U.S. Bank v. Sfr Investments Pool 1, LLC

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

U.S. BANK, N.A., Trustee for Banc No. 19-17033
of America Funding Corporation
Mortgage Pass-Through Certificates, D.C. No.
Series 2005-F, 2:15-cv-00218-
Plaintiff-Counter-Defendant- KJD-NJK
Appellant,

v. OPINION

WHITE HORSE ESTATES
HOMEOWNERS ASSOCIATION,
Defendant-Appellee,

SFR INVESTMENTS POOL 1, LLC,
Defendant-Counter-Claimant-Cross-
Claimant-Appellee,

v.

MERIDIAS CAPITAL, INC.; MAT
HOLDINGS, LLC,
Cross-Claim-Defendants.

Appeal from the United States District Court
for the District of Nevada
Kent J. Dawson, District Judge, Presiding

Argued and Submitted October 29, 2020
Portland, Oregon
2 U.S. BANK V. WHITE HORSE ESTATES HOA

Filed February 8, 2021

Before: A. Wallace Tashima, Susan P. Graber, and Sandra
S. Ikuta, Circuit Judges.

Opinion by Judge Graber;
Dissent by Judge Ikuta

SUMMARY *

Nevada Foreclosure Law

The panel affirmed the district courts’ summary
judgment in favor of a homeowners’ association (“HOA”),
SFR Investments Pool 1, LLC, in a diversity action by U.S.
Bank, N.A. seeking to set aside the HOA’s foreclosure sale
of real property in Nevada.

U.S. Bank argued that a mortgage-savings clause in the
applicable covenants, conditions, and restrictions
(“CC&Rs”), by itself, constituted unfairness that affected the
sale. The district court held that, because the clause did not
affect the sale, the sale could not be set aside; and title vested
with SFR Investments, the purchaser at the HOA sale.

The panel predicted that the Nevada Supreme Court
would adhere to its several unpublished decisions, and hold
that a mortgage-savings clause, by itself, did not constitute
unfairness that affects a sale. The panel held that the
mortgage-savings clause, which stated that any lien for
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
 U.S. BANK V. WHITE HORSE ESTATES HOA 3

unpaid assessments would be subordinate to any lien by the
deed of trust, was void as a matter of Nevada law because it
plainly conflicted with Nev. Rev. Stat. § 116.3116(2), which
required liens for unpaid assessments to have superpriority
status, and Nev. Rev. Stat. § 116.1104, which provided that
the priorities cannot be modified by agreement. The panel
further held that the mortgage-savings clause was void under
the terms of the CC&Rs themselves. In addition, the panel
held that U.S. Bank did not introduce any evidence in this
case that the mortgage-savings clause affected this sale.
Finally, the panel held that the Nevada Supreme Court in
numerous unpublished decisions repeatedly rejected the
same argument that U.S. Bank raised here, in materially
indistinguishable circumstances.

The panel rejected U.S. Bank’s remaining arguments.
The panel held that no unfairness arose from the HOA’s
processing of payments. The panel declined U.S. Bank’s
invitation to remand the case to allow it to raise, for the first
time, the argument that tender was futile and to present
evidence on that point. Finally, the notice at issue here,
which complied with the statutory requirements, did not
violate due process.

Judge Ikuta dissented because she believed that the
majority usurped the authority of the Nevada Supreme Court
by deciding an important and open issue of Nevada state law.
Judge Ikuta would certify to the Nevada Supreme Court the
question of whether misleading CC&Rs constituted slight
evidence of fraud, unfairness, or oppression affecting the
sale.
4 U.S. BANK V. WHITE HORSE ESTATES HOA

COUNSEL

Melanie D. Morgan (argued) and Donna M. Wittig,
Akerman LLP, Las Vegas, Nevada, for Plaintiff-Counter-
Defendant-Appellant.

Jason Martinez (argued), Jacqueline A. Gilbert, and Diana S.
Ebron, Kim Gilbert Ebron, Las Vegas, Nevada, for
Defendant-Counter-Claimant-Cross-Claimant-Appellee.

Sean L. Anderson and Ryan D. Hastings, Leach Kern
Gruchow Anderson Song, Las Vegas, Nevada, for
Defendant-Appellee.

OPINION

GRABER, Circuit Judge:

Under Nevada law, a court has equitable discretion to set
aside a valid foreclosure sale only if fraud, unfairness, or
oppression affected the sale. In this case, a mortgage-
savings clause in the applicable covenants, conditions, and
restrictions (“CC&Rs”) provided—contrary to Nevada
law—that any lien for unpaid assessments would be
subordinate to the first deed of trust. The clause was void as
a matter of law, and no evidence suggests that anyone relied
on the clause or that the clause affected the sale in any way.
Plaintiff U.S. Bank nevertheless argues that the clause, by
itself, constitutes unfairness that affected the sale. The
district court disagreed and granted summary judgment to
Defendants White Horse Estates Homeowners Association
(“HOA”) and SFR Investments Pool 1, LLC. Reviewing de
novo, CitiMortgage, Inc. v. Corte Madera Homeowners
Ass’n, 962 F.3d 1103, 1106 (9th Cir. 2020), we agree with
 U.S. BANK V. WHITE HORSE ESTATES HOA 5

the district court that, because the clause did not affect the
sale, the sale could not be set aside. Accordingly, we affirm.

FACTUAL AND PROCEDURAL HISTORY

In 2005, Tricia Thoen purchased a house within the
White Horse Estates development in Las Vegas, Nevada.
Thoen financed the purchase with a mortgage of more than
$400,000, secured by a first deed of trust. In 2006, Thoen
transferred her interest in the property to MAT Holdings,
LLC (“MAT”).

At all relevant times, the HOA maintained some
amenities that were held in common by property owners
within the development. Property owners such as MAT
were subject to the HOA’s CC&Rs, including a requirement
to pay monthly assessments. MAT soon fell behind on
payments to the HOA.

Although the HOA’s monthly dues were tiny compared
to the amount of the mortgage, Nevada law at the time1
provided homeowners associations with a powerful tool to
incentivize payments and, if necessary, to collect any
deficient payments. In particular, Nevada law permitted a
homeowners association to place a lien on the property for
any delinquent payments. See generally Bank of America,
N.A. v. Arlington W. Twilight Homeowners Ass’n, 920 F.3d
620, 621–22 (9th Cir. 2019) (per curiam). Any portion of
the lien that consisted of the last nine months of unpaid
monthly assessments, or any unpaid maintenance or

1
In 2015, the Nevada legislature substantially revised the pertinent
state statutes. Vegas United Inv. Series 105, Inc. v. Celtic Bank Corp.,
453 P.3d 1229, 1230 n.1 (Nev. 2019). All relevant actions at issue in
this case predate those amendments, so we apply the law that was in
effect before 2015. Id.
6 U.S. BANK V. WHITE HORSE ESTATES HOA

nuisance-abatement charges, had “superpriority” status over
all other liens, including the first deed of trust. Id. at 622. If
the homeowners association conducted a foreclosure sale on
the lien and complied with statutory procedural
requirements, the sale extinguished the first deed of trust. Id.

In 2010, MAT remained behind on payments, and the
HOA recorded a “notice of delinquent assessment” lien.
Someone (the record does not disclose who) paid the full
amount of the deficiency, and the HOA released the lien.

But MAT fell behind on payments to the HOA again. In
2011, the HOA recorded a second lien. In 2012, the HOA
began the foreclosure process by recording a notice of
default and election to sell, which stated that MAT owed a
total of $3,854.72. The servicer of the loan at the time, Bank
of America, N.A., paid the full amount of $3,854.72, thus
preserving the first deed of trust. In August 2012, Bank of
America assigned the first deed of trust to U.S. Bank.

