HSBC Bank USA, N.A. v. Fntic

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 9, 2021
• Docket: 20-15387
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS DEC 9 2021 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

HSBC BANK USA, N.A., as Trustee for the No. 20-15387 Registered Holders of Nomura Home Equity Loan, Inc., Asset-Backed Certificates, Series D.C. No. 2006- HE2, 3:19-cv-00265-MMD-WGC

Plaintiff-Appellant, MEMORANDUM* v.

FIDELITY NATIONAL TITLE INSURANCE COMPANY; LAWYERS TITLE INSURANCE CORPORATION,

Defendants-Appellees.

Appeal from the United States District Court for the District of Nevada Miranda M. Du, Chief District Judge, Presiding

Argued and Submitted October 20, 2021 San Francisco, California

Before: WALLACE and GOULD, Circuit Judges, and VITALIANO,** District Judge.

This appeal arises from an insurance dispute between a land title insurer and

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Eric N. Vitaliano, United States District Judge for the Eastern District of New York, sitting by designation. its insured client. A Nevada homeowners association (“HOA”) foreclosed on a

property in which Appellant HSBC had previously secured a Deed of Trust. After

the foreclosure, Appellant filed a claim with their title insurance provider, Fidelity

National Title Insurance Company (“FNTIC”), requesting indemnity and

protection under the terms of the insurance policy. FNTIC denied Appellant’s

insurance claim and Appellant filed the underlying action in District Court for the

District of Nevada alleging violations of NRS § 686A.310, breach of contract, and

breach of fiduciary duty claims. The district court dismissed Appellant’s

complaint without leave to amend, on futility grounds, after Appellees moved for

judgment on the pleadings. Now, Appellant challenges both the district court’s

grant of judgment on the pleadings in the Appellees’ favor and the district court’s

denial of leave to amend.

We review de novo an order granting judgment on the pleadings, accepting

facts alleged by the nonmoving party as true and drawing all inferences in its favor.

LeGras v. AETNA Life Ins. Co., 786 F.3d 1233, 1236 (9th Cir. 2015). A district

court’s grant of judgment on the pleadings is proper when, “taking all allegations

in the pleading as true, the moving party is entitled to judgment as a matter of

law.” Merchants Home Delivery Serv., Inc. v. Frank B. Hall & Co., 50 F.3d 1486,

1488 (9th Cir. 1995). Dismissals without leave to amend are “appropriate when it

2 is clear that the complaint cannot be saved by further amendment.” Polich v.

Burlington Northern, Inc., 942 F.2d 1467, 1472 (9th Cir. 1991).

Appellant argues that, if it had been allowed leave to amend, it “could have

amended the allegations by including more detail to its claims to assert that

F[NTIC]’s own guidelines and endorsement manuals admit there is coverage under

the ALTA Policy for damages arising from the Nevada HOA Sale.” Reviewing

Appellant’s arguments de novo, we vacate and remand.

First, FNTIC’s insurance manuals are probative as to whether or not FNTIC

knew that the insurance policy and additional addenda were supposed to protect

Appellant from its losses in the foreclosure sale of the property at issue. In a

related case with similar claims against FNTIC, we held that FNTIC’s insurance

manual is “probative of a variety of insurance products Fidelity offered that

provide title insurance for property located within a homeowners’ association.”

Deutsche Bank Nat’l Tr. Co. v. Fid. Nat’l Title Ins. Co., No. 20-15849, 2021 WL

5002215, at *1 (9th Cir. Oct. 28, 2021).

Appellant here presents nearly identical claims against FNTIC as those in

Deutsche Bank. 2021 WL 5002215. Because the manuals would be probative as

to the protections offered and sold to Appellant, which is the crux of the

Appellant’s claims, the manuals potentially may support Appellant HSBC’s

claims. The possible probative value of the manuals is sufficient to support

3 amendment. This is especially true given Nevada’s application of trade usage

information. The insurance manuals, like many other dictionaries and explanatory

commentaries “operate as specialized dictionaries in interpreting a written

contract.” Galardi v. Naples Polaris, LLC, 301 P.3d 364, 367 (2013) (internal

citations omitted).

Additionally, we recently took judicial notice of an order written in a similar

case by the same district court judge who presided over this case. In that order, the

district judge considered newly discovered evidence in the form of insurance

claims manuals. HSBC Bank USA, Nat'l Ass'n as Tr. for Holders of Deutsche Alt-

A Sec., Inc., Mortg. Loan Tr. Pass-Through Certificates Series 2007-OA3 v. Fid.

Nat'l Title Grp., Inc., No. 218CV02162MMDDJA, 2021 WL 1579896, at *4 (D.

Nev. Apr. 22, 2021). Given this newly found evidence, the district judge explained

that if we remanded the case back to the district court, Plaintiff HSBC could file a

motion for reconsideration given the newly discovered insurance manuals. See id.

In light of the district court’s acknowledgement of the newly discovered insurance

manuals, we vacate and remand so that the district court may reconsider its

approach in light of the newly found evidence and may reassess the district court’s

prior denial of leave to amend.

VACATED AND REMANDED.