Daisy Trust v. fnma/fannie Mae ( 2022 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAR 24 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
DAISY TRUST, a Nevada trust, No. 21-15595
Plaintiff-Appellant, D.C. No.
2:20-cv-01217-GMN-EJY
v.
FEDERAL NATIONAL MORTGAGE MEMORANDUM*
ASSOCIATION,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Nevada
Gloria M. Navarro, District Judge, Presiding
Argued and Submitted February 18, 2022
San Francisco, California
Before: McKEOWN and W. FLETCHER, Circuit Judges, and BENNETT,**
District Judge.
Nevada Revised Statutes § 106.240 “creates a conclusive presumption that a
lien on real property is extinguished ten years after the debt becomes due.” Pro-Max
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Richard D. Bennett, United States District Judge for
the District of Maryland, sitting by designation.
Corp. v. Feenstra, 16 P.3d 1074, 1077 (Nev. 2001) (per curiam). This statute
provides as follows:
The lien heretofore or hereafter created of any mortgage or deed of trust
upon any real property, appearing of record, and not otherwise satisfied
and discharged of record, shall at the expiration of 10 years after the
debt secured by the mortgage or deed of trust according to the terms
thereof or any recorded written extension thereof become wholly due,
terminate, and it shall be conclusively presumed that the debt has been
regularly satisfied and the lien discharged.
Nev. Rev. Stat. § 106.240 (emphasis added). This appeal turns on whether an
unrecorded notice of acceleration can trigger the ten-year statutory clock provided
by § 106.240 and extinguish a deed of trust. The district court granted Fannie Mae’s
motion to dismiss, holding that an unrecorded notice cannot trigger this provision.
We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
This foreclosure dispute centers on a property located in North Las Vegas,
governed by a homeowners’ association (“HOA”), and held subject to a deed of trust
that was assigned to Fannie Mae. In 2009, the residential property owners fell behind
on their monthly payments to both entities. Fannie Mae issued a Notice of Default
in 2010 but recorded a Notice of Recission in 2011. The HOA foreclosed on the
property in 2012, and Daisy Trust purchased the property at the foreclosure sale.
From 2014 to 2019, Daisy Trust litigated a quiet title action against Fannie
Mae in Nevada state court. The Nevada trial court granted Fannie Mae summary
judgment, and Daisy Trust appealed, only to voluntarily dismiss its appeal in 2019.
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Subsequently, Daisy Trust filed the instant suit in Clark County, Nevada, alleging
that Nev. Rev. Stat. § 106.240 extinguished the Deed of Trust in 2020, just following
the prior state court litigation. Fannie Mae removed the case to the United States
District Court for the District of Nevada on June 30, 2020. Before the district court,
and on appeal, Appellant’s case rests on a bald allegation that Fannie Mae must have
issued a Notice of Default “not later than between 45 and 62 days after March 1,
2009.” Whether or not such a notice was issued, the record clearly reflects that it
was never recorded.
We review a district court’s ruling on a motion to dismiss de novo, applying
the same standard of review as the district court. Bafford v. Northrop Grumman
Corp., 994 F.3d 1020, 1025 (9th Cir. 2021). In evaluating a motion to dismiss, a
court must “accept all factual allegations in the complaint as true and construe the
pleadings in the light most favorable to the nonmoving party.” Id. (quoting Curtis v.
Irwin Indus., Inc., 913 F.33d 1146, 1151 (9th Cir. 2019)). To survive a motion to
dismiss for failure to state a claim, the complaint must “contain[] enough facts to
‘state a claim to relief that is plausible on its face.’” Plaskett v. Wormuth, 18 F.4th
1072, 1083 (9th Cir. 2021) (quoting Hebbe v. Pliler, 627 F.3d 338, 341–42 (9th Cir.
2010)).
The district court’s holding was correct on the facts and the law. First, Nevada
law requires a notice of default to be recorded. Nev. Rev. Stat. § 107.080, which
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governs the power of sale and prerequisites for a private foreclosure, contains the
following provisions:
[§ 107.080.2(a)(2):] The power of sale must not be exercised . . . until .
. . a beneficiary . . . has, for a period of 35 days . . . failed to make good
the deficiency in performance or payment;
[§ 107.080.3:] The 15- or 35-day period provided in paragraph (a) of
subsection 2 commences on the first day following the day upon which
the notice of default and election to sell is recorded . . .
[§ 107.080.3:] [A]cceleration must not occur if the deficiency in
performance or payment is made good . . . within the time specified in
subsection 2.
Nev. Rev. Stat. § 107.080. The effect of these provisions is that acceleration cannot
occur until the conclusion of the 35-day period allotted for the borrower to cure the
deficiency—and that this period does not begin to run until the notice of default has
been recorded. Accordingly, whether Fannie Mae issued an unrecorded acceleration
notice in 2009 is legally irrelevant. Such a notice could not have rendered its debt
“wholly due.”
Second, even if acceleration were deemed to have occurred, Fannie Mae’s
rescission decelerated the debt and reset the statutory clock. Nevada statutes and
case law provide that a valid rescission decelerates the debt and restores the
contracting parties to their previous positions. Nev. Rev. Stat. § 107.550(3); Holt v.
Reg’l Tr. Servs. Corp., 266 P.3d 602, 606 (Nev. 2011) (en banc) (“Rescission . . .
resets the right-to-cure and other time periods provided by law for the debtor’s
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protection . . . .”). It is undisputed that Fannie Mae recorded its Notice of Rescission
on June 6, 2011. Pursuant to Nevada law, this Rescission reset the statutory clock by
revoking any prior acceleration that may have occurred. Accordingly, Daisy Trust’s
argument fails as a matter of law.
AFFIRMED.
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