OELLA RIDGE TR. v. SILVER STATE SCH. CREDIT UNION

137 Nev., Advance Opinion 66
IN THE SUPREME COURT OF THE STATE OF NEVADA
OELLA RIDGE TRUST, No. 81584
Appellant,
vs.
SILVER STATE SCHOOLS CREDIT
FILED
UNION, A NEVADA CORPORATION,
DEC 2 3 2021
Respondent.
A. BROWN
UPREME COURT
CLERK
Appeal from a district court order granting a motion to dismiss
in a declaratory relief action challenging attorney fees imposed under a deed
of trust. Eighth Judicial District Court, Clark County; Mark R. Denton,
Judge.
Affirmed.
Kerry P. Faughnan, North Las Vegas,
for Appellant.
Hutchison & Steffen, LLC, and Michael R. Brooks, Las Vegas,
for Respondent.
BEFORE THE SUPREME COURT, PARRAGUIRRE, STIGLICH, and
SILVER, JJ.
OPINION
By the Court, SILVER, J.:
Appellant purchased real property at an HOA foreclosure sale,
taking that property subject to respondent's deed of trust. That deed of
trust allows respondent to add any reasonable expenses incurred protecting
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its interest in the property, including attorney fees, to the secured debt.
Although a party seeking an award of attorney fees within the confines of a
district court case must comply with NRCP 54(d)(2)'s filing deadline, the
deed of trust here entitled respondent to add the attorney fees it accrued in
protecting its interest in the property to the secured debt without moving
for those fees in court. Because appellant's property is subject to the deed
of trust, and because appellant sought to pay off the note secured by the
deed of trust, the district court correctly found that respondent may add
those attorney fees to the amount of indebtedness owed under the note
secured by the deed of trust.
FACTS AND PROCEDURAL HISTORY
The property at issue in the underlying case was purchased in
2004. In 2010, the homeowner's association (HOA) recorded a delinquent
assessment lien, and the HOA subsequently foreclosed in 2012. Appellant
Oella Ridge Trust purchased that property at the HOA lien foreclosure sale
for approximately $4,700 and thereafter moved to quiet title. Respondent
Silver State Schools Credit Union, the holder of the first deed of trust on
the property, opposed the action, but the district court found in Oella
Ridges favor. We reversed that decision on appeal, concluding the HOA's
foreclosure sale did not extinguish Silver State's deed of trust because the
HOA's lien did not have superpriority status. See Silver State Sch. Credit
Union v. Oella Ridge Tr., No. 76382, 2019 WL 3061742 (Nev. July 11, 2019)
(Order of Reversal and Remand). On remand, the district court entered
judgment in Silver States favor, ordering that "Oella Ridge owns the
property subject to Silver State School's first position Deed of Trust."
After the district court entered its final judgment, Oella Ridge
requested that Silver State inform it of the notes payoff amount. Silver
State responded with a payoff amount that included attorney fees of more
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than $96,500, in addition to the remaining principal balance of
approximately $138,000. When Silver State declined to remove those
attorney fees from the payoff amount, Oella Ridge filed a complaint for
declaratory relief, seeking a declaration that the fees were unreasonable
and that Silver State had waived any request for attorney fees by failing to
timely seek fees during the course of the quiet title litigation. The district
court granted partial summary judgment in Silver States favor, concluding
the deed of trust allowed Silver State to add the attorney fees as additional
debt to the note secured by the deed of trust. But the district court also
determined that insufficient evidence existed to confirm the fees'
reasonableness and ordered supplemental briefing.
Silver State's supplemental briefing addressed the
reasonableness of the fees and attached supporting documentation. The
district court thereafter dismissed the complaint with prejudice. Oella
Ridge appeals, arguing Silver State waived its right to seek attorney fees by
failing to timely file a motion for those fees following the quiet title action,
as required by NRCP 54(d)(2).1
DISCUSSION
We treat the district court's decision, as the parties do, as one
for summary judgment, which we review de novo, considering the pleadings
and other evidence on file in the light most favorable to the nonmoving
party. See Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029
10ella Ridge also raises arguments under NRS 18.010 and NRS
18.110, but as Oella Ridge did not raise these arguments below, we do not
consider them on appeal. 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.").
