Case Title: Western Surety Company v. ADCO Credit

Citation: 127 Nev. Adv. Op. No. 8

Docket Number: 

State: nevada

Court: Nevada Supreme Court

Date: 2011-03-17T00:00:00Z

Document:
4

 

427 Nev., Advance Opinion 8
IN THE SUPREME COURT OF THE STATE OF NEVADA

WESTERN SURETY COMPANY, AS. No, 54442

SURETY FOR JOSHUA KNIGHT AUTO.

CO. D/B/A JOSHUA'S AUTO SALES,

Appellant, FILED
‘s

ADCO CREDIT, INC., D/B/A AUTO

DEALERS CONSOLIDATED,

Respondent.

MAR 17 201

 

Appeal from a district court order granting a petition for
judicial review in a Department of Motor Vehicles matter. Righth Judicial
District Court, Clark County; Douglas Smith, Judge,

Affirmed,
Anderson, McPharlin & Conners LLP and Janiece S. Marshall and
Zachary T. Ball, Las Vegas; Anderson, McPharlin & Conners LLP and

‘Mark E. Aronson, Los Angeles, California,
for Appellant.

Bell and Young, Ltd., and Richard D. Young, Las Vegas,
for Respondent.

 

BEFORE DOUGLAS, C.J., PICKERING and HARDESTY, JJ.
OPINION:
By the Court, DOUGLAS, C.J.
In this appeal, we consider whether Nevada's motor vehicle

bond statute, NRS 482.345, includes defrauded finance companies as
possible claimants under the bond. We conclude that under the plain

H-Oh1O5.

 

 
meaning of the phrase “any person” in NRS 482.345, a defrauded finance

company is a proper claimant under the dealer bond and, thus, the district

court properly granted respondent ADCO Credit, Inc.'s petition for judicial
FACTS

Appellant Western Surety Company issued a dealer licensing

bond in the amount of $50,000

Respondent ADCO provided Joshua’s with a line of credit to purchase

 

surety for Joshua’s Auto Sales.t

vehicles at auction. ADCO discovered that some of the vehicles Joshu:

 

purchased with the line of credit were vehicles Joshua’

The parties do not dispute that Joshua's defrauded ADCO.

   

already owned.

‘Most of the vehicles were resold to consumers, and ADCO
received some repayment of the funds from the line of eredit but was not
repaid in full. Consequently, ADCO petitioned the DMV to be reimbursed
from the proceeds of the dealer's surety bond provided for Joshua's by
Western.

‘The matter was first heard by a DMV administrative law
judge, who determined that “a dealer’s surety bond is intended for the

 

protection of the consumer, not to safeguard finance companie:
‘Therefore, the administrative law judge found that ADCO was not entitled
to compensation from the bond. ADCO challenged this finding by filing a
petition for judicial review in district court. The district court granted
ADCO’s petition, finding that ADCO was entitled to recover on the bond

\Joshua Knight Auto Co. d.b.a. Joshua's Auto Sales is not a party to
this appeal.

 

 
om

and remanding the matter for further determinations. Western now
appeals from that order.
DISCUSSION

On appeal, Western argues that ADCO is not entitled to
recover from the dealer licensing bond issued by Western to Joshua's
pursuant to NRS 482.345 because ADCO does not fall within the scope of
persons the statute is intended to include. Western focuses on the
language of NRS 482.345(5) and the use of the phrase “consumer contract”
to contend that the statute limits claimants only to defrauded consumers.
ADCO counters that the statute does not limit the potential claimants
only to defrauded consumers because NRS 482.345(6) states that the bond
must provide an opportunity for “any person” to apply for compensation
from the bond. ADCO argues that the 2001 amendments to the statute,
which added the references to consumer contracts and deceptive trade
practices, were not intended to modify the plain meaning of the phrase
“any person.”

Western challenges ADCO’s broad interpretation of the phrase
“any person,” asserting that the remedy provided in NRS 482.345 is only
available following a violation by a salesperson of a licensed dealer, and
therefore, the Legislature considered only consumer victims. Western also
argues that expanding the possible claimants beyond consumers to include
nonconsumers would defeat the purpose of a bond by limiting the funds
available to consumers. We agree with ADCO and, therefore, affirm.
Standard of review

When reviewing a district court’s order granting a petition for
judicial review of an administrative agency decision, this court engages in
the same analysis as the district court: “we evaluate the agency's decision

for clear error or an arbitrary and capricious abuse of discretion.” Law

 
90

Offices of Barry Levinson v. Milko, 124 Nev, 365, 362, 184 P.3d 978, 383
(2008). This court defers to an agency's findings of fact that are supported
by substantial evidence and will “not reweigh the evidence or revisit an
appeals officer's credibility determination.” Id, at 362, 184 P.3d at 383-84.
However, questions of law, including questions of statutory interpretation,
are reviewed de novo, Sims v. Dist. Ct,, 125 Nev. __, __, 206 P.3d 980,
982 (2009); Office of Barry Levinson, 124 Nev. at 362, 184 P.Sd at 384.

