Byrd v. Select Portfolio Servicing, Inc.

Filing 63

ORDER Granting 31 33 Motion for Summary Judgment. IT IS FURTHER ORDERED that 32 notice of pendency regarding 8144 Kokoma Drive, Las Vegas, Nevada, is cancelled. This has the same effect as an expungement of the original notice. See order for details. Case terminated. Signed by Judge Richard F. Boulware, II on 9/29/2016. (Copies have been distributed pursuant to the NEF - DL) Modified on 9/30/2016 to correct text - (DL).

1
2
3
4

UNITED STATES DISTRICT COURT

5

DISTRICT OF NEVADA

6

***

7

GARY DARNELL BYRD, et al.

8

Plaintiffs,

9
10
11

v.
SELECT PORTFOLIO SERVICING, INC.,
et al.

Case No. 2:14-cv-02010-RFB-VCF
OPINION & ORDER
Defendants’ Motions for Summary Judgment
(Dkt. No.’s 31 and 33) and Defendant SPS’
Motion to Expunge Lis Pendens (Dkt. No. 32)

Defendants.

12
13
14

I.

Before the Court are Defendant Select Portfolio Servicing’s (SPS) Motion for Summary

15
16
17
18
19
20
21

INTRODUCTION

Judgment, (Dkt. No. 31), and Defendants Bank of New York, (BONY), Countrywide, and
Mortgage Electronic Registration Services’ (MERS) Motion for Summary Judgment, (Dkt. No.
33). Before the Court, additionally, is Defendant SPS’ Motion to Expunge Lis Pendens. (Dkt. No.
32). For the reasons stated below, the Court GRANTS summary judgment as to all of Plaintiffs’
claims in Defendants’ favor. The Court also GRANTS Defendant’s Motion to Expunge Lis
Pendens.

22
23
24
25
26
27
28

II.

BACKGROUND
A. Procedural History

On November 7, 2014, Plaintiffs filed their Complaint pro se in the Eighth Judicial District
Court of Clark County, Nevada. On December 3, 2014, the case was removed to Federal Court.
An Amended Complaint was filed on September 2, 2015. The Amended Complaint alleges Breach
of Contract, Slander of Title, and Fair Debt Collection Practices Act claims as well as state

1
2

law debt collection claims, under 15 U.S.C. § 1692 and N.R.S. § 649, against Defendants, based

3

upon a Notice of Default and foreclosure process that was commenced against Plaintiffs.

4

Defendant SPS filed a Motion to Dismiss and a Motion to Expunge Lis Pendens on

5

September 17, 2015. Defendants BONY, Countrywide, and MERS, filed a Motion to Dismiss on

6

October 1, 2015. Plaintiffs filed Responses to SPS’ Motion to Dismiss and Motion to Expunge Lis

7

Pendens on October 5, 2015. Plaintiffs filed a Response to BONY, Countrywide, and MERS’

8

Motion to Dismiss on October 16, 2015. Defendants filed Replies on October 22, and October 23,

9

2015. Plaintiffs filed a sur-reply on November 12, 2015.

10

On July 28, 2016, a hearing was held on the Motions to Dismiss. Plaintiffs failed to appear

11

at this hearing. The pending Motions to Dismiss were converted into Motions for Summary

12

Judgment. BONY, Countrywide, and MERS submitted supplemental briefing at the Court’s

13

request on August 3, 2016. On August 18, 2016, another hearing was held, at which Plaintiffs

14

made an appearance. At this hearing, Plaintiffs were given until September 19, 2016, to file a

15

Response to Defendants’ supplemental briefing. Plaintiffs did not file a Response.

