fnma/fannie Mae v. Bfp Investments 4 LLC

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 13 2020 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT FEDERAL NATIONAL MORTGAGE No. 19-15746 ASSOCIATION, D.C. No. Plaintiff-Appellee, 2:17-cv-02033-JCM-VCF v. MEMORANDUM* BFP INVESTMENTS 4 LLC, Defendant-Appellant.

Appeal from the United States District Court for the District of Nevada James C. Mahan, District Judge, Presiding Submitted July 9, 2020** Seattle, Washington Before: HAWKINS, D.M. FISHER,*** and M. SMITH, Circuit Judges.

BFP Investments 4 LLC bought a property at a homeowners association (HOA) nonjudicial foreclosure sale in 2014. After the sale, the Federal National

* 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 D. Michael Fisher, United States Circuit Judge for the U.S. Court of Appeals for the Third Circuit, sitting by designation.

Mortgage Association (Fannie Mae) sued BFP, seeking to quiet title with respect to its deed of trust on the property. The district court granted summary judgment for Fannie Mae. BFP appeals. We have jurisdiction under 28 U.S.C. § 1291, and our review is de novo. Berezovsky v. Moniz, 869 F.3d 923, 927 (9th Cir. 2017). We affirm.

The district court did not err in concluding that Fannie Mae had an interest in the property at the time of the HOA foreclosure sale.1 “[W]hen the recording document lists the deed-of-trust beneficiary, . . . but not the note owner, . . . . an ‘agency relationship’ with the recorded beneficiary preserves the note owner’s power to enforce its interest.” Id. at 932 (quoting In re Montierth, 354 P.3d 648, 650–51 (Nev. 2015) (en banc)). “An agency relationship exists if the note owner has the ability to reclaim the deed of trust from the beneficiary by ordering that the beneficiary make an assignment.” Id. Here, Fannie Mae introduced ample evidence establishing its ownership interest in the property; its agency relationship with the listed deed-of-trust beneficiary, Fannie Mae’s former servicer, Bank of America, N.A. (BANA); and BANA’s contractual obligation to act on Fannie Mae’s behalf after its servicing duties ended. See id. at 932–33.

Additionally, the district court did not commit reversible error in failing to determine whether BFP is a bona fide purchaser. See Nev. Rev. Stat. §§ 111.180, 111.325. BFP had notice of an adverse interest in the property because the deed of trust was recorded in the name of Fannie Mae’s agent—its former servicer—at the time of the foreclosure sale. See Daisy Tr. v. Wells Fargo Bank, N.A., 445 P.3d 846, 849 (Nev. 2019) (en banc). Moreover, the deed of trust includes a provision outlining that “the Note (together with this Security Instrument) can be sold one or more times without prior notice to [the] Borrower.” For these reasons, the record makes clear that BFP is not a bona fide purchaser. See Huntington v. Mila, Inc., 75 P.3d 354, 356 (Nev. 2003) (per curiam) (“A subsequent purchaser with notice, actual or constructive, of an interest in property superior to that which he is purchasing is not a purchaser in good faith, and is not entitled to the protection of [Nevada’s] recording act.”); Allison Steel Mfg. Co. v. Bentonite, Inc., 471 P.2d 666, 668 (Nev. 1970) (subsequent purchaser has “duty of inquiry . . . when the circumstances are such that [he] is in possession of facts which would lead a reasonable man in his position to make an investigation that would advise him of the existence of prior unrecorded rights” (internal quotation marks omitted)).