M&T Bank v. Sfr Investments Pool 1, LLC ( 2020 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
M&T BANK; FEDERAL HOME LOAN No. 18-17395
MORTGAGE CORPORATION,
Plaintiffs-Appellees, D.C. No.
2:17-cv-01867-
v. JCM-CWH
SFR INVESTMENTS POOL 1, LLC,
Defendant-Appellant, OPINION
and
DIAMOND CREEK COMMUNITY
ASSOCIATION, a Nevada Non-Profit
Corporation,
Defendant.
Appeal from the United States District Court
for the District of Nevada
James C. Mahan, District Judge, Presiding
Argued and Submitted June 9, 2020
San Francisco, California
Filed June 25, 2020
2 M&T BANK V. SFR INVESTMENTS POOL 1
Before: Milan D. Smith, Jr. and Andrew D. Hurwitz,
Circuit Judges, and C. Ashley Royal, * District Judge.
Opinion by Judge Hurwitz
SUMMARY **
Federal Foreclosure Bar / Statute of Limitations
The panel affirmed the district court’s summary
judgment in favor of plaintiffs Federal Home Loan Mortgage
Corporation (“Freddie Mac”) and M&T Bank in a quiet title
action concerning foreclosed real property in Nevada.
The Housing and Economic Recovery Act (“HERA”)
created the Federal Housing Finance Agency (“FHFA”) to
regulate Freddie Mac and other lending agencies, and
enacted the Federal Foreclosure Bar, 12 U.S.C. § 4617(j)(3)
(providing that no property of FHFA shall be subject to
foreclosure without the consent of the FHFA, nor shall any
involuntary lien attach to the property of the FHFA).
The panel held that under 12 U.S.C. § 4617(b)(12), a
quiet title action is a “contract” claim that is subject to a
statute of limitations of at least six years. The panel further
held that Freddie Mac and M&T Bank timely filed their quiet
title action within six years of the foreclosure sale; and
*
The Honorable C. Ashley Royal, United States District Judge for
the Middle District of Georgia, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
M&T BANK V. SFR INVESTMENTS POOL 1 3
Freddie Mac’s deed of trust, which had been placed under
the conservatorship of FHFA, survived a non-judicial
foreclosure sale of a Nevada residential property to satisfy a
homeowners association superpriority lien.
The panel held that although Freddie Mac and the Bank
were not assignees of the FHFA, Freddie Mac was under the
FHFA conservatorship, and the FHFA thus had all the rights
of Freddie Mac with respect to its assets. The panel also held
that although there was no contract between the purchaser
and the plaintiffs, the quiet title claims were entirely
“dependent” upon Freddie Mac’s lien on the property, an
interest created by contract.
COUNSEL
Karen L. Hanks (argued), Jacqueline A. Gilbert, Diana S.
Ebron, and Caryn R. Schiffman, Kim Gilbert Ebron, Las
Vegas, Nevada, for Defendant-Appellant.
Michael A.F. Johnson (argued) and Dirk C. Philips, Arnold
& Porter Kaye Scholer LLP, Washington, D.C., for Amicus
Curiae Federal Housing Finance Agency.
Nathan F. Smith and Christine A. Roberts, Malcolm
Cisneros, Irvine, California, for Plaintiffs-Appellees.
4 M&T BANK V. SFR INVESTMENTS POOL 1
OPINION
HURWITZ, Circuit Judge:
The sole contested issue in this appeal is whether under
12 U.S.C. § 4617(b)(12), a quiet title action is a “contract”
claim or a “tort” claim. If it is the former, this action is
subject to a statute of limitations of at least six years, was
timely filed, and the plaintiffs are entitled to summary
judgment. We conclude that the statute of limitations
applicable to a “contract” claim under 12 U.S.C.
§ 4617(b)(12)(A)(i) applies and affirm the judgment of the
district court.
I.
