January 22, 2013
In Medina v. Quality Loan Service Corp., et al., No. 12-CV-00428-KJD-PAL (D. Nev. Oct. 25, 2012), the district court in Nevada addressed the plaintiff’s claim of a violation of the Nevada Deceptive Trade Practices Act.
The Act prohibits sellers from making false statements or misrepresentations about their goods or services. However, the court found that the Act doesn’t apply to most real estate loan transactions. The use of the Deceptive Trade Practices Act was only recognized once by the Nevada Supreme Court in Betsinger v. D.R. Horton, Inc., 232 P.3d 433, 436 (Nev. 2010). However, in that case, the plaintiff purchased a home after the defendant offered a 4.6% mortgage interest rate. After entering a purchase contract and receiving the plaintiff’s deposit, the defendant increased the interest rate to 6.5%. As a result, the plaintiff cancelled the contract and sued for the deposit after the defendant refused to return it. The Supreme Court upheld a jury finding that the defendant violated the Deceptive Trade Practices Act.
In this case, the court distinguished the facts because there was no allegation of a bait and switch, the defendant was not selling a house and the plaintiff was not purchasing one, and the defendant was not withholding a deposit.
The plaintiff also alleged there was a wrongful foreclosure because the party that initiated the foreclosure proceedings, Quality, had no authority to do so. The plaintiff argued that the only person who can enforce the note is the current note holder, not the party in possession of the deed of trust. This theory is a challenge to the split note theory that was addressed in Edelstein v. Bank of New York Mellon, 128 Nev. Adv. Op. 48, *2-3, 286 P.3d 249, ___ (2012). The court summarized the court’s opinion that supported the split note theory and rejected this challenge as well.
As a result, the court granted the defendant’s motion to dismiss this case.