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Greenwood v. Ocwen Loan Servicing LLC

United States District Court, D. Nevada

July 24, 2018

JERRY GREENWOOD et al., Plaintiffs,
v.
OCWEN LOAN SERVICING LLC et al., Defendants.

          ORDER

          ROBERT C. JONES UNITED STATES DISTRICT JUDGE

         This is an action to quiet title. Now pending before the Court is Defendants' motion for attorneys' fees. (Mot. Att'y Fees, ECF Nos. 44, 53.) For the reasons given herein, the Court grants the motion.

         I. FACTS AND PROCEDURAL HISTORY

         The Court provided a detailed history of this case in a prior order, and it need not be fully reproduced here. (See Order 1-5, ECF No. 42.)

         In brief, on September 9, 2016, based on what they claimed to be a "botched securitization" of their home loan, Plaintiffs Jerry and Gina Greenwood filed this action seeking a decree that they are the owners of the subject property, and that "Defendants, and each of them, have no estate, mortgage, title, or interest in or to the Greenwoods' Property." (Compl. 12, ECF No. 1-2.) On April 17, 2018, the Court granted summary judgment for Defendants. The Court held, first, that the claims asserted in this action are precluded by a final adjudication in a prior adversary proceeding before the bankruptcy court. And second, under the binding precedent of Wood v. Germann, 331 P.3d 859 (Nev. 2014), the Greenwoods clearly "lack standing to challenge the assignments of the Note and DOT or to assert claims arising under the trust purchase agreement or Pooling and Servicing Agreement surrounding the securitization of the Note." (Order 9, ECF No. 42.) Accordingly, because the Greenwoods premised this case on precisely the same argument rejected by the Nevada Supreme Court in Wood, the Court ordered the Greenwoods to show cause why sanctions should not be imposed against mem for bringing and maintaining this case without reasonable grounds.

         Now before the Court are the Greenwoods' response to the order to show cause and Defendants' motion for attorneys' fees under NRS § 18.010(2)(b).

         II. LEGAL STANDARDS

         "In diversity actions, federal courts are required to follow state law in determining whether to allow attorneys' fees." Swallow Ranches, Inc. v. Bidart, 525 F.2d 995, 999 (9th Cir.1975). NRS § 18.010(2)(b) provides that a prevailing party can obtain an award of attorneys' fees if the court finds the action was "brought or maintained without reasonable ground." The Nevada Supreme Court has often expressed mat the decision to award attorneys' fees under section 18.010(2)(b) is "within the sound discretion of the district court." Kahn v. Morse & Mowbray, 117 P.3d 227, 238 (Nev. 2005). However, the statute also gives considerable guidance touching on how the Legislature intended courts to exercise their discretion:

The court shall liberally construe the provisions of this paragraph in favor of awarding attorney's fees in all appropriate situations ... to punish for and deter frivolous or vexatious claims and defenses because such claims and defenses overburden limited judicial resources, hinder me timely resolution of meritorious claims and increase the costs of engaging in business and providing professional services to the public.

         III. ANALYSIS

         a. Whether attorneys' fees should be awarded under NRS § 18.010(2)(b)

         Because the binding decision in Wood was issued prior to the filing of this action, the Court finds Ae Greenwoods had no reasonable grounds to challenge the securitization of their Note. The Greenwoods conceded their lack of standing in response to Defendants' summary judgment motion:

In their Motion for Summary Judgment, the Defendants argue that a loan assignment made in violation of a pooling and servicing agreement is voidable and not void. This argument actually has merit. The Greenwoods acknowledge that in Wood v. Germann,130 Nev. Adv. Op. 58, 331 P.3d 859, 861 (decided Aug. 7, 2014), die Nevada Supreme Court concluded that the assignment of a mortgagor's mortgage and the underlying promissory note to the trustee of a securitized mortgage loan trust after the closing date established by the trust's pooling and servicing agreement (PSA) was not void, but was merely voidable; therefore, the mortgagor lacked standing to challenge the validity of me assignment, because the trustee was entitled to ...

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