MAT then fell behind on payments to the HOA for a
third time. In 2013, the HOA recorded a third lien. Later
that year, the HOA recorded a notice of default and election
to sell, which stated that MAT owed a total of $2,740.49.
U.S. Bank took no action to preserve the first deed of trust.
At a foreclosure sale on November 1, 2013, SFR bid the
highest amount, $25,000. The recorded foreclosure deed
estimated the value of the property as $308,823. The
foreclosure sale complied with all statutory requirements,
and a portion of the lien had superpriority status. Pursuant
to Nevada law, the sale thus extinguished the first deed of
trust.

U.S. Bank then brought this action under the district
court’s diversity jurisdiction, asking the district court to set
aside the sale as a matter of equity. SFR filed counterclaims
 U.S. BANK V. WHITE HORSE ESTATES HOA 7

against U.S. Bank and other entities, seeking to quiet title in
its favor. The district court granted summary judgment to
Defendants, quieting title in SFR’s favor and declining to set
aside the sale. U.S. Bank timely appeals.

DISCUSSION

A. Principles of Diversity Jurisdiction

The primary question in this case is one of state law:
whether the mortgage-savings clause in the CC&Rs
constituted unfairness that affected the sale such that the
district court had equitable discretion to set aside the
foreclosure sale. In a diversity case, the published decisions
of the Nevada Supreme Court bind federal courts as to the
substance of Nevada law. Albano v. Shea Homes Ltd.
P’ship, 634 F.3d 524, 530 (9th Cir. 2011). Here, though, the
Nevada Supreme Court has not addressed squarely, in any
published decision, the effect of a mortgage-savings clause
by itself. Our role is thus to “predict how the state high court
would resolve” the question in a published decision. Id.
(internal quotation marks omitted).

As we explain in detail, below, the Nevada Supreme
Court has held in several unpublished decisions that a
mortgage-savings clause, by itself, does not constitute
unfairness that affects a sale. Our cases do not resolve the
appropriate level of deference that we must give to
unpublished decisions of a state’s highest court. At a
minimum, we “may consider” those decisions because they
may “lend[] support” to a conclusion as to what the Nevada
Supreme Court would hold in a published decision. 2 See

2
We likely owe the decisions even greater deference. Under
Nevada Rule of Appellate Procedure 36(c), unpublished decisions by the
8 U.S. BANK V. WHITE HORSE ESTATES HOA

Emps. Ins. of Wausau v. Granite State Ins. Co., 330 F.3d
1214, 1220 n.8 (9th Cir. 2003) (holding that we may
consider unpublished decisions of a state’s intermediate
appellate court). We need not, and do not, decide precisely
how much weight to give unpublished decisions of the
Nevada Supreme Court. As we explain below, under any
standard of deference, or even no deference at all, we readily
predict that the Nevada Supreme Court would adhere to its
unpublished rulings on the disputed point.

B. The Mortgage-Savings Clause

Under Nevada law, courts retain discretion to set aside a
foreclosure sale if two circumstances are present: (1) an
unreasonably low sales price, and (2) fraud, unfairness, or
oppression that affected the sale. Nationstar Mortg., LLC v.
Saticoy Bay LLC Series 2227 Shadow Canyon, (Shadow
Canyon) 405 P.3d 641, 648 (Nev. 2017). The two factors
work together: a greater disparity in purchase price relative
to market value requires only slight evidence of unfairness
that affected the sale. Id. But “mere inadequacy of price is
not in itself sufficient to set aside the foreclosure sale.” Id.
“The party seeking to set aside the sale on equitable grounds
bears the burden to produce evidence showing that the sale
was affected by fraud, unfairness, or oppression that would
justify setting aside the sale.” Res. Grp., LLC v. Nev. Ass’n
Servs., 437 P.3d 154, 160 (Nev. 2019) (en banc) (brackets
and internal quotation marks omitted). If the record contains

Nevada Supreme Court issued after 2015 (which is true of the relevant
decisions here) may be cited for their persuasive value. In that regard,
they are akin to published decisions of a state’s intermediate appellate
court, which we “must follow” unless there is “convincing evidence” that
the state’s highest court would decide otherwise. Goodrich v. Briones
(In re Schwarzkopf), 626 F.3d 1032, 1038 (9th Cir. 2010) (internal
quotation marks omitted).
 U.S. BANK V. WHITE HORSE ESTATES HOA 9

“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.” Shadow Canyon, 405 P.3d at 648–
49.

The Nevada Supreme Court has emphasized that any
fraud, unfairness, or oppression is irrelevant if it did not
affect the sale: “a court may set the sale aside” only “if the
totality of the circumstances demonstrates that the sale itself
was affected by ‘fraud, unfairness, or oppression.’” Res.
Grp. LLC, 437 P.3d at 160–61. Hence, in Resources Group,
even though the trial court found that many equities favored
the bank, the Nevada Supreme Court reversed the trial
court’s decision to set aside the sale because the bank had
“fail[ed] to demonstrate that any of these equities constitute
‘fraud, unfairness, or oppression’ that affected the sales
price.” Id. at 161. Similarly, in Shadow Canyon, 405 P.3d
at 650, the homeowners association listed, on the notice of
sale, the wrong amount necessary to satisfy the unpaid lien,
thus violating a clear statutory requirement. Id. The ultimate
sales price was low—approximately 11% of market value.
Id. But the Nevada Supreme Court held that the statutory
violation nevertheless did not constitute fraud, unfairness, or
oppression that affected the sale: “Significantly, there is no
evidence in the record to suggest that [the bank] ever tried to
tender payment in any amount to the HOA, much less that
[the bank] was confused or otherwise prejudiced by the
notice of sale.” Id.

Here, the purchase price was approximately 8% of the
market value of the property. Because of that low purchase
price, U.S. Bank must produce only slight evidence of fraud,
unfairness, or oppression that affected the sale. Id. at 648.

U.S. Bank points to the mortgage-savings clause in the
CC&Rs as evidence of unfairness that affected the sale. The
10 U.S. BANK V. WHITE HORSE ESTATES HOA

clause stated, contrary to Nevada law, that any lien for
unpaid assessments would be subordinate to any lien by the
first deed of trust. The mortgage-savings clause was void as
a matter of Nevada law. See SFR Invs. Pool 1, LLC v. U.S.
Bank, N.A., 334 P.3d 408, 419 (Nev. 2014) (en banc)
(holding that a similar mortgage-savings clause was void).
The clause plainly conflicted with Nevada Revised Statutes
section 116.3116(2), which required liens for unpaid
assessments to have superpriority status. Id. Additionally,
section 116.1104 provided that the priorities cannot be
modified by agreement. Id.

The mortgage-savings clause also was void under the
terms of the CC&Rs themselves. A provision of the CC&Rs
expressly stated that, if any provision conflicted with chapter
116 of the Nevada Revised Statutes, then “such offending
Declaration provision shall be automatically deemed
modified or severed herefrom.”

U.S. Bank nevertheless urges us to conclude that the
mortgage-savings clause constituted unfairness that affected
the sale. In theory, had U.S. Bank read the mortgage-savings
clause in isolation and without regard to Nevada law, the
clause could have misled U.S. Bank into believing that the
foreclosure sale would not extinguish the first deed of trust.
Even assuming that those theoretical concerns could
constitute sufficient unfairness that would justify setting
aside a sale in different circumstances, U.S. Bank has not
introduced any evidence whatsoever in this case that the
mortgage-savings clause affected this sale. For example,
there is no evidence that U.S. Bank or anyone else relied on
the mortgage-savings clause in deciding whether to bid on
the property or whether to pay off the lien. Cf. U.S. Bank,
Nat’l Ass’n ND v. Res. Grp., LLC, 444 P.3d 442, 447 (Nev.
2019) (describing testimony by U.S. Bank’s collection
 U.S. BANK V. WHITE HORSE ESTATES HOA 11

officer that, had U.S. Bank known of a default, U.S. Bank
“would have paid the lien off”). As the Nevada Supreme
Court said when facing similar circumstances in Shadow
Canyon, “there is no evidence in the record to suggest that
. . . [U.S. Bank or any other potential buyer] was confused
or otherwise prejudiced by” the mortgage-savings clause.
405 P.3d at 650.

