Harlow v. MTC Financial, Inc., No. 2:2011cv01775 - Document 79 (D. Nev. 2012)
Court Description: ORDER Granting 57 Defendant's Motion to Dismiss. Defendant LSI Title Agency, Inc. terminated. Signed by Judge Philip M. Pro on 11/06/2012. (Copies have been distributed pursuant to the NEF - AC)
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Harlow v. MTC Financial, Inc. Doc. 79 1 2 3 UNITED STATES DISTRICT COURT 4 DISTRICT OF NEVADA 5 6 7 8 9 10 11 *** ) FAEGANN HARLOW fka SAMANTHA ) HOBBS, ) ) Plaintiff, ) ) v. ) ) LSI TITLE AGENCY, INC., et al., ) ) Defendants. ) ) 2:11-cv-01775-PMP-VCF ORDER 12 13 Presently before the Court is Defendant LSI Title Agency, Inc.’s (“LSI”) Motion 14 to Dismiss (Doc. #57), supported by a Request for Judicial Notice (Doc. #57-1), filed on 15 August 2, 2012. Plaintiff Faegann Harlow (“Harlow”) filed a Response (Doc. #62) on 16 August 20, 2012. LSI filed a Reply (Doc. #64) on August 30, 2012. 17 I. BACKGROUND 18 On May 12, 2008, Harlow obtained a loan in the principal amount of 19 $238,000.00 from Defendant Wells Fargo Bank, N.A. (“Wells Fargo”). (Def.’s Req. 20 Judicial Notice (Doc. #57-1) [“RJN”], Ex. B at 2.) Repayment of the loan was secured by a 21 deed of trust on property located at 7045 Harbor View Drive, Las Vegas, Nevada 89119 22 (the “Property”). (RJN, Ex. B at 3.) The deed of trust names Wells Fargo as beneficiary 23 and United Title as trustee. (RJN, Ex. B at 1-2.) 24 On January 27, 2010, Wells Fargo recorded a limited power of attorney granting 25 certain employees of Defendant MTC Financial, Inc. d/b/a/ Trustee Corps. (“Trustee 26 Corps.”) authority to, among other things, execute, acknowledge, and record substitutions Dockets.Justia.com 1 of trustees and notices of default on mortgages on Wells Fargo’s behalf. (RJN, Ex. J at 2.) 2 The limited power of attorney became effective as of its execution date, December 18, 3 2009. (Id.) In its capacity as attorney-in-fact for Wells Fargo, Trustee Corps. substituted 4 itself as trustee, removing United Title from that role. (RJN, Ex. D at 1.) The substitution 5 of trustee was acknowledged before a notary on March 4, 2010, and it was recorded on May 6 18, 2010. (Id. at 1-2.) Meanwhile, on March 9, 2010, LSI, on behalf of Trustee Corps., recorded a 7 8 notice of default because Harlow “failed to pay payments which became due.” (RJN, Ex. C 9 at 1.) The notice of default is dated March 5, 2010, and it was notarized and recorded on 10 March 9, 2010. (Id. at 1-2.) The notary acknowledgment had a typewritten date of March 11 5, 2010, but the number “5” was crossed out and replaced with a handwritten number “9.” 12 (Id. at 2.) On March 11, 2010, Wells Fargo assigned to Federal Home Loan Mortgage 13 Corporation all beneficial interest under the deed of trust. (RJN, Ex. H at 1.) On August 25, 2011, the State of Nevada Foreclosure Mediation Program issued 14 15 a certificate allowing the foreclosure process to proceed. (RJN, Ex. E.) The same day, LSI, 16 on behalf of Trustee Corps., recorded a notice of trustee’s sale of the Property. (RJN, Ex. 17 F.) The foreclosure sale occurred on September 20, 2011, and Federal Home Loan 18 Mortgage Corporation purchased the Property at the sale. (RJN, Ex. I at 1-2.) Following the foreclosure sale, Harlow brought suit in Nevada state court 19 20 alleging three claims against Trustee Corps. and one claim against United Title. (Pet. for 21 Removal (Doc. #1), Ex. A.) On November 4, 2011, Trustee Corps. filed a petition for 22 removal to this Court. (Pet. for Removal.) On January 3, 2012, the Court granted Trustee 23 Corp.’s motion to dismiss all claims against it. (Order (Doc. #20).) On June 8, 2012, the 24 Court granted United Title’s motion for summary judgment on the only claim against it and 25 entered judgment in favor of United Title. (Order (Doc. #50); J. (Doc. #51).) 26 /// 2 On June 28, 2012, Harlow filed a Second Amended Complaint in which she 1 2 added new Defendants Wells Fargo and LSI and asserted five new claims for relief: 3 violation of Nevada Revised Statutes § 107.085 (count one); false representation/false 4 document (count two); negligence per se/notary fraud (count three); unlawful/statutorily 5 defective foreclosure (count four); and slander of title (count five). (Second Am. Compl. 