Court Opinion

ID: 2824370
Source: CourtListenerOpinion
Date Created: 2015-08-11 04:44:14.819647+00
Date Added: 2024-06-11T12:29:02.591431
License: Public Domain

131 Nev., Advance Opinion 2.0
        IN THE SUPREME COURT OF THE STATE OF NEVADA

 BRANCH BANKING AND TRUST                           No. 59638
 COMPANY, A NORTH CAROLINA
 BANKING CORPORATION,
 Appellant,
 vs.                                                     FILED
 WINDHAVEN & TOLLWAY, LLC, A                              APR 30 2015
 NEVADA LIMITED LIABILITY
 COMPANY; STANLEY H.
 WASSERKRUG, AN INDIVIDUAL;
 SUSAN S. WASSERKRUG, AN
 INDIVIDUAL; STANLEY HOWARD
 WASSERKRUG AND SUSAN
 SCHWARTZ WASSERKRUG, AS
 TRUSTEES OF THE WASSERKRUG
 FAMILY TRUST DATED NOVEMBER
 13, 2003; KEITH K. LYON, AN
 INDIVIDUAL; KEITH K. LYON, AS
 TRUSTEE OF THE KEITH K. LYON
 LIVING TRUST, DATED OCTOBER 29,
 2003; STACY M. RUSH, AN
 INDIVIDUAL; ADRIENNE J. RUSH, AN
 INDIVIDUAL; STACY M. RUSH AND
 ADRIENNE J. RUSH, AS TRUSTEES
 OF THE STACY AND ADRIENNE
 RUSH FAMILY TRUST DATED
 MARCH 22, 1993; THOMAS B.
 ACEVEDO, AN INDIVIDUAL; AND
 GREENSTREET PROPERTIES, LLC, A
 NEVADA LIMITED LIABILITY
 COMPANY,
 Respondents.
 BRANCH BANKING AND TRUST                           No. 60527
 COMPANY,
 Appellant,
 vs.
 WINDHAVEN & TOLLWAY, LLC, A
 NEVADA LIMITED LIABILITY
 COMPANY; STANLEY H.

1/2-1   CArrreekLei -fer   p.d21;-sher-5,
WASSERKRUG, AN INDIVIDUAL;
SUSAN S. WASSERKRUG, AN
INDIVIDUAL; STANLEY HOWARD
WASSERKRUG AND SUSAN
SCHWARTZ WASSERKRUG, AS
TRUSTEES OF THE WASSERKRUG
FAMILY TRUST DATED NOVEMBER
13, 2003; KEITH K. LYON, AN
INDIVIDUAL; KEITH K. LYON, AS
TRUSTEE OF THE KEITH K. LYON
LIVING TRUST, DATED OCTOBER 29,
2003, A TRUST; STACY M. RUSH, AN
INDIVIDUAL; ADRIENNE J. RUSH, AN
INDIVIDUAL; STACY M. RUSH AND
ADRIENNE J. RUSH, AS TRUSTEES
OF THE STACY AND ADRIENNE
RUSH FAMILY TRUST DATED
MARCH 22, 1993; THOMAS B.
ACEVEDO, AN INDIVIDUAL; AND
GREENSTREET PROPERTIES, LLC, A
NEVADA LIMITED LIABILITY
COMPANY,
Respondents.

           Consolidated appeals from a district court summary judgment
in a deficiency action and from a post-judgment district court order
awarding attorney fees and costs. Eighth Judicial District Court, Clark
County; Linda Marie Bell, Judge.
           Reversed and remanded.

Holland & Hart, LLP, and Frank Z. LaForge and Jeremy J. Nork, Reno,
for Appellant.

Bogatz Law Group and I. Scott Bogatz, Charles M. Vlasic, III, and
YanXiong Li, Las Vegas,
for Respondents Windhaven & Tollway, LLC; Stanley H. Wasserkrug;
Susan S. Wasserkrug; Keith K. Lyon; Stacy M. Rush; Adrienne J. Rush;
and Greenstreet Properties, LLC.

                                    2
                Law Offices of John M. Netzorg and John M. Netzorg, Las Vegas,
                for Respondent Thomas B. Acevedo.

                O'Mara Law Firm, P.C., and David C. O'Mara, Reno, for Amicus Curiae
                Nevada Bankers Association.

                BEFORE THE COURT EN BANC.

