Branch Banking v. Windhaven & Tollway, LLC

• Decision Date: 30 March 2015
• Docket Number: Nos. 59638,60527.,s. 59638
• Citation: 347 P.3d 1038,131 Nev. Adv. Op. 20
• Court: Nevada Supreme Court
• Parties: BRANCH BANKING and Trust Company, A North Carolina Banking Corporation, Appellant, v. WINDHAVEN & TOLLWAY, LLC, A Nevada Limited Liability Company; Stanley H. Wasserkrug, an Indvidual; 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 Company, Appellant, v. Windhaven & Tollway, LLC, A 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, 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.

347 P.3d 1038

131 Nev. Adv. Op. 20

BRANCH BANKING and Trust Company, A North Carolina Banking Corporation, Appellant

v.WINDHAVEN & TOLLWAY, LLC, A Nevada Limited Liability Company;

Stanley H. Wasserkrug, an Indvidual;

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 Company, Appellant

v.Windhaven & Tollway, LLC, A 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, 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.

Nos. 59638

60527.

Supreme Court of Nevada.

March 30, 2015.

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.

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.¹ The loan was secured by various assets, 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 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 sheriff's return or the recital of consideration in the trustee's deed that there is a deficiency of the proceeds of the sale and a balance remaining due to the judgment creditor or the beneficiary of the deed of trust, respectively.

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., –––Nev. ––––, 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).

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. ––– Nev. ––––, 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.

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 “[i]n 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 “...