Chapman v. Deutsche Bank National Trust Co. ( 2013 )

129 Nev., Advance Opinion 341
IN THE SUPREME COURT OF THE STATE OF NEVADA
GEORGE P. CHAPMAN, JR.; AND No. 58664
BRENDA J. GULLY CHAPMAN,
Appellants,
vs.
DEUTSCHE BANK NATIONAL TRUST
COMPANY, AS TRUSTEE, A GERMAN
NATIONAL CORPORATION; FILED
NATIONAL DEFAULT SERVICING
mAY 3 %1 2013
CORPORATION, AN ARIZONA
CORPORATION; AND HOMEQ
SERVICING CORPORATION, A
CALIFORNIA CORPORATION,
Respondents.
Certified questions under NRAP 5 concerning whether Nevada
law characterizes quiet title actions and unlawful detainer actions as
proceedings in personam, in rem, or quasi in rem. United States Court of
Appeals for the Ninth Circuit; Ronald M. Gould and Milan D. Smith, Jr.,
Circuit Judges, and Amy J. St. Eve, United States District Judge.
Questions answered.
Terry J. Thomas, Reno; Geoffrey L. Giles, Reno,
for Appellants.
Houser & Allison, APC, and Jeffrey S. Allison, Irvine, California,
for Respondents.
BEFORE THE COURT EN BANC.
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OPINION
By the Court, PICKERING, C.J.:
The United States Court of Appeals for the Ninth Circuit has
certified the following questions to this court:
1. Is a quiet title action under Nevada
Revised Statutes § 40.010, which is premised on
an allegedly invalid trustee's sale under Nevada
Revised Statutes § 107.080(5)(a), properly
characterized under Nevada law as a proceeding
in personam, in rem, or quasi in rem?
2. Is an unlawful detainer action under
Nevada Revised Statutes § 40.255(1)(c) properly
characterized under Nevada law as a proceeding
in personam, in rem, or quasi in rem?
Chapman v. Deutsche Bank Nat'l Trust Co., 651 F.3d 1039, 1048 (9th Cir.
2011).
I.
This dispute arises out of a nonjudicial foreclosure proceeding
that respondent Deutsche Bank National Trust Company initiated against
a home owned by appellants George P. Chapman, Jr., and Brenda J. Gully
Chapman. Deutsche Bank purchased the home by credit bid at the
trustee's sale. When the Chapmans did not vacate, Deutsche Bank filed
an unlawful detainer action in Reno justice court, seeking to have them
removed. The Chapmans countered by filing a complaint in Nevada
district court seeking to quiet title to the property. They alleged that
Deutsche Bank did not own the promissory note or deed of trust and had
foreclosed without proper notice under NRS 107.080, invalidating the
trustee's sale.
The Chapmans moved the justice court to transfer the
unlawful detainer proceeding to district court so it could be consolidated
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with the quiet title action. But before the justice court could decide the
Chapmans' motion, Deutsche Bank removed the quiet title action from
state to federal district court and filed a motion to dismiss the complaint
for failure to state a claim upon which relief could be granted under Fed.
R. Civ. P. 12(b)(6). A few days later, the Chapmans moved to remand the
quiet title action back to state court on the basis that the unlawful
detainer action gave the state court exclusive jurisdiction over the real
property at issue in both suits. The federal court denied the Chapmans'
motion to remand and granted Deutsche Bank's motion to dismiss.
The Chapmans appealed to the Ninth Circuit Court of
Appeals. They argued that the federal district court should not have ruled
on the motion to dismiss because the prior-exclusive-jurisdiction doctrine
required the federal court to abstain in favor of the earlier-filed unlawful
detainer action. The Ninth Circuit agreed with the Chapmans that, "if
both the Quiet Title Action and the Unlawful Detainer Action are
characterized as in rem or quasi in rem, then the prior exclusive
jurisdiction doctrine requires us to vacate the District Court's dismissal of
the Quiet Title Action." Chapman, 651 F.3d at 1048.
Existing Nevada law does not specify whether quiet title and
unlawful detainer actions are in personam, in rem, or quasi in rem, so the
Ninth Circuit certified questions concerning their proper characterization
to this court.
