Court Opinion

ID: 9897481
Source: CourtListenerOpinion
Date Created: 2023-11-14 19:14:57.596678+00
Date Added: 2024-06-11T09:16:33.219968
License: Public Domain

139 Nev., Advance Opinion C75

       IN THE SUPREME COURT OF THE STATE OF NEVADA

LV DEBT COLLECT, LLC,                                No. 84174
Appellant,
vs.
THE BANK OF NEW YORK MELLON,
F/K/A THE BANK OF NEW YORK, AS                         FILED
TRUSTEE FOR THE
CERTIFICATEHOLDERS OF CWMBS,                           AUG 24 202?
INC., CHL MORTGAGE PASS-                                   %Of 'TH A. BRO'
                                                         • F AJPR            R?
THROUGH TRUST 2005-02,
                                                           nval.ITY .CLERK
MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 2005-02,
Respondent.

           Appeal from a district court order granting a motion for
summary judgment in an action to quiet title. Eighth Judicial District
Court, Clark County; Adriana Escobar, Judge.
           Affirmed.

VC2 Law and Garrett R. Chase, Las Vegas,
for Appellant.

Akerman LLP and Ariel E. Stern, Natalie L. Winslow. and Nicholas E.
Belay, Las Vegas,
for Respondent.

BEFORE THE SUPREME COURT, CADISH, PICKERING, and BELL, JJ.

                                                              2,3- 2-Veto 41
                                                       OPINION

                    By the Court, CADISH, J.:
                                  NRS 106.240 provides that certain liens on real property are
                    automatically cleared from the public records after a specified period of
                    time. In particular, NRS 106.240 provides that a lien that is created by a
                    mortgage or deed of trust on real property is conclusively presumed to be
                    discharged "10 years after the debt secured by the mortgage or deed of trust
                    according to the terms thereof or any recorded written extension thereof
                    become wholly due."
                                  At issue in this appeal is whether a loan secured by real
                    property becomes "wholly due" for purposes of NRS 106.240 when a Notice
                    of Default is recorded as to the secured loan.    We conclude it does not.
                    Accordingly, we affirm the district court's judgment, which determined that
                    the deed of trust continues to encumber the real property at issue in this
                    case.'
                                       FACTS AND PROCEDURAL HISTORY
                                  In 2004, nonparty Nanci Quinnear purchased the subject
                    property. Quinnear financed the purchase with a loan from a bank and
                    executed a promissory note and a deed of trust that secured the note. See
                    generally Edelstein v. Bank of N.Y. Mellon, 128 Nev. 505, 286 P.3d 249
                    (2012) (explaining the interrelation between a promissory note and a deed
                    of trust, as well as what it means to be the beneficiary of a deed of trust).
                    The current beneficiary of the deed of trust is respondent Bank of New York

                             1Pursuant to NRAP 34(f)(1), we have determined that oral argument
                    is not warranted in this appeal.
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                Mellon (BNYM).2     The deed of trust contains a provision cross-referencing
                Quinnear's promissory note wherein she promised to pay off the full loan
                balance by 2034. The deed of trust also contains a provision stating that in

                the event Quinnear defaults on her loan obligation, BNYM has the right to
                provide her notice of such default. As relevant here, that provision further
                explains that if BNYM provides such a notice. Quinnear has at least 30 days
                to cure the default, and if she does not do so, BNYM "at its option, and
                without further demand, may invoke the power of sale, including the right
                to accelerate full payment of the Note."
                            Quinnear defaulted on the loan, and in 2008, BNYM •recorded a
                Notice of Default. The 2008 Notice of Default provided that BNYM "has
                declared and does hereby declare all sums secured [by the deed of trust]
                immediately due and payable."        Around the same time, Quinnear also
                defaulted on her homeowners' association (HOA) dues.           BNYM did not

                pursue foreclosure proceedings after recording the 2008 Notice of Default,
                and in 2011, Quinnear's HOA foreclosed on its "superpriority lien" and
                acquired the property via credit bid. See SFR Invs. Pool 1, LLC v. U.S.
                Bank, N.A., 130 Nev. 742, 758, 334 P.3d 408, 419 (2014) (explaining that
                "NRS 116.3116(2) gives an HOA a true superpriority lien, proper foreclosure
                of which will extinguish a first deed of trust"), superseded by statute on other
                grounds as stated in Saticoy Bay LLC 9050 W Warm Springs 2079 v. Nev.
                Ass'n Servs., 135 Nev. 180, 180, 444 P.3d 428, 429 (2019). At the time of the
                HOA's foreclosure, however, Quinnear had filed for bankruptcy.             It is

