Court Opinion

ID: 8206248
Source: CourtListenerOpinion
Date Created: 2022-09-14 10:05:46.988707+00
Date Added: 2024-06-11T16:41:14.164295
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF NEVADA

                        THE BANK OF NEW YORK MELLON,                            No. 81604
                        F/K/A THE BANK OF NEW YORK, AS
                        TRUSTEE, FOR THE
                        CERTIFICATEHOLDERS OF CWABS,
                        INC. ASSET-BACKED CERTIFICATES,
                        SERIES 2006-25,
                                                                                    FILE
                        Appellant,                                                  SEP 1 3 2022
                        vs.
                                                                                 ELIZABETH A. BROWN
                        SFR INVESTMENTS POOL 1, LLC, A                         CLER3FqPRN   EIE COURT
                                                                               BY
                        NEVADA LIMITED LIABILITY                                     DEPUTY CLERK
                        COMPANY,
                        Res o ondent.

                                         ORDER VACATING AND REMANDING

                                     This is an appeal from a district court order granting summary
                       judgment in an action to cancel a deed of trust as expired under NRS
                       106.240. Eighth Judicial District Court, Clark County; David M. Jones,
                       Judge.
                             Facts
                                     In 2006, Susan and Nelson Pritz executed a promissory note
                       payable to Countrywide Home Loans, Inc. The note had a maturity date of
                       December 1, 2046, and was secured by a first deed of trust on the Pritzes'
                       home at 4946 Droubay Drive in Las Vegas. Countrywide recorded the deed
                       of trust, which references the note's December 1, 2046 maturity date.
                                     The Pritzes stopped making payments on the note as ofJanuary
                       1, 2008, and in April 2008, Countrywide's trustee recorded a Notice of
                       Default and Election to Sell Under Deed of Trust (the "first notice") with the
                       Clark County Recorder's Office. The notice recited the Pritzes' default in
                       their monthly obligations, advised the Pritzes of their 35-day right to cure
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                under NRS 107.080, and stated that if the default was not cured, "the
                property may be sold." On August 4, 2008, Countrywide's trustee recorded
                a Notice of Trustee's Sale, which scheduled a foreclosure sale for August 20,
                2008. On August 12, 2008, the Pritzes signed a loan modification agreement
                with Countrywide that averted the foreclosure sale.         This agreement
                modified the Pritzes' next 60 payments and confirmed that the loan's
                original maturity date remained December 1, 2046.'        The next activity
                shown in the appellate record concerning the note and deed of trust did not
                take place until 2011, when Countrywide recorded an assignment of its deed
                of trust to appellant The Bank of New York Mellon (BNYM).
                            The Pritzes also failed to pay their monthly homeowners
                association (HOA) dues. In September 2012, after the Pritzes' intervening
                bankruptcy, the HOA foreclosed its lien on the property and conducted an
                HOA lien foreclosure sale.    Respondent SFR Investments Pool 1, LLC,
                purchased the property at the sale and recorded the trustee's deed it
                received.
                            In October 2013, BNYM's trustee sent the Pritzes a Notice of
                Default and Notice of Intent to Foreclose, which indicated a default date of
                May 1, 2009 (the "second notice"). This notice requested an amount to cure
                that was less than the full obligation and warned that acceleration would
                occur if the Pritzes did not bring the note current. For reasons unknown,
                the second notice was not recorded, and seemingly, the trustee did not act
                on it.

