In 7510 Perla Del Mar Ave Trust v. Bank of America, N.A., 136 Nev., Adv. Op. 6 (Nev. Feb. 27, 2020), the Nevada Supreme Court reaffirmed that a promise to make a payment at a later date or once a certain condition has been satisfied cannot constitute a valid tender. Id. at *4. This general rule applies to an offer to pay a yet-to-be-determined super-priority HOA lien. Id. However, if the offeror can prove that a valid tender would have been rejected, such as based on the policy of the HOA's agent, the obligation to tender is excused. Id. at *5.
Recent Nevada Supreme Court Decision on Notices of Default
In Rose v. Treasure Island, Case No. 71941-COA, 135 Nev. , Adv. Op. 19 (June 6, 2019), the Nevada Supreme Court held that strict compliance with the notice requirements in a lease agreement was not required where the defaulting party had actual notice of the default. Id. at *5 - 6. Although the Court did not decide whether Nevada is a strict compliance state (majority), or a substantial compliance state (minority), it seemed to indicate that it would follow the majority approach and require strict compliance if there was no actual notice involved. Id. at *5. The Court further held that the subtenant was not a necessary party under NRCP 19. Id. at *16.
More Foreclosure Decisions from the Nevada Supreme Court
In Bank of America, N.A. v. Thomas Jessup, LLC Series VII, Case No. 73785, 135 Nev., Adv. Op. 7 (Mar. 7, 2019), the Nevada Supreme Court held that an offer to pay a superpriority amount in the future is not sufficient to constitute a tender. The Court further held that a formal tender is excused when the party entitled to payment represents that if a tender is made, it will be rejected.
Recent Nevada Supreme Court Foreclosure Decisions
In Wells Fargo Bank v. Radecki, Case No. 71405, 134 Nev., Adv. Op. 74 (Sept. 13, 2018), the Nevada Supreme Court held that a foreclosure sale that complied with the relevant provisions of NRS Chapter 116 was not a fraudulent transfer under NRS 112.190(1), even if the purchase price was not "reasonably equivalent" to the property's value. Id. at *4 - 5. The third element of an NRS 112.190(1) claim was not met because of the safe harbor provision contained in NRS 112.170(2), which provides in pertinent part: "a person gives a reasonably equivalent value if the person acquires an interest of the debtor in an asset pursuant to a regularly conducted, noncollusive foreclosure sale or execution of a power of sale for the acquisition or disposition of the interest of the debtor upon default under a mortgage, deed of trust or security agreement." Id. at *5. HOA foreclosure sales are included in the definition of a "regularly conducted, noncollusive foreclosure sale." Id. at *6. Additionally, "[a]lleged inaccuracies in a foreclosure deed do not invalidate the foreclosure sale." Id.
Dismissal Upheld After Repeated Delay Tactics by Pro Se Litigant
In Rodriguez v. Fiesta Palms, LLC, Case No. 72098, 134 Nev. Adv. Op. 78 (Oct. 4, 2018), the Nevada Supreme Court upheld a district court order denying a motion to set aside the judgment under NRCP 60(b). After repeated warnings to the pro se plaintiff by the court that he needed to respond to motions filed by the defendant, the district court judge granted the defendant's motion to dismiss. Id. At *2. Plaintiff waited five months and three weeks to file a motion to set aside the dismissal under NRCP 60(b). Id. At *3. The Nevada Supreme Court found that the district court had considered the factors set forth in Yochum v. Davis, 98 Nev. 484, 486, 653 P.2d 1215, 1216 (1982), and concluded that they favored denial of Plaintiff's motion. Id. at *3. Even though the motion was filed less than 6 months after the dismissal order, the district court found that the plaintiff did not act promptly, exhibited a pattern of repeated continuances, and was apprised of the procedural requirements. Id. at *4 - 6. The Nevada Supreme Court afforded "wide discretion" to the district court and concluded that no abuse of discretion took place. Id. at *6.
