ORDER
I. INTRODUCTION
This is a quiet title and wrongful foreclosure action brought by Plaintiff JPMorgan Chase Bank, N.A. (“Chase”). Chase, which was the beneficiary of a deed of trust encumbering certain real property in Las Vegas, Nevada, brought suit seeking declaratory, injunctive, and monetary relief against a homeowners association, a collection service, and the entity that purchased the property when the homeowners association foreclosed on it for unpaid assessments pursuant to Nevada’s HOA lien statute, N.R.S. 116.8116.
This case raises a series of questions with respect to the constitutionality of N.R.S. 116.3116 and the validity of other challenges to various aspects of HOA foreclosure sales in Nevada. The case is now before the Court on several motions for summary judgment. For the reasons discussed below, the Court finds that N.R.S. 116,3116 is constitutional. The Court also rejects Chase’s remaining challenges to the foreclosure sale that occurred in this case. Summary judgment is therefore granted in favor of Defendants on all claims.
II. BACKGROUND
A. Procedural History
Chase filed its Verified Complaint on December 9, 2014, ECF No. 1. In its Complaint, Chase names the following Defendants: SFR Investments Pool I, LLC (“SFR”), The Preserves at Elkhorn Springs Homeowners Association, Inc. (“HOA”), ATC Assessment Collection Group, LLC (“ATC”), and Heather and Jason Reinhard (“the Reinhards”). After filing a Notice of Bankruptcy, the Rein-hards were voluntarily dismissed from this action by Chase on April 15, 2015. ECF Nos. 25, 46. ■
In its complaint, Chase states that the Reinhards owned certain real property that was subject to a set of Covenants, Conditions, and Restrictions (CC&Rs) enforced by the HOA and that Chase was the beneficiary of a deed of trust encumbering that property. Chase alleges that the HOA foreclosed on the property pursuant to a lien for unpaid assessments and that SFR purchased the property at the resulting foreclosure sale. Chase claims that the foreclosure sale did not extinguish its deed of trust pursuant to Nevada’s HOA foreclosure statutes, N.R.S. 116.3116 et seq.
Chase asserts the following causes of action in its Complaint: 1) Quiet Title/Declaratory Relief against all Defendants; 2) Permanent and Preliminary Injunction against SFR; 3) Wrongful Foreclosure—
SFR filed a Motion to Dismiss or, in the Alternative, Motion for Summary Judgment and a Motion to Expunge Lis Pen-dens on January 23, 2015, in which ATC and the HOA joined. ECF Nos. 18, 23. On April 1, 2015, Chase filed an opposition to the Motion to Dismiss as well as a, Coun-termotion for Summary Judgment or, in the Alternative, Motion for Continuance under Fed. R. Civ. P. 56(d) against SFR. ECF No. 38. On the same date, Chase also filed an opposition and Countermotion for Summary Judgment against ATC and the HOA. ECF No. 40. The parties engaged in discovery, which closed on September 15, 2015. ECF No. 60. On December 14, 2015, Chase filed a Second Motion for Summary Judgment against all Defendants to which Chase attached evidence obtained during discovery. ECF No. 69. Pursuant to an order from the Court, the parties filed supplemental briefs on February 8, 2016 addressing the applicability to this case of the Nevada Supreme Court’s decision in Shadow Wood HOA v. N.Y. Cmty. Bancorp, Inc., — Nev. -,
B. Undisputed Facts
After reviewing the evidence submitted by the parties, the Court finds the following undisputed facts.
1.Reinhard Loan and Deed of Trust
On approximately August 21, 2008, the Reinhards purchased the real property located at 7400 Brittlethorne Avenue, Las Vegas, Nevada (the “Property”). On May 22,2009, the Reinhards executed a Deed of Trust against the Property securing a loan in the amount of $406,000. The Deed of Trust identified MetLife Home Loans (“MetLife”) as the lender, Mortgage Electronic Registration Systems, Inc. (“MERS”) as the beneficiary, and Fidelity National Title Agency as the trustee. The Reinhards’ loan for the Property is insured by the Department of Housing and Urban Development (HUD), a department of the federal government. On February 17,2012, MERS assigned its beneficial interest under the Deed of Trust to MetLife. On October 17, 2013, MetLife assigned its beneficial interest under the Deed of Trust to Chase.
2.CC&Rs
The Property is part of a planned community governed by the HOA The HOA recorded a Declaration of Covenants, Conditions, and Restrictions (CC&Rs) against the Property on February 19, 1997. Section 17.3(b) of the CC&Rs requires that the HOA give prompt written notice to each “Eligible Mortgagee” and “Eligible Insured,” as those terms are defined in the CC&Rs, of any delinquency in payment of HOA assessments for 60 days where the unit is subject to a first security interest. Section 18.3 contains a limited mortgage savings clause. It provides that the HOA has á lien for unpaid HOA'assessments, arid that “[ejxcept to the extent permitted under [N.R.S. Í16.3116(2)], a lien under this Section is prior to all other liens and encumbrances except ... a first Security Interest on the Unit recorded before the date on which the assessment sought to be enforced became delinquent.”
3.First HOA Foreclosure and Rescission
On July 25, 2011, the HOA recorded a Notice of Delinquent Assessment Lien against the Property. On September 1,
4. Second HOA Foreclosure and Sale of Property
On June 22, 2012, ATC, on behalf of the HOA, recorded a Notice of Delinquent Assessment Lien against the Property. On July 25, 2012, ATC recorded a Notice of Default and Election to Sell against the Property. The Notice of Default and Election to Sell was mailed on August 1, 2012 to the Reinhards, MERS, and MetLife, among others. On July 10, 2014, ATC recorded a Notice of Sale against the Property. The Notice of Sale was mailed on July 8, 2014 to the Reinhards, MERS, MetLife Home Loans, and Chase, among others.
On August 5, 2014, ATC, on behalf of the HOA, conducted, a foreclosure sale by public auction. SFR was the winning bidder at the foreclosure sale with a bid of $69,000. On August 14, 2014, a Trustee’s Deed Upon Sale was recorded, reflecting the fact that the Property was sold to SFR. The Deed states that ATC “has complied with all requirements of law including, but not limited to, the elapsing of 90 days, mailing of copies of Notice of Delinquent Assessment Lien and Notice of Default and the Posting and Publication of the Notice of Sale.”