                                                OPINION

                By the Court, HARDESTY, C.J.:
                            NRS 40.455(1) permits a creditor or deed-of-trust beneficiary
                who is unable to fully recover its investment through foreclosure to bring
                an action for a deficiency judgment after "the foreclosure sale or the
                trustee's sale held pursuant to NRS 107.080, respectively." In this appeal,
                we determine whether NRS 40.455(1) precludes a deficiency judgment
                when the beneficiary nonjudicially forecloses upon property located in
                another state and the foreclosure is conducted pursuant to that state's
                laws instead of NRS 107.080. We hold it does not, and we therefore
                reverse the district court's order and remand for further proceedings
                consistent with this opinion.
                                                 FACTS
                            In 2007, respondent Windhaven & Tollway, LLC, borrowed
                nearly $17 million from appellant Branch Banking and Trust Company's
                predecessor-in-interest.' The loan was secured by various assets,

                      'The predecessor-in-interest, Colonial Bank, is not a party to these
                appeals.

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                including real property located in Texas. The parties agreed that Nevada
                law would govern the note and that the courts in Clark County, Nevada,
                and Collin County, Texas, would have jurisdiction over future disputes.
                The remaining respondents to this action (collectively referred to as the
                Guarantors) entered into a guaranty agreement to pay any debt remaining
                if Windhaven defaulted.
                             Windhaven defaulted on the loan, and Branch Banking sent it
                and the Guarantors a demand letter requesting repayment. Four months
                later, Branch Banking mailed Windhaven and the Guarantors a notice of
                trustee's sale, stating that it would foreclose on the Texas property if
                payment was not received. Windhaven and the Guarantors failed to remit
                payment and the property was sold at a nonjudicial foreclosure sale under
                Texas law for $14,080,000. At that time, the total indebtedness remaining
                on the loan was $16,675,218.61. Branch Banking then sought a deficiency
                judgment against Windhaven and the Guarantors under Nevada law,
                asserting claims for breach of guaranty and breach of the implied covenant
                of good faith and fair dealing.
                             Following discovery, Branch Banking moved for summary
                judgment, but before the district court could rule on the motion,
                Windhaven and the Guarantors also moved for summary judgment, on the
                ground that Branch Banking's deficiency action was precluded by NRS
                40.455(1) because that statute requires all nonjudicial trustee's sales to be
                conducted pursuant to NRS 107.080. 2 The district court granted summary
                judgment in favor of Windhaven and the Guarantors, finding that Branch

                      2The parties do not dispute that the Texas foreclosure did not
                comply with NRS 107.080.

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                Banking's nonjudicial foreclosure in Texas did not comply with the terms
                of NRS 107.080 because Branch Banking did not record a notice of breach
                and election to sell or provide notice in accordance with NRS 107.080. The
                district court also concluded that Branch Banking could have sought a
                deficiency judgment in Texas or conducted the Texas trustee's sale in a
                manner that complied with NRS 107.080. 3 Further, the district court
                ruled that because NRS 40.455(1) prohibited Branch Banking from
                seeking a deficiency award against Windhaven, Branch Banking could not
                seek a deficiency judgment against the Guarantors. Branch Banking
                appeals.
                                                DISCUSSION
                              The primary issue before this court is whether the district
                court erred by granting summary judgment in favor of Windhaven and the
                Guarantors on the basis that NRS 40.455(1) prohibits deficiency
                judgments following a nonjudicial foreclosure not conducted in accordance
                with NRS 107.080.
                              NRS 40.455(1) provides, in pertinent part, that
                              upon 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 consideration in the trustee's deed that