With regard to statutory interpretation, if a statute is clear
and unambiguous, this court gives effect to the plain and ordinary
meaning of the statute’s language, and we do not resort to the rules of
statutory construction. Seput v, Lacayo, 122 Nev. 499, 502, 134 P.3d 733,
735 (2006), abrogated on other grounds by Buzz Stew, LLC v. City of N.
Las Vegas, 124 Nev. 224, 228 n.6, 181 P.3d 670, 672 n.6 (2008).
ADCO is.a proper claimant and can recover under NRS 482,345

ADCO contends that pursuant to the plain language of NRS
482.345, it is a proper claimant and can recover compensation from the
bond. We agree?

NRS 482.345(1) states that:

[lefore any _—dealer’s-_ license... is
furnished ... the Department [of Motor Vehicles}
shall require that the applicant... procure and
file with the Department a good and sufficient
bond with a corporate surety thereon, duly
licensed to do business within the State of Nevada,
approved as to form by the Attorney General, and

2We further reject Western’s argument that under NRS 482.345(6),
only consumers may recover on the bond because the subsection mentions
breach by a salesperson of a licensed dealer. ‘This argument is without
merit.

 

 

 
 

conditioned that the applicant or any employee
who acts on behalf of the applicant within the
scope of his or her employment shall conduct
business as a dealer...without breaching a
consumer contract or engaging in a deceptive
trade practice, fraud or fraudulent representation,
and without violation of the provisions of this
chapter.

NRS 482.345(6) adds that “[tJhe undertaking on the bond includes any
breach of a consumer contract, deceptive trade practice, fraud, fraudulent
representation or violation of any of the provisions of this chapter.” NRS
482.345(6) states that “[tJhe bond must provide that any person injured by
the action of the dealer...may apply... for compensation from the
bond.” Under NRS 482.345(7), “[iJf a person is injured by the actions of a
dealer,” the person may bring an action on the bond.

NRS Chapter 482 provides no definition for the term “person,”
see NRS 482.010-.137, nor is the scope of NRS 482.345 constrained by
limiting language. However, Webster's dictionary defines “person” as “a
human being (natural person) or a group of human beings, a corporation, a
partnership, an estate, or legal entity ... recognized by law as having
rights and duties.” Webster's New Universal Unabridged Dictionary 1445
(1996).

‘Therefore, based on the plain language of the phrase “any
person” as used in NRS 482.345(6), we conclude that its meaning is clear
and unambiguous, and includes corporate entities such as ADCO. Based
on the plain language of NRS 482.345, the statute is intended to extend
protection to a class larger than simply consumers, and the bond's
protections are not limited to consumers, as it states that the bond must
provide that “any person injured by the action of the dealer” may apply for
compensation from the bond. ‘Thus, we further conclude that the district

 
court did not abuse its discretion in granting the petition for judicial
review and finding that ADCO could recover from the bond pursuant to
NRS 482.345(6).

Although not discussing the exact same issue, this court's
opinion in State, Department of Motor Vehicles v. Garcia-Mendoza, 114
Nev. 1187, 971 P.2d 377 (1998), tends to support our conclusion here. In
Garcia-Mendoza, this court addressed whether the DMV could recover
under NRS 482.345. Id, There, this court invalidated the district court's

 

order granting Eva Garcia-Mendoza's petition for a writ of garnishment
and attachment of bond, which directed the DMV to pay fines levied
against the auto dealer from the bond. Id, at 1191, 971 P.2d at 879. This
court concluded that the DMV had not properly executed its claims

against the bond, which as a creditor it must do, and that the DMV

 

“cannot simply help itself to the money it controls for the benefit of
others.” Id, at 1191-92, 971 P.2d at 379-80. The court added that the bond
requirement of NRS 482.345 was “clearly intended to ensure compensation
for defrauded consumers, not the DMV."? Id, The court did not, however,
eliminate the poss
In fact, the court left open the possibility that the DMV may have been
cligible to recover from the bond had it complied with the proper
procedures for executing on its claim. Id, at 1192, 971 P.2d at 380.

 

lity of nonconsumers recovering funds from the bond.

