United States District Court, D. Nevada
DORIS J. MITCHELL, Plaintiff,
SETERUS, INC., Defendant.
RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE.
case was taken on appeal from the Bankruptcy Court on
September 2, 2015. A hearing was held on June 8, 2017. Before
the Court are Appellant Doris Mitchell's Opening Brief
[ECF No. 10], Appellee Seterus, Inc.'s Answering Brief
[ECF No. 16], and Appellant Mitchell's Reply Brief [ECF
case is an appeal from a final order of the United States
Bankruptcy Court for the District of Nevada, issued on August
4, 2015, whereby the bankruptcy court dismissed
Mitchell's Amended Complaint in Adversary Proceeding No.
15-01036-led. Mitchell appeals whether the bankruptcy court
erred in dismissing her Amended Complaint with prejudice.
underlying suit arises from a loan transaction in December
2014 where Appellant borrowed funds to purchase 6750 Del Rey
Ave Unit 138, Las Vegas, Nevada. Appellant signed a
promissory note and Deed of Trust, recorded on May 16, 2005,
in favor of Fannie Mae's predecessor-in-interest, which
secured a repayment of a $108, 750.00 loan. Mitchell
subsequently defaulted on her loan obligations on November 1,
2008. Seterus, the loan servicer, foreclosed on the Property.
then initiated the bankruptcy action against Seterus. She
filed a Complaint on April 6, 2015. Seterus filed a Motion to
Dismiss the Complaint on May 8, 2015. Mitchell never
responded to the Motion to Dismiss, but filed an Amended
Complaint on June 22, 2015. Mitchell did not allege in the
Amended Complaint that she paid the debt secured by the title
to the Property.
August 4, 2015, the Bankruptcy Court dismissed Mitchell's
Amended Complaint, finding that she failed to allege any
facts that stated a claim for quiet title under Nevada law.
It found that: Mitchell had not alleged tender or payment of
the debt; that neither a request for a loan payoff to a prior
servicer or beneficiary, nor her dispute over the
effectiveness of the Deed of Trust, excused her duty to
tender payment of the secured debt, or proof of an absence of
default, in challenging the foreclosure sale.
appeal to the District Court, the Bankruptcy Court's
conclusions of law are reviewed de novo, and its
factual findings are reviewed for clear error. In re
Summers, 332 F.3d 1250, 1252 (9th Cir. 2003).
Interpretation of statutes, and standing issues, are issues
of law, which are reviewed by the appellate court de
novo. In re Mike Hammer Prod., Inc., 294 B.R.
752, 753 (9th Cir. B.A.P. 2003).
Opening Brief does not cite to the record or any binding
legal authority to argue that the bankruptcy court made
erroneous factual findings or incorrect legal determinations
in dismissing her amended complaint. Her Opening Brief admits
that she entered into a loan to purchase the property, and
that she “ceased making the monthly payment
obligation.” In an action for quiet title in Nevada,
NRS 40.010 requires that the plaintiff prove he or she holds
good title in the property. See Breliant v. Preferred
Equities Corp., 112 Nev. 663, 918 P.2d 314, 318 (Nev.
1996). Plaintiff has admitted that she defaulted on her loan.
The bankruptcy court found: “Plaintiff acknowledges the
existence of a secured debt, but does not allege that she
satisfied her obligations, or was discharged from performing
her obligations. Although granted leave to amend, Plaintiff
has failed to come forth with facts showing a tender of the
undisputed portion of the debt, or grounds to excuse,
discharge, or toll the obligation to do so . . . Because
Plaintiff does not allege that she has satisfied all debt
owed on the property, her Amended Complaint fails to allege a
cause of action as a matter of law. Dismissal of
Plaintiff's Amended Complaint with prejudice is warranted
because Plaintiff has had an opportunity to amend her
Complaint, and Plaintiff cannot allege any additional facts
to constitute an appropriate quiet title action under Nevada
law.” DeSoto v. Yellow Freight Systems Inc.,
957 F.2d 655 (9th Cir. 1992).” Bankruptcy Court Order
now raises arguments which were not raised in the bankruptcy
court, since she did not file an opposition to the Motion to
Dismiss before that court. Her opening Brief appears to argue
that her loan was “void ab initio” because of the
securitization process. This argument was not presented to
the bankruptcy court. Furthermore, Nevada courts have
rejected the argument that securitization of a loan
diminishes the underlying power of sale that can be exercised
upon a breach by borrower of the Note and Deed of Trust.
See, e.g., Edelstein v. Bank of New York Mellon, 286
P.3d 249, 256 (Nev. 2012) (holding that “separation [of
the Note and Deed of Trust] is not irreparable or fatal to
either the promissory note or the deed of trust . . . a valid
beneficiary may assign its beneficial interest in the deed of
trust to the holder of the note, at which time the documents
are reunified” and enforcement upon a default may
also now raises an argument that Seterus committed
“constructive fraud” by participating, in some
unexplained manner, in the securitization of the loan. Again,
this was not presented to the bankruptcy court as an argument
against dismissal, since she did not file any opposition to
the Motion to Dismiss before that court. ...