FILED 

MAR 0 5 2015 

131 Nev., Advance Opinion el 

IN THE SUPREME COURT OF THE STATE OF NEVADA 

U.S. BANK NATIONAL ASSOCIATION, 

AS TRUSTEE FOR THE REGISTERED 

HOLDERS OF ML-CFC COMMERCIAL 

MORTGAGE TRUST 2007-7 

COMMERCIAL MORTGAGE PASSTHROUGH CERTIFICATES SERIES 

2007-7, BY AND THROUGH MIDLAND 

LOAN SERVICES, AS ITS SPECIAL 

SERVICER, 

Appellant, 

vs. 

PALMILLA DEVELOPMENT CO., INC., 

A NEVADA CORPORATION; AND 

HAGAI RAPAPORT, AN INDIVIDUAL, 

Respondents. 

No. 62112 

Appeal from a district court order granting summary 

judgment in a deficiency judgment action. Eighth Judicial District Court, 

Clark County; Jerome T. Tao, Judge. 

Reversed and remanded. 

Lewis Roca Rothgerber LLP and Joel D. Henriod, Daniel F. PoIsenberg, 

and Robert M. Charles, Jr., Las Vegas, 

for Appellant. 

Deaner, Malan, Larsen & Ciulla and Brent A. Larsen, Las Vegas; Law 

Offices of Thomas D. Beatty and Thomas D. Beatty, Las Vegas, 

for Respondents. 

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BEFORE HARDESTY, C.J., DOUGLAS and CHERRY, JJ. 

OPINION 

By the Court, DOUGLAS, J.: 

This case presents the question of whether MRS 40.455, which 

governs the award of deficiency judgments, applies when a courtappointed receiver sells real property securing a loan. More specifically, 

the parties dispute whether MRS 40.455(1)'s six-month filing deadline 

bars the mortgagee's recovery of any deficiency after such a receiver's sale 

when the application for a deficiency judgment is made more than six 

months after a purchase and sale agreement is entered into and judicial 

approval of said agreement is sought and given. We hold that a receiver 

sale of real property that secures a loan is a form of judicial foreclosure, 

and thus, to the extent that proceeds from such a sale are deficient, MRS 

40.455 applies. We further hold that the relevant triggering event for the 

purposes of NRS 40.455(1)'s six-month time frame, when a receiver sale of 

real property securing a loan is at issue, is the date of the close of escrow 

rather than the date a purchase and sale agreement is formed or judicially 

sanctioned. And because, here, the mortgagee applied for a deficiency 

judgment within six months from when escrow closed on the sale in 

question, that application was timely. We therefore reverse the district 

court's grant of summary judgment and remand for further proceedings 

consistent with this opinion. 

FACTS AND PROCEDURAL HISTORY 

Respondent borrower, Palmilla Development Co., took out a 

loan for $20.15 million from the predecessor-in-interest of appellant U.S. 

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Bank.' The loan was secured by a deed of trust on a development of 

townhomes and personally guaranteed by respondent Hagai Rapaport, 

Palmilla's president. U S Bank became the legal holder of the loan note 

and all beneficial interest under thefl deed of trust, following which 

Palmilla defaulted and Rapaport failed to fulfill his guarantor obligations. 

U.S. Bank then instituted the underlying action seeking to appoint a 

receiver in order to collect rents from, to market, and to sell the secured 

property. 

Following the district court's approval of this request, the 

receiver, through a real estate marketing company, listed the subject 

property and, over the course of several months, obtained 31 offers to 

purchase the property. From these offers, the receiver identified what it 

believed to be the best offer and entered into a purchase and sale 

agreement with that third-party purchaser for $9.5 million on February 5, 

2010. U.S. Bank filed a motion to approve the sale, which the district 

court granted on March 26, 2010. Escrow closed on June 7, 2010, when 

the purchaser paid the agreed upon price and obtained the deed to the 

property. 

On November 24, 2010, U.S. Bank filed an amended 

complaint, which sought to recover the amount of Palmilla's indebtedness 

that the net proceeds of the receiver sale did not satisfy. Respondents 

filed a motion for summary judgment, arguing that the relief sought in the 

1The appellant's full name is listed as U.S. Bank National 

Association, as trustee for the Registered Holders of ML-CFC Commercial 

Mortgage Trust 2007-7 Commercial Mortgage Pass-Through Certificate 

Series 2007-7, by and through Midland Loan Services, as its Special 

Servicer. 

