Hines v. National Default Servicing Corp. ( 2015 )

 On an unspecified date in 2010, the Hineses' attorney
purportedly called Wells Fargo or NDSC and expressed a desire to
mediate the foreclosure. In February 2010, NDSC submitted an affidavit
to the Foreclosure Mediation Program (FMP) administrator stating that
the Hineses had failed to return the form upon which they were to elect or
waive participation in the FMP. An FMP certificate authorizing a
foreclosure sale was issued. NDSC then recorded a notice of a trustee's
sale, and the Hineses' house was sold at a trustee's sale.
The Hineses filed a complaint against NDSC and Wells Fargo
alleging multiple claims, including wrongful foreclosure and fraud claims.
Wells Fargo filed a motion to compel the production of documents, which
the Hineses did not oppose. The district court then granted Wells Fargo's
motion to compel.
The district court subsequently granted summary judgment to
Wells Fargo and NDSC. It also ordered the Hineses to pay $1,500 to Wells
Fargo for its expenses relating to the motion to compel because the district
court found that the Hineses had failed to respond to the motion to compel
or to produce the requested discovery after the motion to compel was
granted. After the district court issued its order, the Hineses filed a
motion to reconsider, which the district court denied.
The Hineses now appeal and raise the following issues: (1)
whether the district court erred by granting summary judgment against
the Hineses on their wrongful foreclosure claim, (2) whether the district
court erred by granting summary judgment against the Hineses on their
fraud claim, and (3) whether the district court abused its discretion by
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ordering the Hineses to pay Wells Fargo's expenses relating to the motion
to compel.'
Standard of review
We review de novo a district court order granting summary
judgment, Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029
(2005), and will affirm a district court order reaching a correct result for
the wrong reason. See Holcomb v. Ga. Pac., LLC, 128 Nev., Adv. Op. 56,
289 P.3d 188, 200 (2012).
We review a district court's discovery rulings, including an
order imposing a discovery sanction, for an abuse of discretion. Club Vista
Fin, Servs., L.L.C. v. Eighth Judicial Dist. Court, 128 Nev., Adv. Op. 21,
276 P.3d 246, 249 (2012) (reviewing discovery decisions for an abuse of
discretion); Foster v. Dingwall, 126 Nev. 56, 65, 227 P.3d 1042, 1048
(2010) (reviewing the imposition of discovery sanctions for an abuse of
discretion).
'NDSC argues that this court lacks jurisdiction to consider the
Hineses' appeal because the Hineses did not timely file their notice of
appeal after the district court entered its order granting summary
judgment. Here, the Hineses' post-judgment motion to reconsider sought
for the district court to alter or amend its judgment. Therefore, it was a
motion made pursuant to NRCP 59(e), which tolled the deadline by which
to file the notice of appeal. See NRAP 4(a)(4); AA Primo Builders, LLC v.
Washington, 126 Nev. 578, 585, 245 P.3d 1190, 1195 (2010). As a result,
the Hineses' notice of appeal was timely. See NRAP 4(a)(4). Thus,
NDSC's jurisdiction argument is without merit.
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The district court did not err by granting summary judgment against the
Hineses on their wrongful foreclosure claim
The Hineses argue that the district court erred by granting
summary judgment against them on their wrongful foreclosure claim
because there was a genuine issue of material fact as to whether the notice
of rescission rescinded the 2009 Notice of Default. As part of this
argument, they contend that the rule providing that an ambiguous
contract be interpreted against its drafter applies to the notice of
rescission.
Wells Fargo and NDSC argue that because the notice of
recession's deficiencies make its meaning unascertainable, the notice of
recession is without effect and does not rescind the 2009 Notice of Default.
Alternatively, they contend that if the notice of rescission is to be given
effect, extrinsic evidence should be relied upon to conclude that the notice
of rescission only applies to the 2007 Notice of Default.
The Hineses' wrongful foreclosure claim may either be alleging
a tort of wrongful foreclosure or a violation of NRS Chapter 107. Since we
evaluate a claim by "look[ing] at the substance of the claim{ ], not just the
labell I used in the . . . complaint," Nev. Power Co. v. Eighth Judicial Dist.
Court, 120 Nev. 948, 960, 102 P.3d 578, 586 (2004), we address both
versions of the claim here.
The district court did not err by granting summary judgment with
respect to the tort claim for wrongful foreclosure
To prevail on a wrongful foreclosure tort claim, a plaintiff
must prove that the foreclosing party did not have a legal right to foreclose
on the property. Collins v. Union Fed. Say. & Loan Ass'n, 99 Nev. 284,
304, 662 P.2d 610, 623 (1983). "Therefore, the material issue of fact in a
wrongful foreclosure claim is whether the trustor was in default when the
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power of sale was exercised." Id. If the plaintiff does not or cannot
demonstrate that it was not in default, then it cannot prevail on a tort
claim for wrongful foreclosure. See In re Mortg. Elec. Registration Sys.,
Inc., 754 F.3d 772, 785 (9th Cir. 2014).
