Court Opinion

ID: 2750994
Source: CourtListenerOpinion
Date Created: 2014-11-13 18:08:51.197127+00
Date Added: 2024-06-11T09:59:56.010456
License: Public Domain

130 Nev., Advance Opinion 90
                          IN THE SUPREME COURT OF THE STATE OF NEVADA

                   STATE OF NEVADA DEPARTMENT                             No. 62888
                   OF BUSINESS AND INDUSTRY,
                   FINANCIAL INSTITUTIONS
                   DIVISION,
                   Appellant,
                   vs.
                                                                            FP,
                   CHECK CITY PARTNERSHIP, LLC,
                   D/B/A CHECK CITY, A NEVADA
                   LIMITED LIABILITY COMPANY,
                   Respondent.

                              Appeal from a district court order in a declaratory relief action.
                   Eighth Judicial District Court, Clark County; Kenneth C. Cory, Judge.
                              Reversed.

                   Catherine Cortez Masto, Attorney General, and Christopher Eccles, Daniel
                   D. Ebihara, and David J. Pope, Deputy Attorneys General, Carson City,
                   for Appellant.

                   Holland & Hart LLP and Patrick J. Reilly and Nicole E. Lovelock, Las
                   Vegas,
                   for Respondent.

                   BEFORE THE COURT EN BANC.

                                                   OPINION

                   By the Court, PARRAGUIRRE, J.:
                              NRS 604A.425 limits the amount of a deferred deposit loan to
                   25 percent of a borrower's expected gross monthly income. In this appeal,
                   we are asked to determine whether that cap includes only the principal
SUPREME COURT      borrowed or the principal amount plus any interest or fees charged. We
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                 conclude that NRS 604A.425 unambiguously provides that the 25-percent
                 cap includes both principal and any interest or fees charged. Accordingly,
                 we reverse the district court's order granting declaratory relief in Check
                 City's favor.
                                                      FACTS
                                 A deferred deposit loan is a transaction wherein a borrower is
                 given a loan that must be repaid in full within a relatively short time
                 frame The lender generally charges a flat fee based on a very high
                 interest rate. As collateral, the borrower gives the lender a post-dated
                 check that includes the principal amount and any interest or fees to be
                 incurred. 1 The lender then holds that check during the term of the loan.
                 At the end of the loan's term, the borrower may either pay the lender, who
                 will return the post-dated check, or the lender may deposit the check. The
                 loan is for a short, fixed period that cannot exceed 35 days. NRS 604A.408.
                 Loans for longer periods are referred to as "high-interest loans," which are
                 governed by separate provisions of NRS 604A.425. NRS 604A.408(2).
                                 As an example, the record in this case includes a loan
                 agreement under which a customer borrowed $300 and agreed to pay $321
                 the following week. The federal Truth in Lending Act requires lenders to
                 disclose fees as an annual percentage rate (APR). 15 U.S.C. § 1601 et seq.
                 (2012); 12 C.F.R. § 226.17 (2014). According to the loan document, the $21
                 "Finance Charge" was based on a 1-week loan term and an APR of 364.
                 Nevada does not have a usury law, so there is no statutory cap on interest
                 rates.

                       'Instead of a post-dated check, the borrower may provide the lender
                 with a written authorization for an electronic transfer of money from the
                 borrower's bank account. NRS 604A.050(1)(b). We acknowledge both
                 methods but refer only to "checks" for the sake of simplicity.
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                              However, MRS 604A.425 limits the amount of a deferred
                deposit loan to 25 percent of the borrower's expected gross monthly income.
                In 2008, the Nevada Financial Institutions Division (FID) began enforcing
                the 25-percent cap as including both the principal borrowed and interest
                charged. 2 In two separate Reports of Examination issued to Check City,
                the FID informed Check City of this interpretation, but did not fine or cite
                it for issuing loans that violated the FID's interpretation of NRS 604A.425.
                              In June 2013, Check City filed a complaint for declaratory
                relief in the Eighth Judicial District seeking clarification of MRS 604A.425.
                The FID filed a motion to dismiss, arguing that there was no justiciable
                controversy and Check City had not exhausted its administrative
                remedies. The district court rejected these arguments and granted Check
                City's motion for summary judgment, concluding that the 25-percent cap
                only applied to the principal borrowed. The FID now brings this appeal.
                                               DISCUSSION
                              On appeal, the FID argues that the district court erred in
                concluding that NRS 604A.425's 25-percent cap only refers to the principal
                borrowed, rather than to the principal plus interest and fees.