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amended complaint was, in essence, an application for a deficiency 

judgment under NRS 40.455(1), which U.S. Bank was precluded from 

seeking because (1) the receiver sale was not a "foreclosure sale or 

trustee's sale held pursuant to NRS 107.080," and absent either of those 

two types of sales, NRS 40.455(1) does not permit a deficiency judgment; 

and (2) even if NRS 40.455(1) could be used to seek a deficiency judgment 

following a receiver sale of real property securing a loan, U.S. Bank failed 

to comply with the section's time frame for so seeking. The district court 

granted respondents' motion, holding that, although U.S. Bank could 

utilize NRS 40.455(1) to seek a deficiency judgment following a receiver 

sale of real property securing a loan, U.S. Bank had to abide by NRS 

40.455(1)'s six-month time frame in so doing, and that more than six 

months had passed between the date U.S. Bank filed its amended 

complaint and the date the district court approved the purchase and sales 

agreement. This appeal followed. 

DISCUSSION 

A receiver sale of real property securing a loan is a "foreclosure sale" within 

the meaning of NEW 40.455(1) 

U.S. Bank's appeal raises questions of statutory 

interpretation; our review is, therefore, de novo. Pankopf v. Peterson, 124 

Nev. 43, 46, 175 P.3d 910, 912 (2008). As relevant to this appeal, NRS 

40.455(1) states that 

[LT]pon application of the judgment creditor or the 

beneficiary of the deed of trust within 6 months 

after the date of the foreclosure sale or the trustee's 

sale held pursuant to NRS 107.080, respectively, 

and after the required hearing, the court shall 

award a deficiency judgment to the judgment 

creditor or the beneficiary of the deed of trust if it 

appears from the sheriffs return or the recital of 

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consideration in the trustee's deed that there is a 

deficiency of the proceeds of the sale and a balance 

remaining due to the judgment creditor or the 

beneficiary of the deed of trust, respectively. 

NRS 40.455(1) (emphasis added). As a preliminary matter, we must 

determine whether this section applies when the deficiency application in 

question is brought following a receiver sale of real property securing a 

loan. And, because we agree with respondents that NRS 40.455(1) only 

applies when there is a deficiency in the proceeds of a "foreclosure sale or 

[a] trustee's sale held pursuant to NRS 107.080," we therefore must 

resolve whether a receiver sale of real property securing a loan qualifies as 

either. 

We reject outright the proposition that such a sale is a 

"trustee's sale held pursuant to NRS 107.080." NRS 107.080 confers upon 

a trustee the "power of sale" in a nonjudicial foreclosure proceeding, 

wherein, it is almost so intuitive as to go without saying, "frilo judicial 

proceeding is required." Restatement (Third) of Property (Mortgages) § 

8.2 cmt. a (1997). But, in the context of receiver sales of real property 

securing a loan, a court "in which an action is pending" appoints the 

receiver in question, MRS 32.010(2), and thus, involvement of the judicial 

machinery in such circumstances is clearly contemplated. Indeed, as is 

evident from this court's recitation of the facts, here U S Bank's initiation 

of a judicial proceeding prompted the sale in question, and judicial 

approval of the purchase price was required, sought, and given. Inasmuch 

as the requirements in power of sale statutes like NRS 107.080 are only 

intended to ensure that "the mortgagee accomplishes the same purposes 

achieved by judicial foreclosure without the substantial additional burdens 

that the latter type of foreclosure entails," Restatement (Third) of Property 

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(Mortgages) § 8.2 cmt. a (1997), their application in circumstances, such as 

these, where the judicial process is invoked would be needlessly 

duplicative. We therefore cannot accept a reading of NRS 40.455(1) that 

includes a receiver sale of real property securing a loan as a "trustee's sale 

held pursuant to NRS 107.080." NRS 40.455(1); J.E. Dunn Nw., Inc. v. 

Corus Constr. Venture, LLC, 127 Nev. „ 249 P.3d 501, 505 (2011) 

(noting that this court's interpretations should avoid absurd results). 2 

This leaves only the former prospect, that is, that a receiver 

saleS of real property securing a loan is a "foreclosure sale" within NRS 

40.455(1)'s meaning. NRS 40.455 does not define "foreclosure sale," but a 

different section in the same subchapter does. In particular, NRS 

40.462(4) defines the phrase as "the sale of real property to enforce an 

obligation secured by a mortgage or lien on the property, including the 

exercise of a trustee's power of sale pursuant to NRS 107.080." Likewise, 

Black's defines a foreclosure sale as "[Ole sale of mortgaged property, 

authorized by a court decree or a power-of-sale clause, to satisfy the debt." 

