Sexton v. Lsref2 Apex Trust 2012 C/W 63132 ( 2015 )

 The Fair Value Defenses Codified at NRS 40.459(1) Do Not Apply to the
Sextons
NRS 40.459(1)'s fair value defenses do not apply directly to
guarantors; instead, NRS 40.495(3) allows guarantors to invoke NRS
40.459(1)'s fair value defenses if "the obligee maintains an action to
foreclose or otherwise enforce a mortgage or lien." NRS 40.495(3); see Lavi
v. Eighth Judicial Dist. Court, 130 Nev., Adv. Op. 38, 325 P.3d 1265, 1268
(2014). NRS 40.495(3)'s language is ambiguous because foreclosure is a
multi-step process, and two or more reasonably-informed people could
reach different conclusions about when an "obligee maintains an action to
foreclose or otherwise enforce a mortgage or lien." NRS 40.495(3); see D.R.
Horton, Inc. v. Eighth Judicial Dist. Court, 123 Nev. 468, 476, 168 P.3d
731, 737-38 (2007). Therefore, we must look beyond NRS 40.495(3)'s plain
language to determine when guarantors can invoke NRS 40.459(1)'s fair
value defenses.
First, our precedent shows NRS 40.495(3) only allows
guarantors to invoke the anti-deficiency defenses codified between NRS
40.451 and 40.4639 after the actual sale of secured property. Lavi, 130
Nev., Adv. Op. 38, 325 P.3d at 1268. Second, "[i]n determining what the
Legislature intended, the title of the statute may be considered in
construing the statute." Minor Girl v. Clark Cnty. Juvenile Court Servs.,
87 Nev. 544, 548, 490 P.2d 1248, 1250 (1971). NRS 40.495(3) incorporates
NRS 40.451 to 40.4639 which have two sub-chapter headings: "Foreclosure
Sales and Deficiency Judgments" and "Actions by Holders of Junior Real
Mortgages After Foreclosure Sales." See NRS Chapter 40. Therefore,
NRS 40.495(3) incorporates statutes that explain what happens after
secured property is sold. Third, the fair value defenses codified at NRS
40.459(1) presume the secured property has been sold, requiring the
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district court to consider the property's actual sale price and set the
property's fair market value "as of the date of foreclosure sale or trustee's
sale." NRS 40.457; NRS 40.459(1). Fourth, the relevant legislative
histories show the actual sale of secured property triggers NRS 40.495(3).
Legislative counsel and banking interests believed NRS 40.495(3) would
allow guarantors to invoke NRS 40.459(1)'s fair value defenses once a
foreclosure occurred. See Hearing on A.B. 557 Before the Senate Judiciary
Comm., 65th Leg. 12 (Nev., June 9, 1989) (statement by Ms. Stern, Legal
Counsel); see also Hearing on A.B. 557 Before the Assembly Judiciary
Comm., 65th Leg. 14-15 (Nev., June 16, 1989). Further, NRS 40.495(4)
was intended to close "a loophole in the law that allows the bank to file a
suit [against a guarantor] but not take the property when the loan is
secured by the property." Hearing on A.B. 273 Before the Assembly
Commerce & Labor Comm., 76th Leg. 5 (Nev., Mar. 23, 2011) (statement
by Assemblyman Marcus Conklin). That loophole only exists, and NRS
40.495(4) is only necessary, if NRS 40.495(3) merely protects guarantors
after a foreclosure sale. Therefore, the Legislature apparently viewed
NRS 40.495(3) and (4) as companions; NRS 40.495(3) provides fair market
value defenses after foreclosure sale, and NRS 40.495(4) provides the
same protections before any foreclosure.
Although NRS 40.495(3) is ambiguous, we conclude it does not
allow guarantors to invoke the fair value defenses codified at NRS
40.459(1) until an actual foreclosure sale has occurred. Because no sale
has occurred here, NRS 40.495(3) cannot apply to the Sextons, and they
cannot enjoy the fair value defenses codified at NRS 40.459(1). As such,
the Sextons can only invoke a fair value defense to the deficiency
judgment against them if NRS 40.495(4) applies.
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The Fair Value Defenses Codified at NRS 40.495(4) Do Not Apply to the
Sextons
AB 273 (codified at NRS 40.495(4)) applies to guarantor
actions "commenced on or after the effective date of this act," 2011 Nev.
Stat., ch. 311, § 6(3), at 1748, and became effective upon passage and
approval, 2011 Nev. Stat., ch. 311, § 7, at 1748. The Governor signed AB
273 on June 10, 2011, at 3:00 p.m., as required by the Nevada
Constitution and AB 273's enacting provision. Nev. Const. art. IV § 35;
2011 Nev. Stat., ch. 311, § 7, at 1748. Wells Fargo filed its complaint
several hours earlier that same day. Therefore, NRS 40.495(4) was not an
effective law when Wells Fargo filed its complaint, and it cannot apply to
the Sextons unless the Legislature intended for NRS 40.495(4) to apply
retroactively.