Nevada law grants a homeowners association (“HOA”)
a “superpriority” lien on a property for unpaid assessments;
that lien is superior even to a previously recorded first deed
of trust. See Nev. Rev. Stat. § 116.3116; Bank of Am., N.A.
v. Arlington W. Twilight Homeowners Ass’n, 920 F.3d 620,
621–22 (9th Cir. 2019) (per curiam). But, the “Federal
Foreclosure Bar,” 12 U.S.C. § 4617(j)(3), provides that “[n]o
property of the [Federal Housing Finance Agency] shall be
subject to levy, attachment, garnishment, foreclosure, or sale
without the consent of the Agency, nor shall any involuntary
lien attach to the property of the Agency.” The Federal
Foreclosure Bar preempts the Nevada superpriority lien
scheme. See Berezovsky v. Moniz, 869 F.3d 923, 931 (9th
Cir. 2017).
The underlying question in this case is whether a first
deed of trust in favor of the Federal Home Loan Mortgage
Corporation (“Freddie Mac”), which had been placed under
the conservatorship of the Federal Housing Finance Agency
(“FHFA”), survived a non-judicial foreclosure sale of a
M&T BANK V. SFR INVESTMENTS POOL 1 5
Nevada residential property to satisfy an HOA superpriority
lien. That question turns on whether plaintiffs timely filed
this action.
II.
The background facts are undisputed and largely a matter
of public record. The story begins in November 2006, when
an individual purchased a home in Las Vegas (“the
Property”) with a loan of approximately $200,000 from
Universal American Mortgage Company LLC. The loan
was secured by a first deed of trust. In January 2007, Freddie
Mac acquired the loan and deed of trust.
In response to the 2008 financial crisis, Congress enacted
the Housing and Economic Recovery Act (“HERA”), Pub.
L. No. 110–289, 122 Stat. 2654 (codified at 12 U.S.C.
§ 4511 et seq.), which created the FHFA to regulate Freddie
Mac and other lending agencies. In 2008, the FHFA placed
Freddie Mac into conservatorship. As conservator, the
FHFA has “all rights, titles, powers, and privileges” of
Freddie Mac. 12 U.S.C. § 4617(b)(2)(A)(i). HERA also
enacted the Federal Foreclosure Bar. Id. at § 4617(j)(3).
The Property was sold on July 20, 2012 at a nonjudicial
foreclosure sale to SFR Investments Pool 1, LLC, for $5,200
to satisfy unpaid assessments by the Diamond Creek
Community Association, an HOA. The FHFA, however,
never consented to the extinguishment of the first deed of
trust through the 2012 foreclosure sale. Therefore, in July
2017, Freddie Mac and M&T Bank, to whom Freddie Mac
had assigned the deed of trust under a servicing agreement
6 M&T BANK V. SFR INVESTMENTS POOL 1
in May 2012, 1 filed this action, seeking to quiet title in the
Property and requesting a judgment that the first deed of trust
remained enforceable. The complaint asserted that the deed
of trust had not been extinguished because of the Federal
Foreclosure Bar and because the FHFA had never consented
to the foreclosure sale.
SFR moved to dismiss the complaint, claiming that it
was time-barred under the three-year statute of limitations
applicable to “tort” claims in 12 U.S.C.
§ 4617(b)(12)(A)(ii). In response, Freddie Mac and the
Bank contended that the governing statute of limitations was
the five-year statute in Nevada Revised Statutes (“N.R.S”)
§ 11.070 applicable to “an action, founded upon the title to
real property.”
The district court found that the state statute applied and
that the action was timely because it was filed within five
years of the HOA foreclosure sale. The court later granted
summary judgment to Freddie Mac and the Bank, finding
that because the FHFA never consented to the foreclosure
sale, Freddie Mac’s interest in the Property through the deed
of trust survived under the Federal Foreclosure Bar. SFR
timely appealed.
We have jurisdiction under 28 U.S.C. § 1291 and review
the summary judgment de novo. Fed. Home Loan Mortg.