 

8With this statement, it appears that the court implicitly considered
the scope of NRS 482.345. However, this point was expressed in a
plurality decision that only two justices signed. Garcia-Mendoza, 114 Nev.
at 1192, 971 P.2d at 380, Nonetheless, four of the five justices
contemplated construing NRS 482.345 to allow nonconsumers to claim
against the bond. See id. at 1192-96, 971 P.2d at 380-83 (Rose,
dissenting, and Young, J., dissenting).

 

 

 
Further, although this court does not resort to a review of
legislative history when a statute's meaning is plain, we offer as
illumination the statute's legislative history. NRS 482.345 was amended
in 2001 and 2005. The 2001 amendment to NRS 482.345(4), which is now
subsection 5, added “bri

 

ich of consumer contract” and “deceptive trade
practices” to the list of injuries for which the bond could be used to
compensate.* 2001 Nev. Stat., ch. 391, § 8, at 1889-90. During discussion
of the 2005 amendment, Assemblywoman Barbara Buckley discussed the
statute in terms of the rights of the consumer, stating that “the bill
clarifies that an aggrieved consumer has the option of going to court or
bringing an administrative action held by [the] DMV.” Hearing on A.B.
249 Before the Assembly Comm. of Commerce and Labor, 73d Leg. (Nev.

‘The language was amended to read:

‘The undertaking on the bond includes any breach

sumer contract, trade practice,
fraud, or fraudulent representation or violation of
any of the provisions of this chapter by the
representative of any licensed distributor or the
salesman of any licensed dealer, manufacturer or
rebuilder who acts for the dealer, distributor,
manufacturer or rebuilder on his behalf and
within the scope of the employment of the
representative or the salesman.

2001 Nev. Stat., ch. 391, § 3, at 1889-90 (additions underlined, deletions
struck through).

The 2005 amendment added a requirement that the surety issuing
the bond appoint the Secretary of State as its agent, as well as changes to
subsection 6 and the additions of subsections 7 and 8, which are not
important to the outcome of this case. 2005 Nev. Stat., ch. 340, § 16, at
1241-43,

 

 
eno <>

 

April 6, 2005). Western uses this language to assert that the bond is
limited to consumer claims and is solely for consumer protection. ADCO
conversely claims that Assemblywoman Buckley's language indicates that
NRS 482.345 is a consumer protection measure aimed at protecting any
injured person rather than just those with consumer contracts.*

However, the inclusion of “any breach of a consumer
contract” in NRS 482.345(5) as a basis for claiming against the
bond does not decrease the scope of those intended to be eligible
to recover from the bond. The adjective “consumer” modifies only the
term “contract” and not the other violations listed in NRS.
482.345(6), ie, deceptive trade practices, fraud, or fraudulent
representations. The fact that contract breaches are limited to
consumer contracts does not imply that claims based on deceptive

trade practices or fraud are limited to those committed against

“It should be noted that NRS 482.318 appears to support the idea
that the chapter is focused on protecting the public in general, not solely
consumers. It states:

‘The Legislature finds and declares that the
distribution and sale of motor vehicles in the State
of Nevada vitally affects the general economy of
the State and the public interest and the public
welfare, and in the exercise of its police power, it,
is necessary to regulate and to license motor
vehicle manufacturers, distributors, new and used
vehicle dealers, brokers, rebuilders, leasing
companie: salespersons, and —_ their
representatives doing business in the State of
Nevada in order to prevent frauds, impositions
and other abuse upon its citizens,

 
consumers. ‘Thus, the legislative history supports our conclusion that,
based on the plain language of NRS 482.345, ADCO is eligible to apply for
compensation from the bond,”

We therefore affirm the district court's order granting the

petition for judicial review.
Douglas Coa,
Douglas

 

We cons
phen Lak, J
Hardesty
t J.
Pickering

“Our conclusion that the language of NRS 482.345 is clear and
‘unambiguous is supported by similar cases in other jurisdictions. See
‘State v. General Insurance Company of America, 179 N.W.2d 123 (N.D.
1970); Bryant Motors v. American States Ins., 800 P.2d 683 (Idaho Ct.
App. 1990). These courts have broadly construed the meaning of the
phrase “any person” as used in similar vehicle dealer statutes. Bryant
Motors, 800 P.2d at 686 (court broadly applied the definition of “any
[person” based on surrounding broad language of “suffering any loss as a
result of any fraudulent representation”); Hartford Cas, Ins, Co, v, Credit
Union 1, 992 P.2d 800, 806 (Kan. 1999) (interpreting its statute consistent
jwith other jurisdictions’ interpretations that the phrase “any
person’ .. . inelude[s] not only consumers or purchasers but also lenders”).