NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS OCT 19 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
WELLS FARGO BANK, N.A., as trustee for No. 20-16342
Banc of America Mortgage Securities
Mortgage Pass Thru Certificates Series 2005- D.C. No.
3, 2:17-cv-01887-MMD-NJK
Plaintiff-Appellant,
MEMORANDUM*
v.
THE SPRINGS AT CENTENNIAL RANCH
HOMEOWNERS ASSOCIATION; SFR
INVESTMENTS POOL 1, LLC,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Nevada
Miranda M. Du, Chief District Judge, Presiding
Argued and Submitted October 2, 2023
Las Vegas, Nevada
Before: RAWLINSON and OWENS, Circuit Judges, and FITZWATER,** District
Judge.
Wells Fargo Bank, N.A. (“Wells Fargo”) appeals from the district court’s
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Sidney A. Fitzwater, United States District Judge for
the Northern District of Texas, sitting by designation.
grant of summary judgment for Defendants SFR Investments Pool 1, LLC (“SFR”)
and Springs at Centennial Ranch Homeowners Association (“Springs”). In a quiet
title action under Nev. Rev. Stat. § 40.010, Wells Fargo seeks to establish that its
lien survived Springs’ homeowners’ association (“HOA”) foreclosure sale of a
residential property to SFR. The prior homeowners—who recorded a deed of trust
on the property ultimately assigned to Wells Fargo, defaulted on their HOA fees to
Springs, and filed for bankruptcy—are not part of this case. As the parties are
familiar with the facts, we do not recount them here. We reverse and remand.
1. As an initial matter, Wells Fargo’s quiet title claim is not time-barred
because the statute of limitations was not triggered. “[T]he limitations period does
not begin to run until the lienholder receives notice of some affirmative action by
the titleholder to repudiate the lien or that is otherwise inconsistent with the lien’s
continued existence.” U.S. Bank, N.A. v. Thunder Props., Inc., 503 P.3d 299, 306
(Nev. 2022) (emphasis added). “The HOA foreclosure sale, standing alone, is not
sufficient to trigger the period.” Id. SFR, the titleholder, does not suggest that it
took any affirmative action to repudiate Wells Fargo’s lien; its general policy of
refuting the continued existence of deeds of trust on properties it purchased at
HOA foreclosure sales is not an affirmative action. Wells Fargo’s claim is
therefore timely.
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2. We hold that the foreclosure sale is void because it violated the
automatic stay in the prior homeowners’ bankruptcy proceeding. Although Wells
Fargo did not plead this theory in its complaint, it is not forfeited because the
district court reached the issue, and the parties briefed and argued it at summary
judgment, and in this court. See Comcast of Sacramento I, LLC v. Sacramento
Metro. Cable Television Comm’n, 923 F.3d 1163, 1168-69 (9th Cir. 2019)
(explaining that forfeiture doctrine does not have “obvious application” where the
district court addressed the issue). We are not persuaded by SFR’s argument that
Wells Fargo’s failure to raise the issue earlier prejudiced SFR by preventing it
from requesting a retroactive annulment of the bankruptcy stay. SFR has not
explained why it was any less likely to receive a retroactive annulment at the time
of Wells Fargo’s motion for summary judgment than at the time the complaint was
filed.
Next, even though it is neither the debtor nor the trustee, Wells Fargo has
prudential standing to challenge a violation of the stay in the prior homeowners’
bankruptcy proceeding. After the district court’s decision, we held in another case
that a lienholder bank has prudential standing to challenge an alleged violation of a
bankruptcy stay under Nev. Rev. Stat. § 40.010 to establish the validity of its lien
after an HOA foreclosure sale. Bank of N.Y. Mellon v. Enchantment at Sunset Bay
Condo. Ass’n, 2 F.4th 1229, 1230-32 (9th Cir. 2021) (“Enchantment”). That is
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precisely the posture here, so we hold that Wells Fargo has prudential standing and
proceed to the merits.
Upon filing a bankruptcy petition, a stay automatically applies to “any act to
create, perfect, or enforce any lien against property of the estate.” 11 U.S.C.
§ 362(a)(4). We previously have held that an HOA foreclosure sale conducted in
violation of an automatic bankruptcy stay is void under Nevada law. Enchantment,
2 F.4th at 1233-34. Here, although the foreclosure sale occurred after the
bankruptcy closed, Springs sent and recorded the foreclosure notices required by
statute, Nev. Rev. Stat. § 116.31162(1)(a)-(b), while the bankruptcy was ongoing
and the property was part of the bankruptcy estate. Because our decision in
CitiMortgage, Inc. v. Corte Madera Homeowners Ass’n, 962 F.3d 1103, 1109-11
(9th Cir. 2020), rests on the premise that recording these notices during the stay
violates the stay and because the plain language of the bankruptcy statute strongly
supports this conclusion, we hold that the foreclosure sale is void. As such, Wells
Fargo’s lien survives.
3. Because the foreclosure sale is void for violating the bankruptcy stay,
we need not reach whether it should be set aside for equitable reasons.
REVERSED AND REMANDED.
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