                      2 It is undisputed that the deed of trust was validly assigned to BNYM
                and that BNYM is the current deed of trust beneficiary. For the sake of
                clarity, we refer to the bank and any deed of trust beneficiaries that
                preceded BNYM collectively as "BNYM."
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                unclear from the record how the bankruptcy case was resolved, but it
                appears that Quinnear retained ownership of the subject property following
                the bankruptcy case's closure.
                             In 2013, appellant LV Debt Collect acquired title to the subject
                property in two different ways: (1) by a deed from the HOA and (2) by a deed
                from Quinnear.3 LV Debt Collect then filed this quiet title action in 2016,
                seeking a declaration that the HOA's foreclosure sale extinguished BNYM's
                deed of trust and that LV Debt Collect held an unencumbered ownership
                interest in the property.
                             In 2020, LV Debt Collect and BNYM filed competing motions
                for summary judgment, with the overarching issue being the legal effect of
                the HOA's foreclosure sale, given that it was conducted in violation of the
                automatic bankruptcy stay. See SFR Invs. Pool 1, LLC v. U.S. Bank, N.A.,
                135 Nev. 346, 349, 449 P.3d 461, 464 (2019) (recogni.zing that foreclosure
                sales conducted in violation of the automatic bankruptcy stay are void
                unless the stay is retroactively annulled).4     Before those motions were
                resolved, however, the district court granted LV Debt Col.lect leave to file
                an amended complaint asserting a declaratoiy relief claim based on NRS
                1.06.240—that the 2008 Notice of Default made the loan secured by BNYM's
                deed of trust "wholly due," such that by 2018, the deed of trust was
                extinguished as a matter of law.

                      3The circumstances surrounding the deed from Quinnear to LV Debt
                Collect are unclear. However, BNYM does not appear to dispute that this
                deed was effective to transfer whatever interest Quinnear had in the subject
                property to LV Debt Collect.

                      4 LV Debt Collect attempted repeatedly to obtain a retroactive
                annulment of the bankruptcy stay, but the bankruptcy court rejected those
                atternpts.
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                            The di.strict court heard and ruled on the parties' competing
                summary judgment motions pertaining to LV Debt Collect's original
                complaint. In doing so, the district court concluded that           persons or
                entities who were purportedly granted title or an interest in the property
                through the HOA sale or subsequently obtained title from the HOA,
                including [LV Debt Collect] have no valid interest in the property."
                Thereafter, LV Debt Collect filed a motion for reconsideration arguing,
                among other things, that the district court overlooked the legal significance
                of the deed from Quinnear and that, despi.te the HOA's foreclosure being
                void, LV Debt Collect still h.ad standing to assert its declaratory relief claim
                in its amended complaint. Notwithstanding its determination that LV Debt
                Collect had no valid interest in the property, the district court granted LV
                Debt Collect's motion. in part and allowed LV Debt Collect's NRS 106.240
                claim to proceed.
                            A second round of summary judgment motion practice ensued,
                wherein the parties raised competing arguments as to the applicability of
                NRS 106.240. Thereafter, the district court entered an order granting
                summary judgment for BNYM, reasoning that the 2008 Notice of Default
                did not make the loan "wholly due" for purposes of NRS 106.240, such that
                BNYM's deed of trust continued to encumber the subject property. This
                appeal followed.
                                               DISCUSSION
                            We review de novo a district court's decision to grant summary
                judgment. Wood t). Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029
                (2005). In this case, no genuine issues of material facts exist, and the
                primary issue presented is the interpretation of NRS 1.06.240,, which is a

