No. 58602 

HLED 

JAN 3 0 2014 

CLETA\grAk°1-AAT N N 

BY 

DEPLI 

130 Nev., Advance Opinion 

IN THE SUPREME COURT OF THE STATE OF NEVADA 

RECONTRUST COMPANY, N.A.; 

COUNTRYWIDE HOME LOANS, INC., 

A NEW YORK CORPORATION; 

NATIONAL TITLE CO., A NEVADA 

CORPORATION; AND SILVER STATE 

FINANCIAL SERVICES, INC., A 

NEVADA CORPORATION, 

Appellants/Cross-Respondents, 

vs. 

LANLIN ZHANG, 

Respondent/Cross-Appellant. 

Appeal and cross-appeal from judgment and orders entered 

following reversal and remand by la panel of this court in a real property 

dispute. Eighth Judicial District Court, Clark County; Timothy C. 

Williams, Judge. 

Vacated and remanded. 

Gerrard Cox & Larsen and Douglas D. Gerrard and Sheldon A. Herbert, 

Henderson, 

for Appellants/Cross-Respondents. 

Marquis Aurbach Coffing and Scott A. Marquis, Micah S. Echols, and Tye 

S. Hanseen, Las Vegas, 

for Respondent/Cross-Appellant. 

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BEFORE THE COURT EN BANC.' 

OPINION 

By the Court, PICKERING, J.: 

This real property dispute returns to this court for the third 

time. We vacate and remand for the district court to decide the lender's 

equitable subrogation claim, which neither the trial nor the prior appeals 

resolved. 

I. 

This dispute grows out of a contract giving respondent Lanlin 

Zhang the right to buy Frank Sorichetti's house (the Property). Sorichetti 

reneged, so Zhang sued him for specific performance and recorded a lis 

pendens against the Property. Sorichetti moved to dismiss and to expunge 

Zhang's us pendens; the district court granted his motions. Zhang 

successfully petitioned this court for a writ of mandamus directing the 

district court to reinstate Zhang's complaint and vacate its expungement 

order. Zhang v. Eighth Judicial Dist. Court (Zhang 1), 120 Nev. 1037, 103 

P.3d 20 (2004), abrogated in part by Buzz Stew, L.L.C. v. City of N. Las 

Vegas, 124 Nev. 224, 228 n.6, 181 P.3d 670, 672 n.6 (2008). 2 

Months later, someone (the parties suspect Sorichetti) 

recorded the district court's nullified order of dismissal and expungement, 

'The Honorable Ron D. Parraguirre, Justice, voluntarily recused 

himself from participation in the decision of this matter. 

2The case was assigned to and decided by a different district judge 

than the judge who rendered the order underlying this appeal. 

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giving the document a new title: "Release of Lis Pendens." Sorichetti then 

applied to appellant Countrywide for a $705,000 loan 3Before making the 

loan, Countrywide conducted a title search, which revealed both the lis 

pendens and the "Release." Countrywide accepted the "Release" as proof 

that the Property was no longer in litigation and loaned Sorichetti 

$705,000. Countrywide secured its loans by recording first and second 

deeds of trust against the Property. Of the amount loaned, $281,090.12 

went to retire the preexisting mortgage debt. Sorichetti pocketed the 

balance and disappeared. 

Sorichetti defaulted and Countrywide initiated foreclosure. 

When Zhang learned about the pending foreclosure, she amended her 

complaint to join Countrywide and add claims for declaratory judgment, 

negligence, slander of title, and to quiet title. Eventually, the district 

court entered default judgment against Sorichetti and ordered him to 

convey the Property to Zhang for the agreed-upon purchase price 

($532,500) less damages due Zhang from Sorichetti ($262,868.31). But 

Zhang could not complete the purchase because of Countr3rwide's deeds of 

trust. 

The district court conducted a bench trial on the dispute 

between Zhang and Countrywide. Before trial, the parties submitted a 

joint pretrial memorandum. The memorandum identified the "principal 

3Refinancing was provided by appellant Silver State Financial 

Services, Inc., who assigned the notes and deeds of trust to its co-appellant 

Countrywide Home Loans, Inc. The third appellant, National Title 

Company, performed the title search. The parties do not differentiate 

among the appellants/cross-respondents in addressing the issues 

presented by this appeal and, for simplicity's sake, we refer to the 

appellants/cross-respondents collectively as Countrywide. 

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legal issue" as the validity and effect of Zhang's lis pendens. The parties 

stipulated "that Countrywide paid off prior loans against the Property in 

the amount of $230,864.29 and $50,225.83" and identified as an additional 

legal issue "[w]hether Countrywide is entitled to equitable subrogation in 

the amount of $281,090.12," the combined paid-off sum. 

