Alex Berezovsky v. Bank of America
2017 U.S. App. LEXIS 16272
| 9th Cir. | 2017Background
- In 2013 Alex Berezovsky purchased a Las Vegas home at a homeowners association (HOA) foreclosure sale after the Monizes fell behind on HOA assessments; the HOA recorded a superpriority lien and sold the property, and Berezovsky recorded his deed.
- The Monizes’ 2007 loan and deed of trust had been acquired by Freddie Mac; MERS assigned the beneficial interest to Bank of America (BANA), which recorded the assignment and served as Freddie Mac’s servicer.
- Freddie Mac was in conservatorship under the Federal Housing Finance Agency (Agency), which holds Freddie Mac’s assets and benefits from the Federal Foreclosure Bar in 12 U.S.C. § 4617(j)(3) prohibiting foreclosure of Agency property without Agency consent.
- Berezovsky sued in Nevada state court to quiet title; Freddie Mac intervened, the Agency joined, removed to federal court, and moved for summary judgment asserting the Federal Foreclosure Bar preempted Nevada’s HOA superpriority foreclosure and preserved Freddie Mac’s lien.
- The district court granted summary judgment for Freddie Mac; Berezovsky appealed arguing (1) the Foreclosure Bar does not apply to private/HOA foreclosures or to this sale because Freddie Mac/Agency implicitly consented, and (2) Freddie Mac lacked an enforceable property interest.
- The Ninth Circuit affirmed: it held the Federal Foreclosure Bar applies to private HOA foreclosures, preempts Nevada’s superpriority lien to the extent it extinguishes Agency property without consent, and Freddie Mac had an enforceable interest under Nevada law via an agency relationship with BANA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Federal Foreclosure Bar apply to private HOA foreclosures? | Berezovsky: § 4617(j)(3) is limited to tax liens and does not cover private HOA foreclosures. | Freddie Mac/Agency: § 4617(j)(3) applies broadly to any foreclosure of Agency property without consent. | Held: Bar applies generally to private HOA foreclosures; text and structure show no tax-only limitation. |
| Did Freddie Mac/Agency implicitly consent to the HOA sale by inaction? | Berezovsky: Their failure to act equals implicit consent. | Freddie Mac/Agency: Statute requires affirmative consent; inaction does not constitute consent. | Held: No implied consent; Agency protection remains until it affirmatively relinquishes it. |
| Does § 4617(j)(3) preempt Nevada’s HOA superpriority lien statute (NRS 116.3116)? | Berezovsky: State foreclosure law governs and is traditionally within state police powers. | Freddie Mac/Agency: Foreclosure Bar conflicts with and thus preempts state law that extinguishes Agency property without consent. | Held: Federal Foreclosure Bar preempts Nevada’s statute where it would extinguish Agency property without consent. |
| Did Freddie Mac prove an enforceable property interest despite the deed naming BANA? | Berezovsky: Freddie Mac didn’t record and split the note from the deed; evidence insufficient. | Freddie Mac/Agency: Nevada law recognizes an enforceable interest where servicer acts as agent; Freddie Mac showed purchase of the loan and an agency relationship with BANA. | Held: Freddie Mac presented sufficient evidence; Nevada law (and Montierth) treats servicer as agent preserving Freddie Mac’s security interest. |
Key Cases Cited
- Gonzales v. Raich, 545 U.S. 1 (2005) (federal law preempts conflicting state law under Supremacy Clause)
- Arizona v. United States, 567 U.S. 387 (2012) (Congress must manifest clear intent to preempt; framework for analyzing implied preemption)
- McFarland v. F.D.I.C., 243 F.3d 876 (5th Cir. 2001) (interpreting FIRREA provision and limiting its application to tax-related context; distinguished here)
- BFP v. Resolution Trust Corp., 511 U.S. 531 (1994) (foreclosure law generally a matter of state law; presumption against preemption)
- In re Montierth, 354 P.3d 648 (Nev. 2015) (Nevada law recognizes agency relationship between note owner and servicer preserving noteowner’s enforcement rights)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) (summary judgment standard; nonmoving party must show more than metaphysical doubt)