Rodney Mott v. Trinity Financial Services ( 2021 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAY 28 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
RODNEY MOTT, No. 20-15744
Plaintiff-counter- D.C. No.
defendant-Appellant, 2:16-cv-01949-JCM-EJY
v.
MEMORANDUM*
PNC FINANCIAL SERVICES GROUP,
INC.; SELECT PORTFOLIO SERVICING,
INC.; RADIAN SERVICES, LLC;
SPECIAL DEFAULT SERVICES, INC.,
Defendants,
and
TRINITY FINANCIAL SERVICES LLC;
TROJAN CAPITAL INVESTMENTS,
LLC,
Defendants-counter-
claimants-Appellees.
Appeal from the United States District Court
for the District of Nevada
James C. Mahan, District Judge, Presiding
Argued and Submitted May 7, 2021
Seattle, Washington
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: BOGGS,** BERZON, and MURGUIA, Circuit Judges.
This case arises from Trinity Financial Services’ and Trojan Capital
Investments’ (collectively “Defendants”) attempt to foreclose on Rodney Mott’s
home in Las Vegas, Nevada. Mott claims that his debt on the home was forgiven
and that Defendants have no authority to foreclose. Mott sued Defendants asserting
violations of the Fair Debt Collection Practices Act (“FDCPA”), the Real Estate
Settlement Procedures Act, and Nevada state law. Defendants counterclaimed,
asserting claims for quiet title and declaratory relief. The parties cross-moved for
summary judgment, and the district court granted summary judgment to Defendants.
We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
1. Mott contends that Defendants have no authority to foreclose on his
home because his underlying debt was forgiven. Mott submits a letter from First
Franklin Loan Services, from which he obtained a $300,000 loan, which purports to
forgive Mott’s debt in its entirety.1 The district court determined that the “highly
questionable” letter was insufficient for any jury to reasonably find in his favor.
Mott argues that the district court improperly weighed this evidence, and that it
**
The Honorable Danny J. Boggs, United States Circuit Judge for the
U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
1
Mott signed a promissory note (the “Note”) secured by a second position
deed of trust on this home.
2
should have reached the jury. We disagree.
“A trial court can only consider admissible evidence in ruling on a motion for
summary judgment.” Orr v. Bank of Am., 285 F.3d 764, 773 (9th Cir. 2002); see
Fed. R. Civ. P. 56(c). To be admissible, a document must be authentic, meaning
there must be “evidence sufficient to support a finding that the item is what the
proponent claims it is.” Fed. R. Evid. 901(a). A trial court cannot consider
unauthenticated documents in a motion for summary judgment. See Orr, 285 F.3d
at 773.
Here, the purported debt-forgiveness letter was riddled with errors that called
into question its authenticity. Mott presented no supporting tax documentation or
evidence of reconveyance of the deed to the home to verify the purported debt
forgiveness. Nor did Mott identify any individuals who could authenticate the letter
or seek to introduce any other supporting evidence, such as the letter he claims to
have sent that triggered the forgiveness letter. In excluding the letter from
consideration as inadmissible, the district court did not abuse its discretion. See id.(“The district court’s exclusion of evidence in a summary judgment motion is
reviewed for an abuse of discretion.”). Because the letter was an unauthenticated
document, the district court did not err. See id.
2. Mott argues that because neither Trinity nor Trojan is licensed as a
mortgage broker or banker in Nevada, neither party could have lawfully acquired
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the Note, and neither can now lawfully foreclose on the home. Mott contends that
Defendants failed to comply with two Nevada statutes—Nev. Rev.
Stat. §§ 645B and 645E.2
First, Mott argues that Defendants are “mortgage bankers,” which are persons
or entities that directly or indirectly hold themselves out as being able to buy or sell
notes secured by liens on real property. See Nev. Rev. Stat. § 645E.100(1). Such
entities must obtain a license to do so. See id. § 645E.200; see also id. § 645E.900
(noting that entities may not “offer or provide any of the services of a mortgage
banker or otherwise to engage in, carry on or hold [themselves] out as engaging in
or carrying on the business of a mortgage banker without first obtaining a license”
unless an exemption applies). Likewise, Mott argues that Defendants were also
“mortgage brokers,” which are similarly persons or entities “who, directly or
indirectly” “[h]old[] [themselves] out as being able to buy or sell notes secured by
liens on real property[.]” Id. § 645B.0127(d). These entities must also obtain
licenses before buying or selling notes. See id. § 645B.020.
Trinity purchased Mott’s note from nonparty Stelis, LLC, in 2015. Trinity
then sold its interest in the note to Trojan, which began foreclosure efforts in 2016.
2
These statutes were effective through December 31, 2019. On January 1,
2020, Nev. Rev. Stat. § 645E, the Mortgage Banker Act, was consolidated with Nev.
Rev. Stat. § 645B, the Mortgage Broker Act. For purposes of our analysis, we look
to the previous versions of the statute as did the district court and the parties.
