Key Bank of Alaska v. Donnels

• Decision Date: 20 February 1990
• Docket Number: Nos. 19267,19816,s. 19267
• Citation: 787 P.2d 382,106 Nev. 49
• Parties: KEY BANK OF ALASKA, an Alaska Bank Corporation, Appellant, v. Myllie Jo DONNELS, individually and as Executor of the Estate of Wayne T. Donnels, and Walker Boudwin Construction Company, Inc., Respondents (Two Cases).
• Court: Nevada Supreme Court

Page 382

787 P.2d 382

106 Nev. 49

KEY BANK OF ALASKA, an Alaska Bank Corporation, Appellant, v. Myllie Jo DONNELS, individually and as Executor of the

Estate of Wayne T. Donnels, and Walker Boudwin

Construction Company, Inc., Respondents

(Two Cases).

Nos. 19267, 19816.

Supreme Court of Nevada.

Feb. 20, 1990.

Lionel Sawyer & Collins, M. Kristina Pickering, and William R. Killip, and Henderson & Nelson, Reno, for appellant.

McDonald, Carano, Wilson, McCune, Bergin, Frankovich & Hicks, and Margaret M. Springgate, Reno, for respondents.

OPINION

PER CURIAM:

In 1985, appellant Key Bank of Alaska loaned $869,552.15 to respondent Walker Boudwin Construction Company (Walker Boudwin), a Nevada corporation. The obligation was evidenced by a promissory note and secured by a deed of trust on real property located in Reno. Both were executed by respondent Wayne Donnels, president of Walker Boudwin. The obligation was additionally secured by personal guaranties signed by Donnels and his wife, Myllie Jo, in favor of the bank. The note and guaranties were governed by Alaska law while the deed of trust incorporated by reference Nevada foreclosure provisions.

After Walker Boudwin defaulted on the note in 1986, Key Bank elected to sell the Nevada property under the provisions of the deed of trust and thereafter sought a deficiency judgment. The Donnels and Walker Boudwin moved for dismissal of the action under NRCP 12(b)(5), and the district court granted the motion.

Thereafter, respondents filed a motion for attorney's fees on the basis of NRS 18.010(2)(a) and (b). Appellant filed a counter-motion for fees on the basis of contractual provisions in the promissory note and guaranties. The district court granted respondents' motion and denied appellant's motion. We consolidated Key Bank's appeals from these orders.

Appellant contends that the district court erred in applying Alaska law because the deed of trust incorporated by reference NRS 107.030(6), (7) and (8) concerning foreclosure in the event of default on an obligation. Appellant maintains that the parties intended Nevada law to apply to actions involving the Reno property and asserts that it is unreasonable to conclude that the parties would authorize Nevada foreclosure proceedings while intending that their use would result in forfeiture of a deficiency under Alaska law.

Respondents do not argue, however, that appellant had no right to pursue foreclosure under the terms of the deed of trust pursuant to NRS 107.080. Rather, they contend that once appellant elected to foreclose on that basis rather than pursuant to NRS 40.430, it was precluded by Alaska Statute 34.20.100 from pursuing a deficiency action. ¹ Furthermore, regardless of whether the parties agreed that Nevada foreclosure procedures would apply, an action for a deficiency after partial satisfaction through sale of the security is an action on the debt. See Nevada Land & Mtge. v. Hidden Wells, 83 Nev. 501, 504, 435 P.2d 198, 200 (1967); McMillan v. United Mortgage Co., 82 Nev. 117, 122, 412 P.2d 604, 606 (1966). We have held that "[i]t 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." Sievers v. Diversified Mtg. Investors, 95 Nev. 811, 815, 603 P.2d 270, 273 (1979). Because there is no evidence or argument here regarding bad faith or evasion of Nevada law, the provision designating Alaska law in the promissory note is valid. Therefore, based on our decisions in Hidden Wells and Sievers, we hold that the district court did not err in concluding that the deficiency action was an action on the promissory note which contained a valid and enforceable agreement that Alaska law was to apply to the debt.

Appellant contends, however, that even if the district court correctly concluded that Alaska law governed, the court erred in applying the relevant statute. Appellant maintains that AS 34.20.100 does not apply extraterritorially to nonjudicial foreclosure proceedings because the language "as authorized by AS 34.20.070--34.20.130" expressly limits the application of the statute to summary foreclosure procedures conducted in Alaska. ² Appellant cites Hull v. Alaska Federal Sav. & Loan Ass'n, 658 P.2d 122 (Alaska 1983), in which the Alaska Supreme Court held that AS 34.20.100 "applies only to non-judicial foreclosure sales (sales under a deed of trust under sections 70-130), as in this case, and not to judicial foreclosure sales." Id. at 124 (citation omitted).

In dismissing appellant's complaint, the district court apparently construed the language of AS 34.20.100 as illustrative rather than exclusive and concluded that the statute applied extraterritorially. However, we cannot agree with respondents' contention that if the Alaska legislature intended to limit the anti-deficiency provisions, it would not have placed non-restricting commas around the clause "as authorized by AS 34.20.070--34.20.130." On the contrary, we read the offsetting commas as indicating a clear intent to limit the effect of the statute to foreclosures under those sections, especially because AS 34.20.070 expressly refers to deed of trust conveyances of property located in Alaska. Furthermore, because anti-deficiency statutes derogate from the common law, they should be narrowly construed. 3 Sutherland, Statutory Construction § 61.01 (4th ed. 1986). Consequently, we agree with appellant that the district court erred in concluding that AS 34.20.100 applied extraterritorially.

Appellant further contends that the district court abused its discretion in granting respondents' motion for attorney's fees based on NRS 18.010(2)(a) and (b). While respondents maintain that the award was proper under either subsection, we note that because respondents did not recover a money judgment below, the only possible basis for the court's award of attorney's fees was subsection (b). When attorney's fees are based on the provisions in subsection (a), we have held that an award of a money judgment is a prerequisite to an award of attorney's fees. ³ See, e.g., International Indus. v. United Mtg. Co., 96 Nev. 150, 157, 606 P.2d 163, 167 (1980).

Respondents maintain that attorney's fees were proper under subsection (b) be...