Court Opinion

ID: 5142349
Source: CourtListenerOpinion
Date Created: 2021-12-31 01:14:45.39256+00
Date Added: 2024-06-11T08:24:35.986439
License: Public Domain

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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