Corp. v. SFR Invs. Pool 1, LLC, 893 F.3d 1136, 1144 (9th
Cir. 2018). We “may affirm a summary judgment on any
1
The relationship between Freddie Mac and M&T Bank is governed
by Freddie Mac’s Single-Family Seller/Servicer Guide, which provides
that Freddie Mac’s servicer may serve as record beneficiary for a deed
of trust owned by Freddie Mac but must assign the deed of trust back to
Freddie Mac upon Freddie Mac’s demand. See Berezovsky, F.3d at 932–
33.
M&T BANK V. SFR INVESTMENTS POOL 1 7
ground finding support in the record.” Cairns v. Franklin
Mint Co., 292 F.3d 1139, 1155 n.14 (9th Cir. 2002) (quoting
Karl Storz Endoscopy-Am., Inc. v. Surgical Techs., Inc.,
285 F.3d 848, 855 (9th Cir. 2002)).
III.
Although Freddie Mac and the Bank relied on N.R.S.
§ 11.070 below, on appeal all parties—and the FHFA as
amicus—agree that the HERA statute of limitations,
12 U.S.C. § 4617(b)(12)(A), controls. 2 That is correct.
In relevant part, HERA provides that the statute of
limitations for “any action brought by the [FHFA] as
conservator . . . shall be”:
(i) in the case of any contract claim, the
longer of—
(I) the 6-year period beginning on the
date on which the claim accrues; or
(II) the period applicable under State law;
and
2
“Although the general rule in this circuit is that an appellate court
will not consider an issue raised for the first time on appeal, we will reach
the question if it is purely one of law and the opposing party will suffer
no prejudice because of failure to raise it in the district court.” United
States v. Thornburg, 82 F.3d 886, 890 (9th Cir. 1996). This case presents
a purely legal issue that SFR treated extensively in its briefs, so we
consider plaintiffs’ argument regarding whether the action was time-
barred under the federal statute. See id.
8 M&T BANK V. SFR INVESTMENTS POOL 1
(ii) in the case of any tort claim, the longer
of—
(I) the 3-year period beginning on the
date on which the claim accrues; or
(II) the period applicable under State law.
12 U.S.C. § 4617(b)(12)(A). Although the statute refers to
“any action brought by the [FHFA] as conservator,” id., it
applies here even though the plaintiffs are Freddie Mac and
the Bank, its loan servicer.
In FDIC v. Bledsoe, the Fifth Circuit held that that a
similarly worded statute of limitations—facially applying
only to actions brought by a federal agency—also applied to
actions brought by a private entity acting as an assignee for
the federal agency. 989 F.2d 805, 809–11 (5th Cir. 1993).
The Court found that the common law was “loud and
consistent,” in providing that “an assignee stands in the
shoes of his assignor, deriving the same but no greater rights
and remedies than the assignor then possessed” and therefore
receives the same limitations period as the assignor. Id.
at 810 (cleaned up). We adopted the Fifth Circuit’s
reasoning in United States v. Thornburg, 82 F.3d 886, 891
(9th Cir. 1996).
We reach the same conclusion here. Although Freddie
Mac and the Bank are not assignees of the FHFA, Freddie
Mac is under the FHFA conservatorship, and the FHFA thus
has “all rights, titles, powers, and privileges” of Freddie Mac
“with respect to [its] . . . assets.” 12 U.S.C.
§ 4617(b)(2)(A)(i). Like an assignee, Freddie Mac thus
“stands in the shoes of” the FHFA with respect to its current
claims to quiet title to the deed of trust, which is property of
the conservatorship. Bledsoe, 989 F.2d at 809; see
M&T BANK V. SFR INVESTMENTS POOL 1 9
Thornburg, 82 F.3d at 891. M&T Bank, Freddie Mac’s
assignee, stands in the same shoes as its assignor. See
Bledsoe, 989 F.2d at 809; Thornburg, 82 F.3d at 891.
IV.
