The Bank of New York Mellon v. GR Investments, LLC, a Nevada limited liability co
2:16-cv-01959
D. Nev.May 25, 2018Background
- Borrowers took a $511,600 loan in 2005 secured by a first deed of trust; Bank of New York Mellon (BNYM) holds the note and deed of trust.
- HOA recorded assessments, default notices, and conducted a nonjudicial HOA foreclosure sale on August 17, 2012; GR Investments purchased the property and later quitclaimed it to Silverstone.
- BNYM filed suit in 2016 asserting quiet title/declaratory relief, injunction, unjust enrichment, and conversion; GR Investments and Silverstone counterclaimed for quiet title; the HOA moved to dismiss and parties filed cross motions for summary judgment.
- The HOA argued BNYM’s claims were time-barred and insufficiently pled; GR Investments/Silverstone argued the HOA’s foreclosure complied with NRS Chapter 116 and extinguished the deed of trust; BNYM argued the sale was invalid (constitutional defect, commercial unreasonableness, statutory noncompliance).
- The court dismissed BNYM’s conversion claim as time-barred and unjust enrichment for failure to plead benefit; it denied dismissal of the quiet title claim against the HOA (Rule 19 joinder concerns) and dismissed injunctive relief as not an independent cause of action.
- On summary judgment the court held the HOA foreclosure deed recitals were conclusive as to statutory prerequisites under NRS 116.31162–.31164, and BNYM failed to show fraud, unfairness, or oppression or a due-process defect sufficient to set aside the sale; GR Investments and Silverstone were granted quiet title.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statute of limitations (conversion, other claims) | Conversion and related claims accrued at trustee’s-deed recording; suit filed 2016 | Claims time-barred because accrual began at 2012 foreclosure | Conversion time-barred (3-yr). Quiet title (5-yr) and unjust enrichment (4-yr) timely; unjust enrichment dismissed for pleading failures |
| Quiet title / Necessary party (HOA) | HOA should be dismissed because it claims no title | HOA is a required party under Rule 19 because sale invalidation could affect interests/liability | HOA not dismissed; joinder required for equitable relief |
| Injunctive relief as independent cause | Requests injunction to prevent transfers that affect BNYM’s title | Injunction is a remedy, not a standalone claim | Injunctive relief count dismissed without prejudice (not a cause of action) |
| Validity of HOA foreclosure (statutory compliance, commercial reasonableness, due process) | Foreclosure invalid: NRS Chapter 116 scheme (per Bourne Valley) denies needed notice; sale was grossly inadequate and commercially unreasonable; CC&R protections violated | Foreclosure complied with the version of NRS in effect (first-class mail sufficed); deed recitals under NRS 116.31166 are conclusive as to statutory prerequisites; BNYM had actual notice; no fraud/unfairness/oppression shown | GR Investments/Silverstone entitled to summary judgment: foreclosure extinguished deed of trust; BNYM failed to raise genuine equitable/due process grounds to set aside sale |
Key Cases Cited
- Bourne Valley Court Tr. v. Wells Fargo Bank, N.A., 832 F.3d 1154 (9th Cir. 2016) (addressing constitutionality of NRS Chapter 116 "opt-in" notice scheme)
- SFR Invs. Pool 1, LLC v. U.S. Bank, 334 P.3d 408 (Nev. 2014) (establishing HOA superpriority lien and that proper HOA foreclosure can extinguish a first deed of trust)
- Shadow Wood Homeowners Ass'n, Inc. v. New York Cmty. Bancorp., Inc., 366 P.3d 1105 (Nev. 2016) (equitable relief can set aside an HOA foreclosure for fraud, unfairness, or oppression despite deed recitals)
- Jones v. Flowers, 547 U.S. 220 (U.S. 2006) (due process requires notice reasonably calculated to apprise interested parties)
- Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (U.S. 1950) (framework for constitutionally adequate notice)
- Long v. Towne, 639 P.2d 528 (Nev. 1982) (sale price inadequacy alone insufficient to set aside foreclosure; requires fraud/unfairness/oppression)
- Nationstar Mortgage, LLC v. Saticoy Bay LLC Series 2227 Shadow Canyon, 133 P.3d 641 (Nev. 2017) (post-SFR discussion of NRS Chapter 116 and sale challenges)