Here, the Hineses fail to establish that they were not in
default Instead, the evidence in the record shows the opposite: the
Hineses were in default because they missed multiple payments that were
not subsequently made. Thus, the district court correctly granted
summary judgment to the extent that the Hineses' claim was for the tort
of wrongful foreclosure.
The district court did not err in granting summary judgment with
respect to the claim of a violation of NRS Chapter 107
When the grantor of a deed of trust defaults on the underlying
loan, the deed of trust beneficiary may pursue a nonjudicial foreclosure if
NRS Chapter 107's requirements are satisfied. Edelstein v. Bank of N.Y.
Mellon, 128 Nev., Adv. Op. 48, 286 P.3d 249, 254-55 (2012). Of NRS
Chapter 107's requirements, those set out in NRS 107.080 (2010) and NRS
107.086 (2009)—statutes which were in force at the time of the foreclosure
and sale of the Hineses' house—are relevant to our analysis. 2
NRS 107.080 (2010) requires the trustee to provide two notices
before selling a property. First, the trustee must "execute[ ] and cause[ I
to be recorded . . . a notice of the breach and of the election to sell." NRS
107.080(2)(c) (2010). Second, the trustee must, no earlier than three
2Although the Hineses alleged a violation of NRS 107.087 in their
complaint, they waived this issue by not addressing it in their appellate
briefs. See Powell v. Liberty Mut, Fire Ins. Co., 127 Nev. 156, 161 n.3, 252
P.3d 668, 672 n.3 (2011) ("Issues not raised in an appellant's opening brief
are deemed waived.").
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months after recording the notice of default, have a notice of sale recorded.
NRS 107.080(4) (2010). If a trustee fails to substantially comply with NRS
107.080's requirements, then the nonjudicial foreclosure sale may be
voided. NRS 107.080(5) (2010); Edelstein, 128 Nev., Adv. Op. 48, 286 P.3d
at 255.
NRS 107.086(2)(a)(3) (2009) requires a trustee seeking to
complete a nonjudicial foreclosure• of an owner-occupied residence to
provide the homeowner with a form upon which to elect or decline to
participate in FMP mediation. If the homeowner waives mediation or fails
to return the form, then the trustee is entitled to obtain an FMP certificate
stating that no mediation is required. NRS 107.086(3).
After initiating a nonjudicial foreclosure proceeding, a trustee
may 'rescind the process before its completion. Holt w Reg'l Tr. Servs.
Corp., 127 Nev., Adv. Op. 80, 266 P.3d 602, 606 (2011) (quoting Trident
Gtr. v. Conn. Gen. Life Ins. Co., 847 F.2d 564, 567 (9th Cir. 1988)). Thus, a
notice of rescission invalidates a notice of default and "renders moot
disputes concerning the notice of default or its timing." Id. As a result, a
trustee who files a notice of rescission that operates against a notice of
default must record a new notice of default in order to complete a
nonjudicial foreclosure. See Coley v. Accredited Home Lenders, Inc., No.
4:10CV01870 JLH, 2011 WL 1193072, at *4 (E.D. Ark. Mar 29, 2011).
The notice of rescission should not be interpreted as if it were a
contract
The district court applied contract principles when
interpreting the notice of rescission. Therefore, we first address whether
the notice of rescission should be interpreted as if it were a contract.
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"Generally, the purpose of recording statutes is to provide
subsequent purchasers with knowledge concerning the state of title for
real property." State Dep't of Taxation v. Kawahara, 131 Nev., Adv. Op.
42, P.3d (June 25, 2015). Thus, a recorded document serves to
advise all persons of the contents of the document. See 7912 Limbwood
Court Trust v. Wells Fargo Bank, N.A., 979 F. Supp. 2d 1142, 1152 (D.
Nev. 2013); see also In re Century Offshore Mgmt. Corp., 119 F.3d 409,413
(6th Cir. 1997) ("The purpose of the recording statutes at issue here is to
allow third parties to deal with immovable property without searching
beyond the public records."). The recording of a document constructively
"impart[s] notice to all persons of the contents thereof; and subsequent
purchasers and mortgagees shall be deemed to purchase and take with
notice." NRS 111.320. However, it does not impart constructive notice of
information not presented in the document. See Kawahara, 131 Nev.,
Adv. Op. 42, P.3d at (holding that the recording of a tax lien does
not establish constructive notice of a mortgage lien even if the recording
•party desired to record a mortgage lien). Thus, a recorded document
serves to inform others about the information contained in the document
and makes third parties legally responsible for knowledge of its contents.
