1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *
7 HSBC BANK USA NATIONAL Case No. 2:16-cv-01216-KJD-NJK ASSOCIATION, as Trustee, In Trust for the 8 Registered Holders of Ace Securities Corp., ORDER DENYING PLAINTIFF’S Home Equity Loan Trust, Series 2006-FM2, MOTION FOR ATTORNEY’S FEES 9 Asset Backed Pass-Through Certificates,
10 Plaintiff,
11 v.
12 SUZANNAH R. NOONAN IRA, LLC, et. al.,
13 Defendants.
14 15 Before the Court is Plaintiff HSBC Bank USA National Association’s (HSBC) Motion 16 for Attorney’s Fees (#69). Plaintiff Suzannah R. Noonan IRA, LLC (Noonan) responded (#84) to 17 which Defendant replied (#90). 18 I. Factual and Procedural Background 19 20 In June 2014 Noonan purchased a property at a Homeowners’ Association foreclosure 21 sale. (#57 at 5). HSBC and Noonan then disputed over the superpriority lien and who possessed 22 title to the property. Plaintiff brought an action to quiet title and, after the discovery process, 23 HSBC made a $125,000 offer of judgment to Noonan. (#69 at 2). Defendant rejected the offer 24 and the litigation continued. Id. Both parties filed motions for summary judgment and requested 25 26 quiet title. (#57/59). The Court granted Plaintiff’s motion for summary judgment. (#66). HSBC 27 now requests attorney’s fees for the time spent litigating after Noonan rejected its offer of 28 judgment. (#69). 1 II. Legal Standard 2 Federal Rule of Civil Procedure 68 permits a defendant to recover attorney’s fees after 3 making a pre-trial offer of judgment that the plaintiff rejects. FED. R. CIV. P. 68. The Nevada rule 4 extends that rule to any party that makes an offer of judgment. NEV. R. CIV. P. 68. The offeree 5 6 must have rejected the offer and then failed to obtain a more favorable judgment. Id. “A federal 7 court sitting in diversity applies the law of the forum state regarding an award of attorneys’ 8 fees.” Kona Ent., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000). The district court 9 has discretion when deciding whether to award penalties under the offer of judgment rule, but is 10 governed by the Nevada Supreme Court’s factors from Beattie v. Thomas. 668 P.2d 268 (Nev. 11 12 1983). The factors include “(1) whether the plaintiff’s claim was brought in good faith; (2) 13 whether the defendants’ offer of judgment was reasonable and in good faith in both its timing 14 and amount; 3) whether the plaintiff’s decision to reject the offer . . . was grossly unreasonable or 15 in bad faith; and 4) whether the fees sought by the offeror are reasonable and justified in 16 amount.” Beattie, 668 P.2d at 274. “Although explicit findings with respect to [the Beattie] 17 18 factors are preferred, the district court’s failure to make explicit findings is not a per se abuse of 19 discretion.” Wynn v. Smith, 16 P.3d 424, 428 (Nev. 2001). 20 III. Analysis 21 Under Nevada Rule 68 an offeror may only recover attorney’s fees after “the offeree 22 rejects an offer and fails to obtain a more favorable judgment.” Nev. R. Civ. P. 68(f)(1). Plaintiff 23 24 and Defendant disagree as to whether the final judgment was less favorable to Noonan than the 25 offer of judgment. HSBC claims the judgment was less favorable to Noonan because Noonan 26 lost title to the property and the $4,000 discount HSBC offered. Noonan claims it was not less 27 favorable because she was never going to be liable for the remaining debt, there was no evidence 28 1 of how much was due under the deed of trust, and Noonan would have incurred more costs to 2 sell the property than she gained from HSBC’s discount. To warrant an award of attorney’s fees, 3 a party must show that the final judgment was less favorable to the offeree and satisfy the Beattie 4 factors. Because the Court’s analysis of the Beattie factors concludes that an award of attorney’s 5 6 fees is not warranted, a determination of whether the judgment was less favorable to Noonan is 7 unnecessary. 