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                      legal i.ssue that we also review de novo. Williams v. United Parcel Servs.,
                      1.29 Nev. 386, 391, 302 P.3d 1144, 1147 (2013).
                                  Before addressing NRS 106.240, we must first address the
                      district court's determination in its first summary judgment order that LV
                      Debt Collect has no interest in the subject property. We agree with LV Debt
                      Collect that the district court erred in this respect. LV Debt Collect has an
                      interest in the property by virtue of the deed it received from Quinnear. But
                      to the extent that LV Debt Collect contends there are questions of material
                      fact as to whether it holds unencumbered title to the subject property by
                      virtue of the deed it received from the HOA, those arguments are meritless.
                      Namely, it. is undisputed that the HOA conducted its foreclosure sale (and
                      obtained the property via credit bid at that sale) in violation of the
                      automatic bankruptcy stay, which rendered the sale void. SFR Invs., 135
                      Nev. at 349, 449 P.3d at 464; see also Bank of Am., N.A. v. SFR Invs. Pool
                      1, LLC, 134 Nev. 604, 612, 427 P.3d 113, 121 (2018) ("A party's status as a
                      [bona fide purchaser] is irrelevant when a defect in the foreclosure
                      proceeding renders the sale void.").     Accordingly, LV Debt Collect has
                      standing to raise its NRS 106.240 argument solely by virtue of the deed it
                      received from Quinnear. See Doe v. Bryan, 102 Nev. 523, 525, 728 P.2d 443,
                      444 (1986) (observing th.at this court considers appeals only when a
                      "justiciable controversy" between the parties exists and that a lack of
                      standing precludes the existence of a justiciable controversy).
                                  Turning to NRS 106.240, that statute provides that certain
                      liens on real property are discharged by operation of law ten years after the
                      related debt becomes "wholly due." The statute reads in its entirety as
                      follows:
                                  The lien heretofore or hereafter created of any
                                  mortgage or deed of trust upon any real property,
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                                      appearing of record, and not otherwise satisfied and
                                      discharged of record, shall at the expiration of 10
                                      years after the debt secured by the mortgage or deed
                                      of trust according to the terms thereof or any
                                      recorded written extension thereof become wholly
                                      due, terminate, and it shall be conclusively
                                      presumed that the debt has been regularly satisfied
                                      and the lien discharged.
                          (Emphasis added.)
                                      LV Debt Collect contends that language in the 2008 Notice of
                          Default made the debt secured by BNYM's deed of trust wholly due for
                          purposes of NRS 106.240. The relevant language states that BNYM "has
                          declared and does hereby declare all sums secured [by the deed of trust}
                          immediately due and payable." Thus, according to LV Debt Collect, it is
                          now "conclusively presumed that the debt [secured by BNYM's deed of trust]
                          has been regularly satisfied and the lien discharged."
                                      We disagree and are instead persuaded that BNYM's proffered
                          reading of NRS 106.240 is more consistent with the statute's plain
                          language. See Leven v. Frey, 123 Nev. 399, 403, 168 P.3d 712, 715 (2007)
                          ("[W]hen a statute's language is plain and its meaning clear, the court will
                          apply that plain language.").     In particular, as BNYM observes, NRS
                          106.240 plainly states that a debt "become[s] wholly due" only "according
                          to" either of two things: (1) the "terms thereof," referring to the mortgage or
                          deed of trust, or (2) "any recorded written extension thereof." Thus, when
                          there is no recorded extension of the due date, the terms of the mortgage or
                          deed of trust dictate when the debt becomes wholly due. As mentioned
                          previously, the deed of trust's terms include a discretionary acceleration

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                clause.5   That clause provides that BNYM could exercise its option to
                "accelerate full payment of the Note" only if Quinnear failed to cure a
                default after being given notice of the default and at least 30 days to cure
                the default. Thus, the deed of trust's terms permit BNY1VI to accelerate the
                loan only if Quinnear failed to cure the default after being given notice of
                that default and at least 30 days to cure it.6 The Notice of Default satisfied

                      5The at-issue provision in the deed of trust provides as follows:

                            22: Acceleration, Remedies. Lender shall give
                            notice to [Quinnear] prior to acceleration following
                            [Quinnear's] breach of any covenant or agreement
                            in this Security Instrument .. . . The notice shall
                            specify: (a) the default; (b) the action required to
                            cure the default; (c) a date, not less than 30 days
                            from the date the notice is given to [Quinnear], by
                            which the default must be cured; and (d) that
                            failure to cure the default on or before the date
                            specified in the notice may result in acceleration of
                            the sums secured by this Security Instrument and
                            sale of the Property. The notice shall further
                            inform [Quinnear] of the right to reinstate after
                            acceleration and the right to bring a court action to
                            assert the non-existence of a default or any other
                            defense of [Quinnear] to acceleration and sale. If
                            the default is not cured on or before the date
                            specified in the notice, Lender at its option, and
                            without further demand, may invoke the power of
                            sale, including the right to accelerate full payment
                            of the Note, and any other remedies permitted by
                            Applicable Law.

