Court Opinion

ID: 946314
Source: CourtListenerOpinion
Date Created: 2013-06-27 20:43:48.621557+00
Date Added: 2024-06-11T12:35:41.850204
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              JUN 27 2013

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

NORMAN GARAND,                                   No. 11-17277

              Plaintiff - Appellant,             D.C. No. 3:10-cv-00212-LRH-
                                                 VPC
  v.

JPMORGAN CHASE BANK;                             MEMORANDUM*
CALIFORNIA RECONVEYANCE
COMPANY; MORTGAGE
ELECTRONIC REGISTRATION
SERVICE, INC.; WAMU BANK, F.A.;
RECONSTRUCT COMPANY,

              Defendants - Appellees.

                    Appeal from the United States District Court
                             for the District of Nevada
                     Larry R. Hicks, District Judge, Presiding

                        Argued and Submitted May 13, 2013
                             San Francisco, California

Before: McKEOWN and WATFORD, Circuit Judges, and MARBLEY, District
Judge.**

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
       **
             The Honorable Algenon L. Marbley, District Judge for the U.S.
District Court for the Southern District of Ohio, sitting by designation.
      Plaintiff Norman Garand (“Garand”) appeals from the district court’s order

granting summary judgment for Defendants J.P. Morgan Chase Bank (“Chase”)

and California Reconveyance Company (“CRC”) on Garand’s statutorily defective

foreclosure and unjust enrichment claims.

      In 2007, Garand entered into two mortgage loans with Washington Mutual

Bank (“WaMu”), both secured by deeds of trust on which CRC was named trustee.

The first mortgage loan was subsequently endorsed in blank and purportedly

acquired by Freddie Mac. After the purported sale, the FDIC took WaMu into

receivership. Chase alleges that, at that point, the FDIC transferred all of WaMu’s

servicing rights to Chase, including the right to service Garand’s first mortgage

loan (which WaMu had retained after the sale to Freddie Mac). Chase also took

possession of the original first mortgage note. Garand defaulted on that loan and, in

October 2009, CRC initiated non-judicial foreclosure proceedings on Chase’s

behalf. Garand subsequently brought this wrongful foreclosure action.

      None of Garand’s arguments against summary judgment are persuasive.

Garand first contends that CRC’s Notice of Default and Election to Sell was

defective under N.R.S. § 107.080. Nevada’s nonjudicial foreclosure statute confers

on the trustee a power of sale “to secure the performance of an obligation or the

payment of any debt … after a breach of the obligation for which the transfer is

security.” N.R.S. § 107.080(1). The statue further authorizes a trustee to execute
and cause to be recorded the notice of default and notice of sale that are statutory

prerequisites to foreclosure. See N.R.S. § 107.080(2)(c), (3), (4). Hence, as the

original trustee named on the first deed of trust, CRC was a proper party to execute

and record the foreclosure notices at issue in this case.

      Moreover, CRC’s failure to disclose the current holder of the mortgage note

did not render the notice of default defective: at the time CRC recorded the notices

of default and sale, Nevada law imposed no such requirement for non-owner-

occupied residential properties. Although the Nevada legislature subsequently

revised N.R.S. § 107.080(2)(c) to require disclosure of the current note holder in

the notice of default, these provisions did not go into effect until October 2011. See

Assemb. B. 284 § 9, 76th Leg., Reg. Sess. (Nev.2011) (enacting N.R.S. §

107.080(2)(c)(1)-(6)); Assemb. B. 273 § 5.9, 76th Leg., Reg. Sess. (Nev.2011)

(amending effective date of Assembly Bill 284 to October 1, 2011 and amending §

14.5 of the bill to provide that the § 107.080 amendments apply only to notices of

default filed on or after October 1, 2011). Accordingly, the district court did not

err in granting summary judgment for CRC and Chase as to Garand’s claims under

N.R.S. § 107.080.

      Garand also alleges that CRC failed to comply with N.R.S. §§ 107.085 and

107.086. These provisions, however, apply only to owner-occupied premises and

thus are not applicable to the foreclosure proceedings at issue here. See N.R.S. §§
107.085(1)(b), 107.086(1). Therefore, the district court did not err in granting

summary judgment for CRC and Chase on those claims.

      Garand’s claims for unjust enrichment also fail. Under Nevada law, “[a]n

action based on a theory of unjust enrichment is not available when there is an

express, written contract.” Leasepartners Corp. v. Robert L. Brooks Trust Dated

November 12, 1975, 942 P.2d 182, 187 (Nev. 1997) (citing 66 Am.Jur.2d

Restitution § 6 (1973)). Here, the rights and obligations of the parties are dictated

by express contracts—the first mortgage note and deed of trust. The district court

therefore correctly granted summary judgment for CRC and Chase on Garand’s

claims for unjust enrichment.

      Finally, Plaintiff contends that the note and deed of trust are unenforceable

and/or inoperable. These arguments are also without merit. Nevada permits

instruments endorsed in blank to be negotiated by transfer of possession alone.

N.R.S. § 104.3205; Edelstein v. Bank of New York Mellon, 286 P.3d 249, 261

(Nev. 2012). In this case, because Chase has possession of the original note

endorsed in blank, it has the right to enforce the underlying debt. See Edelstein,

286 P.3d at 261 (citing Leyva v. National Default Servicing Corp., 255 P.3d 1275,

1280 (Nev. 2011)). Furthermore, though there was no corresponding assignment

of the deed of trust, this did not sever the security instrument from the debt.

Nevada follows the Restatement approach to notes and mortgages, wherein “a
promissory note and a deed of trust are automatically transferred together unless

the parties agree otherwise.” Id. at 257 (citing Restatement (Third) of Prop.:

Mortgages § 5.4 (1997)). Thus, here, transfer of the mortgage note also effected a

transfer of the deed of trust. Chase is therefore entitled to enforce both.

      Nor did any breach of the note or deed of trust render these contracts

unenforceable. The documents imposed no separate contractual obligation on

WaMu, Chase or CRC to disclose the transfer or assignment of the note or deed of

trust. Indeed, paragraph 20 of the deed of trust specifically provides that “[t]he

Note or a partial interest in the Note (together with this Security Instrument) can be

sold one or more times without prior notice to Borrower.” While paragraph 20

does mandate that written notice be issued to the borrower if there is a change in

loan servicer, the record indicates that Chase fully complied with that requirement.

      Garand also contends that paragraph 20 imposes an obligation to sell the

note and deed of trust together, and that therefore transferring the note without also

assigning the deed of trust constituted breach of contract. In fact, the note and deed

of trust were sold “together,” because the mortgage followed the note

automatically, without the need for a corresponding assignment.

      Garand also argues that, under paragraph 23 of the deed of trust, only the

Lender—not the loan servicer or the trustee—can invoke the power of sale and

cause the trustee to execute a notice of default. Even if paragraph 23 did prohibit
the trustee from initiating foreclosure proceedings at a loan servicer’s request,

CRC’s actions here would not be improper. As the entity in possession of the note,

Chase is entitled to enforce both the note and the deed of trust. Accordingly, Chase

has authority, as beneficiary under the security instrument, to cause CRC to

undertake foreclosure proceedings. There was, therefore, no breach of contract in

that respect.

      For the foregoing reasons, we conclude that the district court correctly

granted summary judgment for CRC and Chase on all claims.

      AFFIRMED.