Court Opinion

ID: 2714041
Source: CourtListenerOpinion
Date Created: 2014-08-06 15:18:53.389925+00
Date Added: 2024-06-11T13:22:13.123059
License: Public Domain

130 Nev., Advance Opinion 5(0
                       IN THE SUPREME COURT OF THE STATE OF NEVADA

                JOHN SCHLEINING, A MARRIED                             No. 57934
                MAN; AND DECAL NEVADA, INC., AN
                OREGON CORPORATION,
                Appellants,
                vs.
                                                                            FILED
                CAP ONE, INC., A NEVADA                                     MAY 29 2014
                CORPORATION; PERRY M. DI
                                                                               . LIN mE
                                                                        CLEMEsKin ED EM_ AN
                LORETO, TRUSTEE OF THE PERRY
                M. DI LORETO AND PATRICIA E. DI                        BY

                LORETO FAMILY TRUST (U/T/D
                10/16/81); ROGER B. PRIMM, TRUSTEE
                OF THE ROGER B. PRIMM FAMILY
                TRUST (U/T/D 1/30/90); AND
                DAMONTE FAMILY LIMITED
                PARTNERSHIP, A NEVADA LIMITED
                PARTNERSHIP,
                Respondents.

                           Appeal from a district court judgment entered after a bench
                trial in a deficiency action. Second Judicial District Court, Washoe
                County; Jerome Polaha, Judge.
                           Affirmed.

                Molof & Vohl and Lee Molof and Robert C. Vohl, Reno,
                for Appellants.

                McDonald Carano Wilson, LLP, and Paul J. Georgeson and Kerry S.
                Doyle, Reno,
                for Respondents.

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                   BEFORE THE COURT EN BANC.'

                                                   OPINION
                   By the Court, HARDESTY, J.:
                               In this appeal, we consider the application of NRS 40.453 and
                   NRS 107.095 in the context of a lender's claim for a deficiency judgment
                   against a guarantor. First, we are asked to determine whether NRS
                   40.453, which generally prohibits borrowers and guarantors from
                   contractually "waiv[ing] any right secured to thlatl person by the laws of
                   this state," invalidates a guarantor's waiver of the statutory right to be
                   mailed a notice of default. Because the Legislature afforded guarantors a
                   statutory right to be mailed a notice of default in the same bill in which
                   NRS 40.453 was enacted, we conclude that the Legislature intended for
                   NRS 40.453 to invalidate a guarantor's purported waiver of the right to be
                   mailed a notice of default.
                               We next consider whether the statute guaranteeing the right
                   to be mailed a notice of default, NRS 107.095, requires strict or
                   substantial compliance on the part of a lender, and if substantial
                   compliance is sufficient, whether there was substantial compliance in this
                   case. We conclude that substantial compliance can satisfy NRS 107.095's
                   notice requirements, and, here, the district court did not abuse its
                   discretion in concluding that the lender substantially complied with NRS

                         'The Honorable Mark R. Denton, District Judge in the Eighth
                   Judicial District Court, was designated by the Governor to sit in place of
                   the Honorable Ron Parraguirre, Justice, who voluntarily recused himself
                   from participation in the decision of this matter. Nev. Const. art. 6, § 4.

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                  107.095's notice requirement. Therefore, we affirm the judgment of the
                  district court.

                                    FACTS AND PROCEDURAL HISTORY
                               In 2007, while acting as a principal and sole owner of Decal
                  Nevada, Inc., appellant John Schleining arranged for Decal's purchase of
                  an undeveloped parcel of real property along the Truckee River in Reno,
                  Nevada, to improve and later sell to a developer. In May 2007, Decal
                  obtained a loan in the amount of $2.5 million from respondent lenders,
                  whom we collectively refer to as Cap One, to help pay the purchase price
                  for the property. The loan required repayment in full by December 2007
                  and was secured by a deed of trust on the property. Schleining signed a
                  personal guaranty of the loan, which included a waiver of his right to
                  receive notice of any default of the loan.
                               By late 2007, Decal had failed to secure a buyer to purchase
                  the property, and Schleining personally sent a letter seeking an extension
                  of the loan. When Cap One declined to extend the loan, Schleining made
                  an offer to pay the December interest payment in exchange for a release of
                  his personal guaranty. Cap One again declined the offer and refused to
                  release him from his personal guaranty. Decal defaulted on the loan in
                  December 2007, and on January 30, 2008, Cap One recorded a notice of
                  default and election to sell. On February 9, 2008, Cap One mailed a copy
                  of the notice of default to Decal at various addresses, including Decal's
                  office in St. Helens, Oregon. At that time, Schleining and Decal shared
                  the St. Helens, Oregon, address, but Schleining was working in a separate
                  office in Medford, Oregon, with forwarding instructions for his mail. Cap
                  One did not mail a separate copy of the notice of default to Schleining as
                  guarantor, as set forth in NRS 107.095, to any address. The notice of