                      6 Citing SFR Investments Pool    1, LLC v. U.S. Bank N.A., 138 Nev.,
                Adv. Op. 22, 507 P.3d 194 (2022), LV Debt Collect suggests that this court
                already held that recording a Notice of Default renders a loan wholly due.
                We disagree. See Liu v. Christopher Homes, LLC, 130 Nev. 147, 151, 321
                P.3d 875, 877 (2014) (observing that this court reviews de novo the
                interpretation of its previous opinions). Although we observed in dicta that
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                the notice-and-cure preconditions in the acceleration clause, but the Notice
                of Default could not itself accelerate the loan under the terms of the
                acceleration clause because BNYIVI could not exercise that option until
                Quinnear failed to cure the default by the date specified in the Notice of
                Default. Moreover, even if a deed of trust has an acceleration clause that
                authorizes the lender to accelerate a loan via a Notice of Default, such
                language would be invalid because NRS 107.080(2)-(3) requires a Notice of
                Default to give a borrower 35 days to cure the default, which is antithetical
                to the concept of "accelerating" a loan.7 See SFR Invs. Pool 1, LLC v. U.S.
                Bank N.A., 138 Nev., Adv. Op. 22, 507 P.3d 194, 198 & n.6 (2022) (observing
                that publicly recorded documents must be interpreted in a manner that
                harmonizes them with statutory provisions).          Consequently, despite
                BNYM's 2008 Notice of Default arguably containing language purporting to
                accelerate the loan (i.e., BNYM "has declared and does hereby declare all
                sums secured [by the deed of trust] immediately due and payable"), the deed
                of trust's terms did not permit BNYM to do so. Therefore, under NRS
                106.240's plain language, the 2008 Notice of Default did not trigger the
                statute's 10-year time frame.
                            In addition to being consistent with NRS 106.240's plain
                language, that conclusion also furthers the statute's purpose. Cf. City of
                Reno v. Yturbide, 135 Nev. 113, 115-16, 440 P.3d 32, 35 (2019) ("Where the

                recording a Notice of Default might be sufficient to accelerate a loan, we
                also expressly "decline[d] to definitively resolve" the issue. SFR Inus., 138
                Nev., Adv. Op. 22, 507 P.3d at 195 n.2.
                      7We note that the acceleration clause in Quinnear's deed of trust
                provides for at least a 30-day cure period, whereas NRS 107.080(2)-(3)
                requires a Notice of Default to provide a 35-day cure period. We are not
                called on to address this difference here.
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                language of the statute is plain and unambiguous, a court should not add to
                or alter the language to accomplish a purpose not on the face of the statute
                or apparent from permissible extrinsic aids such as legislative history or
                committee reports."). Namely, NRS 106.240 is Nevada's ancient-mortgage
                statute,   the    purpose   of   which    "is   to   permit . . . purchasers   and

                encumbrancers, in appraising the title [to property], to ignore mortgages
                whose maturity exceeds the statutory period." Nancy Saint-Paul, Clearing
                Land Titles § 6:5 (3d ed. 2022); see also id. §§ 6:6-6:50 (compiling other
                states' ancient-mortgage statutes and cases interpreting them). In other
                words, the purpose of NRS 106.240 is to "clear[ ] titles of old and obsolete
                mortgages" without the need for a prospective purchaser or encumbrancer
                to file a quiet title action. Town of Pembroke v. Gurnmerus, No. 311622GHP,
                2008 WL 2726524, at *9 (Mass. Land Ct. July 15, 2008).               It should go

                without saying that a deed of trust that is the subject of pending litigation
                "is neither obsolete nor inactive," LBM Fin. LLC v. Shamus Holdings, Inc.,
                No. CIV. 09-11668-FDS, 2010 WL 4181137, at *4 (D. Mass. Sept. 28, 2010),
                and LV Debt Collect's proffered interpretation of NRS 106.240 would lead
                to litigation incongruous with the statute's purpose. See Gallagher v. City
                of Las Vegas, 114 Nev. 595, 599-600, 959 P.2d 519, 521 (1998) (observing
                that statutory interpretation should avoid absurd results).
                            Indeed, as BNYM observes, under LV Debt Collect's proffered
                interpretation of NRS 106.240, property owners would be incentivized to
                engage in run-out-the-clock gamesmanship" by instituting litigation over a
                Notice of Default and prolonging the litigation until NRS 106.240's 10-year
                period expires.     Relatedly, the Legislature repeatedly amended NRS
                107.080—Nevada's statute regarding Notices of Default—in the wake of the
                late-2000s financial crisis and the ensuing onslaught of foreclosures

