Pasillas v. Hsbc Bank U.S.

Citation127 Nev. Adv. Op. 39,255 P.3d 1281
Decision Date07 July 2011
Docket NumberNo. 56393.,56393.
PartiesEmiliano PASILLAS and Yvette Pasillas, Appellants,v.HSBC BANK USA, as Trustee for Luminent Mortgage Trust; Power Default Services, Trustee; and American Home Mortgage Servicing, Inc., Respondents.
CourtSupreme Court of Nevada

255 P.3d 1281
127 Nev.
Adv. Op. 39

Emiliano PASILLAS and Yvette Pasillas, Appellants,
v.
HSBC BANK USA, as Trustee for Luminent Mortgage Trust; Power Default Services, Trustee; and American Home Mortgage Servicing, Inc., Respondents.

No. 56393.

Supreme Court of Nevada.

July 7, 2011.


[255 P.3d 1282]

Terry J. Thomas, Reno, for Appellants.Pite Duncan, LLP, and Gregg A. Hubley, Laurel I. Handley, and Cuong M. Nguyen, Las Vegas, for Respondents.Before the Court En Banc.

OPINION
By the Court, HARDESTY, J.:

In this appeal, we consider issues arising out of Nevada's Foreclosure Mediation Program and address whether a lender commits sanctionable offenses when it does not produce documents and does not have someone present at the mediation with the authority to modify the loan, as set forth in the applicable statute, NRS 107.086, and the Foreclosure Mediation Rules (FMRs).

Because NRS 107.086 and the FMRs expressly require that certain documents be produced during foreclosure mediation and that someone with authority to modify the loan must be present or accessible during the mediation, we conclude that a party's failure to comply with these requirements is an offense subject to sanctions by the district court. In such an event, the district court shall not direct the program administrator to certify the mediation to allow the foreclosure process to proceed until the parties have fully complied with the statute and rules governing foreclosure mediation.

[255 P.3d 1283]

Here, because respondents HSBC Bank USA, Power Default Services, and American Home Mortgage Servicing, Inc. (AHMSI), did not bring the required documents to the mediation and did not have access to someone authorized to modify the loan during the mediation, we conclude that the district court erred in denying appellants Emiliano and Yvette Pasillas's petition for judicial review. Therefore, we reverse the district court's order and remand this matter to the district court so that the court may determine sanctions.

FACTS AND PROCEDURAL HISTORY

The Pasillases purchased a home in Reno in 2006 with a loan from American Brokers Conduit. The note and deed of trust were allegedly assigned to HSBC. 1 Near the end of 2009, Power Default Services became a substitute trustee, removing HSBC from that role. Allegedly, the servicer for the Pasillases' loan is AHMSI.2

When the Pasillases defaulted on their mortgage and received a notice of election to sell, they elected to mediate pursuant to the Foreclosure Mediation Program provided for in NRS 107.086. Two separate mediations occurred, one on February 18, 2010, and one on March 8, 2010,3 but neither mediation resulted in a resolution.

While a representative of AHMSI was available by phone at both mediations, it is unclear whether HSBC was present or represented by counsel. There is some disagreement between the parties regarding who the respondents' attorneys represented at the mediations and at the hearing on the petition for judicial review. In the addendum to the mediator's statement, the mediator stated that “HSBC ... was identified as Beneficiary ... and represented by Cuong Nguyen, Esq. of Pite Duncan, LLP.” In the second mediation, the mediator indicated that “HSBC ... was again identified as Beneficiary ... and represented by Heather Hudson, Esq. of Pite Duncan, LLP.” However, in responding to the Pasillases' petition for judicial review, the Pite Duncan law firm indicated that it was not counsel for HSBC. Specifically, the response opened with the following statement: “Respondents AMERICAN HOME MORTGAGE SERVICING, INC. (‘AHMSI’), erroneously named herein as HSBC BANK USA AS TRUSTEE FOR LUMINENT MORTGAGE TRUST.” Respondents also claimed that the Pasillases were “incorrect that Pite Duncan, LLP attended [the mediations] on behalf of HSBC.” At oral argument before this court, respondents' counsel stated that they represented all of the respondents named in this case at the mediations, but they did not dispute the mediator's finding that respondents needed additional authority from investors to agree to a loan modification.

