Rodney Mott v. Trinity Financial Services

• Court: Court of Appeals for the Ninth Circuit
• Decided: May 28, 2021
• Docket: 20-15744
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS MAY 28 2021 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

RODNEY MOTT, No. 20-15744

Plaintiff-counter- D.C. No. defendant-Appellant, 2:16-cv-01949-JCM-EJY

v. MEMORANDUM* PNC FINANCIAL SERVICES GROUP, INC.; SELECT PORTFOLIO SERVICING, INC.; RADIAN SERVICES, LLC; SPECIAL DEFAULT SERVICES, INC.,

Defendants,

and

TRINITY FINANCIAL SERVICES LLC; TROJAN CAPITAL INVESTMENTS, LLC,

Defendants-counter- claimants-Appellees.

Appeal from the United States District Court for the District of Nevada James C. Mahan, District Judge, Presiding

Argued and Submitted May 7, 2021 Seattle, Washington

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: BOGGS,** BERZON, and MURGUIA, Circuit Judges.

This case arises from Trinity Financial Services’ and Trojan Capital

Investments’ (collectively “Defendants”) attempt to foreclose on Rodney Mott’s

home in Las Vegas, Nevada. Mott claims that his debt on the home was forgiven

and that Defendants have no authority to foreclose. Mott sued Defendants asserting

violations of the Fair Debt Collection Practices Act (“FDCPA”), the Real Estate

Settlement Procedures Act, and Nevada state law. Defendants counterclaimed,

asserting claims for quiet title and declaratory relief. The parties cross-moved for

summary judgment, and the district court granted summary judgment to Defendants.

We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

1. Mott contends that Defendants have no authority to foreclose on his

home because his underlying debt was forgiven. Mott submits a letter from First

Franklin Loan Services, from which he obtained a $300,000 loan, which purports to

forgive Mott’s debt in its entirety.1 The district court determined that the “highly

questionable” letter was insufficient for any jury to reasonably find in his favor.

Mott argues that the district court improperly weighed this evidence, and that it

** The Honorable Danny J. Boggs, United States Circuit Judge for the U.S. Court of Appeals for the Sixth Circuit, sitting by designation. 1 Mott signed a promissory note (the “Note”) secured by a second position deed of trust on this home.

2 should have reached the jury. We disagree.

“A trial court can only consider admissible evidence in ruling on a motion for

summary judgment.” Orr v. Bank of Am., 285 F.3d 764, 773 (9th Cir. 2002); see

Fed. R. Civ. P. 56(c). To be admissible, a document must be authentic, meaning

there must be “evidence sufficient to support a finding that the item is what the

proponent claims it is.” Fed. R. Evid. 901(a). A trial court cannot consider

unauthenticated documents in a motion for summary judgment. See Orr, 285 F.3d

at 773.

Here, the purported debt-forgiveness letter was riddled with errors that called

into question its authenticity. Mott presented no supporting tax documentation or

evidence of reconveyance of the deed to the home to verify the purported debt

forgiveness. Nor did Mott identify any individuals who could authenticate the letter

or seek to introduce any other supporting evidence, such as the letter he claims to

have sent that triggered the forgiveness letter. In excluding the letter from

consideration as inadmissible, the district court did not abuse its discretion. See id.

(“The district court’s exclusion of evidence in a summary judgment motion is

reviewed for an abuse of discretion.”). Because the letter was an unauthenticated

document, the district court did not err. See id.

2. Mott argues that because neither Trinity nor Trojan is licensed as a

mortgage broker or banker in Nevada, neither party could have lawfully acquired

3 the Note, and neither can now lawfully foreclose on the home. Mott contends that

Defendants failed to comply with two Nevada statutes—Nev. Rev.

Stat. §§ 645B and 645E.2

First, Mott argues that Defendants are “mortgage bankers,” which are persons

or entities that directly or indirectly hold themselves out as being able to buy or sell

notes secured by liens on real property. See Nev. Rev. Stat. § 645E.100(1). Such

entities must obtain a license to do so. See id. § 645E.200; see also id. § 645E.900

(noting that entities may not “offer or provide any of the services of a mortgage

banker or otherwise to engage in, carry on or hold [themselves] out as engaging in

or carrying on the business of a mortgage banker without first obtaining a license”

unless an exemption applies). Likewise, Mott argues that Defendants were also

“mortgage brokers,” which are similarly persons or entities “who, directly or

indirectly” “[h]old[] [themselves] out as being able to buy or sell notes secured by

liens on real property[.]” Id. § 645B.0127(d). These entities must also obtain

licenses before buying or selling notes. See id. § 645B.020.

Trinity purchased Mott’s note from nonparty Stelis, LLC, in 2015. Trinity

then sold its interest in the note to Trojan, which began foreclosure efforts in 2016.

2 These statutes were effective through December 31, 2019. On January 1, 2020, Nev. Rev. Stat. § 645E, the Mortgage Banker Act, was consolidated with Nev. Rev. Stat. § 645B, the Mortgage Broker Act. For purposes of our analysis, we look to the previous versions of the statute as did the district court and the parties.