Black's Law Dictionary 1455 (9th ed. 2009). But, to the extent that NRS 

40.455(1) bifurcates "foreclosure sale[s]" from nonjudicial trustees' sales 

held pursuant to NRS 107.080, within the section's confines, "foreclosure 

sale" must mean, more limitedly, only the former type of sale—namely, a 

sale of real property held to enforce an obligation secured by a mortgage or 

lien, other than those trustee's sales authorized by NRS 107.080. 

2Because such receiver sales are not "held pursuant to NRS 

107.080," any failures alleged by respondents of U.S. Bank to meet NRS 

107.080's requirements are beside the point. 

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A sale directed by a court-appointed receiver plainly falls 

within this definition. Pursuant to NRS 32.010(2), the statute under 

which the instant receiver was appointed, a court may appoint a receiver 

... [fin an action by a mortgagee for the 

foreclosure of the mortgage and sale of the 

mortgaged property, where it appears that the 

mortgaged property is in danger of being lost, 

removed or materially injured, or that the 

condition of the mortgage has not been performed, 

and that the property is probably insufficient to 

discharge the mortgage debt. 

Inasmuch as NRS 32.010(2) states that a receiver may be appointed "in an 

action by a mortgagee for the foreclosure of the mortgage," it plainly 

envisages that a receiver sale of real property securing a loan is one of 

foreclosure. Indeed, the request for receiver under the section is only 

ancillary to such a sale. See 2 Baxter Dunaway, The Law of Distressed 

Real Estate § 16:32 (2014). And as this court has previously recognized, 

any property "[e]ntrusted to [a receiver's] care is regarded as being in 

custodia legis"; put differently, "the court itself [has] the care of the 

property by its receiver." Bowler v. Leonard, 70 Nev. 370, 383, 269 P.2d 

833, 839 (1954) (internal quotations omitted). Even further, a receiver is 

merely the court's "creature or officer, having no powers other than those 

conferred upon him by the order of his appointment." Id. (internal 

quotations omitted). Thus, real property that secures a loan and is sold in 

a receiver sale is undoubtedly "sold through a court proceeding" inasmuch 

as the receiver, for all intents and purposes, acts as a court's proxy, 

facilitating the sale of property in the appointing court's care and only 

with its approval. See id.; see also Campbell v. Parker, 45 A. 116, 118 (N.J. 

Ch. 1900) ("[If a sale by a sheriff, by virtue of a writ directed to him by 

this court, is a judicial sale, a fortiori one made by a receiver, who is 

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appointed by this court, and who is in a sense an arm of the court, and, so 

to speak, a part of it, is also a judicial sale."); Dunaway, supra, § 16:32 

(identifying a receiver sale as a method of judicial foreclosure); 2 Clark on 

Receivers § 482 (3d ed. 1959) ("A receiver's sale is a judicial sale."). 

In light of the strength of this reasoning, we reject 

respondents' arguments that a receiver sale of real property securing a 

loan is not a form of judicial foreclosure sale because, as occurred here, the 

property may not be sold at a public auction, cf. NRS 40.430(4) (indicating 

that a judicial foreclosure sale "must be conducted in the same manner as 

the sale of real property upon execution, by the sheriff'); NRS 21.150 

(indicating that sales of property under execution shall be made at 

auction to the highest bidder"), or because there may be instances where, 

as here, no "judgment" is entered prior to the sale. Such arguments 

unnecessarily elevate form over substance. We therefore hold that a 

receiver sale of real property securing a loan is a "foreclosure sale" within 

the meaning that NRS 40.455(1) ascribes to the phrase. 

NRS 40.455(1)'s six-month time frame was satisfied in the instant action 

Thus having determined that NRS 40.455(1) governs actions 

for deficiency judgments following a receiver sale of real property securing 

a loan, we turn to the question of whether NRS 40.455(1), which requires 

an application for a deficiency judgment to be made "within 6 months after 

the date of the foreclosure sale," offers any relief to the respondents in the 

instant case. Specifically, respondents argue that U.S. Bank's filing for 

deficiency on November 24, 2010, was untimely pursuant to NRS 

40.455(1), because the date of the "foreclosure sale" fell either on February 

5, 2010, when the receiver entered into the purchase and sale agreement 

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with the third-party purchaser or, at the very latest, March 26, 2010, the 

date when the district court approved the sale. 

