Clay v. Countrywide Home Loans, Inc. et al
Filing
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ORDER Granting 29 Motion for Summary Judgment. The Clerk is directed to close this case. Signed by Chief Judge Roger L. Hunt on 4/21/11. (Copies have been distributed pursuant to the NEF - MMM)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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DANIELLE CLAY, an individual,
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Plaintiff,
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vs.
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COUNTRYWIDE HOME LOANS, INC., a
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New York Corporation; RECONTRUST
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COMPANY, a Nevada Corporation,
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Defendants.
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_______________________________________)
Case No.: 2:09-cv-02040-RLH-RJJ
ORDER
(Motion for Summary Judgment–#29)
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Before the Court is Defendant Countrywide Home Loans, Inc.’s Motion for
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Summary Judgment (#29, filed Nov. 1, 2010). The Court has also considered Plaintiff Danielle
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Clay’s Opposition (#33, filed Dec. 6, 2010), and Countrywide’s Reply (#36, filed Jan. 10, 2011).
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BACKGROUND
This dispute arises from a mortgage loan transaction between Clay and
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Countrywide. In February 2007, Clay purchased a new construction home located at 6457 Lovett
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Canyon Street in Las Vegas, Nevada. Clay financed the $345,141.00 purchase price by executing
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a promissory note and a home equity line of credit for $276,112.00 and 69,028.00 respectively,
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both in favor of Countrywide. Clay secured these loans with first and second deeds of trust on her
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new home, both also in favor of Countrywide.
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In December 2007, Countrywide informed Clay that Clark County had reassessed
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her property and increased her property taxes. Because of this increase, Countrywide claimed,
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there was an escrow shortage in Clay’s account from March 2007 to December 2007. Therefore,
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Clay’s monthly payment would increase to both cover the new taxes and the resulting escrow
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shortfall. Clay made these increased payments for a time, but in November 2008, Clay defaulted
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on her mortgage and has not made any payments since. After Clay defaulted, Countrywide
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recorded a Notice of Default and Election to Sell on March 20, 2009. Clay then filed suit in the
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Eighth Judicial District of the State of Nevada alleging (1) unfair lending practices, (2) fraudulent
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misrepresentation, (3) promissory estoppel, (4) wrongful foreclosure/declaratory relief, (5) recision
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of contract, and (6) intentional and/or negligent infliction of emotional distress. (Dkt. 1, Compl.)
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Countrywide subsequently removed the case to this Court, after which the Court dismissed all
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claims save the fraud and promissory estoppel claims. (Dkt. #21, Hr’g Mins.) Countrywide has
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now filed a motion for summary judgment on Clay’s remaining claims. For the reasons discussed
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below, the Court grants Countrywide’s motion.
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DISCUSSION
I.
Legal Standard
The purpose of summary judgment is to avoid unnecessary trials when there is no
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dispute as to the facts before the court. Nw. Motorcycle Ass'n v. U.S. Dep't of Agric., 18 F.3d
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1468, 1471 (9th Cir.1994). Summary judgment is appropriate when the pleadings, the discovery
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and disclosure materials on file, and any affidavits “show there is no genuine issue as to any
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material fact and that the movant is entitled to judgment as a matter of law.” Celotex Corp. v.
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Catrett, 477 U.S. 317, 330 (1986). An issue is “genuine” if there is a sufficient evidentiary basis
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on which a reasonable fact-finder could find for the nonmoving party and a dispute is “material” if
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it could affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc.,
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477 U.S. 242, 248–49 (1986). Where reasonable minds could differ on the material facts at issue,
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however, summary judgment is not appropriate. Warren v. City of Carlsbad, 58 F.3d 439, 441
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(9th Cir. 1995), cert. denied, 516 U.S. 1171 (1996). “The amount of evidence necessary to raise a
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genuine issue of material fact is enough ‘to require a jury or judge to resolve the parties' differing
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versions of the truth at trial.’” Aydin Corp. v. Loral Corp., 718 F.2d 897, 902 (9th Cir. 1983)
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(quoting First Nat'l Bank v. Cities Service Co., 391 U.S. 253, 288–89 (1968)). In evaluating a
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summary judgment motion, a court views all facts and draws all inferences in the light most
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favorable to the nonmoving party. Kaiser Cement Corp. v. Fishbach & Moore, Inc., 793 F.2d
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1100, 1103 (9th Cir. 1986).
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The moving party bears the burden of showing that there are no genuine issues of
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material fact. Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir. 1982). “In order to carry
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its burden of production, the moving party must either produce evidence negating an essential
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element of the nonmoving party’s claim or defense or show that the nonmoving party does not
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have enough evidence of an essential element to carry its ultimate burden of persuasion at trial.”
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Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000). Once the
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moving party satisfies Rule 56’s requirements, the burden shifts to the party resisting the motion to
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“set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256.
