Hefetz v. Beavor

• Decision Date: 06 July 2017
• Docket Number: No. 70327,70327
• Citation: 397 P.3d 472
• Parties: Yacov Jack HEFETZ, Appellant, v. Christopher BEAVOR, Respondent.
• Court: Nevada Supreme Court

397 P.3d 472

Yacov Jack HEFETZ, Appellant,

v.Christopher BEAVOR, Respondent.

No. 70327

Supreme Court of Nevada.

FILED JULY 06, 2017

Cohen Johnson Parker Edwards and H. Stan Johnson, Chris Davis, and Michael V. Hughes, Las Vegas, for Appellant.

Dickinson Wright PLLC and Joel Z. Schwarz, Gabriel A. Blumberg, and Taylor Anello, Las Vegas, for Respondent.

BEFORE THE COURT EN BANC.

OPINION

By the Court, STIGLICH, J.:

The one-action rule generally requires a creditor seeking to recover debt secured by real property to proceed against the security first prior to seeking recovery from the debtor personally. This opinion addresses whether the nonwaiver provisions of NRS 40.495(5) preclude a party from waiving the one-action rule by failing to assert it in his responsive pleadings. We hold that the one-action rule must be timely interposed as an affirmative defense in a party's responsive pleadings or it is waived. Because respondent Christopher Beavor failed to raise the one-action rule defense until prior to the commencement of the second trial in the case, the district court erred by granting his motion to dismiss based on the one-action rule.

FACTUAL AND PROCEDURAL HISTORY

The Herbert Frey Revocable Family Trust (the trust) loaned Toluca Lake Vintage, LLC (Toluca Lake) $6,000,000, pursuant to a loan agreement dated March 29, 2007. Appellant Yacov Jack Hefetz (Hefetz) entered into a participation agreement with the trust and contributed $2,214,875 toward funding of the loan. The proceeds of the loan were used to purchase property, as well as the funding of engineering, marketing, and architects for a planned development of the commercial property. In relevant part, the loan was secured by the personal residence of respondent Christopher Beavor and his former wife, Samantha.¹ In addition to Beavor's personal residence, the loan was secured by a personal guaranty agreement, wherein Beavor waived his rights under Nevada's one-action rule, found in NRS 40.430. One of the provisions of the loan stated that the loan would default should Toluca Lake file for bankruptcy.

In 2009, Toluca Lake filed for bankruptcy, thereby defaulting on the loan, and Beavor refused to repay the loan under the terms of the personal guaranty agreement. Subsequently, the trust assigned its interest in the loan, promissory note, deeds of trust, and guaranty to Hefetz.

Without foreclosing on the property, Hefetz filed a complaint to recover damages against Beavor for breach of the guaranty agreement.² Beavor did not assert the one-action rule in either his answer to the complaint or his counterclaim. The district court scheduling order mandated the parties file motions to amend pleadings or add parties on or before February 21, 2012, and file dispositive motions on or before June 20, 2012. On April 9, 2012, Beavor filed his first amended counterclaim, which did not assert the one-action rule.

On May 29, 2012, a stipulation and order to extend discovery deadlines was entered, extending discovery until July 23, 2012, and the dispositive motion deadline until August 23, 2012. However, the parties expressly stipulated that the "deadline for any party to amend the pleadings has passed" and "[t]he parties do not seek an extension of [the February 21, 2012,] date."

A jury trial was held between February 5, 2013, and March 1, 2013, and the jury entered a verdict in favor of Beavor. Subsequently, Hefetz filed a motion for a new trial, or in the alternative, a motion for judgment notwithstanding the verdict. The district court granted Hefetz's motion for a new trial based on Beavor's failure to oppose the motion on its merits. The new trial was scheduled for a five-week stack, commencing October 12, 2015. The district court ordered that the deadlines remained governed by the May 29, 2012, scheduling order, which had deadlines of July 23, 2012, for discovery, and August 23, 2012, for dispositive motions.

On May 5, 2015, Beavor filed a motion to dismiss Hefetz's complaint based on the one-action rule, raising the one-action rule defense for the first time. After a hearing, the district court granted Beavor's motion to dismiss based on the one-action rule, finding that the one-action rule could not be waived. The district court later granted Beavor attorney fees.

Hefetz now appeals and raises the following issues: (1) whether the district court erred by granting Beavor's motion to dismiss because Beavor waived the one-action rule defense by not timely asserting it, and (2) whether the district court abused its discretion by awarding attorney fees to Beavor.

DISCUSSION

The district court erred by granting Beavor's motion to dismiss

Hefetz argues that the district court erred by granting Beavor's motion to dismiss because NRS 40.435(2) and NRCP 8(c) and 12(b) together provide that the one-action rule must be timely asserted in litigation as an affirmative defense and, here, Beavor did not timely assert the defense because he did not assert it until after the first trial. Beavor argues that NRS 40.435(3) and NRS 40.495(5)(d) prohibit a waiver of the one-action rule prior to the entry of final judgment, his assertion of the rule is thus timely, and the district court properly dismissed Hefetz's action under NRS 40.453(2)(a).