                     lIt is unclear whether the loan modification agreement was recorded.
                The document indicates that Countrywide requested recording, but the
                document does not include the Clark County Recorder's stamp.
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                            In April of 2018, BNYM sued the HOA and SFR in federal
                district court "for quiet title/declaratory relief." In its complaint, BNYM
                alleged that the HOA rejected its pre-sale tender of the superpriority
                portion of the HOA lien, such that its first deed of trust survived the HOA's
                foreclosure sale. SFR filed a motion to dismiss on the ground that the HOA
                lien foreclosure sale had occurred more than four years prior, so the action
                was barred by NRS 11.220's four-year statute of limitations. The federal
                district court granted SFR's motion to dismiss.
                            BNYM did not appeal the federal court's dismissal order.
                Instead,   BNYM     reinitiated non-judicial foreclosure    proceedings by
                recording, on January 16, 2019, its third Notice of Default and Election to
                Sell (the "third notice"). The third notice, like the second, indicated a May
                1, 2009, default date by the Pritzes.
                            In response to the third notice, SFR filed the underlying
                complaint against BNYM in district court. In its complaint, SFR seeks to
                C6cancel" BNYM's deed of trust under Nevada's "ancient
                                                                       mortgage" statute,
                NRS 106.240.      SFR alleges that the first notice accelerated the note's
                maturity date from 2046 to 2008 such that the deed of trust expired ten
                years later, in 2018, by operation of NRS 106.240, extinguishing BNYM's
                deed of trust.2   The district court decided the matter on cross-motions for
                summary judgment. In its order, the district court granted SFR's motion

                      2 SFR alternatively sought cancellation because BNYM allegedly did
                not possess the original wet-ink promissory note. Because SFR does not
                argue for affirmance on this basis, we do not address this issue on appeal.
                See Frazier v. Drake, 131 Nev. 632, 645 n.11, 357 P.3d 365, 374 n.11 (Ct.
                App. 2015) (declining to consider an argument that the respondent failed to
                raise in his answering brief).
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                       based on NRS 106.240, denied BNYM's cross-motion, and enjoined BNYM
                       from further pursuing foreclosure. BNYM appeals.
                             Discussion
                                   This court reviews a district court's summary judgment
                       decision de novo. Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026,
                       1029 (2005). Summary judgment is appropriate when "the pleadings and
                       other evidence on file demonstrate that 'no genuine issue as to any material
                       facts remains[,1 and . . . the moving party is entitled to . . . judgment as a
                       matter of law." Id.; see also NRCP 56(a). The moving party bears the initial
                       burden of proving that no genuine issue of material fact exists for trial.
                       Cuzze v. Univ. & Crnty. Coll. Sys. of Nev., 123 Nev. 598, 602, 172 P.3d 131,
                       134 (2007). And where, as here, the moving party will bear the burden of
                       persuasion at trial, "that party must present evidence that would entitle it
                       to a judgment as a matter of law in the absence of contrary evidence." Id.,
                       172 P.3d at 134.
                             The federal dismissal does not preclude BNYM's defense of SFR's
                             cancellation claim
                                   As a preliminary matter, SFR argues that the federal court's
                       dismissal order precludes BNYM from defending SFR's cancellation action.
                       BNYM responds that the federal court dismissed its quiet title/declaratory
                       judgment action on statute-of-limitations grounds and did not, in so doing,
                       preclude its ability to foreclose non-judicially or to assert its deed of trust
                       defensively. We agree with BNYM.
                                   To successfully assert claim preclusion, SFR must show that (1)
                       the parties in both actions are the same, (2) the final judgment is valid, and
                       (3) the later action is based on the "same claim" as that asserted in the first
                       case. Five Star Capital Corp. v. Ruby, 124 Nev. 1048, 1054, 194 P.3d 709,
                       713 (2008); see also Bennett v. Fid. & Deposit Co. of Md., 98 Nev. 449, 452,
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                652 P.2d 1178, 1180 (1982) (noting that the party asserting the doctrine of
                res judicata bears the burden of establishing its elements). Elements one
                and two are satisfied here. But SFR fails to demonstrate that its claim to
                cancel BNYM's deed of trust under NRS 106.240 is the same as—or could
                have been encompassed by, see Five Star Capital Corp., 124 Nev. at 1054-
                55, 194 P.3d at 713 (applying claim preclusion to "all grounds of recovery
                that were or could have been brought in the first case")--BNYM's claim for
                quiet title and declaratory relief in the federal action.
                            In its federal complaint, BNYM alleged that tender or tender
                futility satisfied the superpriority portion of the HOA lien, leaving its deed
                of trust intact and superior to the interest SFR acquired at the HOA lien
                foreclosure sale. See 7510 Perla Del Mar Ave Tr. v. Bank of Am., N.A., 136
                Nev. 62, 66, 458 P.3d 348, 351 (2020) (adopting futility-of-tender exception
                to formal tender in the HOA lien foreclosure context); Bank of Am., N.A. v.
                SFR Invs. Pool 1, LLC, 134 Nev. 604, 605, 427 P.3d 113, 116 (2018) (holding
                that a deed-of-trust beneficiary can preserve its deed of trust by tendering
                the superpriority portion of an HOA lien). SFR's cancellation action, by
                contrast, is modeled on a California procedure; it asks the court to "cancel"
                BNYM's deed of trust because its predecessor allegedly accelerated the
                note's maturity date ahead of filing the first notice in 2008 such that, under
                NRS 106.240, BNYM's deed of trust expired in 2018. Cf. 12 Miller & Starr,
                California Real Estate § 40:113 (4th ed. Supp. 2022). SFR's claim that a
                former acceleration rendered the underlying contractual obligation "wholly
                due" under NRS 106.240, extinguishing BNYM's lien, does not involve the
                same facts and circumstances as BNYM's quiet title claim, in which it
                sought an affirmative declaration that its deed of trust survived the HOA
                foreclosure sale based on tender or tender futility. Indeed, SFR concedes as

