Chapman v. Deutsche Bank Nat'l Trust Co.

• Decision Date: 30 May 2013
• Docket Number: No. 58664.,58664.
• Citation: 302 P.3d 1103,129 Nev. Adv. Op. 34
• Parties: George P. CHAPMAN, Jr.; and Brenda J. Gully Chapman, Appellants, v. DEUTSCHE BANK NATIONAL TRUST COMPANY, As Trustee, A German National Corporation; National Default Servicing Corporation, An Arizona Corporation; and Homeq Servicing Corporation, A California Corporation, Respondents.
• Court: Nevada Supreme Court

302 P.3d 1103

129 Nev. Adv. Op. 34

George P. CHAPMAN, Jr.; and Brenda J. Gully Chapman, Appellants,

v.DEUTSCHE BANK NATIONAL TRUST COMPANY, As Trustee, A German National Corporation; National Default Servicing Corporation, An Arizona Corporation; and Homeq Servicing Corporation, A California Corporation, Respondents.

No. 58664.

Supreme Court of Nevada.

May 30, 2013.

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

Houser & Allison, APC, and Jeffrey S. Allison, Irvine, CA, for Respondents.

Before the Court En Banc.

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 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.

II.

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, 126 S.Ct. 1735, 164 L.Ed.2d 480 (2006). If Deutsche Bank's unlawful detainer action and the Chapman's quiet title action are “strictly in personam,” no prior-exclusive-jurisdiction problem arises because “both a state court and a federal court having concurrent [in personam] jurisdiction may proceed with the litigation.” Penn Gen. Cas. Co. v. Pennsylvania ex rel. Schnader, 294 U.S. 189, 195, 55 S.Ct. 386, 79 L.Ed. 850 (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. Cas. Co., 294 U.S. at 195, 55 S.Ct. 386.

The character of the parties' competing quiet title and unlawful detainer actions thus is determinative of the Chapmans' 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, 909 F.Supp.2d 490, 494, 500–501, 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 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).

III.

“[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, 24 L.Ed. 565 (1877), overturned in part on other grounds by Shaffer v. Heitner, 433 U.S. 186, 205–06, 97 S.Ct. 2569, 53 L.Ed.2d 683 (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, 97 S.Ct. 2569;see also State v. Cent. Pac. R.R. Co., 10 Nev. 47, 80 (1875) (explaining that actions in personam 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 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, seeRestatement (Second) of Judgments § 6 cmt. a (1982), its essential purpose is to establish superiority of title in property. Arndt v. Griggs, 134 U.S. 316, 321, 10 S.Ct. 557, 33 L.Ed. 918 (1890). This is quintessentially a manifestation of an in rem or quasi in rem proceeding. See Seitz, 909 F.Supp.2d at 503–504, 2012 WL 5523078, at *11 (holding that a suit to quiet title is either in rem or quasi in rem...