Unpublished Disposition, 855 F.2d 860 (9th Cir. 1985)

No. 86-2739.

United States Court of Appeals, Ninth Circuit.

Before FERGUSON and LEAVY, Circuit Judges, and ALAN A. McDONALD^** , District Judge.

MEMORANDUM^*** 

The plaintiff, Robert Blevins, brought this action for declaratory relief and to quiet title to real property located in Reno, Nevada. Blevins is a citizen of California and all the defendants are citizens of Nevada, thus, the district court had diversity jurisdiction. The defendants, all of whom claim an interest in the property superior to Blevins', moved for summary judgment. Blevins filed a response, then moved to amend his response and to extend the discovery cut-off date. The district court granted summary judgment in favor of the defendants, denied Blevins' motion to amend his response, and denied Blevins' motion to extend the discovery cut-off date. The court entered judgment against Blevins. Blevins appeals. We affirm the district court.

FACTS AND PROCEEDINGS

The real property at issue here is located in Reno, Nevada. In June 1977, Owen H. Cooper obtained ownership of the property by a "Grant, Bargain, and Sale Deed."¹  O.H.C. Batteries and Car Sales, Inc. (OHC) was incorporated in Nevada in 1979. The only member of the Board of Directors was Owen Cooper. On October 5, 1982, Owen Cooper executed a quitclaim deed in which he granted the Reno real property to OHC. This deed was recorded with the Washoe County, Nevada, Recorder's Office.

OHC operated as a business on the property. It was managed by Bruce Cooper; however, Owen Cooper remained the sole director and officer of OHC.

On October 6, 1983, Bruce and Owen Cooper entered into an agreement; it is this agreement from which Blevins claims he can trace his title to the property (Agreement). The relevant portions of the Agreement are as follows:

"Whereas, Bruce Cooper has personally paid for and/or been the party solely responsible for earning the money for payment on certain assets as set forth on Exhibit A ... and,

Whereas, Bruce Cooper is aware that [therefore] he may have ownership of the property in constructive trust, even though title to the stock of [OHC], which has title to the assets is held in the name of [Owen Cooper], and

Whereas, it is ... intended ... that the property would and shall remain in the name of [Owen Cooper], as his sole and separate property, subject to the terms herein, and

Whereas, it is ... the desire of Bruce Cooper to keep all of the assets intact for his future use, [Owen Cooper's] use, and thereafter to distribute the property to the children of [Owen Cooper] or grandchildren of Bruce Cooper.

Now, therefore, in consideration of the premises and ... the mutual promises ... hereinafter set forth, the parties agree, ... as follows:

1. To declare that the property ... is to remain in the name of [Owen Cooper], as the sole and separate property of [Owen Cooper], as long as the terms of this agreement ... are not violated.

2. [Owen Cooper] shall not assign, sell, transfer or otherwise dispose of his shares in [OHC] except as hereinafter provided. Furthermore, he shall not borrow using his shares as collateral or encumber the shares in any way without the consent of Bruce Cooper.

3. That if the property ... or the shares of stock in [OHC] becomes subject to an agreement to be transferred ... or if [Owen Cooper] makes an assignment for the benefit of creditors, ... or should [Owen Cooper] ... become in default under any deed of trust or other instrument constituting a lien on the subject real property, or encumber the shares of [OHC], the stock of [OHC] and/or the property as set forth in Exhibit A shall revert to Bruce Cooper, the person who paid for or arranged for payment of all the assets as set forth in Exhibit A.

4. Any sale, transfer, assignment, hypothecation, purported sale, or purported hypothecation or use for security purposes any of stock of [OHC] by [Owen Cooper] in violation of this agreement shall be completely null and void.

Exhibit A includes the OHC share certificate issued to Owen Cooper and the legal description of the Reno real property, representing the assets that are the subject of the Agreement. This Agreement was filed with the Washoe County Recorder on October 6, 1983.

Blevins claimed that under the Agreement, Owen Cooper held title to the property and to the OHC stock in "constructive trust" for his father. If Owen violated the terms of the Agreement, these assets would allegedly revert to Bruce Cooper.

Kendall Boyd, a defendant, visited the OHC premises and found OHC being operated by Bruce Cooper. Boyd and Bruce Cooper entered into negotiations which culminated in December 1983, with Boyd agreeing to lend $30,000 to OHC. In return, Boyd was to receive a promissory note secured by a deed of trust on the real property on which the OHC business was located. During the negotiations, Bruce Cooper told Boyd that Owen would have to sign the necessary documents since the real property was in Owen's name.

