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Wood Bro Capital, LLC v. Underwood

United States District Court, D. Nevada

May 25, 2017

WOOD BRO CAPITAL, LLC, Plaintiff,
v.
FRED W. UNDERWOOD, et al. Defendants.

          ORDER

          LARRY R. HICKS UNITED STATES DISTRICT JUDGE

         This is a quiet-title action brought by Plaintiff Wood Bro Capital against the defendants Fred Underwood, Angela Underwood, and Dwight Carlton (collectively “defaulted defendants”). The court will grant judgment to Wood Bro because the defaulted defendants have failed to respond to Wood Bro's complaint and Wood Bro has satisfied the requirements of NRS 40.110 and NRS 40.100.

         I. Background

         Wood Bro purports to be the current owner of the real property at issue (“subject property”), located in Washoe County, Nevada.[1] ECF No. 1-1 at ¶ 1. Wood Bro purchased the subject property by quitclaim deed in 2015 from non-party Wood is Good, LLC. Id. at ¶ 7. Wood is Good originally acquired the property from a Washoe County tax sale in 2010, which resulted from the then-owner's failure to pay property tax. Id. at ¶ 8. The county treasurer conveyed the property by quitclaim deed. Id. Prior to the tax sale, the property was held by the defaulted defendants, who recorded their deed in 1996. Id. at ¶ 9.

         The subject property was encumbered by two separate federal tax liens in favor of the United States and against Angela Underwood. Id. at ¶ 10. Both liens were recorded in Washoe County in 2007. Id.

         Wood Bro now brings this quiet-title action. Wood Bro filed suit against the United States, the defaulted defendants, and Duane and Genevieve South. Wood Bro has since reached a settlement agreement with the United States, in which Wood Bro shall use the proceeds from the sale of the subject property to satisfy liens held by the United States. See ECF Nos. 42, 46, 49.

         The defaulting defendant's ownership of the subject property was subject to a First Deed of Trust in favor of the Souths. ECF No. 44 at 3. The Souths did not answer the complaint or appear, but voluntarily executed a Substitution of Trustee Under Deed of Trust and Deed of Reconveyance, which was recorded on March 28, 2017, in Washoe County, Nevada. Id. at 2. The Souths have thus reconveyed all title and interest to the current subject-property owners (i.e., Wood Bro). Id. at 7. In turn, Wood Bro voluntarily dismissed the Souths from this action. ECF No. 47. The only remaining issue is the defaulting defendant's interest.

         On January 20, 2017, Wood Bro moved for entry of clerk's default against Carlton and the Underwoods (ECF Nos. 32-33), which was entered (ECF Nos. 38-39). Because Nevada law prohibits courts from entering default judgment on quiet-title claims, this court ordered Wood Bro to file points & authorities, supported by admissible evidence, that establish its title to the subject property and compliance with NRS 40.100 and 40.110. ECF No. 48. The court now considers Wood Bro's filings.

         II. Discussion

         A quiet-title action does not consist of any particular elements, but “each party must plead and prove his or her own claim to the property in question and, a plaintiff's right to relief therefore depends on superiority of title.” Chapman v. Deutsche Bank Nat'l Trust Co., 302 P.3d 1103, 1106 (Nev. 2013) (internal quotation marks omitted) (quoting Yukeno v. Mafnas, 973 F.2d 803, 808 (9th Cir. 1992)). When a defendant fails to answer in a quiet-title action, NRS 40.110 prohibits courts from entering default judgment and instead directs courts to “require evidence of Plaintiff's title and possession, and receive such legal evidence as may be offered respecting the claims and title of any of the Defendants . . . .” Nev. Rev. Stat. § 40.110(1). Only after receiving such evidence may a court “direct judgment to be entered in accordance with the evidence and the law.” Id.

         NRS 40.110 further directs courts to receive evidence “that the summons [was] served and posted as” required under NRS 40.100. Id. Under this statute, a plaintiff must, within one year of the complaint's filing, serve the summons in a “manner and form” that complies with the Nevada Rules of Civil Procedure. Id. § 40.100(1). The statute further requires that, “[w]ithin 30 days of the issuance of the summons, the Plaintiff shall post or cause to be posted a copy [of the summons] in a conspicuous place, on each separate parcel of the property described in the complaint . . . .” Id. § 40.100(2).

         As discussed below, the court finds that Wood Bro has satisfied the additional service requirements under NRS 40.100 and that Wood Bro has proven its title and possession of the subject property.

         A. Wood Bro satisfies the additional service requirements under NRS 40.100

         Wood Bro provided a copy of the original summons served to defendant Carlton. ECF No. 49-1. However, Wood Bro was unable to locate the Underwoods or any potential heirs. Process servers conducted a multi-state search for the Underwoods but could not find them. Id. at 5. Therefore, Wood Bro published the summons in the Reno Gazette-Journal on September 21 and 28, 2016, and October 5 and 12, 2016. Id. Service by publication is sufficient “when the person on whom service is to be made . . . cannot, after due diligence, be found within the state . . . .” Nev. R. Civ. P. 4(e)(1)(i). Further, publication of service must “be made in a newspaper, published in the State of ...


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