8 A. Good faith of claim 9 The first Beattie factor looks at whether the plaintiff brought a claim in good faith. 10 Beattie, 668 P.2d at 274. HSBC is the plaintiff in this case but contends that Noonan is also a 11 12 plaintiff. While Noonan did not officially file a counterclaim, she did request quiet title in her 13 motion for summary judgment. HSBC does not allege that Noonan’s request was in bad faith 14 when litigation commenced. However, HSBC claims that Noonan’s quiet title request was 15 continued in bad faith considering the information learned in discovery. The Court disagrees. 16 Defendant purchased the property legally at a foreclosure sale, subject to Plaintiff’s lien, and it 17 18 was not unreasonable to bring or defend a claim for the title. Noonan’s quiet title request in her 19 competing motion for summary judgment was brought in good faith for purposes of the Beattie 20 analysis. Additionally, because Noonan is the defendant, the Court considers whether her 21 defenses were litigated in good faith. See Yamaha Motor Co., U.S.A. v. Arnoult, 955 P.2d 661, 22 673 (Nev. 1998). There is no allegation that Noonan did not litigate her defenses in good faith 23 24 and the Court finds no reason to rule otherwise. 25 B. Reasonableness of offer 26 The second Beattie factor looks at whether the offer of judgment was reasonable and in 27 good faith in both timing and amount. Beattie, 668 P.2d at 274. The rule requires that an offer of 28 1 judgment be made at least 21 days before trial. NEV. R. CIV. P. 68(a). Neither party disputes that 2 HSBC made this offer of judgment to Noonan within the Rule 68 time frame. “There is no 3 bright-line rule that qualifies an offer of judgment as per se reasonable in amount; instead, the 4 district court is vested with discretion to consider the adequacy of the offer and the propriety of 5 6 granting attorney fees.” Certified Fire Prot., Inc. v. Precision Const., Inc., 283 P.3d 250, 258 7 (Nev. 2012). The offer was for Noonan to pay HSBC $125,000 in exchange for the reconveyance 8 of HSBC’s deed of trust. HSBC supplied the Court with a “Zestimate” from the real estate 9 website Zillow.com to show that the property was likely to sell for $128,965. HSBC claims that 10 the nearly $4,000 discount, combined with its offer not to disgorge any profits that Noonan 11 12 might have made from the property in her time as owner, constitutes a reasonable offer. Noonan 13 claims the offer was unreasonable because she would never be personally liable for the debt 14 owed by the previous owner, so $125,000 was no bargain, and that the “Zestimate” is not an 15 appraisal of the property’s actual value. The Court finds that the offer was reasonable. While a 16 “Zestimate” is not an appraisal of the property, it is indicative of the sale price of comparable 17 18 properties. Accepting the offer would have given Noonan a slight discount and a title free and 19 clear with which to use the property however she pleased. 20 C. Rejection of offer 21 The third Beattie factor looks at whether the rejection of the offer was grossly 22 unreasonable or in bad faith. Beattie, 668 P.2d at 274. HSBC claims that it was grossly 23 24 unreasonable for Noonan to proceed after discovery because Noonan did not present any 25 evidence to prevent summary judgment in HSBC’s favor. Noonan claims she was not grossly 26 unreasonable because she never would have had to pay off the debt of the previous owner and 27 she had every right to possess the property until it was foreclosed upon.
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1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *
7 HSBC BANK USA NATIONAL Case No. 2:16-cv-01216-KJD-NJK ASSOCIATION, as Trustee, In Trust for the 8 Registered Holders of Ace Securities Corp., ORDER DENYING PLAINTIFF’S Home Equity Loan Trust, Series 2006-FM2, MOTION FOR ATTORNEY’S FEES 9 Asset Backed Pass-Through Certificates,
10 Plaintiff,
11 v.
