Torrealba v. Kesmetis

• Decision Date: 06 March 2008
• Docket Number: No. 47738.,47738.
• Citation: 178 P.3d 716
• Parties: Leonard TORREALBA, an Individual; and Shelly Torrealba, an Individual, Appellants, v. Laurie KESMETIS, an Individual; Emily Herrera, an Individual; John Keilly, an Individual; and J.M.K. Investments, Ltd., Respondents.
• Court: Nevada Supreme Court

178 P.3d 716

Leonard TORREALBA, an Individual; and Shelly Torrealba, an Individual, Appellants, v. Laurie KESMETIS, an Individual; Emily Herrera, an Individual; John Keilly, an Individual; and J.M.K. Investments, Ltd., Respondents.

No. 47738.

Supreme Court of Nevada.

March 6, 2008.

Law Office of Charles J. Lybarger and Charles J. Lybarger, Las Vegas, for Appellants.

Larry C. Johns, Las Vegas; John H. Pilkington, Las Vegas, for Respondents.

BEFORE HARDESTY, PARRAGUIRRE and DOUGLAS, JJ.

OPINION

By the Court, HARDESTY, J.:

This appeal concerns claims of negligence per se and fraud based on alleged misconduct by notaries public. Appellants Leonard and Shelly Torrealba filed a complaint for damages against two notaries public, respondents Laurie Kesmetis and Emily Herrera, and the notaries' employer, respondent J.M.K. Investments, Ltd., claiming that the notaries were negligent as a matter of law under regulatory statutes governing notaries public and that they fraudulently notarized the Torrealbas' signatures on certain loan documents. The district court dismissed both the negligence per se claim and the fraud claim as time-barred. Today, we consider, first, the statute of limitations applicable to claims brought under NRS 240.150, which establishes civil liability and penalties for notary misconduct or neglect. Second, we consider whether instruments recorded but improperly acknowledged provide constructive notice under NRS 111.320 to start the running of the limitations period.

We conclude that claims brought under NRS 240.150(1) and NRS 240.150(2) are claims upon a liability created by statute, other than a penalty or forfeiture, and are subject to a three-year statute of limitations under NRS 11.190(3)(a). Because the Torrealbas' negligence per se claim is based upon NRS 240.150(1)-(2), we reverse the district court's order dismissing that claim as time-barred and remand for further proceedings.

Actions for fraud are subject to a three-year statute of limitations under NRS 11.190(3)(d), which commences when the aggrieved party discovers the facts constituting the fraud. Respondents maintain that the Torrealbas had constructive notice of the recorded but improperly acknowledged loan documents at least three years before they commenced their action, resulting in the fraud claim being time-barred. In resolving this issue, we adopt the test articulated by the Supreme Court of Appeals of West Virginia in In re Williams¹ for determining whether a recorded but improperly notarized instrument can impart constructive notice. Under the Williams test, an improperly notarized instrument is void, and thus does not provide constructive notice for statute of limitations purposes, if either the notary or any party to the instrument benefited from the improper notarization or any harm flowed from the transaction. In light of our holding, we reverse the district court's order dismissing the Torrealbas' fraud claim and remand for further proceedings under the Williams test.

FACTS

Beginning in 1997, the Torrealbas invested with respondent J.M.K. Investments, Ltd., with the understanding that J.M.K. would make real estate loans on behalf of the Torrealbas, and name the Torrealbas as lenders. In April 2000, J.M.K. informed the Torrealbas that borrowers on three loans—the Taylor Ranch loan, the Saxton loan, and the Diamond Key Homes loan—were going to default. On January 7, 2003, the Torrealbas learned that three declarations of agency and limited powers of attorney had been notarized and recorded for those loans. The powers of attorney authorized J.M.K. to sign for the Torrealbas when reconveying the deeds of trust to the borrowers.

The Torrealbas did not sign the powers of attorney for the Taylor Ranch and Saxton loans, nor did they appear in front of notaries to acknowledge their signatures. Laurie Kesmetis and Emily Herrera, notaries hired by J.M.K., notarized the Torrealbas' signatures on these powers of attorney, and the instruments were recorded in Clark County on February 20, 1998, and May 27, 1999, respectively. With regard to the Diamond Key Homes loan, Leonard Torrealba admitted to signing a document on his and his wife Shelly Torrealba's behalf, but he asserted that he did not know that the document was a power of attorney and that he did not sign the document in front of a notary. According to the parties, that power of attorney was recorded in Maricopa County, Arizona, on July 20, 2000, but it is unclear who notarized it.

