6344 Legend Falls Trust v. National Default Servicing Corporation

• Court: Court of Appeals for the Ninth Circuit
• Decided: July 14, 2025
• Docket: 24-2456
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 14 2025 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

6344 LEGEND FALLS TRUST, No. 24-2456 D.C. No. Plaintiff - Appellant, 2:22-cv-01023-GMN-NJK v. MEMORANDUM* NATIONAL DEFAULT SERVICING CORPORATION; SPECIALIZED LOAN SERVICING, LLC; NEVADA LEGAL NEWS, LLC,

Defendants - Appellees.

Appeal from the United States District Court for the District of Nevada Gloria M. Navarro, District Judge, Presiding

Submitted July 10, 2025** San Francisco, California

Before: H.A. THOMAS and DE ALBA, Circuit Judges, and RAKOFF, District Judge.***

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). *** The Honorable Jed S. Rakoff, United States District Judge for the Southern District of New York, sitting by designation. Plaintiff 6344 Legend Falls Trust (Legend) appeals the dismissal of its claim

under Nevada Revised Statutes section (NRS) 106.240. We have jurisdiction

under 28 U.S.C. § 1291. We review de novo. Election Integrity Project Cal., Inc.

v. Weber, 113 F.4th 1072, 1081 (9th Cir. 2024). We affirm.

Legend is the owner of real property subject to a deed of trust. The deed of

trust affords the lender the right to accelerate the underlying loan if the borrower

defaults, and after acceleration occurs it affords the borrower the right to reinstate

the terms of the loan by paying past-due sums and costs associated with the

default. Legend argues that the lender accelerated the loan sometime between

February 1, 2010, and October 22, 2021; that acceleration rendered the loan

“wholly due” for purposes of NRS 106.240; that the lender failed to enforce the

lien in the ensuing 10 years; and hence that the deed of trust has been extinguished

under NRS 106.240.

We disagree. We assume without deciding that acceleration of a loan could,

in some circumstances, cause the loan to become “wholly due” for purposes of

NRS 106.240. We nevertheless hold that Legend’s claim fails for two independent

reasons.

First, under section 19 of the deed of trust, the borrower has a right of

reinstatement following acceleration of the loan. To avoid foreclosure and

reinstate the original terms of the loan, the borrower need only pay the past-due

2 24-2456 amounts and the lender’s costs. The borrower need not pay the full amount of the

loan. Thus, acceleration does not render the loan “wholly due” for purposes of

NRS 106.240. See LV Debt Collect, LLC v. Bank of N.Y. Mellon, 534 P.3d 693,

697–98 (Nev. 2023) (holding that the loan did not become wholly due where the

lender recorded a notice of default declaring all sums immediately due and payable

because the borrower had 35 days under state law to cure the default and reinstate

the original terms of the loan); W. Coast Servicing, Inc. v. Kassler, No. 84122,

2023 WL 4057073, at *2 (Nev. June 16, 2023) (unpublished disposition) (“[I]f a

homeowner does not need to pay the entire loan balance to avoid the institution of

foreclosure proceedings, the loan is not ‘wholly due’ for purposes of NRS

106.240.”); Restatement (Third) of Prop.: Mortgages § 8.1(d) (Am. L. Inst. 1997)

(“A mortgagor may defeat acceleration and reinstate the mortgage obligation by

paying or tendering to the mortgagee the amount due and owing at the time of

tender in the absence of acceleration and by performing any other duty in default

the mortgagor is obligated to perform in the absence of acceleration if . . . such an

action is authorized by . . . the terms of the mortgage documents . . . .”).1

Legend argues that reinstatement is irrelevant here because “the borrower

never exercised its right to reinstate after acceleration.” But it is the right to

reinstatement, not the exercise of that right, that prevents the full amount of the

1 We cite Kassler for its persuasive value. See Nev. R. App. P. 36(c)(3).

3 24-2456 loan from becoming due. It is only after the right of reinstatement terminates—

typically five days prior to the foreclosure sale—that the full amount of the loan

becomes due. Legend’s argument is therefore without merit.

Second, Legend’s NRS 106.240 claim fails for the additional reason that the

lender rescinded acceleration of the loan in 2011 and 2018. Under Nevada law,

rescission cancels acceleration and resets NRS 106.240’s 10-year clock. SFR Invs.

Pool 1, LLC v. U.S. Bank N.A., 507 P.3d 194, 196 (Nev. 2022).

We reject Legend’s argument that these notices of rescission rescinded only

the notice of default and not the acceleration of the loan. According to Legend, the

lender accelerated the loan through actions other than the recording of the notice of

default. Thus, in Legend’s view, the rescissions of the notices of default had no

effect on the acceleration of the loan. But the 2011 notice of rescission not only

rescinded the notice of default but also “reinstated” “all obligations secured” by the

deed of trust. The 2018 notice of rescission not only rescinded the notice of

default but also revoked “any prior or concurrent acceleration of the Note or Deed

of Trust whether stated . . . in correspondence or otherwise.” Thus, even assuming

acceleration of the loan triggered NRS 106.240, these rescissions revoked the

acceleration and reset the clock before 10 years elapsed.

4 24-2456 Because we affirm the district court on these grounds, we need not reach the

defendants’ alternative arguments. The judgment of the district court is

AFFIRMED.2

2 The motion by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation for leave to join the amicus brief filed by the Federal Housing Finance Agency, Dkt. 26, is GRANTED.

5 24-2456