Stoffels et al v. GRP Financial Services, Corp. et al

Filing 219

ORDER. IT IS ORDERED that D Fremont's 199 motion for summary judgment, joined by Ds DLJ and SPS in 201 Joinder, is GRANTED as to Ds Fremont, DLJ, and SPS. Signed by Judge Edward C. Reed, Jr on 9/30/2011. (Copies have been distributed pursuant to the NEF - PM)

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UNITED STATES D I

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D ISTR ICT OF

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FRANK STOFFELS and KAREN STOFFELSr )
)
Plaintiffs,
)
)
vs .
)
)
DLJ MORTGAGE CAPITAL INC .; SELECT )
PORTFOLIO SERVICING, INC .;
)
SIGNATURE GROUP HOLDINGS p/k/a
)
FREMONT REORGANIZING CORP. p/k/a
)
FREMONT INVESTMENT AND LOAN BREA
)
CALIFORNIA ; MORTGAGE ELECTRONIC
)
REGISTM TION SYSTEMS # INC ; SLM
)
CORPOM TION a/k/a SALLIE MAE; and )
DOES I through X,
)
)
Defendants.
)
)
)

3:
08-CV-00468-ECR-GWF

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Order

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Plaintiffs in this case are homeowners facing foreclosure of

1 their property in Carson City , Nevada . Now pending is Defendant
9

20 Signature Group Holdings p/k/a Fremont Reorganizing Corp. p/k/a
21 Fremont Investment and Loan Brpa California's (
uFremont') motion for
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22 summary judgment (
uMSJ' #l99), joined by Defendants DLJ Mortgage
')(
23 Capital Inc. (
MDLJ') and Select Portfolio Servicing. Inc. (
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MSPS'
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2 (
4 #201).
25

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1 . Factual Backcround

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On April 10, 1998, Plaintiffs purchased a home in Carson City,

27 Nevada via a purchase money mortgage from Countrywide Home Loans

28 Inc. (
ucountrywide').
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(
Second Am . Compl. I
nSAC') %% 9, 13 (
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#139).)

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1 In 2004, Plaintiffs refinanced the property by obtaining a refinance

2 mortgage from Countrywide at a lower interest rate.

(
Id. % 14.)

In

3 early 200 6, Plaintiff s refinanced again by obtaining a negativd .
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löktgage from IndyMac Bank, :
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5 at an even 'lolèjïinterest rate .
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(Id . % l5 )
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On November 28, 2006, Plaintiffs received'a ' etter '
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titled

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7 nUrgent Notice' regarding a nNegative Amortization Disclosure .'
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8 (
Id. % 17; Plaintiffs' Ex. 2, Ex. 9 at 8.) The letter appeared to

9 be from IndyMac but was realiy a solicitation from First National
1 Mortgage sources, LLC (
0
uFirst National'
/), a brokerage firm.

(
Second

11 Am . Compl. % 19 (
#49); P1s.' Resp. Ex. 2 (
#208).) The letter
12 indicated that Plaintiff's negative amortization loan was of a type
13 with uan extremely high rate of default ,' and asked Plaintiffs to
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1 call 'A.S. .P' to discuss other loan options available.
4
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(Id.)

15 Plaintiffs called the number in the letter and initiated the

16 negotiation of the loan at issue .
17

On December 20, 2006, Plaintiffs and Defendant Fremont entered

18 into a contract for a home loan 0'
2006 Loan' in the amount of
')

19 $300,900.00 with an adjustable interest rate set at the time at
20 5 .50%, to be paid in full on January 1, 2037, the maturity date (
SAC

21 %% 18, 25-31; Def.'s Mo. Summ . J. Ex. 3 (
#199) .uMSJ').)
(
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:. 22 was an initial monthly payment of $1473,95.

The result

(
SAC % 21; MSJ '
Ex. 3.)

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23 The Balloon 'Payment Rider attached to the promissory note provide
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24 for full payment of any unpaid principle, a11 acçrued and unpaid
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25 interest: and a11 charges in'a single payment on January . 2037 .
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26 (
MSJ ' . 3 .)
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Plaintiffs never made a single payment on the 2006 loan.

2 %% 34,.1O; Pls.' Resp. Ex. 10.)

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(
SAC

Plaintiffs were notified on June 5,

. 3. 2 007 .
that .
they.were i n ' fault.and f. reclosure procee ings would .
s de
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.-'. :. ju.4,comhé .agains - m . J ( . 332). ln.order, .''void'fore
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exe
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documentsLon a lcan'pqdificatâon u
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6' Fremont on Augist 29, 2007 .(% 7 .
a
%200. Modification'), . modification . '
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a
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of
7 the original 2006 Loan .