                      2 The FID and another deferred deposit lender, Advanced Check
                Cashing & Payday Loan (ACC), filed a joint petition for declaratory relief
                seeking clarification of MRS 604A.425 in 2008. The district court in that
                case concluded that the 25-percent cap includes both interest and
                principal. Check City focuses a portion of its argument on the fact that it
                was not informed of, or included in, the joint petition that the FID filed
                with ACC. Check City, however, does not argue that it was a necessary
                party to that case under NRCP 19(a), and it does not provide a legal basis
                for its argument that it should have been informed of, or included in, the
                ACC case. Furthermore, the specifics of the ACC case are not material
                because this case requires de novo review of the relevant statute.
                Accordingly, we do not address the extensive references Check City makes
                to being excluded from the ACC case.
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                                   We review questions of statutory interpretation de novo.
                       Estate of Smith v. Mahoney's Silver Nugget, Inc.,      127 Nev. „ 265
                       P.3d 688, 690 (2011). We will not look beyond the plain language of a
                       statute to determine its meaning when the statute is unambiguous.        Id.
                       "[A] statute is ambiguous when it is capable of being understood in two or
                       more senses by reasonably informed persons .. ." Id. (internal quotation
                       marks omitted). If a statute is ambiguous, this court will look to "the
                       context and the spirit of the law or the causes which induced the
                       legislature to enact it.'" D.R. Horton, Inc. v. Eighth Judicial Dist. Court,
                       123 Nev. 468, 476, 168 P.3d 731, 738 (2007) (quoting McKay v. Bd. of
                       Supervisors, 102 Nev. 644, 650-51, 730 P.2d 438, 443 (1986)). To
                       determine the Legislature's intent, we look to "legislative history, reason,
                       and considerations of public policy ... ." Chanos v. Nev. Tax Comm'n, 124
                       Nev. 232, 240, 181 P.3d 675, 681 (2008).
                                   The threshold inquiry, then, is whether NRS 604A.425
                       unambiguously states that the 25-percent cap includes both the principal
                       amount borrowed and any interest or fees charged. NRS 604A.425
                       provides: "A licensee shall not . . . [m]ake a deferred deposit loan that
                       exceeds 25 percent of the expected gross monthly income of the customer
                       when the loan is made." NRS 604A.425(1)(a) (emphasis added). NRS
                       604A.050 defines "deferred deposit loan" as follows:
                                   "Deferred deposit loan" means a transaction in
                                   which, pursuant to a loan agreement:
                                         1. A customer tenders to another person:
                                          (a) A personal check drawn upon the account
                                   of the customer; or
                                         (b) Written authorization for an electronic
                                   transfer of money for a specified amount from the
                                   account of the customer; and
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                                    2. The other person:
                                    (a) Provides to the customer an amount of
                              money that is equal to the face value of the check
                              or the amount specified in the written
                              authorization for an electronic transfer of money,
                              less any fee charged for the transaction; and
                                   (b) Agrees, for a specified period, not to cash
                              the check or execute an electronic transfer of
                              money for the amount specified in the written
                              authorization.
                  (Emphases added.)
                              The district court applied what it considered a plain-language,
                  commonsense meaning for the phrase "deferred deposit loan," concluding
                  that the phrase only encompassed the principal borrowed. However, we
                  find that the language of NRS 604A.050 does not limit deferred deposit
                  loans to just the amount borrowed, as it clearly contemplates that a
                  deferred deposit loan is a transaction based on a loan agreement. That
                  loan agreement, in turn, is made up of various terms including both the
                  amount borrowed and any fees charged. Therefore, deferred deposit loans
                  are not limited to just the amount borrowed.
                              NRS 604A.050 defines "deferred deposit loan" by describing a
                  deferred deposit loan transaction. NRS 604A.050(1) describes the
                  customer's basic obligations, and NRS 604A.050(2) describes the basic
                  obligations of the "other person," typically a licensed lender. When these
                  two subsections are read together, a "deferred deposit loan" is a transaction
                  with three distinctive characteristics that separate it from other types of
                  loan agreements: (1) the customer secures a loan with a check; (2) the
                  lender finances an amount that is equal to the check the customer
                  tendered, minus any fees due to the lender; and (3) the lender holds the