16
17
18
19
20
21
22
23
24
25
26
27
28

B. Factual Background

The Court incorporates its discussion from its hearing on August 18, 2016. At that hearing,
the Court maintained that no disputes remain as to issues of material fact in this case. The Court
invited Plaintiffs to submit supplemental factual briefing on the Defendants’ converted Motions
for Summary Judgment, but Plaintiffs did not submit any additional briefing. The Court finds the
following facts undisputed:
On or about March 21, 1997, Plaintiffs purchased the property located at 8144 Kokoma
Drive, Las Vegas, Nevada (the “property”). On November 17, 2005, Plaintiffs obtained a mortgage
loan in the amount of $364,500. The loan was evidenced by a Promissory Note in favor of
Countrywide Home Loans, and secured with a Deed of Trust against the property, naming MERS
as the beneficiary as nominee for Countrywide and its successors and assigns. This Deed was
recorded on December 16, 2005.

-2-

1

On or about August 15, 2009, a Corporation Assignment of Deed of Trust was recorded,

2

wherein the 2005 Deed of Trust and Note was assigned to BONY. On September 12, 2013, a

3

Substitution of Trustee was recorded, whereby National Default Servicing Corporation (“NDSC”)

4

was substituted as Trustee on the 2005 Deed of Trust.

5

On April 13, 2007, a second Deed of Trust was recorded, wherein CitiFinancial, Inc., was

6

stated as the beneficiary. This Deed secured a loan in the amount of $16,113.93. On November 14,

7

2013, a Corporate Assignment of Deed of Trust was recorded, whereby U.S. Bank, N.A., as

8

Trustee, was assigned all the beneficial interest in the second Deed of Trust.

9

Plaintiffs defaulted on their loan payments. On October 9, 2014, a Notice of Default and

10

Election to Sell under Deed of Trust was recording, stating BONY as the beneficiary on the 2005

11

Deed of Trust and Note.

12
13

III.

LEGAL STANDARD

14

Summary judgment is appropriate when the pleadings, depositions, answers to

15

interrogatories, and admissions on file, together with the affidavits, if any, show “that there is no

16

genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”

17

Fed. R. Civ. P. 56(a); accord Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). When considering

18

the propriety of summary judgment, the court views all facts and draws all inferences in the light

19

most favorable to the nonmoving party. Johnson v. Poway Unified Sch. Dist., 658 F.3d 954, 960

20

(9th Cir. 2011). If the movant has carried its burden, the non-moving party “must do more than

21

simply show that there is some metaphysical doubt as to the material facts . . . . Where the record

22

taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no

23

genuine issue for trial.” Scott v. Harris, 550 U.S. 372, 380 (2007) (alteration in original) (internal

24

quotation marks omitted).

25
26
27
28

IV.

ANALYSIS
A. Count 1: Breach of Contract

“Basic contract principles require, for an enforceable contract, an offer and acceptance,
meeting of the minds, and consideration.” May v. Anderson, 119 P.3d 1254, 1257 (Nev. 2005).
-3-

1

Breach of contract is “a material failure of performance of a duty arising under or imposed by

2

agreement.” Bernard v. Rockhill Dev. Co., 734 P.2d 1238, 1240 (Nev. 1987). A breach of contract

3

claim under Nevada law requires (1) the existence of a valid contract, (2) a breach by the defendant,

4

and (3) damage as a result of the breach. Richardson v. Jones, 1 Nev. 405, 409 (1865); Rivera v.

5

Peri & Sons Farms, Inc., 735 F.3d 892, 899 (9th Cir. 2013) (citing Richardson).

6

In this case, Plaintiffs were parties to a mortgage loan contract, evidenced by a Promissory

7

Note and secured by a Deed of Trust. Plaintiffs did not fully perform their obligations as borrowers

8

under this contract. Plaintiffs do not dispute that they defaulted on their loan payments pursuant to

9

the Promissory Note they originally signed with Countrywide Home Loans. On October 9, 2014,

10

a Notice of Default and Election to Sell under Deed of Trust was recorded. See Dkt. No. 10, Defs’

11

Ex. H. Therefore, Plaintiffs failed to perform their obligations under the Promissory Note that they

12

signed in 2005, and cannot raise a valid claim of breach of contract against Defendants for

13

exercising their power of sale, under the contract, upon Plaintiffs’ breach.