                      3 The
                          district court also denied Branch Banking's motion for
                summary judgment.

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            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.
Each party argues that the language of the statute clearly supports its
interpretation and that the contrary interpretation would lead to absurd
results. Primarily, they argue over the interpretation of the phrase "held
pursuant to NRS 107.080."
            Statutory interpretation "is a question of law, which this court
reviews de novo." Kay v. Nunez, 122 Nev. 1100, 1104, 146 P.3d 801, 804
(2006). In interpreting a statute, this court looks to the plain language of
the statute and, if that language is clear, this court does not go beyond it.
Great Basin Water Network v. State Eng'r, 126 Nev. 187, 196, 234 P.3d
912, 918 (2010). Each section of a statute should be construed to be in
harmony with the statute as a whole.       Smith v. Kisorin USA, Inc.,    127
Nev. Adv. Op. No. 37, 254 P.3d 636, 639 (2011); 2A Norman J. Singer &
J.D. Shambie Singer, Statutes and Statutory Construction § 46:5 (7th ed.
2014). We presume that a statute does not modify common law unless
such intent is explicitly stated. See 3 Norman J. Singer & J.D. Shambie
Singer, Statutes and Statutory Construction § 61:1 (7th ed. 2008).
Statutes that operate in derogation of the common law should be strictly
construed, and, if there is any doubt as to the statute's meaning, the court
should interpret the statute in the way that least changes the common
law. Id. Additionally, this court reviews a district court order granting
summary judgment de novo.       Wood v. Safeway, Inc., 121 Nev. 724, 729,
121 P.3d 1026, 1029 (2005).

                                      6
                NRS 40.455(1) does not require an out-of-state trustee's sale to comply with
                NRS 107.080, nor does it preclude a deficiency judgment in Nevada when a
                nonjudicial foreclosure sale is conducted pursuant to the laws of another
                state
                               The parties dispute whether NRS 40.455(1)'s phrase "trustee's
                sale held pursuant to NRS 107.080" permits a deficiency judgment in
                Nevada when a nonjudicial foreclosure takes place in another state and
                the beneficiary of the deed of trust does not comply with the requirements
                of NRS 107.080. Windhaven argues that the clause requires that a
                trustee's sale comply with Nevada law before the beneficiary of the deed of
                trust may seek a deficiency judgment. Branch Banking argues that the
                clause is merely illustrative, that the statutory scheme does not support
                Windhaven's interpretation, and that to interpret the statute to require
                out-of-state nonjudicial foreclosures to comply with NRS 107.080 would
                lead to absurd results. 4
                               Thus, we turn to whether NRS 40.455(1) precludes deficiency
                judgments in Nevada when a nonjudicial foreclosure sale is conducted
                pursuant to the laws of another state. In U.S. Bank National Ass'n v.
                Palmilla Development Co., we recognized NRS 40.455(1) as applicable
                when one is seeking a deficiency judgment. 131 Nev. Adv. Op. No. 9, 343
P.3d 603, 604 (2015). However, while we addressed whether "foreclosure
                sale" encompasses a receiver sale of real property securing a loan, we did
                not address the extent of the definition of "foreclosure sale" as it applies
                here.

                        4Theparties also disagree about the effect of the lack of offsetting
                commas in the phrase "trustee's sale held pursuant to NRS 107.080."
                However, as this effect is not essential to our determination, we do not
                address it here.

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                            NRS 40.455 governs applications for deficiency judgments by
                "the judgment creditor or the beneficiary of the deed of trust," made within
                six months "after the date of the foreclosure sale or the trustee's sale held
                pursuant to NRS 107.080, respectively." Windhaven argues that
                "foreclosure sale" refers only to a judicial foreclosure. With respect to the
                use of that term in NRS 107.080, we agree. The word "respectively" is
                used to pair words or phrases in the correct order.         Merriam-Webster's
                Collegiate Dictionary 1061 (11th ed. 2007) (defining respectively as          "WTI

                the order given"); Merriam-Webster's Dictionary of English Usage 816
                (1994) (noting that respectively is commonly used to join "two words in
                matching sets of things in the correct order"); Black's Law Dictionary 1311
                (6th ed. 1990) (defining respective as Id elating to particular persons or
                things, each to each"). The use of "respectively" in the first part of NRS
                40.455(1) pairs "foreclosure sale" with "judgment creditor" and "trustee's
                sale held pursuant to NRS 107.080" with "beneficiary of the deed of
                trust."5 Because "foreclosure sale" is specifically tied to "judgment
                creditor," the foreclosure sale described here is a judicial foreclosure. 6

                      5A second such pairing occurs at the end of NRS 40.455(1) when
                "respectively" is used to tie together "judgment creditor" with "sheriffs
                return," and "the beneficiary of the deed of trust" with "the recital of
                consideration in the trustee's deed."

