HSBC Bank USA, N.A. v. Green Valley Pecos Homeowners Association, Inc.
2:16-cv-00242
D. Nev.Nov 21, 2016Background
- HSBC (as trustee) sued Green Valley HOA, its collection agent Absolute Collections, and purchaser Mike Short, challenging an HOA nonjudicial foreclosure that produced a $5,900 sale price and purportedly extinguished a senior deed of trust.
- Josephs took out a 2007 deed of trust later assigned to HSBC; HOA recorded delinquent assessment lien (Oct 5, 2011) and proceeded to sale (Sept 18, 2012).
- Bank of America (servicer) allegedly sought a payoff ledger for the HOA super-priority amount in Feb 2012; Absolute Collections refused to provide it.
- HSBC asserted claims for quiet title/declaratory relief, breach of NRS 116.113, wrongful foreclosure, and injunctive relief; argued NRS Chapter 116’s opt-in notice scheme violated due process and that the sale did not extinguish the deed of trust (tender, commercial unreasonableness, bona fide purchaser).
- Green Valley noticed broad Rule 30(b)(6) depositions of HSBC and Bank of America; HSBC moved for a protective order as the topics were overbroad, irrelevant, and mooted by the Ninth Circuit’s decision in Bourne Valley and the Nevada Supreme Court’s Stone Hollow decision.
- Court limited and tailored the 30(b)(6) topics: denied protective order in part, ordered interrogatory answers for contention topics, excluded certain policy topics, allowed protective order for sensitive materials, and reopened discovery with new deadlines.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope/relevance of Rule 30(b)(6) topics | Topics are irrelevant, overbroad, disproportional; protective order warranted | Topics are relevant to HSBC's claims and defenses and necessary for discovery | Allowed depositions with limits: some topics narrowed or excluded; contention topics 13/14 to be answered by interrogatory within 14 days |
| Effect of Bourne Valley / Stone Hollow on discovery | Bourne Valley (and Stone Hollow) moot many discovery areas and render depositions unnecessary | Those decisions do not eliminate discovery on other claims (standing, tender, commercial reasonableness, actual notice) | Bourne Valley does not moot discovery; depositions on many topics remain appropriate |
| Sufficiency/effect of tender of super-priority amount | Tender issues resolved by Stone Hollow (tender discharged lien); discovery unnecessary | Tender facts are disputed here (whether servicer made sufficient tender / payoff ledger requested); discovery needed | Stone Hollow not dispositive; testimony on tender (Topic 9) is relevant and permitted |
| Requests for internal policies and privileged communications | Policies and internal communications are proprietary or privileged; many topics unduly burdensome | Policies and communications are relevant to whether lender protected its interest; discovery permissible with protections | Topics seeking certain policies (5) are allowed with protective order; topics 6–8 (less relevant) excluded; privileged communications may be withheld and asserted during deposition |
Key Cases Cited
- Bourne Valley Court Trust v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016) (held NRS opt-in notice scheme facially violated lenders’ due process rights)
- Shadow Wood Homeowners Ass'n v. New York Community Bancorp., 366 P.3d 1105 (Nev. 2016) (nonjudicial foreclosure may be set aside for grossly inadequate price plus fraud, unfairness, or oppression)
- Golden v. Tomiyasu, 387 P.2d 989 (Nev. 1963) (foreclosure sale can be set aside where price is grossly inadequate and accompanied by fraud or unfairness)