958 F.3d 794
9th Cir.2020Background
- In 2006 the Rodriguezes bought property secured by a deed of trust later assigned to U.S. Bank.
- HOA assessments went unpaid; HOA recorded a delinquent-assessment notice and elected to foreclose under Nev. Rev. Stat. § 116.3116 in April 2010 and completed a foreclosure sale on Feb. 10, 2011 (recorded same day).
- Buyer later conveyed the property to Thunder Properties, Inc.
- In Aug. 2016 U.S. Bank sued Thunder in federal court seeking a declaratory judgment that the HOA foreclosure did not extinguish U.S. Bank’s mortgage lien (or that the sale was void).
- District court dismissed the declaratory claim as time-barred, applying the five-year quiet-title statutes (Nev. Rev. Stat. §§ 11.070/11.080) and holding the limitations period began on the recorded foreclosure sale; U.S. Bank appealed.
- Ninth Circuit certified several unsettled Nevada law questions to the Nevada Supreme Court and stayed further proceedings pending its answers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Whether a declaratory judgment claim that a mortgage lien survived an HOA foreclosure is exempt from a statute of limitations under City of Fernley | City of Fernley means declaratory/injunctive relief is not time-barred; U.S. Bank’s claim is analogous | City of Fernley is limited to preventing future constitutional violations; SOL applies here | Ninth Circuit did not decide; certified the question to the Nevada Supreme Court |
| 2. If a SOL applies, which limitations period governs (5-year quiet-title §§11.070/11.080; 4-year catch-all §11.220; 3-year §11.190; or other) | U.S. Bank suggested a longer or non-applicable period (argued §106.240/ten-year theory and that claim may fall outside ordinary statutes) | Thunder (and some authorities) favor shorter or statute-based periods (3-year or application of quiet-title rules) | Ninth Circuit found §§11.070/11.080 may be the most analogous but uncertainty remains; certified which period applies |
| 3. If a SOL applies, when does it begin to run (recording of election to sell, recording of sale, dispossession, or actual notice) | Accrual should depend on actual notice or dispossession; U.S. Bank may not have had immediate notice | Limitations period began on recording of the foreclosure sale (district court position) | Ninth Circuit found accrual timing unclear under Nevada law and certified the accrual question |
| 4. Whether the federal court should stay and seek Nevada Supreme Court guidance on these recurring state-law questions | U.S. Bank sought resolution but argued federal adjudication appropriate absent controlling state law | Thunder urged dismissal as time-barred under existing rules | Ninth Circuit stayed the case and certified the identified questions to the Nevada Supreme Court for authoritative answers |
Key Cases Cited
- City of Fernley v. Nevada Dep’t of Taxation, 366 P.3d 699 (Nev. 2016) (distinguishes retrospective damages from prospective declaratory/injunctive relief for statute-of-limitations purposes)
- Perry v. Terrible Herbst, Inc., 383 P.3d 257 (Nev. 2016) (determine limitations period by nature of claim; borrow analogous statutes)
- Bank of Am., N.A. v. Arlington W. Twilight Homeowners Ass’n, 920 F.3d 620 (9th Cir. 2019) (describes HOA superpriority lien extinguishing first deed of trust)
- Saticoy Bay LLC Series 2021 Gray Eagle Way v. JPMorgan Chase Bank, N.A., 388 P.3d 226 (Nev. 2017) (holds certain presumptions about satisfaction of liens do not operate as statutes of limitations)
- Allen v. Webb, 485 P.2d 677 (Nev. 1971) (discusses recording-constructive notice rules and their limits for prior trust-deed holders)
- Torrealba v. Kesmetis, 178 P.3d 716 (Nev. 2008) (explains meaning of "liability created by statute" for limitations analysis)