4
Based on these two transactions, Mott asserts that Trinity and Trojan acted as
unlicensed mortgage brokers and bankers. Contrary to Mott’s assertion, however,
he cannot challenge these underlying transactions. Under Nevada law, the
consequence of a person acting without the appropriate license is a “[contract]
voidable by the other party to the contract.” See id. §§ 645B.920, 645E.920. As the
contracts are voidable, not void, the transactions remain valid with respect to third
parties, including Mott. Mott nevertheless contends that he could bring a civil action
as a “client,” under Nev. Rev. Stat. §§ 645B.930 and 645E.930. But there is nothing
in the record indicating that Mott ever tried to do so, nor does he present any
authority in which Nevada courts have sanctioned suits under similar
circumstances.3
3. Even if Defendants had lawfully acquired the Note, Mott argues that
some of his FDCPA claims against Trojan should have survived summary judgment.
Mott alleges that Trojan violated 15 U.S.C. § 1692e(2), 1692e(5), and 1692e(10), by
misrepresenting the interest rate and the late fees in letters Trojan sent him.
Mott points to two letters, sent on February 23, 2016 and March 17, 2016, in
3
It appears that, at least with respect to Mott, Defendants acted as mortgage
servicers and were exempt from the mortgage servicer licensing requirement. See
Nev. Rev. Stat. §§ 645F.063, 645F.500. However, this does not necessarily mean
Defendants were exempt from licensing requirements as mortgage bankers or
brokers under Nev. Rev. Stat. §§ 645B and 645E. We need not reach that question,
as Mott cannot challenge the underlying transactions to the Note.
5
which Trojan specified an 8.63 percent interest rate, when, based on the Note, the
interest rate should have been 8.625 percent. We find Trojan’s minor
misrepresentations as to the interest rate immaterial. “We have consistently held
that whether conduct violates [the FDCPA] requires an objective analysis that
considers whether the least sophisticated debtor would likely be misled by a
communication.” Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1033 (9th Cir.
2010) (internal quotation marks and citation omitted). “[F]alse but non-material
representations are not likely to mislead the least sophisticated consumer and
therefore are not actionable under [section] 1692e.” Id. Importantly here, Mott does
not contend that Trojan’s letters miscalculated the total debt he owed or that he was
ever charged the microscopically higher interest rate stated in the February 23 and
March 17 letters. We find that these minor misrepresentations could not reasonably
have misled Mott. This is especially true given that Mott received two subsequent
letters, on March 24, 2016 and July 20, 2016, which reflected the correct 8.625
percent interest rate. To create liability based on such immaterial information would
undercut the purpose of the FDCPA. See Donohue, 592 F.3d at 1033–34; see also
Afewerki v. Anaya L. Grp., 868 F.3d 771, 776 (9th Cir. 2017) (“Immaterial false
representations . . . are those that are literally false, but meaningful only to the
6
hypertechnical reader.” (internal quotation marks and citation omitted)).4
4. Nor is Mott’s argument on his slander-of-title claim convincing. Mott
contends that Trojan committed slander of title by recording a Notice of Breach and
Default with the Clark County Recorder on August 19, 2016. Mott’s allegation is
premised on his argument that Trojan has no authority to enforce the Note because
it was unlicensed when it bought his Note from Trinity. Under Nevada law, “[t]he
requisites to an action for slander of title are that the words spoken be false, that they
be maliciously spoken and that the plaintiff sustain some special damage as a direct
and natural result of their having been spoken.” Rowland v. Lepire, 662 P.2d 1332,
1335 (Nev. 1983).
As discussed above, Mott’s licensing argument is unavailing. Because the
underlying transactions involving the Note are valid, and Defendants properly
acquired the Note, it cannot be that Trojan’s recording of the Notice of Breach and
Default was “false.” See id. The district court was correct that “[b]ecause of its
legitimate interest in the property, Trojan did not slander title.”
4
Mott also highlights another letter, sent on February 10, 2016, in which
Trojan represented that Mott owed $1,408.00 in late payment fees, when, according
to Mott, he should have been charged $1,396.00. We disagree that this
representation is a violation of the FDCPA. Trojan’s letter is more reasonably
interpreted as requiring Mott to pay the February 2016 late fee, the month when the
letter was sent, to reinstate his loan. As Mott acknowledges, payments are due on
the first day of each month and a late fee is applied thereafter. Thus, by February
10, 2016, Mott was required to pay $1,408.00.
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5. Finally, Mott argues that the district court erred in denying his motion
to strike the untimely disclosed Stelis agreement. A district court may exclude
evidence if a party fails to comply with Rule 26, “unless the failure was substantially
justified or is harmless.” Fed. R. Civ. P. 37(c)(1). We review the district court’s
ruling for abuse of discretion. See Magnetar Techs. Corp. v. Intamin, Ltd., 801 F.3d
1150, 1155 (9th Cir. 2015). The district court determined that the untimely
disclosure was harmless because the Stelis agreement was not determinative to the
district court’s ruling on summary judgment, Mott had access to the Stelis agreement
from another related case, and Mott conceded that the transfer of the Note to Trinity
was authorized. These were valid reasons not to exclude the agreement and we find
that the district court did not abuse its discretion in refusing to do so. Id.AFFIRMED.
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