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                   trustee's sale was also mailed to Decal and Schleining's St. Helens,
                   Oregon, address, but again a copy was not separately mailed to
                   Schleining. On June 11, 2008, a trustee's sale was held at which Cap One
                   was the only bidder on the property, purchasing it for $100,000.
                               Cap One then filed a complaint seeking a deficiency judgment
                   against Schleining as guarantor. Schleining raised Cap One's failure to
                   mail the notice of default to him separately under NRS 107.095 as an
                   affirmative defense in his answer and moved for summary judgment. In
                   response, Cap One argued that Schleining expressly waived his right to
                   receive a notice of default in his guaranty. The district court ruled that
                   the waiver was invalid pursuant to NRS 40.453. The district court further
                   determined that issues of material fact remained, and the case proceeded
                   to trial.
                               At trial, Schleining testified that although he was not mailed a
                   copy of the notice of default or notice of trustee's sale, he was nevertheless
                   aware of the default and that Cap One would likely foreclose. He also
                   acknowledged that he knew of the trustee's sale prior to its
                   commencement. He testified that, upon learning of the pending trustee's
                   sale, he made no effort to contact Cap One to attempt to prevent or delay
                   the sale. Following the trial, the district court concluded that the notice
                   requirements of NRS 107.095 could be satisfied by substantial compliance.
                   Thus, because Schleining had actual notice of the default and foreclosure
                   sale and was not prejudiced by the lack of formal notice, the district court
                   held that Cap One had substantially complied with NRS 107.095.
                   Accordingly, the district court awarded a deficiency judgment against
                   Schleining in favor of Cap One, and Schleining appealed.

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                                                DISCUSSION
                             On appeal, Schleining asserts that the district court erred in
                concluding that strict compliance with NRS 107.095's notice of default
                provisions is not required and that, regardless, Cap One failed to afford
                him adequate notice under a substantial-compliance standard, such that
                he should be released from his obligation as guarantor. Cap One, on the
                other hand, disagrees and counters that these issues need not even be
                addressed because Schleining validly waived NRS 107.095 notice and,
                thus, the district court reached the right result.

                Pursuant to NRS 40.453, Schleining could not waive the right to be mailed
                the notice of default
                            Cap One argues that Schleining validly waived any right to
                notice of Decal's default. The district court, however, concluded that NRS
                40.453 invalidated Schleining's waiver of his right to be mailed the notice
                of default. This court reviews determinations of statutory construction de
                novo. Estate of Smith v. Mahoney's Silver Nugget, Inc., 127 Nev.      ,
                265 P.3d 688, 690 (2011).
                            NRS 40.453(1) states as follows:
                            It is hereby declared by the Legislature to be
                            against public policy for any document relating to
                            the sale of real property to contain any provision
                            whereby a mortgagor or the grantor of a deed of
                            trust or a guarantor or surety of the indebtedness
                            secured thereby, waives any right secured to the
                            person by the laws of this state. 2

                      2NRS 40.453 expressly excludes any waivers allowed by NRS 40.495,
                but that exclusion is not at issue here.

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                   (Emphases added.) Cap One argues that this court has already held that
                   NRS 40.453 only applies to waivers of rights conferred in Nevada's
                   antideficiency statutes, citing to Lowe Enterprises Residential Partners v.
                   Eighth Judicial District Court, 118 Nev. 92, 102-04, 40 P.3d 405, 411-12
                   (2002), and that the right to notice of default is not one of those
                   antideficiency rights to which the prohibition applies. 3 In Lowe, the real
                   parties in interest argued that a waiver of their right to a jury trial in
                   their loan documents and guaranty was invalid under NRS 40.453. 118
                   Nev. at 95, 40 P.3d at 407. This court disagreed, holding that the right to
                   a jury trial did not fall under the scope of NRS 40.453. Id. at 104, 40 P.3d
                   at 413. In doing so, this court first noted that NRS 40.453's plain
                   language prohibited the waiver of 'any right secured to [the person] by
                   the laws of this state." Id. at 102, 40 P.3d at 411 (quoting MRS 40.453
                   (1993)). We then recognized, however, that a literal application of this
                   blanket prohibition would render unenforceable "such things as
                   arbitration agreements, forum selection clauses and choice-of-law
                   provisions." Id. at 102-03, 40 P.3d at 412 (footnotes omitted). Because of
                   the potential for such absurd results, we determined that such a literal
                   application of MRS 40.453 was not the Legislature's intent. We therefore

