In Wells Fargo Bank v. Radecki, Case No. 71405, 134 Nev., Adv. Op. 74 (Sept. 13, 2018), the Nevada Supreme Court held that a foreclosure sale that complied with the relevant provisions of NRS Chapter 116 was not a fraudulent transfer under NRS 112.190(1), even if the purchase price was not "reasonably equivalent" to the property's value. Id. at *4 - 5. The third element of an NRS 112.190(1) claim was not met because of the safe harbor provision contained in NRS 112.170(2), which provides in pertinent part: "a person gives a reasonably equivalent value if the person acquires an interest of the debtor in an asset pursuant to a regularly conducted, noncollusive foreclosure sale or execution of a power of sale for the acquisition or disposition of the interest of the debtor upon default under a mortgage, deed of trust or security agreement." Id. at *5. HOA foreclosure sales are included in the definition of a "regularly conducted, noncollusive foreclosure sale." Id. at *6. Additionally, "[a]lleged inaccuracies in a foreclosure deed do not invalidate the foreclosure sale." Id.
Dismissal Upheld After Repeated Delay Tactics by Pro Se Litigant
In Rodriguez v. Fiesta Palms, LLC, Case No. 72098, 134 Nev. Adv. Op. 78 (Oct. 4, 2018), the Nevada Supreme Court upheld a district court order denying a motion to set aside the judgment under NRCP 60(b). After repeated warnings to the pro se plaintiff by the court that he needed to respond to motions filed by the defendant, the district court judge granted the defendant's motion to dismiss. Id. At *2. Plaintiff waited five months and three weeks to file a motion to set aside the dismissal under NRCP 60(b). Id. At *3. The Nevada Supreme Court found that the district court had considered the factors set forth in Yochum v. Davis, 98 Nev. 484, 486, 653 P.2d 1215, 1216 (1982), and concluded that they favored denial of Plaintiff's motion. Id. at *3. Even though the motion was filed less than 6 months after the dismissal order, the district court found that the plaintiff did not act promptly, exhibited a pattern of repeated continuances, and was apprised of the procedural requirements. Id. at *4 - 6. The Nevada Supreme Court afforded "wide discretion" to the district court and concluded that no abuse of discretion took place. Id. at *6.
Nevada Legislature in session
The 80th session of the Nevada Legislature convened February 4, 2019 in Carson City, Nevada. Legislation has already been requested on many important matters impacting our clients including civil litigation, the courts and creditor rights. Legislation can be tracked on the legislative website at https://www.leg.state.nv.us
Restoration of The Protecting Tenants at Foreclosure Act
Anyone who was involved in the post-foreclosure eviction world in the last decade will certainly recall the 2009 Protecting Tenants at Foreclosure Act ("PTFA"). That measure, part of the larger Dodd-Frank reform laws, added significant "protections" for unwitting tenants who were caught up in situations where the home they were leasing or occupying was subject to foreclosure during their tenancy. Whereas, prior to 2009, many state laws only required relatively short notice periods before the purchaser at the foreclosure sale could file an action for unlawful detainer (eviction), the PTFA granted any "bona fide tenants" a minimum of 90 days notice before an unlawful detainer complaint could be filed. The PTFA also afforded additional time to bona fide tenants pursuant to a "bona fide lease" entered into prior to a "notice of foreclosure." Those tenants in possession pursuant to a bona fide lease could remain in the leasehold until their bona fide lease expired. Those provisions, with their attendant ambiguities, slowed many post foreclosure possession actions and made verification of "bona fides" a constant part of any servicer, purchaser or attorney's work. They also engendered substantial litigation trying to fill in the contours of those ambiguities.
Recent Nevada Supreme Court Decision on Conflict of Laws in Deficiency Actions
In Nevada, Inadequacy of Price is Not Enough to Set Aside a Foreclosure Sale
In Nationstar Mortgage, LLC v. Saticoy Bay LLC Series 2227 Shadow Canyon, 133 Nev., Adv. Op. 91, Case No. 70382 (Nov. 22, 2017), the Nevada Supreme Court declined to adopt the Restatement (Third) of Property: Mortgages § 8.3 (1997) which states that a court is generally justified in setting aside a foreclosure sale when the sales price is less than 20 percent of the property's fair market value. First, the Court concluded that U.C.C. Article 9's commercial reasonableness standard is inapplicable to HOA foreclosure sales. Second, since HOA real property foreclosure sales are not subject to Article 9's commercial reasonableness standard, the Court held that they are governed by the longstanding framework for evaluating any other real property foreclosure sale. Therefore, Golden v. Tomiyasu, 79 Nev. 503, 514, 387 P.2d 989, 995 (1963) was upheld by the Nevada Supreme Court in regard to foreclosure sales, including HOA foreclosure sales, and continues to remain the law in Nevada. "Thus, we continue to endorse Golden's approach to evaluating the validity of foreclosure sales: mere inadequacy of price is not in itself sufficient to set aside the foreclosure sale, but it should be considered together with any alleged irregularities in the sales process to determine whether the sale was affected by fraud, unfairness, or oppression. However, it necessarily follows that if the district court closely scrutinizes the circumstances of the sale and finds no evidence that the sale was affected by fraud, unfairness, or oppression, then the sale cannot be set aside, regardless of the inadequacy of price." Nationstar, 133 Nev., Adv. Op. 91, at *10 - 11 (citing Golden, 79 Nev. at 515 - 16, 387 P.2d at 995). The Court then found that the following did not amount to fraud, unfairness, or oppression: (1) the inclusion of fines in the HOA lien; (2) the notice of sale's failure to list the unpaid lien amount on the date of sale; and (3) the person who signed the notice of default was not the person who the HOA president designated to sign the notice. See id. at *11 - 15.