On December 14, 1983, Owen Cooper signed the appropriate documents as the president of OHC. Present at the signing were Bruce and Owen Cooper and their attorney and Kendall Boyd and his attorney. Boyd claimed, and supported by his affidavit and that of his attorney, that at no time did the Coopers or their attorney inform Boyd or his lawyer about the Agreement. Boyd also claimed, and supported by the affidavit of OHC's bookkeeper, that Bruce Cooper fully participated in the loan negotiations. The trust deed, signed by Owen Cooper on behalf of OHC, was filed with the Washoe County Recorder's Office.

Blevins alleged that he loaned $90,000 to Bruce Cooper and OHC. He claimed this loan was secured by a series of promissory notes and a mortgage on the real property on which OHC was located, executed by Bruce Cooper on behalf of himself and OHC. Blevins alleged that the mortgage was recorded with the Washoe County Recorder on August 10, 1984, however, neither the notes nor the mortgage are in the record provided to this court. Blevins claimed that Bruce Cooper, under an alleged power of attorney, signed the mortgage in the name of Owen Cooper. Blevins offered no evidence to support the allegation that Bruce Cooper had such a power of attorney.

On February 11, 1985, Bruce Cooper executed to Blevins a grant deed on the property in lieu of foreclosure, allegedly as the sole shareholder and officer of OHC. This deed was filed with the Washoe County Recorder on March 12, 1985.

On February 11, 1985, Bruce Cooper also executed a "Notice of Default; Breach of Condition and of Reversion to Granter" in which he stated that Owen Cooper had breached the terms of the Agreement, and therefore the assets listed in the Agreement reverted to Bruce Cooper. He filed this with the Washoe County Recorder.

Before the district court, Blevins contended he owns the property in fee simple absolute, and the defendants have no interest in the property. He argued that due to the Agreement, Bruce Cooper had an interest in the property that prevented Owen Cooper from conveying any interest in it to Boyd, making Boyd's deed of trust void. Blevins claimed that if Boyd could not find the Agreement in a standard title search, then he should at least have made an inquiry about Bruce's interest given that Bruce operated the business and lived on the property. Because Owen Cooper allegedly breached the Agreement, Blevins argued the property and the shareholder certificate reverted to Bruce Cooper. When Bruce Cooper allegedly conveyed the property to Blevins, Blevins became the sole owner.

Boyd moved for summary judgment, in which the other defendants joined. Boyd argued that Owen Cooper had the authority to enter into the loan agreement with Boyd, including securing it with a trust deed on the OHC property. He submitted supporting affidavits and exhibits demonstrating that no material facts are in issue disputing his contentions.

Blevins responded, but did not file any affidavits or other documents. Rather, relying upon his amended complaint and Boyd's motion for summary judgment, Blevins conclusorily stated that the allegations show a genuine issue for trial exists. Blevins later filed a motion for leave to amend his response to the summary judgment motion and to amend the discovery cut-off date. In his motion, Blevins stated that he learned the real property at issue had been purchased from Boyd by a Frank Kujac. Therefore, Blevins requested the court to reserve its ruling until he could determine whether the correct defendants were named. Blevins also requested an extension of the discovery cut-off date to take the deposition of Bruce Cooper.

The district court granted the defendants' motion for summary judgment and denied Blevins' motion to amend his response and to extend the discovery cut-off date.

STANDARD OF REVIEW

This court reviews the grant of summary judgment de novo. Darring v. Kincheloe, 783 F.2d 874, 876 (9th Cir. 1986). District court rulings concerning discovery are reviewed for an abuse of discretion. Landmark Dev. Corp. v. Chambers Corp., 752 F.2d 369, 373 (9th Cir. 1985).

DISCUSSION

A. Grant of Summary Judgment in Favor of Appellees

Federal Rule of Civil Procedure 56(e) provides that when a motion for summary judgment is made and supported by affidavits and any documentary evidence, an adverse party may not rely upon the mere allegations of its pleadings, but its response, by affidavit or as otherwise permitted by Rule 56, must set forth specific facts showing there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if otherwise appropriate under the law, shall be entered against it.