4 Based on these two transactions, Mott asserts that Trinity and Trojan acted as

unlicensed mortgage brokers and bankers. Contrary to Mott’s assertion, however,

he cannot challenge these underlying transactions. Under Nevada law, the

consequence of a person acting without the appropriate license is a “[contract]

voidable by the other party to the contract.” See id. §§ 645B.920, 645E.920. As the

contracts are voidable, not void, the transactions remain valid with respect to third

parties, including Mott. Mott nevertheless contends that he could bring a civil action

as a “client,” under Nev. Rev. Stat. §§ 645B.930 and 645E.930. But there is nothing

in the record indicating that Mott ever tried to do so, nor does he present any

authority in which Nevada courts have sanctioned suits under similar

circumstances.3

3. Even if Defendants had lawfully acquired the Note, Mott argues that

some of his FDCPA claims against Trojan should have survived summary judgment.

Mott alleges that Trojan violated 15 U.S.C. § 1692e(2), 1692e(5), and 1692e(10), by

misrepresenting the interest rate and the late fees in letters Trojan sent him.

Mott points to two letters, sent on February 23, 2016 and March 17, 2016, in

3 It appears that, at least with respect to Mott, Defendants acted as mortgage servicers and were exempt from the mortgage servicer licensing requirement. See Nev. Rev. Stat. §§ 645F.063, 645F.500. However, this does not necessarily mean Defendants were exempt from licensing requirements as mortgage bankers or brokers under Nev. Rev. Stat. §§ 645B and 645E. We need not reach that question, as Mott cannot challenge the underlying transactions to the Note.

5 which Trojan specified an 8.63 percent interest rate, when, based on the Note, the

interest rate should have been 8.625 percent. We find Trojan’s minor

misrepresentations as to the interest rate immaterial. “We have consistently held

that whether conduct violates [the FDCPA] requires an objective analysis that

considers whether the least sophisticated debtor would likely be misled by a

communication.” Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1033 (9th Cir.

2010) (internal quotation marks and citation omitted). “[F]alse but non-material

representations are not likely to mislead the least sophisticated consumer and

therefore are not actionable under [section] 1692e.” Id. Importantly here, Mott does

not contend that Trojan’s letters miscalculated the total debt he owed or that he was

ever charged the microscopically higher interest rate stated in the February 23 and

March 17 letters. We find that these minor misrepresentations could not reasonably

have misled Mott. This is especially true given that Mott received two subsequent

letters, on March 24, 2016 and July 20, 2016, which reflected the correct 8.625

percent interest rate. To create liability based on such immaterial information would

undercut the purpose of the FDCPA. See Donohue, 592 F.3d at 1033–34; see also

Afewerki v. Anaya L. Grp., 868 F.3d 771, 776 (9th Cir. 2017) (“Immaterial false

representations . . . are those that are literally false, but meaningful only to the

6 hypertechnical reader.” (internal quotation marks and citation omitted)).4

4. Nor is Mott’s argument on his slander-of-title claim convincing. Mott

contends that Trojan committed slander of title by recording a Notice of Breach and

Default with the Clark County Recorder on August 19, 2016. Mott’s allegation is

premised on his argument that Trojan has no authority to enforce the Note because

it was unlicensed when it bought his Note from Trinity. Under Nevada law, “[t]he

requisites to an action for slander of title are that the words spoken be false, that they

be maliciously spoken and that the plaintiff sustain some special damage as a direct

and natural result of their having been spoken.” Rowland v. Lepire, 662 P.2d 1332,

1335 (Nev. 1983).

As discussed above, Mott’s licensing argument is unavailing. Because the

underlying transactions involving the Note are valid, and Defendants properly

acquired the Note, it cannot be that Trojan’s recording of the Notice of Breach and

Default was “false.” See id. The district court was correct that “[b]ecause of its

legitimate interest in the property, Trojan did not slander title.”

4 Mott also highlights another letter, sent on February 10, 2016, in which Trojan represented that Mott owed $1,408.00 in late payment fees, when, according to Mott, he should have been charged $1,396.00. We disagree that this representation is a violation of the FDCPA. Trojan’s letter is more reasonably interpreted as requiring Mott to pay the February 2016 late fee, the month when the letter was sent, to reinstate his loan. As Mott acknowledges, payments are due on the first day of each month and a late fee is applied thereafter. Thus, by February 10, 2016, Mott was required to pay $1,408.00.

7 5. Finally, Mott argues that the district court erred in denying his motion

to strike the untimely disclosed Stelis agreement. A district court may exclude

evidence if a party fails to comply with Rule 26, “unless the failure was substantially

justified or is harmless.” Fed. R. Civ. P. 37(c)(1). We review the district court’s

ruling for abuse of discretion. See Magnetar Techs. Corp. v. Intamin, Ltd., 801 F.3d

1150, 1155 (9th Cir. 2015). The district court determined that the untimely

disclosure was harmless because the Stelis agreement was not determinative to the

district court’s ruling on summary judgment, Mott had access to the Stelis agreement

from another related case, and Mott conceded that the transfer of the Note to Trinity

was authorized. These were valid reasons not to exclude the agreement and we find

that the district court did not abuse its discretion in refusing to do so. Id.

AFFIRMED.