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August 2018

Las Vegas Team Wins on Summary Judgment and Again on Appeal

In April 2017, Gordon Rees Scully Mansukhani Las Vegas litigation team of Robert Larsen and David Gluth prevailed on summary judgment on a quiet title claim on behalf of client MetLife Home Loans. The plaintiff purchased a parcel of residential real property via quit claim deed which was worth more than $200,000 in 2012. The property was previously sold to another company for $2,700 at a homeowners association lien sale. The plaintiff sued Gordon & Rees' client MetLife alleging the foreclosure sale extinguished MetLife’s deed of trust. 

In 2014, the Nevada Supreme Court held that under Nevada law, a portion of a homeowners association lien has priority over all other liens.This has been termed a “superpriority  lien.”  If the foreclosure sale included the superpriority lien, it operated to extinguished the deed of trust.  See SFR Inv. Pool 1, LLC v. U.S. Bank, N.A., 334 P.3d 408, 411 (Nev. 2014). This has been a hot area of law in Nevada resulting in thousands of lawsuits.

In this case, the plaintiff argued that the foreclosure sale included the superpriority portion of the lien and thus extinguished MetLife’s deed of trust. The plaintiff alternatively argued that even if there was a defect in the sale, it was a bona fide purchaser for value. 

During discovery, the Las Vegas team carefully set up the plaintiff where he admitted he did not review any of the documents in the chain of title and did not conduct any due diligence.  Instead, the plaintiff admitted it had received its interest in the property following a series of insider transactions. 

At the summary judgment hearing, the trial judge agreed with MetLife’s arguments and held that the foreclosure sale did not include the superpriority lien and thus did not extinguish MetLife’s deed of trust.  After considering the mountain of evidence about the lack of due diligence and red flags, the judge compared the purchaser to a horse with blinders that could only see straight ahead as he rejected the bona fide purchaser argument.

Undaunted, the plaintiff appealed the decision to the Nevada Supreme Court.  After considering all the briefing, on July 20, 2018, the Nevada Supreme Court affirmed the judgment in favor of MetLife in its entirety.   

Robert Larsen, David Gluth, Brian Walters, Wing Wong and Lynne McChrystal of the Las Vegas office have represented parties in more than 200 Nevada state and federal cases involving superpriority lien litigation.

Robert S. Larsen