NRCP 68 Offers of Judgment and Claim Preclusion
On October 5, 2017, in Mendenhall v. Tassinari, Case No. 68053, the Nevada Supreme Court answered the question of whether claim preclusion bars a party from subsequently filing claims based on fraud discovered during the ten-day irrevocable period for an offer of judgment. The Court held that claim preclusion would apply if the three-part test for claim preclusion set forth in Five Star Capital Corp. v. Ruby, 124 Nev. 1048, 1054, 194 P.3d 709, 713 (2008) is met: (1) the parties or their privies are the same; (2) the final judgment is valid; and, (3) the subsequent action is based on the same claims or any part of them were or could have been brought in the first case. The Court in Mendenhall found that claim preclusion did apply based on the three-part test and the fact that the offer of judgment was timely accepted. The Court held that the proper avenue for relief in such a situation is through the filing of a NRCP 60(b) motion for relief from a final judgment or order, as alluded to in Nava v. Second Judicial District Court, 118 Nev. 396, 46 P.3d 60 (2002). Unfortunately, the appellant/defendant failed to file a NRCP 60(b) motion after the offer of judgment was accepted. The Court noted that claim preclusion may not apply if the offer of judgment does not "evince an intent by the parties to prevent a broad set of claims from being raised in a second action." Unfortunately for appellants/defendants, the Court found that the broad wording of the offer of judgment evinced an intent for the offer to apply broadly to "any related or potential claims" that could have been asserted "between and among" the parties.
Nevada Supreme Court Issues Review on October 1 Victim Autopsy Reports
The Nevada Supreme Court, in an expedited review, determined that the press does have a right to obtain autopsy reports of victims of the October 1 Las Vegas shooting. The Court held:
REPLEVIN/CLAIM AND DELIVERY IN NEVADA
While the vast majority of customers undoubtedly enter into a purchase agreement or lease fully intending to make all the scheduled payments for the car, the equipment, or some other item of personal property, the reality is that some of those purchasers are going to default . In those situations, a secured party or lessor can often recover their "collateral" themselves through a "self-help" repossession - they find the car on the street and send out a repossession agent to recover the vehicle. However, self-help repossession can only be used if the "repo" can be performed without a "breach of the peace." That effectively means that if a vehicle or other piece of equipment is found indoors, is behind a fence, or is garaged, it is beyond the scope for a normal self-help repo. In such situations (and in situations where the location of the collateral or the delinquent customer is unknown), a secured creditor or lessor must turn to a judicial action known most commonly as "replevin." An action for replevin (in Nevada referred to as an action for Claim and Delivery), is a judicial action where the secured creditor or lessor files a lawsuit for breach of contract or breach of lease and, concurrently, asks the court to issue a pre-judgment writ of possession/replevin authorizing the sheriff or constable to enter a garage or structure or fenced area and seize the collateral. The Law Office of Hayes & Welsh has years of experience in recovering personal property via replevin or claim and delivery and dealing with courts and the constables/sheriffs who execute on the writs.
What happens, however, if the vehicle is not in the garage or the equipment has been removed to some other unknown location? For years many secured creditors have simply proceeded to get a money judgment on the unpaid balance due on the loan (effectively abandoning the collateral) and tried to collect the delinquent amount from the debtor (often with limited success). They do not need to choose one path over the other. Secured creditors and lessors do not need to abandon recourse to their collateral in favor of a money judgment alone. Nevada law allows secured creditors and lessors to obtain a final money judgment and final judgment for replevin so that they can execute on their collateral if they eventually locate it. The Law Office of Hayes & Welsh has successfully employed this strategy in situations where the collateral (and even the debtor) cannot be found. You don't need to abandon hidden collateral in favor of a money judgment alone.
The attorneys at Law Office of Hayes & Welsh are experienced at representing secured creditors and lessors throughout the replevin process in Nevada, including coordinating with the constable and sheriffs who will execute on any writ. Give us a call today to discuss your situation and the best course of action for you.
Exceptions to Discharge Under 11 U.S.C. section 523
If you are owed money by a debtor who files bankruptcy, you may still be able to collect the money by preventing the debt from being discharged in the bankruptcy. 11 U.S.C. section 523(a) contains a number of exceptions to discharge which apply to individual debtors (but not corporate debtors). Some common exceptions to discharge include: Debts for money, property, services, or an extension, renewal or refinancing of credit if obtained by false pretenses, a false representation or actual fraud or the use of a materially false statement regarding the debtor's financial condition (11 U.S.C. section 523(a)(2)); Debts for fraud or defalcation while acting in a fiduciary capacity, embezzlement or larceny (11 U.S.C. section 523(a)(4)); Debts for a domestic support obligations (11 U.S.C. section 523(a)(5)); Debts for willful and malicious injury by the debtor to another entity or the property of another entity (11 U.S.C. section 523(a)(6)); Certain debts to financial institutions (11 U.S.C. section 523(a)(11) and (12)); and, Debts to a spouse, former spouse, or child of the debtor that are incurred during the course of a divorce or separation (11 U.S.C. section 523(a)(15)).