The district court ruled in Countrywide's favor without 

reaching equitable subrogation. It held that the ostensibly released lis 

pendens did not give Countrywide actual or constructive notice of Zhang's 

specific performance claim against Sorichetti. Thus, Countrywide's deeds 

of trust had priority for the full $705,000 they secured. Since the $705,000 

included the $281,090.12 that retired the preexisting mortgage debt 

against the Property—the object of Countrywide's equitable subrogation 

claim—the district court did not need to decide that issue, and it didn't. It 

struck the equitable-subrogation references in the draft findings of fact 

and conclusions of law Countrywide submitted. It also denied Zhang's 

claims for negligence, slander of title, and to quiet title and awarded costs 

to Countrywide. 4 

Zhang appealed, and her appeal was heard by a three-judge 

panel of this court. The panel found no merit in Zhang's contention that 

the district court erred in rejecting Zhang's negligence and slander-of-title 

claims, but reversed as to Zhang's declaratory and quiet-title claims and 

costs. Zhang v. Recontrust Co., N.A. (Zhang II), Docket Nos. 52326/52835 

4The district court rejected Zhang's negligence claim on the basis 

that she failed to establish the standard of care required to perform a 

"skillful and diligent title search and, further, whether a breach [of duty] 

occurred." It rejected her slander-of-title claim because she did not prove 

that Countryvvide's deeds of trust were maliciously recorded. 

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(Order of Reversal and Remand, February 26, 2010). It held that Zhang's 

us pendens put Countrywide on inquiry notice as to Zhang's suit against 

Sorichetti. Thus, the panel accepted Zhang's argument that "the district 

court erred in. . . concluding that Zhang's us pendens should not be given 

priority over [Countrywide's] deeds of trust." Id. "Since it was error for 

the district court to conclude that the deeds of trust had priority over the 

lis pendens," the Zhang II panel wrote, "the district court's determination 

that title could not be quieted in Zhang's name because of the priority of 

the deeds of trust on the Property was also error." Id. The order and 

remittitur in Zhang II state that we "ORDER the judgment of the district 

court REVERSED and REMAND this matter to the district court for 

proceedings consistent with this order." Id. 

Both sides filed petitions for panel rehearing and, when these 

were denied, for en banc reconsideration. Zhang challenged the panel's 

rejection of her negligence and slander-of-title claims, while Countrywide 

challenged the panel's decision that the lis pendens gave it constructive 

notice of Zhang's specific performance claim against Sorichetti. The 

parties questioned a footnote in Zhang II that stated, "Because we order 

the district court's judgment reversed, we vacate the district court's award 

of costs. We therefore remand to the district court to make a 

determination of whether attorney fees and costs are appropriate pending 

the outcome of the new trial." Id. (emphasis added). They asked the court 

to clarify the "new trial" the footnote alluded to. 

The en banc court denied reconsideration, over Justice 

Hardesty's dissent. In doing so, it modified the questioned footnote to 

delete the reference to a "new trial." As modified, the footnote read: "We 

therefore remand this matter to the district court to determine whether 

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attorney fees and costs are appropriate in light of this order." Zhang v. 

Recontrust Co., N.A., Docket Nos. 52326/52835 (Order Denying En Banc 

Reconsideration and Modifying Prior Order, November 17, 2010). 

Otherwise, the en banc court left the panel order unchanged. 

On remand, Countrywide asked the district court for a 

decision on equitable subrogation. The district court acknowledged the 

undecided equitable subrogation claim but stated that it did not "feel it 

[could] award equitable subrogation [since] it was not given jurisdiction to 

do so by the Supreme Court's Decision reversing and remanding this 

matter." The district court then entered judgment as follows: "Upon 

recordation of this Judgment, Lanlin Zhang shall be recognized in all 

official records as the owner of [property address]." The court also 

awarded most of what Zhang requested in fees and costs. 

Countrywide filed a motion to alter or amend the judgment. It 

argued that not granting equitable subrogation meant that Zhang 

acquired the Property without paying off the debt to which it already was 

subject when she agreed to buy it. The district court pondered why "a 

person should get a free home." But it reiterated that, since the panel 

order did not give "any guidance as to how to handle the equitable 

subrogation issue whatsoever," it felt constrained to deny relief. 

Countrywide appealed and Zhang cross-appealed. 5 

5Zhang argues that this court lacks jurisdiction because 

Countrywide filed an untimely notice of appeal. This argument lacks 

merit. As a motions panel of this court previously held, Countrywide filed 

a timely NRCP 59 motion which tolled the time for filing its appeal. See 

NRAP 4(a)(4). We also deny Countrywide's motion to strike Zhang's 

supplemental authorities. 

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IL 

A. 

Nevada recognizes the doctrine of equitable subrogation as 

formulated in section 7.6 of the Restatement (Third) of Property: 

Mortgages (1997). Am. Sterling Bank v. Johnny Mgmt. LV, Inc., 126 Nev. 