                      6 Moreover, were we to hold that "foreclosure sale" could reference all
                judicial and nonjudicial foreclosures, we would negate the purpose of the
                phrase "trustee's sale held pursuant to NRS 107.080," a result that would
                run contrary to well-established rules of statutory construction. See In re
                Parental Rights as to S.M.M.D., 128 Nev. Adv. Op. No. 2, 272 P.3d 126,
                 132 (2012) (stating that statutes should not be interpreted to "render[
                language meaningless or superfluous" (internal quotations omitted)).

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                            However, we disagree that the statute limits deficiency
                judgments to judicial foreclosures and trustee's sales held in accordance
                with NRS 107.080. NRS 40.455(1) has no such limiting language. While
                it clearly governs deficiencies arising from judicial foreclosures and those
                trustee's sales that are held pursuant to NRS 107.080, it does not indicate
                that it precludes deficiency judgments arising from nonjudicial foreclosure
                sales held in another state. In fact, the statutory scheme contemplates
                that a party may nonjudicially foreclose in another state and still bring an
                action in Nevada to recover the deficiency. Specifically, NRS 40.430,
                Nevada's one-action rule, creates an exception for proceedings "[t]o enforce
                a mortgage or other lien upon any real or personal collateral located
                outside of the State [of Nevada] which does not, except as required under
                the laws of that jurisdiction, result in a personal judgment against the
                debtor." NRS 40.430(6)(c).
                            Moreover, NRS 40.455(1) is an antideficiency statute that
                "derogate [s] from the common law," and this court construes such
                provisions narrowly, in favor of deficiency judgments. Key Bank of Alaska
                v. Donnels, 106 Nev. 49, 53, 787 P.2d 382, 385 (1990). Common law allows
                a lienholder to seek a deficiency judgment against the person(s) liable on
                the lien, see, e.g., Restatement (Third) of Prop.: Mortgs. § 8.4 (1997), and
                we decline to interpret NRS 40.455 in such a way that would interfere
                with this common-law right, when the statute does not expressly limit
                deficiency suits arising from nonjudicial foreclosures conducted pursuant
                to the laws of another state. Furthermore, since the purpose of NRS

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                40.455 is to create fairness for both creditors and debtors, 7 see First
                Interstate Bank of Nev. v. Shields, 102 Nev. 616, 618, 730 P.2d 429, 431
                (1986) ("Nevada's deficiency legislation is designed to achieve fairness to
                all parties to a transaction secured in whole or in part by realty."),
                interpreting NRS 40.455(1) to deny deficiency judgments to creditors who
                nonjudicially foreclose on out-of-state property pursuant to another state's
                law would undermine the purpose of the statute. Because NRS 40.455
                does not prohibit deficiency judgment actions from being brought in
                Nevada when the nonjudicial foreclosure in another state did not comply
                with NRS 107.080, we conclude that the district court erred in precluding
                Branch Banking from pursuing a deficiency judgment against Windhaven
                and the Guarantors. 8

                      7Although   the legislative history is silent concerning out-of-state
                nonjudicial foreclosures, it reveals that the Legislature was concerned
                about protecting unsuspecting debtors from creditors who sought large
                deficiency judgments years after the foreclosure sale occurred. Hearing on
                A.B. 493 Before the Assembly Judiciary Comm., 55th Leg. (Nev., March
                13, 1969). Moreover, the Legislature enacted NRS Chapter 40's debtor
                protections so that debtors would not have to undergo the timely and
                expensive judicial foreclosure process. Id.

                      8The  question of whether a court should, in such situations, apply
                Nevada law or the law of the state where the foreclosure was held is a
                conflict-of-laws question that will depend upon the particular facts of the
                case. See Restatement (Second) of Conflict of Laws § 229 (1971); Robert A.
                Brazener, Annotation, Conflict of Laws as to Application of Statute
                Proscribing or Limiting Availability of Action for Deficiency After Sale of
                Collateral Real Estate, 44 A.L.R. 3d 922 (1972). Here, however, the parties'
                agreement allows them to litigate future disputes under either Texas or
                Nevada law, and because there is no argument or evidence that the
                parties acted in bad faith or to evade Texas law by filing suit in Nevada,
                Nevada law may govern the deficiency judgment. See Key Bank of Alaska
                v. Donnels, 106 Nev. 49, 52, 787 P.2d 382, 384 (1990) ("We have held that
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                              Accordingly, we reverse the district court's judgment in favor
                of Windhaven and the Guarantors and remand this matter for further
                proceedings consistent with this opinion. 9

                                                      Hardesty

                We concur:

