Case 3:10-cv-00256-RCJ-RAM Document 25 Filed 11/04/10 Page 1 of 6

1 GEOFFREY L. GILES
State Bar Number 959
2 527 California Ave.
Post Office Box 93
3 Reno, NV 89504
4 775.329.4999
5 Attorney for the Plaintiffs
6 UNITED STATES DISTRICT COURT
7 DISTRICT OF NEVADA
8 ***
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JOHN KEHOE and KATHY KEHOE,
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11 Plaintiffs, Case No: 3:10-cv-00256-RCJ-RAM
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-vs-
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AURORA LOAN SERVICES LLC;
14 QUALITY LOAN SERVICE
CORPORATION and JIM MCGILL.
15 OPPOSITION TO MOTION FOR
Defendants. SUMMARY JUDGMENT
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_________________________________/
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COMES NOW Plaintiffs JOHN KEHOE and KATHY KEHOE, by and through counsel of
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record Geoffrey Giles, Esq., interpose the following opposition to the Motion for Summary Judgment
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filed by Quality Loan Service Corporation on July 15, 2010. Counsel previously requested an extension
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of time to respond to that motion, and this Honorable Court granted an additional fifteen (15) days from
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the date of the Order referenced below, October 20, 2010. Reasons for Plaintiff’s opposition are more
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fully set forth below.
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POINTS AND AUTHORITIES
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1. Introduction.
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This Honorable Court has already considered the bulk of the contentions raised by the Plaintiffs
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in their complaint by virtue of an Order entered October 20, 2010. Co-Defendants Aurora Loan
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Geoffrey L. Giles and
Associates
Post Office Box 93
Reno, Nevada 89504
775.329.4999 Page 1 of 6
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1 Services LLC and Jim McGill were dismissed entirely from the case as no claim for relief was stated
2 against them, and no leave to amend granted. Most of the claims for relief against Quality Loan Service
3 Corporation [Quality] were also dismissed, this Court having found that it acted in ‘substantial
4 compliance’ with state law. The only remaining claim was characterized by the Court as one sounding
5 under the federal Fair Debt Collection Practice Act, though under the ‘Well Pleaded Complaint’ rule,
6 the claim for relief sounded as a predicate for the Nevada unfair and Deceptive Trade Practice statute.
7 2. Argument.
8 Quality goes to great length in its memorandum to demonstrate that it is not factually, nor legally
9 a debt collector nor collection agency, despite all the language to the contrary that is set forth in its
10 Notice of Default, and Notice of Trustee’s Sale. Nevertheless, on October 14, 2010, the State of Nevada,
11 Department of Business and Industry, Financial Institutions Division [FID] issued an; ORDER TO
12 CEASE AND DESIST UNLICENCED ACTIVITIES AND NOTICE OF RIGHT TO APPEAL, to
13 Quality Loan Service, Corp., in connection with another foreclosure. A copy of this document is
14 attached as Exhibit “1”, and it bears strongly on this case1. There the FID determined that Quality was
15 engaging in unlawful collection activity by foreclosing in the State of Nevada, without first obtaining
16 the proper license.
17 This is significant because in this case the Federal Court has been called upon to answer a
18 question of state law, when the Nevada Supreme Court has not previously addressed it. While the FID
19 is not the Nevada Supreme Court, it is a legitimate source of guidance about how this Nevada Statute,
20 NRS 649.171 is to be applied. It is anticipated that Quality will exercise its appeal rights with respect
21 to this order, and may even file a Petition for Review in state court, if it is unhappy with the result it
22 ultimately obtains. Nevertheless, if this Cease and Desist Order is correct, and it certainly is entitled to
23 a presumption of correctness until such time as it is vacated or reversed, then it is a predicate for one of
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This order was entered after Randolph Barton filed a complaint with the Financial Institutions
26 Division. He did this because it was required by the state court in the case of; Barton v. First Horizon
& Quality, 09-1845, Second Judicial District Court, Order entered on 6/9/10. A copy of this order was
27 previously provided to this Court as Exhibit ‘1' to the Motion to Enlarge Time, and is incorporated by
reference herein.
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Geoffrey L. Giles and
Associates
Post Office Box 93
Reno, Nevada 89504
775.329.4999 Page 2 of 6
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1 Plaintiffs’ claims for relief. It is entitled to some deference by this Court, as the only source of authority
2 on the particular point of law in question. The Plaintiffs have alleged that Quality does not have the
3 proper license, and as such it has committed an Unfair and Deceptive Trade Practice [UDAP] under NRS
4 598.0923(1);
5 “Deceptive trade practice” defined. A person engages in a “deceptive trade practice”
when in the course of his or her business or occupation he or she knowingly: 1.
6 Conducts the business or occupation without all required state, county or city licenses.”
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A violation of a state or federal statute or regulation is also such a violation under NRS 598.0923(3).
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As alleged in the complaint, the plaintiffs are entitled to actual damages, costs and attorney fees because
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they then become ‘victims of fraud’ under NRS 41.600(3). Indeed, now that this case is in federal court
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they intend to pursue their Fair Debt Collection Practice Act directly, and not just as a predicate to a state
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UDAP claim. This would entitle each of them to statutory damages as well. This Court will also be
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called upon to determine if the actions taken by Quality, are void, voidable or merely serve as a predicate
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for the UDAP claim because of this violation.
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In the motion undue reliance is place upon precedent cited by counsel that is not controlling. The
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Hulse, case, infra, is simply not a Ninth Circuit case, it is from the Federal District Court in Oregon.
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For reasons that will be made clear, is now bad law and should not be followed by this court. The
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defendant Quality has pointed to federal cases which state that other foreclosure trustees, under other
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factual circumstances have been held not to be ‘debt collectors’ in FDCPA cases. Those cases may
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certainly be persuasive authority, but they are not controlling authority which this Court is obligated to
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follow. Only the Nevada Supreme Court and the Ninth Circuit Court of Appeals could be taken as
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setting binding precedent, and that is not the case here.
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The Ninth Circuit as simply not ruled squarely on the issue of a foreclosure companies being
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within the FDCPA, or not. The case cited by Quality for the proposition that foreclosure trustee are not
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debt collectors is that of; Hulse v. Ocwen Fed. Bank, 195 F.Supp.2d 1188 (D.Or. 2002). In Hulse,
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the Court determined that foreclosure was not a “debt collection” activity as defined by the Fair Debt
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Collection Practices Act and the corollary Oregon statute. The state court and state agency here have
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Geoffrey L. Giles and
Associates
Post Office Box 93
Reno, Nevada 89504
775.329.4999 Page 3 of 6
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1 held the opposite. This is not a binding decision that federal courts in Nevada would be obliged to
2 follow, but merely a persuasive one. Because its reasoning is flawed, it should not be followed by this
3 court. It cited to only one case, Heinemann v. Jim Walter Homes, Inc., 47 F.Supp.2d 716 (D.W.Va.
4 1998), aff’’d173 F.3d 850 (4th Cir. 1999), which contained no analysis of foreclosure law but
5 nevertheless held that the FDCPA did not apply. However, the Heinemann decision supra, has been
6 overruled by Wilson v. Draper & Goldberg, 443 F.3d 373 (4th Cir. 2006). In Wilson, supra, the 4th
7 Circuit expressly rejected the foreclosure lawyer’s assertion that they were not collecting a debt as
8 defined by the FDCPA because the action was in rem and noted, as is the case here, that the lawyers
9 advised that reinstatement could occur if monies were paid; Id. at 376. Thus, the Wilson Court expressly
10 rejects the summary decision rendered in Heinemann, which is the case that supported the Court’’s
11 holding in Hulse. An identical issue has been pending in the Tenth Circuit Court of appeals for more
12 than a year now, and it will be brought to this Court’s attention when it is ruled upon, either way.
13 The Wilson decision supra, was rendered at approximately the same time as; Kaltenbach v.
14 Richards, 464 F.3d 524 (5th Cir. 2006). The Court in Kaltenbach did not rely upon the Wilson decision,
15 but still reached the same conclusion –– that the FDCPA did apply to attorneys and/or trustees who were
16 attempting to collect a debt by foreclosing. The 3rd Circuit in Piper v. Portnoff Law Assocs., 396 F.3d
17 227, 234 (3rd Cir. 2005) reached the same conclusion and emphasized the importance of the fact that the
18 foreclosing law firm was asking for money to reinstate the loan. Id.
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In Hulse, supra, there is no indication that the Court even considered that when foreclosing, a
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trustee and beneficiary are concurrently making demands for money to stop the sale, which is of course,
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happening in the case at bar. It is clear that the 3rd, 4th and 5th Circuit Courts in Wilson, Kaltenbach and
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Piper found that the demand for payment was debt collection activity in lieu of seizing the real property.
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The Ninth Circuit may come down contrary, but it would open the matter for a petition for certiorari,
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which is something it has been loath to do of late, and case in the Tenth Circuit may well give much
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needed guidance in this regard.
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Perhaps the touchstone is whether the foreclosure trustee also is collecting money in the process
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Geoffrey L. Giles and
Associates
Post Office Box 93
Reno, Nevada 89504
775.329.4999 Page 4 of 6
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1 of foreclosure, or merely getting the collateral back from the homeowners in rem. If memory serves
2 this very issue was touched upon in this very Court during the oral argument on the motion.2 Quality
3 not only processes foreclosure documents, it collects money on behalf of banks/lenders/servicers. Please
4 see the declaration of Geoffrey Giles, attached hereto as exhibit “2”, which is submitted for the purposes
5 of F.RCiv.P. 56(f). Repossessing on real estate, coupled with collecting money due on the underlying
6 notes, brings Quality within the definition of a debt collector under federal law, or a collection agency
7 under state law. Part of this determination has already been made by the state court and state a agency,
8 and it is one that this Honorable Court is bound to respect.
9 3. Conclusion.
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For the foregoing reasons, the motion for summary judgment as to the FDCPA and UDAP issues
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must be denied, and the Plaintiffs be allowed to go forward with discovery.
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AFFIRMATION
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14 That the undersigned affirms that this document does not contain the social security number of

