Chapman v. Deutsche Bank National Trust Co.

129 Nev., Advance Opinion 341

IN THE SUPREME COURT OF THE STATE OF NEVADA

GEORGE P. CHAPMAN, JR.; AND No. 58664

BRENDA J. GULLY CHAPMAN,

Appellants,

vs.

DEUTSCHE BANK NATIONAL TRUST

COMPANY, AS TRUSTEE, A GERMAN

NATIONAL CORPORATION; FILED

NATIONAL DEFAULT SERVICING

mAY 3 %1 2013

CORPORATION, AN ARIZONA

CORPORATION; AND HOMEQ

SERVICING CORPORATION, A

CALIFORNIA CORPORATION,

Respondents.

Certified questions under NRAP 5 concerning whether Nevada

law characterizes quiet title actions and unlawful detainer actions as

proceedings in personam, in rem, or quasi in rem. United States Court of

Appeals for the Ninth Circuit; Ronald M. Gould and Milan D. Smith, Jr.,

Circuit Judges, and Amy J. St. Eve, United States District Judge.

Questions answered.

Terry J. Thomas, Reno; Geoffrey L. Giles, Reno,

for Appellants.

Houser & Allison, APC, and Jeffrey S. Allison, Irvine, California,

for Respondents.

BEFORE THE COURT EN BANC.

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C

OPINION

By the Court, PICKERING, C.J.:

The United States Court of Appeals for the Ninth Circuit has

certified the following questions to this court:

1. Is a quiet title action under Nevada

Revised Statutes § 40.010, which is premised on

an allegedly invalid trustee's sale under Nevada

Revised Statutes § 107.080(5)(a), properly

characterized under Nevada law as a proceeding

in personam, in rem, or quasi in rem?

2. Is an unlawful detainer action under

Nevada Revised Statutes § 40.255(1)(c) properly

characterized under Nevada law as a proceeding

in personam, in rem, or quasi in rem?

Chapman v. Deutsche Bank Nat'l Trust Co., 651 F.3d 1039, 1048 (9th Cir.

2011).

I.

This dispute arises out of a nonjudicial foreclosure proceeding

that respondent Deutsche Bank National Trust Company initiated against

a home owned by appellants George P. Chapman, Jr., and Brenda J. Gully

Chapman. Deutsche Bank purchased the home by credit bid at the

trustee's sale. When the Chapmans did not vacate, Deutsche Bank filed

an unlawful detainer action in Reno justice court, seeking to have them

removed. The Chapmans countered by filing a complaint in Nevada

district court seeking to quiet title to the property. They alleged that

Deutsche Bank did not own the promissory note or deed of trust and had

foreclosed without proper notice under NRS 107.080, invalidating the

trustee's sale.

The Chapmans moved the justice court to transfer the

unlawful detainer proceeding to district court so it could be consolidated

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with the quiet title action. But before the justice court could decide the

Chapmans' motion, Deutsche Bank removed the quiet title action from

state to federal district court and filed a motion to dismiss the complaint

for failure to state a claim upon which relief could be granted under Fed.

R. Civ. P. 12(b)(6). A few days later, the Chapmans moved to remand the

quiet title action back to state court on the basis that the unlawful

detainer action gave the state court exclusive jurisdiction over the real

property at issue in both suits. The federal court denied the Chapmans'

motion to remand and granted Deutsche Bank's motion to dismiss.

The Chapmans appealed to the Ninth Circuit Court of

Appeals. They argued that the federal district court should not have ruled

on the motion to dismiss because the prior-exclusive-jurisdiction doctrine

required the federal court to abstain in favor of the earlier-filed unlawful

detainer action. The Ninth Circuit agreed with the Chapmans that, "if

both the Quiet Title Action and the Unlawful Detainer Action are

characterized as in rem or quasi in rem, then the prior exclusive

jurisdiction doctrine requires us to vacate the District Court's dismissal of

the Quiet Title Action." Chapman, 651 F.3d at 1048.

Existing Nevada law does not specify whether quiet title and

unlawful detainer actions are in personam, in rem, or quasi in rem, so the

Ninth Circuit certified questions concerning their proper characterization

to this court.