By contrast, "[a] contract is generally defined as a promise, or
a set of promises, actionable upon breach." Minster Farmers Coop. Exch.
Co. v. Meyer, 884 N.E.2d 1056, 1061 (Ohio 2008) (internal quotations
omitted). Thus, it governs a relationship between parties and generally
does not apply to uninvolved third parties. Because the notice of
rescission is a recorded notice which can apply to uninvolved third parties
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and does not memorialize an exchange of promises, contract principles are
inapplicable to its interpretation. 3
A recorded notice is to be interpreted on its face in conjunction
with other recorded documents to which it refers
Since a recorded notice is a legal document, its interpretation
is an issue of law. 4 See, e.g., Streck v. Bd. of Educ. of the E. Greenbush
Cent. Sch. Dist., 408 F. App'x 411, 414 (2d Cir. 2010) (holding that the
"[i]nterpretation of a legal document is [an issue] of law"); Sanders v. Dias,
947 A.2d 1026, 1031 (Conn. App. Ct. 2008) ("Intent as expressed in deeds
and other recorded documents is a matter of law." (emphasis added)
(internal quotations omitted)); Red Hill Outing Club u. Hammond, 722
A.2d 501, 504 (N.H. 1998) (holding that "[t]he construction of [a] deed[ ] is
an issue of law").
Although our caselaw has not addressed how to interpret a
notice of default or a notice of rescission, federal cases interpreting tax
liens provide meaningful guidance. A federal tax lien arises when the
Internal Revenue Service assesses a lien "upon all property and rights to
property, whether real or personal," of a person or entity who failed to pay
a tax demand. 26 U.S.C. § 6321 (2012). "The primary power of a tax
lien . . . lies not in its effect against the taxpayer, but in its priority vis-a-
vis other lienholders and subsequent purchasers." In re Crystal Cascades
Civil, LLC, 398 B.R. 23, 28 (Bankr. D. Nev. 2008), aff'd, 415 B.R. 403, 415
3 Therefore, we necessarily reject the dissent's apparent reliance on
the contract law principle of interpreting ambiguous contracts against the
drafter because it is inapplicable to the present case.
4We decline to adopt the dissent's novel and unsupported theory that
the interpretation of the present recorded notice is an issue of fact.
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(B.A.P. 9th Cir. 2009). Thus, a tax lien "is not valid until placed [in the]
public record." United States v. Pioneer Am. Ins. Co., 374 U.S. 84, 88
(1963). If a tax lien fails to adequately identify the person or entity
against whom it is to operate, "[t]his defect is fatal [and] results in a
failure to provide even constructive notice." In re Focht, 243 B.R. 263, 266-
67 (W.D. Pa. 1999) (finding that the failure to identify an entity's co-owner
on a tax lien prevented the lien from operating against the co-owner). If,
however, an error or omission is minor and the true identity of the person
or entity subject to the lien is readily discernable, then an Internal
Revenue Service tax lien is valid. See In re Spearing Tool & Mfg. Co., 412
F.3d 653, 656 (6th Cir. 2005) (holding that a tax lien's identification of
"Spearing Tool and Manufacturing" as "Spearing Tool & Mfg." did not
prevent the lien from providing constructive notice).
Furthermore, federal courts have held that the notice that a
tax lien provides can include the content of recorded documents whose
connections to the tax lien are readily discoverable. See Kiwi v. United
States, 878 F.2d 301, 304-05 (9th Cir. 1989) (holding•that a tax lien
naming "Bobbie Morgan Lane" was effective against a property held by
that person under the name "Bobbie M. Morgan" because the recorded
documents connected to the title of the property and to the tax lien
demonstrated that both names represented the same person). Thus,
federal caselaw establishes two principles that guide our interpretation of
the notice of rescission: (1) that a defect in a recorded notice that omits a
material term can prevent the notice from having a legal effect, and (2)
that a recorded notice may be interpreted by reference to other recorded
documents to which it refers.
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Here, the notice of rescission does not identify which notice of
default it was to rescind. Therefore, it does not establish on its face that it
rescinds the 2009 Notice of Default. Furthermore, the only recorded
document to which the notice of rescission refers is the Hineses' deed of
trust. Thus, the notice of rescission does not demonstrate by reference to
other recorded documents that it rescinds the 2009 Notice of Default.
Therefore, the notice of rescission does not rescind the 2009
Notice of Default. 5 Because the record does not show that the 2009 Notice
of Default had been rescinded, it does not suggest that NDSC or Wells
Fargo violated NRS 107.080 by foreclosing on the Hineses' property
without having a notice of default in force.
