SFR Invs. Pool 1, LLC v. Bank of N.Y. Mellon
422 P.3d 1248
| Nev. | 2018Background
- In 2010 Star Hill HOA recorded notices and foreclosed under NRS Chapter 116; sale occurred in 2012 and title passed to SBW and then to SFR.
- Bank of New York Mellon (BNYM) sued in federal court seeking a declaration that the HOA sale did not extinguish its deed of trust, alleging due-process defects in HOA notice procedures.
- The federal court certified the question whether NRS 116.31168(1)’s incorporation of NRS 107.090 required HOAs to provide default/sale notices to holders of subordinate interests who did not request notice (pre-October 1, 2015 amendments).
- Nevada Supreme Court considered statutory text, structure, legislative history, and prior decisions addressing whether incorporation was full (including mandatory notice to junior lienholders) or limited to an opt‑in scheme.
- The court rejected the Ninth Circuit’s Bourne Valley interpretation that limited notice to parties who opted in, holding instead that NRS 116.31168(1) fully incorporated NRS 107.090’s notice requirements and thus required notice to recorded holders of subordinate interests.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NRS 116.31168(1) (pre-2015) incorporated NRS 107.090 such that HOAs must mail default/sale notices to holders of subordinate security interests even if they did not request notice | SFR: Yes — the statute’s language "provisions of NRS 107.090 apply" incorporates all notice provisions, requiring notice to subordinate interest holders | BNYM: No — Chapter 116’s repeated references to requests show an opt-in regime; Bourne Valley supports that only those who requested notice must be notified | Held: Yes — the statute fully incorporated NRS 107.090, requiring notice to recorded holders of subordinate interests prior to HOA foreclosure sale |
Key Cases Cited
- SFR Invs. Pool 1, LLC v. U.S. Bank, N.A., 130 Nev. 742, 334 P.3d 408 (Nev. 2014) (explains HOA superpriority lien and its effect on first deeds of trust)
- Bourne Valley Court Tr. v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016) (held NRS 116.31168 did not fully incorporate NRS 107.090 and described an opt‑in notice scheme)
- Volvo Cars of N. Am., Inc. v. Ricci, 122 Nev. 746, 137 P.3d 1161 (Nev. 2006) (standards for accepting certified questions)
- Owen v. United States, 713 F.2d 1461 (9th Cir. 1983) (federal courts’ constructions of state statutes are not binding on state supreme courts)