Opinion
19-16795
10-28-2022
DITECH FINANCIAL LLC, FKA Green Tree Serving, LLC, Plaintiff-Appellee, v. SATICOY BAY LLC SERIES 7904 LIMBWOOD, Defendant-Appellant, and ATC ASSESSMENT COLLECTION GROUP LLC; ELKHORN COMMUNITY ASSOCIATION, Defendants.
NOT FOR PUBLICATION
Submitted October 19, 2022 [**] San Francisco, California
Appeal from the United States District Court for the District of Nevada D.C. No. 2:17-cv-00860-JAD-DJA Jennifer A. Dorsey, District Judge, Presiding
Before: GILMAN, [***] CALLAHAN, and VANDYKE, Circuit Judges.
MEMORANDUM [*]
Saticoy Bay LLC Series 7904 Limbwood ("Saticoy") appeals from the district court's grant of summary judgment for Ditech Financial LLC ("Ditech") in a quiet title and declaratory relief action involving residential property located in Las Vegas, Nevada. We have jurisdiction under 28 U.S.C. § 1291, review de novo, Berezovsky v. Moniz, 869 F.3d 923, 927 (9th Cir. 2017), and affirm.
This case arises from a foreclosure sale to satisfy a homeowners association ("HOA") "superpriority lien" on the property. Nevada law provides that if a homeowner fails to pay a certain portion of HOA dues, the HOA is authorized to foreclose on a "superpriority lien" in that amount, extinguishing other liens and encumbrances on the delinquent property, including a previously recorded first deed of trust. See Nev. Rev. Stat. § 116.3116. However, a lender holding a first deed of trust may avoid extinguishment of its lien by tendering payment on the "superpriority" portion of the unpaid HOA dues. See Bank of Am., N.A. v. Arlington W. Twilight Homeowners Ass'n, 920 F.3d 620, 622-23 (9th Cir. 2019); see also Bank of Am., N.A. v. SFR Invs. Pool 1, LLC, 427 P.3d 113, 116-17 (Nev. 2018) (en banc) ("Diamond Spur").
1. Saticoy's primary argument on appeal is that the district court erred in granting summary judgment in favor of Ditech because Ditech's operative First Amended Complaint ("FAC") was untimely filed. The applicable statute of limitations for quiet title claims like the one filed by Ditech is four years from the titleholder's affirmative repudiation of the lien, which does not necessarily happen at the foreclosure sale. See U.S. Bank, N.A., v. Thunder Props., 503 P.3d 299, 302 (Nev. 2022) (en banc). Ditech's original complaint was filed on March 23, 2017, less than three years after Saticoy recorded the deed memorializing the HOA foreclosure sale. However, the FAC, which contained more specific tender allegations, was not filed until May 14, 2019, nearly five years after the HOA foreclosure sale was recorded.
The district court concluded that the FAC related back to the original complaint under both the Federal Rules of Civil Procedure and Nevada law and was therefore timely. We agree. Federal Rule of Civil Procedure 15(c)(1) "incorporates the relation back rules of the law of a state when that state's law provides the applicable statute of limitations and is more lenient." Butler v. Nat'l Cmty. Renaissance of Cal., 766 F.3d 1191 (9th Cir. 2014). Under the Federal Rules, an amended pleading relates back when it "asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out-or attempted to be set out-in the original pleading." Fed.R.Civ.P. 15(c)(1)(B). Nevada Rule of Civil Procedure 15(c)'s standard for relation back is nearly identical. Thus, under either standard, Ditech's tender allegations in the FAC are timely because they arose out of the same transaction set out in the original complaint.
Moreover, the original complaint expressly alleged, on information and belief, that "prior to the completion of the HOA Foreclosure Sale, Elkhorn, or ATC[,] received payment for the HOA Lien and/or entered into an agreement for such payment." It also alleged more generally that the foreclosure was void and that the foreclosure sale did not extinguish the deed of trust. Therefore, as of the filing of the original complaint, Saticoy knew that, among the various reasons Ditech believed that the sale was void and that the deed of trust survived, was the fact that Ditech believed the superpriority amount had been tendered. The FAC merely expanded on the facts supporting Ditech's existing claims and contentions.
Therefore, Saticoy had adequate notice that the "whole transaction" of the HOA foreclosure and its effect on the deed of trust was at issue. See ASARCO, LLC v. Union Pac. R. Co., 765 F.3d 999, 1006 (9th Cir. 2014) (quoting Martell v. Trilogy, Ltd., 872 F.2d 322, 326 (9th Cir. 1989)). Because "the purposes of the statute of limitations were satisfied" and Saticoy failed to identify any prejudice caused by the timing of the FAC, "there is no reason to find [the FAC] time barred." Clipper Exxpress v. Rocky Mountain Motor Tariff Bureau, Inc., 690 F.2d 1240, 1260 n.29 (9th Cir. 1982); see also Costello v. Casler, 254 P.3d 631, 634-35 (Nev. 2011) (noting that modern rules of procedure are intended to be liberally construed to allow the court to reach the merits of the case, as opposed to disposing them on technical niceties).
2. Saticoy's remaining arguments on appeal are either foreclosed by Thunder Properties (to the extent they continue to challenge the applicable statute of limitations), or are otherwise without merit. Saticoy's alternative argument that, even if the tender satisfied the superpriority portion of the HOA lien, Saticoy's purported status as a bona fide purchaser gives it title to the property free and clear was expressly rejected in Diamond Spur, 427 P.3d at 121. Saticoy's arguments that the doctrines of waiver, equitable estoppel, and unclean hands preclude entry of summary judgment are not persuasive and were properly rejected by the district court given the facts surrounding Ditech's tender and Saticoy's failure to identify any case in which similar conduct by a lender's representative was found to be preclusive of equitable relief.
AFFIRMED. The unopposed motion to substitute The Bank of New York Mellon in place of Ditech as Appellee (Dkt. No. 18) is GRANTED.
The Clerk will update the docket to reflect that Bank of New York Mellon replaced Ditech Financial LLC, FKA Green Tree Servicing, LLC.
[*] 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).
[***] The Honorable Ronald Lee Gilman, United States Circuit Judge for the U.S. Court of Appeals for the Sixth Circuit, sitting by designation.