                         3 Cap OneS also cites McDonald v. D.P. Alexander & Las Vegas
                   Boulevard, L.L.C., 121 Nev. 812, 123 P.3d 748 (2005), for the proposition
                   that this court has already held that a guarantor may validly waive the
                   right to be mailed a notice of default. But McDonald is inapposite, as this
                   court did not address the validity of the waiver itself, much less the
                   potential effect of NRS 40.453. Rather, we merely concluded that the
                   applicability of an exception under NRS 40.430 (Nevada's one-action rule)
                   did not depend on whether the guarantor waived notice under NRS
                   107.095. 121 Nev. at 818, 123 P.3d at 751-52.

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                concluded that NRS 40.453 was ambiguous, and we went on to determine
                the actual scope of NRS 40.453 through analysis of its legislative history.
                Id. at 102-03, 40 P.3d at 412. In concluding that NRS 40.453 does not
                apply to the right to a jury trial, this court stated that
                            the comments solicited by the [L]egislature during
                            the hearing on the amendment to NRS 40.453
                            highlight the intent of the [L]egislature to protect
                            the rights created by Nevada's anti-deficiency
                            legislation, not to protect the right to a jury trial.
                            This conclusion is consistent with the fact that
                            NRS 40.453 is codified in Chapter 40 of the
                            Nevada Revised Statutes under the subheading
                            "Foreclosure Sales and Deficiency Judgments."
                Id. at 103-04, 40 P.3d at 412.
                             Cap One argues that Lowe restricts the scope of NRS 40.453 to
                the statutes dealing with deficiency judgments, NRS 40.451 through
                40.459, which would preclude its application to NRS 107.095 in this case.
                While MRS 107.095 is not codified in the same subchapter that this court
                explicitly mentioned in Lowe, NRS 107.095 relates to the same subject
                matter and was enacted as part of the same bill that enacted NRS 40.453• 4
                1987 Nev. Stat., ch. 685, §§ 6, 8, at 1643-45. Additionally, the legislative
                hearing minutes that this court relied on in Lowe to determine the scope of
                NRS 40.453 included a discussion of the need to provide notice to
                guarantors in deficiency proceedings codified in NRS 107.080, which
                would later be separated into NRS 107.095, as part of that legislative

                      4When     enacted in 1987, MRS 107.095 was codified as MRS
                107.080(5). See 1987 Nev. Stat., ch. 685, § 8, at 1645 (enacting the
                majority of NRS 107.095's language in NRS 107.080(5)). A 1989
                amendment separated that language into MRS 107.095. 1989 Nev. Stat.,
                ch. 750, § 11, at 1770.

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               scheme. See Hearing on S.B. 359 Before the Assembly Judiciary Comm.,
               64th Leg. Ex. D (Nev., June 10, 1987) (Memorandum from Michael K.
               Wall, Deputy Supervising Staff Attorney, Nevada Supreme Court to Chief
               Justice E.M. Gunderson, Nevada Supreme Court (June 9, 1987)); see also
               Lowe,       118 Nev. at 103-04, 40 P.3d at 412 (concluding that the
               memorandum distributed at the hearing illustrated the intent of the
               Legislature in enacting NRS 40.453).
                              Unlike the right to a trial by jury, the statute providing for a
               guarantor's right to be mailed a notice of default was enacted together
               with NRS 40.453 and relates directly to the policy underlying the
               statutory scheme of which NRS 40.453 is a part. Therefore, we conclude
               that NRS 107.095 falls within the scope of NRS 40.453's prohibited
               waivers. Accordingly, the district court properly invalidated Schleining's
               waiver of his right to be mailed the notice of default, and we must go on to
               address Schleining's arguments concerning Cap One's compliance with
               NRS 107.095. 5

               The district court did not abuse its discretion in determining that Cap One
               substantially complied with the notice requirement in NRS 107.095
                              In determining whether strict or substantial compliance with
               a statute is required, "we examine whether the purpose of the statute or
               rule can be adequately served in a manner other than by technical

                      Cap One further argues that NRS 40.453 is inapplicable because it
                       5

               applies only to "document[s] relating to the sale of real property" and,
               according to Cap One, a guaranty agreement is not a document "relating
               to the sale of real property." (quoting NRS 40.453). We reject this
               argument, as the plain language of NRS 40.453 explicitly applies to
               guarantors of notes secured by deeds of trust.