Furthermore, NDSC submitted a request• for an FMP
certificate in which it represented that the Hineses failed to submit the
form on which they were to elect or waive mediation. The record is devoid
of evidence suggesting that the Hineses returned the FMP enrollment
form to NDSC, Wells Fargo, or the FMP administrator. Therefore, the
undisputed material facts demonstrate that NDSC and Wells Fargo
complied with the applicable NRS 107.086 requirements.° See MRS
107.086(2)-(3).
5 Sinceit does not affect our holding, we do not address whether the
notice of rescission made sufficient reference to recorded documents to
demonstrate that it rescinded the 2007 Notice of Default.
°Although the dissent identifies a potentially meritorious policy
concern about the potential for bad faith conduct when seeking an FMP
certificate, we decline to adopt its suggestion that NRS 107.086(6)'s
requirement for the beneficiary of a deed of trust to act in good faith at
mediation be extended to apply to the request for an FMP certificate
because NRS 107.086 does not impose such a requirement. See NRS
107.086(2)-(3); see also S. Nev. Homebuilders Ass'n v. Clark Cnty., 121
continued on next page...
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Here, the district court granted summary judgment to Wells
Fargo and NDSC because it found that extrinsic evidence demonstrated
that the notice of rescission applied to the 2007 Notice of Default and not
the 2009 Notice of Default. Although the district court incorrectly applied
contract principles in its analysis, it correctly found that the notice of
rescission does not rescind the 2009 Notice of Default. Because the
district court reached the correct result, albeit for the wrong reason, it did
not err by granting summary judgment against the Hineses on their
wrongful foreclosure claim. See Holcomb v. Ga. Pac., LLC, 128 Nev., Adv.
Op. 56, 289 P.3d 188, 200 (2012).
The district court did not err by granting summary judgment against the
Hineses on their fraud or intentional misrepresentation claim
The Hineses argue that there is a genuine issue of material
fact as to whether Wells Fargo committed fraud when obtaining the FMP
certificate by making a false statement about the Hineses' desire to
mediate the foreclosure.
The first element of a fraud claim is that "the defendant made
a false representation that the defendant knew or believed was false."
Franchise Tax Bd. of Cal. v. Hyatt, 130 Nev., Adv. Op. 71, 335 P.3d 125,
...continued
Nev. 446, 451, 117 P.3d 171, 174 (2005) (stating that "it is not the business
of this court to fill in alleged legislative omissions based on conjecture as
to what the legislature would or should have done" (internal quotations
omitted)). Therefore, whether NDSC and Wells Fargo acted in good faith
when requesting the FMP certificate after the Hineses failed to return the
form on which they were to elect or waive mediation is immaterial to this
issue and does not provide a basis to reverse the grant of summary
judgment. See Wood v. Safeway, Inc., 121 Nev. 724, 731, 121 P.3d 1026,
1031 (2005).
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144 (2014). "With respect to the false representation element, the
suppression or omission of a material fact which a party is bound in good
faith to disclose is equivalent to a false representation, since it constitutes
an indirect representation that such fact does not exist." Nelson v. Heer,
123 Nev. 217, 225, 163 P.3d 420, 426 (2007) (internal quotations omitted).
Here, NDSC submitted a request for an FMP certificate in
which it represented that the Hineses failed to return the FMP form on
which they were to elect or waive mediation. The record includes no
evidence suggesting that the Hineses did in fact return the FMP
enrollment form to NDSC, Wells Fargo, or the FMP administrator.
Therefore, the Hineses failed to proffer evidence to show that NDSC's
request for an FMP certificate contained an express misrepresentation.
Instead of providing evidence to challenge the veracity of
NDSC's request for an FMP certificate, the Hineses proffered evidence
suggesting that their attorney orally told Wells Fargo that the Hineses
desired to mediate. NDSC did not reveal this purported conversation in
its request for an FMP certificate. However, the Hineses have not shown
that this evidence of NDSC's purported omission creates a genuine issue of
material fact for two reasons.
First, the Hineses proffered no evidence or analysis to suggest
that NDSC or Wells Fargo had a duty to disclose this purported
conversation when requesting the FMP certificate. The FMP rules state
that a person whose house is subject to foreclosure "shall . . . complete the
IFMPI Enrollment Form and deliver it. . . to the [FM13 Administrator."