In unpublished decisions, the Nevada Supreme Court
repeatedly has rejected the very same argument that U.S.
Bank advances here, in materially indistinguishable
circumstances. For example, in U.S. Bank Nat’l Ass’n as
Trustee for Benefit of HarborView 2005–08 v. Vistas
Homeowners Ass’n, 432 P.3d 191, 2018 WL 6617731 (Nev.
2018) (unpublished), the Nevada Supreme Court held:

As evidence of unfairness, appellants first
contend that the covenants, conditions, and
restrictions (CC&Rs) include a protective
covenant, under which an HOA foreclosure
does not extinguish a first deed of trust. We
are not persuaded that this evidence
constitutes unfairness. Appellants have not
presented any evidence that potential bidders
were misled by the CC&Rs’ protective
covenant and that bidding was chilled.
Moreover, we must presume that any such
bidders also were aware of NRS 116.1104,
such that they were not misled. See Smith v.
State, 151 P. 512, 512 (Nev. 1915) (“Every
one is presumed to know the law and this
presumption is not even rebuttable.”).
12 U.S. BANK V. WHITE HORSE ESTATES HOA

Id. at *1 (citation format modified) (footnote omitted). The
Nevada Supreme Court has reached the same conclusion in
at least nine additional unpublished decisions. 3

U.S. Bank focuses on footnote 11 in Shadow Canyon, in
which the Nevada Supreme Court listed five examples of
“irregularities that may rise to the level of fraud, unfairness,
or oppression,” and the court cited a case or two per example.
Shadow Canyon, 405 P.3d at 648 n.11. The second example
in the list is “an HOA’s representation that the foreclosure
sale will not extinguish the first deed of trust, see ZYZZX2 v.
Dizon, No. 2:13-cv-1307, 2016 WL 1181666, at *5 (D. Nev.
Mar. 25, 2016).” Shadow Canyon, 405 P.3d at 648 n.11.
The district court’s unpublished decision in Dizon involved
a mortgage-savings clause and an individualized letter,
mailed to the relevant bank and to other potential buyers,
stating that the specific sale at issue would not extinguish the
first deed of trust. Dizon, 2016 WL 1181666, at *5. The
district court held that the misrepresentations constituted

3
Residential Credit Sols., Inc. v. TRP Fund IV, LLC, 457 P.3d 245,
2020 WL 762637, at *2 n.3 (Nev. Feb. 14, 2020) (unpublished);
Nationstar Mortg., LLC v. BDJ Invs., LLC, 452 P.3d 410, 2019 WL
6208548, at *2 (Nev. Nov. 20, 2019) (unpublished); Wells Fargo Bank,
N.A. v. Gabriel, 451 P.3d 898, 2019 WL 6119271, at *1 (Nev. Nov. 15,
2019) (unpublished); SFR Invs. Pool 1, LLC v. Nationstar Mortg., LLC,
451 P.3d 548, 2019 WL 6119435, at *2 (Nev. Nov. 15, 2019)
(unpublished); Bank of N.Y. Mellon v. Saticoy Bay LLC Series 4330, 437
P.3d 167, 2019 WL 1244783, at *1 n.3 (Nev. March 15, 2019)
(unpublished); JPMorgan Chase Bank, N.A. v. SFR Invs. Pool 1, LLC,
433 P.3d 263, 2019 WL 292823, at *1 (Nev. Jan. 17, 2019)
(unpublished); Bank of America, N.A. v. Saticoy Bay LLC Series 716,
433 P.3d 262, 2019 WL 292773, at *2 (Nev. Jan. 17, 2019)
(unpublished); PennyMac Corp. v. SFR Invs. Pool 1, LLC, 425 P.3d 719,
2018 WL 4413612, at *2 (Nev. Sept. 14, 2018) (unpublished); First
Horizon Home Loans v. Entrust Grp., Inc., 422 P.3d 710, 2018 WL
3544967, at *2 n.2 (Nev. July 20, 2018) (unpublished).
 U.S. BANK V. WHITE HORSE ESTATES HOA 13

unfairness, and the court held, without elaboration, that the
misrepresentations “resulted in an unreasonably low sale
price.” Id. (emphasis added).

U.S. Bank reasons as follows. First, by citing Dizon, the
Nevada Supreme Court necessarily adopted and
incorporated Dizon’s analysis in full. Second, because
Dizon involved a mortgage-savings clause and because the
district court in Dizon held that there was unfairness that
affected the sale, the Nevada Supreme Court would adopt
the rule that any mortgage-savings clause is necessarily an
unfairness that affects any foreclosure sale. We disagree
with both steps of the analysis.

At the first step, we read the Shadow Canyon footnote in
a straightforward manner. The Nevada Supreme Court listed
examples of irregularities that, depending on the
circumstances, “may rise to the level of fraud, unfairness, or
oppression.” Shadow Canyon, 405 P.3d at 648 n.11
(emphasis added). For each example, the court cited a case
or two in which another court had held that the irregularity
constituted fraud, unfairness, or oppression. Id. But nothing
suggests that the court necessarily agreed with all aspects of
the cited cases and intended to adopt all the decisions
wholesale. 4

4
Courts often cite a case or legal source to illustrate a narrow point
without adopting the cited case’s analysis in full. Indeed, Shadow
Canyon itself made this point. In an earlier case, the Nevada Supreme
Court had cited a section of the Restatement (Third) of Property, but
Shadow Canyon rejected the bank’s argument that the court had adopted
the Restatement’s standard: “The citation to the Restatement in [the
earlier case] cannot reasonably be construed as an implicit adoption” of
the Restatement’s rule. Shadow Canyon, 405 P.3d at 647. The same
14 U.S. BANK V. WHITE HORSE ESTATES HOA

With respect to the citation of Dizon specifically, nothing
suggests that—by citing an unpublished order, without
parenthetical or other elaboration, in a footnote, in a long list
of examples—the court adopted all of Dizon’s analysis. The
most natural reading of the footnote’s citation to Dizon is
that Dizon is an example of a case in which a court found
that, in the totality of the circumstances, an HOA’s
misleading representations constituted unfairness. Id. We
do not read the footnote’s citation to Dizon as adopting
Dizon’s entire analysis, particularly with respect to other
issues such as whether the HOA’s representations in that
case affected the sale and what evidence is required to
establish an effect on the sale.

At step two of the analysis, even if we assume that the
Nevada Supreme Court intended in Shadow Canyon to adopt
all of Dizon’s analysis, we readily conclude that the Nevada
Supreme Court would distinguish this case from Dizon. As
noted above, Dizon concerned a mortgage-savings clause
and a letter affirmatively stating that the specific sale at issue
would not extinguish the first deed of trust. Dizon, 2016 WL
1181666, at *5. By representing that the specific sale at
issue would not extinguish the first deed of trust, the letter
informed the bank, in effect, that the homeowners
association’s lien contained only charges with subpriority
status and contained no charges with superpriority status.
The bank therefore had no reason to protect its interest
because, according to the letter, the bank’s interest was not
threatened. That type of individualized affirmative
misrepresentation is clearly unfair. See Lahrs Family Tr. v.
JPMorgan Chase Bank, N.A., 446 P.3d 1157, 2019 WL
4054161, at *2 (Nev. August 27, 2019) (unpublished)

analysis applies here: the citation to Dizon cannot reasonably be
construed as an implicit adoption of all of Dizon’s reasoning.
 U.S. BANK V. WHITE HORSE ESTATES HOA 15

(holding that a letter similar to the one sent in Dizon
constituted unfairness and explaining that, “at the very least,
the letter suggested that the HOA was seeking to foreclose
only on the subpriority portion of the lien, thereby lulling
[the bank] into believing its senior lien was not in
jeopardy”). By contrast, the mortgage-savings clause was
void as a matter of law and did not, by itself, constitute
unfairness that affected the sale.