Although § 4617(b)(12)(A) only explicitly addresses
“tort” and “contract” claims, it applies to all claims brought
by the FHFA as conservator. See 12 U.S.C.
§ 4617(b)(12)(A) (stating that it “provides” what “the statute
of limitations” “shall be” for “any action brought by the
[FHFA] as conservator”). “By using these words, Congress
precluded the possibility that some other limitations period
might apply to claims brought by FHFA as conservator.”
Fed. Hous. Fin. Agency v. UBS Ams. Inc., 712 F.3d 136, 142
(2d Cir. 2013); cf. Nat’l Credit Union Admin. Bd. v. RBS
Sec., Inc., 833 F.3d 1125, 1131 (9th Cir. 2016) (“By
expressly stating that ‘the’ statute of limitations for ‘any
action’ brought by the NCUA as conservator or liquidating
agent ‘shall be’ as specified, Congress made clear that no
other limitations period applies to the NCUA’s claims.”).
Thus, if neither description is a perfect fit, we must decide
when applying the statute whether a claim is better
characterized as sounding in contract or in tort.
We conclude that the claims in this action are “contract”
claims under 12 U.S.C. § 4617(b)(12)(A)(i). Although there
is no contract between SFR and the plaintiffs, the quiet title
claims are entirely “dependent” upon Freddie Mac’s lien on
the Property, an interest created by contract. See Stanford
Ranch, Inc. v. Md. Cas. Co., 89 F.3d 618, 625 (9th Cir. 1996)
(“If a claim is dependent upon the existence of an underlying
contract, the claim sounds in contract, as opposed to tort.”)
(applying California law); see also Smith v. FDIC, 61 F.3d
1552, 1561 (11th Cir. 1995) (“[B]ecause a mortgage lien is
an interest in property created by contract, an action to
10 M&T BANK V. SFR INVESTMENTS POOL 1
enforce that lien is clearly a contract action.”). Freddie Mac
and the Bank do not seek damages or claim a breach of duty
resulting in injury to person or property, two of the
traditional hallmarks of a torts action. See United States v.
Burke, 504 U.S. 229, 234–35 (1992); Prudential Ins. Co. of
Am. v. L.A. Mart, 68 F.3d 370, 375 (9th Cir. 1995).
Indeed, even if the question were closer, we would still
choose the longer contract limitations period. “When
choosing between multiple potentially-applicable statutes,
as a matter of federal policy the longer statute of limitations
should apply.” Wise v. Verizon Commc’ns, Inc., 600 F.3d
1180, 1187 n.2 (9th Cir. 2010) (cleaned up); see Fed.
Deposit Ins. Corp. v. Former Officers & Dirs. of Metro.
Bank, 884 F.2d 1304, 1307 (9th Cir. 1989) (“This circuit has
held, however, that when there is a ‘substantial question’
which of two conflicting statutes of limitations to apply, the
court should apply the longer.”). 3
We therefore conclude that plaintiffs had at least six
years to bring their claims after the foreclosure sale.
Because less than six years transpired between the accrual of
the cause of action in 2012 on the date of the foreclosure sale
3
Contrary to SFR’s contentions, Megapulse, Inc. v. Lewis, which
stated that “the mere existence of . . . contract-related issues” does not
“convert this action to one based on the contract,” does not compel a
contrary result. 672 F.2d 959, 969 (D.C. Cir. 1982). The issue in
Megapulse was whether the claim presented was “clearly” a contract
claim over which “the Court of Claims has exclusive jurisdiction.” Id.
at 967, 968. And, although the D.C. Circuit did not find that the claim
at issue was “clearly” a contract claim, it also did not find that the claim
sounded in tort. See id. at 971.
 M&T BANK V. SFR INVESTMENTS POOL 1 11
and the filing of this suit in 2017, the suit was not time-
barred. The judgment of the district court is AFFIRMED. 4
4
We grant SFR’s unopposed motion for judicial notice of orders in
five cases before the Eighth Judicial District of the State of Nevada.