„ 245 P.3d 535, 539 (2010). Equitable subrogation "permits 'a 

person who pays off an encumbrance to assume the same priority position 

as the holder of the previous encumbrance," Houston v. Bank of Am. Fed. 

Say. Bank, 119 Nev. 485, 488, 78 P.3d 71, 73 (2003) (quoting Mort v. 

United States, 86 F.3d 890, 893 (9th Cir. 1996)), so long as the payor (1) 

"reasonably expected to receive a security interest in the real estate with 

the priority of the mortgage being discharged, and [(2)1 subrogation [does] 

not materially prejudice the holders of intervening interests in the real 

estate." Restatement (Third) of Prop.: Mortgages § 7.6(b)(4). "The payor is 

subrogated only to the extent that the funds disbursed are actually 

applied toward payment of the prior lien. There is no right of subrogation 

with respect to any excess funds." Id. cmt. e. 

Applying these principles to this case, Countrywide had a 

strong equitable subrogation position. It loaned Sorichetti $705,000, part 

of which paid off preexisting debt against the Property in the stipulated 

amount of $281,090.12. This left it to the district court to decide the other 

equitable-subrogation factors—Countrywide's reasonable expectations and 

the cognizable prejudice to Zhang of crediting Countrywide's position. See 

Am. Sterling Bank, 126 Nev. at 245 P.3d at 539-41. But the district 

court did not decide equitable subrogation because it resolved the case on 

other, later-reversed grounds. 

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Although Zhang argues otherwise, Countrywide adequately 

raised equitable subrogation in the district court. The joint pretrial 

memorandum, submitted before trial pursuant to NRCP 16 and EDCR 

2.67, stipulated without qualification or objection from Zhang that 

equitable subrogation was a legal issue in the case. See EDCR 2.67(b)(8) 

(the joint pretrial memorandum shall include a statement "of each 

principal issue of law which may be contested at the time of trial [and] 

include with respect to each principal issue of law the position of each 

party"); cf. Walters v. Nev. Title Guar, Co., 81 Nev. 231, 234, 401 P.2d 251, 

253 (1965) ("As a general proposition a pretrial order. . . control[s] the 

subsequent course of the trial and supersedes the pleadings."). Thus, as 

the district court acknowledged, equitable subrogation was legitimately in 

play, at least up until Zhang 

B. 

The question we must decide is Zhang ifs impact on 

Countrywide's equitable subrogation claim. The district court took Zhang 

II as, sub silentio, rejecting equitable subrogation in favor of granting 

unencumbered title to Zhang. This reads more into the Zhang II 

proceedings and our law-of-the-case doctrine than either can sustain. 

The law-of-the-case doctrine "refers to a family of rules 

embodying the general concept that a court involved in later phases of a 

lawsuit should not re-open questions decided (i.e., established as law of 

the case) by that court or a higher one in earlier phases." Crocker v. 

Piedmont Aviation, Inc., 49 F.3d 735, 739 (D.C. Cir. 1995). Normally, "for 

the law-of-the-case doctrine to apply, the appellate court must actually 

address and decide the issue explicitly or by necessary implication." 

Dictor v. Creative Mgmt. Servs., L.L.C., 126 Nev. , 223 P.3d 332, 

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334 (2010); see Wheeler Springs Plaza, L.L.C. v. Beemon, 119 Nev. 260, 

266, 71 P.3d 1258, 1262 (2003) ("The doctrine only applies to issues 

previously determined, not to matters left open by the appellate court."). 

"Subjects an appellate court does not discuss, because the parties did not 

raise them, do not become the law of the case by default." Bone v. City of 

Lafayette, Ind., 919 F.2d 64, 66 (7th Cir. 1990), quoted with approval in 

Dictor, 126 Nev. at , 223 P.3d at 334. 

Zhang II did not decide equitable subrogation explicitly or by 

necessary implication. Zhang appealed the district court's conclusion that 

her lis pendens did not give Countrywide notice of her suit against 

Sorichetti, such that its deeds of trust had complete priority over her claim 

to specific performance. She also appealed the district court's rejection of 

her quiet title, negligence, and slander-of-title claims. Because the district 

court did not reach much less resolve equitable subrogation, the Zhang II 

briefs did not discuss it. And consistent with the general rule against 

considering matters not raised in the briefs, see Fanders v. Riverside 

Resort & Casino, Inc., 126 Nev. n.2, 245 P.3d 1159, 1163 n.2 

(2010), the panel did not discuss equitable subrogation either. 