The prior-exclusive-jurisdiction doctrine holds that, "when one
court is exercising in rem jurisdiction over a res, a second court will not
assume in rem jurisdiction over the same res." Marshall v. Marshall, 547
U.S. 293, 311 (2006). If Deutsche Bank's unlawful detainer action and the
Chapman's quiet title action are "strictly in personam," no prior-exclusive-
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jurisdiction problem arises because "both a state court and a federal court
having concurrent [in personam] jurisdiction may proceed with the
litigation." Penn Gen. Gas. Co. v. Pennsylvania ex rel. Schnader, 294 U.S.
189, 195 (1935). Similarly, if only one of the causes of action is in rem or
quasi in rem, "both cases may proceed side by side." United States v.
$79,123.49 in U.S. Cash & Currency, 830 F.2d 94, 97 (7th Cir. 1987). "But
if the two suits are in rem or quasi in rem, requiring that the court or its
officer have possession or control of the property which is the subject of the
suit in order to proceed with the cause and to grant the relief sought, the
jurisdiction of one court must of necessity yield to that of the other." Penn
Gen. Gas. Co., 294 U.S. at 195.
The character of the parties' competing quiet title and
unlawful detainer actions thus is determinative of the Chaprnans' federal
appeal. Of note, we do not need to decide whether quiet title and unlawful
detainer actions are in personam or in rem or quasi in rem. The prior
exclusive jurisdiction doctrine applies whether the actions are in rem or
quasi in rem, just not if they are in personam. See Seitz v. Fed. Nat'l
Mortg. Ass'n, No. 3:12CV633, 2012 WL 5523078, at *2, 8 (E.D. Va. Nov.
14, 2012) (declining to determine whether quiet title actions are in rem or
quasi in rem because the distinction does not impact the prior exclusive
jurisdiction rule in a case "strikingly similar" to Chapman).
Since current Nevada law does not resolve the questions
certified to us by the Ninth Circuit, we exercise our discretion under
NRAP 5 and accept them. See Volvo Cars of N. Am. v. Ricci, 122 Nev. 746,
749-51, 137 P.3d 1161, 1163-64 (2006). We reframe the questions,
however, to ask whether the quiet title and unlawful detainer actions are
in personam, on the one hand, or quasi in rem or in rem, on the other
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hand. This obviates the need to debate the exiguous distinction between
in rem and quasi in rem jurisdiction, which was historically significant but
now is of questionable importance. Restatement (Second) of Judgments §
6 cmt. a (1982); see Terracon Consultants W., Inc. v. Mandalay Resort
Grp., 125 Nev. 66, 72, 206 P.3d 81, 85 (2009) (this court may exercise its
discretion to reframe certified questions).
"[A] proceeding in rem is one taken directly against property,
and has for its object the disposition of the property, without reference to
the title of individual claimants. . . ." Pennoyer v. Neff, 95 U.S. 714, 734
(1877), overturned in part on other grounds by Shaffer v. Heitner, 433 U.S.
186, 205-06 (1977). In other words, when an action is in rem, the resulting
judgment applies against the whole world. Restatement (Second) of
Judgments §§ 6, 30 (1982). By comparison, an in personam judgment acts
upon the persons who are parties to the suit. Shaffer, 433 U.S. at 199; see
also State v. Cent. Pac. R.R. Co., 10 Nev. 47, 80 (1875) (explaining that
actions in personarn seek personal judgments and are directed against
specific persons), overruled on other grounds by State ex rel. State Bd. of
Equalization v. Barta, 124 Nev. 612, 626, 188 P.3d 1092, 1101-02 (2008);
Restatement (Second) of Judgments § 5 (1982). Quasi in rem proceedings
are "a halfway house between in rem and in personam jurisdiction,"
because the "action is not really against the property" but rather is used
"to determine rights in certain property." 4A Charles Alan Wright &
Arthur R. Miller, Federal Practice and Procedure § 1070 (3d ed. 2002).
A.
