1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 4 Deutsche Bank National Trust Company, as Case No.:2:17-cv-01166-JAD-DJA Trustee for Holders of the GSAA Home 5 Equity Trust 2006-16 Asset-Backed Certificates Series 2006-16, 6 Plaintiff 7 v. OrderGranting Motion to Dismiss Action as Time-barred and Denying as Moot 8 SFR Investments Pool 1, LLC, Motion for Summary Judgment 9 Defendant [ECF Nos.46,48,49] 10 11 Deutsche Bank brings this quiet-titleaction to determinethe effect of the 2013non- 12 judicial foreclosure sale of a homeon which the bankclaims a deed of trust securing a mortgage. 13 The sale was conducted under Nevada’s statutory scheme that grants homeowners’ associations 14 superpriority liens fora narrow category of unpaid fees and assessments that accrue on homes in 15 their communities and allowsthose associations toenforce suchliens with non-judicial 16 foreclosure sales.1 The banksues SFR Investments Pool 1, LLC, who purchasedthe property at 17 the foreclosure sale,seeking adeterminationthat its deed of trust survived the foreclosure.2 SFR 18 moves to dismiss the bank’s actionas time-barred, and the bank has filed its own motion for 19 summary judgment in its favor.3 Because I find that the bank’s suit is barred by the applicable 20 21 1 See SFR Invs. Pool 1, LLC v. U.S. Bank (SFR I),

, 409–14 (Nev. 2014); Bank of 22 Amer. v. Arlington West Twilight HOA,920F.3d 620(9th Cir. 2019). The statute was substantially amended in 2015, but this case involves the pre-amendment version. 2 ECF No. 57. 3 I find both motions suitable for disposition without oral argument. L.R. 78-1. 1 statute of limitation, I grant SFR’s motion to dismiss, deny the bank’s summary-judgment 2 motion as moot, and close this case. 3 Background 4 Noelle Angeles and Matthew Rhinersonpurchased the home at 4286 Penguin Avenue in 5 North Las Vegas, Nevada, in 2006with a mortgage secured by a deed of trust that designated

6 Mortgage Electronic Registration Systems, Inc. (MERS) as the beneficiary.4 After a series of 7 assignments, Deutsche Bank is the beneficiary of the deed of trust.5 The home is located in the 8 Aliante common-interest community and subject to the declaration of covenants, conditions, and 9 restrictions for the Aliante Master Association (the HOA), which requires the owners of units 10 within this development to pay certain assessments.6 When the ownersfell behind on their 11 assessments,the HOA commenced nonjudicial foreclosure proceedings on the home under 12 Chapter 116 of the Nevada Revised Statutes.7 SFR purchased the home at foreclosure on 13 January 4, 2013.8 14 As the Nevada Supreme Court held in SFR Investments Pool 1 v. U.S. Bank in 2014,

15 because NRS 116.3116(2) gives an HOA “a true superpriority lien, proper foreclosure of” that 16 lien under the non-judicial foreclosure process created by NRS Chapters 107 and 116 “will 17 extinguish a first deed of trust.”9 Four years and nearly four months after the foreclosure sale, 18 19 20 4 ECF No. 49-2(deed of trust). 21 5 ECF Nos.49-3, 49-4 (assignments). 6 ECF No. 49-2 (PUD Rider), ECF No. 49-9 (Master Declaration of CC&Rs). 22 7 ECF Nos. 49-5–49-7 (notices). 8 ECF No. 49-8 (recorded 1/8/13). 9 SFR Invs.Pool 1 v. U.S. Bank, 334 P.3d at 419. 1 the bank filedthis action to save its deed of trust from extinguishment. It pursuesa single claim 2 for quiet title.10 3 SFR moves to dismiss that claim as time-barred. It argues that this quiet-title claim is an 4 action upon a liability created by statute that had to be brought within three years of the 5 foreclosure sale. At best, SFR contends, the bank’s claim is governed by Nevada’s four-year

6 catchall deadline, which the bank missed by nearly four months.11 The bank responds that no 7 statute of limitations applies to its claim, but if one does, it’s a five-year deadline, making its 8 claim timely. Regardless, it avers, SFR is estopped from asserting, or has waived, any statute-of- 9 limitations defense.12 I consider each argument in turn. 10 Analysis 11 A. The bank’s claim is an equitable quiet-title claim. 12 To evaluate claims, “we must look at the substance of the claims, not just the labels 13 used.”13 The bank’s claim is labeled “quiet title” and its general purpose is to challenge the 14 impact of the foreclosure sale on the deed of trust.14 This requested equitable relief makes the

