131 Nev., Advance Opinion 23 

IN THE SUPREME COURT OF THE STATE OF NEVADA 

MICHAEL A. MUNOZ AND SHERRY L. 

MUNOZ, HUSBAND AND WIFE, 

Appellants, 

vs. 

BRANCH BANKING AND TRUST 

COMPANY, INC., A NORTH 

CAROLINA CORPORATION, 

Respondent. 

No. 63747 

FILED 

APR 3 0 2015 

Appeal from a post-judgment deficiency judgment in a judicial 

foreclosure action. Tenth Judicial District Court, Churchill County; 

Thomas L. Stockard, Judge. 

Affirmed. 

Law Offices of John J. Gezelin and John J. Gezelin, Reno, 

for Appellants. 

Sylvester & Polednak, Ltd., and Jeffrey R. Sylvester and Allyson R. Noto, 

Las Vegas, 

for Respondent. 

BEFORE THE COURT EN BANC. 

OPINION 

By the Court, SAITTA, J.: 

Pursuant to the Supremacy Clause of the United States 

Constitution, "state laws that conflict with federal law are without effect." 

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Altria Grp., Inc. v. Good, 555 U.S. 70, 76 (2008) (internal quotations 

omitted). One of the purposes of the federal Financial Institutions 

Reform, Recovery and Enforcement Act of 1989 (FIRREA), Pub. L. No. 

101-73, 103 Stat. 183 (codified as amended in scattered sections of 12 

U.S.C.), is "to facilitate the purchase and assumption of failed banks as 

opposed to their liquidation." FDIC v. Newhart, 892 F.2d 47, 49 (8th Cir. 

1989). 

At issue here is whether MRS 40.459(1)(c)'s limitation on the 

amount of a deficiency judgment that a successor creditor can recover 

conflicts with FIRREA's purpose of facilitating the transfer of the assets of 

failed banks to other institutions. Because MRS 40.459(1)(c) limits the 

value that a successor creditor can recover on a deficiency judgment, its 

application to assets transferred by the Federal Deposit Insurance 

Corporation (FDIC) frustrates the purpose of FIRREA. Therefore, we hold 

that MRS 40.459(1)(c) is preempted by FIRREA to the extent that NRS 

40.459(1)(c) limits deficiency judgments that may be obtained from loans 

transferred by the FDIC. 

FACTUAL AND PROCEDURAL HISTORY 

In 2007, appellants Michael A. and Sherry L. Munoz borrowed 

money from Colonial Bank and granted Colonial Bank a security interest 

in their real property. In 2009, the FDIC placed Colonial into receivership 

and assigned the Munozes' loan to respondent Branch Banking and Trust 

Company, Inc. (BB&T). In 2011, MRS 40.459(1)(c), which implements 

certain limitations on the amount of a deficiency judgment that can be 

recovered by an assignee creditor, became effective. 2011 Nev. Stat., ch. 

311, §§ 5, 7, at 1743, 1748. In 2012, after the Munozes had defaulted on 

their loan, BB&T instituted an action for a judicial foreclosure of the 

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secured property, which the Munozes did not oppose. The property was 

sold for less than the value of the outstanding loan at a sheriffs sale in 

2013. BB&T then filed a motion seeking a deficiency judgment against 

the Munozes for the remaining balance of the loan. Reasoning that NRS 

40.459(1)(c) did not apply retroactively to the Munozes' loan, which was 

originated and assigned before the statute's effective date, the district 

court awarded a deficiency judgment to BB&T for the full deficiency 

amount sought. In its order, the district court did not address whether 

NRS 40.459(1)(c)'s present application was preempted by federal law. The 

Munozes then filed the present appeal. 

DISCUSSION 

In addition to addressing whether NIBS 40.459(1)(c)'s 

application in the present case was impermissibly retroactive, the parties 

briefed several other issues, including whether this statute was preempted 

by federal law. The Munozes argue that NRS 40.459(1)(c) is not 

preempted by a conflict with federal law because it does not impair the 

FDIC's ability to act as the receiver for a failed bank or to transfer a failed 

bank's assets. 

