Our Ontario foreclosure defense lawyers read a lot of appellate opinions stemming from allegedly sloppy paperwork by mortgage lenders. Missing or incorrect paperwork can lead to delays in the foreclosure, ending the foreclosure case altogether, penalties for the lender and its attorneys and other problems. But the Ninth U.S. Circuit Court of Appeals decision in Chapman v. Deutsche Bank National Trust Co. et al. may be the first case we've read in which the alleged mistakes could lead to new law. George P. Chapman Jr. and Brenda J. Gully Chapman are a married couple from Nevada who argue that Deutsche Bank and two other mortgage companies illegally foreclosed and attempted to take control of their home despite not owning the title. The defendants filed an unlawful detainer action -- to remove the Chapmans from the home -- three months before the Chapmans filed a quiet title action asking a judge to declare that they owned the home. The ensuing controversies led the Ninth Circuit to certify questions of Nevada law to that state's Supreme Court.
The disputed home was purchased by Deutsche Bank at a foreclosure auction in October 2008. Some time later, the bank filed an unlawful detainer action in Reno Justice Court. No action was taken on that claim until after the Chapmans struck back by filing their quiet title action three months later. The quiet title action was originally filed in Nevada state court, but later removed to the federal district court for Nevada. In the quiet title action, the Chapmans alleged that the defendants did not own the Chapmans' promissory note or deed of trust. They also alleged defendants violated Nevada law by failing to notify them of their default and of the trustee's sale. The Chapmans successfully moved to transfer the unlawful detainer case to the same state court where the quiet title action was pending, but this was defeated after the quiet title case was moved to federal court. They unsuccessfully moved to remand it back to state court, and the defendants moved for summary judgment for failure to state a claim. The federal court found that defendants followed Nevada law and granted the motion to dismiss. The Chapmans appealed to the Ninth Circuit.
On appeal, the Ninth focused its attention on whether the federal court had jurisdiction to decide the quiet title case while the unlawful detainer action was pending. In arguing that it did not, the Chapmans cited the prior exclusive jurisdiction doctrine, which says a second court should not assume jurisdiction over the same property and issue that a first court is already deciding. The Ninth first decided that Nevada state court started hearing the case first because the filing date for the unlawful detainer action was before the quiet title action entered either state or federal court. It then looked at whether the actions should be considered in rem, a legal action directed toward property, in personam, about people and their rights, or quasi in rem, determining parties' interests in the property. Only if both actions are in rem can the prior exclusive jurisdiction doctrine apply, the Ninth said, and this depends entirely on Nevada law. Nevada precedent (from 1897) suggests a similar dispute was in rem, but the case was not similar enough, the Ninth said. Because it believes the Nevada Supreme Court should decide the issue, it certified two questions to that court: whether quiet title and unlawful detainer cases are best viewed under Nevada Law as in rem, quasi in rem or in personam. If the high court characterizes both types of actions as in rem or quasi in rem, the Ninth declared that it would resurrect the quiet title case.
As Irvine foreclosure defense attorneys, we know the Chapmans and people in their position could be feeling a bit frustrated by this result. When your home is at stake, it's difficult to care whether your legal case is best described by one obscure Latin term or another. For this reason, we strongly recommend that borrowers with a strong case against the lender bring legal action as early as possible, particularly before the foreclosure. If the foreclosure has not yet taken place, the lender does not have legal documents showing any kind of ownership -- and it cannot file an unlawful detainer case to evict anyone. Lenders have been known to wrongfully foreclose; indeed, we know of cases involving people who owned their homes outright and still got foreclosure notices, or had the wrong owner attempt to foreclose. Much more often, they have also been known to blatantly violate state law for notification of foreclosure and proper recording of documents. Our Torrance foreclosure defense lawyers have represented people in these positions, but for the most success, we prefer to start early.
Howard Law, P.C., offers free, confidential case evaluations, so you can tell us your story and learn more about your rights with no further obligation. For a free, confidential evaluation of your case, send us a message online or call toll-free at 1-800-872-5925.