Nationstar Mortgage v. Sfr Investments Pool 1, LLC ( 2020 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAR 30 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
NATIONSTAR MORTGAGE LLC, No. 18-16295
Plaintiff-Appellant, D.C. No.
2:15-cv-01702-JCM-CWH
v.
SFR INVESTMENTS POOL 1, LLC; MEMORANDUM*
SUNCREST HOMEOWNERS
ASSOCIATION,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Nevada
James C. Mahan, District Judge, Presiding
Submitted March 27, 2020**
Las Vegas, Nevada
Before: W. FLETCHER, BYBEE, and WATFORD, Circuit Judges.
Nationstar Mortgage LLC appeals from the district court’s order resolving
the parties’ cross-motions for summary judgment. We affirm.
1. The pre-2015 version of Nevada Revised Statutes § 116.3116 et seq.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Page 2 of 4
establishes a constitutionally sufficient notice scheme. The Nevada Supreme Court
has clarified that the statute requires a mandatory notice of default and notice of
sale to all holders of subordinate interests to a homeowners association’s
superpriority lien. SFR Investments Pool 1, LLC v. Bank of New York Mellon, 422
P.3d 1248, 1252–53 (Nev. 2018) (en banc). Such notice adequately apprises
holders of subordinate interests that a foreclosure sale is imminent and affords
them an opportunity to protect their interest in the property, which is all that due
process demands in this context. Contrary to Nationstar’s argument, the notice
provided need not specify the superpriority portion of a homeowners association’s
lien. See Bank of America, N.A. v. Arlington West Twilight Homeowners Ass’n,
920 F.3d 620, 622, 624 (9th Cir. 2019) (per curiam) (upholding the statute’s facial
constitutionality notwithstanding the fact that the deed of trust holder did not
receive notice of the superpriority portion of the lien).
Nationstar’s as-applied challenge to the adequacy of the notice provided by
the homeowners association fails for the same reason. Nationstar’s predecessor
was not entitled, as a matter of due process, to notice specifying the amount of the
superpriority portion of the lien. It was instead entitled to notice specifying the
total amount owed to the homeowners association, and it received such notice.
Based on the notice afforded, Nationstar’s predecessor could have requested more
information from the homeowners association in order to tender the amount of the
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superpriority portion of the lien, or it could have tendered the full amount of the
lien and requested a refund of the non-superpriority portion. See id. at 623; SFR
Investments Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d 408, 418 (Nev. 2014) (en
banc).
2. The district court correctly declined to set aside the foreclosure sale on
equitable grounds. Under Nevada law, a foreclosure sale may not be set aside on
equitable grounds merely because the sale price was substantially below the
property’s fair market value; the party challenging the sale must also demonstrate
that the foreclosure sale was affected by some measure of fraud, unfairness, or
oppression. Shadow Wood Homeowners Ass’n, Inc. v. New York Cmty. Bancorp,
Inc., 366 P.3d 1105, 1111 (Nev. 2016) (en banc). Nationstar contends that the
foreclosure sale was rendered unfair because the homeowners association’s
covenants, conditions, and restrictions (CC&Rs) stated that the sale would not
extinguish a first deed of trust, thereby publicizing to prospective buyers that the
property was less valuable than it was. But the Nevada Supreme Court has held
that such provisions conflict with the superpriority lien statute and are therefore
invalid. See SFR Investments, 334 P.3d at 419. Nothing in the record suggests that
any prospective buyer was misled by the invalid CC&R provision. The legal
inaccuracy of the CC&R provision, standing alone, is not a sufficient basis to find
that prospective buyers were misled such that the foreclosure sale was unfair.
Page 4 of 4
AFFIRMED.