The prior-exclusive-jurisdiction doctrine holds that, "when one

court is exercising in rem jurisdiction over a res, a second court will not

assume in rem jurisdiction over the same res." Marshall v. Marshall, 547

U.S. 293, 311 (2006). If Deutsche Bank's unlawful detainer action and the

Chapman's quiet title action are "strictly in personam," no prior-exclusive-

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jurisdiction problem arises because "both a state court and a federal court

having concurrent [in personam] jurisdiction may proceed with the

litigation." Penn Gen. Gas. Co. v. Pennsylvania ex rel. Schnader, 294 U.S.

189, 195 (1935). Similarly, if only one of the causes of action is in rem or

quasi in rem, "both cases may proceed side by side." United States v.

$79,123.49 in U.S. Cash & Currency, 830 F.2d 94, 97 (7th Cir. 1987). "But

if the two suits are in rem or quasi in rem, requiring that the court or its

officer have possession or control of the property which is the subject of the

suit in order to proceed with the cause and to grant the relief sought, the

jurisdiction of one court must of necessity yield to that of the other." Penn

Gen. Gas. Co., 294 U.S. at 195.

The character of the parties' competing quiet title and

unlawful detainer actions thus is determinative of the Chaprnans' federal

appeal. Of note, we do not need to decide whether quiet title and unlawful

detainer actions are in personam or in rem or quasi in rem. The prior

exclusive jurisdiction doctrine applies whether the actions are in rem or

quasi in rem, just not if they are in personam. See Seitz v. Fed. Nat'l

Mortg. Ass'n, No. 3:12CV633, 2012 WL 5523078, at *2, 8 (E.D. Va. Nov.

14, 2012) (declining to determine whether quiet title actions are in rem or

quasi in rem because the distinction does not impact the prior exclusive

jurisdiction rule in a case "strikingly similar" to Chapman).

Since current Nevada law does not resolve the questions

certified to us by the Ninth Circuit, we exercise our discretion under

NRAP 5 and accept them. See Volvo Cars of N. Am. v. Ricci, 122 Nev. 746,

749-51, 137 P.3d 1161, 1163-64 (2006). We reframe the questions,

however, to ask whether the quiet title and unlawful detainer actions are

in personam, on the one hand, or quasi in rem or in rem, on the other

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hand. This obviates the need to debate the exiguous distinction between

in rem and quasi in rem jurisdiction, which was historically significant but

now is of questionable importance. Restatement (Second) of Judgments §

6 cmt. a (1982); see Terracon Consultants W., Inc. v. Mandalay Resort

Grp., 125 Nev. 66, 72, 206 P.3d 81, 85 (2009) (this court may exercise its

discretion to reframe certified questions).

"[A] proceeding in rem is one taken directly against property,

and has for its object the disposition of the property, without reference to

the title of individual claimants. . . ." Pennoyer v. Neff, 95 U.S. 714, 734

(1877), overturned in part on other grounds by Shaffer v. Heitner, 433 U.S.

186, 205-06 (1977). In other words, when an action is in rem, the resulting

judgment applies against the whole world. Restatement (Second) of

Judgments §§ 6, 30 (1982). By comparison, an in personam judgment acts

upon the persons who are parties to the suit. Shaffer, 433 U.S. at 199; see

also State v. Cent. Pac. R.R. Co., 10 Nev. 47, 80 (1875) (explaining that

actions in personarn seek personal judgments and are directed against

specific persons), overruled on other grounds by State ex rel. State Bd. of

Equalization v. Barta, 124 Nev. 612, 626, 188 P.3d 1092, 1101-02 (2008);

Restatement (Second) of Judgments § 5 (1982). Quasi in rem proceedings

are "a halfway house between in rem and in personam jurisdiction,"

because the "action is not really against the property" but rather is used

"to determine rights in certain property." 4A Charles Alan Wright &

Arthur R. Miller, Federal Practice and Procedure § 1070 (3d ed. 2002).

A.