]
FMR 8(2)(a) (emphasis added). The person seeking mediation "shall also
mail a copy of the Enrollment of Mediation to the trustee." FMR 8(2)(b)
(emphasis added). If the person does not complete and return the form to
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the FMP administrator during this time period, the FMP 'shall . . issu[e]
a certificate stating no mediation is required, and that a foreclosure sale
may be noticed according to law." FMR 8(4) (emphasis added). Because
these FMP rules use the word "shall," they impose mandatory duties. See
Pasillas v. HSBC Bank USA, 127 Nev., Adv. Op. 39, 255 P.3d 1281, 1285
(2011). Thus, the FMP rules require the FMP to issue a certificate stating
that mediation is not required if the homeowner fails to return the
mediation enrollment form.
Furthermore, the Hineses have provided no authority or
analysis to show that the FMP rules allow a person subject to foreclosure
to fulfill the duty to return an FMP enrollment form by orally expressing a
desire to mediate. Cf. FMR 8. Nor do they provide authority or analysis
to show that a lender has a duty to inform the FMP when the borrower
orally expresses an interest in mediation. Therefore, NDSC and Wells
Fargo did not have a duty to inform the FMP about the Hineses' attorney's
purported telephone call.
Second, the Hineses proffered no evidence or analysis to show
that NDSC's refusal to mention the Hineses' attorney's purported oral
statement made its representation that the Hineses failed to return the
FMP enrollment form false or misleading. The existence or nonexistence
of the Hineses' attorney's statement has no bearing on whether the
Hineses completed or submitted the FMP enrollment form. Therefore, the
Hineses failed to proffer evidence to show that NDSC's request for an FMP
certificate made a misrepresentation. As a result, we conclude that the
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district court did not err in granting summary judgment against the
Hineses on their fraud claim. 7
The district court did not abuse its discretion by ordering the Hineses to
pay Wells Fargo's expenses related to the motion to compel
The Hineses argue that the district court abused its discretion
in granting Wells Fargo's motion to compel because the Hineses
substantially complied with Wells Fargo's discovery requests and the
deficiencies in their responses were technical and not substantive.
Alternatively, the Hineses argue that if the district court properly granted
the motion to compel, an award of expenses to Wells Fargo was
unwarranted because Wells Fargo failed to make a good faith effort to
acquire the discovery from them before filing its motion to compel.
The district court did not abuse its discretion in granting Wells
Fargo's motion to compel
If a party does not file and serve a timely opposition to a
motion, this failure "may be construed as an admission that the motion is
meritorious and a consent to granting it." Las Vegas Fetish & Fantasy
Halloween Ball, Inc. v. Ahern Rentals, Inc., 124 Nev. 272, 278, 182 P.3d
764, 768 (2008); see also King v. Cartlidge, 121 Nev. 926, 927, 124 P.3d
1161, 1162 (2005) (providing the same). Here, Wells Fargo filed a motion
7 To the extent that the Hineses contend on appeal that their fraud
claim is based on something other than the statements made in NDSC's
request for an FMP certificate, they are arguing for a claim that they did
not make in their complaint. Therefore, we decline to consider this new
claim. See Laird v. State Pub. Emps. Ret. Bd., 98 Nev. 42,46, 639 P.2d
1171, 1173 (1982) (refusing to consider a claim made for the first time on
appeal); see also Old Aztec Mine, Inc. v. Brown, 97 Nev. 49, 52, 623 P.2d
981, 983 (1981) (failure to properly raise a non-jurisdictional issue before
the district court waives the issue on appeal).
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to compel written discovery, which the Hineses did not oppose. Whether
the Hineses substantially complied with the discovery requests or made
only technical errors in their discovery responses does not alter the fact
that they failed to oppose the motion. Therefore, the district court acted
within its discretion in granting Wells Fargo's uncontested motion to
compel. See Las Vegas Fetish & Fantasy Halloween Ball, Inc., 124 Nev. at
278, 182 P.3d at 768.
The district court did not abuse its discretion by ordering the Hineses
to pay Wells Fargo's expenses relating to the motion to compel
NRCP 37(a)(4)(A) provides that "[i]f the motion [to compel] is
granted. . . , the court shall ... require the party or deponent whose
conduct necessitated the motion. . . to pay to the moving party the
reasonable expenses incurred in making the motion," unless an exception
enumerated in the rule applies. In a court rule, the term "shall" is
mandatory. See State Emps. Ass'n, Inc. v. Daines, 108 Nev. 15, 19, 824
P.2d 276, 278 (1992) (holding that "in statutes, 'may' is permissive and
'shall' is mandatory unless the statute demands a different construction to
carry out the clear intent of the legislature"); see also Webb v. Clark Cnty.
Sch. Dist., 125 Nev. 611, 618, 218 P.3d 1239, 1244 (2009) (stating that "the
rules of statutory interpretation apply to Nevada's Rules of Civil
Procedure"). Thus, NRCP 37(a)(4)(A) requires the district court to award
expenses to a party who succeeds on its motion to compel discovery unless
an exception applies.