III. LEGAL STANDARD
Summary judgment is appropriate when the pleadings-, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show “that there is no genuine dispute as to any material fact and the- movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); accord Celotex Corp. v. Catrett,
Where the party seeking summary judgment does not have the ultimate burden of persuasion at trial, it “has both the initial burden of production and the ultimate burden of persuasion on a motion for summary judgment.” Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Companies, Inc.,
IV. DISCUSSION
A. Order of Disposition of Motions
The Court currently has several motions before it which were filed at different stages of the case. Defendants filed a Motion to • Dismiss or, in the Alternative, a Motion for Summary Judgment as their initial response to the Complaint. Before discovery began, Chase filed a Countermotion for Summary Judgment or, in the Alternative, Motion for Continuance pursuant to Rule 56(d). After discovery closed, Chase filed a Second Motion for Summary Judgment.
In the interest of judicial economy and in light of the Court’s inherent power to control its own docket, the Court will address the parties’ arguments at the summary judgment stage and will consider all admissible evidence presented in the record. The Court therefore will address all arguments raised in the parties’ various summary judgment motions, considering evidence where appropriate. Accordingly, the Court denies Chase’s request for a Rule 56(d) continuance, as Chase has already had the opportunity to conduct discovery and to use evidence from discovery in support of its Second Motion for Summary Judgment.
Based upon its review, the Court grants summary judgment in Defendants’ favor on all claims. To the extent Defendants have not moved for summary judgment on a particular’ claim, the Court grants it sua sponte because both sides have had a full and fair opportunity to conduct discovery and present arguments on the issues involved. See Albino v. Baca,
B. Overview of Nevada’s HOA Lien Statute
This case deals with the applicability and validity of Nevada’s HOA lien statute, N.R.S. 116.3116, which confers liens to HOAs on homeowners’ units for unpaid assessments, construction penalties, and fines imposed against the owners of those units. The statute also establishes the priority of the liens and provides a mechanism for their nonjudicial foreclosure. Given the centrality of this statutory scheme to this case, the Court will lay out its structure in some detail.
N.R.S. 116.3116 has recently been amended several times. As the HOA foreclosure sale (and the legal effect of that sale, if any) took place in August 2014, the Court focuses its analysis on the version of the statute that was in effect at that time. The Nevada Supreme Court settled many aspects of the debate over the legal effect of this statute in September 2014 in SFR Investments Pool 1, LLC v. U.S. Bank, holding in that decision that “N.R.S^ 116.3116(2) gives an HOA a true superpri-ority lien, proper foreclosure of which will extinguish a first deed of trust.” — Nev. -,
The Nevada Supreme Court has also recently clarified that the superpriority portion of the HOA’s lien for assessments does not include collection fees and foreclosure costs. Horizons at Seven Hills v. Ikon Holdings, — Nev. -,
Chapter 116 of the Nevada Revised Statutes
The provisions following N.R.S. 116.3116 also impose specific notice requirements on HOAs and their representatives. Within 10 days of recording the notice of default and eléction to sell, the HOA or its representative must send a copy of the notice by first-class mail to, among others, “[e]ach person who has requested notice pursuant
Finally, “[a] trustee’s deed reciting compliance with the notice provisions of N.R.S. 116.31162 through N.R.S. 116.31168 ‘is conclusive’ as to the recitals ‘against the unit’s former owner, his or her heirs and assigns, and all other persons.’ ” SFR,
In light of the foregoing, it is clear that absent the statute being found unconstitutional, the HOA’s foreclosure of its lien on the Property for unpaid assessments, if properly conducted, extinguished Chase’s Deed of Trust.
C. Due Process Challenge to N.R.S. 116.3116
In its Countermotion for Summary Judgment, Chase argues that N.R.S. 116.3116 is unenforceable because it violates the Due Process Clause of the Fourteenth Amendment to the United States Constitution and is therefore facially unconstitutional. Unlike an as-applied challenge,, which attacks the application of a statute to a specific set of facts, “a facial challenge is a challenge to an entire legislative enactment or provision.” Hoye v. City of Oakland,
The Court concludes that N.R.S. 116.3116 does not violate the Due Process Clause.- First, the nonjudicial foreclosure that Chase challenges is not attributable to the state. Second, even if it were, the Court would find that the statute satisfies the requirements of the Due Process Clause. Finally, in any event, the Court would apply the doctrine of constitutional avoidance to interpret the statute to comply with the Constitution.
1. State Action Requirement
a. Applicable Law
The Fourteenth Amendment protects citizens from unlawful action by the government, but does not regulate the con
The fact that a business is subject to state regulation “does not by itself convert its action into that of the State for purposes of the Fourteenth Amendment.” Id. at 52,
b. The HOA’s Foreclosure Does Not Constitute State Action
In this case, the Court finds that the state action requirement has not been satisfied by the HOA’s nonjudicial foreclosure sale carried out pursuant to N.R.S. 116.3116. Chase has' successfully established’ the first element of state action; the parties do not dispute that the foreclosure sale, and the alleged extinguishment of Chase’s interest in the Property, was “caused by the exercise of some right or privilege created by the State.” Id. at 50,
The Court begins its analysis of whether a state actor was involved by identifying the specific action by Defendants of which Chase complains. Id. at 51,
The Court does not find that standard to be met in this case. As discussed in Section IV.B above, Nevada’s HOA lien statute authorizes, but does not require, HOAs to obtain a superpriority lien against real property for nine months of unpaid assessments by following the procedures set forth in N.R.S. 116.31162 through N.R.S. 116.31168. The decision to actually foreclose and extinguish a prior recorded interest is made by private parties. There is no provision for involvement by state officials in the foreclosure process other than the requirement that the HOA file certain documents in the county recorder’s office. The enactment of this statute is not enough to constitute the exercise of “coercive power” or “significant encouragement” by the state so as to constitute state action. Am. Mfrs.,
Chase’s constitutional challenge must therefore be denied for failure to establish state action. See Apao,
2. Procedural Due Process
Even if the Court were to find that a nonjudicial foreclosure conducted pursuant to Nevada’s HOA lien statute constituted state action, it would nonetheless deny Chase’s' constitutional challenge because the statute does not violate the Due Process Clause.