Once again, unpublished decisions by the Nevada
Supreme Court confirm our interpretation of Shadow
Canyon’s citation of Dizon. Time and again, the Nevada
Supreme Court has distinguished Dizon for the reasons given
above. For example, in HarborView, 2018 WL 6617731,
after holding that no prospective buyer could have been
misled by the mortgage-savings clause, the court held in a
footnote:

In this respect, to the extent it is persuasive,
ZYZZX2 v. Dizon, 2016 WL 1181666 (D.
Nev. 2016), is distinguishable because in
addition to the CC&Rs’ covenant, the HOA
sent a letter to the deed of trust beneficiary
affirmatively misrepresenting to the
beneficiary that it would not need to take any
action to protect its deed of trust.

HarborView, 2018 WL 6617731, at *1 n.2 (citation format
modified); accord Residential Credit Sols., 2020 WL
762637, at *2 n.3; BDJ Invs., 2019 WL 6208548, at *2 n.4;
Gabriel, 2019 WL 6119271, at *1 n.3; SFR Invs. Pool 1,
LLC, 2019 WL 6119435, at *2 n.4; Saticoy Bay LLC Series
4330, 2019 WL 1244783, at *1 n.3; JPMorgan Chase, 2019
WL 292823, at *1 n.3; Saticoy Bay LLC Series 716, 2019
WL 292773, at *2 n.5; PennyMac Corp., 2018 WL 4413612,
16 U.S. BANK V. WHITE HORSE ESTATES HOA

at *2 n.5; First Horizon, 2018 WL 3544967, at *2 n.2; see
also U.S. Bank, N.A. v. S. Highlands Cmty. Ass’n, 2019 WL
1429524, at *6 (D. Nev. March 29, 2019) (“In fact, the Court
that decided [Dizon] has since clarified that its holding
hinged upon the HOA’s representations in its letter to Wells
Fargo.” (citing Bayview Loan Servicing, LLC v. SFR Invs.
Pool 1, LLC, No. 2:14-cv-1875, 2017 WL 1100955, at *9
(D. Nev. Mar. 22, 2017))), appeal docketed, No. 19-15918
(9th Cir. May 1, 2019).

For all of those reasons, we conclude that, under Nevada
law, the mortgage-savings clause did not constitute fraud,
unfairness, or oppression that affected the sale.

The dissenting opinion suggests that we should certify
the question to the Nevada Supreme Court. We respectfully
decline the suggestion. Our role in a diversity case is to
“predict how the state high court would resolve” a question
in a published decision. Albano, 634 F.3d at 530 (internal
quotation marks omitted). As that legal standard makes
clear, we regularly decide issues of state law without
certifying questions to the state’s highest court. Neither
before the district court nor before us (until we sua sponte
raised the question of certification) did either party request
certification. Instead, the parties asked both the district court
and us to resolve the question directly. Although we may
certify a question sua sponte, “[w]e invoke the certification
process only after careful consideration and do not do so
lightly.” Murray v. BEJ Minerals, LLC, 924 F.3d 1070,
1072 (9th Cir. 2019) (en banc) (order) (internal quotations
marks omitted). “In deciding whether to exercise our
discretion, we consider: (1) whether the question presents
important public policy ramifications yet unresolved by the
state court; (2) whether the issue is new, substantial, and of
broad application; (3) the state court’s caseload; and (4) the
 U.S. BANK V. WHITE HORSE ESTATES HOA 17

spirit of comity and federalism.” Id. (internal quotation
marks omitted).

Several of those factors weigh heavily against
certification here. In our view, the answer to the legal issue
is clear under the Nevada Supreme Court’s published
decisions, including Shadow Canyon. Likely because the
answer is clear, the Nevada Supreme Court repeatedly and
consistently has resolved the precise issue many times in
reasoned, unpublished decisions. No further guidance is
needed.

Nor is the issue “new.” Murray, 924 F.3d at 1072. In
the past six years, the issue has recurred repeatedly both in
federal court and in state court. No federal court has
suggested that the issue requires certification, and the state
courts have deemed the question unworthy of publication.

The issue also lacks “broad application.” Id. The issue
affects only a dwindling number of cases, because six years
have now passed since the Nevada legislature significantly
revised the statutory scheme. See, e.g., Arlington W.,
920 F.3d at 622 n.1 (“The Nevada legislature made
significant amendments to these provisions in 2015.”). Once
the remaining few cases in the pipeline are resolved, the
issue has no continuing vitality. 5

5
The 2015 amendments added procedural protections for holders of
first deeds of trust. See, e.g., JPMorgan Chase Bank, N.A. v. SFR Invs.
Pool 1, LLC, 200 F. Supp. 3d 1141, 1169 (D. Nev. 2016) (describing the
effect of the amendments); Christiana Tr. v. K&P Homes, No. 2:15-cv-
01534, 2018 WL 456020, at *2–*3 (D. Nev. Jan. 16, 2018) (unpublished)
(describing the legislative history). HOAs undoubtedly will continue to
foreclose on delinquent homeowners. But the 2015 amendments make
it extremely unlikely that the pertinent issue—a foreclosure’s
18 U.S. BANK V. WHITE HORSE ESTATES HOA

Next, although “comity and federalism,” id., often will
support a decision to certify, those considerations point in
the opposite direction here. The Nevada Supreme Court
repeatedly has answered the precise question in reasoned
decisions, while determining that publication is not a wise
expenditure of its limited judicial resources. As a matter of
comity and federalism, we respect that considered
determination.

Finally, we note that the dissenting opinion
fundamentally misunderstands the nature of a federal court’s
decision in a diversity case. A resolution on the merits
neither “usurps the authority of the Nevada Supreme Court”
nor “deprives the Nevada Supreme Court of the opportunity
to develop its own jurisprudence.” Dissent at 20, 33. The
Nevada Supreme Court remains free to resolve the legal
issue in a future published decision, and the federal courts
must respect that decision. See, e.g., Arlington W., 920 F.3d
at 623–24 (holding that our earlier decision on a question of
Nevada law “no longer controls the analysis” because “the
Nevada Supreme Court later rejected [our] interpretation of
the Nevada statutory scheme”).

extinguishing the first deed of trust despite statements in CC&Rs—will
arise under the amended statute with any frequency, if at all. Notably,
the dissenting opinion cites for the contrary contention only an entirely
inapposite case and a newspaper article describing foreclosures with no
mention of first deeds of trust or CC&Rs. See Dissent at 35 (citing Bank
of Am., N.A. v. Hernandez, 2:17-cv-03108, 2019 WL 1442184, at *4 (D.
Nev. Mar. 31, 2019), which did not concern CC&Rs and where the bank
successfully protected its interest by paying the superpriority amount).
 U.S. BANK V. WHITE HORSE ESTATES HOA 19

C. U.S. Bank’s Remaining Arguments

U.S. Bank’s remaining arguments do not persuade us.

No unfairness arose from the HOA’s processing of
payments. Bank of America’s payment to the HOA fully
satisfied the second lien, and the HOA later recorded the
third lien. Neither U.S. Bank nor another entity requested—
at any time before the foreclosure—that the HOA apply a
portion of Bank of America’s earlier payment to satisfy the
third lien.

