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)).
2017 Nevada Legislature Changes Venue Statute
Wage Garnishments Extended from 120 Days to 180 Days
July Bar Exam Results Released
The July 2017 exam results were released on Tuesday, October 10. The unofficial pass rate is 66 percent. Congratulations to all who passed. Swearing-in ceremonies will be held in Reno onWednesday, October 18, at 3:30 p.m. at the Washoe County Administrative Complex, 1001 East 9th Street, with a reception following, hosted by the Washoe County Bar Association. A ceremony will be held in Las Vegas on Friday, October 20, at 3:30 p.m. at the Las Vegas City Hall Council Chambers, 495 South Main Street. The Nevada Supreme Court and Clark County Bar Association will host a reception at Las Vegas City Hall immediately following the ceremony.
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