Here, Boyd supported his motion for summary judgment with affidavits and documentary evidence that support his factual allegations. Blevins, in his response to the motion, failed to offer any affidavits or other evidence whatsoever. Rather, Blevins merely relied on the allegations made in his amended complaint and the conclusory statements of his response to the summary judgment motion. This is insufficient to oppose the summary judgment motion. First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968). Pleadings and legal memoranda do not create issues of fact capable of defeating an otherwise valid motion for summary judgment. Long v. Bureau of Economic Analysis, 646 F.2d 1310, 1321 (9th Cir.), vacated on other grounds, 454 U.S. 934 (1981), on remand, 671 F.2d 1229 (1982). Because Blevins failed to set forth and support facts demonstrating that a genuine issue for trial exists, Boyd is entitled to summary judgment if appropriate under the law.

The law of Nevada controls because the district court's jurisdiction is based on diversity of citizenship. Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). Under Nevada law, Boyd must demonstrate that he had neither actual nor implied notice of the Agreement.

Nevada law provides that county recorders maintain separate indexes of grantors and grantees. Nev.Rev.Stat.Ann. Sec. 247.150 (Michie 1986); Snow v. Pioneer Title Ins. Co., 84 Nev. 480, 444 P.2d 125, 127 (1968). One doing a title search

need examine the granter index under the name of a previous owner of the property only during the period such owner is shown by the record as the owner--that is, from the date of the conveyance to him until the date of the first conveyance of his entire interest away from him. Any instrument executed by such an owner which is recorded before his acquisition or after his relinquishment of title is considered outside the "chain of title."

Snow, 444 P.2d at 128.

Boyd conducted the necessary title search by examining the grantor index. This revealed that OHC was the record owner of the property, that OHC received title to the property by a quitclaim deed Owen Cooper executed in 1982, and that Owen Cooper obtained title to the property by a grant deed in 1977. This proper title search did not reveal the existence of the Agreement because it was recorded after Owen Cooper relinquished his interest in the property to OHC, and therefore was outside the chain of title. Furthermore, OHC was not a party to the Agreement. Therefore, the facts presented to the district court by affidavit and documents show no factual dispute exists that Boyd did not have actual notice of the existence of the Agreement.

The undisputed facts also demonstrate that Boyd did not have implied notice of the Agreement. Under Nevada law, a purchaser of real property without actual notice of prior interests in that property has a duty to inquire about such interests in certain circumstances. This duty of inquiry arises

when the circumstances are such that a purchaser is in possession of facts which would lead a reasonable man in his position to make an investigation that would advise him of the existence of prior unrecorded rights. He is said to have constructive notice of their existence whether he does or does not make the investigation.

Berge v. Fredericks, 95 Nev. 183, 189, 591 P.2d 246, 249 (1979) (citations omitted).

Blevins has not alleged and supported by affidavit or documentary evidence any facts which would give rise to a duty of inquiry by Boyd. The facts presented to the district court are consistent with OHC having exclusive ownership of the property. Boyd visited the property and found Bruce Cooper, who identified himself as the manager of the business. As supported by affidavits, Bruce Cooper and Boyd had extensive discussions concerning the loan to OHC. During these negotiations, Bruce Cooper informed Boyd that the property was in his son's name and that his son would have to sign any loan documents. Bruce Cooper was present at the time Owen Cooper signed the loan agreement on behalf of OHC, including the trust deed securing it. Neither he, Owen Cooper, nor their attorney said anything to Boyd or Boyd's attorney that would give rise to a duty of inquiry.

Even if, as Blevins argues, Bruce Cooper's presence on the property gave rise to a duty of inquiry, his intimate involvement with the loan agreement, in which he said nothing about any interest he might have in the property, was sufficient to satisfy any duty Boyd might have had. Furthermore, the evidence before the district court showed that Bruce Cooper identified himself as the manager of OHC, and nothing more.

The district court properly granted summary judgment in favor of the appellees.

B. Denial of Motion to Amend Response and Extend Discovery Cut-Off Date

Blevins moved to amend his response to the summary judgment motion and extend the discovery cut-off date because he wished to depose Bruce Cooper and possibly add more allegations and substitute a new defendant. Federal Rule of Civil Procedure 56(f) provides:

Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.

(Emphasis added.) Blevins did not submit with his response to the summary judgment motion or his motion to amend any affidavits explaining why he was unable to support his response with affidavits. He did not even submit his own affidavit testifying to facts that would justify allowing him to amend his response and extend discovery. Nor did he explain why he had not deposed Bruce Cooper already.

Given Blevins' failure to offer affidavits justifying granting the motion to amend his response and extend discovery, the district court did not abuse its discretion in denying Blevins' motion.

CONCLUSION

The district court properly granted summary judgment in favor of the appellees and did not abuse its discretion in denying the appellant's motion to amend his summary judgment response and extend the discovery cut-off date. The judgment of the district court is AFFIRMED.