Document Type

Case Summary

Publication Date

1-1-2003

Case Synopsis

Appellants Edward R. Houston and Regina Houston paid David Boone $740,000 for investment services, which Boone converted to his own use. In May 1998, Boone and his wife Donna divorced and Boone quitclaimed real property to Donna. Norwest Mortgage, Respondent Bank of America’s predecessor, held a deed of trust on the real property for $342,000. That same month, the Houstons filed a complaint against Boone to recover their $740,000. The Houstons filed a notice of lis pendens in the Clark County Recorder’s Office on June 1, 1998 and filed an ex parte motion with the district court directing the issuance of a prejudgment writ of attachment. The court granted the motion and a writ of attachment was filed in the Clark County Recorder’s Office in June 1998. The Houstons obtained a judgment against Boone, who had filed for bankruptcy. Boone stipulated that the debt he owed to the Houstons was nondischargeable. The district court granted a writ of execution on the real property and scheduled a sale of the real property. Respondent Bank of America intervened and the sale was enjoined. Bank of America had refinanced the real property in June 1998, after the Houstons’ writ of attachment had been recorded. In May 1998, pursuant to Bank of America’s direction, Nevada Title Company had conducted a title search of the property. Both Bank of America and the Houstons filed motions for summary judgment after the district court enjoined the sale. Bank of America argued that it was the priority lien holder on the real property because it was equitably subrogated to the rights of Norwest Mortgage when it refinanced the property. The Houstons argued that Bank of America was negligent in failing to discover their interest in the real property and that they would be injured if the district court allowed Bank of America to hold the priority lien position. The district court granted summary judgment in favor of Bank of America and denied the Houston’s motion for summary judgment. The Houstons appealed. The Nevada Supreme Court adopted the approach of the Restatement (Third) of Property for equitable subrogation and found that because the Houstons failed to produce any evidence that equitable subrogation of Bank of America to Norwest’s priority lien position would materially prejudice them, Bank of America was entitled to equitable subrogation as to the full amount of the Norwest Mortgage deed of trust.

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