Bourne Valley Court Trust v. Wells Fargo Bank, NA

BACKGROUND

This case arises out of an action to quiet title to real property located at 410 Horse Pointe Avenue (the Property) purchased at a homeowners’ association foreclosure auction in North Las Vegas, Nevada.

Renee Johnson, the original homeowner, purchased the Property in 2001 with a loan for $174,000 from Plaza Home Mortgage, Inc. (Plaza). The Property is part of a planned development governed by the Parks Homeowners’ Association (Parks). Plaza recorded a deed of trust securing a note on the property, and Appellant Wells Fargo was assigned all beneficial interest in the note and deed of trust in February 2011.

Johnson fell behind on payments for her HOA dues, and Parks recorded a Notice of Delinquent Assessment Lien on August 30, 2011. The total amount due was $1,298.57. On October 12, 2011, Parks recorded a Notice of Default and Election to Sell. On April 9, 2012, Parks recorded a Notice of Trustee/Foreclosure Sale against the Property.

On May 22, 2012, a Trustee’s Deed Upon Sale was recorded, reflecting that Horse Pointe Avenue Trust paid

BOURNE VALLEY COURT TRUST V. WELLS FARGO

$4,145 at the homeowners’ association foreclosure sale. Horse Pointe…

Dissent by Judge WALLACE

OPINION

Nevada Revised Statutes section 116.3116 et seq. (the Statute) 1 strips a mortgage lender of its first deed of trust when a homeowners’ association forecloses on the property based on delinquent homeowners’ association (HOA) dues. Before it was amended, it did so without regard for whether the first deed of trust was recorded before the HOA dues became delinquent, and critically, without requiring actual notice to the lender that the homeowners’ association intends to foreclose.

We hold that the Statute’s “opt-in” notice scheme, which required a homeowners’ association to alert a mortgage lender that it intended to foreclose only if the lender had affirmatively requested notice, facially violated the lender’s constitutional due process rights under the Fourteenth Amendment to the Federal Constitution. We therefore vacate the district court’s judgment and remand for proceedings consistent with this opinion.

BACKGROUND

This case arises out of an action to quiet title to real property located at 410 Horse Pointe Avenue (the Property) purchased at a homeowners’ association foreclosure auction in North Las Vegas, Nevada.

Renee Johnson, the…

dissenting

The majority holds that section 116.3116 et seq. of the Nevada Revised Statutes (HOA Statute) is facially unconstitutional because it fails to satisfy the Fourteenth Amendment’s Due Process Clause. I dissent for two reasons. First, both the Supreme Court’s case law and our own precedent make it clear that for a due process challenge to succeed, the challenger must *1161 show that there has been “overt official involvement,” or, in other words, state action. Because there has been no state action here, I would hold that Wells Fargo’s challenge necessarily fails. Second, even were there sufficient state action to implicate the Due Process Clause, the HOA Statute satisfies due process because it incorporates another provision in the Nevada Revised Statutes that requires the homeowners’ association (HOA) to provide written notice to a mortgage lender.

I.

A foundational principle for all constitutional law is that “most rights secured by the Constitution are protected only against infringement by governments.” Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 156 , 98 S.Ct. 1729 , 56 L.Ed.2d 185 (1978). Thus, “[wjhile as a factual matter any person with sufficient physical power…