We decline U.S. Bank’s invitation to remand this case to
allow U.S. Bank to raise, for the first time, the argument that
tender was futile and to present evidence on that point. The
Nevada Supreme Court recently discussed futility of tender
in 7510 Perla Del Mar Ave. Tr. v. Bank of Am. N.A.,
458 P.3d 348 (Nev. 2020) (en banc). But we see no reason
to excuse U.S. Bank’s forfeiture of the issue. See Corte
Madera, 962 F.3d at 1109 (declining to permit the belated
argument because “the futility-of-tender concept discussed
in Perla Del Mar is nothing new”).

Finally, the notice at issue here, which complied with the
statutory requirements, did not violate due process. Wells
Fargo Bank, N.A. v. Mahogany Meadows Ave. Tr., 979 F.3d
1209, 1217–18 (9th Cir. 2020).

AFFIRMED.
20 U.S. BANK V. WHITE HORSE ESTATES HOA

IKUTA, Circuit Judge, dissenting:

The majority here usurps the authority of the Nevada
Supreme Court by deciding an important and open issue of
Nevada state law. This appeal raises the question whether a
court can set aside a foreclosure sale where: (1) a
homeowner’s association (HOA) foreclosed on a lien for a
few thousand dollars in unpaid assessments and by doing so
extinguished a first deed of trust securing a loan for hundreds
of thousands of dollars, (2) the foreclosure sales price was
grossly inadequate compared to the value of the property;
and (3) there was evidence of unfairness, fraud or oppression
due to the HOA’s promise not to foreclose in that exact
situation. Instead of certifying the question — or at the least,
following the direction of a published Nevada Supreme
Court opinion on this issue — the majority elects to follow
conflicting unpublished decisions, while trying to explain
away the inconsistency between the two. Because resolving
such conflicts is the prerogative of the highest state court, we
should have shown judicial humility and certified this
question, which has “significant policy implications” for
those with property interests in Nevada, to the Nevada
Supreme Court. See Perez-Farias v. Glob. Horizons, Inc.,
668 F.3d 588, 593 (9th Cir. 2011) (per curiam).

I

In failing to defer to the Nevada Supreme Court by
certifying the question raised by this appeal, the majority
interferes with the Nevada Supreme Court’s prerogative to
resolve a recurring legal issue in the area of foreclosures and
priorities relating to common interest communities. A brief
overview of this unfolding story is necessary.

In 1991, the Nevada legislature adopted the Uniform
Common Interest Ownership Act, a model law created by
 U.S. BANK V. WHITE HORSE ESTATES HOA 21

the Uniform Law Commission to regulate HOAs. SFR Invs.
Pool 1 v. U.S. Bank, 130 Nev. 742, 744 (2014) (en banc)
(SFR I). One part of this act, which Nevada adopted, was
NRS 116.3116 (HOA lien statute). Subsection 1 of this
statute allows the HOA to place a lien on its homeowners’
residences for any delinquent HOA assessment. See NRS
116.3116(1). 1 Subsection 2 gives that HOA lien priority
over most other liens. See NRS 116.3116(2). 2 While the

1
At the time of the foreclosure sale in this case, NRS 116.3116(1)
provided:

The association has a lien on a unit for any
construction penalty that is imposed against the unit’s
owner pursuant to NRS 116.310305, any assessment
levied against that unit or any fines imposed against
the unit’s owner from the time the construction
penalty, assessment or fine becomes due. Unless the
declaration otherwise provides, any penalties, fees,
charges, late charges, fines and interest charged
pursuant to paragraphs (j) to (n), inclusive, of
subsection 1 of NRS 116.3102 are enforceable as
assessments under this section. If an assessment is
payable in installments, the full amount of the
assessment is a lien from the time the first installment
thereof becomes due.

NRS 116.3116(1) (2013). In 2015, the legislature amended this
provision to allow HOAs to add the costs of collecting past due
obligations to the lien amount. NRS 116.3116(1) (2015).

2
NRS 116.3116(2) provided:

A lien under this section is prior to all other liens and
encumbrances on a unit except:

(a) Liens and encumbrances recorded before the
recordation of the declaration and, in a cooperative,
22 U.S. BANK V. WHITE HORSE ESTATES HOA

liens and encumbrances which the association creates,
assumes or takes subject to;

(b) A first security interest on the unit recorded before
the date on which the assessment sought to be enforced
became delinquent or, in a cooperative, the first
security interest encumbering only the unit’s owner’s
interest and perfected before the date on which the
assessment sought to be enforced became delinquent;
and

(c) Liens for real estate taxes and other governmental
assessments or charges against the unit or cooperative.

The lien is also prior to all security interests described
in paragraph (b) to the extent of any charges incurred
by the association on a unit pursuant to NRS
116.310312 and to the extent of the assessments for
common expenses based on the periodic budget
adopted by the association pursuant to NRS 116.3115
which would have become due in the absence of
acceleration during the 9 months immediately
preceding institution of an action to enforce the lien,
unless federal regulations adopted by the Federal
Home Loan Mortgage Corporation or the Federal
National Mortgage Association require a shorter
period of priority for the lien. If federal regulations
adopted by the Federal Home Loan Mortgage
Corporation or the Federal National Mortgage
Association require a shorter period of priority for the
lien, the period during which the lien is prior to all
security interests described in paragraph (b) must be
determined in accordance with those federal
regulations, except that notwithstanding the provisions
of the federal regulations, the period of priority for the
lien must not be less than the 6 months immediately
preceding institution of an action to enforce the lien.
This subsection does not affect the priority of
 U.S. BANK V. WHITE HORSE ESTATES HOA 23

HOA’s lien does not have priority for all costs and
assessments, the portion of the lien securing nine months of
HOA dues and maintenance and nuisance-abatement
charges does have priority over a first deed of trust. See NRS
116.3116(2)(b). The portion of the HOA assessment with
priority over the first deed of trust is referred to as the
“superpriority” lien. See SFR I, 130 Nev. at 745.

The HOA’s ability to impose a superpriority lien on
residences in the common interest community and then
foreclose on the lien did not raise any controversies for many
years. Indeed, in order to induce lenders to participate in
financing the sale of a residence within a common interest
community, HOAs typically included mortgage protection
clauses in their covenants, conditions, and restrictions
(CC&Rs). These mortgage protection clauses stated that the
HOA would subordinate its superpriority lien to the bank’s
first deed of trust. As a result, HOAs did not generally
foreclose on superpriority liens. See Letter from Common
Int. Comm., Real Prop. Section, State Bar of Nev., to Joint
Ed. Bd. for Unif. Real Prop. Acts 9 (Oct. 31, 2013)
[hereinafter CIC Letter]. 3 Rather, lenders brought
foreclosure actions when homeowners fell behind on their
payments on the first deed of trust, and then paid off the
HOA’s lien from the proceeds of the foreclosure sale. See
id.

mechanics’ or materialmen’s liens, or the priority of
liens for other assessments made by the association.

NRS 116.3116(2) (2013).

3
Available at https://www.nvbar.org/wp-content/uploads/8631043
_1Comment-Letter-to-JEB.pdf (last accessed Dec. 13, 2020).
24 U.S. BANK V. WHITE HORSE ESTATES HOA

This landscape changed after the 2008 economic
downturn, which severely affected the Nevada housing
market. To respond to the crisis, the Nevada legislature
passed AB 284 in 2011. Id. at 9–10; 2011 Nev. Laws Ch. 81
(AB 284). Among its other provisions, AB 284 required
lenders to provide a sworn affidavit before pursuing non-
judicial foreclosure against a homeowner, and increased the
criminal penalties for “robo-signing” foreclosure
documents. See NRS 107.080 (2011); NRS 205.395 (2011).
In response to these new rules, lenders brought fewer
foreclosure actions. See CIC Letter at 9. As a result, HOAs
initiated their own foreclosures of superpriority liens in order
to recover unpaid assessments. Id.