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                  much in its supplemental answering brief by stating that [a] tender in
                  connection with a super-priority lien has no bearing on the invocation and
                  operation of NRS 106.240."       BNYM's quiet title/declaratory relief suit
                  therefore did not preclude its ability to defend SFR's cancellation claim and
                  pursue non-judicial foreclosure. See Facklam u. HSBC Bank USA, 133 Nev.
                  497, 499, 401 P.3d 1068, 1070 (2017) ("For over 150 years, this court's
                  jurisprudence has provided that lenders are not barred from foreclosing on
                  mortgaged property merely because the statute of limitations for
                  contractual remedies on the note has passed."); 5 Miller & Starr, supra,
                  ("When the power [of sale] is contained in a deed of trust, it can be exercised
                  and the security foreclosed even though the statute of limitations has
                  expired on the underlying debt, at least prior to the time the lien is
                  discharged as an 'ancient mortgage.'"); see also Boca Park Martketplace
                  Syndications Grp., LLC v. Higco, Inc., 133 Nev. 923, 925-26, 407 P.3d 761,
                  764 (2017) (holding that ordinarily "claim preclusion does not apply where
                  the original action sought only declaratory relief').
                              Nor does issue preclusion apply.            Despite arguing in its
                  supplemental brief that issue preclusion bars BNYM's assertion of an
                  interest in the property based on tender, SFR also acknowledges that the
                  issue of tender is "separate and distinct from the issue of whether the deed
                  of trust is terminated under NRS 106.240." We agree that the issues are
                  distinct. The issue the parties litigated and the federal court resolved was
                  whether the statute of limitations in NRS 11.220 barred BNYM's
                  affirmative quiet title/declaratory relief claim. The cancellation issue SFR
                  raises in this case—and the implicated issue of whether BNYM retains an
                  interest in the subject property based on tender or futility of tender that it
                  can assert defensively against SFR's cancellation claim—were not "actually