( . % 37 .)
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The 2007 Modification provided

8 for a fixed interest rate of 5.50% and capitalized the prev.ously
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9 unpaid interest and late fees .

(
MSJ Ex . 4.) The 2007 Modification

1 included an Errors and Omissions Compliance Agreement whereby
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11 Plaintiffs agreed to cooperate in the correction of any clerical

1 errors made in the documents.
2

(
Id.) The 2007 Modification also

13 included a General Release and Indemnity Agreement releasing
1 Defendant from any claim s and liability relating to or arising out
4

1 of the 2006 Loan.
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( .)
Id

The parties dispute the maturity date on the 2007 Modification .

17 The original documents Plaintiffs signed provided for a January 1,

1 2057 maturity date.
8

(
Id.) However, Defendant contacted Plaintiffs

1 a few days later inéicating that a clerical error had been made in
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20 the 2007 Modification which should have said January 1, 2037.
21 Ex. 5.)
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Id.

It appears that Plaintiffs refused to re-sign the 2007

22 Modification with the 2037 maturity date . Again , Plaintiffs did not
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23 make any payments .

2 was again cormenced on the property .
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(
SAC % 40 .) ' March . 1, 2. , a foreclosure
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( . % 53.)
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II . Procedural Backcround

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Plaintiffs fi'ed their complaint ( l),on September 2, 2008. On
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3:January 9, 2009, .
n this. rt.'ssued a'
foul .i
preliminary injunction ( )u- ':..j
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#36
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: .' ' 6'their first amended)complaint G #49) on v
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Februark 1' , : 009 . : Defendant : ''
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7 Mortgage Electronic'
Registration Systems, Inc. ('
'MERS' filed a .
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8 motion to dismiss (
#91) on June 25, 2009. Defendant Fremont .

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9 Investment ahd Loan Brea California (
nFremont' ) also filed a motion
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1 to dismiss (
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#92) on June 26, 2009. On January l5, 2010, we granted
11 (
#135) Defendant MERS' motion to stay (
#134) the amended complaint
12 pending a decision on transfer by the Judicial Panel on

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1 Multidistrict Litigation as to a1l claims involving the formation
3
14 and operation of the MERS system .

On January 26, 2010 , we granted

1 (
5 #136) Defendant MERS and Defendant Fremont's motions to dis
miss
1 (
6 #91, 92) as to a11 of Plaintiffs' nOn-MERS related claims. On
17 January 27, 2010, the claim s in this case related to the formation

1 and/or operation of MERS were transferred to the MDL court in the
8
1 District of Arizona (
9
#137). The claims that are unrelated tO'
MERS

20 were simultaneously remanded to our jurisdiction.

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On February l6, 2010, Plaintiffs filed their second amended

22 complaint (
#139), the operative pleading in this case . On May 10,
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23 Defendants GRP.and Fremont .
moved to.dismiss (
#150, . ) the
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24 complaint . By stipulation, we ordered (
#153) Defendant.MERS . .
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25 dismissed without prejudice from the claims remanded from the MDL
26 court. By order (
#195) on March 2, 2011, we denied Defendant
27 Fremont's motion to dismiss (
#150) and dismissed all claims against
28

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1 GRP under our jurisdiction. We also granted DLJ and SPS'S motion to
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2 substitute.parties. with DLJ replacing Defendant GRP Loan LLC and
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3 SPSJreplacing Defendant GRP Financial Servic es Corp . .. n2Mar h.18. .. . .
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On March 21

2011

Defendant Fremont filed a:motion for summary

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8 judgment (
#199) o; Plaintiffs' remaining claims in this jurisdictioh
9 for ( Failure of Contract and ( Fraud/Fraud in the Inducement.
l)
2)

1 Defehdants DLJ and SPS joined (
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#201) that motion on March 30, 2011.
11 Plaintiffs filed their response (
#208) and their answer (
#209) to

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1 the counterclaim (
2
#196) on May 9, 2011. Defendant Fremont filed its

13 reply (
#215) on May 24, 2011, and Defendant DLJ and SPS joined
1 (
4 #216) the reply on May 25, 2011.
15

111 . Lecal Standard

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Summary judgment allows courts to avoid unnecessary trials

17 where no material factual dispute exists . Nw . Motorcvcle Ass'n v .

