Wells Fargo Bank, N.A. v. Kari Lee Limited Partnership
2:17-cv-01184
D. Nev.Feb 18, 2020Background
- Property at 5451 Autumn Crocus Ct., North Las Vegas was sold at an HOA nonjudicial foreclosure on February 11, 2014; Saticoy Bay LLC Series 5451 Autumn Crocus (Saticoy) bought the property.
- Wells Fargo, N.A. is the recorded beneficiary of a 2003 first deed of trust and sued seeking a declaration that the deed of trust still encumbers the property.
- Wells Fargo alleges unjust enrichment and other claims against Saticoy, Arbor Park Community Association (the HOA), and Absolute Collection Services (the HOA’s foreclosure agent); Saticoy counterclaimed for title free and clear.
- Ocwen (Wells Fargo’s servicer) requested payoff/account statements from Absolute before the sale but did not tender the superpriority amount; no evidence showed Ocwen attempted payment or was told payment would be rejected.
- Cross-motions for summary judgment: the court granted Saticoy’s motion, denied Wells Fargo’s motion, and held the 2014 HOA sale extinguished the deed of trust; other Wells Fargo claims remain pending.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statute of limitations for declaratory claim | Wells Fargo timely sued to determine whether the HOA sale extinguished its deed | Saticoy argued untimeliness (more than three years) | Claim governed by 4-year catchall (NRS §11.220); complaint filed within four years — timely |
| Due process challenge to HOA foreclosure scheme | Wells Fargo relied on earlier Ninth Circuit decisions attacking statute | HOA argued recent authority forecloses that due process challenge | Court: Bourne Valley is no longer good law; HOA statutes do not violate due process; Saticoy wins on due process point |
| Tender of superpriority amount | Wells Fargo/Ocwen argued tender was excused because Absolute would have rejected payment | Saticoy/Arbor Park said Ocwen never tendered and offered no evidence of rejection or futility | No evidence Ocwen tendered or was told payment would be rejected; tender not excused; Wells Fargo fails on tender |
| Equitable setting aside of the sale (inadequate price, notice, fees) | Wells Fargo argued sale affected by unfairness: inadequate price, misleading account statements, fees included, failure to identify superpriority amount | Saticoy/Arbor Park: no evidence unfairness affected sale price or procedures; notices need not state superpriority amount | No evidence of fraud/unfairness that affected sale; notices lawful; sale not set aside; 2014 HOA sale extinguished the deed |
Key Cases Cited
- SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d 408 (Nev. 2014) (en banc) (HOA superpriority foreclosure can extinguish first deed of trust)
- Bank of Am., N.A. v. SFR Investments Pool 1, LLC, 427 P.3d 113 (Nev. 2018) (en banc) (tender must be unconditional or on terms the tenderer may insist on)
- Bank of Am., N.A. v. Thomas Jessup, LLC Series VII, 435 P.3d 1217 (Nev. 2019) (promise to pay later is not valid tender; rejection of an actual offer can excuse tender)
- Nationstar Mortg., LLC v. Saticoy Bay LLC Series 2227 Shadow Canyon, 405 P.3d 641 (Nev. 2017) (challenger bears burden to show sale should be set aside; statutory presumptions favor HOA sale)
- Res. Grp., LLC v. Nevada Ass’n Servs., Inc., 437 P.3d 154 (Nev. 2019) (en banc) (fraud/unfairness must have affected the sale itself to set it aside)
- Horizons at Seven Hills v. Ikon Holdings, 373 P.3d 66 (Nev. 2016) (en banc) (collection fees not part of superpriority portion of lien)
- Bourne Valley Court Tr. v. Wells Fargo Bank, N.A., 832 F.3d 1159 (9th Cir. 2016) (addressed due process challenge; later limited by Ninth Circuit)
- Bank of Am., N.A. v. Arlington W. Twilight Homeowners Ass’n, 920 F.3d 620 (9th Cir. 2019) (citing Nevada authority rejecting earlier due process holdings)