12 SUZANNAH R. NOONAN IRA, LLC, et. al.,
13 Defendants.
14 15 Before the Court is Plaintiff HSBC Bank USA National Association’s (HSBC) Motion 16 for Attorney’s Fees (#69). Plaintiff Suzannah R. Noonan IRA, LLC (Noonan) responded (#84) to 17 which Defendant replied (#90). 18 I. Factual and Procedural Background 19 20 In June 2014 Noonan purchased a property at a Homeowners’ Association foreclosure 21 sale. (#57 at 5). HSBC and Noonan then disputed over the superpriority lien and who possessed 22 title to the property. Plaintiff brought an action to quiet title and, after the discovery process, 23 HSBC made a $125,000 offer of judgment to Noonan. (#69 at 2). Defendant rejected the offer 24 and the litigation continued. Id. Both parties filed motions for summary judgment and requested 25 26 quiet title. (#57/59). The Court granted Plaintiff’s motion for summary judgment. (#66). HSBC 27 now requests attorney’s fees for the time spent litigating after Noonan rejected its offer of 28 judgment. (#69). 1 II. Legal Standard 2 Federal Rule of Civil Procedure 68 permits a defendant to recover attorney’s fees after 3 making a pre-trial offer of judgment that the plaintiff rejects. FED. R. CIV. P. 68. The Nevada rule 4 extends that rule to any party that makes an offer of judgment. NEV. R. CIV. P. 68. The offeree 5 6 must have rejected the offer and then failed to obtain a more favorable judgment. Id. “A federal 7 court sitting in diversity applies the law of the forum state regarding an award of attorneys’ 8 fees.” Kona Ent., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000). The district court 9 has discretion when deciding whether to award penalties under the offer of judgment rule, but is 10 governed by the Nevada Supreme Court’s factors from Beattie v. Thomas. 668 P.2d 268 (Nev. 11 12 1983). The factors include “(1) whether the plaintiff’s claim was brought in good faith; (2) 13 whether the defendants’ offer of judgment was reasonable and in good faith in both its timing 14 and amount; 3) whether the plaintiff’s decision to reject the offer . . . was grossly unreasonable or 15 in bad faith; and 4) whether the fees sought by the offeror are reasonable and justified in 16 amount.” Beattie, 668 P.2d at 274. “Although explicit findings with respect to [the Beattie] 17 18 factors are preferred, the district court’s failure to make explicit findings is not a per se abuse of 19 discretion.” Wynn v. Smith, 16 P.3d 424, 428 (Nev. 2001). 20 III. Analysis 21 Under Nevada Rule 68 an offeror may only recover attorney’s fees after “the offeree 22 rejects an offer and fails to obtain a more favorable judgment.” Nev. R. Civ. P. 68(f)(1). Plaintiff 23 24 and Defendant disagree as to whether the final judgment was less favorable to Noonan than the 25 offer of judgment. HSBC claims the judgment was less favorable to Noonan because Noonan 26 lost title to the property and the $4,000 discount HSBC offered. Noonan claims it was not less 27 favorable because she was never going to be liable for the remaining debt, there was no evidence 28 1 of how much was due under the deed of trust, and Noonan would have incurred more costs to 2 sell the property than she gained from HSBC’s discount. To warrant an award of attorney’s fees, 3 a party must show that the final judgment was less favorable to the offeree and satisfy the Beattie 4 factors. Because the Court’s analysis of the Beattie factors concludes that an award of attorney’s 5 6 fees is not warranted, a determination of whether the judgment was less favorable to Noonan is 7 unnecessary. 8 A. Good faith of claim 9 The first Beattie factor looks at whether the plaintiff brought a claim in good faith. 10 Beattie, 668 P.2d at 274. HSBC is the plaintiff in this case but contends that Noonan is also a 11 12 plaintiff. While Noonan did not officially file a counterclaim, she did request quiet title in her 13 motion for summary judgment. HSBC does not allege that Noonan’s request was in bad faith 14 when litigation commenced. However, HSBC claims that Noonan’s quiet title request was 15 continued in bad faith considering the information learned in discovery. The Court disagrees. 16 Defendant purchased the property legally at a foreclosure sale, subject to Plaintiff’s lien, and it 17 18 was not unreasonable to bring or defend a claim for the title. Noonan’s quiet title request in her 19 competing motion for summary judgment was brought in good faith for purposes of the Beattie 20 analysis. Additionally, because Noonan is the defendant, the Court considers whether her 21 defenses were litigated in good faith. See Yamaha Motor Co., U.S.A. v. Arnoult, 955 P.2d 661, 22 673 (Nev. 1998). There is no allegation that Noonan did not litigate her defenses in good faith 23 24 and the Court finds no reason to rule otherwise. 