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The nonmoving party “may not rely on denials in the pleadings but must produce specific
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evidence, through affidavits or admissible discovery material, to show that the dispute exists,”
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Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991), and “must do more than simply
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show that there is some metaphysical doubt as to the material facts.” Bank of America v. Orr, 285
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F.3d 764, 783 (9th Cir. 2002) (internal citations omitted). “The mere existence of a scintilla of
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evidence in support of the plaintiff's position will be insufficient.” Anderson, 477 U.S. at 252.
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The Court would also like to take this opportunity to remind Clay’s counsel that
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when in federal court, the Federal Rules of Civil Procedure apply absent rare circumstances, not
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the Nevada Rules of Civil Procedure.
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II.
Analysis
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Fraud
In order to succeed on a claim for fraud, Clay must prove each of the following: (1)
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a false representation by Countrywide, (2) Countrywide’s knowledge or belief that the
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representation was false, or that Countrywide had an insufficient basis for making the
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representation, (3) Countrywide’s intent to induce Clay to act or refrain from acting in reliance on
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the misrepresentation, (4) Clay’s justifiable reliance on the misrepresentation, and (5) damages
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resulting from that reliance. Bulbman, Inc. v. Nevada Bell, 825 P.2d 588, 592 (Nev. 1992). Clay,
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however, has failed to demonstrate any of these elements, most importantly a false representation.
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In her complaint, Clay contends that Countrywide misrepresented her monthly
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payments. Additionally, in her response to the motion, Clay contends that Countrywide
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misrepresented the shortfall in her escrow account. Neither contention is accurate. Countrywide
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dispels Clays contentions by presenting the Tax Notice that Clay signed before closing on her loan.
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(Dkt. #29, Mot. Ex. B.) The Tax Notice explains that Countrywide is not liable for increases in
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property tax and that Clay’s taxes would likely “take a big jump” when her property was
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reassessed. (Id.) Further, Clay checked the box saying that she wished to only impound taxes
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based on the unimproved assessment (the assessment made before a house was built on the
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property), which states “I realize that my taxes may increase substantially during the second year,
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which would make my monthly payments increase accordingly.” (Id.) Clay cannot legitimately
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claim that Countrywide did not warn her that her payments might increase after having signed this
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document. See Circuit City Stores, Inc. v. Ahmed, 283 F.3d 1198, 1200 (9th Cir. 2002) (“general
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rule is that one who signs a contact is bound by its provisions and cannot complain of unfamiliarity
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with the language of the instrument.”) (internal quotation omitted).
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Although Clay’s claim that Countrywide misrepresented the amount of the shortfall
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in her escrow account makes its first appearance in her response to the motion, the Court will
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quickly address it. Clay claims that she does not understand why there was a shortfall in her
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escrow account based on taxes. Countrywide, however, adequately explains the escrow shortfall
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by providing an accounting of Clay’s escrow account. (Dkt. #36, Reply Ex. E, Loan History.)
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This accounting demonstrates that Clay did not pay her taxes as she claimed, but that her lender
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did. (Id.) Clay only deposited $356.18 at the time of closing for taxes. Since her original
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payments only covered insurance and the interest on her principal balance, this created a shortfall
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in her escrow account as Countrywide paid her taxes. Before this deficiency occurred,
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Countrywide even provided Clay an estimate showing that this shortfall was likely to occur. (Dkt.
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#29, Mot. Ex. C, Escrow Acct. Review.) Because Countrywide neither misrepresented the escrow
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shortfall nor misrepresented Clay’s eventual payments and tax liability, Clay’s claim for fraudulent
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misrepresentation fails as a matter of law.
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B.
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Promissory Estoppel
To prove promissory estoppel Clay must show: “(1) the party to be estopped
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must be apprised of the true facts; (2) he must intend that his conduct shall be acted upon, or must
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so act that the party asserting estoppel has the right to believe it was so intended; (3) the party
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asserting the estoppel must be ignorant of the true state of facts; (4) [she] must have relied to [her]
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detriment on the conduct of the party to be estopped.” Pink v. Busch, 100 Nev. 684, 689, 691 P.2d
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456, 459 (1984). Here, Clay claims that Countrywide represented that she would have a lesser
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payment than she eventually owed. As shown above, this is inaccurate. The uncontroverted
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evidence shows that Countrywide made no such promise. Countrywide specifically informed Clay
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that her “monthly payments may increase substantially” because of tax increases and any resulting
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escrow shortfall. Therefore, Clay has not met her burden to set forth specific facts showing a
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genuine issue for trial and so the Court grants summary judgment on Clay’s remaining claims.
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CONCLUSION
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Accordingly, and for good cause appearing,
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IT IS HEREBY ORDERED that Countrywide’s Motion for Summary Judgment
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(#29) is GRANTED. The Clerk of the Court is directed to close this case.
Dated: April 21, 2011.
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____________________________________
ROGER L. HUNT
Chief United States District Judge
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