Here, the district court granted Wells Fargo's motion to
compel discovery. Therefore, NRCP 37(a)(4)(A) required the district court
to order the Hineses to pay Wells Fargo's expenses associated with the
motion to compel unless an exception applies.
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On appeal, the Hineses contend that NRCP 37(a)(4)(A)'s
exception for when the movant fails to make a good faith effort to obtain
the discovery before filing the motion to compel precludes an award of
expenses. 8 However, they waived this argument by not raising it before
the district court. 8 See Old Aztec Mine, Inc. v. Brown, 97 Nev. 49, 52, 623
P.2d 981, 983 (1981) ("A point not urged in the trial court, unless it goes to
the jurisdiction of that court, is deemed to have been waived and will not
be considered on appeal."). Therefore, we conclude that the district court
did not abuse its discretion in awarding Wells Fargo's expenses.
Conclusion
The district court did not err by granting summary judgment
against the Hineses on their wrongful foreclosure claim because the
Hineses failed to establish a genuine issue of material fact as to whether
they were in default on their loan or whether the notice of rescission
rescinds the 2009 Notice of Default. The district court did not err by
granting summary judgment against the Hineses on their fraud claim
because the Hineses failed to establish a• genuine issue of material fact as
to whether NDSC or Wells Fargo made a misrepresentation on the
application for the FMP certificate. Finally, the district court did not
8 TheHineses do not argue in their appellate briefing that NRCP
37(a)(4)(A)'s other exceptions apply. Therefore, they waive these issues on
appeal. See Powell v. Liberty Mut. Fire Ins. Co., 127 Nev. 156, 161 n.3,
252 P.3d 668, 672 n.3 (2011).
8 1fthe Hineses' appellate arguments about the technical deficiencies
and substantial compliance of their discovery responses are also intended
to be arguments against liability for Wells Fargo's expenses under NRCP
37(a)(4)(A), the Hineses waived these arguments by not making them with
regard to this issue before the district court. See Old Aztec Mine, 97 Nev.
at 52, 623 P.2d at 983.
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abuse its discretion in ordering the Hineses to pay Wells Fargo's expenses
related to the motion to compel because the Hineses did not file and serve •
a written opposition to the motion or demonstrate that an exception to
NRCP 37(a)(4)(A)'s imposition of liability for expenses applies. 10
Therefore, we
ORDER the judgment of the district court AFFIRMED.
PICKERING, J., concurring in part and dissenting in part:
The district court granted summary judgment against
borrowers Keith and Deena Hines on their chapter 107 claim. In my view,
genuine issues of material fact precluded summary judgment on that
claim. This lender, or its agent, recorded notices of default in 2007 and
2009 and a notice of rescission of notice of default in 2010. The 2010
notice of rescission did not specify whether it invalidated the 2007 notice
of default, the 2009 notice of default, or both. Adding to the confusion, the
lender and its agent spoke to the borrowers' attorney before recording the
notice of rescission and were told that the borrowers expected the lender to
restart foreclosure, whereupon the borrowers would elect mediation under
10 We have considered the parties' remaining arguments and
conclude that they are without merit.
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Nevada's foreclosure mediation program (FMP). Despite these events, the
lender went ahead with foreclosure based on the 2009 notice of default
and, to obtain the required certificate from the FMP administrator,
represented that the borrowers had not requested mediation, not
disclosing that the lender knew the borrowers expected a fresh notice of
default and had declared their intention, on receipt of such notice, to
demand mediation. Viewing these facts most favorably to the Hineses, as
the summary judgment context requires, I cannot say, as a matter of law,
that the lender: (1) substantially complied with NRS chapter 107, see NRS
107.080(5)(a); or (2) met the FMP's good faith requirement, see NRS
107.086(6). For these reasons, while I join the decision affirming the
discovery sanctions imposed, I respectfully dissent from the majority's
affirmance of the district court's summary judgment in favor of the lender.
The Hineses were represented by counsel during part of their
foreclosure and from the filing of their complaint up until the district court
denied the first motion for summary judgment. Their litigation counsel
withdrew, however, before Wells Fargo and NDSC renewed their motion
for summary judgment after the close of discovery. Nevertheless, in
opposing the renewed motion, the Hineses presented sufficient evidence to
show issues of fact prevented summary judgment on their chapter 107
claim. Their evidence showed that in December 2009 a Wells Fargo
representative called and informed them that their foreclosure "was to be
dismissed and procedures need to take place under [the] Hamp Bill."
After the Hineses learned that Wells Fargo had not halted foreclosure,
they contacted an attorney on January 20, 2010, who called Wells Fargo
and NDSC "and informed them that this was not in compliance with
Nevada Foreclosure Laws and needed[ ]to be cancelled and refil[ed] again
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[and] advised that once refil[ed] we would request mediation." The
Hineses' attorney told them to contact her once the new notice of default
was filed and they could begin the request for mediation. The next day,
January 21, NDSC recorded the notice of rescission.