"This court reviews de novo a district court's order granting a motion to dismiss." Moon v. McDonald, Carano & Wilson LLP, 129 Nev. 547, 550, 306 P.3d 406, 408 (2013). Such an order is "rigorously reviewed [;] [t]o survive dismissal, a complaint must contain some set of facts, which, if true, would entitle [Hefetz] to relief." In re Amerco Derivative Litig., 127 Nev. 196, 210–11, 252 P.3d 681, 692 (2011) (citation and internal quotation marks omitted). When interpreting statutes, "[i]f the plain meaning of a statute is clear on its face, then [this court] will not go beyond the language of the statute to determine its meaning." Beazer Homes Nev., Inc. v. Eighth Judicial Dist. Court, 120 Nev. 575, 579–80, 97 P.3d 1132, 1135 (2004). When construing statutes and rules together, this court will, if possible, "interpret a rule or statute in harmony with other rules and statutes ... such that no part of the statute is rendered nugatory or turned to mere surplusage." Albios v. Horizon Communities, Inc., 122 Nev. 409, 418, 132 P.3d 1022, 1028 (2006) ; see also Orion Portfolio Servs. 2 LLC v. Cty. of Clark, 126 Nev. 397, 403, 245 P.3d 527, 531 (2010) ("This court has a duty to construe conflicting statutes as a whole, so that all provisions are considered together and, to the extent practicable, reconciled and harmonized.").

This court has previously harmonized the statutory provisions of the one-action rule and the NRCP

NRS 40.430 is commonly referred to as Nevada's "one-action rule." Walters v. Eighth Judicial Dist. Court, 127 Nev. 723, 725, 263 P.3d 231, 232 (2011). The one-action rule provides that "there may be but one action for the recovery of any debt, or for the enforcement of any right secured by a mortgage or other lien upon real estate." NRS 40.430. When applicable, the one-action rule thus requires that "a creditor ... seek to recover on the property through judicial foreclosure before recovering from the debtor personally." McDonald v. D.P. Alexander & Las Vegas Boulevard, LLC, 121 Nev. 812, 816, 123 P.3d 748, 750 (2005). If a creditor fails to comply with the one-action rule and sues a debtor personally without seeking judicial foreclosure, the debtor may assert the one-action rule as a defense and move to dismiss the action. NRS 40.435.

We have previously held, however, that in litigation the one-action rule may be waived if it is not timely asserted. Keever v. Nicholas Beers Co., 96 Nev. 509, 513 n.1, 611 P.2d 1079, 1082 n.1 (1980). This holding is contemplated by NRS 40.435(2), which provides that "[i]f the provisions of NRS 40.430 are timely interposed as an affirmative defense ...," then the court may, on an appropriate motion, either "[d]ismiss the proceeding" or "[g]rant a continuance" so that the action may be converted into one that complies with the one-action rule. While NRS 40.435(2) does not address what is meant by "timely interpos[ing]" the one-action rule "as an affirmative defense," NRCP 8(b) and 12(c), and our interpretation of them, govern the timely assertion of affirmative defenses, including the one-action rule. See Webb v. Clark Cty. Sch. Dist ., 125 Nev. 611, 620, 218 P.3d 1239, 1245 (2009) (holding that a party may waive a statutory affirmative defense if the party fails to timely raise it); Clark Cty. Sch. Dist. v. Richardson Constr., Inc., 123 Nev. 382, 395 & n.25, 168 P.3d 87, 96 & n.25 (2007) ("Under NRCP 8(c), a defense that is not set forth affirmatively in a pleading is waived."); Elliot v. Resnick, 114 Nev. 25, 30, 952 P.2d 961, 964 (1998) ("If affirmative defenses are not pleaded or tried by consent, they are waived.").

The litigation waiver provision in NRS 40.435(2) contrasts with the statutory provisions prohibiting the pre-litigation waiver of the one-action rule by agreement. NRS 40.453(1) provides that a debtor may not waive the provisions of the one-action rule in "any document relating to the sale of real property." We have harmonized these conflicting statutes by holding that, while a debtor may be precluded from waiving the one-action rule in documents "relating to the sale of real property," he may waive the rule, intentionally or not, by failing to timely raise it as an affirmative defense after the commencement of litigation. See Nev. Wholesale Lumber Co. v. Myers Realty, Inc., 92 Nev. 24, 28, 544 P.2d 1204, 1207 (1976) (holding that a debtor may waive the one-action rule in litigation by failing to timely assert it, "even though NRS 40.453 precludes a [debtor] from waiving a right secured by the laws of the state in any document relating to the sale of real property"); see also Keever, 96 Nev. at 513 n. 1, 611 P.2d at 1082 n. 1 (1980) (explaining that the one-action rule may be waived in litigation,...