A Nevada quiet title action is predominantly in rem or quasi
in rem. NRS 40.010 governs Nevada quiet title actions and provides: "An
action may be brought by any person against another who claims an estate
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or interest in real property, adverse to the person bringing the action, for
the purpose of determining such adverse claim." A plea to quiet title does
not require any particular elements, but "each party must plead and prove
his or her own claim to the property in question" and a "plaintiff's right to
relief therefore depends on superiority of title." Yokeno v. Mafnas, 973
F.2d 803, 808 (9th Cir. 1992); see also Hodges Transp., Inc. v. Nevada, 562
F. Supp. 521, 522 (D. Nev. 1983).
In Robinson v. Kind, this court held that a proceeding is
substantially in rem where its "direct object is to reach and dispose of the
property of the parties described in the complaint." 23 Nev. 330, 343, 47
P. 977, 978-79 (1897). After rejecting the argument that an action to quiet
title necessarily invokes in personam jurisdiction because it seeks an
equitable remedy and equity normally acts upon the person, this court
explained that these precepts do not apply when the state has provided by
statute for the adjudication of titles to real estate within its boundaries,
which it deemed to be an in rem proceeding. Id. at 340-42, 47 P. at 978.
Although we decided Robinson more than 100 years ago, its holding that
quiet title affects property and thus is in rem (or quasi in rem) remains
good law. See Cent. Pac. R.R. Co., 10 Nev. at 80 ("A judgment in rem is
founded on a proceeding not as against the person as such, but against the
thing or subject-matter itself whose state or condition is to be determined."
(internal quotations omitted)).
By their complaint, the Chapmans seek to revest title in
themselves based on Deutsche Bank's alleged violation of NRS 107.080.
Even though a judgment quieting title vests title in a particular claimant,
and to that extent affects the interests of persons, see Restatement
(Second) of Judgments § 6 cmt. a (1982), its essential purpose is to
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establish superiority of title in property. Arndt v. Griggs, 134 U.S. 316,
321 (1890). This is quintessentially a manifestation of an in rem or quasi
in rem proceeding. See Seitz, 2012 WL 5523078, at *11 (holding that a
suit to quiet title is either in rem or quasi in rem); 1st Nat'l Credit Corp. v.
Von Hake, 511 F. Supp. 634, 641-42 (D. Utah 1981) (commenting on the
semantic differences between in rem and quasi-in-rem labels and holding
that the Utah statutory action to quiet title is an action in rem, or quasi in
rem); see also 40235 Washington St. Corp. v. Lusardi, 976 F.2d 587, 589
(9th Cir. 1992) ("A quiet title action is a proceeding in rem."), Neagle v.
Brooks, 373 F.2d 40, 43 (10th Cir. 1967) (quiet title is "purely an in rem
action"); Restatement (Second) of Judgments § 30 ctht. a (1982) (actions
"to quiet or remove a cloud on title" are quasi in rem because the
judgments they produce determine interests in property); Restatement
(Second) of Conflict of Laws § 95 cmt. f (Supp. 1989) (deeming quiet title
actions quasi in rem because judgments rendered in them affect the
interests of particular persons in property).
Deutsche Bank nonetheless insists that the Chapmans' action
is in personam because it does not seek to quiet title so much as to
establish breach of contract and incorporated foreclosure statutes. As
support, Deutsche Bank points to the Chapmans' allegations of loan-
servicing irregularities and improper foreclosure notices and their prayer
for compensatory damages. We disagree. The Chapmans' claim is in rem
or quasi in rem because they seek to establish title to property. The
nature of their claim does not change because they request monetary
damages in addition to the central relief—quiet title—that they request.
Here, as in Seitz, the Chapmans' quiet title claim "is quasi in rem or in
rem, [and] it does not lose that nature simply because [they] seek[ ]
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monetary damages in addition to title to property." Seitz, 2012 WL
5523078, at *11.
B.