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                and necessarily" litigated in the prior action. See Five Stctr Capital Corp.,
                124 Nev. at 1055, 194 P.3d at 709 (listing the elements of issue preclusion
                and holding that an issue must be "actually and necessarily litigated" to
                have preclusive effect); Powell v. Lane, 289 S.W.3d 440, 445 (Ark. 2008) ("In
                the context of collateral estoppel, 'actually litigated' means that the issue
                was raised in the pleadings, or otherwise, that the defendant had a full and
                fair opportunity to be heard, and that a decision was rendered on the
                issue."); see also Dredge Corp. v. Wells Cargo, Inc., 80 Nev. 99, 102, 389 P.2d
                394, 396 (1964) ("Limitations do not run against defenses."). Because these
                issues were not actually or necessarily litigated in the federal action, issue
                preclusion does bar BNYM's defense to SFR's cancellation action.
                      SFR did not present undisputed evidence of an earlier maturity date
                      than Decernber 1, 2046
                            The merits of the parties' arguments depend on the proper
                application of NRS 106.240, which "creates a conclusive presumption that
                a lien on real property is extinguished ten years after the debt becomes
                [wholly] due    Pro-Max Corp. v. Feenstra, 117 Nev. 90, 94, 16 P.3d 1074,
                1077 (2001). NRS 106.240 states:
                            The lien heretofore or hereafter created of any
                            mortgage or deed of trust upon any real property,
                            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.
                (Emphases added.) Thus, to determine whether the 10-year period in NRS
                106.240 has run, the statute directs its reader to examine whether the "debt
                secured by the mortgage or deed of trust according to the terms thereof or
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                    any recorded written extension thereof became] wholly due." The statute
                    further requires that the mortgage or deed of trust "appeari] of record."
                                On its face, the deed of trust states that the obligation it secures
                    matures on December 1, 2046. BNYM argues that the only way to render
                    an obligation secured by a deed of trust "wholly due" under the statute is to
                    await expiration of the original maturity date indicated in the recorded deed
                    of trust. SFR counters that a debt secured by a deed of trust can become
                    "wholly due" if it was accelerated. SFR maintains that such acceleration
                    occurred in 2008, before SFR recorded the first notice, such that the deed of
                    trust terminated in 2018, before BNYM filed the third notice. SFR states
                    in its answering brief that "[t]o be clear, SFR did not and does not argue
                    that [the first notice], in and of itself, accelerated the loan," and instead
                    argues that a prior acceleration occurred. As support, SFR points to the
                    statement by the trustee in the first notice that the beneficiary "has
                    declared and does hereby declare all sums secured thereby immediately due
                    and payable."
                                The record on appeal does not support summary judgment in
                    SFR's favor on the theory that the obligation the deed of trust secures was
                    accelerated in 2008 such that the deed of trust expired in 2018 under NRS
                    106.240. 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)). The past-tense language in the
                    first notice referencing a prior, unrecorded acceleration is unclear and, if
                    read as having already accelerated the note, conflicts with other language
                    in that notice. By its terms, the first notice references a default in "the
                    installment of principal, interest and impounds which became due on

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                            01/08/2008 and all subsequent installments."          It then reiterates the
                            December 1, 2046, maturity date, stating that "in addition, the entire
                            principal arnount will become due on 12/01/ 2046 as a result of the maturity
                            of the obligation on that date." Finally, the first notice advises the Pritzes'
                            of their 35-day right to cure the monthly installment default under NRS
                            107.080 "without requiring payment of that portion of the principal and
                            interest which would not be due had no default occurred." The first notice
                            thus does not establish that acceleration was a fait accompli before it was
                            filed but, rather, that acceleration would occur if the monthly installment
                            defaults went uncured.
                                        The first notice thus does not clearly and unequivocally
                            establish that the obligation securing the deed of trust became "wholly due"
                            in 2008, thereby advancing the deed of trust's stated December 1, 2046,
                            maturity date. And even assuming as the court did in SFR Illus. Pool 1,
                            LLC v. U.S. Bank N.A., 138 Nev., Adv. Op. 22, 507 P.3d 194, 197-98 (2022),
                            that the first notice amounted to a notice of intent to accelerate 35 days
                            hence if the debtor failed to make the past-due installments, the record
                            neither establishes that the past-due installments remained unpaid, nor
                            that the acceleration was not ultimately averted or rescinded. True, the
                            first notice was followed by a notice of sale, setting an August 20, 2008,
                            foreclosure date. But the August 20, 2008, foreclosure sale did not occur;
                            instead, the record reflects that BNYM's predecessor prepared and the
                            Pritzes signed a loan modification agreement that averted the foreclosure
                            sale.   Although apparently not filed with the County Recorder, this

