Nationstar Mortgage LLC v. Keynote Properties, LLC ( 2020 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUN 25 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
NATIONSTAR MORTGAGE LLC, DBA No. 19-15287
Mr. Cooper,
D.C. No.
Plaintiff-Appellant, 2:18-cv-00762-JAD-VCF
v.
MEMORANDUM*
KEYNOTE PROPERTIES, LLC,
Defendant-Appellee,
and
RANCHO SANTA FE HOMEOWNERS
ASSOCIATION,
Defendant.
Appeal from the United States District Court
for the District of Nevada
Jennifer A. Dorsey, District Judge, Presiding
Submitted June 8, 2020**
San Francisco, California
Before: M. SMITH and HURWITZ, Circuit Judges, and ROYAL,*** District Judge.
*
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).
In 2005, a buyer purchased a Nevada residence with a loan secured by a deed
of trust, and the Federal National Mortgage Association (“Fannie Mae”) later
acquired the loan and deed of trust. After the buyer failed to pay assessments of the
Rancho Santa Fe Homeowners Association (the “HOA”), the property was sold at a
non-judicial foreclosure sale to Keynote Properties, LLC, in 2013. Nevada law
grants a homeowners association a “superpriority” lien for unpaid assessments; that
lien is superior even to a previously recorded first deed of trust. See Nev. Rev. Stat.
§ 116.3116; Bank of Am., N.A. v. Arlington W. Twilight Homeowners Ass’n, 920
F.3d 620, 621-22 (9th Cir. 2019) (per curiam).
However, in 2008, the Federal Housing Finance Agency (“FHFA”) had
placed Fannie Mae into conservatorship. See 12 U.S.C. § 4617(a)(2), (b)(2)(A)(i).
Under the Federal Foreclosure Bar, 12 U.S.C. § 4617(j)(3), “[n]o property of [the
FHFA] shall be subject to levy, attachment, garnishment, foreclosure, or sale without
the consent of the Agency, nor shall any involuntary lien attach to the property of
the Agency.” The Federal Foreclosure Bar preempts the Nevada superpriority lien
scheme. See Berezovsky v. Moniz, 869 F.3d 923, 929-31 (9th Cir. 2017).
In 2018, Nationstar Mortgage, LLC, a Fannie Mae servicer and assignee of
Fannie Mae’s interest in the deed of trust, brought this quiet title action against
***
The Honorable C. Ashley Royal, United States District Judge for the
Middle District of Georgia, sitting by designation.
2
Keynote, alleging that Fannie Mae’s deed of trust survived the foreclosure sale
because the FHFA did not consent to the extinguishment of Fannie Mae’s deed of
trust through the sale. See 12 U.S.C. § 4617(j)(3). The district court dismissed the
complaint as time-barred, applying the four-year limitations period in Nev. Rev.
Stat. § 11.220. We have jurisdiction over Nationstar’s appeal under 28 U.S.C.
§ 1291.1
We vacate and remand. For the reasons stated in our opinion in M&T Bank v.
SFR Investments Pool 1, LLC., No. 18-17395, the six-year limitations period in 12
U.S.C. § 4617(b)(12)(A)(i) governs Nationstar’s claims.2 Nationstar’s complaint,
which was filed less than six years after the 2013 non-judicial foreclosure sale, was
therefore timely.3
1
The district court also dismissed Nationstar’s claims against the HOA, but
Nationstar does not challenge that ruling on appeal.
2
“Although the general rule in this circuit is that an appellate court will not
consider an issue raised for the first time on appeal, we will reach the question if it
is purely one of law and the opposing party will suffer no prejudice because of failure
to raise it in the district court.” United States v. Thornburg, 82 F.3d 886, 890 (9th
Cir. 1996). Nationstar did not argue until its reply brief that 12 U.S.C.
§ 4617(b)(12)(A)(i) governed, however, Keynote addressed the argument in a
surreply and the applicable statute of limitations is a purely legal question. We
therefore exercise our discretion to address the issue. See id.
3
Keynote argues that the district court properly dismissed Claims 3 and 6 of
the complaint in any event because Nationstar did not address Keynote’s motion to
dismiss those counts. The district court, whose judgment was based only on the
statute of limitations, can address that argument on remand in the first instance.
3
VACATED AND REMANDED.
Each party to bear its own costs.
4