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Nevada Supreme Court Resurrects Unlawful Detainer and Quiet Title Lawsuits - Chapman v. Deutsche Bank

June 18, 2013

Vincent Howard and our San Bernardino County foreclosure defense attorneys were interested to see a ruling from the Nevada Supreme Court on some of the issues that arise during and after a foreclosure. In Chapman v. Deutsche Bank, the Ninth U.S. Circuit Court of Appeals asked the Nevada Supreme Court to decide whether an action by George and Brenda Chapman to quiet title to their foreclosed home, and an unlawful detainer action by Deutsche Bank, were proceedings in rem, which means they had to do with property rather than personal liabilities, or quasi in rem, meaning they are based on the property rights of a person over whom the court doesn't have jurisdiction. The Nevada Supreme Court ultimately agreed that both cases are in rem or quasi in rem, meaning the quiet title action should not have been dismissed.

Deutsche Bank foreclosed on the Chapmans' Reno-area home and purchased it from itself at auction. When the Chapmans didn't vacate the home, Deutsche Bank filed an unlawful detainer case in state court to evict them. They responded by filing a quiet title action, arguing that the trustee's sale was invalid because Deutsche Bank did not own the note or deed of trust for the house and had not provided proper notice. They moved to consolidate the actions, but Deutsche Bank moved the quiet title case to federal court and then moved to dismiss. The district court denied remand and granted the motion to dismiss. The Chapmans then appealed to the Ninth Circuit, saying the district court should not have dismissed because the prior exclusive jurisdiction doctrine should have required the federal court to abstain in favor of the earlier action. The Ninth Circuit agreed that this is true, but only if the cases were in rem or quasi in rem, and asked the Nevada Supreme Court for a ruling.

The Nevada Supreme Court noted that if both of the actions relate to personal jurisdiction, there is no prior exclusive jurisdiction problem. But two courts may not exercise jurisdiction over the same property at the same time, the court said, because an in rem judgment applies "against the whole world." The court noted that for its purposes, it's irrelevant whether the actions are in rem or quasi in rem, as long as they're not in personam. It then found that quiet title actions are in rem or quasi in rem, because their purpose is to determine who has the better claim to the property. Similarly, the high court found that unlawful detainer is in rem or quasi in rem because it resolves a dispute over possession, which is a kind of property interest. It left the parties' arguments on the prior exclusive jurisdiction doctrine to the Ninth Circuit.

Vincent Howard and our Newport Beach foreclosure defense lawyers are pleased to see that this couple will get another chance to make their case. The Nevada court's ruling does not resolve the underlying dispute over whether the foreclosure was valid, and indeed, that's an argument that requires strong facts to back it up. But the decision will permit the Chapmans to at least air the arguments they have in state court, which may be better equipped for the job given the local nature of real estate disputes. Vincent Howard and our Long Beach foreclosure defense attorneys prefer that homeowners with credible allegations of lender misconduct--and from what we know about the housing bubble, many such allegations are credible--get their days in court.

If you're fighting a foreclosure you believe you were railroaded into, Howard Law, P.C., may be able to help. To tell us your story and learn more about your rights, call us today at 1-800-872-5925 or send us a message online.

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