million and hold it for a year. During that time, Centex could exercise its 

purchase option and buy the Property from St. Rose for $54 million. 

St. Rose's acquisition money came from three sources: (1) a 

promissory note payable to Colonial Bank, N.A. (Colonial) in the amount 

of $29 million secured by a first-priority deed of trust against the Property 

(the Purchase Loan); (2) nonrefundable deposits in the amount of $8 

million from Centex; and (3) a promissory note payable to R&S Lenders in 

the amount of $12 million secured by a deed of trust against the Property 

that was recorded after the Colonial Bank deed of trust (R&S Lenders 

Deed of Trust). 

Rad and Nourafchan obtained the financial backing for R&S 

Lenders by soliciting funds from private investors, including Eckley M. 

Keach and Robert E. Murdock. Keach agreed to loan $500,000, and 

Murdock agreed to loan $100,000. Keach and Murdock obtained 

individual promissory notes to secure their loans. Both promissory notes 

required St. Rose to pay monthly interest on the principal amounts at a 

rate of 12.5% per annum, due on the first day of each month, and 

contained late-fee provisions. However, these notes were not secured by a 

beneficial interest in a deed of trust.' 

When Centex decided not to exercise its purchase option, St. 

Rose needed additional money to hold and develop the Property. In 2007, 

St. Rose obtained an additional loan from Colonial not exceeding $43 

million (the Construction Loan). The Construction Loan was intended to 

pay off the Purchase Loan and provide funding for improvements on the 

1Keach and Murdock subsequently assigned their judgment against 

R&S Lenders to respondent Commonwealth Title Insurance Company. 

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Property. A deed of trust in favor of Colonial secured the Construction 

Loan (the 2007 Deed of Trust). As part of the Construction Loan 

transaction, Nevada Title Company issued Colonial a title insurance 

policy for $44 million. This title policy insured that the 2007 Deed of 

Trust was in first priority position against the Property and that the R&S 

Lenders Deed of Trust was removed as an exception to marketable title. 

Funds from the Construction Loan were used to pay off the amount due 

under the Purchase Loan. However, Nevada Title did not obtain a release, 

reconveyance, or a subordination agreement for the R&S Lenders Deed of 

Trust. 

When St. Rose defaulted on the Construction Loan and 

stopped making payments to R&S Lenders, Colonial and R&S Lenders 

recorded notices of default. Both foreclosure proceedings were enjoined 

pending the outcome of this dispute between R&S Lenders and Colonial 

regarding the priority of the deeds of trust. During the litigation, the 

Alabama State Banking Department closed Colonial and named the 

Federal Deposit Insurance Corporation (FDIC) as receiver. The same day, 

Branch Banking and Trust (BB&T) and the FDIC entered into a 

"Purchase and Assumption Agreement, Whole Bank All Deposits" (the 

PAA) to transfer Colonial's assets to BB&T. 

R&S Lenders appeals from a district court order granting 

summary judgment in favor of Murdock and Keach on their claims for 

breach of the promissory notes. R&S Lenders alleges that the district 

court erred when it calculated the interest due under Murdock and 

Keach's promissory notes. BB&T appeals the district court's 

determination that the R&S Lenders Deed of Trust had priority over the 

2007 Deed of Trust because BB&T did not prove that it received a valid 

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assignment of the Construction Loan from the FDIC. BB &T alleges that 

the district court improperly analyzed its ownership of the Construction 

Loan. 

The district court did not err in its interest calculations on Murdock and 

Keach's promissory notes 

We review an order granting a motion for summary judgment 

de novo. Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029 

(2005). Prejudgment interest awards are reviewed for error. Schiff v. 

Winchell, 126 Nev. „ 237 P.3d 99, 100 (2010). 

On appeal, R&S Lenders challenges the district court's 

calculation of interest in its order granting Murdock and Keach's motion 

for summary judgment. Specifically, R&S Lenders argues that allowing a 

5% monthly late fee to accrue on the total amount owed after the maturity 

date was not provided for in the notes and is contrary to law. R&S 

Lenders also argues that the imposition of the 25% default rate on the 

entire prejudgment amount owed to Murdock and Keach is improper 

compound interest. 

