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Slovak v. Golf Course Villas Homeowners Association

United States District Court, D. Nevada

March 2, 2015

ROBERT A. SLOVAK, Plaintiff,
v.
GOLF COURSE VILLAS HOMEOWNERS ASSOCIATION, et al., Defendants.

REPORT AND RECOMMENDATION OF U.S. MAGISTRATE JUDGE

VALERIE P. COOKE, Magistrate Judge.

This Report and Recommendation is made to the Honorable Robert C. Jones, United States District Judge. Before the court is a motion (#107) by defendant Wells Fargo Bank, N.A. ("Wells Fargo") to enforce the terms of a binding settlement agreement reached by the parties before this court on June 3, 2014 (#96). Plaintiff Robert Slovak ("Slovak") responded (#115), and Wells Fargo replied (#123).

I. BACKGROUND

The current dispute arises from the parties' differing interpretations of their settlement agreement. On June 3, 2014, the parties participated in lengthy discussions and reached an oral agreement to settle this litigation, which involves various claims in contract and tort against Wells Fargo related to a home equity line of credit on plaintiff's real property in Incline Village, Nevada. Slovak also brought claims against the Golf Course Villas Homeowners Association, but he and the Association agreed to a stipulated dismissal of the claims without prejudice; the Court ordered dismissal on June 19, 2014 pursuant to that stipulation (#85). Following the discussions, the court convened and placed the material terms of the settlement onto the record (#96). Present at the hearing were Slovak, Robert Ferguson ("Ferguson") on behalf of Wells Fargo, plaintiff's counsel, Joseph Scalia ("Scalia"), and defense counsel, Catherine O'Mara ("O'Mara").

1. The June 3, 2014 Settlement Hearing

The essence of the June 3 agreement was that Slovak would repay to Wells Fargo a portion of the balance due under the terms of the promissory note for the home equity loan, and that Wells Fargo would take the appropriate steps to remove the lien from his property, such that the title will be clear of any encumbrances related thereto. Accordingly, and first, Slovak is to pay a sum of $280, 000 to Wells Fargo, which "represents a payoff of the note secured by deed of trust on Mr. Slovak's property...." (#96 at 7:22-25, 8:13-15.) Scalia, Slovak, O'Mara, and Ferguson each agreed to this term ( id. at 8:3, 8:6, 8:9, 8:12), and there is no controversy about it.

Second, upon Slovak's payment, Wells Fargo will take necessary steps to lift the lien from Sloavk's property. The dispute centers, in part, on the meaning of words spoken at the hearing related to this term. Initially, the court stated that "the second term of the agreement is that the canceled note will be returned and deed of trust will be returned to Mr. Slovak through counsel or directly to Mr. Slovak, whichever the parties work out." ( Id. at 8:16-19.) As the court verbally verified the parties' acceptance of this term, uncertainty arose regarding the procedures by which Wells Fargo reconveys the title to real property. The court clarified to Ferguson that "the note needs to be returned to Mr. Slovak indicating that it's cancelled." ( Id. at 9:9-10.) Ferguson responded: "I'll have to check on that. I know that we would reconvey the lien once the note is paid, the deed of trust, following reconveyance with the county showing that it's paid." ( Id. at 9:11-14.) Scalia questioned "why [Wells Fargo] can't just write canceled on the deed and the note...." ( Id. at 9:16-17.) Slovak then alleged that Wells Fargo, or its counsel, had already indicated that "they would return the note and deed under no uncertain terms.... they said, yes, of course, you will get the note and the deed." ( Id. at 9:22-10:2.) Ferguson again intimated his uncertainty with the exact steps, and said: "I know for sure we file a reconveyance releasing... the lien from the property." ( Id. at 10:4-8.)

Therefore, the court summarized its impression of the agreement. "... I think that the understanding that we have here today is that the canceled note and deed of trust will be returned to Mr. Slovak and that there will be a reconveyance, ...." ( Id. at 10:14-17.) O'Mara guaranteed that her client will "make every effort to return the deed of trust and the note to Mr. Slovak...." ( Id. at 11:1-3.) Scalia stated that he and Slovak "will do the settlement agreement, we will tender the check, we will wait for these documents to come in. Once they're all in, the reconveyance, the cancellation, then we'll file the stipulation to dismiss." ( Id. at 11:9-12.) The court verified that Slovak understood and agreed, and he responded that he did, although he also stated that he "continue[d] to believe that Wells Fargo does not have [his] original note...." ( Id. at 11:19-22.)

The court reiterated the terms and verified the parties' assent thereto one final time. "... Mr. Slovak, will prepare a check for $280, 000 to pay off this home equity line of credit;... Wells Fargo intends as we speak here today to return a canceled deed of trust and promissory note to [Slovak] and also file a deed of reconveyance..., and... the submission of the stipulation and order ending this case will not be filed until those issues are resolved to the satisfaction of the parties." ( Id. at 12:5-13.) Slovak responded: "I understand and I accept." ( Id. at 12:14.) Scalia, O'Mara, and Ferguson also verified their agreement. ( Id. at 12:18, 12:21, 12:24.) The parties further agreed that the settlement would remain confidential and is not an admission of liability by Wells Fargo, and also that the court will retain jurisdiction to adjudicate any issues that arise in the consummation and finalization of the written agreement and stipulation for dismissal. ( Id. at 12:25-15:3.) The court set a deadline of August 3, 2014 for the filing of the stipulated dismissal-and, by implication, the completion and signing of the written settlement agreement. ( Id. at 16:20-25.) Following the conference, O'Mara agreed to draft the written agreement at Scalia's request and deliver it to him for Slovak's review. (#107-1 at 2:26-27.)

