Samet v. Bayview Loan Servicing, LLC

Opinion

1 UNITED STATES DISTRICT COURT

2 DISTRICT OF NEVADA

3 JAYNE G. SAMET, ) 4 ) Plaintiff, ) Case No.: 2:18-cv-00906-GMN-NJK 5 vs. ) ) ORDER 6 BAYVIEW LOAN SERVICING, LLC, et al., ) 7 ) Defendants. ) 8 ) ) 9 10 Pending before the Court is Plaintiff Jayne Samet’s (“Plaintiff’s”) Motion to Dismiss, 11 (ECF No. 36). Defendant Bayview Loan Servicing, LLC (“Defendant”) filed a Response, 12 (ECF No. 41), and Plaintiff filed a Reply, (ECF No. 44). 13 Also pending before the Court are Defendant’s Motion to Enforcement Settlement, (ECF 14 No. 42), and Motion for Sanctions, (ECF No. 43). Plaintiff filed Responses, (ECF Nos. 48, 49), 15 and Defendant filed a Reply, (ECF No. 51). 16 For the reasons discussed below, the Court GRANTS in part Plaintiff’s Motion to 17 Dismiss, GRANTS Defendant’s Motion to Enforce Settlement, and DENIES Defendant’s 18 Motion for Sanctions. 19 I. BACKGROUND 20 Plaintiff filed this action on May 18, 2018, alleging Defendant inaccurately informed 21 credit reporting agencies that Plaintiff owed a “past due” debt of over $100,000 based on a loan 22 to purchase real property located at 2331 Peaceful Sky Drive, Henderson, NV 89044 (the 23 “Property”). (Compl. ¶¶ 19, 39–61, ECF No. 1). To support Plaintiff’s contention that she does 24 not owe any past-due debt related to the Property, she alleges that she surrendered her Property 25 to BAC Home Loans Servicing, LLC (“BAC”) in 2014 pursuant to a Confirmation Order in 1 bankruptcy court, thereby discharging the debt. (Id. ¶ 19). Defendant later became BAC’s 2 successor in interest. (Id. ¶¶ 19–20). Despite the earlier Confirmation Order, Plaintiff contends 3 that Defendant continued to report the debt on the Property as past-due and owing. (Id. ¶¶ 20, 4 23–24, 39). Plaintiff thus argues that Defendant’s inaccurate reporting of debt violated the Fair 5 Credit Reporting Act, 15 U.S.C. § 1681. et seq. (Id. ¶¶ 73–76). 6 On September 12, 2018, Plaintiff filed a Notice of Settlement in this case stating that the 7 parties “have reached a tentative settlement.” (Not. Settlement 1:24–26, ECF No. 27). 8 Defendant alleges that, as part of the settlement agreement, Plaintiff agreed to not contest 9 foreclosure on the Property. (Def.’s Resp. to Mot. to Dismiss (“Def.’s Resp.”) 3:1–4, ECF No. 10 41). However, Defendant’s counsel later discovered that Plaintiff applied for a modification of 11 her loan on the Property. (Id. 3:15–22); (Emails re: Application for Loan Modification (“Loan 12 Emails”) at 1, Ex. B to Mot. Enforce Settlement (“MES”), ECF No. 42-2). Plaintiff also filed a 13 Petition for Foreclosure Mediation Assistance in state court on October 19, 2018, seeking an 14 alternative to foreclosure of the Property; and the state court set a mediation for March 5, 2019. 15 (MES 3:23–4:1–5); (see also Pet. Foreclosure Mediation Assistance, Ex. C. to MES., ECF No. 16 42-3). 17 On March 11, 2019, Plaintiff filed a Motion to Dismiss Defendant with prejudice, (ECF 18 No. 36). Defendant opposes the Motion only to the extent that dismissal would occur without 19 “holding [Plaintiff] to the terms of the settlement agreement.” (Resp. 2:16–19, ECF No. 41). 20 Defendant thus seeks enforcement of the settlement alongside sanctions against Plaintiff. 21 (MES, ECF Nos. 42); (Mot. Sanctions, ECF No. 43). 22 II. LEGAL STANDARD