6 (Doc. #53).) LSI now moves to dismiss, arguing Harlow’s two claims against LSI, 7 negligence per se/notary fraud (count three) and slander of title (count five), fail as a matter 8 of law. Harlow responds that she adequately has alleged her claims against LSI. 9 II. MOTION TO DISMISS Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may move for 10 11 dismissal of a complaint based upon its “failure to state a claim upon which relief can be 12 granted.” To succeed on such a motion, the defendant must show the plaintiff does not 13 make sufficient factual allegations to establish a plausible entitlement to relief. Ashcroft v. 14 Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 554, 570 15 (2007)). In considering whether the complaint is sufficient to state a claim, “all well- 16 pleaded allegations of material fact are taken as true and construed in a light most favorable 17 to the non-moving party.” Wyler Summit P’ship v. Turner Broad. Sys. Inc., 135 F.3d 658, 18 661 (9th Cir. 1998) (citation omitted). The Court “liberally construe[s] the inartful pleading 19 of pro se litigants.” Eldridge v. Block, 832 F.2d 1132, 1137 (9th Cir. 1987) (quotation 20 omitted). 21 When ruling on a motion to dismiss, if the Court considers evidence outside the 22 pleadings, it normally must convert the motion into a motion for summary judgment. 23 United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). The Court “may, however, 24 consider certain materials—documents attached to the complaint, documents incorporated 25 by reference in the complaint, or matters of judicial notice—without converting the motion 26 to dismiss into a motion for summary judgment.” Id. at 908. Here, LSI submitted as 3 1 exhibits to its Request for Judicial Notice copies of various title documents recorded in the 2 Clark County Recorder’s Office. The documents are public records appropriate for judicial 3 notice under Federal Rule of Evidence 201(b)(2). As such, in reviewing the Motion to 4 Dismiss, the Court properly may consider the documents attached to LSI’s Request for 5 Judicial Notice without converting the Motion into one for summary judgment. 6 A. Count Three 7 Harlow labels count three as “negligence per se/notary fraud.” However, in 8 addition to allegations regarding negligence per se and notary fraud, Harlow alleges in 9 count three that LSI violated Nevada’s Deceptive Trade Practices Act. Therefore, the Court 10 11 12 will address each of the three claims alleged in count three. 1. Negligence Per Se Harlow alleges LSI is liable for negligence per se because it violated three 13 statutes: Nevada Revised Statutes § 240.155, which requires a notary to be present when 14 notarizing a signature; Nevada Revised Statutes § 239.330, which makes it a felony to offer 15 a false instrument for filing or recording; and Nevada Revised Statutes § 205.090, which 16 makes it a felony to alter, forge, or counterfeit any one of the documents listed in the 17 statute. LSI moves to dismiss, arguing Harlow fails to state a claim for negligence per se 18 because these statutes are criminal statutes that do not provide a private right of action and 19 cannot form the basis of a negligence per se claim. LSI further argues the legislature did 20 not intend to impose civil liability for the criminal statutes at issue. 21 Harlow responds that “[a] civil statute’s violation establishes the duty and breach 22 elements of negligence when the injured party is in the class of persons whom the statute is 23 intended to protect and the injury is of the type against which the statute is intended to 24 protect.” (Opp’n to Def. LSI Title Agency, Inc.’s Mot. to Dismiss (Doc. #62) at 17.) 25 Harlow argues that § 239.330 was enacted to protect the rights of titleholders and that she 26 was a member of this class of titleholders. She further argues that LSI’s violation of 4 1 § 240.155, combined with its violation of § 239.330, is enough to establish negligence per 2 se. Finally, Harlow argues the notice of default is void because it allegedly was signed 3 outside the presence of a notary, thereby rendering the trustee’s sale void under Nevada 4 Revised Statutes § 107.080(5).1 Section 240.155(1) provides that a notary public “shall not willfully notarize the 5 6 signature of a person unless the person is in the presence of the notary public” and “[i]s 7 known to the notary public” or, if unknown, “provides a credible witness or documentary 8 evidence of identification to the notary public.” A person who violates this statute or who 9 aids and abets in the violation of this statute “is guilty of a gross misdemeanor.” 10 Id. § 240.155(2). Section 239.330 provides that it is a felony to “knowingly procure[] or 11 offer[] any false or forged instrument to be filed, registered or recorded in any public office 12 . . . .” Likewise, § 205.090 provides that it is a felony to “falsely make[], alter[], forge[] or 13 counterfeit[] any record, or other authentic matter of a public nature . . . with the intent to 14 damage or defraud any person . . . .” There is no express statutory grant of a private right of 15 action for the violation of any of these statutes. In determining whether a statute creates a private right of action when one is not 16 17 expressly authorized by the statute, courts “may look no further than any unambiguous, 18 plain statutory language.” Richardson Constr. Inc. v. Clark Cnty. Sch. Dist., 156 P.3d 21, 19 23 (Nev. 2007). The absence of an express private right of action “suggests that the 20 Legislature did not intend for the statute to be enforced through a private cause of action. 