Nor did Zhang II reject equitable subrogation by necessary 

implication. To be sure, the panel in Zhang II discussed Zhang's quiettitle claim in broad and expansive terms. But the panel assumed that, if 

Zhang's lis pendens gave Countrywide constructive notice of her specific 

performance claim, its deeds of trust would be wholly subordinate to her 

right to purchase. "A position that has been assumed without decision for 

purposes of resolving another issue is not the law of the case." 18B 

Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal 

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Practice and Procedure § 4478 (2d ed. 2002). The panel's reference to 

quieting title in Zhang was a description of her claim, not a disposition of 

the unmentioned equitable subrogation claim. See Snow-Erlin ex rel. 

Estate of Erlin v. United States, 470 F.3d 804, 808 (9th Cir. 2006) (holding 

that reference in the decision of a prior appeal in the same case to the 

plaintiff s claim as being for negligence, not false imprisonment, was 

descriptive not dispositive and did not establish law of the case for 

purposes of a later challenge to subject matter jurisdiction under the 

Federal Tort Claims Act, which waives the federal government's sovereign 

immunity for negligence but not false imprisonment claims). 

C. 

Zhang next argues that Countrywide could and should have 

asserted equitable subrogation defensively in its answering brief in Zhang 

II and that Countrywide's omission supports the judgment in her favor. In 

effect, she invokes the "common. . . rule that a question that could have 

been but was not raised on one appeal cannot be resurrected on a later 

appeal to the same court in the same case." Wright, Miller Sz Cooper, 

supra, § 4478.6; see United States v. Parker, 101 F.3d 527, 528 (7th Cir. 

1996) ("A party cannot use the accident of a remand to raise in a second 

appeal an issue that he could just as well have raised in the first 

appeal. . . ."). Certainly, it would have been prudent for Countrywide to 

advise the Zhang II panel of its undecided equitable subrogation claim as 

its fallback position, so the panel could make clear that it did not express 

an opinion on that claim. But its failure to raise equitable subrogation in 

Zhang II did not preclude it from doing so on remand to the district court 

for two reasons. 

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First, the district court did not rule on equitable subrogation 

before Zhang IL Waiver in the law-of-the-case context "applies only when 

the trial court has expressly or impliedly ruled on a question and there 

has been an opportunity to challenge that ruling on a prior appeal." 

Crocker, 49 F.3d at 740-41 n.2. Since the district court did not decide 

equitable subrogation, there was no error for Countrywide to argue. 

Second, Countrywide was the respondent or appellee in Zhang 

II, not the appellant. "While there are clear adjudicative efficiencies 

created by requiring appellants to bring all of their objections to a 

judgment in a single appeal rather than seriatim . . . , forcing appellees to 

put forth every conceivable alternative ground for affirmance might 

increase the complexity and scope of appeals more than it would 

streamline the progress of the litigation." Crocker, 49 F.3d at 740-41 

(emphasis added) (also noting that an appellant seeking to persuade the 

court to overturn a district court ruling "enjoys the offsetting procedural 

benefit of filing both the opening and reply briefs," while an "appellee 

presenting alternative grounds for affirmance and facing a potential 

application of the waiver doctrine must also attack an adverse district 

court ruling. . . without the offsetting advantage of being able to file a 

reply brief'). For these reasons, courts hesitate to find waiver "where, as 

here, the judgment from which an appeal is taken is entirely favorable to 

the appellee and that party, after losing the appeal, then seeks to raise a 

new issue during a later appeal of an unfavorable judgment." United 

States v. Moran, 393 F.3d 1, 12 (1st Cir. 2004); see Eichorn v. AT&T Corp., 

484 F.3d 644, 657-58 (3d Cir. 2007); Laitram Corp. v. NEC Corp., 115 F.3d 

947, 954 (Fed. Cir. 1997). 

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The proceedings on rehearing and reconsideration in Zhang II 

do not counsel a different result. When an appellate court "declines in its 

discretion to rehear a case en banc after a panel orders a remand, the 

court retains authority to rehear the matter en bane at a subsequent stage 

of the proceedings." Cattier v. City of Martin, 604 F.3d 553, 556-57 (8th 

Cir. 2010). Denial of en banc reconsideration signifies that the petition 

does not qualify under the stringent requirements imposed by NRAP 40A, 

nothing more. And the deletion of the "new trial" reference in footnote 3 of 

Zhang II addressed both sides' concerns that the order seemingly required 

a new trial when, in fact, trial of all issues already occurred. Resolving 

equitable subrogation—an issue already tried to but not yet decided by the 

district court—did not require a new trial. We thus do not find a fatal 

inconsistency between Countrywide's positions on rehearing and later on 

remand. 

For these reasons, we vacate the district court's judgment in 

favor of Zhang and remand with instructions to decide Countrywide's 

equitable subrogation claim on the merits and to enter final judgment 

accordingly. Vacating the judgment removes the predicate for the award 

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of fees and costs contested on cross-appeal. We therefore vacate and 

remand as to attorney fees and costs as well. 

Gibbons 

J. 

Hardesty 

J. 

Ch24t. 

Cherry 

Saitta 

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