23 A. Motion to Enforce Settlement 24 “It is well settled that a district court has the equitable power to enforce summarily an 25 agreement to settle a case pending before it. However, the district court may enforce only 1 complete settlement agreements.” Callie v. Near, 829 F.2d 888, 890 (9th Cir. 1987) (citations 2 omitted). “Whether the parties intended only to be bound upon the execution of a written, 3 signed agreement is a factual issue.” Id. at 890-91. “In addition to the intent of the parties to 4 bind themselves, the formation of a settlement contract requires agreement on its material 5 terms.” Id. at 891. “Because a settlement agreement is a contract, its construction and 6 enforcement are governed by principles of contract law.” May v. Anderson, 119 P.3d 1254, 7 1257 (Nev. 2005) (footnote omitted). 8 Under Nevada law, “[b]asic contract principles require, for an enforceable contract, an 9 offer and acceptance, meeting of the minds, and consideration.” Id. (footnote omitted). “A 10 valid contract cannot exist when material terms are lacking or are insufficiently certain and 11 definite.” Id. (footnote omitted). “A contract can be formed, however, when the parties have 12 agreed to the material terms, even though the contract’s exact language is not finalized until 13 later.” Id. (footnote omitted). Ordinarily, “[w]here a complete contract was made orally, the 14 fact that it was expected that a written contract would afterwards be signed, embodying the 15 terms of the oral contract, does not prevent the oral contract from taking effect.” Micheletti v. 16 Fugitt, 134 P.2d 99, 104 (Nev. 1943). 17 “In the case of a settlement agreement, a court cannot compel compliance when material 18 terms remain uncertain.” May, 119 P.3d at 1257 (footnote omitted). “The court must be able to 19 ascertain what is required of the respective parties.” Id. (footnote omitted). “[T]he question of 20 whether a contract exists is one of fact.” Id. A settlement contract is formed “when the parties 21 have agreed to its material terms”; accordingly, a party’s refusal to later execute a written 22 settlement agreement containing the agreed upon terms “does not render the settlement

23 agreement invalid.” Id. at 1256. 24 /// 25 /// 1 B. Motion for Sanctions 2 District courts have inherent power to sanction a party for improper conduct. Fink v. 3 Gomez, 239 F.3d 989, 991 (9th Cir. 2001). The court may only issue sanctions under its 4 inherent power upon finding “bad faith or conduct tantamount to bad faith.” Id. at 994. Bad 5 faith, or conduct tantamount to bad faith, encompasses “a variety of types of willful actions, 6 including recklessness when combined with an additional factor such as frivolousness, 7 harassment, or an improper purpose.” Id. Upon a finding of bad faith, the decision to issue 8 sanctions is within the court’s discretion. Air Separation, Inc. v. Underwriters at Lloyd’s of 9 London, 45 F.3d 288, 291 (9th Cir. 1995). 10 III. DISCUSSION 11 The Court’s below discussion first addresses whether the parties executed an enforceable 12 settlement contract. Because the Court finds that they did, the Court then addresses 13 Defendant’s request for sanctions. 14 A. Motion to Enforce Settlement 15 Defendant argues that the parties reached an enforceable settlement contract because 16 Plaintiff accepted Defendant’s offer, which was supported by consideration, and contained all 17 the requisite material terms. (MES 5:1–8, ECF No. 42). Plaintiff responds with the following 18 arguments: (1) there is no enforceable settlement contract because it was not executed in a 19 writing; (2) the agreement lacks material terms because there was no choice of law provision; 20 and (3) the emails between the parties show that they did not agree upon the meaning of a 21 material term: what constitutes contestation of foreclosure. (Resp. to MES 2:15–22, 4:8–22, 22 ECF No. 48). Plaintiff also argues that, even if there is an enforceable settlement contract, the