"Whether applying a statute in a particular instance
constitutes retroactive operation is a question of law that we review de
novo." Sandpointe Apts., LLC v. Eighth Judicial Dist. Court, 129 Nev.,
Adv. Op. 87, 313 P.3d 849, 853 (2013). NRS 40.495(4)'s enactment
provisions expressly state that it can only apply to breach of guaranty
claims filed on or after June 10, 2011. 2011 Nev. Stat., ch. 311, §§ 6(3), 7,
at 1748. The Sextons argue the Legislature intended for NRS 40.495(4) to
be retroactive as to any claims filed on June 10, 2011, in the hours before
the governor signed the bill because the enacting provision expressly
states that NRS 40.495(4) applies to any claims "commenced on or after
the effective date of this act." 2011 Nev. Stat., ch. 311, § 6(3), at 1748
(emphasis added). However, § 7 of AB 273 only made the act effective
upon the Governor's approval. 2011 Nev. Stat., ch. 311, § 7, at 1748.
Therefore, we reject the Sextons' argument because following the plain
language here would violate the Legislature's clear intent to avoid any
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retroactive application. McKay v. Bd. of Supervisors of Carson City, 102
Nev. 644, 648, 730 P.2d 438, 441 (1986) ("[W]ords in a statute should be
given their plain meaning unless this violates the spirit of the act."); see
also Sandpointe Apts., 129 Nev., Adv. Op. 87, 313 P.3d at 858-59 (AB 273
was not intended to be retroactive and the language in its enactment
provision does not permit retroactive application).
The Sextons cannot invoke the fair value defenses codified at
NRS 40.459(1) because NRS 40.495(3) only allows guarantors to invoke
those defenses after the secured property is sold. Similarly, the Sextons
cannot invoke the fair value defenses from NRS 40.495(4) because
applying it here would require an impermissible and unintended
retroactive application. Accordingly, we
ORDER the judgment of the district court AFFIRMED.
Parraguirre
'Dot.it, J.
J.
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cc: Hon. Scott N. Freeman, District Judge
Wm. Patterson Cashill, Settlement Judge
Gunderson Law Firm
McDonald Carano Wilson LLP/Reno
Washoe District Court Clerk
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HARDESTY, C.J., with whom SAITTA, J., agrees, concurring in part and
dissenting in part:
While I concur with the majority's conclusion that NRS
40.495(1) does not apply to the Sextons, I respectfully disagree with the
majority's analysis and determination that NRS 40.495(4) was not an
effective law when Wells Fargo filed its complaint on the morning of June
10, 2011. The majority concludes that there is an issue of retroactivity
here and that the law did not become effective until 3:00 p.m. on June 10,
2011, when the Governor signed AB 273. However, the plain language of
the statute and the legislative history indicate that there is no
retroactivity issue and that AB 273 became effective at midnight on June
10, 2011, not beginning at 3:00 pm when the Governor signed the bill.
First, NRS 40.495(4)'s enactment provision expressly states
that it applies to any breach of guaranty claims "commenced on or after the
effective date of this act." 2011 Nev. Stat., ch. 311, § 6(3), at 1748
(emphasis added). The "effective date" in this case is June 10, 2011, which
begins at 12:00:00 am and ends at 11:59:59 pm. Thus, the plain language
of the statute's own enactment terms dictates that A.B. 273 became
effective for the entirety of June 10, 2011, and not at the specific time the
Governor signed the bill.
Second, the legislative history here demonstrates that there is
no retroactivity issue. Specifically, Assemblyman Conklin overtly stated
that "[t]here is no retroactivity in this bill. It is simply all future action."
Hearing on A.B. 273 Before the Assembly Commerce & Labor Comm., 76th
Leg. 12 (Nev., Mar. 28, 2011) (statement by Assemblyman Marcus
Conklin). Taken together with the plain language of the bill's enactment
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provision, there can be no question but that the bill was meant to take
effect for the entirety of June 10, 2011.
Moreover, the legislative history reveals that the Legislature
wanted to make it difficult for creditors to do exactly what Wells Fargo
did, while also ensuring that NRS 40.495(4) did not affect already filed
claims. Originally, all of AB 273 would become effective on July 1, 2011.
A.B. 273, § 7, 76th Leg. (Nev., Mar. 15, 2011) (as introduced). However,
explicit concerns were raised that by making NRS 40.495(4) effective on a
set date it would encourage creditors to rush and file suits against
guarantors in an effort to avoid the new guarantor protections. Hearing
on A.B. 273 Before the Assembly Commerce & Labor Comm., 76th Leg. 12
(Nev., Mar. 28, 2011) (statement by Assemblyman Marcus Conklin). If the
Governor signed AB 273 in April, but NRS 40.495(4) did not take effect
until July 1, 2011, creditors could use the intervening months filing suit
against guarantors to avoid the new protections. Id. As such, the
Legislature foresaw the possibility that creditors would do exactly what
Wells Fargo has done here: rush to file a suit against a guarantor to avoid
the application of NRS 40.495(4).
The Legislature responded to these two concerns by making
NRS 40.495(4) applicable only to an action against a
guarantor.... commenced on or after the effective date of this act." 2011
Nev. Stat., ch. 311, § 6(3), at 1748 (emphasis added). That is, MRS
40.495(4) became operative upon passage and approval by the Governor
for any claims "commenced on or after" June 10, 2011, regardless of the
specific hour that the Governor signed the bill.
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Therefore, because I concur in part, and dissent in part, I
would reverse and remand this case to the district court to determine the
fair value defenses created by NRS 40.495(4).
CA.
Hardesty
I concur:
J.
Saitta
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