21 Moreover, when a statute provides an express remedy, courts should be cautious about 22 reading additional remedies into the statute.” Id. (internal footnote omitted). “[W]hile a 23 24 1 25 26 To the extent Harlow also intended to state a claim for violation of Nevada Revised Statutes § 107.085(5), this claim already was alleged in count one. In her Response, Harlow concedes that count one is directed solely at Defendant Wells Fargo. (Opp’n to Def. LSI Title Agency, Inc.’s Mot. to Dismiss (Doc. #62) at 14.) 5 1 criminal statute can form the basis of a claim for negligence per se, in the absence of 2 legislative intent to impose civil liability, a violation of a penal statute is not negligence per 3 se.” Mazzeo v. Gibbons, 649 F. Supp. 2d 1182, 1200 (D. Nev. 2009) (quotation and 4 citations omitted) (applying Nevada law). 5 Here, given that §§ 240.155, 239.330, and 205.090 do not provide for a private 6 right of action or otherwise contemplate civil liability, they cannot provide a basis for 7 Harlow’s negligence per se claim. Further, the Nevada Legislature’s express provision of 8 criminal remedies but not civil remedies supports the conclusion that no private right of 9 action was intended with respect to these statutes. The Court therefore dismisses Harlow’s 10 11 12 negligence per se claim with prejudice. 2. Notary Fraud Harlow alleges LSI committed fraud because the notice of default falsely 13 represents that Keli Tune, LSI’s employee, signed the notice of default in front of a notary 14 because the notice of default is dated March 5, 2010, but was not notarized until March 9, 15 2010. Harlow further alleges it is impossible for the notice of default to have been 16 notarized in California on March 9, 2010, and recorded in Nevada on the same day. LSI 17 moves to dismiss, arguing that Harlow fails to plead fraud with particularity. LSI further 18 argues that Harlow’s fraud claim fails because Harlow does not allege she justifiably relied 19 on the misrepresentation in the notice of default to her detriment. LSI contends that any 20 damages Harlow suffered as a result of the filing of the notice of default resulted from her 21 failure to make mortgage payments when due, not from inconsistencies in the notarization 22 of the notice of default. Harlow responds that she pleaded fraud with the requisite 23 particularity. However, Harlow asks the Court to grant her leave to amend if the Court does 24 not find she pleaded fraud with the requisite particularity. Harlow further argues that she is 25 not required to tender the amount owed on her mortgage before seeking to set aside a 26 statutorily defective foreclosure. 6 1 To state a claim for fraud, a plaintiff must allege (1) the defendant made a false 2 representation, (2) the defendant knew or believed the representation to be false, 3 (3) the defendant intended to induce plaintiff to rely on the misrepresentation, and (4) the 4 plaintiff suffered damages as a result of his or her reliance on the misrepresentation. 5 Barmettler v. Reno Air, Inc., 956 P.2d 1382, 1386 (Nev. 1998). Under Rule 9(b), “a party 6 must state with particularity the circumstances constituting fraud.” Pleading fraud with 7 particularity requires allegations regarding the “time, place, and specific content of the false 8 representations as well as the identities of the parties to the misrepresentations.” Swartz v. 9 KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (quotation omitted). Further, “the plaintiff 10 must set forth what is false or misleading about a statement, and why it is false.” Ebeid ex 11 rel. U.S. v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) (quotation omitted). 12 Harlow has not sufficiently alleged the requisite elements of fraud. Although 13 Harlow alleges specific facts regarding the circumstances of the notarization and recording 14 of the notice of default, she does not allege she relied on this misrepresentation to her 15 detriment or otherwise explain how LSI intended to induce her to act or refrain from acting 16 based on this misrepresentation. Given that the Court already has afforded Harlow an 17 opportunity to amend and that the allegations in count three of Harlow’s Second Amended 18 Complaint largely reiterate the allegations in counts one and two of her Amended 19 Complaint, the Court will deny Harlow’s request for an additional opportunity to amend 20 this claim. The Court therefore dismisses Harlow’s notary fraud claim with prejudice. 