23 Plaintiff’s availment of foreclosure mediation did not violate the agreement because the 24 proceedings did not “contest” foreclosure. (Id. 3:10–4:7). 25 1 In support of its position, Defendant provides an exchange of emails between the 2 parties’ counsels. (See Emails Agreeing to Settlement Terms (“Settlement Emails”), Ex. A to 3 MES, ECF Nos. 42-1, 40-1); (see also Loan Emails, Ex. B to Def.’s MES, ECF No. 42-2). 4 These emails show that the parties began settlement negotiations via email on September 11, 5 2018. (Settlement Emails at 2–6) (“Bayview offers each of your clients $1000 (total $2000).”). 6 After Plaintiff’s counsel rejected the initial offer via counteroffer, (id.), Defendant increased its 7 monetary offer and stated that “[it] would also like the settlement agreement to confirm your 8 clients will not attempt to contest foreclosure to the extent not already part of the confirmation 9 order.” (Id. at 4). After several more rounds of negotiation culminated in the parties agreeing to 10 the monetary term of $7,000, Defendant still sought to have Plaintiff agree not to contest 11 foreclosure. (Id. at 2–5) (“When you get a chance let me know about the consent to foreclose 12 term. But for now, as discussed, i’ll [sic] let my client know the deposition is off.”). Plaintiff’s 13 counsel then informed Defendant on September 12, 2018, “I’m advised that the language you 14 suggested won’t be a bar to settlement. So we’ll get notices of settlement on, and we’ll wait for 15 the SA. Glad we could work these cases out.” (Id. at 1). That day, the parties filed the Notice 16 of Settlement indicating that the parties reached a tentative agreement. (Not. Settlement, ECF 17 No. 27). 18 On November 1, 2018, Plaintiff’s counsel reached out to Defendant’s counsel saying, 19 “We settled [this case] on 9/12/2018. Approximately 50 days have passed since this matter was 20 settled. Please forward our office your client’s proposed form settlement agreement for the 21 Plaintiff to review and sign.” (Loan Emails at 2). In response, Defendant’s counsel explained, 22 “As part of the settlement agreement, they were to agree to consent to foreclosure. After Mr.

23 Clark and I reached that agreement, we learned that your clients were simultaneously seeking 24 an agreement to modify their loan . . . . the intention to enter an agreement to modify the loan is 25 inconsistent with the agreement to foreclose.” (Id. at 1). 1 Based on Defendant’s provided evidence, the Court concludes that the parties reached an 2 enforceable settlement contract despite the agreement not being executed in a signed writing. 3 Defendant made an ascertainable settlement offer: $7,000 in exchange for dismissal with 4 prejudice and an agreement not to contest foreclosure. (See Settlement Emails at 1–2); (see also 5 Not. Settlement) (explaining that dismissal with prejudice was a term of the settlement 6 contract). Plaintiff accepted the offer. (See Settlement Emails at 1). The promised exchange 7 supplied sufficient consideration to make the contract enforceable. The negotiations indicate 8 the agreement had only three material terms: the monetary offer to Plaintiff, the agreement to 9 dismiss the case with prejudice, and an agreement not to contest Defendant’s foreclosure of the 10 Property. (See id.); (see also Not. Settlement). 11 Ordinarily, the Court would hesitate to enforce an agreement the parties described as 12 “tentative” in the Notice of Settlement. (See Not. Settlement, ECF No. 27). However, the 13 subsequent communications between the parties’ counsel persuade the Court that any 14 outstanding issues regarding settlement did not concern material terms of the agreement. The 15 emails indicate Plaintiff intended to be bound by the agreement prior to filing the Notice of 16 Settlement because Plaintiff’s counsel confirmed that it believed that the matter was “settled” 17 on the September 12, 2018—the date of Plaintiff’s counsel’s acceptance email—and Plaintiff 18 merely requested a written settlement agreement memorializing the contract. (See Loan Emails 19 at 2) (explaining that counsel considered the case settled as of September 12, 2018); (see also 20 Settlement Emails at 1 and Notice of Settlement) (describing the material terms of the 21 agreement); see, e.g., Micheletti, 134 P.2d at 104 (“[w]here a complete contract was made 22 orally, the fact that it was expected that a written contract would afterwards be signed,

