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Benko v. Quality Loan Service Corp.

Supreme Court of Nevada

December 26, 2019

JEFFREY BENKO, A NEVADA RESIDENT; CAMILO MARTINEZ, A NEVADA RESIDENT; ANA MARTINEZ, A NEVADA RESIDENT; FRANK SCINTA, A NEVADA RESIDENT; JACQUELINE SCINTA, A NEVADA RESIDENT; SUSAN HJORTH, A NEVADA RESIDENT; RAYMOND SANSOTA, AN OHIO RESIDENT; FRANCINE SANSOTA, AN OHIO RESIDENT; SANDRA KUHN, A NEVADA RESIDENT; JESUS GOMEZ, A NEVADA RESIDENT; SILVIA GOMEZ, A NEVADA RESIDENT; DONNA HERRERA, A NEVADA RESIDENT; JESSE HENNIGAN, A NEVADA RESIDENT; SUSAN KALLEN, A NEVADA RESIDENT; ROBERT MANDARICH, A NEVADA RESIDENT; JAMES NICO, A NEVADA RESIDENT; PATRICIA TAGLIAMONTE, A NEVADA RESIDENT; AND BIJAN LAGHAEI, Appellants,
v.
QUALITY LOAN SERVICE CORPORATION, A CALIFORNIA CORPORATION; MTC FINANCIAL INC., D/B/A TRUSTEE CORPS, A CALIFORNIA CORPORATION; MERIDIAN FORECLOSURE SERVICE, A CALIFORNIA AND NEVADA CORPORATION, D/B/A MTDS, INC., D/B/A MERIDIAN TRUST DEED SERVICE; NATIONAL DEFAULT SERVICING CORPORATION, AN ARIZONA CORPORATION; AND CALIFORNIA RECONVEYANCE COMPANY, A CALIFORNIA CORPORATION, Respondents.

          Appeal from a district court order dismissing the case for failure to state a claim. Eighth Judicial District Court, Clark County; William D. Kephart, Judge.

          Law Offices of Nicholas A. Boylan, APC, and Nicholas A. Boylan, San Diego, California, for Appellants.

          Bryan Cave Leighton Paisner LLP and Lawrence G. Scarborough, Jessica R. Maziarz, and Kathryn E. Bettini, Phoenix, Arizona; Smith Larsen & Wixom and Kent F. Larsen and Katie M. Weber, Las Vegas, for Respondent California Reconveyance Company.

          Kolesar & Leatham, Chtd., and Michael R. Brooks, Las Vegas; Burke, Williams & Sorensen, LLP, and Richard J. Reynolds and Allan E. Ceran, Santa Ana, California, for Respondent MTC Financial Inc.

          McCarthy & Holthus LLP and Kristin A. Schuler-Hintz, Las Vegas, for Respondent Quality Loan Service Corporation.

          Tiffany & Bosco, P.A., and Jason C. Kolbe and Kevin S. Soderstrom, Las Vegas, for Respondent National Default Servicing Corporation.

         BEFORE THE COURT EN BANC.

          OPINION

          HARDESTY, J.

         NRS Chapter 649 governs agencies engaged in debt collection in Nevada, while NRS Chapter 107 governs the deed of trust system and the nonjudicial foreclosure process. In this appeal, we determine whether trustees who exercise a power of sale under a deed of trust pursuant to NRS Chapter 107 are engaging in collection activities under NRS Chapter 649, such that they must be licensed under that chapter.[1]

         Appellants, Jeffrey Benko and 18 other individuals (collectively referred to as Benko), brought a putative class action alleging that respondents, all of whom are current or former NRS Chapter 107 trustees, engaged in unlicensed debt collection agency activities by pursuing nonjudicial foreclosures on their homes. The district court dismissed the complaint, finding that the plain language of NRS Chapter 107 authorizes the actions allegedly performed by respondents. We agree.

         While deed of trust trustees engage in activities that would otherwise meet the definition of a debt collection agency under NRS Chapter 649, the comprehensive scheme of NRS Chapter 107 demonstrates that the Legislature intended to exempt deed of trust trustees from NRS Chapter 649 licensing requirements. Because Benko's allegations concern conduct that falls within the scope of NRS Chapter 107, we conclude that respondents were not required to be licensed under NRS Chapter 649. Therefore, we affirm the district court's order of dismissal.

         FACTS AND PROCEDURAL HISTORY

         Benko filed a putative class action against respondents Quality Loan Service Corporation; MTC Financial, Inc.; Meridian Foreclosure Services;[2] National Default Servicing Corporation; and California Reconveyance Company (collectively referred to as respondents), alleging claims of statutory consumer fraud under NRS 41.600, based on violations of NRS 649.075 and NRS 649.171, and unjust enrichment. Benko's statutory fraud claim relied on allegations that respondents acted as collection agencies when they pursued payment of claims owed or due, or asserted to be owed or due, to the lenders, and they did not hold the requisite license to act as a collection agency. Based on respondents' alleged illegal collection practices, Benko further claimed that respondents were unjustly enriched by substantial payments. Respondents sought to dismiss the claims, maintaining that they were not required to be licensed as collection agencies in their capacity as trustees under NRS Chapter 107.

         The district court dismissed the case as a matter of law and directed judgment in favor of respondents because" [t]rustees are subject to NRS Chapter 107 and do not need to be licensed as collection agencies" and the "enforcement of security interests in real property does not constitute doing business in the State of Nevada." The district court found that NRS Chapter 107 empowers deed of trust trustees to contract and perform duties to accomplish nonjudicial foreclosure, that NRS Chapter 649 intends to exclude deed of trust trustees engaged in nonjudicial foreclosure from its licensing requirements, that enforcing a security interest in real property is not ...


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