a. Applicable Law
The Fourteenth Amendment to the U.S. Constitution states, in relevant part, that no state shall “deprive any person of life, liberty, or property, without due process of law[.]” U.S. Const. Amend. V. “An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Mullane v. Central Hanover Bank & Trust Co.,
When a party asserts an unconstitutional deprivation of property un
Under the “well-established principle” of constitutional avoidance, “statutes will be interpreted to- avoid constitutional difficulties.” Fair Hous. Council v. Roommate.com, LLC,
b. N.R.S. 116.3116 Does Not Violate the Due Process Clause
The Court concludes that N.R.S. 116.3116 comports with the requirements of the Due Process Clause. In its brief, Chase attempts to characterize the notice provisions of N.R.S. 116.3116 as “opt-in” provisions that do not mandate notice to an interested party unless that party affirmatively requests it. The Court disagrees and finds that the notice provisions of N.R.S. 116.3116 mandate notice to holders of deeds of trust and other recorded interests as due process requires. There are two reasons for this conclusion.
First, as recognized by the Nevada Supreme Court in SFR, the Nevada HOA lien statute expressly incorporates the provisions of N.R.S. 107.090, which “govern[ ] notice to junior lienholders and others in deed-of-trust foreclosure sales.”
Second, insofar as the procedures set forth in the HOA lien statute might raise due process concerns, the Court would apply the canon of constitutional avoidance to interpret the statute so as to eliminate those concerns. Read in isolation (and without reference to the provisions of N.R.S. 107.090), the HOA lien statute could lead its readers to the conclusion that HOAs are not required to give notice of impending HOA foreclosures to lenders absent an affirmative request. But the statute is susceptible to an alternative (and equally reasonable) construction that avoids this constitutional problem. Under this alternative construction, the holder of a recorded security interest in a parcel of real property has “notified” and “requested notice” from an HOA by simply publicly recording its interest, thereby triggering the HOA’s duty under the statute to provide notice to the interest holder of its election to sell and the sale itself. This is consistent with the principle in Nevada law that by recording a deed of trust or other conveyance of real property, an interest holder has “impart[ed] notice to all persons of the contents thereof.” N.R.S. 111.320. Therefore, even if it were to find that the statute could be construed in a way that offended due process, the Court would adopt an interpretation requiring HOAs to give notice of default and sale to all persons with a recorded interest in the property at issue. Under this construction of the statute, no further affirmative act by the recorded interest holder would be necessary beyond the recording of the instrument.
For these reasons, the Court rejects Chase’s challenge to N.R.S. 116.3116 under the Due Process Clause.
D. Property Clause Challenge to N.R.S. 116.3116
Chase also argues that HUD holds an interest in the Deed of Trust through its contract of insurance and that extinguishment of the Deed of Trust would therefore violate the Property Clause of the U.S. Constitution. This argument has been raised—and rejected—by at least one other court in this District. See Freedom Mortg. Corp. v. Las Vegas Dev. Grp., LLC,
1. Applicable Law
Under the Property Clause of the Constitution of the United States, “Congress has the Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States.” U.S. Const. Art. IV, § 3, cl'. 2. Accordingly, title to the United States’s property can only be divested by an Act of Congress. Beaver v. United States,
The term “property” under the Property Clause includes not only territo
Here, Chase seeks to invoké the Property Clause on the basis of a purported property interest held by HUD, which is not a party to this case. For this court to have jurisdiction over a case, “the party bringing the suit must establish standing.” Elk Grove Unified Sch. Dist. v. Newdow,
It is the prudential component of standing that is at issue here. Prudential standing “encompasses the general prohibition on a litigant’s raising another person’s legal rights _” Id. at 649-50 (internal quotation marks omitted). “It is a well-established rule that a litigant may assert, only his own legal rights and interests and cannot rest a claim to relief on the legal rights or interests of third parties.” Coal. of Clergy, Lawyers, & Professors v. Bush,
2. Chase Lacks Standing to Assert a Property Clause Challenge
The Court rejects Chase’s Property Clause challenge for lack of standing. Chase is not the proper party to bring a Property Clause challenge to the extin-guishment of the Deed of Trust and cannot meet the requirements for third-party standing. Therefore, it may not assert a Property Clause claim.
Chase falls within the general prohibition on asserting a third party’s rights encompassed by the doctrine of prudential standing. In its Property Clause challenge, Chase attempts to assert an interest (in the form of a policy insuring the Deed of Trust) belonging to HUD, not Chase. HUD is not a party to this action, and to the extent it possesses a protected interest in the Property, it has not attempted to assert it in this case. HUD is perfectly capable of protecting its own rights if it so chooses. Federal law authorizes the Secretary of HUD, “in carrying out the provisions of this subchapter” and other sub-chapters with respect to national housing, mortgages, and mortgage insurance, “to sue and be sued in any court of competent jurisdiction, State or Federal.” 12 U.S.C. § 1702. Chase has produced no evidence of any assignment of HUD’s rights to itself,
Moreover, Chase has not satisfied the limited exception to the bar on third-party standing. Chase has not produced evidénce of any hindrance to HUD’s ability to intervene in this suit or to bring a separate suit to protect its own interests. The Court therefore finds that Chase lacks prudential standing to challenge the HOA’s foreclosure under the Property Clause. As stated by the Supreme Court in Singleton v. Wulff:
Federal courts must hesitate before resolving a controversy, even one within their constitutional power to resolve, on the basis of the rights of third persons not parties to the litigation. The reasons are two. First, the courts should not adjudicate such rights unnecessarily, and it may be that in fact the holders of those rights either do not wish to assert them, or will be able to enjoy them regardless of whether the in-court litigant is successful or not. Second, third parties themselves usually will be the best proponents of their own rights. The courts depend on effective advocacy, and therefore should prefer to construe legal rights only when the most effective advocates of those rights are before them. The holders of the rights may have a like preference, to the extent they will be bound by the courts’ decisions under the doctrine of stare decisis,
3. The Foreclosure Sale Did Not Violate the Property Clause
Even if the Court were to find that Chase had established standing to assert a Property Clause challenge on HUD’s behalf, it would deny the challenge on the merits for two reasons.