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                  compliance with the statutory or rule language."      Leyva v. Nat? Default
                  Servicing Corp., 127 Nev. „ 255 P.3d 1275, 1278 (2011). Here, we
                  find it significant that at the time of the underlying events in this case,
                  the Legislature had expressly imposed a substantial-compliance standard
                  with regard to a lender's duty to provide a borrower with notice of a loan's
                  default and the lender's election to foreclose.   See NRS 107.080(5) (2007)
                  (indicating that a trustee's sale may be declared void if, among other
                  things, the entity conducting the sale "does not substantially comply with"
                  the provisions of NRS 107.080). 6        In other words, the Legislature
                  specifically envisioned that the purposes behind NRS 107.080's notice and
                  timing requirements could be achieved even if these requirements were
                  not strictly adhered to.   Cf. Leyva, 127 Nev. at , 255 P.3d at 1278
                  (recognizing that strict compliance with a statute's requirements may not
                  be necessary when strict compliance is not required to serve the statute's
                  purpose). Given that the Legislature intended for a substantial-
                  compliance standard to apply with regard to Cap One's duty to provide
                  notice to Decal under NRS 107.080, we see no reason why the Legislature
                  would intend for a strict-compliance standard to apply when providing the
                  same notice directly to Schleining under NRS 107.095.

                        6 We note that, in 2011, the Legislature added a new subsection to
                  NRS 107.080. See 2011 Nev. Stat., ch. 81, § 9, at 335. This subsection,
                  now NRS 107.080(7), sets forth specific penalties against an entity who
                  "did not comply with" certain requirements in NRS 107.080. See NRS
                  107.080(7) (2011). Although the Legislature indicated that subsection 7's
                  remedy "is in addition to the remedy provided in subsection 5," the
                  Legislature did not change the substantial-compliance standard in
                  subsection 5. Because the underlying events in this case took place before
                  subsection 7's enactment, we need not consider what effect, if any,
                  subsection 7 may have on subsection 5's substantial-compliance standard.

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                              Moreover, this court has already addressed the applicability of
                  substantial compliance in the context of notice requirements. In
                  considering the notice requirements for mechanics' liens, this court held
                  that substantial compliance is sufficient where actual notice occurs and
                  there is no prejudice to the party entitled to notice. Las Vegas Plywood St
                  Lumber, Inc. v. D & D Enters., 98 Nev. 378, 380, 649 P.2d 1367, 1368
                  (1982). Similar to the notice requirements for mechanics' liens discussed
                  in Las Vegas Plywood, the purpose of NRS 107.095 is simply to notify the
                  guarantor that the loan is in default and that the lender has elected to
                  foreclose on the secured property. Thus, we conclude that the notice
                  requirements of NRS 107.095 can be fulfilled through substantial
                  compliance. We must now determine whether the district court properly
                  concluded that there was substantial compliance in this case.
                              This court reviews substantial-compliance determinations for
                  an abuse of discretion. Redl v. Heller, 120 Nev. 75, 81, 85 P.3d 797, 800-01
                  (2004); Las Vegas Plywood, 98 Nev. at 380, 649 P.2d at 1368. Applying
                  the first prong of the rule articulated in Las Vegas Plywood to the facts of
                  this case, we conclude that the district court properly found that
                  Schleining had actual knowledge of the default and the pending
                  foreclosure sale despite the lack of statutory notice. A review of the trial
                  record clearly demonstrates that Schleining knew Decal would not be able
                  to pay the loan when it became due. He first attempted to get an
                  extension of the loan's due date, which Cap One rejected. Thereafter, he
                  asked Cap One to release his personal guaranty in exchange for payment
                  of one month's interest, which Cap One also rejected. Moreover,
                  Schleining admitted at trial that he had actual knowledge of the default
                  and the date of the foreclosure sale prior to its commencement.

