Saticoy Bay LLC Series 350 Durango 104 v. Wells Fargo Home MortgageAnnotate this Case
Roy and Shirley Senholtz took out a loan from Wells Fargo Home Mortgage, a division of Walls Fargo Bank, N.A. (Wells Fargo). The loan was secured by a deed of trust on property governed by an a homeowners’ associations’ (HOA) CC&Rs. When the Senholtzes failed to pay their HOA dues and mortgage, the HOA conducted a nonjudicial foreclosure sale. The property was sold to Saticoy Bay LLC. Satico Bay filed a complaint seeking an injunction preventing Wells Fargo from foreclosing on the property and a declaration that it was the rightful owner of the property free and clear of any encumbrances or liens. The district court granted Wells Fargo’s motion to dismiss, concluding that Nev. Rev. Stat. 116.3116-.31168 violated Wells Fargo’s due process rights. The statutes grant an HOA a superpriority lien for certain unpaid assessments and allow an HOA to nonjudicially foreclose on such a lien if specific requirements are met. The Supreme Court reversed, holding (1) the statutes do not implicate due process because neither the HOA’s nonjudicial foreclosure nor the Legislature’s enactment of the statutes constitute state action; and (2) the extinguishment of a subordinate deed of trust through an HOA’s nonjudicial foreclosure does not violate the Takings Clauses of the federal and state Constitutions.