First, Chase has not identified a property interest owned by the federal government that is protected under the Property Clause. Chase argues that a federal agency’s insurance of a mortgage cre-átes a federal property interest protected by the Property Clause. The Court’s review of Ninth Circuit precedent in this area indicates that property interests have been found where the federal government actually owned the property or held the mortgage. See Rust v. Johnson,
' Second, to the extent that HUD’s interest in the Property is one that is protected by the Property Clause, that interest was divested by operation of federal law as laid out by HUD; therefore, the Property Clause was not violated. According to HUD’s own regulation, its contract of insurance “shall be terminated” if the property “is bid in and acquired at a foreclosure sale by a party other than the mortgagee.” 24 C.F.R. § 203.315(a)(2)®, (b)(2). HUD’s regulation providing for the
E. Federal Preemption
Next, Chase argues that the operation of N.R.S. 116.3116 to extinguish its Deed of Trust is preempted by HUD’s mortgage insurance program. The Court finds that federal and state law do not conflict on this issue, and thus the Supremacy Clause does not bar enforcement of N.R.S; 116.3116. In reaching this conclusion, the Court once again agrees with the legal analysis and result reached by the court in Freedom Mortgage on this issue.
1. Applicable Law
The Supremacy Clause provides that the laws of the United States “shall be the supreme Law of the Land .,. any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” U.S. Const. Art. VI, cl. 2. “Under our system of dual sovereignty, courts deciding whether a particular state law is preempted under the Supremacy Clause must strive to maintain the delicate balance between the States and the Federal Government, especially when Congress is regulating in an area traditionally occupied by the States.” Gonzalez v. Arizona,
There are traditionally three types of preemption: express preemption, field preemption, and conflict preemption. Oneok, Inc, v. Learjet, Inc., — U.S. -,
2. HUD’s Mortgage Insurance Program Does Not Preempt N.B.S. 116.3116
The Court finds that N.R.S. 116.3116'is not preempted by HUD’s insurance program under any of the preemption doctrines.
First, Chase has not identified, and the Court has not found, any authority expressly preempting the operation of state law in the context of HOA foreclosures on HUD-insured mortgages. Thus, express preemption does not apply.
Second, it is clear that field preemption does not apply either, as property foreclosure is not an area where Congress has demonstrated its intent to “occupy the field” of regulation. On the contrary, foreclosure of real property has traditionally been an area left to the states. See BFP v. Resolution Trust Corp.,
The only potential way in which N.R.S. 116.3116 could be preempted, therefore, is through conflict preemption. Chase argues that enforcing. N.R.S. 116.3116 to extinguish Chase’s Deed of Trust would conflict with the purposes of HUD’s insurance program, through which it insures mortgages originated by private lenders for the purpose of making housing available to all citizens. Chase contends that this program allows title to be conveyed to HUD after foreclosure on the Deed of Trust, thereby allowing HUD to replenish the funds used for the insurance program, and that enforcement of the HOA’s superpriority lien through N.R.S. 116.3116 would interfere with this structure.
The purpose and structure of HUD’s mortgage insurance program was set forth in detail in Freedom Mortgage:
As HUD’s website and various publications explain, the single-family mortgage-insurance program provides mortgage insurance to protect lenders against the risk of default on mortgages to qualified buyers. The federal regulations governing the program are contained in the Code of Federal Regulations (CFR), Title 24.. .. .•
When a HUD-insured mortgage goes into default, the lender may make a claim for the remaining principal amount owed under the loan. Typically, the lender must assign the mortgage to HUD and certify that the mortgage is prior to all liens and encumbrances, or defects which may arise except such liens or other matters as may have been approved by the Commissioner. Alternatively, the lender may foreclose, acquire title, and make a claim for the deficiency. The insurance contract shall be terminated if [t]he property is bid in and acquired at a foreclosure sale by a party other than the mortgagee—which is to say, any party except the lender. In short, a lender has two primary ways to obtain benefits under the program: (1) assign the first-position mortgage interest to HUD before foreclosure or (2)initiate foreclosure and make a claim for the deficiency.
The Court concludes that conflict preemption does not apply in this case. Lenders are perfectly capable of complying with both HUD’s program and N.R.S. 116.3116; in fact, HUD’s regulations expressly contemplate situations in which a lender forfeits its security interest by failing to protect it against senior interests. As described in Freedom Mortgage, when a HUD-insured mortgage goes into default, a lender has two options: (1) assign the first-position mortgage interest to HUD before foreclosure and make a claim for the remaining principal amount, or (2) initiate foreclosure and make a claim for the deficiency.
F. Wrongful Foreclosure and Quiet Title Claims
Chase also argues that summary judgment should be granted in its favor on its wrongful foreclosure and quiet title claims for a variety of reasons unrelated to its constitutional challenges. Chase asserts that the foreclosure sale should be unwound or set aside because the foreclosure sale was commercially unreasonable, that ATC and the HOA did not comply with the statutory notice provisions before conducting the sale, that ATC and the HOA failed to give notice as required under the CC&Rs, that ATC unlawfully failed to disclose the superpriority portion of the HOA lien, and that ATC unlawfully included attorney’s fees and costs of collection in the lien amount.
Nevada law provides that “[a]n action may be brought by any person against another who claims an estate or interest in real property, adverse to the person bringing the action, for the purpose of determining such adverse claim.” N.R.S. 40.010. In a quiet title action, the plaintiff bears the burden of proving good title in himself, and there is a presumption favoring the record title holder. Breliant v. Preferred Equities Corp.,
Relatedly, “[a] wrongful foreclosure claim challenges the authority behind the foreclosure, not the foreclosure act itself.” McKnight Family, L.L.P. v. Adept Mgmt., — Nev. -,
In light of recent case law from the Nevada Supreme Court, this Court finds that Chase has not met its burden of demonstrating good title to the Property or the elements of any of its wrongful foreclosure claims, nor has it established equitable grounds to set aside the foreclosure sale. The Court therefore grants summary judgment in favor of Defendants on Chase’s quiet title and wrongful foreclosure claims. The Court considers, and rejects, each of Chase’s arguments in support of these claims in turn.
1. Tender
First, Chase argues that the HOA’s superpriority lien was discharged by MetLife’s tender of payment to Hampton & Hampton on October 7, 2011. The Court rejects this contention because the payment tendered by MetLife was in satisfaction of an entirely separate HOA hen.