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(2005) (addressing the standard for reviewing summary judgments);
Schneider v. Conel Assurance Co., 110 Nev. 1270, 1271, 885 P.2d 572, 573
(1994) (explaining that where the district court considers more than the
pleadings in granting a motion to dismiss, this court will treat the dismissal
as a grant of summary judgment). Summary judgment is appropriate if no
genuine issue of material fact remains and the moving party is entitled to
judgment as a matter of law. Wood, 121 Nev. at 729, 121 P.3d at 1029.
When the facts in a case are not in dispute, contract
interpretation is a question of law, which we review de novo. Galardi v.
Naples Polaris, LLC, 129 Nev. 306, 309, 301 P.3d 364, 366 (2013). "[We
construe a contract that is clear on its face from the written language, and
it should be enforced as written." Masto v. Second Judicial Dist. Court, 125
Nev. 37, 44, 199 P.3d 828, 832 (2009).
Pertinent here, section 9 of the deed of trust provides for
attorney fees reasonably incurred to protect Silver States interest in the
property:
If.. . . there is a legal proceeding that might
significantly affect Lender's interest in the
Property and/or rights under this Security
Instrument (such as a proceeding . . . for
enforcement of a lien which may attain priority
over this Security Instrument . . . ) . . . then Lender
may do and pay for whatever is reasonable or
appropriate to protect Lender's interest in the
Property and rights under this Security
Instrument, including . . . (b) appearing in court;
and (c) paying reasonable attorneys fees to protect
its interest in the Property and/or rights under this
Security Instrument. . . .
Any amounts disbursed by Lender under this
Section 9 shall become additional debt of Borrower
secured by this Security Instrument. These
amounts shall bear interest at the Note rate from
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date of disbursement and shall be payable, with
such interest, upon notice from Lender to Borrower
requesting payment.
(Emphases added.)
As an initial matter, we conclude that this section applies to
Oella Ridge. Critically, because Oella Ridge purchased the property at an
HOA foreclosure sale, it took title subject to the deed of trust and pursuant
to the promissory note, neither of which were extinguished by the HOA
foreclosure sale. As OeIla Ridge does not contend that it is not subject to
the deed of trust, we need say no more on this point.
Next, section 9 plainly allows Silver State to act to protect its
interest in the property. This includes "pay[ing] for whatever is reasonable
or appropriate" to protect that interest. Contracts involving real estate are
subject to general contract laws, and because we construe this plain
language by its common meaning, Miller & Starr, Cal. Real Estate, § 1:1 &
1:62 (4th ed. 2021), we interpret it as allowing Silver State to pay property-
related costs such as continued taxes, utility fees, late fees and interest—
or, as pertinent here, its reasonable attorney fees incurred in defending its
interest in the property. Section 9 further provides that any amount
disbursed by Silver State under that section shall be added to the debt
secured by the deed of tnist. Other courts addressing provisions with this
same or similar language have interpreted the language as providing the
lender with a right to costs as opposed to an award of attorney fees. In Hart
v. Clear Recon Corp., the court explained that an identical provision in a
deed of trust was "a provision that attorney's fees, like any other expenses
the lender may incur to protect its interest, will be added to the secured
debt." 237 Cal. Rptr. 3d 907, 911 (Ct. App. 2018). The court further
recognized that a number of federal district courts have reached this same
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conclusion in unpublished orders and determined that the lender may
therefore "convert the amounts spent on attorneys fees into additional debt
secured by the mortgage." Id. at 911 (quotation marks omitted). Even
among courts that do not bar attorneys from seeking attorney fees under
similar provisions through a motion for attorney fees following the
proceedings, courts still recognize that fees under the language of similar
provisions "are the costs of collection or costs incurred to protect the bank's
interest in the mortgaged property and its rights under the security
interest. . . . [and] are part of [the] contractual debt." Richardson v. Wells
Fargo Bank, N.A., 740 F.3d 1035, 1038-39 (5th Cir. 2014). These cases
therefore support that a lender may use a deed of trust to secure any
attorney costs incurred in protecting the lender's interest, even against one
who is not the "borrower,"2 where, as here, a nonborrower seeks to pay off
the loan balance.