14

Although Plaintiffs admit that they defaulted on their loan payments, Plaintiffs argue that

15

assignment of the Deed of Trust on their home constituted full satisfaction of the underlying debt

16

on their mortgage loan, and that therefore, they were excused from performance of their contract

17

on their loan. This premise underlies their claim that Defendants breached the loan agreement by

18

failing to reconvey the property to the Byrds when their underlying debt obligations were

19

“satisfied” when the Deed of Trust was assigned. However, Plaintiffs’ premise is incorrect. The

20

securitization process did not diminish Plaintiffs’ obligation to pay, under the Promissory Note

21

and Deed of Trust. The terms of the instant Deed of Trust allow for transfer of the Note and Deed

22

of Trust without affecting the security interest in the property. See Dkt. No. 28, Ex. D at 13 (stating

23

that “[t]he Note or a partial interest in the Note (together with this Security Instrument) can be sold

24

one or more times without prior notice to the Borrower). Nevada law recognizes securitization and

25

assignments of deeds of trust without notice to the borrowers. See Edelstein v. Bank of New York

26

Mellon, 286 P.3d 249, 258-59 (Nev. 2012) (interpreting provisions in a Deed of Trust identical to

27

those at issue in the instant Deed of Trust, to find that MERS was the proper beneficiary and “had

28

the authority to transfer the note on behalf of [lender] and its successors and assigns.”). As

-4-

1

Defendants correctly argue, securitization of a loan, as has occurred in this case, does not diminish

2

the underlying power of sale that can be exercised upon the breach by Plaintiffs of their Note and

3

Deed of Trust. See Wood v. Germann, 331 P.3d 859 (Nev. 2014). Plaintiffs breached their

4

contractual obligations to pay, under the loan agreement, and Defendants were permitted, under

5

Nevada law, to exercise their rights and power of sale pursuant to the agreement. Therefore,

6

Plaintiffs’ breach of contract claim fails.

7
8

The Court grants summary judgment in favor of all Defendants with respect to Plaintiffs’
claim of breach of contract.

9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

B. Count 2: Slander of Title

Plaintiffs have alleged that the statement that MERS could assign “beneficial interest
(personal property) alternate means of collection, rights, and title” is a false statement. To state a
slander of title claim, a plaintiff must allege a “false and malicious communication, disparaging to
[his] title in land, and causing special damage.” See Exec. Mgmt., Ltd. v. Ticor Title Ins. Co., 963
P.2d 465, 478 (Nev. 1998). Defendants argue that Plaintiffs fail to allege any false statement that
purportedly caused damage to the title of the property. Under Nevada law, MERS may be a valid
beneficiary of a deed of trust, and such a designation does not irreparably split the note and deed
of trust. MERS has the authority to transfer the note on behalf of [the lender] and its successors
and assigns. See Edelstein v. Bank of N.Y. Mellon, 286 P.3d 249, 260 (Nev. 2012); Turner v. Bank
of America Home Loans, 541 Fed. Appx. 786 (9th Cir. 2013). Furthermore, Plaintiffs have not
alleged any facts regarding “special damage”.
Therefore, Plaintiffs have not alleged facts to support any false communication on MERS’
part, nor any special damage that they suffered. They may not recover under a slander of title cause
of action. The Court grants summary judgment in favor of all Defendants with respect to Plaintiffs’
slander of title claim.