In late January 2003, the Torrealbas filed complaints with the Notary Division of Nevada's Secretary of State, alleging that Kesmetis and Herrera had improperly notarized their signatures on powers of attorney because they never actually appeared before either Kesmetis or Herrera. The Notary Division's hearing officer determined that Kesmetis had violated Nevada law by notarizing the Torrealbas' signatures without requiring them to appear before her, therefore improperly acknowledging their signatures, as well as by failing to maintain a notary journal. The Division fined Kesmetis. Herrera agreed to pay a fine rather than challenge the complaint.

On January 6, 2006, the Torrealbas filed a complaint in the district court against Kesmetis, Herrera, J.M.K., and respondent John Keilly, the president of J.M.K. (collectively, respondents). The Torrealbas alleged two causes of action: negligence per se for violations of NRS 240.075, NRS 240.120, and NRS 240.150; and fraud. The Torrealbas allege that they were injured when J.M.K. improperly reconveyed deeds of trust in which the Torrealbas had an interest. Respondents filed a motion to dismiss, arguing that the statute of limitations barred the Torrealbas' claim for negligence per se. Treating the motion to dismiss as a summary judgment motion, the district court found that the Torrealbas had constructive notice of the Taylor Ranch power of attorney, the Saxton power of attorney, and the Diamond Key Homes power of attorney on the dates when the powers of attorney were recorded. The district court also found that the Torrealbas had actual notice of the Diamond Key Homes power of attorney since Leonard had signed that document. Finally, the district court determined that since the Torrealbas brought both of their claims under NRS Chapter 240 and, because the Torrealbas had constructive notice of the three powers of attorney as of the date of their recordation, the claims were time-barred under NRS 11.190(4)(b)'s two-year statute of limitations for actions grounded on a penalty statute. Accordingly, the district court granted the motion and entered summary judgment in favor of respondents. The district court subsequently denied the Torrealbas' motion for reconsideration. The Torrealbas now appeal.

DISCUSSION

This court reviews a district court's order granting summary judgment de novo, "to determine whether the evidence properly before the district court `demonstrate[s] that no genuine issue as to any material fact [remains] and that the moving party is entitled to a judgment as a matter of law.'"<sup>2</sup> While we construe the facts in the light most favorable to the nonmoving party, we also place the burden on the nonmoving party to "set forth facts demonstrating the existence of a genuine issue in order to withstand a disfavorable summary judgment."<sup>3</sup> Where the nonmoving party would bear the burden of persuasion at trial, "the party moving for summary judgment may satisfy the burden of production by either (1) submitting evidence that negates an essential element of the nonmoving party's claim, or (2) `pointing out . . . that there is an absence of evidence to support the nonmoving party's case.'"⁴ To successfully defend against a summary judgment motion, "the nonmoving party must transcend the pleadings and, by affidavit or other admissible evidence, introduce specific facts that show a genuine issue of material fact."⁵

The Torrealbas' negligence per se claim

The Torrealbas contend that their negligence per se claim should not be considered "[a]n action upon a statute for a penalty" and therefore should not be subject to NRS 11.190(4)(b)'s two-year statute of limitations. According to the Torrealbas, their action does not involve a statutory penalty because it was brought under NRS 240.150(1) and NRS 240.150(2), neither of which refers to penalties. Instead, they argue that because NRS 240.150 subsections (1) and (2) create civil liabilities for notary public misconduct or neglect, NRS 11.190(3)(a)'s three-year statute of limitations applicable to "actions upon a liability created by statute" governs their action. We agree.

Statutory interpretation is a question of law that this court reviews de novo.⁶ We interpret statutes in accordance with their plain meaning and generally do not look beyond the plain language of the statute absent ambiguity.⁷ Furthermore, "it is the duty of this court, when possible, to interpret provisions within a common statutory scheme `harmoniously with one another in accordance with the general purpose of those statutes' and to avoid unreasonable or absurd results, thereby giving effect to the Legislature's intent."⁸

In determining the statute of limitations applicable to the Torrealbas' claims, we must characterize the actions authorized under each subsection of the statute. NRS 240.150(1) permits an aggrieved party to bring a claim against a notary on the notary's official bond based on misconduct or neglect, while NRS 240.150(2) permits an aggrieved party to bring a claim against the notary's employer for the notary's misconduct, provided the notary was acting within the scope of his employment and the employer consented to the misconduct.⁹ NRS 240.150 subsections (3) and (4) authorize the Secretary of State to discipline a notary public for willful violations of the regulatory scheme by way of fines or revocation or suspension of the notary's appointment. Subsections (1) and (2) of NRS 240.150 thus authorize...