Freedom Mortgage Corp. v. Triple Braided Cord, LLC

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FILED
FOR THE NINTH CIRCUIT
SEP 01 2015
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FREEDOM MORTGAGE No. 14-15559
CORPORATION, a New Jersey
corporation, D.C. No. 2:11-cv-01403-MMD-
GWF
Plaintiff - Appellee,
v. MEMORANDUM*
TRIPLE BRAIDED CORD, LLC, as
Trustee of the HR Trust,
Defendant - Appellant,
and
TROVARE HOMEOWNERS
ASSOCIATION, a Nevada corporation
and GERARDO GOMEZ, an individual,
Defendants.
Appeal from the United States District Court
for the District of Nevada
Miranda M. Du, District Judge, Presiding
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Submitted August 10, 2015**
San Francisco, California
Before: REINHARDT, TASHIMA, and CALLAHAN, Circuit Judges.
Appellant Triple Braided Cord, LLC (“Triple Braided Cord”) appeals the
judgment against it in Appellee Freedom Mortgage Corporation’s (“Freedom
Mortgage”) suit to quiet title on a property located at 5521 Hidden Rainbow Street
in North Las Vegas, Nevada. Because the parties are familiar with the facts and
procedural history, we do not restate them except as necessary to explain our
decision. We have jurisdiction under 28 U.S.C. § 1291, and we reverse and
remand for further proceedings.
The district court granted judgment for Freedom Mortgage based on its
determination that Triple Braided Cord1 was not a bona fide purchaser of the
Hidden Rainbow property because Triple Braided Cord had constructive notice of
Freedom Mortgage’s prior-recorded first deed of trust at the time of the purchase.
The district court also held, in denying Triple Braided Cord’s motion for an
extension of time to file dispositive motions, that a homeowner’s association
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
1
Triple Braided Cord is acting as Trustee of the HR Trust. The Court uses
the term “Triple Braided Cord” to refer to both parties.
2
(“HOA”) foreclosure based on a super-priority lien under Nevada law does not
extinguish a first security deed of trust. However, the Nevada Supreme Court has
since held in SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d 408 (Nev.
2014), that an HOA has a true super-priority lien on a property for nine months of
unpaid assessments, and foreclosure on this lien extinguishes all other interests in
that property, included prior-recorded first deeds of trust.2 Accordingly, the district
court’s judgment, to the extent it was based on a contrary interpretation of the
Nevada HOA super-priority statutory scheme, was erroneous. See, e.g., Olympic
Sports Prods., Inc. v. Universal Athletic Sales Co.,760 F.2d 910, 913 (9th Cir.
1985) (federal courts “are bound to follow the decisions of a state’s highest court
in interpreting that state’s law”) (citation omitted).
We accordingly REVERSE the district court’s judgment and REMAND for
further proceedings. This remand is without prejudice to any constitutional
arguments the parties may make below, which the district court may address in the
first instance. We note that the State of Nevada or the Federal Housing Finance
Agency may wish to intervene in the proceedings below, in light of the possible
constitutional issues that the district court may address on remand.
2
Given the change in the law presented by SFR, and the fact that Triple
Braided Cord did present its extinguishment theory below, we do not find that
Triple Braided Cord’s extinguishment argument was waived on appeal.
3
REVERSED AND REMANDED.
4