But on February 1, 2010, NDSC altered course and proceeded
with the foreclosure, signing and submitting an affidavit to the FMP
seeking a foreclosure certificate on the grounds no mediation was required
because the Hineses had failed to return the form to elect or waive
mediation. In March 2010, Keith contacted Wells Fargo to inform it that
he had been having serious medical problems that required extensive
surgery and thus he could only make a half payment that month; the
Wells Fargo representative he spoke to told him to send in the
documentation demonstrating his medical hardships "and, as long as it's
curable, as long as we know it's a curable issue, we're going to work with
you." The Hineses then mailed in their partial $700 payment for that
month. In April 2010 NDSC received its certificate from the FMP
allowing it to proceed with the foreclosure sale, which occurred on August
3, 2010.
Summary judgment requires the reviewing court to consider
the evidence and all inferences fairly derived therefrom in favor of the
non-moving party. Winn v. Sunrise Hosp. & Med. Gtr., 128 Nev., Adv. Op.
23, 277 P.3d 458, 462 (2012). Doing so here suggests that despite Wells
Fargo's December 2009 statement that its foreclosure was "to be
dismissed," the January 2010 communication between the Hineses'
attorney and Wells Fargo and NDSC, and the subsequent immediate
recording of the notice of rescission, NDSC still sought and obtained a
mediation certificate based upon the Hineses failure to return a mediation
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election form. These facts at minimum raise a question as to whether
Wells Fargo and NDSC substantially complied with NRS 107.080 and
NRS 107.086. 1
The usual substantial compliance issue in this context is
whether the foreclosing entity sufficiently noticed the foreclosure. See,
e.g., Schleining u. Cap One, Inc., 130 Nev., Adv. Op. 36, 326 P.3d 4, 8-9
(2014) (considering whether foreclosing entity substantially complied with
the notice provisions concerning guarantors provided in NRS 107.095);
Banks v. Freddie Mac, No. 2:11-CV-00648-GMN, 2014 WL 2741875, at *7
(D. Nev. June 17, 2014) (summary judgment denied where lender and
servicer failed to show that they had substantially complied with the
statutory foreclosure notice mandates to the grantor/borrower and thus
had "failed to meet their initial burden"). Here, however, the unique issue
presented is whether the foreclosing entity substantially complied with
the statutory foreclosure procedure when it recorded a notice of rescission
of notice of default and election to sell in the midst of its foreclosure, and
thereafter claimed the notice of rescission undid an earlier, ostensibly
superseded notice of default, not the notice of default about which the
borrowers and their lawyer had corresponded with the lender.
The majority focuses on whether the notice of rescission can
have any legal effect on the 2009 notice of default given that it does not
specifically reference that notice of default, looking to tax lien cases for
support. But those cases concern whether a flawed tax lien notice
recorded against the property can be held to provide constructive notice of
'The. Hineses did not file a cross-motion for summary judgment.
Thus, the sole issue presented is whether the lender showed it was
entitled to judgment as a matter of law.
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the tax lien to a third-party (not the tax debtor) and thus allow the tax
lien to have priority. See Majority at 7-8. So, a seriously flawed tax lien
would be held against the entity that created and recorded it. The
majority uses this principle here, however, to• shield Wells Fargo and
NDSC from the effect of the problematic notice of rescission that NDSC
recorded, a document that they were not required to record but that, as
the majority recognizes, has the effect of cancelling a given foreclosure.
The more relevant factual inquiry, then, would be what the
notice of rescission would mean to a third party who viewed the document
in the context of the entire foreclosure process. See NRS 247.190(1) ("A
document acknowledged or proved and certified and recorded in the
manner prescribed in this chapter from the time of depositing the
document with the county recorder of the proper county for record,
provides notice to all persons of the contents thereof, and all third parties
shall be deemed to purchase and take with notice."); see also NRS 111.320
("Every such conveyance or instrument of writing, acknowledged or proved
and certified, and recorded . . . , must from the time of filing the same with
the Secretary of State or recorder for record, impart notice to all persons of
the contents thereof; and subsequent purchasers and mortgagees shall be
deemed to purchase and take with notice."); State Dep't of Taxation v.