27

C. Count 3: Violation of Fair Debt Collection Practices Act, 15 U.S.C. § 1692;
and N.R.S. § 649

28

“A violation of any provision of the Fair Debt Collection Practices Act, 15 U.S.C. 1682 et

-5-

1

seq., or any regulation adopted pursuant thereto, shall be deemed to be a violation of N.R.S. §

2

649.” N.R.S. § 649.37. The Court will therefore treat Plaintiffs’ FDCPA and N.R.S. claims

3

together. “The Fair Debt Collection Practices Act prohibits ‘debt collector[s]’ from making false

4

or misleading representations and from engaging in various abusive and unfair practices.” Heintz

5

v. Jenkins, 514 U.S. 291, 292 (1995). The Act specifies various prohibited practices, stating, for

6

example, that a debt collector may not use violence, obscenity, or repeated annoying phone calls,

7

15 U.S.C. § 1692(d); may not falsely represent “the character, amount, or legal status of any debt,”

8

§ 1692(e)(2)(A); and may not “unfair or unconscionable means to collect or attempt to collect” a

9

consumer debt, § 1692(f). See id. “The FDCPA defines the phrase ‘debt collector’ to include: (1)

10

‘any person who uses any instrumentality of interstate commerce or the mails in any business the

11

principal purpose of which is the collection of any debts,’ and (2) any person ‘who regularly

12

collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or

13

due another.’15 U.S.C. § 1692a(6).” Schlegel v. Wells Fargo Bank, NA, 720 F.3d 1204, 1208 (9th

14

Cir. 2013).

15

Plaintiffs have raised these federal and state claims only against Defendant SPS. Aside

16

from a conclusory allegation that SPS has used unconscionable means to collect on a non-existent

17

debt, Plaintiffs have raised no specific facts regarding their FDCPA claim. Since Plaintiffs have

18

not alleged any facts regarding “unconscionable means” of collection or abusive debt collection,

19

these claims fail. As analyzed in Section IV. B., supra, Plaintiffs have not provided any evidence

20

to refute the fact that they defaulted on their loan obligations, nor any law to refute the point that

21

securitization does not necessarily diminish the underlying power of sale in a loan agreement.

22

Plaintiffs cannot refute that they were in default on their loan. On October 9, 2014, a Notice of

23

Default and Election to Sell under Deed of Trust was properly recorded. Therefore, the Court

24

grants Summary Judgment in favor of Defendant SPS with respect to Plaintiffs’ FDCPA and

25

N.R.S. § 649 claims.

26
27
28

D. Motion to Expunge Lis Pendens

Defendants renew their Motion to Expunge Lis Pendens, which was denied without
prejudice when Plaintiffs were given leave to amend their original complaint. Pursuant to N.R.S.
-6-

1

§ 14.015(2-3), a lis pendens must be expunged if upon 15 days’ notice, the party that recorded the

2

lis pendens fails to establish to the satisfaction of the court either (“(a) that the party who recorded

3

the notice is likely to prevail in the action; or (b) that the party who recorded the notice has a fair

4

chance of success on the merits in the action…”. N.R.S. § 14.015(3)(a-b). If the court finds that

5

the party who recorded the notice of pendency of the action has failed to establish any of the

6

matters required by the statute, the court must order the cancellation of the notice of pendency and

7

shall order the party who recorded the notice to record with the recorder of the county a copy of

8

the order of cancellation. Id. Since summary judgment has been granted for Defendants on all of

9

Plaintiffs’ claims, the Court orders cancellation of the notice of pendency, which has the same

10

effect as an expungement of the original notice, and orders Plaintiff to record with the recorder of

11

Clark County a copy of the order of cancellation.

12
13
14
15

V.

CONCLUSION
IT IS THEREFORE ORDERED that Defendants’ Motions for Summary Judgment are

GRANTED. The case is hereby closed.

16

IT IS FURTHER ORDERED that the notice of pendency regarding 8144 Kokoma Drive,

17

Las Vegas, Nevada, is cancelled. This has the same effect as an expungement of the original notice.

18

Plaintiff is ordered to record with the recorder of Clark County a copy of this order of cancellation.

19

If Plaintiff does not record a copy of this order, the Defendants may seek leave to do so.

20
21

DATED this 29th day of September, 2016.

22
____________________________________
RICHARD F. BOULWARE, II
UNITED STATES DISTRICT JUDGE

23
24
25
26
27
28

-7-