During this period, it was unclear whether the HOA’s
foreclosure of its superpriority lien extinguished the lender’s
first deed of trust. Nevada’s state courts and federal district
courts in Nevada were divided on this issue. See SFR I,
130 Nev. at 747. Some courts held that a foreclosure sale on
the HOA superpriority lien extinguished all junior interests,
including the first deed of trust, id. (citing 7912 Limbwood
Court Trust v. Wells Fargo Bank, N.A., 979 F. Supp. 2d
1142, 1149 (D. Nev. 2013)). Other courts held that the
superpriority lien merely established a right to payment.
According to this view, the proceeds from a foreclosure sale
must be used to pay off the superpriority lien before being
applied to the first deed of trust, but the HOA’s lien itself
could not extinguish the deed of trust. Id. (citing Bayview
Loan Serv., LLC v. Alessi & Koenig, LLC, 962 F. Supp. 2d
1222, 1226 (D. Nev. 2013)).

In the absence of a definitive legal ruling, “the Nevada
real estate community [did] not operate as if HOA
foreclosures extinguish first mortgages recorded before the
HOA delinquency arises.” See Bayview, 962 F. Supp. 2d
 U.S. BANK V. WHITE HORSE ESTATES HOA 25

at 1226. Investors like SFR bought residences at HOA
foreclosure sales for roughly the amount of the HOA’s liens,
which were “tiny fractions of [the residences’] fair market
value.” Id. As Bayview observed, if “investors believed that
HOA foreclosures extinguished first mortgages,” the homes
would have instead sold for amounts significantly closer to
their fair market value. Id.

In 2014, the Nevada Supreme Court resolved the
division among the state and federal courts by reaching the
unexpected conclusion that the HOA’s foreclosure on its
superpriority lien did extinguish a first deed of trust. See
SFR I, 130 Nev. at 747–48. The court held that because the
HOA lien statute does not speak in terms of payment
priorities, but instead “states that the HOA ‘lien . . . is prior
to other liens,’” it establishes a true priority lien that
extinguishes the first deed of trust. Id. at 748 (quoting NRS
116.3116(2)). The court reasoned that this interpretation
was not unfair to lenders because they could easily pay off
the superpriority lien to avoid the loss of their investments.
Id. at 750. The court rejected the argument that the
ubiquitous mortgage protection clause in CC&Rs for
common interest communities could waive the effect of the
superpriority lien. Id. at 757–58. Relying on NRS 116.1104,
which states that the provisions of chapter 116 “may not be
varied by agreement, and rights conferred by it may not be
waived,” the court indicated that the HOA’s waiver of its
superpriority lien was void and unenforceable. Id. SFR I did
not, however, consider whether a foreclosure sale could be
set aside if it were commercially unreasonable. Id. at 756
n.6.

SFR I was a windfall to investors purchasing residences
at HOA foreclosure sales. According to the Nevada
Association of Realtors, during the period from January
26 U.S. BANK V. WHITE HORSE ESTATES HOA

2013 through July 2016, investors purchased residences at
HOA foreclosure sales in Clark and Washoe Counties
(Nevada’s most populous counties) at a 42 and 90 percent
discount, respectively. See LIED Institute for Real Estate
Studies at UNLV, Report of Nevada Association of Realtors
On Nevada’s Homeowners’ Association Super Priority Lien,
Appendix III 56–57 (2017). 4

Unsurprisingly, SFR I was controversial. The court’s
interpretation of the HOA lien statute made it more difficult
to obtain a loan for a home governed by an HOA. Id.
at Appendix I 40; Federal Housing Finance Agency,
Statement on Super Priority Liens (Dec. 22, 2014). 5
Moreover, we concluded that NRS 116.3116, as interpreted
by SFR I, did not apply to the Federal National Mortgage
Association (Fannie Mae) or the Federal Home Loan
Mortgage Corporation (Freddie Mac) because it was
preempted by the Federal Foreclosure Bar, 12 U.S.C.
§ 4617(j)(3). See Fed. Home Loan Mortg. Corp. v. SFR
Invs. Pool 1, LLC, 893 F.3d 1136, 1140–41 (9th Cir. 2018),
cert. denied, 139 S. Ct. 1618 (2019).

In 2015, the Nevada Legislature responded to these
concerns by modifying the HOA foreclosure scheme to
create a pre-foreclosure sale payoff option and a 60-day right
of redemption for first deed of trust holders. See NRS
116.31166(3). In addition, the legislature strengthened the

4
Available at http://hoasuperprioritylien.com/Appendix-III.pdf and
https://hoasuperprioritylien.com/methodology-appendices/ (last accessed
Dec. 13, 2020).

5
Available at https://www.fhfa.gov/mobile/Pages/public-affairs-
detail.aspx?PageName=Statement-of-the-Federal-Housing-Finance-
Agency-on-Certain-Super-Priority-Liens.aspx (last accessed Dec. 29,
2020).
 U.S. BANK V. WHITE HORSE ESTATES HOA 27

scheme’s notice requirements, mandating that HOAs send
all relevant foreclosure notices to the first deed of trust
holder, and requiring that those notices include the amount
of the HOA lien with superpriority status. See NRS
116.31162.

The aftermath of SFR I also prompted the Nevada
Supreme Court to refine its interpretation of the HOA lien
statute in a manner that mitigated some of the harshest
impacts on lenders. Although concluding that “inadequacy
of price, however gross, is not in itself a sufficient ground
for setting aside a . . . sale,” Shadow Wood Homeowners
Ass’n, Inc. v. N.Y. Cmty. Bancorp, Inc., 132 Nev. 49, 58
(2016) (en banc) (citation omitted), the Nevada Supreme
Court clarified that “where the inadequacy of the price is
great, a court may grant relief based on slight evidence of
fraud, unfairness, or oppression.” Nationstar Mortg., LLC v.
Saticoy Bay LLC Series 2227 Shadow Canyon, 133 Nev.
740, 741 (2017) (emphasis added); see also id. at 749 (“[I]t
is universally recognized that . . . where the inadequacy is
palpable and great, very slight additional evidence of
unfairness or irregularity is sufficient to authorize the
granting of the relief sought.”) (quoting Golden v. Tomiyasu,
79 Nev. 503, 515–16 (1963)). Shadow Canyon held that the
inadequacy of the sales price at the foreclosure sale should
“be considered together with any alleged irregularities in the
sales process to determine whether the sale was affected by
fraud, unfairness, or oppression.” Id. at 749.

To guide courts and litigants going forward, Shadow
Canyon included a nonexhaustive list of “irregularities that
may rise to the level of fraud, unfairness, or oppression.” Id.
at 749 n.11. Among these irregularities was “an HOA’s
representation that the foreclosure sale will not extinguish
the first deed of trust.” Id. (citing ZYZZX2 v. Dizon,
28 U.S. BANK V. WHITE HORSE ESTATES HOA

No. 2:13-cv-1307, 2016 WL 1181666, at *5 (D. Nev. Mar.
25, 2016)). Dizon, cited with approval in Shadow Canyon,
set aside a foreclosure sale because the HOA’s mortgage
protection clause in its CC&Rs represented to the general
public that the HOA’s foreclosure would not extinguish the
first deed of trust. Dizon, 2016 WL 1181666, at *5. The
HOA had also sent a letter to the lender and other interested
parties making the same representation. Id. Dizon reasoned
that “[t]he association’s notice to [the lender] and the
information it conveyed to potential buyers was legally
inaccurate and resulted in an unreasonably low sale price.”
Id. “This defect in sale, coupled with a disproportionately
low price, demonstrates that the foreclosure was unfair and
commercially unreasonable.” Id.