A Nevada quiet title action is predominantly in rem or quasi

in rem. NRS 40.010 governs Nevada quiet title actions and provides: "An

action may be brought by any person against another who claims an estate

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or interest in real property, adverse to the person bringing the action, for

the purpose of determining such adverse claim." A plea to quiet title does

not require any particular elements, but "each party must plead and prove

his or her own claim to the property in question" and a "plaintiff's right to

relief therefore depends on superiority of title." Yokeno v. Mafnas, 973

F.2d 803, 808 (9th Cir. 1992); see also Hodges Transp., Inc. v. Nevada, 562

F. Supp. 521, 522 (D. Nev. 1983).

In Robinson v. Kind, this court held that a proceeding is

substantially in rem where its "direct object is to reach and dispose of the

property of the parties described in the complaint." 23 Nev. 330, 343, 47

P. 977, 978-79 (1897). After rejecting the argument that an action to quiet

title necessarily invokes in personam jurisdiction because it seeks an

equitable remedy and equity normally acts upon the person, this court

explained that these precepts do not apply when the state has provided by

statute for the adjudication of titles to real estate within its boundaries,

which it deemed to be an in rem proceeding. Id. at 340-42, 47 P. at 978.

Although we decided Robinson more than 100 years ago, its holding that

quiet title affects property and thus is in rem (or quasi in rem) remains

good law. See Cent. Pac. R.R. Co., 10 Nev. at 80 ("A judgment in rem is

founded on a proceeding not as against the person as such, but against the

thing or subject-matter itself whose state or condition is to be determined."

(internal quotations omitted)).

By their complaint, the Chapmans seek to revest title in

themselves based on Deutsche Bank's alleged violation of NRS 107.080.

Even though a judgment quieting title vests title in a particular claimant,

and to that extent affects the interests of persons, see Restatement

(Second) of Judgments § 6 cmt. a (1982), its essential purpose is to

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establish superiority of title in property. Arndt v. Griggs, 134 U.S. 316,

321 (1890). This is quintessentially a manifestation of an in rem or quasi

in rem proceeding. See Seitz, 2012 WL 5523078, at *11 (holding that a

suit to quiet title is either in rem or quasi in rem); 1st Nat'l Credit Corp. v.

Von Hake, 511 F. Supp. 634, 641-42 (D. Utah 1981) (commenting on the

semantic differences between in rem and quasi-in-rem labels and holding

that the Utah statutory action to quiet title is an action in rem, or quasi in

rem); see also 40235 Washington St. Corp. v. Lusardi, 976 F.2d 587, 589

(9th Cir. 1992) ("A quiet title action is a proceeding in rem."), Neagle v.

Brooks, 373 F.2d 40, 43 (10th Cir. 1967) (quiet title is "purely an in rem

action"); Restatement (Second) of Judgments § 30 ctht. a (1982) (actions

"to quiet or remove a cloud on title" are quasi in rem because the

judgments they produce determine interests in property); Restatement

(Second) of Conflict of Laws § 95 cmt. f (Supp. 1989) (deeming quiet title

actions quasi in rem because judgments rendered in them affect the

interests of particular persons in property).

Deutsche Bank nonetheless insists that the Chapmans' action

is in personam because it does not seek to quiet title so much as to

establish breach of contract and incorporated foreclosure statutes. As

support, Deutsche Bank points to the Chapmans' allegations of loan-

servicing irregularities and improper foreclosure notices and their prayer

for compensatory damages. We disagree. The Chapmans' claim is in rem

or quasi in rem because they seek to establish title to property. The

nature of their claim does not change because they request monetary

damages in addition to the central relief—quiet title—that they request.

Here, as in Seitz, the Chapmans' quiet title claim "is quasi in rem or in

rem, [and] it does not lose that nature simply because [they] seek[ ]

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monetary damages in addition to title to property." Seitz, 2012 WL

5523078, at *11.

B.