Nevada Legislature in session
The 80th session of the Nevada Legislature convened February 4, 2019 in Carson City, Nevada. Legislation has already been requested on many important matters impacting our clients including civil litigation, the courts and creditor rights. Legislation can be tracked on the legislative website at https://www.leg.state.nv.us
Restoration of The Protecting Tenants at Foreclosure Act
Anyone who was involved in the post-foreclosure eviction world in the last decade will certainly recall the 2009 Protecting Tenants at Foreclosure Act ("PTFA"). That measure, part of the larger Dodd-Frank reform laws, added significant "protections" for unwitting tenants who were caught up in situations where the home they were leasing or occupying was subject to foreclosure during their tenancy. Whereas, prior to 2009, many state laws only required relatively short notice periods before the purchaser at the foreclosure sale could file an action for unlawful detainer (eviction), the PTFA granted any "bona fide tenants" a minimum of 90 days notice before an unlawful detainer complaint could be filed. The PTFA also afforded additional time to bona fide tenants pursuant to a "bona fide lease" entered into prior to a "notice of foreclosure." Those tenants in possession pursuant to a bona fide lease could remain in the leasehold until their bona fide lease expired. Those provisions, with their attendant ambiguities, slowed many post foreclosure possession actions and made verification of "bona fides" a constant part of any servicer, purchaser or attorney's work. They also engendered substantial litigation trying to fill in the contours of those ambiguities.
Recent Nevada Supreme Court Decision on Conflict of Laws in Deficiency Actions
In Nevada, Inadequacy of Price is Not Enough to Set Aside a Foreclosure Sale
In Nationstar Mortgage, LLC v. Saticoy Bay LLC Series 2227 Shadow Canyon, 133 Nev., Adv. Op. 91, Case No. 70382 (Nov. 22, 2017), the Nevada Supreme Court declined to adopt the Restatement (Third) of Property: Mortgages § 8.3 (1997) which states that a court is generally justified in setting aside a foreclosure sale when the sales price is less than 20 percent of the property's fair market value. First, the Court concluded that U.C.C. Article 9's commercial reasonableness standard is inapplicable to HOA foreclosure sales. Second, since HOA real property foreclosure sales are not subject to Article 9's commercial reasonableness standard, the Court held that they are governed by the longstanding framework for evaluating any other real property foreclosure sale. Therefore, Golden v. Tomiyasu, 79 Nev. 503, 514, 387 P.2d 989, 995 (1963) was upheld by the Nevada Supreme Court in regard to foreclosure sales, including HOA foreclosure sales, and continues to remain the law in Nevada. "Thus, we continue to endorse Golden's approach to evaluating the validity of foreclosure sales: mere inadequacy of price is not in itself sufficient to set aside the foreclosure sale, but it should be considered together with any alleged irregularities in the sales process to determine whether the sale was affected by fraud, unfairness, or oppression. However, it necessarily follows that if the district court closely scrutinizes the circumstances of the sale and finds no evidence that the sale was affected by fraud, unfairness, or oppression, then the sale cannot be set aside, regardless of the inadequacy of price." Nationstar, 133 Nev., Adv. Op. 91, at *10 - 11 (citing Golden, 79 Nev. at 515 - 16, 387 P.2d at 995). The Court then found that the following did not amount to fraud, unfairness, or oppression: (1) the inclusion of fines in the HOA lien; (2) the notice of sale's failure to list the unpaid lien amount on the date of sale; and (3) the person who signed the notice of default was not the person who the HOA president designated to sign the notice. See id. at *11 - 15.
NRCP 68 Offers of Judgment and Claim Preclusion
On October 5, 2017, in Mendenhall v. Tassinari, Case No. 68053, the Nevada Supreme Court answered the question of whether claim preclusion bars a party from subsequently filing claims based on fraud discovered during the ten-day irrevocable period for an offer of judgment. The Court held that claim preclusion would apply if the three-part test for claim preclusion set forth in Five Star Capital Corp. v. Ruby, 124 Nev. 1048, 1054, 194 P.3d 709, 713 (2008) is met: (1) the parties or their privies are the same; (2) the final judgment is valid; and, (3) the subsequent action is based on the same claims or any part of them were or could have been brought in the first case. The Court in Mendenhall found that claim preclusion did apply based on the three-part test and the fact that the offer of judgment was timely accepted. The Court held that the proper avenue for relief in such a situation is through the filing of a NRCP 60(b) motion for relief from a final judgment or order, as alluded to in Nava v. Second Judicial District Court, 118 Nev. 396, 46 P.3d 60 (2002). Unfortunately, the appellant/defendant failed to file a NRCP 60(b) motion after the offer of judgment was accepted. The Court noted that claim preclusion may not apply if the offer of judgment does not "evince an intent by the parties to prevent a broad set of claims from being raised in a second action." Unfortunately for appellants/defendants, the Court found that the broad wording of the offer of judgment evinced an intent for the offer to apply broadly to "any related or potential claims" that could have been asserted "between and among" the parties.