Kawahara, 131 Nev., Adv. Op. 42, P.3d (2015) ("Generally, the
purpose of recording statutes is to provide subsequent purchasers with
knowledge concerning the state of title for real property."). Though
NDSC's notice of rescission appears to reference the 2007 notice of default
by listing the same internal reference number, the recording date strongly
suggests that it applies to the 2009 notice of default. Thus, a third-party
reader looking at these recorded documents would not automatically
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conclude that the notice of rescission applied only to the 2007 notice of
default, or that the notice of rescission had no effect at all (because why
would a trustee have such a notice recorded in the first place if not to have
some effect on the recorded foreclosure documents). See Holt v. Reg'l Tr,
Servs. Corp., 127 Nev., Adv. Op. 80, 266 P.3d 602, 606 (2011) (the purpose
of a notice of rescission is to render "moot disputes concerning the notice of
default or its timing"). But these are the only two options the majority's
holding leaves. And, in any event, resolution of this factual inquiry is not
proper at summary judgment.
NDSC voluntarily caused the notice of rescission to be
recorded in the middle of its foreclosure under the 2009 notice of default
and this raises an issue about whether NDSC and Wells Fargo
substantially complied with the foreclosure procedure outlined in NRS
107.080, specifically whether a third party would view the document as
rescinding one, both, or none of the notices of default. This issueS of fact is
material, and prevents summary judgment in Wells Fargo and NDSC's
favor, especially because the two argue only that the Hineses failed to cure
their 2009 default, and a 2007 loan modification document indicates the
Hineses may have cured their 2007 default. If this is the case, then Wells
Fargo could not have foreclosed pursuant to the 2007 notice of default. See
NRS 107.080(2)-(3) (trustee can exercise power of sale only if the grantor
fails to make good the deficiency in performance of payment within a
certain period of time of recording the notice of default).
Furthermore, issues of fact surround whether Wells Fargo and
NDSC substantially complied with NRS 107.086's FMP-specific
provisions. The foreclosure mediation process demands that the lenders
and their agents attend mediation and act in good faith, and if they do not,
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then the certificate of mediation may not issue and the lender must start
the foreclosure process over. See NRS 107.086(6); Holt, 266 P.3d at 607
("[D]enial of an FMP certificate follows automatically from a finding the
statutory FMP requirements have been shirked."). The Legislature also
instructed this court to establish "procedures• to protect the mediation
process from abuse and to ensure that each party to the mediation acts in
good faith." NRS 107.086(11)(d) (emphasis added); see also FMR 22
(authorizing judicial review to determine, among other things, whether
the trust deed beneficiary participated in the mediation in good faith).
Given the factual issue as to Wells Fargo's December 2009 representations
that it was to restart the foreclosure process and the Hineses' attorney's
January 2010 communication with Wells Fargo and NDSC that the
Hineses wanted to mediate but that the foreclosure had to be redone, a
genuine issue of fact remains as to whether Wells Fargo and NDSC's
actions in still seeking the FMP certificate based upon the Hineses failure
to elect mediation in writing amounted to a bad faith abuse of the
mediation process such that they failed to substantially comply with NRS
107.086.
The majority states that it will not review the argument just
considered because the Hineses did not plead it as part of their fraud
claim. The fact remains that their chapter 107 claim encompasses this
argument. The complaint alleges that Wells Fargo and NDSC "failed to
comply with applicable provisions of AB 149 [which enacted the FMP
requirements], now incorporated into NRS 107.080, 107.086 and 107.087."
It also avers that the 2009 notice of default, the notice of rescission, the
notice of sale, the deed upon sale, and the FMP certificate "evidence
failures to adhere to the notice provisions required by law and constitute
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'substantial irregularities" supporting vacation of the sale. The Hineses
also advanced this argument in opposing the renewed summary judgment
motion by maintaining that the foreclosure did not comply with the laws of
this state and that a person reviewing the public records could reasonably
conclude that the notice of rescission rescinded the 2009 notice of default
or both notices of default. Thus, whether the sequence and nature of
events render Wells Fargo and NDSC's foreclosure noncompliant with
chapter 107 is a fair argument that we should consider on appeal.
Viewing the facts favorably to the Hineses, there are genuine
issues of material fact as to whether Wells Fargo, through NDSC,
substantially complied with NRS 107.080 and NRS 107.086 and thus
summary judgment was improper on their chapter 107 claim. I thus
would reverse and remand for the district court to address these
substantial compliance issues. See Las Vegas Plywood & Lumber, Inc. v.
D & D Enters., 98 Nev. 378, 380, 649 P.2d 1367, 1368 (1982) ("The district
court has discretion to determine whether there has been substantial
compliance with the statute."); Schleining, 326 P.3d at 8 (applying Las
Vegas Plywood's substantial compliance rules to chapter 107).
Picker
cc: Hon. David A. Hardy, District Judge
Lemons, Grundy & Eisenberg
Snell & Wilmer, LLP/Las Vegas
Tiffany & Bosco, P. A.
Washoe District Court Clerk
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