set forth in Nevada Revised Statutes §§ 11.070 and 11.080 for certain quiet title actions applied. The district court reasoned that U.S. Bank’s claim accrued and the five-year limitations period started to run on February 10, 2011, when the foreclosure sale that purported to extinguish U.S. Bank’s mortgage lien took place and was recorded. The district court thus held that the claim was time-barred by the time U.S. Bank filed its Complaint in August 2016, approximately five and a half years later. U.S. Bank appealed the dismissal of its claim to this court.

IV.

A.

The first issue on appeal is whether U.S. Bank’s claim is subject to a statute of limitations at all. U.S. Bank argues that under City of Fernley v. Nevada Department of Taxation , 132 Nev. 32, 366 P.3d 699 (2016), no statute of limitations applies to its claim for declaratory relief.

In City of Fernley , a city government challenged the constitutionality of a state tax provision, seeking money damages for tax revenue the state allegedly owed to the city, as well as a declaration that the provision was unconstitutional and a corresponding injunction against its application. Id. at 705 & n.4. The Nevada Supreme Court held that the city’s claim for money damages was time-barred, but that its claims for declaratory and injunctive relief were not. Id. at 707–08. The court reasoned that "[t]he statute of limitations applies differently depending on the type of relief sought." Id. at 706. The claim for damages sought "retrospective relief" and was untimely. Id. at 707–08. The court held that, by contrast, "the statute of limitations d[id] not bar [the city’s] claims for injunctive and declaratory relief from an allegedly unconstitutional statute." Id. at 707. In so holding, the court cited with approval the Michigan Supreme Court’s statement that statutes of limitations "do[ ] not prevent a taxpayer from seeking to enjoin a governmental unit from imposing on him in the future taxes that violate the [constitution]," because taxpayers "retain the right to prevent future violations of their rights." Id. (second alteration in original) (quoting Taxpayers Allied for Constitutional Taxation v. Wayne County , 450 Mich. 119, 537 N.W.2d 596, 599–600 (1995) ). Following this principle, the Nevada Supreme Court concluded that the city’s bid to have the tax provision enjoined and declared unconstitutional was not time-barred "because claimants retain the right to prevent future violations of their constitutional rights." Id. at 708.

U.S. Bank insists that its claim here is akin to the claims for declaratory and injunctive relief in City of Fernley because its "present and prospective rights are unclear" and "it does not know whether it may legally foreclose its [mortgage lien]." Although there are differences between U.S. Bank’s claim and claims seeking "to prevent future violations of ... constitutional rights," id. , that may cause City of Fernley not to govern here, we are not aware of any Nevada Supreme Court or Court of Appeals precedent that clearly addresses whether a claim like U.S. Bank’s is subject to a statute of limitations. We therefore certify that question.

B.

If U.S. Bank’s claim is subject to a statute of limitations, it is not clear under current Nevada law which limitations period should be imposed. Nevada courts focus on "[t]he nature of the claim, not its label, [to] determine[ ] what statute of limitations applies." Perry v. Terrible Herbst, Inc. , 132 Nev. 767, 383 P.3d 257, 260 (2016). Where, as here, a claim does not fit neatly within any statute of limitations, "courts look to analogous causes of action for which an express limitations period is available" and may "borrow the most suitable statute of limitations on the basis of the nature of the cause of action or of the right sued upon." Id. (quotation marks omitted). If no limitations period expressly applies or is sufficiently analogous to be "borrowed," Nevada law imposes a four-year catch-all statute of limitations. See Nev. Rev. Stat. § 11.220 ("An action for relief, not hereinbefore provided for, must be commenced within 4 years after the cause of action shall have accrued.").

We see the claims governed by the five-year limitations period prescribed in Nevada Revised Statutes §§ 11.070 and 11.080 as the most analogous to U.S. Bank’s claim, but it is unclear whether they are analogous enough to prevent the four-year catch-all statute of limitations from applying instead of a five-year statute of limitations.² Section 11.070 requires that an action "founded upon the title to real property" may only be brought if the plaintiff "was seized or possessed of the premises in question within 5 years" before its lawsuit. Section 11.080 similarly provides that "[n]o action for the recovery of real property ... shall be maintained[ ] unless it appears that the plaintiff ... was seized or possessed of the premises in question, within 5 years before the commencement thereof." The district court in this case applied the five-year limitations period after characterizing U.S. Bank’s request for a declaratory judgment as a "quiet title claim[ ]."

On appeal, both parties agree that sections 11.070 and 11.080 do not apply by their terms to U.S. Bank’s claim. We too think that neither section 11.070 nor section 11.080 is expressly applicable because U.S. Bank’s suit is not "founded upon the title to real property," but rather on a lien...