The primary purpose of an unlawful detainer action is to
restore the possession of property to one from whom it has been forcibly
taken or to give possession to one from whom it is unlawfully being
withheld. G. C. Wallace, Inc. v. Eighth Judicial Dist. Court, 127 Nev. ,
262 P.3d 1135, 1140 (2011); Seitz, 2012 WL 5523078, at *4 (citing
Shorter v. Shelton, 33 S.E.2d 643, 647 (Va. 1945)). Consistent with this
purpose, a person who obtains title to property at a trustee's sale may
remove holdover tenants by means of an unlawful detainer action under
NRS 40.255(1)(c).
To initiate an action under NRS 40.255, the would-be plaintiff
must serve the property's occupants with a notice to quit. If the occupants
do not vacate the property within the time set by the notice, the owner
may file a written complaint for unlawful detainer, seeking restitution of
the premises. NRS 40.300. The plaintiff must serve the complaint with
summons on the occupants, id., and provide the court with proof of service
of the notice to quit as required by NRS 40.280(3) or (4).
Thereafter, a trial may ensue if the parties' pleadings
demonstrate an issue of fact. NRS 40.310. But the proceedings are
summary and their scope limited. See G.C. Wallace, 127 Nev. at , 262
P.3d at 1140 (explaining that evidence extrinsic to the issue of immediate
possession cannot be introduced at trial). Typically, the issues are
whether the plaintiff gave the statutorily required notice, Davidsohn v.
Doyle, 108 Nev. 145, 150, 825 P.2d 1227, 1230 (1992), and who as between
the plaintiff and the defendant has a superior right to possession. NRS
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(holding that unlawful detainer does not adjudicate title or an absolute
right to possession of property because It he object of the [unlawful
detainer] statute was not to try titles, but to preserve the peace and
prevent violence"); Seitz, 2012 WL 5523078, at *7 (unlawful detainer
action limits court to determining possession between plaintiff and
defendant). Notably, a superior right to possession does not require proof
of title, although title can be evidence of the right to possession. Yori v.
Phenix, 38 Nev. 277, 282, 149 P. 180, 180-81 (1915) NIA has universally
been held that title to property cannot be an issue in such actions. . . even
though such pleading and proof may incidentally involve the question of
title."). If after a trial, the court determines that the occupant has no legal
defense to the alleged unlawful detainer, it will issue a summary order for
restitution of the premises. NRS 40.360(1).
Although possession of property differs from ownership of
property, possession is nonetheless a type of property interest. Loretto v.
Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982) ("Property
rights in a physical thing have been described as the rights 'to possess, use
and dispose of it.' (quoting United States v. General Motors Corp., 323
U.S. 373, 378 (1945))); Seitz, 2012 WL 5523078, at *5. In his
Commentaries on the Laws of England, Blackstone instructed that "there
are four 'degrees' of title: (1) 'naked possession,' (2) 'right of possession,' (3)
'mere right of property,' and (4) 'complete title.' Seitz, 2012 WL 5523078,
at *5 (quoting 2 William Blackstone, Commentaries *195-99). Unlawful
detainer actions fall into the second "degree" of title in a property, "right of
possession," and accordingly, are actions that affect interests in a thing—
real property. As such, unlawful detainer is in rem or quasi in rem. See
G.C. Wallace, 127 Nev. at , 262 P.3d at 1140-41 (explaining in the
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analogous summary eviction setting that the key elements and defenses of
unlawful detainer center on possession and property rights, rather than
personal rights or obligations.); Seitz, 2012 WL 5523078, at *8; see also
Hepburn & Dundas' Heirs v. Dunlop & Co., 14 U.S. 179, 203 n.d (1816)
(describing ejectment as a proceeding in rem); Scherbenske v. Wachovia
Mortg., FSB, 626 F. Supp. 2d 1052, 1057 (E.D. Cal. 2009) (holding that the
unlawful detainer action plaintiff sought to enjoin was a quasi-in-rem
action).
Thus, in response to the Ninth Circuit's questions, we answer
that quiet title and unlawful detainer proceedings pertain to interests in a
thing and are, thus, "in rem" or "quasi in rem" in nature. We decline the
parties' invitation to expound on the federal prior-exclusive-jurisdiction
doctrine, as those questions were not certified to us and are best left to the
court of origin.
, C.J.
J2e,oft__\ ' J.
Gibbons Hardesty
Parraguirre
Cherry
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