15 bank’sclaim the type of quiet-title claim recognized by the Nevada Supreme Court in Shadow 16 Wood Homeowners Association, Inc. v. New York Community Bancorp—an action “seek[ing] to 17 18 19 10 Although the bank frames its complaint to contain a claim for quiet title and a second claim captioned “Injunctive Relief,” injunctive relief is a remedy, not a claim for relief, and it rises and 20 falls on the merits of the bank’s quiet-title claim. SeeECF No. 1 at 10. So I treat the bank’s complaint as a single quiet-title claim that seeks declaratory relief and injunctive relief. 21 11 ECF No. 48 (motion to dismiss). 22 12 ECF No. 50. 13 Nevada Power Co. v. Eighth Judicial Dist. Court of Nevada ex rel. Cty. of Clark,

(Nev. 2004). 14 ECF No. 1. 1 quiet title by invoking the court’s inherent equitable jurisdiction to settle title disputes.”15 The 2 resolution of such a claim is part of “[t]he long-standing and broad inherent power of a court to 3 sit in equity and quiet title, including setting aside a foreclosure sale if the circumstances 4 support” it.16 5 B. The bank’s claim was time-barred four years after theforeclosure sale.

6 The next step is determining whichstatute of limitations applies to the bank’s equitable 7 claim to quiet title. The bank argues that its claim is not subject to a statute of limitations based 8 on the Nevada Supreme Court’s opinion in Facklam v. HSBC Bank.17 But Facklam has no 9 application here. In Facklam,18 the Court held that non-judicial foreclosure actions are not 10 subject to the statutes of limitations in NRS Chapter 11 because those time bars apply only to 11 judicial actions, and a non-judicial foreclosure is not a judicial action.19 So “lenders are not 12 barred from foreclosing on mortgaged property merely because the statute of limitations for 13 contractual remedies on the note has passed.”20 But Facklam is inapplicable here because this 14 caseis not anon-judicial foreclosureaction—it’s a lawsuit seeking equitable relief—so it falls

15 under the “civil action” umbrella and is subject to the limitations periods in NRS Chapter 11.21 16 17 18 15 Shadow Wood Homeowners Ass’n, Inc. v. New York Cmty.Bancorp,

, 1110– 1111 (Nev. 2016). 19 16 Id. at 1112. 20 17 ECF No. 50 at 4. 18 Facklam v. HSBC Bank,

, 1071 (Nev. 2017). 21 19 Id. at 1070. 22 20 Id. 21 SeeNev. Rev. Stat. § 11.010 (“Civil actions can only be commenced within the periods prescribed in this chapter, after the after the cause of action shall have accrued, except where a different limitation is prescribed by statute.”). 1 The bank argues alternatively that if a limitation period applies, it’s a five-year one 2 established by NRS 11.070 or 11.080, making its claim timely.22 But this lienholder’s claim fits 3 under neither statutory provision. NRS 11.080 provides a five-year deadline for claims for “the 4 recovery of real property, or for the recovery of the possession thereof other than mining claims . 5 . . .”23 But the bank’s claim is not an action for the recovery of property or possession of

6 property. If the bank wins, it gets only a declaration that its security interest remains on the 7 property. Because NRS 11.080 “is focused on ownership or possession of real property,”24 it has 8 no application to the bank’s quiet-title claim. 9 Nevada’s other five-year statute of limitations for some quiet-title claims is found in NRS 10 11.070. It provides a five-year statute of limitations for actions or defenses “founded upon the 11 title to real property or to rents or to services out of the same.”25 But the bank’s claims are not 12 founded upon title, rents, or services, but rather upon lien rights created by a deed of trust. And 13 although these claims impact or may impact title, they themselves are not founded upon title as 14 NRS 11.070 requires. So the bank cannot reap the benefits of the liberal five-year limitation

15 period in NRS 11.070 or 11.080. 16 The bank cites the Ninth Circuit’s unpublished disposition in Scott v. Mortgage Elec. 17 Reg. Sys.26 and the Nevada Supreme Court’s holding in Saticoy Bay LLC Series

19 20 22 ECF No. 50 at 5. 23

. 21 24 Berberich v. Bank of Amer., __ P.3d __,

, *2 (D. Nev. March 26, 2020) 22 (clarifying“that the limitations period provided by NRS 11.080 only starts to run when the plaintiff has been deprived of ownership or possessionof the property”). 25