In addition to holding that courts could set aside
foreclosure sales where an inadequate price is accompanied
by “slight evidence” of irregularities, the Nevada Supreme
Court also issued opinions after SFR I declining to hold
lenders to rigid procedural requirements. For example, the
Nevada Supreme Court held “that a first deed of trust
holder’s unconditional tender of the superpriority amount
due results in the buyer at foreclosure taking the property
subject to the deed of trust.” Bank of Am., N.A. v. SFR Invs.
Pool 1, LLC, 134 Nev. 604, 605 (2018) (en banc) (Diamond
Spur). Further, the court held that where the HOA’s
accounting did not plainly establish that the residence had
any charges for maintenance or nuisance abatement, the
lender’s tender of nine months of unpaid assessments
discharged the superpriority amount. Id. at 607. In addition,
the lender’s tender did not have to be unconditional, but
could include conditions on which it had the right to insist,
such as the condition that “acceptance of the tender would
satisfy the superpriority portion of the lien,” thus preserving
the lender’s interest in the property. Id. Finally, the Nevada
 U.S. BANK V. WHITE HORSE ESTATES HOA 29

Supreme Court held that formal tender of the superpriority
amount to the HOA’s agent is excused when evidence shows
that the HOA’s agent had a known policy of rejecting such
payments. See 7510 Perla Del Mar Ave Trust v. Bank of
Am., N.A., 136 Nev. 62, 66–67 (2020) (en banc).

II

This history of Nevada law provides the backdrop to the
open legal question raised here: whether U.S. Bank is
entitled to equitable relief as a matter of Nevada state law.
To understand the importance of this question—and why the
majority errs in answering the question itself instead of
deferring to the Nevada Supreme Court—it is helpful to
understand the facts of this case in their historical context.

A

In 2005, the original lender (now U.S. Bank) made a loan
of some $479,000 to Tricia Thoen to buy the residence at
6353 Ebony Legends Avenue in Las Vegas, which was
subject to the CC&Rs issued by White Horse Estates
Homeowners Association (White Horse). The CC&Rs
expressly stated that an HOA superpriority lien would not
take priority over a lender’s first deed of trust: “no lien
created [by the HOA] shall defeat or render invalid the rights
of a Beneficiary under any Recorded First Deed of Trust
encumbering a Unit, made in good faith and for value.”

In 2010, a few years after the 2008 housing crisis, White
Horse recorded its first notice of delinquent assessment lien
of $1100, which the lender subsequently paid. In 2012, the
lender paid a lien of $3854 pursuant to White Horse’s second
notice of delinquent assessment. In 2013, White Horse
recorded a third notice of delinquent assessment lien in the
amount of $1429. When the lender failed to pay this lien,
30 U.S. BANK V. WHITE HORSE ESTATES HOA

White Horse foreclosed on the residence in November 2013.
At the foreclosure sale, SFR purchased the residence, which
was then valued at some $309,000, for a mere $25,000.

At the time of the foreclosure sale, the Nevada Supreme
Court had not yet decided whether an HOA’s foreclosure of
its superpriority lien extinguished a lender’s first deed of
trust. See supra Part I. After Shadow Canyon resolved this
issue in favor of HOAs, U.S. Bank brought an action for
equitable relief, arguing that the court should set aside the
sale because the sale price was grossly inadequate, and the
HOA acted unfairly in light of the mortgage protection
clause in its CC&Rs. The district court rejected U.S. Bank’s
claim, holding that, as a matter of law, the mortgage
protection clause was not evidence of fraud, unfairness or
oppression sufficient to set aside the sale.

B

The district court’s conclusion, which the majority
echoes, is not supported by Nevada law. The Nevada
Supreme Court has made clear that equitable relief may be
available in the circumstances present here. Specifically, a
foreclosure sale may be set aside if it results in a grossly
inadequate price and there is “slight evidence” of fraud,
unfairness, or oppression affecting the sale. See Shadow
Canyon, 133 Nev. at 741. There is no doubt that SFR paid a
grossly inadequate price of $25,000 for a home valued at
over $308,000, approximately eight percent of the home’s
total value. And Shadow Canyon supports U.S. Bank’s
argument that it has shown “slight evidence” of fraud,
unfairness or oppression. See id. at 749 n.11. As in Dizon,
White Horse included a mortgage protection clause which
“represented to both the general public as well as [U.S.
Bank] that the association’s foreclosure would not
extinguish the first deed of trust.” See Dizon, 2016 WL
 U.S. BANK V. WHITE HORSE ESTATES HOA 31

1181666, at *5. This representation was legally inaccurate.
See SFR I, 130 Nev. at 757–58. And as explained in
Bayview, such legally inaccurate information necessarily
resulted in an unreasonably low sale price, because if
investors believed that HOA foreclosures extinguished first
deeds of trust, they would have paid significantly more for
the residence than what the residence ultimately sold for.
See 962 F. Supp. 2d at 1226. Although the HOA in Dizon
made misrepresentations in both the CC&Rs and the letter,
and White Horse made misrepresentations only in the
CC&Rs, neither Dizon nor Shadow Canyon suggested that
this distinction had any significance. See Shadow Canyon,
133 Nev. at 749 n.11; Dizon, 2016 WL 1181666, at *5.
Given Shadow Canyon’s approving citation to Dizon, it is
reasonable to conclude that the HOA’s use of a mortgage
protection clause constitutes slight evidence of fraud,
unfairness, or oppression sufficient to set aside the sale. See
Shadow Canyon, 133 Nev. at 749 n.11.

In reaching the opposite conclusion, the majority invents
a new rule: that there must be evidence that the lender relied
on the mortgage protection clause before it can serve as
evidence of fraud, unfairness or oppression. Maj. at 10. To
support this holding, the majority purports to rely on
Resources Group, LLC v. Nevada Association Services, Maj.
at 8, but that opinion provides no help because it did not
consider an HOA’s mortgage protection clause or suggest
that the lender had to show reliance on an HOA’s
misrepresentation in order to present evidence of fraud,
unfairness or oppression. 135 Nev. 48, 55–57 (2019). In
fact, no Nevada decision imposes such a reliance
requirement in this context. To the contrary, Shadow
Canyon relied on Dizon, which did not require evidence that
potential bidders relied on the misleading information in the
letter or the CC&Rs, or that there was otherwise an effect on
32 U.S. BANK V. WHITE HORSE ESTATES HOA

the sale. See Shadow Canyon, 133 Nev. at 749 n.11; Dizon,
2016 WL 1181666, at *5.

The majority also relies on unpublished Nevada
Supreme Court cases, Maj. at 15–16, but these too provide
little support because they are in tension with the Nevada
Supreme Court’s published decision in Shadow Canyon. For
instance, U.S. Bank National Ass’n as Trustee for Benefit of
HarborView 2005–08 v. Vistas Homeowners Ass’n, stated
that evidence that the CC&Rs included a mortgage
protection clause did not constitute evidence of unfairness,
432 P.3d 191, 2018 WL 6617731 (Nev. 2018) (unpublished),
a conclusion that clearly clashed with Shadow Canyon’s
citation to Dizon to support the contrary proposition.
Implicitly recognizing this tension, Vistas Homeowners
stated that Dizon “is distinguishable because in addition to
the CC&Rs’ covenant, the HOA sent a letter to the deed of
trust beneficiary affirmatively misrepresenting to the
beneficiary that it would not need to take any action to
protect its deed of trust.” 2018 WL 6617731 at *1 n.2. But
Vistas Homeowners provided no explanation as to why this
bare factual distinction—Dizon involved misleading
CC&Rs and a misleading letter while Vistas Homeowners
involved only misleading CC&Rs—made any material
difference to its analysis, presumably leaving such a
reasoned analysis to a subsequent published decision.