When the sale in question is a trustee's sale conducted 

pursuant to NRS 107.080, this court has held that the date of the sale for 

the purposes of NRS 40.455(1)'s time frame is that on which the auction 

was conducted. Sandpointe Apartments, LLC v. Eighth Judicial Dist. 

Court, 129 Nev. „ 313 P.3d 849, 856 (2013); Walters v. Eighth 

Judicial Dist. Court, 127 Nev. , 263 P.3d 231, 234 (2011). But the 

transaction that we presently consider was orchestrated pursuant to the 

method of judicial foreclosure sanctioned by NRS 32.010, not NRS 

107.080. When a sale is conducted pursuant to NRS 107.080, it makes 

sense that the close of the auction triggers the start of NRS 40.455(1)'s 

time frame—the winning bidder typically pays the bid price at the 

auction's conclusion. See Roark v. Plaza Say. Ass'n, 570 S.W.2d 825, 830 

(Mo. Ct. App. 1978) ("The trustee must be able to exercise discretion in 

requiring bidders to satisfy him that they will be able to pay their bid in 

cash."); 2 Michael T. Madison, et al., Law of Real Estate Financing § 12:57 

(2014) (collecting cases and noting that the trustee has discretion to 

require bidders to prove their ability to immediately pay the bid price). 

But, as discussed above, in the context of receiver sales of property 

securing a loan, an element of judicial review and approval is added 

separate and apart from any requirements that NRS 107.080 places on 

trustee's sales such that payment is not immediately made when a 

contract for purchase and sale is formed. Thus, other jurisdictions have 

reasoned that, where such judicial review and approval is mandated, a 

prospective purchaser's submission of the highest bid is merely an 

irrevocable offer to purchase, and have rejected the idea that any right to 

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deficiency judgment vests by virtue of the seller's acceptance of said offer 

alone. See, e.g., Leggett v. Ogden, 284 S.E.2d 1, 3 (Ga. 1981); Commercial 

Credit Loans, Inc. v. Espinoza, 689 N.E.2d 282, 285 (Ill. App. Ct. 1997). 

We likewise hold that the receiver's mere entry into an agreement with a 

prospective purchaser in a receiver sale of real property securing a loan 

does not commence NRS 40.455(1)'s applicable six-month time frame. 

Neither, in our view, does the date that judicial approval is 

given begin NRS 40.455(1)'s time frame in the context of such a receiver 

sale. It has been said that a judicial foreclosure sale is not "legally 

complete or binding until the purchaser has actually paid the amount bid." 

In re Grant, 303 B.R. 205, 210 (Bankr D Nev. 2003) (internal citations 

omitted); see Matter of Kleitz, 6 B.R. 214, 218 (Bankr. D. Nev. 1980). Prior 

to that time, if the court becomes satisfied that the purchaser will not or 

cannot pay the bid amount, the property must be re-advertised and resold. See Dazet v. Landry, 21 Nev. 291, 293-94, 30 P. 1064, 1066 (1892), 

criticized on other grounds by Golden v. Tomiyasu, 79 Nev. 503, 512, 387 

P.2d 989, 993 (1963). Accordingly, in the context of receiver sales of real 

property securing loans, even after the sale has received judicial sanction, 

the mortgagee has no certainty as to whether that sale will come to 

fruition and thus cannot be sure of the existence of any deficiency 

resulting therefrom. It is this assurance of a recoverable deficiency's 

existence that triggers a mortgagee's opportunity to seek it and 

commences the applicable six-month limitations period, see Sandpointe, 

129 Nev. at 313 P.3d at 856 ("The trustee's sale marks the first point 

in time that an action for deficiency can be maintained and commences the 

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Cherry 

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applicable six-month limitations period."), and therefore, we hold that in 

the context of receiver sales of real property securing loans, it is not until 

the actual exchange of money, the close of escrow, that NRS 40.455(1)'s 

six-month time limit begins. 

To be clear, we do not abrogate or overrule Sandpointe, only 

clarify that when a receiver conducts a sale of real property securing a 

loan, NRS 40.455(1) applies, and the triggering event for NRS 40.455(1)'s 

time frame is the date that escrow closes and payment is made. Given 

that, here, less than six months had elapsed between the payment of funds 

on June 7, 2010, and U.S. Bank's application for a deficiency judgment on 

November 24, 2010, U.S. Bank complied with NRS 40.455(1)'s requisite 

time frame. The district court therefore erred in granting summary 

judgment on those grounds; we reverse and remand for proceedings 

consistent with this opinion. 

.D.174 

Douglas 

J. 

We concur: 

sa■■ 

Hardesty 

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