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                check as security and deposits it only when an agreed-upon date has
                arrived.
                            NRS 604A.050 makes clear that the principal amount
                borrowed is merely one aspect of the larger transaction. NRS
                604A.050(2)(a) states that as a part of the overall transaction, the lender
                will "[p]rovide[ ] to the customer an amount of money that is equal to the
                face value of the check [held as security] . . . less any fee charged for the
                transaction." (Emphasis added.) Accordingly, by its terms, a deferred
                deposit loan transaction encompasses more than simply the amount
                borrowed but also includes some consideration to the lender beyond the
                customer's promise to repay the amount borrowed. Moreover, the amount
                of a deferred deposit loan must be fixed by the value of the entire loan
                transaction, including principal, fees, and interest, because NRS 604A.050
                unambiguously defines a deferred deposit loan as "a transaction."
                            In light of the statutory definition provided by NRS 604A.050
                for "deferred deposit loan," we hold that NRS 604A.425 unambiguously
                limits the total amount of a deferred deposit loan transaction—comprised
                of principal, interest, and any additional fees—to 25 percent of a
                customer's expected gross monthly income.
                            Check City relies on Black's Law Dictionary's since-revised
                definition of a "loan" to argue that the unambiguous meaning of "loan" is
                nothing more than the amount borrowed. 3 When examining the plain

                      3 Check  City cites the sixth edition of Black's Law Dictionary, which
                defines a "loan" as:

                            A lending. Delivery by one party to and receipt by
                            another party a sum of money upon agreement,
                            express or implied, to repay it with or without
                            interest. Anything furnished for temporary use to
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                 meaning of a statute, "we presume that the Legislature intended to use
                 words in their usual and natural meaning."        McGrath v. State, Dep't of
                 Pub. Safety, 123 Nev. 120, 123, 159 P.3d 239, 241 (2007). Even if we were
                 to accept Check City's interpretation of the usual and natural meaning of
                 the word "loan," that definition would conflict with the Legislature's
                 statutory definition. Specifically, NRS 604A.080 defines "loan" by referring
                 the reader to NRS 604A.050's definition of deferred deposit loan. 4 In such
                 a case, the statutory definition must govern.    Williams v. Clark Cnty. Dist.
                 Attorney, 118 Nev. 473, 485, 50 P.3d 536, 544 (2002) ("A statute's express
                 definition of a term controls the construction of that term no matter where
                 the term appears in the statute.").
                                Thus, we conclude that NRS 604A.425's 25-percent cap on
                 deferred deposit loans includes both the principal amount loaned and any
                 interest or fees charged. NRS 604A.050 defines the phrase "deferred
                 deposit loan" to include principal, interest, and fees, not just the principal

                 ...continued
                                a person at his request, on condition that it shall
                                be returned, or its equivalent in kind, with or
                                without compensation for its use.
                 Black's Law Dictionary 936 (6th ed. 1990) (citations omitted). The most
                 recent edition defines a loan as "1. An act of lending; a grant of something
                 for temporary use .... 2. A thing lent for the borrower's temporary use;
                 esp., a sum of money lent at interest . . ." Black's Law Dictionary 1019
                 (9th ed. 2009).
                       4 "Loan'means any deferred deposit loan, high-interest loan or title
                 loan, or any extension or repayment plan relating to such a loan .. .."
                 NRS 604A.080.
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                amount borrowed, and neither NRS 604A.425 nor NRS 604A.050 is
                ambiguous. Accordingly, we reverse the district court's order granting
                summary judgment. 5
                                                                                ,   J.
                                                     Parraguirre

                We,concur
                 (   o
                                            , C.J.
                Gibbons

                Pickering

                             tit\           ,   J.
                Hardesty

                Douglas

                 C

                                                J.
                Saitta

                         5 The
                             FID argues that Check City has not exhausted its
                administrative remedies and that this matter does not present a justiciable
                case or controversy. We disagree. Exhaustion is not required where, as
                here, the only issue is the interpretation of a statute. Malecon Tobacco,
                LLC v. Dep't of Taxation, 118 Nev. 837, 839,59 P.3d 474, 475-76 (2002).
                Additionally, the possibility of a license suspension—a consequence Check
                City might have faced if it failed to comply with the FID's interpretation of
                NRS 604A.425—may constitute irreparable harm for the purpose of
                granting a preliminary injunction, see Dep't of Bus. & Indus., Fin. Insts.
                Div. v. Nev. Ass'n Servs., Inc., 128 Nev. „ 294 P.3d 1223, 1228
                (2012), which would be sufficient to form a justiciable case or controversy,
                see Doe v. Bryan, 102 Nev. 523, 525, 728 P.2d 443, 444 (1986).

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