BB&T argues that the application of NRS 40.459(1)(c) to loans 

acquired from the FDIC is preempted by FIRREA because NRS 

40.459(1)(c) interferes with the FDIC's ability to assume and dispose of a 

failed bank's assets. 

Standard of review 

"Whether state law is preempted by a federal statute or 

regulation is a question of law, subject to our de novo review." Nanopierce 

Techs., Inc. v. Depository Trust & Clearing Corp., 123 Nev. 362, 370, 168 

P.3d 73, 79 (2007) (citation omitted). When reviewing a question of law, 

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"[we] will affirm the order of the district court if it reached the correct 

result, albeit for different reasons." Rosenstein v. Steele, 103 Nev. 571, 

575, 747 P.2d 230, 233 (1987). 

A state law that conflicts with federal law is preempted and without effect 

The preemption doctrine is rooted in the Supremacy Clause of 

the United States Constitution, which provides: 

This Constitution, and the Laws of the 

United States which shall be made in Pursuance 

thereof; and all Treaties made, or which shall be 

made, under the Authority of the United States, 

shall be the supreme Law of the Land; and the 

Judges in every State shall be bound thereby, any 

Thing in the Constitution or Laws of any State to 

the Contrary notwithstanding. 

U.S. Const. art. VI, cl. 2. Thus, "state laws that conflict with federal law 

are without effect." Altria Grp., 555 U.S. at 76 (internal quotations 

omitted). 

One situation in which federal law can preempt a state law is 

where a direct conflict between federal and state law exists. See Boyle v. 

United Techs. Corp., 487 U.S. 500, 504 (1988). This occurs when the state 

law "frustrates the purpose of the national legislation, or impairs the 

efficiencies of [the] agencies of the Federal government to discharge the 

duties for the performance of which they were created." McClellan v. 

Chipman, 164 U.S. 347, 357 (1896) (internal quotations omitted); see also 

Malone v. White Motor Corp., 435 U.S. 497, 504 (1978) (observing that 

state and local laws which frustrate federal law are preempted); 

Nanopierce Techs., 123 Nev. at 375, 168 P.3d at 82 (holding that conflict 

preemption occurs when a state law frustrates a federal law's purpose). 

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FIRREA serves to facilitate the sale of a failed bank's assets 

"Congress enacted WIRREAl to enable the federal 

government to respond swiftly and effectively to the declining financial 

condition of the nation's banks and savings institutions." Schettler v. 

RalRon Capital Corp., 128 Nev. Adv. Op. No. 20, 275 P.3d 933, 936 (2012) 

(alteration in original) (quoting Henderson v. Bank of New England, 986 

F.2d 319, 320 (9th Cir. 1993)). Under FIRREA, "[wthen the FDIC is 

appointed receiver of a failed financial institution, it immediately becomes 

the receiver of all of that institution's assets, including promissory notes 

that are in default." James J. Boteler, Protecting the American Taxpayers: 

Assigning the FDIC's Six Year Statute of Limitations to Third Party 

Purchasers, 24 Tex. Tech L. Rev. 1169, 1172 (1993) (citation omitted). 

When acting as a receiver for a failed bank, "[t] he FDIC's essential duty is 

to convert all of the institution's assets to cash to cover the insured 

depositors." Id. One method of this is a purchase and assumption 

agreement, where "the FDIC tries to arrange for a solvent bank to 

purchase the assets of the failed bank so as to avoid any interruption and 

loss to the depositors." Id.; see also Newhart, 892 F.2d at 49 (observing 

that one of FIRREA's purposes "is to facilitate the purchase and 

assumption of failed banks as opposed to their liquidation"). 

To assist the FDIC in carrying out this duty, federal law 

provides special status to the FDIC's assignees so as to maintain the value 

of the assets they receive from the FDIC. See, e.g., FDIC v. Bledsoe, 989 

F.2d 805, 809-11 (5th Cir. 1993) (providing that FDIC assignees share the 

FDIC's statutory "super" holder-in-due-course status and are entitled to 

the benefit of a six-year statute of limitations under FIRREA rather than 

any shorter state statute of limitations); see also Campbell Leasing, Inc. v. 