1 U. Deo't of Acricw 18 F.3d 1468, 1471 (
8 S.
9th Cir. 1994). The court
1 must view the evidence and the inferences arising therefrom in the
9
20 light most favorable to the nonmoving party , Bacdadi v . Nazar , 84

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21 P. 1191, 1197 (
3d
9th Cir. 1996), and should award summary judgment

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22 where no genuine issues of material fact remain ip dispute and the

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23 moving u
party is entitled ' judgment as a matter t f . . 'ed . R . . .. '
to
o law. F
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24 Civ. P. 56(
c). Judgment as a matter of law is appropriate where

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25 there is no legally sufficient evidentiary basis '
for a reasonable

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26 jury to find for the nonmoving party. Fed. R. Civ. P. 50( ). Where
a

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27 reasonable minds could differ on the material facts at issue,

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1 however, summary judgment should not be granted . Warren v . Citv of

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2 Carlsbad, 58 F.3d 439, 44l (9th Cir. 1995), cert. denied, 116 S.
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:..''.y 3.1261 .( . 6'...
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of
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t Catrettà 477 U. 317' 323 (
S.
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1986). Once the moving par has met
ty
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8 its burden s t he party opposing the motion may not rest upon mere

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9 allegations.or denials in the pleadings, but must' set forth specific
10 facts showing that there exists a genuine issue for trial . Anderson

11 v . Libertv Lobbv, Incw

477 U .S. 242 , 248 (1986). Although the

1 parties may submit evidence in an inadm issible foçm--namely ,
2

1 depositions, admissions, interrogatory answers, and affidavits--only
3
1 evidence which might be admissible at trial may be considered by a
4

1 trial court in ruling on a motion for summary judgment. Fed. R.
5
1 civ . P. 56(
6
c); Bevene v. Coleman Sec. Servs., Incw

854 F.2d 1179,

1 1181 (
7
9th Cir. 1988).

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In deciding whether to grant summary judgment, a court must

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1 take three necessary steps: ( it must determine whether a fact is
9
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20 material; ( it must determine whether there exists a genuine issue
2)

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of fact , as determined by the documents submitted to

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2 the court; and ( it must consider.that evidence in light . the
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of

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23 appropriate standard of proof. .Anderson , 477 U'' . at'24 8 . ' Summary
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24 judgqment is not proper if material factual issues elist for trial. ..
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C v
Dist w 192 F .
3d 1260, 1264 (
9th Cir .
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26 1999). As to materiality, only disputes over facts that might
27 affect the outcome of the suit under the governing 1aw will properly
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1 preclude the entry of summary judgment. Disputes over irrelevant or
2 unnecessary facts .
should not be considered. Id. , Where there is a
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3 complete. failure .
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5 party2 suenk.tled ' judgmën'.as . a
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t . a matter ofZlaw.' .ce1otex.2.'!.U.:.. .
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hçt a disf
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ntegr part of the feder rules as a whol ' I
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A . The nFaizure of Contract' Claim
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In alleging a cause of action for nfailure of contract,' it
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11 appears that Plaintiffs are asserting that no contract was formed

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1 between the parties.
2

(
See SAC %% 69-71.)

Plaintiffs also allege

1 that they rescinded and/or repudiated the 2006 Loan, and that 50th
3

1 parties repudiated and/or rescinded the 2007 Modification.
4

( .)
Id

15 Finally , Plaintiffs allege that there was no consideration on

16 Defendant's part for the 2007 Modification.
17

(
Id. % 74.)

To create an enforceable contract there must be an noffer and

18 acceptance, meeting of the minds , and consideration . ' Mav v .
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Nev. 2005). Moreover,

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wlhen a party to a written contract accepts . . . he is
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bound by the stipulations and conditions expressed in it
whether he reads them or not :. . . He who signs or accepts
a written contract, in the absence of fraud or other
wrongful act on the part of apothe: contracting party, is

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conclusively presumed to know its contends (
sic) and to
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' assèntlto'them, and there can be no evidenfe:for. t
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as to his understanding of its term s.

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: Camoanelli v. Conservas Alta
mira, S.
A., 477 P. 870, 87i (
2d
sev.

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1j ô). Plaintiffs clai that they never agreed 'o /he terms of the
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2006 Loan or the 2007 Modification, but the evidence is otherwise .

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1 In their depositions, Plaintiffs admitted that they understood and
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. executed all' the documents pertaining .to the 2006 Loan and the 2007
2

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C .:v' . .. .3 Modification . . ( J . . l at u -.1;-' 4,.76, . 9-80, .2, r 02 :03p.10. ,
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6 the-l .
oah'doçu
menté. '(
5 See MSJ : x. :-4.)7. he 2006 '
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Loan . u
was execut . .
ed. 1
7 by Plaintiffs before a notary.public. (
. SAC % 27' MSJ Ex.3 ' 9.
7
at
)

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8 The 2007 Modification included a ratification and reaffirmation of 9 the 2006 Loan .