The primary purpose of an unlawful detainer action is to

restore the possession of property to one from whom it has been forcibly

taken or to give possession to one from whom it is unlawfully being

withheld. G. C. Wallace, Inc. v. Eighth Judicial Dist. Court, 127 Nev. ,

262 P.3d 1135, 1140 (2011); Seitz, 2012 WL 5523078, at *4 (citing

Shorter v. Shelton, 33 S.E.2d 643, 647 (Va. 1945)). Consistent with this

purpose, a person who obtains title to property at a trustee's sale may

remove holdover tenants by means of an unlawful detainer action under

NRS 40.255(1)(c).

To initiate an action under NRS 40.255, the would-be plaintiff

must serve the property's occupants with a notice to quit. If the occupants

do not vacate the property within the time set by the notice, the owner

may file a written complaint for unlawful detainer, seeking restitution of

the premises. NRS 40.300. The plaintiff must serve the complaint with

summons on the occupants, id., and provide the court with proof of service

of the notice to quit as required by NRS 40.280(3) or (4).

Thereafter, a trial may ensue if the parties' pleadings

demonstrate an issue of fact. NRS 40.310. But the proceedings are

summary and their scope limited. See G.C. Wallace, 127 Nev. at , 262

P.3d at 1140 (explaining that evidence extrinsic to the issue of immediate

possession cannot be introduced at trial). Typically, the issues are

whether the plaintiff gave the statutorily required notice, Davidsohn v.

Doyle, 108 Nev. 145, 150, 825 P.2d 1227, 1230 (1992), and who as between

the plaintiff and the defendant has a superior right to possession. NRS

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(holding that unlawful detainer does not adjudicate title or an absolute

right to possession of property because It he object of the [unlawful

detainer] statute was not to try titles, but to preserve the peace and

prevent violence"); Seitz, 2012 WL 5523078, at *7 (unlawful detainer

action limits court to determining possession between plaintiff and

defendant). Notably, a superior right to possession does not require proof

of title, although title can be evidence of the right to possession. Yori v.

Phenix, 38 Nev. 277, 282, 149 P. 180, 180-81 (1915) NIA has universally

been held that title to property cannot be an issue in such actions. . . even

though such pleading and proof may incidentally involve the question of

title."). If after a trial, the court determines that the occupant has no legal

defense to the alleged unlawful detainer, it will issue a summary order for

restitution of the premises. NRS 40.360(1).

Although possession of property differs from ownership of

property, possession is nonetheless a type of property interest. Loretto v.

Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982) ("Property

rights in a physical thing have been described as the rights 'to possess, use

and dispose of it.' (quoting United States v. General Motors Corp., 323

U.S. 373, 378 (1945))); Seitz, 2012 WL 5523078, at *5. In his

Commentaries on the Laws of England, Blackstone instructed that "there

are four 'degrees' of title: (1) 'naked possession,' (2) 'right of possession,' (3)

'mere right of property,' and (4) 'complete title.' Seitz, 2012 WL 5523078,

at *5 (quoting 2 William Blackstone, Commentaries *195-99). Unlawful

detainer actions fall into the second "degree" of title in a property, "right of

possession," and accordingly, are actions that affect interests in a thing—

real property. As such, unlawful detainer is in rem or quasi in rem. See

G.C. Wallace, 127 Nev. at , 262 P.3d at 1140-41 (explaining in the

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analogous summary eviction setting that the key elements and defenses of

unlawful detainer center on possession and property rights, rather than

personal rights or obligations.); Seitz, 2012 WL 5523078, at *8; see also

Hepburn & Dundas' Heirs v. Dunlop & Co., 14 U.S. 179, 203 n.d (1816)

(describing ejectment as a proceeding in rem); Scherbenske v. Wachovia

Mortg., FSB, 626 F. Supp. 2d 1052, 1057 (E.D. Cal. 2009) (holding that the

unlawful detainer action plaintiff sought to enjoin was a quasi-in-rem

action).

Thus, in response to the Ninth Circuit's questions, we answer

that quiet title and unlawful detainer proceedings pertain to interests in a

thing and are, thus, "in rem" or "quasi in rem" in nature. We decline the

parties' invitation to expound on the federal prior-exclusive-jurisdiction

doctrine, as those questions were not certified to us and are best left to the

court of origin.

, C.J.

J2e,oft__\ ' J.

Gibbons Hardesty

Parraguirre

Cherry

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