15 any person.

16 Respectfully submitted this 4th day of November, 2010.

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/s/ Geoff Giles
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GEOFFREY L. GILES, Esq.
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In all honesty, I do not recall if it came up in this case or in the case of; Martinez v. Bank of
26 America, 3:10-cv-287, which I argued the week following argument on this case. The transcripts of
those cases have not been ordered at this point. I do recall that the Court informed me that it had ruled
27 in another case that a foreclosure trustee was not a debt collector, so long as it did not collect money in
the process.
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Geoffrey L. Giles and
Associates
Post Office Box 93
Reno, Nevada 89504
775.329.4999 Page 5 of 6
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CERTIFICATE OF SERVICE:
3 Under the penalty of perjury the foregoing statement is true and correct:
4 That I am an employee of Geoffrey L. Giles and on 11/4/10, the parties below have been mailed
a copy of the foregoing document to via first class mail:
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[those participation in the ECF program will receive notice by eMail]
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/s/ Geof Giles
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10 _____________________________
Geof Giles
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12 Christopher Hunter
13 McCarthy Holthus
9510 W. Sahara, #110
14 Las Vegas, NV 89117
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Geoffrey L. Giles and
Associates
Post Office Box 93
Reno, Nevada 89504
775.329.4999 Page 6 of 6