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(
MSJ Ex. 4 .) Finally , . arguing that Defendant
in

1 nbreached the agreement' (
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' Pls.' Resp. at 6 (
#208)), Plaintiffs admit

11 to an agreementt The evidence is such that no reasonable juror

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1 could conclude that the parties failed to form a contract .
2
13

Plaintiffs' argument that one set of their signatures on the

14 HUD-I settlement statement that accompanied the 2006 Loan was
15 altered or forged by Defendant is unconvincing .

Plaintiffs contend

1 that the signatures on the form were nobviously . . . cut off and
6

1 pasted on the bottom .'
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(
Idk at 3.) However, the document, as

18 provided by b0th parties/ is clearly a transmission of the original
19 document via facsimile, as evidenced by the time stamp and fax .

20 number at the top of the document .

21 apparent from the face of the document that the irregularity in

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( . Ex. 2.) It is readily
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23 signature is also cut off, 'nd '
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is a similar irreéularity '. .
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24 higher up on the page. Furthermore, it strains credulity,to believe : 1
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25 thatl Defendant would forge only this document connected to the 2006
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26 Loan, and if so, that it would do such a poor jbb replicating
27 Plaintiffs' signatures .
28

Plaintiffs testified in their depositions
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1 that they read, understood r and executed the 2006 Loan documents .

2 (
MSJ Exs. 1-2).. Moreover, Tlaintiff Frank Stoffels admitted in his.

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3: depositiontthat he. and.his .
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attorney.. came up with' this -irgument. . '
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.' :: 2 - - k / 1,1 ::f$ ! :Ek .:lE::1 1 lx5h71 p z
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'' ' ':'.And t''.Jb :
' Q : .'
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j1pt k not your .signature2' '. ' - :.. . .: $.@v v.;.:.. . 2:
r)
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. That's not my complete signature f no .

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,

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E .'. '.-...6 . ' Q :.:; hat dt ' j ' ean' ytuk:comp.ete 'sIgnature7 . ' .- . .':. 2 $ .'; ..
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A

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7

That has been - - this wa s the cut'and-' aste piece' of
p
.... p aper ; .
.
'
''

.

8'

. .

:

:.

.
.
''
.
...
.
I did not sign this piece of paper . This was placed
on here .
How do you know that was placed on there?
.
Looking through the information with my attorney , we
came up with this and looked at it and saw that the
. signatures had been cut off.

A
'

'

9
Q
A

1
0
I1'
12

.

.

'

Q
A

And you and (
your attorney) came up with that idea?

A

14

Yes.

Q

13

On a11 three signatures. Correct?
We came up with the - - with the thought that it had
been cut and pasted, yes .

15

1
6

(
Id. Ex. l at 64:5 - 65:10.) For these reasons, no reasonable juror
'

could conclude that Defendant forged the HUD-I Settlement Statement .

1
7
Furthermore , the contract did not fail for this reason .

18
Plaintiffs further argue that Defendant provided no

1
9
consideration for the 2007 Modification .

20

uTo cohstitute

'

'

consideration, a performance or return prom ise must be bargained
21
'
.
for. A performance or return promise is bargained for if it is
77

.. ..
.
.

.

.

23
24

.

'

sought by the prom isor in exchange for his promise and is given by
'
.

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.. ...
.:

.

.

.

.. '.. .. . . .
.
.
.
.

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.

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.

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.

the prom isee in exchange for that promise .' Pink v . Busch, . 91 P .2d
'
6
. ..
l'
. .
.. :
.
.

456, 459 (
Nev. 1984) (
quoting Restatement (
Second) of Contracts
'

'

,

,

'
'

'

,

5 714
1), (
2) (
1982)). This bargained-for exchange requires a
26
.
mutuality of obligation : nunless 50th parties to a contract are

27
28

,
9

'

1 bound, neither is bound .' Seroa v . Darlinc, 810 P . 778, 78l (
'
2d
Nev .
.

2 1991). 'Consideration may be any benefit conferred : any .
'
or
detriment .

.

L.a' '.'' ..sufferedè ...,, and. law'will not enter intoij inquiry . to.: . 7
. .- ; l
.
the
x
v
.
-dn
.
as
.

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adekuacy.:'.Nvberc.v . . rbv, 188;. '2d-1006,. 0l0:.5ev.. 1948). . -'. ,r
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j

. ' : 'Even '
6
.
viewing the '
:
evidence in the light most': avorable.to... 1' . '' 1
f
. '.:
.
.
.
7 Plaintiffs, it is clear that Defendant provided c' nsideration for
o

8 the 2007 Modification, contrary to the allegations in the second .
9 amended complaint . The 2007 Modification provided for a fixed

1 interest rate where Plaintiffs were subject to an adjustable rate
0
11 under the 2006 Loan.

