Opinion
No. 79597-COA
09-23-2020
CHRISTOPHER MARTINEZ, Appellant, v. WVMF FUNDING, LLC; STATEBRIDGE COMPANY, LLC; AND SABLES, LLC, Respondents.
ORDER OF AFFIRMANCE
Christopher Martinez appeals from a district court order denying a request for appropriate relief in a foreclosure mediation matter. Eighth Judicial District Court, Clark County; Linda Marie Bell, Chief Judge.
The original owners of the subject property defaulted on their home loan. After acquiring the property from the original owners, Martinez elected to participate in Nevada's Foreclosure Mediation Program (FMP), and respondent WVMF Funding, LLC (WVMF), the beneficiary of the first deed of trust on the property, appeared at the mediation via counsel. The parties did not come to an agreement on a loan modification, and the mediator recommended that the district court dismiss Martinez's petition for foreclosure mediation assistance and direct the issuance of a foreclosure certificate. Martinez subsequently filed what was essentially a request for appropriate relief under FMR 20(2) in the district court, arguing that WVMF had failed to establish authority to foreclose at the mediation because the documents it provided failed to properly establish the chain of title with respect to the deed of trust.
Although Martinez also named respondents Statebridge Company, LLC, and Sables, LLC—which appear to be the servicer of the underlying loan and the trustee under the deed of trust, respectively—in his petition for foreclosure mediation assistance, it is not clear from the record whether those entities appeared at the mediation or in the proceedings before the district court below. Regardless, only the beneficiary of the first deed of trust is required to participate in FMP proceedings, see NRS 107.086(5) (2017); FMR 12(1)(a), and WVMF accomplished that here.
Specifically, Martinez challenged the legitimacy of the assignment of the first deed of trust and the underlying promissory note from Mortgage Electronic Registration Systems, Inc. (MERS)—the original beneficiary of the deed of trust—to one of WVMF's predecessors, contending primarily that the original lender had previously assigned the note to a different entity under the Uniform Electronic Transactions Act and that MERS therefore lacked authority to assign it. Martinez also argued that the individual who signed the assignment on behalf of MERS was not actually an employee of that entity, but was instead an employee of the assignee and a known "robo-signer." On those grounds, Martinez requested that the district court sanction WVMF by declining to direct the issuance of a foreclosure certificate, by awarding Martinez monetary damages, and by cancelling the supposedly invalid assignment and all of the subsequently recorded documents pertaining to the deed of trust. The district court denied Martinez's request in a written order, reasoning that Martinez's arguments exceeded the scope of the district court's review in an FMP matter and that such challenges must be brought in a separate civil action. This appeal followed.
In an FMP matter, we give deference to the district court's factual determinations, but we review legal issues de novo. Pascua v. Bayview Loan Servicing, LLC, 135 Nev. 29, 31, 434 P.3d 287, 289 (2019).
On appeal, Martinez repeats his arguments from below and contends that the district court erred in concluding that his challenges to WVMF's authority and the chain of title exceed the scope of the instant FMP proceedings. In support, he cites Wood v. Germann, in which our supreme court disagreed with the "suggest[ion] that the FMP judicial review process should be limited to determining whether the required documents have been produced and that a homeowner's concerns regarding the veracity of those documents are beyond the FMP's limited scope." 130 Nev. 553, 555 n.3, 331 P.3d 859, 860 n.3 (2014). The court reasoned that "the purpose of the FMP's document-production requirements is to ensure that the party seeking to [foreclose] is actually authorized to do so" and that "[i]t is not difficult to envision how this purpose might be defeated if a homeowner were prohibited from challenging the veracity of a lender's documents." Id. The court went on to identify a scenario "where the assignor did not possess the rights it was purporting to assign" as an example of a defect that would render an assignment void and subject to challenge by a homeowner in an FMP matter. Id. at 556 n.4, 331 P.3d at 861 n.4.
Martinez's challenge to the MERS assignment is precisely the sort of challenge the supreme court recognized in Wood as being appropriately raised in the context of FMP proceedings. See id. Accordingly, the district court erred when it concluded otherwise and declined to reach the merits of Martinez's request for appropriate relief. Nevertheless, because we conclude that Martinez is precluded from raising this challenge in the instant matter under the doctrine of claim preclusion, we affirm. See Weddell v. Sharp, 131 Nev. 233, 240-41, 350 P.3d 80, 85 (2015) (setting forth the elements of claim preclusion).
Although the Foreclosure Mediation Rules and the governing statute—NRS 107.086—have been amended multiple times since the supreme court issued its opinion in Wood, the amendments do not affect our analysis here.