                Parraguirre

                                                 J.
                Douglas

                Pickering

                ...continued
                lilt is well settled that the expressed intention of the parties as to the
                applicable law in the construction of a contract is controlling if the parties
                acted in good faith and not to evade the law of the real situs of the
                contract." (alteration in original) (quoting Ferdie Sievers & Lake Tahoe
                Land Co. v. Diversified Mortg. Investors, 95 Nev. 811, 815, 603 P.2d 270,
                273 (1979)

                      9 Based   on our decision to reverse the district court's summary
                judgment, we conclude that the district court's order awarding costs to
                Windhaven and the Guarantors is premature. Accordingly, we reverse the
                district court's award of costs and attorney fees.

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                GIBBONS, J., with whom CHERRY and SAITTA, JJ., join, dissenting:
                            In my view, the critical issue on appeal—what is meant by the
                phrase "trustee's sale held pursuant to NRS 107.080" in NRS 40.455(1)—is
                fairly straightforward.
                            To address this issue, two facts warrant rehashing. First,
                Branch Banking sued Windhaven for a deficiency judgment under NRS
                40.451-40.463. Second, as pointed out by the district court, the parties
                agreed that "Branch Banking was a beneficiary of a deed of trust, and not
                a judgment creditor, as the property was sold at a trustee's sale and not
                through a judicial foreclosure sale." See also Branch Banking's Complaint
                ("Plaintiff is the successor in interest and holder of the Note, the
                beneficiary under the Deed of Trust . . . . [T]he Property was sold at a non-
                judicial foreclosure sale to Plaintiff. . . in partial satisfaction of the
                indebtedness secured by the Deed of Trust.").
                            Once competing motions for summary judgment were filed,
                the district court naturally looked for what requirements Branch
                Banking's deficiency judgment claim needed to satisfy under Nevada law.
                This inquiry led the district court to NRS 40.455.
                            NRS 40.455 "governs the award of deficiency judgments."
                U.S. Bank Nat'l Ass'n v. Palmilla Dev. Co., 131 Nev. Adv. Op. No. 9, 343
P.3d 603, 604 (2015). Specifically, NRS 40.455(1) states:
                             [U]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 consideration in the trustee's deed that
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            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.
(Emphasis added.) As pointed out by the majority, NRS 40.455 splits into
two categories: (1) foreclosure sale and (2) trustee's sale, as delineated by
the statute's consistent use of "respectively."
            Because the parties agreed that "Branch Banking was a
beneficiary of a deed of trust, and not a judgment creditor, as the property
was sold at a trustee's sale and not through a judicial foreclosure sale," the
district court properly looked to NRS 40.455's trustee's sale requirements:
namely, what is the effect of 1VRS 40.455's language, "trustee's sale held
pursuant to NRS 107.080."
            To solve this quandary, only the most basic rule of statutory
interpretation is necessary: "[When the language of a statute is plain and
unambiguous, a court should give that language its ordinary meaning and
not go beyond it." Emp'rs Ins. Co. of Nev. v. Chandler, 117 Nev. 421, 425,
23 P.3d 255, 258 (2001).
             As found by the district court, I conclude that this language—
"trustee's sale held pursuant to NRS 107.080"—means that before Branch
Banking could obtain a deficiency judgment from a trustee's sale pursuant
to Nevada law, it would have to satisfy the requirements of NRS 107.080.
Branch Banking fell well short of fulfilling NRS 107.080's requirements.
Thus, Branch Banking's deficiency claim under NRS 40.451-40.463 failed
as a matter of law. Justice Elena Kagan recently stated in her dissent in
Yates v. United States that:
             Resolution of the pros and cons of whether a
             statute should sweep broadly or narrowly is for
             Congress. If judges disagree with Congress's
             choice, we are perfectly entitled to say so—in
             lectures, in law review articles, and even in dicta.

                                        2
                             But we are not entitled to replace the statute
                             Congress enacted with an alternative of our own
                             design.
                574 U.S.           , 135 S. Ct. 1074, 1101 (2015) (Kagan, J., dissenting)
                (internal quotation omitted). The majority undertook its own design of
                NRS 40.455. The district court interpreted the statute as written and, in
                my view, did so correctly. Therefore, I respectfully dissent.

                                                                                J.
                                                     Gibbons

                We concur:

                                                J.

                                                J.

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