Bank of New York Mellon v. Enchantment at Sunset Bay Condominium Ass'n, No. 19-17048 (9th Cir. 2021)Annotate this Case
The Ninth Circuit reversed the district court's grant of summary judgment in favor of the 732 Hardy Way trust, the denial of summary judgment to the Bank, and the dismissal of the Bank's claims against the HOA in a quiet title action brought by the Bank, concerning title to real property in Nevada that was subject to a HOA nonjudicial foreclosure sale. At issue is whether the Bank, as the first deed of trust lienholder, may set aside a completed superpriority lien foreclosure sale on the grounds that the sale occurred in violation of the automatic stay in bankruptcy proceedings.
The panel concluded that the Bank may raise the HOA's violation of the automatic stay provision and that the Bank has superior title. The panel explained that the Bank has standing under Nevada's quiet title statute, Nevada Revised Statute 40.010, and established case authority confirms that any HOA foreclosure sale made in violation of the bankruptcy stay—like the foreclosure sale here—is void, not merely voidable, Schwartz v. United States, 954 F.2d 569, 571–72 (9th Cir. 1992). Therefore, the district court erred in holding that the Bank lacked standing to pursue its quiet title claim in federal court. The panel remanded for further proceedings.