25 B. Reasonableness of offer 26 The second Beattie factor looks at whether the offer of judgment was reasonable and in 27 good faith in both timing and amount. Beattie, 668 P.2d at 274. The rule requires that an offer of 28 1 judgment be made at least 21 days before trial. NEV. R. CIV. P. 68(a). Neither party disputes that 2 HSBC made this offer of judgment to Noonan within the Rule 68 time frame. “There is no 3 bright-line rule that qualifies an offer of judgment as per se reasonable in amount; instead, the 4 district court is vested with discretion to consider the adequacy of the offer and the propriety of 5 6 granting attorney fees.” Certified Fire Prot., Inc. v. Precision Const., Inc., 283 P.3d 250, 258 7 (Nev. 2012). The offer was for Noonan to pay HSBC $125,000 in exchange for the reconveyance 8 of HSBC’s deed of trust. HSBC supplied the Court with a “Zestimate” from the real estate 9 website Zillow.com to show that the property was likely to sell for $128,965. HSBC claims that 10 the nearly $4,000 discount, combined with its offer not to disgorge any profits that Noonan 11 12 might have made from the property in her time as owner, constitutes a reasonable offer. Noonan 13 claims the offer was unreasonable because she would never be personally liable for the debt 14 owed by the previous owner, so $125,000 was no bargain, and that the “Zestimate” is not an 15 appraisal of the property’s actual value. The Court finds that the offer was reasonable. While a 16 “Zestimate” is not an appraisal of the property, it is indicative of the sale price of comparable 17 18 properties. Accepting the offer would have given Noonan a slight discount and a title free and 19 clear with which to use the property however she pleased. 20 C. Rejection of offer 21 The third Beattie factor looks at whether the rejection of the offer was grossly 22 unreasonable or in bad faith. Beattie, 668 P.2d at 274. HSBC claims that it was grossly 23 24 unreasonable for Noonan to proceed after discovery because Noonan did not present any 25 evidence to prevent summary judgment in HSBC’s favor. Noonan claims she was not grossly 26 unreasonable because she never would have had to pay off the debt of the previous owner and 27 she had every right to possess the property until it was foreclosed upon. The Court agrees that the 28 1 rejection was not grossly unreasonable or in bad faith. While HSBC asserts that Noonan should 2 not be rewarded for “rolling the dice” after discovery, this action was not grossly unreasonable or 3 in bad faith. “Grossly unreasonable or bad faith rises to a much higher level than poor judgment 4 or incorrect tactical decisions.” Assurance Co. of America v. Nat’l Fire & Marine Ins. Co, 2012 5 6 WL 6626809, *3 (D. Nev. 2012). Noonan’s decision to continue to the summary judgment stage 7 does not rise to the much higher level necessary to satisfy gross negligence or bad faith. 8 D. Reasonableness of fees 9 The final Beattie factor looks at whether the fees requested are reasonable and justified in 10 amount. Beattie, 668 P.2d at 274. To determine if the fees are reasonable, the Court must use the 11 12 factors laid out by the Nevada Supreme Court in Brunzell v. Golden Gate Nat’l Bank. 455 P.2d 13 31 (Nev. 1969). Those factors include: 14 1) the qualities of the advocate; his ability, his training, education, experience, 15 professional standing and skill; 2) the character of the work to be done: its difficulty, its intricacy, its importance, time and skill required, the responsibility 16 imposed and the prominence and character of the parties where they affect the importance of the litigation; 3) the work actually performed by the lawyer: the 17 skill, time and attention given to the work; 4) the result: whether the attorney was 18 successful and what benefits were derived.
19 Id. at 33. HSBC hired experienced attorneys to pursue its cause of action. It admits that the work 20 was not uniquely complex, but the attorneys needed a deep understanding of HOA lien 21 foreclosures and engaged in significant motion practice before the Court granted summary 22 judgment. Noonan concedes that the fees are reasonable and the Court has no reason to find 23 24 otherwise. 25 All the claims were brought in good faith. The offer and rejection were reasonable and in 26 good faith. HSBC provided the information required by Local Rule of Practice 54-14 and the 27 fees requested are reasonable. When the factors weigh both for and against awarding fees, as 28 1 | they do here, “the court is loath to award attorneys’ fees in the absence of bad faith or 2 unreasonableness.” Gallagher v. Crystal Bay Casino, LLC, 2012 WL 1409244, *5 (D. Nev. 3 2012). 4 5 IV. Conclusion 6 Accordingly, IT IS HEREBY ORDERED that Plaintiff HSBC Bank U.S.A. National Association’s Motion for Attorney’s Fees (#69) is DENIED. 8 IT IS FURTHER ORDERED that Plaintiff's and Defendant’s Joint Stipulation and Order 9 to Extend (#71) is DENIED AS MOOT. 10 11 12 Dated this 9th day of September, 2020. 14
27 16 Kent J. Dawson United States District Judge 18 19 20 21 22 23 24 25 26 27 28
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