Nationstar Mortgage LLC v. Amber Hills II Homeowners' Association, Inc.
2:15-cv-01433
D. Nev.Mar 31, 2016Background
- In 2005 Tumber took a loan secured by a deed of trust on a Las Vegas condo; Countrywide → U.S. Bank → Nationstar (assigned to Nationstar in Oct 2013).
- Amber Hills HOA, through agent ACS, recorded delinquent assessment notices in 2011–2012 and conducted an HOA nonjudicial foreclosure sale on May 15, 2012, purchasing the unit for $7,400.
- MERS (for U.S. Bank) contacted ACS seeking the superpriority payoff ledger; ACS allegedly refused and said the superpriority payoff would not be addressed until the lender foreclosed.
- Nationstar sued (filed July 2015) to quiet title and for declaratory relief that the HOA sale did not extinguish the first deed of trust; pleaded alternative bases: Chapter 116 is unconstitutional (facial and as-applied), ACS obstructed tender, sale was commercially unreasonable, and Amber Hills was not a bona fide purchaser.
- Amber Hills moved to dismiss for lack of standing, statute-of-limitations/laches, and failure to state claims. Nationstar moved for summary judgment on due process grounds.
- District court: dismissed Nationstar’s wrongful-foreclosure and breach of NRS §116.1113 claims as time-barred; dismissed quiet-title allegations premised on federal due-process invalidity of Chapter 116; denied summary judgment on due-process; denied dismissal of quiet-title claim insofar as Nationstar seeks equitable relief setting aside sale as commercially unreasonable; dismissed request for special damages (attorney fees) for failure to oppose.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to bring quiet-title suit | Nationstar: deed of trust not extinguished by HOA sale, so it has an interest to protect | Amber Hills: Nationstar had no property interest at time of sale; assignment occurred after sale | Nationstar has Article III standing to seek declaration because the disputed extinguishment is the very injury alleged |
| Timeliness of claims (statute of limitations / laches) | Nationstar: quiet-title is a defense/declaratory relief not governed by 3-year statute; claim accrued when deprivation occurred; filed within 5 years of acquiring interest | Amber Hills: claims arise under statute → 3-year limit; facial constitutional attack accrued at enactment; laches bars equitable claim | Quiet title timely under 5-year NRS §11.070; breach of NRS §116.1113 and wrongful-foreclosure claims (statutory damages) barred by §11.190(3); laches not applicable to quiet title filed within analogous limitations period |
| Federal due process challenge to NRS Chapter 116 (facial and as-applied) | Nationstar: Chapter 116 lacked required notice (did not require identifying superpriority amount or how to satisfy it); ACS’s refusal to provide payoff shows statute failed in practice | Amber Hills: Chapter 116 provides adequate notice to junior lienholders and homeowners; deedholder had means to protect itself (pay lien, attend sale, sue for refund); not a state-actor issue for statute | Court: Chapter 116’s notice scheme satisfies procedural due process both facially and as applied; dismissed quiet-title allegations grounded on federal due-process invalidity and denied Nationstar summary judgment |
| Equitable relief to set aside HOA sale (commercial reasonableness / unfairness) | Nationstar: ACS’s refusal to provide payoff and inadequate sale price support setting aside sale for unfairness/oppression | Amber Hills: no commercial-reasonableness requirement in statute; plaintiff did not actually tender superpriority amount | Court: Nevada law permits equitable relief to set aside defective HOA sales; plaintiff alleged operative facts (refusal to provide payoff and inadequate price) sufficient to survive dismissal on this theory |
| Special damages (attorney fees) | Nationstar sought attorney fees as special damages | Amber Hills moved to dismiss special damages; Nationstar did not oppose | Court granted dismissal of special damages for failure to oppose |
Key Cases Cited
- Wyler Summit P’ship v. Turner Broad. Sys., Inc., 135 F.3d 658 (9th Cir.) (pleading standard on motion to dismiss)
- Clegg v. Cult Awareness Network, 18 F.3d 752 (9th Cir.) (courts need not accept legal conclusions as true on a motion to dismiss)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Sup. Ct.) (plausibility pleading standard)
- Barnum Timber Co. v. U.S. E.P.A., 633 F.3d 894 (9th Cir.) (Article III standing elements)
- Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306 (Sup. Ct.) (due process notice requirements)
- Jones v. Flowers, 547 U.S. 220 (Sup. Ct.) (actual notice not always required; notice must be reasonably calculated)
- Mennonite Bd. of Missions v. Adams, 462 U.S. 791 (Sup. Ct.) (mortgagee has substantial property interest affected by sale)
- McKesson Corp. v. Florida, 496 U.S. 18 (Sup. Ct.) (when payment-under-protest required, state must provide clear and certain postpayment remedy)
- Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829 (9th Cir.) (laches as equitable defense; relation to statute of limitations)
- SFR Investments Pool 1 v. U.S. Bank, 334 P.3d 408 (Nev. 2014) (Nevada en banc holding that Chapter 116 notice need not itemize superpriority amount; lienholder remedies)