In its brief, Chase appears to argue that MetLife’s tender of payment forever discharged the superpriority lien and that the HOA’s subsequent enforcement .of the lien was an attempt to resuscitate that lien by successive enforcement action. Chase cites to a report from the Joint Editorial Board for Uniform Real Property Acts (JEB), an arm of the Uniform Law Commission, which found that the Uniform Common Interest Ownership Act of 1982 (UCIOA6
The Court does not disagree with the JEB’s interpretation of the UCIOA. But that is not what happened in this case. The evidence in this case demonstrates that MetLife’s tender of payment on October 7, 2011 discharged the 2011 hen recorded by Hampton & Hampton—a fact acknowledged by the HOA when its agent recorded a Notice of Rescission on October 21,' 2011. In 2012, howéver, the HOA commenced enforcement proceedings on a separate hen based upon the Reinhards’ default on HOA assessments beginning in November 2011—after the rescission of the Hampton & Hampton lien. The HOA’s second hen, which was noticed in 2012 and foreclosed upon by sale in 2014, was based upon unpaid assessments and late fees dating from November 1, 2011 onward. Chase has produced no evidence of an attempt to tender payment in satisfaction of the second HOA hen.
Chase has not presented, and the Court has not found, any authority stating that an HOA -is precluded from bringing multiple enforcement actions to enforce entirely separate hens (with superpriority portions) for unpaid assessments against the same parcel of property. Chase’s reliance on the JEB report for this proposition is unavailing. The JEB report, citing to an unpublished Connecticut case, states that the UCIOA does not ahow HOAs “to assert a first hen priority for more than six months of unpaid common expense assessments in the context of the same foreclosure proceeding by [the bank].” Rep. of Joint Editorial Bd. for Uniform Real Prop.
The Court therefore declines to adopt Chase’s position that the superpriority portion of an HOA’s lien for assessments is a one-shot offer that, once discharged, can never be asserted again. Such a holding would be contrary to the purposes of Nevada’s HOA lien statute, one of which is to encourage the collection of needed HOA funds and avoid adverse impacts on other residents. See SFR,
2. Compliance with the Notice Provisions of N.R.S. Chapter 116 and the CC&Rs
'Next, Chase argues that the HOA both procedurally and substantively failed to comply with the notice requirements of the HOA lien statute and the CC&Rs. The Court rejects both aspects of this argument.
Chase’s procedural argument is twofold. First, Chase argues that the HOA has not shown that it complied with N.R.S. 116.31163, which at the time required that the Notice of Default and Election to Sell be mailed by first-class mail and not simply by certified mail. The evidence demonstrates and the Court finds, however, that on August 1, 2012, the HOA mailed a copy of the Notice of Default and Election to Sell on August 1, 2012 by first-class mail to MetLife, Chase’s predecessor in interest, in accordance with N.R.S. 116.31163. See ECF No. 68 Ex. A-l. Second, Chase contends that the HOA has not shown that it fulfilled Section 17.3(b) of the CC&Rs, which requires that notice of any delinquency in assessments be sent to the holder of a first security interest. While Defendants appear to concede that the Notice of Delinquent Assessment was not sent to Chase, Chase has not cited to any authority which establishes that &• foreclosure sale can be invalidated by an HOA’s failure to comply with such a requirement in its own CC&Rs. To the contrary, this argument is foreclosed by N.R.S. 116.1104, which states that absent express statutory language to the contrary, Chapter 116’s
Substantively, Chase argues that the notices provided by the HOA regarding foreclosure of its hen were insufficient because they did not contain a calculation of the superpriority hen amount and because they impermissibly included collection costs and fees. The Court rejects Chase’s argument that the 2013 HOA hen statute required that the HOA specify the portions of the hen that are accorded su-perpriority status. The 2013 HOA hen statute merely required that the written notice “[describe the deficiency in payment.” N.R.S. 116.31162(l)(b)(l) (2013). It did not require an HOA. to break down its statement of the hen amount into superpriority and subpriority categories. In 2015, the Nevada legislature amended N.R.S. 116.31162 to require that the HOA separately state the amount of the superpriority portion of the lien. The amendment suggests that this requirement did not exist in previous versions of the statute. See In re Estate of Thomas,
The Court agrees with Chase that the HOA’s notices included collection costs and attorney’s fees that are not part of the HOA’s lien for assessments. In Horizons at Seven Hills v. Ikon Holdings, the Nevada Supreme Court found that the superpriority portion of the HOA’s lien under N.R.S. 116.3116 does not include collection costs and fees.
First, Chase does not assert that the foreclosure sale was improper due to the inclusion of these additional fees or that the superpriority portion of the HOA’s lien would have been paid if the lien amount did not include these fefes. The purpose of
Second, the Court finds that the HOA, and its agent ATC, substantially complied with the HOA lien statutes. “Generally, in determining whether strict or substantial compliance is required, courts examine the statute’s provisions, as well as policy and equity considerations.” Leven v. Frey,
The Court finds that substantial compliance was required for identifying the proper amount of the lien subject to foreclosure by the HOA under the 2013 version of N.R.S. 116.3116. N.R.S. Chapter 116 does not contain any provisions invalidating a sale based on an improper or incorrect lien amount, and the Court construes N.R.S. 116.3116(1), which defines the permissible elements that comprise an HOA lien, as a “form and content” requirement rather than a “time and manner” requirement. Substantial compliance thus may be permissible under Nevada law, and the Court finds that requiring only substantial compliance in this case comports with the policy considerations underlying the HOA lien statute. As discussed by the Nevada Supreme Court in SFR, the statute provides an expedient process by which HOAs can recover unpaid assessments so that those costs are not borne by other homeowners. Requiring strict compliance would defeat the goal of providing this expedient process. Requiring only substantial compliance is therefore appropriate in this case.