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                         Applying the second prong of the rule articulated in Las Vegas
                 Plywood, we conclude that the district court properly determined that
                 Schleining was not prejudiced by the lack of statutory notice. Although
                 Schleining claimed that his failure to act to save the property at issue was
                 because he did not receive the appropriate notice, there was no evidence
                 presented that Schleining attempted to refinance the property but failed
                 due to time constraints. Nor did Schleining testify about any additional
                 actions he could have or would have taken to save the property and avoid
                 a deficiency judgment if he had personally received the notice of default.
                 Accordingly, and in light of the notice that Cap One sent to Decal at the
                 address provided in Schleining's guaranty agreement, we conclude that
                 the district court did not abuse its discretion in determining that Cap One
                 substantially complied with the notice requirements of NRS 107.095.
                         Although the dissenting justices cite to the substantial-
                 compliance rule, they refuse to apply the rule or review the discretion
                 exercised by the district court. Instead, they conclude as a matter of law
                 that substantial compliance did not occur, citing to Las Vegas Convention
                 & Visitors Authority v. Miller for the proposition that the "failure to even
                 attempt to comply with a statutory requirement will result in a lack of
                 substantial compliance." 124 Nev. 669, 684, 191 P.3d 1138, 1148 (2008).
                 However, this statement from Las Vegas Convention was not a holding of
                 the court; rather, it was a comment on the fact that "typically" this court
                 has found no substantial compliance when no attempt is made to comply
                 with statutory requirements.    Id.   In fact, the court actually held that
                 there was no substantial compliance with a ballot-initiative statute
                 because the reasonable purpose of the statute was not met when the
                 ballot-initiative proponents failed to include certain statutorily required

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                information on their affidavits and the proponents could not point to facts
                that would have otherwise demonstrated substantial compliance with the
                statute. Id. at 686, 191 P.3d at 1149.
                         In this regard, Las Vegas Convention was factually different from
                this case, as the purpose of the statute in that case was to prevent voter
                fraud, and the ballot initiative's proponents failed altogether to
                demonstrate that the statute's purpose had been achieved.      Id. at 688-89,
                191 P.3d at 1150-51. This is important because the purpose of the
                substantial-compliance rule is to identify a factual situation in a case
                whereby the reasonable purpose of the statute is met by the offending
                party's actions without requiring "technical compliance with the
                statutory. . . language." See Leyva, 127 Nev. at , 255 P.3d at 1278.
                         The dissent also argues that we have ignored Las Vegas
                Convention's reliance upon Schofield v. Copeland Lumber Yards, Inc., 101
                Nev. 83, 692 P.2d 519 (1985). However, Schofield does not undermine our
                decision in this case. In Schofield, the lienholder gave notice of the lien
                but failed to include certain statutorily required information in the notice,
                namely the terms and conditions of the lienholder's contract. 101 Nev. at
                84, 692 P.2d at 519-20. This court determined that without that
                information, the notice did not adequately advise the property owners
                about the contract's terms and "placed them at a considerable
                disadvantage in defending against the motion for summary judgment." Id.
                at 85, 692 P.2d at 520. Thus, this court concluded that there was no
                substantial compliance because the purposes of the statutory notice
                requirements were not fulfilled Id. at 85-86, 692 P.2d 520-21.
                            We conclude that the district court did not abuse its discretion
                when it determined that Schleining's actual notice of the default and

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                foreclosure sale, coupled with the lack of prejudice, satisfied the purpose of
                NRS 107.095. Accordingly, we affirm the judgment of the district court.

                                                                tiaw-t 1
                                                                     L            , J.
                                                     Hardesty

                We concur:

                                                J.
                Pickering

                1114--
                Saitta
                                                J.

                                                D.J.
                Denton

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                  DOUGLAS, J., with whom GIBBONS, C.J., and CHERRY, J., agree,
                  concurring in part and dissenting in part:
                              While I concur with the majority's determination that a
                  guarantor cannot waive the right to a notice of default, I dissent from the
                  majority's application of substantial compliance to the notice requirement
                  of NRS 107.095.