23 embodying the terms of the oral contract, does not prevent the oral contract from taking 24 effect.”). Plaintiff provides no evidence that the parties intended to be bound by the agreement 25 only after its reduction to a signed writing. 1 The parties’ omission of a choice of law provision in the contract is not fatal. A choice 2 of law provision is optional; it is not a material term unless the parties condition the agreement 3 on its inclusion. See 15 Corbin on Contracts § 83.9 (2019) (explaining that parties often agree 4 to choice of law provisions, but that state law will fill the gap in the absence of an agreement). 5 There is no indication that a choice of law provision was a material term for settlement here 6 because the parties never negotiated for its inclusion. 7 The Court concludes that the parties agreed upon the meaning of the provision 8 consenting not to “contest” foreclosure. Plaintiff argues that “contest” is ambiguous because 9 the Black’s Law Dictionary definition of “contested case” is one that is “opposed by another 10 person or interested party.” (Resp. to MES, 3:10–4:7). She argues that because mediation does 11 not necessitate opposition, the state court proceedings did not contest foreclosure. (Id.) But 12 Plaintiff’s use of the “contested case” definition does not persuade the Court that the parties did 13 not agree upon the meaning of “contest.” In Defendant’s final email preceding Plaintiff’s 14 acceptance, Defendant indicated that the term required Plaintiff to “consent to foreclosure.” 15 (Settlement Emails at 1). Plaintiff’s agreement to consent to foreclosure correspondingly 16 means Plaintiff would not ensnare Defendant in a proceeding that has the goal of seeking an 17 alternative to foreclosure. Likewise, seeking to modify the loan upon which Defendant sought 18 to foreclose necessarily contests Defendant’s right to do so. 19 Accordingly, the parties have an enforceable contract, which the Court has the power to 20 enforce as a basis for dismissal. Pursuant to its authority to enforce the contract, the Court 21 orders Plaintiff to refrain from taking any actions that frustrate Defendant’s right to foreclose 22 on the Property, including seeking alternatives to foreclosure through mediation or

23 modification of her loan. With this condition set, the Court finds that Plaintiff’s request for 24 dismissal of Defendant with prejudice is appropriate pursuant to Federal Rule of Civil 25 Procedure 42(a)(2). 1 B. Motion for Sanctions 2 Defendant argues that Plaintiff acted in bad faith by taking conflicting positions in this 3 case and in state court regarding the status of the Property, by filing this (allegedly frivolous) 4 case, and by seeking and receiving attorney’s fees in the state court mediation. (Mot. Sanctions 5 6:20–28, ECF No. 43). Plaintiff contends that Defendant’s argument is conclusory and fails to 6 allege any facts demonstrating bad faith. (Resp. to Mot. for Sanctions, 6:12–7:2, ECF No. 52). 7 The Court agrees that Defendant does not satisfy its burden to show Plaintiff acted in 8 bad faith. The Court therefore declines to award sanctions against Plaintiff. 9 IV. CONCLUSION 10 IT IS HEREBY ORDERED that Defendant’s Motion to Enforce Settlement, (ECF No. 11 42), is GRANTED. Plaintiff must comply with the parties’ settlement by refraining from 12 acting inconsistently with the agreement to consent to foreclosure of the Property. The Court 13 finds that seeking modification of the loan encumbering the property, or seeking alternatives to 14 foreclosure through mediation in the Nevada Foreclosure Mediation Program, are inconsistent 15 with the parties’ settlement contract. 16 IT IS FURTHER ORDERED that Plaintiff’s Motion to Dismiss, (ECF No. 36), is 17 GRANTED in part. 18 IT IS FURTHER ORDERED that Defendant’s Motion for Sanctions, (ECF No. 43), is 19 DENIED. 20 The Clerk of Court shall close the case. 21 DATED this __3_0__ day of December, 2019. 22

23 ___________________________________ Gloria M. Navarro, District Judge 24 United States District Court 25