Weeping Hollow Avenue Trust v. Ashley Spencer

Nevada has a statute that gives a homeowners’ association lien priority over “all other liens and encumbrances” (subject to some limited exceptions) for up to nine months of unpaid HOA fees. Nev. Rev. Stat. § 116.3116 (2)-(3) (2012). This statute has engendered substantial litigation in both state and federal courts. See, e.g., Freedom Mortg. Corp. v. Las Vegas Dev. Grp., LLC, 106 F.Supp.3d 1174 (D. Nev. 2015); SFR Invs. Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d 408 (Nev. 2014). In this case, Wells Fargo Bank, NA (Wells Fargo) asks us to invalidate the statute on constitutional grounds, arguing that it violates due process and the Takings Clause. We decline to reach those arguments, however, because the district court improperly exercised diversity jurisdiction. Thus, we reverse the district court’s judgment and remand the case to the district court with instructions that the court remand the case to state court.

I.

This case concerns a dispute between the parties over who has priority ownership of property located in Las Vegas, Nevada. In late 2008, Ashley Spencer bought the property using a $166,961 loan she obtained from PrimeLending. Prime-Lending recorded the deed…