                  Cap One did not substantially comply with NRS 107.095
                              I agree that in determining whether strict or substantial
                  compliance with a statute is required, "we examine whether the purpose of
                  the statute or rule can be adequately served in a manner other than by
                  technical compliance with the statutory or rule language."     Leyva v. Nat'l
                  Default Servicing Corp., 127 Nev. „ 255 P.3d 1275, 1278 (2011)
                  (citing Leven v. Frey, 123 Nev. 399, 407 n.27, 168 P.3d 712, 717-18 n.27
                  (2007)). In the context of notice requirements for mechanics' liens, this
                  court has held that substantial compliance is sufficient where actual
                  notice occurs and there is no prejudice to the party entitled to notice.   Las
                  Vegas Plywood & Lumber, Inc. v. D & D Enters., 98 Nev. 378, 380, 649
                  P.2d 1367, 1368 (1982). Thus, applying that standard here, the district
                  court incorrectly held that Cap One substantially complied with NRS
                  107.095.
                              This court reviews substantial-compliance determinations for
                  an abuse of discretion. Redl v. Heller, 120 Nev. 75, 81, 85 P.3d 797, 800-01
                  (2004). "Courts have defined substantial compliance as compliance with
                  essential matters necessary to ensure that every reasonable objective of
                  the statute is met." Williams v. Clark Cnty. Dist. Attorney, 118 Nev. 473,
                  480, 50 P.3d 536, 541 (2002). "[Manure to even attempt to comply with a
                  statutory requirement will result in a lack of substantial compliance." Las
                  Vegas Convention & Visitors Auth. v. Miller,    124 Nev. 669, 684, 191 P.3d
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                   1138, 1148 (2008); Schofield v. Copeland Lumber Yards, Inc., 101 Nev. 83,
                   85, 692 P.2d 519, 520 (1985) ("Me do not think that a notice of lien may
                   be so liberally construed as to condone the total elimination of a specific
                   requirement of the statute.").
                               The majority notes that Las Vegas Convention              involves
                   substantial compliance in a factually different context, an election statute,
                   but ignores this court's reliance on Schofield in reaching its conclusion. In
                   Schofield, the failure to give notice of a lien as required in a mechanic's
                   lien statute could not be satisfied without at least an attempt to comply
                   with the statute.    Schofield, 101 Nev. at 85, 692 P.2d at 520. The
                   reasoning in Schofield      and Las Vegas Convention       that substantial
                   compliance in the face of a failure to attempt compliance would negate the
                   particular statutory provision in question is the better approach.
                   Schofield, 101Nev . at 85, 692 P.2d at 520; Las Vegas Convention, 124 Nev.
                   at 686, 191 P.3d at 1149.
                               Here, Cap One concedes that it gave no notice to Schleining,
                   either in a form required by NRS 107.095 and NRS 107.080 or otherwise.'
                   Schleining conceded that he had become aware of the foreclosure sale two
                   or three days prior, but neither Schleining nor Cap One alleges that it was
                   Cap One who gave Schleining notice. Because Cap One took no action to
                   give Schleining notice, Cap One's actions do not constitute "compliance
                   with essential matters." Williams, 118 Nev. at 480, 50 P.3d at 541.

                         "The majority points out that Cap One mailed a notice of default to
                   Decal Nevada and that Decal Nevada's address was identical to
                   Schleining's address as listed in the written guaranty. This notice was not
                   addressed to Schleining specifically, and Cap One does not argue that the
                   notice mailed to Decal Nevada was also intended to provide notice to
                   Schleining. Accordingly, this fact should not alter the conclusion that Cap
                   One failed entirely to comply with the requirement to provide notice.
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                                Furthermore, the rule articulated in Las Vegas Plywood &
                   Lumber v. D & D Enterprises, 98 Nev. 378, 649 P.2d 1367 (1982), requires
                   the court to review prejudice as to Schleining. The majority believes
                   Schleining was not prejudiced; however, the district court, by finding that
                   actual notice two or three days before the foreclosure sale was sufficient
                   where the statute provides that such notice be effected over three months
                   before the foreclosure sale, abused its discretion. Additionally, it must be
                   noted that having two or three days to cure the $3 million default
                   constitutes prejudice when Cap One took no action to give Schleining the
                   required notice.
                                I dissent because I believe the test was not properly applied as
                   to substantial compliance (notice and prejudice). I therefore, would reverse
                   this judgement for failure to comply with NRS 107.095.

                                                        Douglas
                                                                    )
                                                                    gig-               J.

                   We concur:

                                                   C.J.
                   Gibbons

                      Chsut.                       J.
                   Cherry

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