The Court now looks to whether the HOA and its agent actually did substantially comply with N.R.S. 116.3116 in this case. The evidence shows that they did. The HOA and its agent issued the statutorily required notices and included unpaid assessments and late .charges in the hen, as permitted by- the statute. In addition, the notice of default and election to sell indicates that while the “amount due” by the homeowner was $2,116.95 as of July 24, 2012, the homeowner could contact ATC to provide a written itemization of
As a final matter, while it need not reach the issue in this case, the Court finds it likely that Chase waived its substantive arguments as to the inclusion of additional costs and fees and failure to differentiate the superpriority and subpri-ority amounts of the lien. In Nevada, “[a] waiver is the intentional relinquishment of a known right. A waiver may be implied from conduct which evidences an intention to waive a right, or by conduct which is inconsistent with any other intention than to waive the right.” Mill-Spex, Inc. v. Pyramid Precast Corp.,
3. Retroactivity of SFR
Chase also advances the argument that the Nevada Supreme Court’s decision in SFR is not retroactive, and that the HOA’s foreclosure sale therefore did not extinguish Chase’s first deed of trust.' The Court rejects this argument.
“When questions of state law are at issue, state courts generally have the authority to determine the retroactivity of their own decisions.” Am. Trucking Ass’ns, Inc. v. Smith,
' The Nevada Supreme Court has not decided whether its interpretation of N.R.S. 116.3116 is retroactive. However, the Court finds it extremely likely that the Nevada Supreme Court would answer this question in the affirmative. The Nevada Supreme Court’s decision in SFR was both authoritative and foreseeable. The decision clearly resolved the issue of whether N.R.S. 116.3116 authorizes a true superpri-ority lien, making it authoritative. The decision was also foreseeable. In its ruling, the Nevada Supreme Court relied on the plain language of the statute and the official comments to the UCIOA, upon which N.R.S. 116.3116 was based. While lower courts were divided on the proper interpretation of the statute, the Nevada Supreme Court ultimately interpreted it to give effect to its plain language, a result that was clearly foreseeable. The Court therefore denies Chase’s argument that SFR should not apply retroactively.
Chase also argues that the CC&Rs specifically provide for the preservation of its deed of trust even after the HOA foreclosure sale. This argument has previously been rejected in SFR and fails again here.
The mortgage savings clause contained in the CC&Rs states that the HOA has a lien for unpaid HOA assessments and that “[e]xcept to the extent permitted under [N.R.S. 116.3116(2)], a lien under this Section is prior to all other liens and encumbrances except ... (2) a first Security Interest on the Unit recorded before the date on which the assessment sought to be enforced became delinquent.” Decl. of Covenants, Conditions & Restrictions for The Preserves at Elkhorn Springs § 18.3(b), Chase’s Countermotion Summ. J. Ex. 1, ECF No. 38 (“CC&Rs”). The subsection goes on to state that “[a] lien under, this Section is also prior to all Security Interests described in subdivision (2) of this subsection to the extent that the Common Expense assessments are based on the periodic budget adopted by the Association .;. and would have become due in the absence of acceleration, during the six months immediately preceding institution of an action to enforce the Association’s lien.” Id. The mortgage savings clause does not save Chase’s claim for two reasons.
First, by its own terms, the clause does not apply where an HOA seeks to enforce the superpriority portion of its lien under N.R.S. 116.3116(2). The savings clause includes the phrase “except to the extent permitted under the Act (N.R.S. 116.3116(2)),” which demonstrates that the HOA did not intend to enact any savings provisions that would conflict with the statutory superpriority lien. This conclusion is confirmed by the remainder of Section 18.3(b), which closely tracks the language of N.R.S. 116.3116(2).
Second, the Nevada Supreme Court’s decision in SFR is directly on point and states that a mortgage savings clause does not prevent the extinguishment of a first security interest. In SFR, the Nevada Supreme Court held that “N.R.S. 116.1104 defeats this argument. It states that Chapter 116’s provisions may not be varied by agreement, and rights conferred by it may not be waived ... [e]xcept as expressly provided in Chapter 116. ... Nothing in [N.R.S.] 116.3116 expressly provides for a waiver of the HOA’s right to a priority position for the HOA’s super priority lien. The mortgage savings clause thus does not affect NRS 116.3116(2)’s application in this case.” SFR,
5. Equitable Grounds for Setting Aside Foreclosure Sale
Finally, the Court concludes that Chase has not established any other equitable grounds for setting aside the foreclosure sale. While Chase focuses on arguing that the sale was commercially reasonable, this standard does not apply to HOA foreclosure sales under Nevada law. Instead, courts must look to whether the challenger has shown a grossly inadequate price plus fraud, unfairness, or oppression. Shadow Wood,
a. Commercial Reasonableness
In its third cause of action, Chase asserts a wrongful foreclosure claim against the HOA and ATC on the ground that the foreclosure sale was commercially unreasonable. N.R.S. Chapter 116 does not contain any provisions requiring that an HOA foreclosure sale be commercially reasonable, nor does it provide for parties to be able to set aside foreclosure, sales as being commercially unreasonable.
Chapter 116 does require that “[e]very contract or duty governed by this chapter imposes an obligation of good faith in its performance or enforcement.” N.R.S. 116.1113. “Good faith” is defined in the Nevada Revised Statutes as meaning “honesty in fact and the observance of reasonable commercial standards of fair dealing.” N.R.S. 104.1201(t). This definition only applies, however, to the extent that an action is governed by another article of the Uniform Commercial Code as adopted in Nevada. N.R.S. 104.1102. HOA foreclosure sales are not governed by the Uniform Commercial Code as adopted in Nevada. This is confirmed by N.R.S. 104.9109(k), which states that Article 9 of the UCC (governing secured transactions) does not apply to “[t]he creation or transfer of an interest in or lien on real property.” Therefore, the Court does not find that foreclosure sales under N.R.S. 116 are governed by the commercial reasonableness standard as that term is defined elsewhere in the Nevada Revised Statutes. See, e.g., N.R.S. 104.9627 (defining commercial reasonableness in the context of secured transactions); Levers v. Rio King Land & Inv. Co.,
b. Grossly Inadequate Price “Plus”
The fact that the commercial reasonableness standard does not expressly apply to HOA foreclosure sales in Nevada does not mean that a challenger can never assert a claim based on aspects of the sale. As the Nevada Supreme Court reaffirmed in Shadow Wood, “courts retain the power to grant equitable relief from a defective foreclosure sale when appropriate despite N.R.S. 116.31166,” which states that the recitals in a foreclosure deed regarding the giving of notice and elapsing' of the required number of days are conclusive.