(
MSJ Exs. 3-4.)

Furthermore, the 2007

.

12 Modification capitalized the unpaid interest and penalties,

.

13 providing Plaintiffs with a fresh start on the loan at a time when
14 Defendant was entitled to foreclose on the property due to total

1 nonpayment.
5

(
Id.)

For these reasons, the 2007 Modification did not

1 fail due to lack of consideration .
6
17

1 . The 2007 Modification M aturity Date

1
8

Plaintiffs claim that the 2007 Modification failed because the

1 parties f
9
ailed to agree on the Maturity Date. Plaintiffs claim, and

7

20 the signed 2007 Modification shows, that January 1, 2057 was the set

:

21 maturity date.

'
.

(
MSJ Ex. 4.)

Defendants argue thàt the date was a

i
:

.

22 clerical error and should have read January 1, 2037 .
.

23

' With. the '
exception of Plaintiffs' allegations, the evidence
.

'

.

.

'

.

.

'.
'

.

.

J'

.

.

.

.

. .

'
.

'

.

25 should have read 2037.

26 was January 1, 2037.

.

l

.!

24 shows that the 2057 date was a typo, and the 2007. Modification
.

''

'

.

E

.

The maturity date in the original 2006 Loan

(
MSJ Ex. 3.) The 2007 Modification was an

27 amendment of the 2006 Loan, providing that ut
elxcept as otherwise
28

1
0

'

I

:

q
p

1 specifically provided in this Agreement, the Note and Security

'
j

1
.

.

.

2 Instrument will remain unchanged, and Borrower and Lender will be -

,

3 bound by , and comp'y with , .
.
l
- al1 of the terms .and .
pyovisions. thereo f, .' .j
C$ . .
-

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7 : as h
4. ' amerded . .' is-Ac/eement... '. ( d' .Ex . : at %: 6i' '. here fore , .to.. -iJ
i
bv t h: .
:-. - ' . - . 7
'.' I
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. . .T
:
c' ' . .Et
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:

5 tle extent tlat. n t
a
a tlez
partzes.éâa . . grees the 'osp date, as .. ,, ..i
. . not.a
.
to
,
j
. ,.
.

s .. 7 . , - .
. 6... :. . .
.

.
..

'
.

.

: ' Plaintiffs contend Defendant s
6%
.
did not ,.the 2 03. datë ' .the'ori. inal. i..
'
7
. ;
in.
. g
.1
.
7 2006 Loan should control . C:nsidering the contràèt as a whole , see ,

b

8 e.
a., Sicaelkow v. Phoenix Ins. Co., 846 P.2d 303, 304 (
Nev . 1993),

.

9 it appears that 2057 was a clerical error . Even when viewed in a
1 light most favorable to Plaintiffs, the other evidence confirm s that
0
11 interpretation,z as outlined below .

.

12

Within days of the execution of the documents and in accordance

13 with the Errors and Omissions Agreement contained within the 2007

1 Modification (
4
MSJ Ex. 4), Defendant sent Plaintiffs a letter asking
15 the Plaintiffs to re-sign the 2007 Modification due to a %typo error
N

1 on E
6
the) maturity date.' (
' MSJ Ex. 5.) Moreover, the letter
17 proposing the 2007 Modification lists in detail the numerous changes

1 to be made to the 2006 Loan, with no mention of a change in the
8

1 maturity date.
9
2
0

.

'

.

21

.

22

' r '
.

.

(
P1s.' Resp. Ex . 9 at 6-7 (
#208)):

Based on our review of your concern and the loan file we
have proposed to you the following resolution .
'
.
..
.
.
'
.

.

' '
'
l For this reason , tl 2007 Modif ication :as unambiguously a
ne

.

' 23' midificàk:on and af.irmation of Ehe 2006 .z
n
i
/
loan'a'd could:nbt possibly: ï
n
. .

' be considered ' a repudiation of the 2006 Lo4n, as alleged by
24 Plaintif fs .
(
sel sAC % 70)ï . ' .
'
.'
' . '
.
'
.. .
' .
.
'
.

25
'

k
' 2 Parol evidence is .
admisslble to show a ; c zerical error or.
mistake. 800th v. Tiernan, 109 U.S. 205, 207-08 (
1883); see also
26 State ex rel . LiéE v . courtesv Motors, 590 P .
2d 163 r 165 (
Nev . 1979)
(
stating the parol evidence is admissible to determine intent when the

.

''

.

27 written contract is ambiguous).
28

l
l

3

7

F
1

1. )

:

Capitalize the amount of $7 ,4 12 .00 for the
revolving debt and the delinquent interest

2
.
.

