503 P.3d 299
Nev.2022Background
- U.S. Bank held a first deed of trust on residential property; an HOA conducted a nonjudicial foreclosure sale in 2011 over unpaid assessments and the bank did not challenge the sale at that time.
- Thunder Properties purchased the property at the HOA sale and holds the recorded title; dispute centers on whether the sale extinguished U.S. Bank’s deed of trust.
- In 2016 U.S. Bank sued in federal court seeking declaratory relief/quiet title, asking a judicial declaration that its deed of trust survived the HOA sale.
- The federal district court dismissed the suit as time‑barred; the Ninth Circuit certified questions to the Nevada Supreme Court about statutes of limitations and accrual.
- Nevada Supreme Court considered (1) whether City of Fernley makes declaratory relief categorically exempt from statutes of limitations, (2) which limitations period applies to a quiet title/declaratory action to determine a lien’s validity, and (3) when the limitations period begins to run.
Issues
| Issue | Plaintiff's Argument (U.S. Bank) | Defendant's Argument (Thunder) | Held |
|---|---|---|---|
| Whether declaratory‑relief claims are categorically exempt from statutes of limitations under City of Fernley | City of Fernley protects declaratory relief and therefore the claim is not time‑barred | City of Fernley does not create a blanket exemption for declaratory relief; SOLs apply | City of Fernley is not a categorical exemption; it only protects prospective declaratory/injunctive relief to prevent ongoing constitutional violations — otherwise SOLs apply |
| Which statute of limitations applies to an action to determine the validity of a nonpossessory lien (quiet title/declaratory) | No clear, specific SOL applies to this type of claim; relief should not be time‑barred | The claim is analogous to statutes creating liabilities (shorter periods) or possession‑based quiet‑title statutes | NRS 11.220 (the four‑year catch‑all) applies to an action seeking to quiet title by declaring a nonpossessory lien valid |
| What event triggers the limitations period for a lienholder’s suit to quiet title | The bank need not be forced into action by the sale alone; accrual may occur later | The foreclosure sale started the SOL running | The SOL does not begin to run until the lienholder has notice of an affirmative action repudiating the lien or otherwise inconsistent with its continued existence — a sale alone may not trigger accrual |
| Whether an HOA foreclosure sale automatically triggers accrual of a lender’s quiet‑title claim | Foreclosure notice alone should not always start the clock, especially where tender preserves the lien | Foreclosure sale publicly notifies lender and should trigger accrual | An HOA foreclosure sale standing alone is insufficient to trigger the SOL; accrual requires an act that affirmatively repudiates the lien (extension of Berberich principle to lienholders) |
Key Cases Cited
- City of Fernley v. State, Dept. of Taxation, 132 Nev. 32, 366 P.3d 699 (Nev. 2016) (statute of limitations cannot bar suits for prospective declaratory/injunctive relief to prevent ongoing constitutional violations)
- Berberich v. Bank of Am., N.A., 136 Nev. 93, 460 P.3d 440 (Nev. 2020) (SOL for purchaser’s quiet‑title claim triggers when possession is disturbed or ownership is called into question)
- Perry v. Terrible Herbst, Inc., 132 Nev. 767, 383 P.3d 257 (Nev. 2016) (object/gravamen of action controls which limitations period applies; use analogous limitations when no express period exists)
- Shadow Wood Homeowners Ass’n v. N.Y. Cmty. Bancorp, Inc., 132 Nev. 49, 366 P.3d 1105 (Nev. 2016) (equitable challenges to HOA foreclosure sales and relief that can set aside sales)
- SFR Invs. Pool 1, LLC v. U.S. Bank, N.A., 130 Nev. 742, 334 P.3d 408 (Nev. 2014) (HOA foreclosure sales can extinguish a senior deed of trust under certain conditions)
- Bank of Am., N.A. v. SFR Invs. Pool 1, LLC, 134 Nev. 604, 427 P.3d 113 (Nev. 2018) (tender of the superpriority portion preserves the deed of trust; sale cannot extinguish the first deed of trust after valid tender)
- 7510 Perla Del Mar Ave. Tr. v. Bank of Am., N.A., 136 Nev. 62, 458 P.3d 348 (Nev. 2020) (tender futility doctrine excuses tender where tender would obviously be rejected, preserving the deed of trust)