We agree and conclude this provision enables Silver State to
add its attorney fees to the secured debt at the time Silver State disburses
those amounts. Although Oella Ridge is not personally liable for attorney
fees under the deed of trust, if Oella Ridge wishes to pay off the note, then
it must pay any costs Silver State added to the secured debt pursuant to the
deed of trust. Key here, the HOA foreclosed on-its lien, and the deed of trust
and promissory note were not extinguished. Had the foreclosure sale been
2We recognize that Hart and the cases it cites regard a lender
foreclosing against the original borrower and are therefore factually
distinguishable from many Nevada cases where the HOA forecloses on an
underwater property and a third-party investor purchases the home at the
HOA foreclosure sale. Nevertheless, these cases support the lender's ability
to add its costs, including attorney fees, to the underlying debt pursuant to
the deed of trust.
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on the deed of trust itself, we might reach a different conclusion in light of
Nevada's one action rule. See NRS 41.430(1).
Indeed, Oella Ridge neither offers an alternative interpretation
of the contractual language nor argues that it is not bound by section 9.
Instead, Oella Ridge argues that Silver States request for the payment of
attorney fees is untimely and therefore waived. But we are not persuaded
by Oella Ridges argument that NRCP 54(d)(2) required Silver State to file
a motion for attorney fees within a certain time period before it could add
those fees to the secured debt. Although the American rule bars a court
from awarding attorney fees unless allowed by a statute, rule, or agreement,
Pardee Homes of Nev. v. Wolfram, 135 Nev. 173, 177, 444 P.3d 423, 426
(2019), and NRCP 54(d)(2) requires a party seeking attorney fees to timely
move for such fees at a cases conclusion, the procedural posture of this case
does not implicate those rules. Oella Ridge's obligation to pay the attorney
fees in this case did not arise from a judgment or from an order on a motion
for attorney fees where NRCP 54(d)(2) would apply. Instead, the obligation
arose directly from the deed of trust's section 9 provision stating that
reasonable attorney fees, along with other expenses incurred to protect
Silver States interest, are automatically added to the secured debt. As a
result, NRCP 54(d)(2)'s language governing the timing of "claims" for
attorney fees in civil cases is inapplicable in this case.3
3To reiterate, if Silver State wanted to hold Oella Ridge personally
liable for the attorney fees, it would have needed to seek those fees in the
previous quiet title action and in compliance with NRCP 54(d)(2). However,
if Oella Ridge wishes to pay off the note then it must pay any costs Silver
State added to the secured debt pursuant to the deed of trust, and Silver
State need not have sought those fees in the previous action.
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Oella Ridge argues that our holding will deprive purchasers like
itself of any right to have a court review such attorney fees for their
reasonableness, timeliness, or good faith and fair dealing. Not so. A
purchaser is free to contest the reasonableness of attorney fees added to the
indebtedness securing a deed of trust in district court or to contest the deed
of trust's application to the purchaser. Here, for example, Oella Ridge
contested the fees reasonableness below, and in response, Silver State
submitted both an analysis of its fees and supporting documentation. The
district court granted summary judgment after considering that additional
argument and evidence.4 Thus, Oella Ridge was able to obtain court review
of the fees, even though Silver State did not move for an attorney fees award
following the judgment.
Oella Ridge took the property subject to the deed of trust, and
because Silver State was entitled to its reasonable fees under the deed of
trust, Silver State properly added its reasonable fees to the indebtedness
secured by the deed of trust. We therefore conclude the district court did
not err by granting summary judgment.
CONCLUSION
The deed of trust in this case permitted Silver State to
automatically add to the secured debt its reasonable attorney fees incurred
in protecting its interest in the property. Although Oella Ridge sought to
4A1though the district court did not make express findings as to the
fees' reasonableness, the record before this court supports the district
court's conclusion that there was no triable issue of fact regarding the fees'
reasonableness. See Sierra Glass & Mirror v. Viking Indus., Inc., 107 Nev.
119, 125, 808 P.2d 512, 515 (1991) ("If the court makes no ruling, findings
may be implied when clearly supported by the record."). And Oella Ridge
does not contest the fees' reasonableness on appeal.
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pay off the unpaid loan balance secured by the deed of trust and questioned
the attorney fees added to the debt, Silver State did not seek an order for
attorney fees within a civil district court case, making NRCP 54(d)(2) and
its timing requirements inapplicable. We affirm the district court's order
granting summary judgment and dismissing Oella Ridges complaint for
declaratory relief.
J.
Silver
We concur:
Parraguirre
"44;_lic,0
Stiglich
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