-

-. .

.

.,
.

2 .) .
The next payment due on your loan will be
09/O1/2OO7

3 : .. .
.
:. 1

=

,

. .

3 .) ' Chanqe .
. ,
:
the rate 'on .
J vour loan from.an adjustable . '
.

: 1
.
.
.

..

'

5.
50% for the'remaining term of ydur loan
;

' '.

'

the loan to include late charges ,'property

'

7

;
'

l

' l 5. .:'=:': .5 tJ L. ive : . ' 'a.sociated .
: ' . ...' ' . ' Wa
. .. ,
'
al1 feeà z s
with the deli. quent . ::.'. .:!
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of f'.' .
. . .
:

' ' , . . é ' . '..'' . ' inspectioh fees,J
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''attorney fees. )costs. '.
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ï ' rs,-,;J . .:.ik:thè .
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interest . te at.the.
ra
. t fnal.
orig'
. Lof. :..'. . . n
rate t . . ,.J .' .
.- . '

'

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.

..

rate t o a fixed rate

.
'

.

.

'

k

.. . .
' . j

6 .) The new principal balance will be $319,272 .91
' .
' 7 .) The new payment would be $ l,755 .16 this amount
'
'
'
includes $1,567 .44 for principal and interest
'
.
and $l87 .72 for taxe s and in su rance . This is an
. '
inc rease o f $ 93 .4 9 .
.

'

8
9

During our conversation on July 20 , 2007 , you agreed to
the above terms and a modification agreement was sent to
your home .

1
0

''

11
Noticeably absent from this letter proposing the 2007
12
Modification is any mention of a change in maturity date .

The

13
cover letter to the 2007 Modification likewise does not mention

14
a change in the maturity date , but states only the interest rate

15

and monthly payment.

( . Ex. 6.) The 2057 maturity date
Id

1
6
17

alleged by Plaintiffs is inconsistent with a11 other evidence of
.
the parties' intent .

18
Plaintiffs repeatedly claim that the shift to a 2037 maturity

1
9
date required a larger monthly payment than was stated in the 2007

20

Modification (
SAC % 38; P1s.' Resp . at 4, 8, 14 (
#208).) However,
21
this is simply not the case .

The monthly payment for principal and

22

' interest provided for in the 2007 Modific#tion 1$ .
$1524.
59. The

'

.

23'

'

. ',

.

'

'
:

'

cover letter to '
the 2oo7 Modification agreed'that the principal and
'
24
.
.
.. .
.
.

.
'

,
'

25

interest pay
ment would be $1524.
59, plus a mo
nthly es
crow collection
'
.

'

Of $187 . 72 (
Pls.' Resp . Ex. 6 (
#208)), for a total of $1712.31 due

.

1

' I
!
,

.
'

'

: 26

.
:
'
everv month . . Plaintiff Frank Stoffels averred in his affidavit that
27
28

l
2

I

1

i

:

l Plaintiffs' obligati6h ùnd*r the 2001 éodification was %$17l2. '
'
N
00.'
.

.

:. . '
.

2 ( ' Ex. 5 at % 31.)
Id..

3 showing. that ' was calculated :
.
'
it'
according..o a 2037 x
t
.maturitv .
i
date k.
.

'
: .: ;.
.
.

' .
, ,

The agreed-to payment amount did not change,

.

.

'

,

.

.

:

; 4 .Plaint' .s ' cla.m tha, . ' he:n onkh.y:payment kent . rom :apploximately . , . ,
if f .
i
t .. . i
't
l .
x
f
: r
...

:
6

'

'

'

't C.: . ....$l700:to.overz$2.00.byt
J :. ' 5.
. . .
' .
1 ' that:changèkof-term' ( s-i ' sp' 't... ) L s '
.
s
. '
' Pl .k .Re . . a .14 'i.
.
L
: '
.

.

.

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.

.

l.
.
.

-

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.

!

6 belièd . ' . .evidencé z z ThéE first payment noticelf ror Defendant
.
bv the
.
.
.
à

'

1

... f $
'

7 after the execution of Ehe 2007 Modification provided for ' total
a

8 payment of $1712.31, exactly what Plaintiffs agreed to . .(Id . Ex.
'
.

..

9 5 .73.) On June l6, 2008, Defendant sent Plaintiffs a letter
10 explaining that correcting the maturity date did not change the

11 payment amount, the interest rate, or the unpaid bal#nce.

(
Id. at

1 9.) Even when viewed in the light most favorable to Plaintiffs, the
2
1 evidence is clear that the 2037 maturity date did not change
3
1 Plaintiffs' monthly payment, and that they agreed to a payment for
4
15 that amount .