We conclude that the district court did not err when it 

determined that the calculations attached to Murdock and Keach's motion 

for summary judgment accurately set forth the amount owed by R&S 

Lenders under the promissory notes. The plain language of the 

promissory notes allows a 5% monthly charge as liquidated damages in 

two amounts: first, on delinquent monthly interest payments, and second, 

on the entire amount due under the promissory notes if not paid by the 

maturity date. Further, we conclude that the district court's provision for 

a 25% default rate does not equate with ordering compound interest 

because the interest is not being added back into the principal. See 44B 

Am. Jur. 3d Interest and Usury § 54 (2007) (compound interest occurs 

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when "accrued interest is added periodically to the principal, and interest 

is then computed upon the new principal thus formed," and is not the 

mere "allowance of interest on overdue installments of interest"). 

The district court's conclusion that BB&T did not prove ownership of the 

loan was supported by substantial evidence 

On cross-appeal, BB&T challenges the district court's rulings 

relating to its claims against St. Rose for failure to pay under the 

Construction Loan and the respective priorities of the 2007 Deed of Trust 

and the R&S Lenders Deed of Trust. Specifically, BB&T argues that the 

district court erred in determining that it lacked standing to assert the 

claims it raised in its complaint. BB&T further contends that the district 

court should not have concluded that the R&S Lenders Deed of Trust had 

priority over the 2007 Deed of Trust. R&S Lenders responds that the 

district court properly granted its NRCP 52(c) motion because BB&T 

failed to prove that it owned the Construction Loan, which was an implied 

element of its claim. 

We will not set aside a district court's findings of fact and 

conclusions of law unless clearly erroneous. Sheehan & Sheehan v. Nelson 

Malley & Co., 121 Nev. 481, 486, 117 P.3d 219, 223 (2005). Generally, a 

merger transfers all assets and liabilities, while in an asset purchase, 

assets and liabilities are not assumed unless otherwise specified. See Viii. 

Builders 96, L.P. v. U.S. Labs., Inc., 121 Nev. 261, 268, 112 P.3d 1082, 

1087 (2005); Caires v. JP Morgan Chase Bank, 745 F. Supp. 2d 40, 48-49 

(D. Conn. 2010) ("the FDIC [has the] ability to designate specific assets 

and liabilities for purchase and assumption . . . [and] a Court should look 

to the purchase and assumption agreement governing the transfer of 

assets between the FDIC and a subsequent purchaser of assets of a failed 

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bank to determine which assets and corresponding liabilities are being 

assumed"). 

The PAA was an asset purchase and therefore the district 

court looked to its language in order to determine which assets and 

corresponding liabilities were transferred to BB&T. However, due to the 

omission of the schedules of assets, the district court found that PAA did 

not transfer the Construction Loan to BB&T. We agree, and therefore 

conclude that the district court's decision to grant R&S Lenders' NRCP 

52(c) motion after BB&T failed to carry its evidentiary burden to prove its 

ownership of the Construction Loan was not clearly erroneous. 2 

Further, we conclude that the district court's decision to 

exclude two documents relating to BB&T's interest in the Construction 

Loan was not an abuse of discretion because the documents were not 

properly produced in accordance with the disclosure requirements of 

NRCP 16.1(a)(1) or NRCP 26(3)(a). See MC. Multi-Family Dev. v. 

Crestdale Assocs., 124 Nev. 901, 913, 193 P.3d 536, 544 (2008) (we review 

a district court's decision to deny admission of evidence for abuse of 

discretion). 

2BB&T urges us to adopt the reasoning in Branch Banking & Trust 

Co. v. Navarre 33, Inc., No. 3:10CV10/MCR/EMT, 2012 WL 2377851 (N.D. 

Fla. May 21, 2012), but we conclude the reasoning of that case is 

unpersuasive. Although Navarre involved the same PAA between the 

FDIC and BB&T, the case concerned a breach of contract relating to a 

promissory note. Id. at *1. The Federal District Court for the Northern 

District of Florida concluded that the no genuine issues of material fact 

existed regarding whether the PAA excluded the promissory note at issue. 

Id. at *5-6. Therefore, not only did Navarre deal with a different 

procedural posture, it also involved the negotiation of a promissory note, 

not the assignment of a deed of trust. 

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Gibbons 

1,;;Dz kla_ 

Douglas 

We have considered the parties' remaining arguments and 

conclude they are without merit. Accordingly, we 

ORDER the judgment of the district court AFFIRMED. 

Saitta 

J. 

J. 

J. 

cc: Elizabeth Goff Gonzalez, District Court Judge 

Larry J. Cohen, Settlement Judge 

David J. Merrill, P.C. 

Early Sullivan Wright Gizer & McRae, LLP 

Gerrard Cox & Larsen 

Meier & Fine, LLC 

Eighth District Court Clerk 

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