In determining whether a sale price is grossly inadequate as a matter of law, the
Here, the Court finds that Chase has not demonstrated equitable grounds to set aside the foreclosure sale for two reasons. First, Chase has not shown that the sale price of the Property was grossly inadequate as a matter of law. SFR paid $69,000 for the Property at the foreclosure sale. In its supplemental brief, Chase produced an appraisal report of the Property stating that at the time of the foreclosure sale, the Property was worth $414,000. The report is dated May 4, 2016, and was therefore available to Chase at the time it filed its Second Motion for Summary Judgment; however, Chase did not attach the report, to its motion. The Court- thus declines to consider it. See School Dist. No. 1J v. ACandS, Inc.,
Even if the Court were to consider this report and adopt the $414,000 figure as one appraiser’s estimate of the fair market value of the Property, it would not change the Court’s conclusion. Although SFR’s purchase price is less than 20 percent of $414,000, the circumstances in this case show that SFR’s purchase price was not grossly inadequate. The sale was conducted by public auction and SFR’s winning bid ($69,000) far exceeded the amount due on the Notice of Sale ($4,632.86). Moreover, the foreclosure sale was conducted on August 5, 2014, before the Nevada Supreme Court issued its decision in SFR. Prior to that decision, federal and state courts in Nevada were divided over whether N.R.S. 116.3116 created a true superpri-ority lien or whether it merely created a “payment priority” lien that did not extinguish junior interests. See SFR,
Second, even if the price were grossly inadequate, Chase has produced no evidence of fraud, unfairness, or oppression, as required by Nevada law. See Shadow Wood,
While Chase has raised a host of arguments in support of its quiet title and wrongful foreclosure claims, each one fails for the reasons discussed above. The Court therefore grants summary judgment in favor of Defendants on Chase’s quiet title and wrongful foreclosure claims.
G. Injunctive Relief
Chase’s Second Cause of Action seeks a preliminary and permanent injunction. These forms of equitable relief are properly invoked pursuant to a quiet title action. Shadow Wood,
H. Negligence and Negligence Per Se
In its claims for negligence and negligence per se, Chase alleges that the HOA and ATC had a duty to conduct the foreclosure sale properly and in a manner that would allow Chase to protect its interest and cure the superpriority lien. Chase alleges that the HQA and ATC breached this duty by failing to disclose that they were foreclosing on a superpriority lien, failing to disclose the amount of the su-perpriority lien, and failing to provide Chase notice of its opportunity to cure.
The Court need not rule on the issue of whether N.R.S. 116.3116 creates a separate cause of. action for negligence. Based on the discussion above, ATC and the HOA were not required under the statute to disclose the existence or amount of the superpriority lien, nor were they required to notify Chase of its opportunity to cure.
I.Breach of Contract
In its eighth cause of action, Chase asserts that ATC and the HOA’s conduct before and during the foreclosure sale breached the CC&Rs. In Nevada, breach of contract is “a material failure of performance of a duty arising under or imposed by agreement.” Bernard v. Rockhill Dev. Co.,
For the reasons discussed above, the Court finds that the HOA and ATC did not materially breach the provisions of the CC&Rs identified by Chase. Moreover, to the extent the HOA’s apparent failure to provide the notice of delinquent assessment constituted a material breach of Section 17.3(b) of the CC&Rs, Chase has produced no evidence that it was damaged by the breach. As discussed above, the record indicates that the notice of default and election to sell was mailed to MetLife on August 1, 2012, that MetLife assigned its beneficial interest in the Property to Chase on October 17, 2013, and that the notice of sale was mailed to Chase on July 8, 2014. Despite these notices, Chase never contacted the HOA or its agent to inquire about or attempt to stop the sale, never attempted to satisfy the HOA’s lien, and never took any other steps to protect its interest. There is no evidence to suggest that a failure to provide the notice of delinquent assessment, which was recorded approximately one month before the notice of default and election to sell, caused damage to Chase, which is an essential element of its breach of contract claim. The Court grants summary judgment in the HOA’s and ATC’s favor on this claim.
J.Misrepresentation
In its misrepresentation claim, Chase alleges that the HOA made false representations in the mortgage protection clause contained in the CC&Rs. As discussed above, however, the mortgage protection clause specifically provides that the protection does not apply to enforcement of Ñ.R.S. 116.3116(2), the HOA superpriority lien statute. Therefore, Chase cannot prove an essential element of its misrepresentation claim: that the HOA made a false representation. See Barmettler v. Reno Air, Inc.,
K.Unjust Enrichment
Chase also asserts a claim for unjust enrichment against SFR, alleging that SFR has benefited from Chase’s payment of taxes, insurance, or HOA assessments since the date of the foreclosure sale. In its Second Motion for Summary Judgment, Chase also argues that SFR has been unjustly enriched because it has collected rent on the Property and has delayed Chase’s ability to foreclose on its deed of trust.
Unjust enrichment is a theory of restitution in which a plaintiff confers a
Here, the Court has' found that ATC and the HOA properly foreclosed on the Property by selling it to SFR at the foreclosure sale. Chase has not demonstrated that this sale was wrongful or inequitable, and cannot prove good title in itself. Therefore, with respect to the allegations raised in its Second Motion for Summary Judgment that SFR benefited by collecting rent and preventing. Chase from foreclosing, Chase cannot satisfy the third element of its unjust enrichment claim (demonstrating that it would be inequitable. for SFR to retain ;the benefit it received).
The remaining allegations pertaining to Chase’s unjust enrichment claim are that Chase paid taxes, insurance, or HOA assessments after SFR purchased the Property at the foreclosure sale. This portion of Chase’s claim fails for two reasons. First, Chase has produced no evidence of such payments; thus, it cannot establish the first element of its unjust enrichment claim (the plaintiffs conferral of a benefit on the defendant).