After both mediations were completed, the mediator filed a statement indicating that (1) “[t]he parties participated but were unable to agree to a loan modification or make other arrangements,” (2) “[t]he beneficiary or his representative failed to participate in good faith,” and (3) “[t]he beneficiary failed to bring to the mediation each document required.” The mediator also filed an addendum to his statement, wherein he stated that two pages of the mortgage note were missing, that the assignment purportedly assigning the mortgage note and deed of trust to HSBC was incomplete, that instead of an appraisal HSBC provided a broker's price opinion,4 and that respondents stated they

[255 P.3d 1284]

would need additional investor approval before agreeing to a loan modification. The mediator concluded that he would not recommend that the administrator issue a certificate authorizing further foreclosure proceedings because HSBC “failed to participate in [the] mediation in good faith as evidenced by its failure to produce required documents and information initially, or subsequently to cure its failures.” The Pasillases subsequently filed a petition for judicial review in the district court. In the petition, the Pasillases requested sanctions in the form of a modification of their mortgage and attorney fees.

The district court conducted a short hearing, during which the only issue addressed was the parties' failure to come to an agreement. The district court did not address whether respondents failed to provide the required documents at the mediation or whether respondents lacked the requisite authority at the mediation to modify the loan. After the hearing, the district court entered an order finding that “Respondent[s] [have] met the burden to show cause why sanctions should not lie,” and directed the Foreclosure Mediation Program administrator to issue a certification authorizing the foreclosure to proceed. The Pasillases appealed.

DISCUSSION

In resolving this appeal, we must determine whether the district court abused its discretion when it refused to enter sanctions against respondents for failing to satisfy express statutory requirements and allowed respondents to continue with the foreclosure process. We begin our discussion with a brief background of the Foreclosure Mediation Program.

The Foreclosure Mediation Program

The Nevada Legislature enacted the Foreclosure Mediation Program in 2009 in response to the increasing number of foreclosures in this state. Hearing on A.B. 149 Before the Joint Comm. on Commerce and Labor, 75th Leg. (Nev., February 11, 2009) (testimony of Assemblywoman Barbara Buckley). The program requires that a trustee seeking to foreclose on an owner-occupied residence provide an election-of-mediation form along with the notice of default and election to sell. NRS 107.086(2)(a)(3). If the homeowner elects to mediate, both the homeowner and the deed of trust beneficiary must attend, must mediate in good faith, provide certain enumerated documents,5 and, if the beneficiary attends through a representative, that person must have authority to modify the loan or have “access at all times during the mediation to a person with such authority.” NRS 107.086(4), (5); FMR 5(7)(a). After the conclusion of the mediation, the mediator must file a mediator's statement with the program administrator, indicating whether all parties complied with the statute and rules governing the program. FMR 12(2). If the beneficiary does not (1) attend the mediation; (2) mediate in good faith; (3) provide the required documents; or (4) if attending through a representative, have a person present with authority to modify the loan or access to such a person, the mediator is required to “submit ... a petition and...

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111 cases
  • Moultrie v. State
    • United States
    • Nevada Court of Appeals
    • December 24, 2015
    ...discretion and, consequently, mandates the result set forth by the statute." (internal citations omitted)); Pasillas v. HSBC Bank USA, 127 Nev. 462, 467, 255 P.3d 1281, 1285 (2011) ("[T]his court has stated that ‘shall’ is mandatory unless the statute demands a different construction to car......
  • Moultrie v. State
    • United States
    • Nevada Court of Appeals
    • December 24, 2015
    ...discretion and, consequently, mandates the result set forth by the statute." (internal citations omitted)); Pasillas v. HSBC Bank USA, 127 Nev. 462, 467, 255 P.3d 1281, 1285 (2011) ("[T]his court has stated that 'shall' is mandatory unless the statute demands a different construction to car......
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    ...valid or enforceable. Defendant cites the Court to the Nevada Supreme Court's recent decisions in Pasillas v. HSBC Bank USA, --- P.3d ----, 2011 WL 2671894, 127 Nev. Adv.Op. 39 (2011) and Leyva v. National Default Servicing Corp., ---P.3d ---, 2011 WL 2670183, 127 Nev.Adv.Op. 40 (2011). Bot......
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1 books & journal articles
  • Foreclosure Diversion and Mediation in the States
    • United States
    • Georgia State University College of Law Georgia State Law Reviews No. 33-2, December 2016
    • Invalid date
    ...6 N.Y.S.3d 393, 407-08, 415, 425-26 (N.Y. Sup. Ct. 2014), vacated, 2015 WL 4919899 (N.Y. Sup. Ct. 2015).259. Pasillas v. HSBC Bank USA, 255 P.3d 1281, 1285, 1287 (Nev. 2011).260. Id. at 1286-87.261. Id. at 1284.262. Id. at 1285.263. Wells Fargo Bank v. Renslow, No. 58283, 2015 WL 3368883, a......

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