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                throughout Nevada.8     It stands to reason that if the Legislature intended

                for a Notice of Default to trigger NRS 106.240's 10-year time frame, it would
                have amended NRS 107.080 to eliminate the 35-day cure period and, more
                importantly, add Notices of Default to NRS 106.240's list of documents that
                can render a loan "wholly due." Cf. Thomas v. Nev. Yellow Cab Corp., 130
                Nev. 484, 488, 327 P.3d 518, 521 (2014) (recognizing the canon of statutory
                construction that a legislature's inclusion of certain things in a statute
                implies a conscious decision on the legislature's part to exclude other
                things). Instead, a deed of trust can only be presumed satisfied under NRS
                106.240 when ten years have passed after the last possible date the deed of
                trust is in effect, as shown by the maturity date on the face of the deed of
                trust or any recorded extension thereof, rather than a document like a
                Notice of Default that can sometimes have multiple iterations, recordings,
                rescissions, and other circumstances that would not give the clarity to
                property records this statute was designed to bring. Cf. LDG Golf, Inc. v.
                Bank of Arn. N.A., No. 83056, 2022 WL 6838390, at *1 (Nev. Oct. 11, 2022)
                (Order of Affirmance) (addressing a circumstance where multiple Notices of
                Default were filed and only one was rescinded, thereby creating, rather than
                alleviating, confusion in the property records).

                      8 See 2009 Nev. Stat., ch. 247, § 1, at 1005; 2009 Nev. Stat., ch. 364,
                § 2, at 1755-56; 2009 Nev. Stat., ch. 443, § 5, at 2482; 2009 Nev. Stat., ch.
                484, § 7, at 2790-91; 2010 Nev. Stat., ch. 10, at 79; 2011 Nev. Stat., ch. 81,
                § 9, at 332-36; 2011 Nev. Stat., ch. 511, § 1, at 3511; 2011 Nev. Stat., ch.
                513, § 6, at 3536-58; 2011 Nev. Stat., ch. 525, § 2, at 3656; 2013 Nev. Stat.,
                ch. 302, § 1, at 1419-20; 2013 Nev. Stat., ch. 330, § 5, at 1549-50; 2013 Nev.
                Stat., ch. 403, § 17, at 2197; 2015 Nev. Stat., ch. 316, § 4, at 1617-19; 2015
                Nev. Stat., ch. 517, § 1.5, at 3317, 3320-22; 2017 Nev. Stat., ch. 571, § 1.5,
                at 4085-91; 2019 Nev. Stat., ch. 238, § 9, at 1352-56.
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                            Finally, even if recording a Notice of Default could render a loan
                wholly due, the 2008 Notice of Default in this case was not sufficient to do
                so. Namely, this court has held that acceleration of a debt must "be
                exercised in a manner so clear and unequivocal that it leaves no doubt as to
                the lender's intention." Clayton v. Gardner, 107 Nev. 468, 470, 813 P.2d
                997, 999 (1991) (quoting United States v. Feterl, 849 F.2d 354, 357 (8th Cir.
                1988)). Here, although the 2008 Notice of Default stated that BNYM "does
                hereby declare all sums secured [by the deed of trust] immediately due and
                payable," the Notice also provided that Quinnear could cure the default
                "upon the payment of the amounts required by [NRS 107.080] without
                requiring payment of that portion of the principal and. interest which would
                not be due had no default occurred." Given this conflicting language, we
                conc] ude that the 2008 Notice of Default was not "so clear and unequivocal"
                as to "leave[ ] no doubt as to [BNYM's] intention." Clayton, 107 Nev. at 470,
                813 P.2d at 999. Accordingly, and for that additional reason, the 2008
                Notice of Default did not trigger NRS 106.240's 10-year time frame.
                            In sum, the secured debt here did not become wholly due when
                the Notice of Default was recorded in 2008 for any and all of the following
                reasons: (1) a Notice of Default is not identified in NRS 106.240 as a
                document that can render a secured loan "wholly due" for purposes of
                triggering the statute's 10-year time frame, (2) Nevada law requires a cure
                period following a Notice of Default before acceleration of the entire
                outstanding debt, and (3) acceleration can only occur if its exercise is clear
                and unequivocal, and the Notice of Default's purported acceleration
                language was not sufficiently clear and unequivocal here. The district court
                therefore correctly determined that BNYM's lien has not been discharged

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                by operation of law and that the deed of trust continues to encumber the
                subject property. Accordingly, we affirm the district court's judgment.

                                                                                      ,   J.
                                                          Cadi.sh

                We concur:

                                               J.

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