1
6

Finally, even if the dispute over the maturity date invalidated

17 the 2007 Modification , there is still a valid and binding contract
18 between the parties comprised of the original 2006 Loan with a 2037
19 maturity date .

Though the Court has engaged in a careful analysis

20 of the 2007 Modification , it> failure or otherwise is immaterial to
21 Plaintiffs' claim , given the existence of the original contract .
22 For this reason alone, Plaintiffs' Failure of Contract claim must
23 fail
24

'

25
'

.

7 Plaintiffs have includéd with their Response Exhibit 5,
26 Affidavit of Frank Stoffels , which itself has a number of exhibits
attached . With the notation Ex . 5.7, the Court refers to Exhibit 7
27 to the Affidavit .
28

1
3

'

,

1

2 B . The nFraud/Fraud in the Inducement' Claim
r
.

: z . . .. 3
:

, .. .
'

' . .
.

. : In .
. order.to prove a commonclaw ' raud or f raud in .the inducement . '
.
c
f
.
'

!:' . ' . 4 claif .inuJ
.-. .
n'
Nevada b .aii
? . .plaintiff 5must .proMe the .followirg -fivn ze3
J
.
i ' s e lements .' .:d
.

7 ..
7
, .. ' ..

? , ... :
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'
.

' .
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. .

-

5 by71lea. and k
.
7 r
cohvincifg evjderdé'. - . .
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.

-. . :':'' .:.. : ''., ,: '''::ë
.: '. . ' i.' ,- . ' Lt ,: ..
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.

6

.

.

7
'

.

.
.
. . . : false representation .méde .by .
. :. A
1
the défendant i, . : . . .:.
. .
.J
2:
.
Defehdant 's knowledge or belief that the
.
1
.

.

8

. 3.
.

. .

'
representation is false ( insufficient basis for L
or

I
''

E

making the representation);
Defendant's intention to induce the plaintiff to act .

:

or to refrain from acting in reliance upon the

9

m isrepresentation ;

4.
1
0

12

.

representation; and
5.

11

.

Plaintiff's justifiable reliance upon the
Damage to the plaintiff resulting from such reliance .

Bulbman. Inc. v . Nevada Bell, 825 P. 588, 592 (
2d
Nev. 1992)(
citing
Lubbe v. Barbar 54O P. 115, 1l7 (
2d
Nev. 1975))7 see also J. . Jones
A

13

Constr . Co . v . Lehrer McGovern Bovis , Inc ., 89 P .3d 1009, 1017 (
Nev .
14
15

1
6
1
7

2004).

'

Plaintiffs first allege that Defendant committed fraud in
representing to Plaintiffs that they were qualified for the loan,

and that they would be elig ible for refinancing if they could not
'

18
make their payments (
SAC % 116.) Plaintiffs further allege that
1
9
:
Defendant failed to disclose the terms and risks of the loan , and
20

'

21

.

that Plaintiffs and others like them %all across the United States'
%
'

were not qualified for their loans.
22

(
Id. %% 117-18.) Finally,

Plaintiffs claim that Defendant failed to disclose the nature of the

23

increases in interest rate in a way that Plaintiffs :
understood .
.
24
'

:

.
.

( . % 120.)
Id'
25

Summary judgment is proper where at least one essential element
26
of a claim for a relief is absent, rendering all other facts
27

28

1
4

)

1 immaterial .
,

.

Plaintiffs fail to raise a genuine issue as to whether

2 Defendants made a false representation .

.

First r .
plaintiffs.have

:t'. z & .' produced.no..
. .: . '3
.
'evidence that Defendantr. isrepresented.'
m
.
that they.were

..

.

.

u.z:. L .à' :.. qt
. ..î . '.. :.4 jali fiedv.r rêf
' aJ : '
' .ther loan. . ' imilarl? ,,they l
f l
ê
. S
tv .,
ly .
nave . o, uc.d.no:.
pr'd d
x
euidenee......i:
. - ..
:
'
!
.
' ' A. , : . 5 that' D:fendant represented that .
..' : : . ,
.
'
.
Plaint iff s .
eould'' ffordzthe.loan . : .
.
a
n
.
.. t
..
. ..

.

.

' : f . b 6 Secondi ,
' '
.
r the'statement '
r
that' Plaintïf fs would be able to. refinancey if : . .
'
t
'

'

7 they could not make their payments proved true : Plaiptiffs were able

,

8 to refinance the 2006 Loan via the 2007 Modification . . Th' rd, the
c i

?

9 evidence shows that al1 terms of the 2006 Loan, including the

1 adjustable rate mortgage and its consequences, were in fact fully
0
11 disclosed in the loan documents.