The majority attempts to provide the missing reasoning,
but falls short. According to the majority, a letter promising
not to extinguish a first deed of trust is unfair, but a mortgage
protection clause promising the same thing is not, because
(1) a letter informs the lender that the HOA did not have a
superpriority lien on the residence, Maj. at 14; and (2) a
mortgage protection clause is “void as a matter of law” and
therefore “did not, by itself, constitute unfairness that
 U.S. BANK V. WHITE HORSE ESTATES HOA 33

affected the sale.” Maj. at 15. These arguments are
unpersuasive. In none of the unpublished opinions cited by
the majority did the letter at issue inform the lender that the
HOA’s lien “contained only charges with subpriority
status.” Maj. at 14–16. The majority entirely fabricates this
factual claim. At most, one unpublished opinion indicated
that an HOA’s letter stating that the HOA’s lien was junior
to the first deed of trust raised the inference that “the HOA
was seeking to foreclose only on the subpriority portion of
the lien.” Lahrs Family Tr. v. JPMorgan Chase Bank, N.A.,
446 P.3d 1157, 2019 WL 4054161 (Nev. 2019)
(unpublished). But the exact same inference is raised by a
covenant in the CC&Rs that “no lien created [by the HOA]
shall defeat or render invalid the rights of a Beneficiary
under any Recorded First Deed of Trust.” The majority’s
second distinction (that a mortgage protection clause is void
as a matter of law) also fails, because a letter from an HOA
to a bank stating that it will not extinguish the first deed of
trust is likewise void as a matter of law. Maj. at 14–15.
Under NRS 116.1104, no purported waiver of the right to
foreclose a first deed of trust is enforceable.

C

Given this lack of clarity, the majority’s election to
decide this case by distinguishing Shadow Canyon and
Dizon and relying on unpublished opinions deprives the
Nevada Supreme Court of the opportunity to develop its own
jurisprudence and resolve significant questions of state law.

The majority’s unpersuasive attempts to paper over the
tension between the Nevada Supreme Court’s published and
unpublished opinions is improper. “In considering the state
court opinion, we are not free, of course, to craft a different
analysis by which the state court could have resolved the
case before it, but for whatever reasons chose not to use.”
34 U.S. BANK V. WHITE HORSE ESTATES HOA

Cherry v. Steiner, 716 F.2d 687, 691 (9th Cir. 1983). The
question whether evidence of a grossly inadequate sales
price and misleading CC&Rs justifies setting aside a
foreclosure sale should be answered by the Nevada Supreme
Court, not by federal courts. We should not look behind the
reasoning of the Nevada Supreme Court or speculate about
why it cited Dizon or chose to distinguish Shadow Canyon
in unpublished dispositions, cf. Nev. R. App. Proc.
36(c)(1)(B) (indicating that only published dispositions, not
unpublished dispositions, can alter, modify or significantly
clarify a rule of law). Instead, we should certify the question.
As the Supreme Court has pointed out, this exercise of
judicial humility “in the long run save[s] time, energy, and
resources.” See Lehman Bros. v. Schein, 416 U.S. 386, 391
(1974).

The Nevada Supreme Court will accept a certified
question when the answer may “be determinative” of part of
the federal case, there is no controlling Nevada precedent,
and the answer will help settle important questions of
Nevada law. See Volvo Cars of N. Am., Inc. v. Ricci,
122 Nev. 746, 749–50 (2006); Nev. R. App. Proc. 5(a).
Here, the question presented by this case meets all these
factors. It is determinative of whether to set aside the sale.
See Shadow Canyon, 133 Nev. at 749 n.11. There is no
controlling Nevada precedent, but instead only unpublished
decisions that are in tension with Shadow Canyon. Finally,
the answer will help settle an important legal question
because it will resolve the tension between Shadow Canyon,
which says that representations like a mortgage protection
clause can cause slight unfairness, and the unpublished
cases, which have subsequently rejected this argument with
little explanation. Compare id., with Vistas Homeowners,
2018 WL 6617731 at *1.
 U.S. BANK V. WHITE HORSE ESTATES HOA 35

This case also meets our own standard for certification.
In deciding whether to certify a question to a state supreme
court, we first examine whether the question presents
important public policy ramifications that have not yet been
resolved by the state court and whether the issue is new and
substantial. See Murray v. BEJ Mins., LLC, 924 F.3d 1070,
1072 (9th Cir. 2019) (en banc). This is not a high bar; we
recently certified to the Montana Supreme Court a question
regarding whether dinosaur fossils constitute minerals under
Montana law. Id. The question in this case has much
broader applicability, given that the superpriority statute
remains in effect and HOAs continue to initiate foreclosures
based on it. See NRS 116.3116; see, e.g., Bank of Am., N.A.
v. Hernandez, No. 2:17-CV-03108 RFB CWH, 2019 WL
1442184, at *4 (D. Nev. Mar. 31, 2019) (involving an HOA
foreclosure sale based on a superpriority lien in December
2016, after the Nevada Legislature amended the statute in
2015); see also Eli Segall, Despite Foreclosure Freeze,
HOAs Sending Default Notices, Las Vegas Review-Journal,
June 11, 2020. 6 Nor is there any evidence that HOAs have
amended their CC&Rs to remove their misleading
covenants. So long as HOAs continue to make
misrepresentations to induce lenders to finance the purchase
of residential properties, and continue to foreclose on
superpriority liens on properties they then sell for a tiny
fraction of their value, the question raised by this case will
continue in importance. 7

6
Available at https://www.reviewjournal.com/business/housing/
despite-foreclosure-freeze-hoas-sending-default-notices-2050802/ (last
accessed Jan. 11, 2021).
7
The majority claims that the 2015 amendments to the HOA
foreclosure scheme, which now gives lenders a 60-day period to redeem
36 U.S. BANK V. WHITE HORSE ESTATES HOA

Finally, the spirit of comity and federalism compels our
deference. See Murray, 924 F.3d at 1072. It is well
understood that our publication of an opinion on a state law
issue may, as a practical matter, be the final word on that
issue. A state court may not have an opportunity to address
that issue for years to come, particularly given that litigants
who favor the federal view will strategize to have their cases
heard in federal court. Here, for instance, buyers at HOA
foreclosure sales may preemptively file quiet title actions in
federal court against lenders holding first deeds of trust. See,
e.g., SFR Invs. Pool 1, LLC v. Bank of Am., N.A., No. 2:19-
CV-1534-JCM-DJA, 2020 WL 3106316, at *1 (D. Nev. June
11, 2020). The majority’s refusal to certify the question here
is contrary to the spirit of comity evinced in our case law;
indeed, an en banc panel of our court recently vacated a
three-judge panel decision for the sole purpose of certifying
a question to a state supreme court—even though the
question at issue concerned only dinosaur fossils. See, e.g.,
Murray v. BEJ Mins., LLC, 908 F.3d 437, 439 (9th Cir.
2018), on reh’g en banc, 924 F.3d at 1070, certified question
answered, 400 Mont. 135 (2020).

Because I would certify to the Nevada Supreme Court
the question of whether White Horse’s misleading CC&Rs

the property subject to a first deed of trust after a foreclosure, will make
it “extremely unlikely” that the issue here will arise frequently in the
future. Maj. at 17 & n.5; NRS 116.31166(3). But for the same reason
so many lenders failed to tender the superpriority amounts in a timely
manner, it is likely that many lenders will miss the 60-day window (or
otherwise miss one of the many procedural requirements) for exercising
their right of redemption. See NRS 116.31166(3). Such typical human
error should not deprive a lender of whatever equitable rights it has under
state law.
 U.S. BANK V. WHITE HORSE ESTATES HOA 37

constitutes slight evidence of fraud, unfairness, or
oppression affecting the sale, I dissent.