Kal-Mor-Usa, LLC v. Bank of America, N.A.

FILED
NOT FOR PUBLICATION
AUG 27 2015
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
KAL-MOR-USA, LLC, a Nevada limited No. 13-16591
liability company,
D.C. No. 2:13-cv-00680-LDG-
Plaintiff - Appellant, VCF
v.
MEMORANDUM*
BANK OF AMERICA, N.A.; et al.,
Defendants - Appellees.
Appeal from the United States District Court
for the District of Nevada
Lloyd D. George, Senior District Judge, Presiding
Submitted August 10, 2015**
San Francisco, California
Before: REINHARDT, TASHIMA, and CALLAHAN, Circuit Judges.
Appellant Kal-Mor-USA, LLC (“Kal-Mor-USA”) appeals the dismissal of
its suit to quiet title on a property located at 3047 Casey Drive, Unit 103, in Las
Vegas, Nevada. Because the parties are familiar with the facts and procedural
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
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.
1. The district court dismissed Kal-Mor-USA’s suit based on its
determination that a homeowner’s association’s (“HOA”) nonjudicial 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. Accordingly, the district court’s dismissal, 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).
2. Appellees argue that the dismissal of the suit was proper because,
inter alia, the HOA’s sale of the Casey Drive property was commercially
unreasonable. Nevertheless, “inadequacy of price, however gross, is not in itself a
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sufficient ground” for setting aside a sale as commercially unreasonable, because
“there must be in addition to proof of some element of fraud, unfairness, or
oppression as accounts for and brings about the inadequacy of price.” Brunzell v.
Woodbury, 449 P.2d 158, 159 (Nev. 1969) (citation omitted). Appellees have not
identified any ground aside from the low price which might render the sales
commercially unreasonable. Although the Nevada Supreme Court later held that
HOA super-priority lien foreclosures extinguish first deeds of trust, that holding
did not render the sales commercially unreasonable at the time the sales occurred.
We accordingly REVERSE the district court’s dismissal 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.
REVERSED AND REMANDED.
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