Second, to the extent Chase did make payments to SFR, the Court finds that Chase’s unjust enrichment claim is barred by the voluntary payment doctrine. “The voluntary payment doctrine is an affirmative defense that provides that one who makes a payment voluntarily cannot recover it on the ground .that he was under no legal obligation to make the payment.” Nevada Ass’n Servs., Inc. v. Eighth Jud. Dist. Court, — Nev. -,
Here, SFR has met its burden of showing that, even, if Chase made tax payment's, these payments were voluntary. The parties both agree that if Chase made any payments towards the Property, it did so after the HOA foreclosure sale. Chase does, not argue that it made the payments under protest. Nor does Chase argue that it lacked knowledge of the facts;, indeed, as discussed above, Chase or its predecessor received the HOA’s Notice of Default and Election to Sell and the Notice of Sale, and the Trustee’s Deed Upon Sale was recorded less than ten' days after the foreclosure sale. This is sufficient to • satisfy SFR’s initial burden. Nevada Ass’n Servs.,
Chase argues that the defense of property exception should apply in this ease to save its unjust enrichment claim. “It is well settled that one is not a volunteer or stranger when he pays to save his interest in his property.” Cobb v. Osman,
Cobb involved a case where the payor risked losing his property interest in foreclosure if he did not pay another’s loan. Here, Elsinore did not demonstrate any such risk existed. Although Elsinore demonstrated that Peccole Ranch placed a lien on Elsinore’s property, there is no evidence showing that foreclosure proceedings were imminent. While a lien creates a security interest in property, a lien right alone does not give the lienholder right and title to property. Instead, title, which constitutes the legal right to control and dispose of property, remains with the property owner until the lien is enforced through foreclosure proceedings. Thus, a hen that is not subject to ongoing or imminent foreclosure proceedings does not create a risk of the loss of property. Furthermore, where a reasonable legal remedy is available to the payor, a. payment made to relieve the lien is voluntary.
Therefore,' Elsinore’s payment to release Peccole Ranch’s lien does not meet Cobb’s defense of property exception to the voluntary payment doctrine.
Id. at 1256-57 (citations and internal quotation marks omitted). The reasoning of Nevada' Association Services applies here. Chase has not demonstrated that foreclosure proceedings were imminent if the property tax was not paid on the Property, and therefore has not shown that it risked losing its interest (even if it had one, which it did not) if it did not make the tax payments.
For these reasons, the Court grants summary judgment in favor of SFR on Chase’s unjust enrichment claim.
L. Waste
Chase’s final cause of action is for waste against SFR. Nevada law does not clearly define the contours of a cause of action for waste. At a minimum, however, it is clear that in order to state a claim for waste, the plaintiff must have an interest in the property. See Restatement (Third) of Prop. (Mortgages) § 4.6 (providing for remedies for waste by the mortgagor that are “available to the mortgagee”). Here, the Court has granted summary judgment in Defendants’ favor on Chase’s quiet title claim. Therefore, Chase no longer can assert an interest in the Property and may not maintain its claim for waste. Summary judgment is granted in SFR’s favor on Chase’s waste claim.
M. SFR’s Motion to Expunge Lis Pendens
SFR also moves to expunge the notice of lis pendens filed against the Property by Chase. Under N.R.S. 14.015, the party who records the notice of lis pendens must “establish to the satisfaction of the court either: (a) That the party who recorded the notice is likely to prevail in the action; or (b) That the party who recorded the notice has a fair chance of success on the merits in the action and the injury ... would be sufficiently serious .... ” N.R.S. 14.015(3). Here, the Court has granted summary judgment in Defendants’ favor on all of Chase’s claims. Chase can no longer demonstrate a likelihood or a fair chance of success on the merits of its claims. SFR’s
V. CONCLUSION
For the reasons discussed above,
IT IS ORDERED that Defendant SFR Investments Pool I, LLC’s Motion to Dismiss or, in the Alternative, Motion for Summary Judgment (ECF No. 18), to which Defendants ATC Assessment Collection Group, LLC and The Preserves at Elkhorn Springs Homeowners Association filed a Joinder (ECF No. 23), is GRANTED. Summary judgment is granted in favor of Defendants on all claims asserted in the Complaint.
IT IS FURTHER ORDERED that Defendant SFR’s Motion to Expunge Lis Pendens (ECF No. 19) is GRANTED.
IT IS FURTHER ORDERED that Plaintiff JPMorgan Chase Bank, N.A.’s Counter-Motions for Summary Judgment (ECF Nos. 38 and 40) and Second Motion for Summary Judgment (ECF No. 69) are DENIED.
The Clerk of Court is instructed to enter judgment in favor of Defendants and close this ease.
Notes
. All references to the Nevada Revised Statutes in this section are to the statutes in effect at the time the relevant notices were sent in this case, unless otherwise noted.
. N.R.S. 116,3116 allows for an HOA lien to be foreclosed nonjudicially. SFR,
.The Court references the 2012 version of the statute because the HOA’s notice of delinquent assessment and notice of default and election to sell were recorded in 2012. See Section II.B.3, supra.
. The second requirement—that “the party charged with the deprivation must be a person who may fairly be said to be a state actor”—applies with equal force even in cases asserting facial due process challenges to statutes. Id.
, This Court does not find it necessary in this case to reach the second reason articulated in Freedom Mortgage for rejecting the preemption challenge—namely, that operation of Nevada’s HOA lien statute is consistent with United States v. Kimbell Foods, Inc.,
. Nevada's HOA lien-statute is "a creature of” the UCIOA and, with certain important exceptions, closely tracks the UCIOA's provisions. SFR,
. Available at http://www.uniformlaws.org/ shared/docs/jeburpa/2013junl_JEBURPA_ UCIOA% 20Lien% 20Priority% 20Report.pdf.
. This case is more comparable to the JEB Report's fifth example, in which the bank paid the association an amount equal to the superpriority portion of its lien and the association subsequently commenced an action to enforce its lien for later-accrued unpaid assessments. JEB Report at 14. In that example, the JEB concluded that the first payment would not preclude the association from asserting the superpriority portion of its lien for the subsequent unpaid assessments. Id. at 14-15. While the example differs in some respects from this case, the Court finds it to be instructive.
. The Court also notes that Chase relies heavily on the U.S. Supreme Court’s decision in Chevron Oil Co. v. Huson,
. Further, in Ikon Holdings, the Nevada Supreme Court ruled that a similar mortgage savings clause restricting the superpriority lien to six months of assessments conflicted with N.R.S. 116.3116(2) and was thus negated pursuant to N.R.S. 116.1206(1).
. Even if ATC or the HOA were required to notify Chase of its opportunity to cure the default, they did so in this case by mailing the notice of default and election to sell and the notice of sale to Chase or its predecessor-in-interest, MetLife. Both notices informed Chase that the property was subject to foreclosure by sale and provided instructions on how to stop the HOA’s foreclosure.