2. Completion of the Written Agreement

Over the next several months, disputes arose about the settlement terms. The principal focus of the discord centered on Slovak's desire for forensic examination of the original note. ( See id. at 3:8-4:20.) Scalia and O'Mara initially worked together to consummate the agreement, but plaintiff terminated Scalia's representation on or around July 15, 2014. ( Id. at 3:7-10, 7.)

On July 24, Slovak emailed O'Mara. In addition to expressing his concern about the length of time in which he could review the forthcoming settlement agreement, he indicated that he had engaged "the services of a forensic note examiner to authenticate the note and the deed of trust. They will be making a number of tests. They need lead time to coordinate their schedule to attend the presentation of the note and deed of trust." (#107-1 at 10.) Later that day, O'Mara responded with a proposal to stipulate to an extension of the deadline for completing and signing the written settlement agreement, to allow for its finalization and review by the parties. ( Id. at 12.) She also expressed confusion about the forensic examination, for that was neither discussed nor made part of the settlement terms on June 3, 2014. ( Id. )

A full week later, on August 1, and despite his professed concern with the looming deadline, Slovak responded. He conditioned his agreement to a stipulation on Wells Fargo's agreement to allow "inspection of the note by a qualified person." ( Id. at 15.) That afternoon, Slovak again emailed O'Mara and stated that "Wells Fargo was supposed to have had the settlement agreement done and arranged to have the deed of trust and promissory note brought into court for inspection by a party who authenticates such things. They failed to do so." ( Id. at 19.) Claiming that Wells Fargo was, therefore, in default of the agreement, Slovak again demanded that Wells Fargo acquiesce "to an expert to authenticate the deed of trust and promissory note." ( Id. ) One hour later, O'Mara responded. She informed Slovak that Wells Fargo would agree to extending the deadline, but it would not stipulate to inserting a new term into the agreement that conditioned his performance on forensic examination. ( See id. at 21.) She further informed Slovak that she would ask the court for a status hearing if he was unable to agree to Wells Fargo's proposed stipulation. ( Id. ) Slovak answered the following Monday, again reiterating in his email his position that his agreement to pay Wells Fargo was conditioned on Wells Fargo's production of the trust deed and original note, "subject to the norms of a person who authenticates said instruments to inspect and assure that the instruments are in fact originals...." ( Id. at 24.)

A second issue, albeit minor, related to the manner in which the deed of trust would be reconveyed. In late June, as O'Mara continued to secure the original note to provide to Slovak, as contemplated by the settlement agreement, she and Scalia spoke by phone. ( Id. at 3:1-2.) Scalia suggested that Wells Fargo simply record a deed of reconveyance, since such an act is "typically" how creditors lift real property liens in Nevada. ( Id. at 3:3-5.) As this was the understanding that Ferguson held and communicated-however unclearly-at the June hearing, and as Slovak's counsel also shared that understanding, O'Mara agreed. ( Id. at 3:5-6.)

3. The September 22, 2014 Status Hearing

On September 22, 2014, the court held a status hearing (#104). In attendance were Slovak, acting pro se, O'Mara, and Richard Gordon ("Gordon"), also an attorney for Wells Fargo. (#104 at 2:7-9.) At some length, Gordon recounted the events that had transpired between the June and September hearings. Specifically, he focused on the issue of forensic examination. ( Id. at 4:20-5:17.) In explaining his understanding of the terms, he stated that "Wells Fargo has the original note and is willing to provide that marked as paid upon the payment of $280, 000 by plaintiff." ( Id. at 6:1-3.) He also explained that, as "is always done in reconveying, " Wells Fargo would ensure that a deed of reconveyance would be properly filed and recorded with the Washoe County recorder, as Scalia had suggested to O'Mara, to extinguish the lien upon the clearance of Slovak's payment. ( See id. at 6:4-8.) Gordon also expressed his frustration with Slovak's conduct, and remarked that if the settlement could not be soon resolved, Wells Fargo would prefer to proceed to dispositive motion practice-including consideration of its fully-briefed motion to dismiss by the District Court. ( Id. at 6:19-24.)

Slovak spoke next. First, he explained that, after the hearing, he "realized that none of the issues would be discussed in detail, and [he] was in an extremely frightened state, and we [i.e. the parties], in fact, only covered mostly the homeowners association's actions." ( Id. at 7:23-8:1.) Second, he stated that he " assumed ... that there would be a situation in which the note and the deed of trust, the originals, were brought to court, and [he] would bring a check in full, the $280, 000, and that would be the beginning of the resolution of this action." ( Id. at 8:3-7) (emphasis added). Further, he contested that he had ever permitted Scalia to agree to simply allowing a deed of reconveyance, because "for someone to demonstrate that they have standing to receive your payment, they have to demonstrate they're the holder in due course, and that means you have to prove... in the State of Nevada, that you are in possession of the note and the deed." ( Id. at 8:8-9:22).

In the midst of the latter remarks, the court clarified that "what a lender does is record the deed of reconveyance which tells the world and you that this [i.e. the lien] has been resolved, ... Wells Fargo no longer has an interest in this particular parcel of property...." ( Id. at 9:4-8.) After Slovak communicated his interpretation of Nevada law, the court asked about Gordon's statements about the original note. Slovak confirmed that he did, in fact, want forensic examination. ( Id. at 10:1-10.)

Following exchanges by the parties about other non-germane issues ( see id. at 10:11-14:21), the court articulated its view.

I've read the settlement agreement. The settlement agreement is very straightforward, the settlement that we put on the record. It requires very few steps. The one issue that seemed to be at contention was whether-Mr. Ferguson said he wasn't sure what the process was for releasing the lien and so forth, and we now have established what it is, it is that they will give you the promissory note, the original note, marked paid in ...

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