. 26 Scott v. Mortgage Elec. Reg. Sys.,

(9th Cir. Feb. 17, 2015)(unpublished). 1 Eagle Way v. JP Morgan Chase Bank.27 But these cases are materially distinguishable from this 2 one because the claim that the court was analyzing in each was brought by a titleholder, not a 3 lienholder like Deutsche Bank. So, unlike the bank’s claims, those were founded on title or 4 sought to recover propertyandthey were properly governed by the five-year statutes of 5 limitations in NRS 11.070 and 11.080. The bank offers no analysis ofhow these statutes govern

6 an equitable quiet-title claim brought by a deed-of-trust beneficiarylike itself. 7 Still,I also cannot agree with SFR that the bank’s claim is subject tothe three-year 8 statute of limitations in NRS 11.090(3)(a).28 That statutegoverns actions “upon a liability 9 created by statute, other than a penalty or forfeiture.”29 But the bank’s claim is not an action 10 uponaliability created by statute; it is anequitable action to determine adverse interests in real 11 property, as codified in NRS 40.010.30 Section 40.010 does not create liability,and a party 12 cannot impose liability upon another through that statute. Rather, the statute allows for a 13 proceeding to determine adverse claims to property. Even if I interpret the bank’s quiet-title 14 action as aclaim underNRS 116.3116, it still doesnot seek to impose liability under that statute.

15 So NRS 11.090(3)(a) does not apply. 16 With no squarely applicable limitations statute for the bank’s claim, I am left with the 17 catch-all four-year deadline in NRS 11.220, which states that “[a]n action for relief, not 18 hereinbefore provided for, must be commenced within 4 years after the cause of action shall have 19 20 27 Saticoy Bay LLC Series 2021 Gray Eagle Way v. JP Morgan Chase Bank,

(Nev. 21 2017). 22 28 SeeECF No. 48 at 10. 29

(3)(a). 30 See Shadow Wood, 366 P.3d at1111 (recounting that “NRS 40.010 essentially codified the court’s existing equity jurisprudence” (comma omitted)). 1 accrued.”31 Because the foreclosure sale occurred on January 3, 2013, and this action was filed 2 more than four years later on April 26, 2017,the bank’s actionis time-barred. 3 As abackstop argument, the bank suggests that “SFR’s failure to take any action after the 4 HOA foreclosure sale to extinguish Deutsche Bank’s deed of trust” shows that it has waived, or 5 should be estopped from asserting, a statute-of-limitations defense.32 But this argument assumes

6 a duty that didnot exist. SFR had no obligation to take action to extinguish Deutsche Bank’s 7 deed of trust in this case; NRS 116.3116 operates as a matter of law.33 Any obligation to take 8 action here rested with the bank, as the party challenging the foreclosuresale and its legal 9 effect.34 So the bank has not identified any basis to find waiver or estoppel here. 10 Conclusion 11 Because the bank’s equitable quiet-title action was filed after the applicable four-year 12 statute of limitations expired, I grant SFR’s motion to dismiss on this basis35 and deny the bank’s 13 motion for summary judgment as moot. 14 IT IS THEREFORE ORDERED that:

15 SFR Investments Pool 1, LLC’s Renewed Motion to Dismiss Plaintiff’s Complaint 16 [ECF No. 46, 48 (corrected)] is GRANTED; THIS ACTION IS DISMISSED as time- 17 barred; and 18 31

. 19 32 ECF No. 50 at 7. 20 33 See SFR I, 334 P.3d at 419 (“NRS 116.3116(2) gives an HOA a true superpriority lien, proper foreclosure of which will extinguish a first deed of trust.”). 21 34 See Res. Grp., LLC as Tr. of E. Sunset Rd. Tr. v. Nevada Ass’n Servs., Inc.,

, 156 22 (Nev. 2019) (“The burden of demonstrating that the delinquency was cured presale, rendering the sale void, was on the party challenging the foreclosure, who failed to meet its burden.”) 35 Because I grant dismissal on this basis, I need not and do not reach SFR’s other challenges to the bank’s claims. 1 e Deutsche Bank’s Motion for Summary Judgment [ECF No. 49] is DENIED as moot. 2 IT IS FURTHER ORDERED that the Clerk of Court is directed to ENTER 3|| JUDGMENT ACCORDINGLY and CLOSE THIS CASE. 4 Dated: April 7, 2020 5 ___7hur< ‘ USS. District Judge Jennifer A. Dorsey

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