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                agreement reiterates the debt's maturity date as December 1, 2046.3 And
                the second and third notices both suggest that the Pritzes cured the January
                1, 2008, default referenced in the first notice, because they recite a May 1,
                2009, monthly obligation default date.
                             Courts elsewhere have divided on the interpretation and effect
                of ancient mortgage statutes such as NRS 106.240. See Nancy Saint-Paul,
                Clearing Land Titles §§ 6:6-6:50 (3d ed. Supp. 2021) (collecting statutes and
                cases). Compare Holta v. Certified Fin. Servs. Inc., 49 P.3d 1104, 1107
                (Alaska   2002) (holding that Alaska's analogous statute does not
                contemplate acceleration); Schmidli v. Pearce, 100 Cal. Rptr. 3d 343, 346
                (Ct. App. 2009) (holding that "the record" in California's analogous statute
                means "a recorded document reflecting the actual debt obligation, such as a
                deed of trust or promissory note, and not a notice of default"), with Conner
                v. Coggins, 349 So. 2d 780, 781 (Fla. Dist. Ct. App. 1977) (noting that
                Florida's analogous statue contemplates acceleration); Driessen-Rieke v.
                Steckman, 409 N.W.2d 50, 52 (Minn. Ct. App. 1987) (holding that
                acceleration triggered the ancient-mortgage period because the mortgage
                clearly indicated the debt's new maturity date). But what unites them is
                the requirement that the record clearly establish the underlying obligation's

                      3SFR  argues that the loan modification agreement is of no import
                because Countrywide did not sign it. But this argument is beside the point,
                because BNYM does not seek to enforce the agreement. Cf. NRS 111.220.
                Rather, BNYM points to the agreement to demonstrate that Countrywide
                offered the Pritzes an opportunity to cure default by paying less than the
                note's full sum—which the Pritzes accepted by their apparent
                performance—and accepted payments for less than the full obligation, thus
                rescinding any prior acceleration. See Leonard v. Ocwen Loan Serv., LLC,
                616 Fed. Appx. 677, 678, 680 (5th Cir. 2015) (holding that a lender
                abandoned a prior acceleration by giving the debtors an opportunity to cure
                default by paying less than the obligation's full sum).
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                maturity date and that the statute run from that date. See, e.g., Holta v.
                Certified Fin. Servs. Inc., 49 P.3d 1104, 1107 (Alaska 2002) (holding that
                Alaska's analogous statute attains its purpose of clearing liens on title by
                "establishing a ten-year default maturity date; the statute allows no
                exception to the default date unless a different date is expressly stated in
                either the recorded lien itself or some other recorded document that extends
                the lien"); Trenk v. Soheili, 273 Cal. Rptr. 3d 184, 191 (Ct. App. 2020)
                ("There is no ambiguity in this statutory requirement that a document
                stating the last date for payment of the underlying obligation must be
                recorded for the 10-year period to apply."); Miller v. Provost, 33 Cal. Rptr.
                2d 288, 291 (Ct. App. 1994) (holding that the note's maturity date must be
                clear from the recorded documents to trigger California's analogous
                statute); Silvernagel v. U.S. Bank, N.A., 503 P.3d 165, 170-71 (Colo. Ct. App.
                2021) (holding that acceleration does not impact the running of Colorado's
                analogous 15-year statute unless the maturity date is changed in the
                recorded deed of trust); Willow Tree Invs., Inc. v. Wilhelm, 465 N.W.2d 849,
                852 (Iowa 1991) (holding that the debt's maturity date must appear from
                documents recorded with the county recorder to trigger Iowa's ancient
                mortgage statute). Here, the only clear maturity date stated in the record
                is December 1, 2046. The ambiguous and conflicting evidence in this case
                falls short of establishing an earlier maturity date for purposes of NRS
                106.240.   We therefore conclude that SFR failed to meet its burden on
                summary judgment. We do not hold that BNYM's property interest persists
                or that summary judgment in BNYIVI's favor would have been proper, just
                that summary judgment for SFR on its cancellation claim was not. We
                accordingly,

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                              ORDER the judgment of the district court VACATED AND
                REMAND this matter to the district court for proceedings consistent with
                this order.

                                                 Ca dish

                                                                Ifait
                                                 Pickering

                                                 Herndon

                cc:   Hon. David M. Jones, District Judge
                      M. Nelson Segel, Settlement Judge
                      ZBS Law, LLP
                      Hanks Law Group
                      Eighth District Court Clerk

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