Although the district court did not reach the issue in light of its disposition, WVMF argued below that Martinez was precluded from raising his challenges in the instant proceedings under the doctrines of claim and issue preclusion. Specifically, WVMF pointed to a federal lawsuit that Martinez had previously filed against WVMF's predecessors, in which Martinez challenged the predecessors' authority to foreclose on the subject property. In that lawsuit, Martinez primarily argued that the original lender's assignment of the underlying loan to a securitization trust failed to comply with the terms of the relevant Pooling and Servicing Agreement (PSA), rendering that assignment and any subsequent assignment of the loan or deed of trust void. Martinez also alleged that MERS lacked authority to assign the loan on behalf of the original lender's successor.
The federal district court rejected Martinez's arguments and dismissed his claims for failure to state a claim under FRCP 12(b)(6), and the United States Court of Appeals for the Ninth Circuit Court summarily affirmed that decision in a memorandum disposition. See Martinez v. USAA Fed. Sav. Bank, 683 F. App'x 584, 585-86 (9th Cir. 2017). In the disposition, the Ninth Circuit cited Edelstein v. Bank of New York Mellon, 128 Nev. 505, 516-21, 286 P.3d 249, 257-60 (2012), in support of the proposition that MERS had authority to assign the loan on behalf of the original lender's successor. Martinez, 683 F. App'x at 585. On the basis of the federal courts' disposition of that action, WVMF argued before the district court below that Martinez's challenges had already been litigated and that he was therefore precluded from asserting them in the context of his request for appropriate relief under FMR 20(2) under the doctrines of claim and issue preclusion. Because we conclude that Martinez is indeed precluded from raising his challenges under the doctrine of claim preclusion, we address only that issue.
The purpose of claim preclusion is "to obtain finality by preventing a party from filing another suit that is based on the same set of facts that were present in the initial suit." Weddell, 131 Nev. at 240, 350 P.3d at 85 (internal quotation marks omitted). Generally, claim preclusion bars a subsequent suit where (1) the final judgment in the first suit is valid, (2) the second suit is based on the same claims or any part of them that were or could have been brought in the first suit, and (3) the parties or their privies in the second suit are the same as they were in the first suit. Id. at 241, 350 P.3d at 85. Moreover, although this standard formulation of the doctrine presupposes the existence of two separate lawsuits—and the FMP proceedings at issue in this appeal do not constitute a civil lawsuit in the traditional sense—the same basic principles apply. Cf. Tom v. Innovative Home Sys., LLC, 132 Nev. 161, 169, 368 P.3d 1219, 1224-25 (Ct. App. 2016) (recognizing that claim and issue preclusion apply even when one of the proceedings in question was not a traditional lawsuit, but was instead a dispute before an administrative agency, so long as the agency acted in a judicial capacity and resolved disputed issues of fact that the parties had the opportunity to litigate).
Here, all three prongs of claim preclusion are satisfied. Martinez's federal suit ended in a valid final judgment of dismissal. See Weddell, 131 Nev. at 241, 350 P.3d at 85; see also FRCP 41(b) (providing that "any dismissal not under this rule"—including a dismissal under FRCP 12(b)(6)—"operates as an adjudication on the merits"); Stewart v. U.S. Bancorp, 297 F.3d 953, 955-56 (9th Cir. 2002) (citing FRCP 41(b) and concluding that a dismissal under FRCP 12(b)(6) constitutes a final judgment for purposes of claim preclusion). Moreover, Martinez's current challenges were either explicitly raised in the federal lawsuit or could have been raised at that time, as they all pertain to assignments and events that predated the lawsuit. See Weddell, 131 Nev. at 241, 350 P.3d at 85. Finally, as the most recent assignee in a chain of assignments of the deed of trust and the underlying note, WVMF is in privity with the predecessor entities Martinez sued in the federal action. See id.; see also Mendenhall v. Tassinari, 133 Nev. 614, 618, 403 P.3d 364, 369 (2017) (discussing the concept of privity and recognizing that successors are generally privies of their predecessors in interest). Consequently, Martinez is precluded from raising his challenges to WVMF's authority to foreclose in the instant proceedings, and we therefore
ORDER the judgment of the district court AFFIRMED.
/s/_________, C.J.
Gibbons
/s/_________, J.
Tao
/s/_________, J.
Bulla cc: Hon. Linda Marie Bell, Chief Judge
Christopher Martinez
ZBS Law, LLP
Eighth District Court Clerk