The Bank of New York Mellon v. Manchester at Huntington Homeowners Association
2:16-cv-02175
D. Nev.Sep 20, 2019Background
- In 2005 Adjarian bought 648 Belsay Castle Ct., Las Vegas, with a deed of trust later assigned to Bank of New York Mellon.
- The property was subject to Manchester at Huntington HOA assessments; HOA initiated a Chapter 116 nonjudicial foreclosure after delinquencies.
- Bank's servicer counsel (Miles Bauer) tendered $365.85 (nine months of assessments) on April 5, 2013, but did not tender a $250 "Abandoned Property Clean up" charge shown on the HOA ledger.
- Red Rock (HOA agent) rejected the tender, sent letters indicating the HOA lien was "Junior only to the Senior Lender," and sold the property to SFR Investments on August 8, 2014 for $33,000.
- Bank sued for quiet title, wrongful foreclosure, and breach of NRS 116.1113; discovery closed and the bank, SFR, and HOA filed cross-motions for summary judgment.
- Court denies the bank's and SFR's summary-judgment motions; grants HOA's motion in part (rejects bank's facial due-process theory and dismisses NRS 116.1113 claim); factual disputes remain on superpriority amount, what was foreclosed, and whether the sale should be set aside; mandatory settlement conference ordered.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Miles Bauer's $365.85 tender satisfied the superpriority lien | Tendered nine months plus $50.85 over nine-month total, so full superpriority was paid | Ledger shows $250 maintenance/abatement charge unpaid; tender likely insufficient | Genuine dispute of fact; bank failed to establish tender at summary judgment |
| Whether HOA foreclosed only the subpriority portion of its lien | Red Rock letters stated the lien was "Junior only to the Senior Lender," so sale could not extinguish deed of trust | Foreclosure notices and deed reference a single lien; documents do not carve out superpriority piece | Fact issue about what was actually foreclosed precludes summary judgment |
| Whether the sale should be set aside under Shadow Canyon (grossly inadequate price + irregularities) | Sale for ~12% of value, rejected tender, and HOA/agent representations warrant setting aside | Price was within forced-sale reality and plaintiff hasn't shown fraud, unfairness, or oppression affected sale | Bank didn't prove sale was affected by unfairness; issues of fact remain and summary judgment denied |
| Whether Chapter 116's notice scheme is facially unconstitutional | Chapter 116 denies procedural due process (relies on Bourne Valley) | Nevada Supreme Court rejected that interpretation; Ninth Circuit recognizes Bourne Valley is no longer good law | Facial due-process theory fails as a matter of law; HOA entitled to summary judgment on this theory |
| Whether bank stated a claim for breach of NRS 116.1113 (good-faith performance) | Rejection of tender is unfair/oppressive and violates good-faith duty | NRS 116.1113 requires a contract/duty under NRS 116.11136; bank identified no contract or basis for the statutory claim | Bank identified no contract; HOA entitled to summary judgment on NRS 116.1113 claim |
Key Cases Cited
- SFR Investments Pool 1 v. U.S. Bank, 334 P.3d 408 (Nev. 2014) (establishes HOA superpriority lien can extinguish a first deed of trust when properly foreclosed)
- Bank of America v. SFR Investments Pool 1, LLC, 427 P.3d 113 (Nev. 2018) (tender of full superpriority portion cures default and voids sale as to that portion)
- Shadow Wood Homeowners Ass'n v. New York Cmty. Bancorp, 366 P.3d 1105 (Nev. 2016) (courts retain equitable power to quiet title and set aside HOA foreclosures despite deed recitals)
- Nationstar Mortg. LLC v. Saticoy Bay LLC Series 2227 Shadow Canyon, 405 P.3d 641 (Nev. 2017) (sale may be set aside where price is grossly inadequate plus slight evidence of fraud, unfairness, or oppression)
- Bourne Valley Court Trust v. Wells Fargo Bank, 832 F.3d 1154 (9th Cir. 2016) (earlier held Chapter 116 facially unconstitutional; later treated as no longer good law)
- Bank of Am., N.A. v. Arlington W. Twilight Homeowners Ass'n, 920 F.3d 620 (9th Cir. 2019) (clarifies that Bourne Valley is not controlling and Chapter 116 is not facially unconstitutional)