(
See MSJ Ex. 3.) Moreovero

1 Plaintiffs have testified extensively in their depositions that they
2
1 read and understood the 2006 Loan .
3
14

(Id . Ex . 1, 2 .)

Finally , Defendant was under no obligation to disclose the

15 risks of the loan and whether Plaintiffs could afford it :

1
6

Although the Nevada Supreme Court has not ruled on the

issue, this Court and the Ninth Circuit Courk of Appeals
17

18
1
9

have predicted that the Nevada Supreme Court would hold
that a lender does not owe a fiduciary duty , as uan armslength lender-borrower relationship is not fidcuiary in
; nature, absent exceptional circumstances .'
'
!

Meciho v. Linear Financial, No. 2: -CV-00370, 201l- 53086 at *5
'
09
WL
20

21

-

( Nev. Jan . 6, 2011) (
D.
quoting Yerinaton Ford, Inc. v . Gen. Motors
'

Accertance Corpw 359 F.
supp . 1075, 1090 ( Nev. 2004), overruled
zd
D.

22

.

on other crounds bv Giles v . Gen . Motors Acceotance Corr w 494 F .3d
.

24
25

865 (
9th Cir. 2007)); see also Renteria v . United States, 452

P.
Supp. 910, 922-23 (D. Ariz. 2006) (
2d
holding thit borrowers cannot
establish the reliance elem ent of their claim because lenders have

,

,

.

!
.

26

no duty to determ ine the borrower's ability to repay the loan); Oaks
27
.
28

1
5

i
'

--

... .-. .... -

1 Mcmt . Coro . v . Suoerior Court of San Dieco Ctv w

:. '
L .
. .
; . ,.
''

z
. .

51 Cal. Rptr . 3d

2 561, 570 ('( bsent special.circumstances . . . a loan transaction.
% A)
'
z

.

3 is at armsvlergth : .
2
t
and there. is C fiduciary.relationship .
no:
.
betweep k
the ,. .
:i

'
'

z'. .b. . ... :
..2. ' a '. borrower.and , he...nde.:J. . citations.omitted). ,lhere'. 'easen:ia1...'.
.n
4.
.
. .e
.
t
l
r .' . '
7) (
:W
an
' ' ..ê
. :L
. :

.

!'. .:L..-.
''
'
. ;.

.

; 5 element : à ' laim : or.relief.' s ' sent, .
. '
.
of c
f '.
.
k
, aft
.
i
the fadt's.as . oïothér '':.... .. i
.; x
t
:, . :.
.. . c :
. s .
.

.

..

' '

L .' k 6.elements are .
;' '
rendered in nateri' l . . u y judiment :is '
u
a and sun nar.
g'
. proper. :.: :. h
t. 1

:.

7 Ceiotex, 47. : .S. at 323 . Because Plaintiffs have failed to . .
7 U

'

8 establish the first element of their fraud claimà Defendants .
4
are

..

.

9 entitled to judgment as a matter of law.
4
1
0
11

V . Conclusion
Plaintiffs have failed to produce any genuine issue of material

1 fact on their two claims remaining in this jurisdiction for ufailure
2
13 of contract' and fraud . The evidence conclusively establishes the
'

'

1 existence of a valid contract between the parties and an absence of
4

1 fraud such that no reasonable juror could find otherwise. As such,
5
1 Defendants are entitled to judgment as a matter of law.
6
17

1
8

1
9

20

1

4 Defendants also argue they are entitled'to summary judgment
because Plaintiffs signed a release of a1l liab ility in connection

21 with the loan when they executed the 2007 Modification.

'

'

'

19-21.) Becau'e we grant summary judgment on other grounds, we need
s
'

(
See MSJ at

'

22 not address the validity of the release nor Plaintiffs argument that
'

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i was substantively, but not procedurally, unconscionable. Moreo
t
ver,

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23 in order for a court to exercise its discretion . refuse.to enforce
.
fo
a èontract as unconscionable, v
generally 50th procedural and

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k

24 substantive unconscionability must be present .

.

Burch v' Second
.

I

Judicial District Court, 49 P.3d 647, 650 (
Nev . 2002). To the extent

'

25 that Plaintiffs argue they signed the release under economic ùuress,

'

'

the Court notes that the exercise èf a legal right to foreclose does
26 not constitute a wrongful act or threat for the purposes of economic'

duress. See In re Desert Entersw 87 B. 631, 633-34 (
R.
Bankr. D. Nev.
27 1988).
28

1
6

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2 motion for summary judgment (
#199), joined by Defendants DLJ and.SPS . è

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IT IS . THEREFORE , HEREBY ORDERED that Defendant Fremont 's

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UN ITED

TATES DI T ICT JU DGE

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