21 22 3. Deceptive Trade Practices Harlow alleges LSI’s misrepresentations regarding the notarization of the notice 23 of default constituted a deceptive trade practice under Nevada Revised Statutes 24 § 598.0915(15). LSI moves to dismiss, arguing Harlow’s claim for violation of 25 § 598.0915(15) fails as a matter of law because LSI was not a party to a transaction with 26 Harlow. Harlow does not respond to LSI’s argument regarding § 598.0915(15). 7 1 Harlow’s failure to respond to LSI’s argument regarding § 598.0915(15) 2 constitutes a consent to the granting of LSI’s motion with respect to this claim. LR 7-2(d). 3 Moreover, § 598.0915(15) is inapposite in this case. Section 598.0915 defines various 4 activities involving the sale or lease of goods or services that constitute deceptive trade 5 practices. Nev. Rev. Stat. §§ 598.0915(1)-(16). Subsection 598.0915(15) is a catch-all 6 provision stating it is a deceptive trade practice to “[k]nowingly make[ ] any other false 7 representation in a transaction.” Although § 598.0915(15) is not specifically limited to 8 transactions involving the sale or lease of goods or services, the plain language and overall 9 organization of § 598.0915 indicate that subsection fifteen, like the rest of the transactions 10 enumerated in the statute, applies to transactions involving the sale or lease of goods or 11 services. Rodriguez v. Bank of Am. Corp., 2:11-cv-01877-ECR-CWH, 2012 WL 3277108, 12 at *2 (D. Nev. Aug. 8, 2012); Baudoin v. Lender Processing Servs., No. 2:12-cv-114-JCM- 13 CWH, 2012 WL 2367820, at *3 (D. Nev. June 21, 2012). 14 Harlow does not allege that LSI’s misrepresentation regarding the notarization 15 and recording of the notice of default or the non-judicial foreclosure at issue in this case 16 were transactions involving the sale or lease of goods or services. Further, she does not cite 17 any authority stating that § 598.0915(15) applies to real estate or foreclosure transactions. 18 The Court therefore dismisses Harlow’s deceptive trade practices claim with prejudice. 19 B. Slander of Title (Count Five) 20 In count five, Harlow alleges the Defendants slandered the title to her property by 21 recording false and defective documents, resulting in an invalid foreclosure sale. LSI 22 moves to dismiss, arguing the notice of default and the notice of trustee’s sale did not 23 constitute false communications because Harlow does not allege she was not in default on 24 her mortgage. Further, LSI argues it was not false that Harlow’s property was to be sold at 25 a trustee’s sale. LSI also contends that Harlow did not allege facts indicating LSI acted 26 with malice in recording the documents. Harlow responds that the notice of default is a 8 1 false document because it contains a fraudulent notary acknowledgment. Harlow does not 2 respond to LSI’s arguments regarding the statements contained in the notice of trustee’s 3 sale or malice and thereby concedes these issues pursuant to Local Rule 7-2(d). 4 To state a claim for slander of title, a plaintiff must allege (1) false and malicious 5 communications; (2) disparaging to one’s title in land; (3) that cause special damages. 6 Higgins v. Higgins, 744 P.2d 530, 531 (Nev. 1987). The communication element requires 7 that “the words spoken [are] false.” Rowland v. Lepire, 662 P.2d 1332, 1335 (Nev. 1983). 8 An allegation that a notice of default is statutorily defective is insufficient to state a claim 9 for slander of title when “the claims of default are not alleged to be false.” Vega v. CTX 10 11 Mortg. Co., 761 F. Supp. 2d 1095, 1100 (D. Nev. 2011). Here, Harlow argues in her Opposition that the notice of default is a false 12 communication because Keli Tune, LSI’s employee who signed the notice of default, did 13 not personally appear in front of the notary. Even assuming the notice of default is 14 statutorily defective due to the notary issue, Harlow does not allege the claims of default 15 contained in the notice of default are false. Specifically, Harlow does not allege that she did 16 not “fail[] to pay payments which became due” as stated in the notice of default. The Court 17 therefore dismisses Harlow’s slander of title claim with prejudice. 18 III. CONCLUSION 19 20 IT IS THEREFORE ORDERED that Defendant LSI Title Agency, Inc.’s Motion to Dismiss (Doc. #57) is hereby GRANTED. 21 22 23 24 DATED: November 6, 2012 _______________________________ PHILIP M. PRO United States District Judge 25 26 9
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