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Schram v. Brown

United States District Court, D. Nevada

April 16, 2018

NICHOLAS T. SCHRAM et al., Plaintiffs,
MELISSA L. BROWN, Defendant.


          ROBERT C. JONES United States District Judge.

         This is an action to quiet title. Now pending before the Court is a motion to dismiss. (Mot. Dismiss, ECF No. 5.) For the reasons given herein, the Court grants the motion in part and denies it in part.


         In February 2012, Plaintiffs Nicholas and Sandra Schram wanted to purchase a new house at 674 West winds Drive in Dayton, Nevada (“the Property”), but were unable to qualify for a home loan due to a recent foreclosure. They asked their daughter, Defendant Melissa Brown, if she would be willing to obtain a loan and purchase the Property for them. Ms. Brown agreed; however, the precise terms of that agreement, discussed below, are at the heart of this dispute.

         Ultimately, Ms. Brown obtained an $88, 000 loan to finance a final purchase price of $110, 000. Mr. and Mrs. Schram funded the down payment and closing costs. Ms. Brown closed on the Property in August 2012, and the Schrams took possession of the home. Since that time, the Schrams have made all payments on Ms. Brown's mortgage, which are alleged to have been approximately $570 per month. (See Compl. ¶ 7, ECF No. 1-5; Mot. Dismiss 8, ECF No. 5.) The Schrams also allege they have made “significant improvements” to the Property, although they do not specify the nature of those improvements.

         In September 2017, after occupying the Property for about five years, the Schrams notified Ms. Brown that they were “qualified and ready” to obtain their own home loan in order to satisfy the balance of Ms. Brown's mortgage and take title to the Property. Ms. Brown refused, which leads to the central controversy of this case. The Schrams allege that, prior to Ms. Brown's purchase of the Property, the parties entered into a voluntary oral agreement under which: (1) Ms. Brown would borrow money and purchase the Property, (2) the Schrams would pay the down payment and all other costs incurred in purchasing the Property, (3) the Schrams would make all payments on Ms. Brown's mortgage, and (4) at some future date, when the Schrams became able to obtain their own financing, they would pay off Ms. Brown's mortgage in full, at which time Ms. Brown would transfer title to them. (Compl. ¶ 5.) Ms. Brown denies that she made any agreement to transfer title to the Schrams. Her apparent understanding of the agreement, as indicated in her motion to dismiss, is simply that she would buy the Property and allow the Schrams to live in it so long as they made her monthly mortgage payments. (Mot. Dismiss 2-3; Reply 2-3, ECF No. 10.)

         With this lawsuit, the Schrams seek to quiet title in themselves, on the basis of their alleged oral agreement with Ms. Brown. They have also asserted claims for breach of fiduciary duty and unjust enrichment. Ms. Brown has moved for dismissal.


         Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief” in order to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957). Federal Rule of Civil Procedure 12(b)(6) mandates that a court dismiss a cause of action that fails to state a claim upon which relief can be granted. A motion to dismiss under Rule 12(b)(6) tests the complaint's sufficiency. See N. Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). When considering a motion to dismiss under Rule 12(b)(6) for failure to state a claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the court will take all material allegations as true and construe them in the light most favorable to the plaintiff. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). The court, however, is not required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).

         A formulaic recitation of a cause of action with conclusory allegations is not sufficient; a plaintiff must plead facts pertaining to his own case making a violation “plausible, ” not just “possible.” Ashcroft v. Iqbal, 556 U.S. 662, 677-79 (2009) (citing Twombly, 550 U.S. at 556) (“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”). That is, under the modern interpretation of Rule 8(a), a plaintiff must not only specify or imply a cognizable cause of action (Conley review), but also must allege the facts of his case so that the court can determine whether the plaintiff has any basis for relief under the cause of action he has specified or implied, assuming the facts are as he alleges (Twombly-Iqbal review).

         “Generally, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion. However, material which is properly submitted as part of the complaint may be considered on a motion to dismiss.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990) (citation omitted). Similarly, “documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss” without converting the motion to dismiss into a motion for summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). Moreover, under Federal Rule of Evidence 201, a court may take judicial notice of “matters of public record.” Mack v. S. Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986). Otherwise, if the district court considers materials outside of the pleadings, the motion to dismiss is converted into a motion for summary judgment. See Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 925 (9th Cir. 2001)

         III. ANALYSIS

         a. Quiet Title

         A quiet title action is simply a request that a court declare the rights of the parties as to the title to a piece of real estate. See Kress v. Corey, 189 P.2d 352, 364 (Nev. 1948). In Nevada, “[a]n action may be brought by any person against another who claims an estate or interest in real property, adverse to the person bringing the action for the purpose of determining such adverse claim.” Nev. Rev. Stat. § 40.010. “A plea to quiet title does not require 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 ...

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