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FDIC, 901 F.2d 1244, 1249 (5th Cir. 1990) (holding that "the FDIC and 

subsequent note holders enjoy holder in due course status whether or not 

they satisfy the technical requirements of state law"); Bell & Murphy & 

Assocs., Inc. v. Interfirst Bank Gateway, NA, 894 F.2d 750, 754 (5th Cir. 

1990) (holding that protections provided to the FDIC from claims or 

defenses based on unrecorded side agreements extend to private assignees 

of the FDIC). 

If a state statute limits the market for assets transferred by 

the FDIC, it conflicts with FIRREA because it "would have a deleterious 

effect on the FDIC's ability to protect the assets of failed banks." Newhart, 

892 F.2d at 50; see also Bledsoe, 989 F.2d at 811 (holding that FDIC 

assignees are afforded a six-year statute of limitations under FIRREA 

rather than any shorter state statute of limitations, because the shorter 

state statute of limitations would limit the value of the assets the FDIC is 

to assign); Fall v. Keasler, No. C 90 20643 SW (ARB), 1991 WL 340182, at 

*4 (N.D. Cal. Dec. 18, 1991) ("The FDIC can only make frill use of the 

market in discharging its statutory responsibilities if the market 

purchasers have the same rights to pursue actions against recalcitrant 

debtors as does the FDIC."). Thus, state laws that limit the private 

market for assets of failed banks held by the FDIC conflict with FIRREA 

and are preempted. 

NRS 40.459(1)(c) is preempted by its conflict with FIRREA 

NRS 40.459(1)(c) limits the amount an assignee creditor may 

recover on a deficiency judgment to the amount that it paid to acquire the 

interest in the secured debt less the amount of the secured property's 

actual value. Specifically, the statute provides that 

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the amount by which the amount of the 

consideration paid for that right [to obtain the 

deficiency judgment] exceeds the fair market value 

of the property sold at the time of sale or the 

amount for which the property was actually sold, 

whichever is greater, with interest from the date 

of sale and reasonable costs, 

shall be the amount of a deficiency judgment. NRS 40.459(1)(c). 

Since the statute limits a successor creditor's recovery to no 

more than it paid for a loan, NRS 40.459(1)(c) prevents a creditor from 

realizing a profit on its purchase of a debt from an assignor creditor. See 

Id. This statute makes it less likely that a rational creditor would 

purchase such a loan. Therefore, NRS 40.459(1)(c)'s application to failed 

banks' assets held by the FDIC would limit the private market for such 

assets by making it more difficult for the FDIC to dispose of these assets. 

Thus, the application of NRS 40.459(1)(c) to assets transferred by the 

FDIC would frustrate the purpose of FIRREA and directly conflict with 

this federal statutory scheme. Consequently, NRS 40.459(1)(c) is 

preempted by FIRREA as to assets transferred by the FDIC and is without 

effect in this case. See Altria Grp., 555 U.S. at 76. 

CONCLUSION 

Although the district court found that NRS 40.459(1)(c) does 

not apply to BB&T's application for a deficiency judgment for a different 

reason than the one stated above, it reached the correct result in 

concluding that NRS 40.459(1)(c) did not shield the Munozes from 

deficiency judgment liability. Since "[we] will affirm the order of the 

district court if it reached the correct result, albeit for different reasons," 

Rosenstein v. Steele, 103 Nev. 571, 575, 747 P.2d 230, 233 (1987), we 

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affirm the district court's order on the grounds that conflict preemption 

prevents NRS 40.459(1)(c)'s application in the present case.' 

Saitta 

We concur: 

'Since NRS 40.459(1)(c)'s application in the present case is 

preempted by its conflict with FIRREA, we do not reach the other issues 

raised, including whether: (1) NRS 40.459(1)(c)'s application in the present 

case would be retroactive, (2) this statute's application in the present case 

violates the Contracts Clause of the United States or Nevada 

Constitutions, or (3) the FDIC is a person within the meaning of NRS 

40.459(1)(c). 

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