SANDPOINTE APARTMENTS, LLC, a Nevada Limited Liability Company; and Stacy Yahrauslewis, an Individual, Petitioners,
The EIGHTH JUDICIAL DISTRICT COURT of the State of Nevada, in and for the County of Clark; and the Honorable Elizabeth Goff Gonzalez, District Judge, Respondents, and CML-NV Sandpointe, LLC, a Florida Limited Liability Company, Real Party in Interest.
Marquis Aurbach Coffing and Frank M. Flansburg, III, and Candice E. Renka, Las Vegas, for Petitioners.
Lewis & Roca LLP and Daniel F. Polsenberg, Las Vegas; Cotton, Driggs, Walch, Holley, Woloson & Thompson and Richard F. Holley, Victoria L. Nelson, and William N. Miller, Las Vegas, for Real Party in Interest.
Holland & Hart LLP and Jeremy J. Nork and Frank Z. LaForge, Reno, for Amicus Curiae Branch Banking and Trust Company.
Legislative Counsel Bureau Legal Division and Brenda J. Erdoes, Legislative Counsel, and Kevin C. Powers, Senior Principal Deputy Legislative Counsel, Carson City, for Amicus Curiae Legislature of the State of Nevada.
The O'Mara Law Firm, P.C., and David C. O'Mara, Reno, for Amicus Curiae Nevada Bankers Association.
Sylvester & Polednak, Ltd., and Jeffrey R. Sylvester and Allyson R. Noto, Las Vegas, for Amicus Curiae RADC/CADC Venture 2010-2, LLC.
Alfred M. Pollard, Washington, D.C., for Amicus Curiae Federal Housing Finance Agency.
Joseph Brooks, Arlington, Virginia, for Amicus Curiae Federal Deposit Insurance Corporation.
BEFORE THE COURT EN BANC.
In this opinion, we address NRS 40.459(1)(c), a statute limiting the amount of judgments in instances where a right to obtain a judgment against the debtor, guarantor, or surety has been transferred from one person to another. NRS 40.459(1)(c) was added to Nevada's law by Assembly Bill 273, which provided that NRS 40.459(1)(c) would " become effective upon passage and approval." 2011 Nev. Stat., ch. 311, §§ 5, 7, at 1743, 1748. We conclude that NRS 40.459(1)(c) would have an improper retroactive effect if applied to the facts underlying this writ petition. Because the language of the enrollment section does not overcome the presumption against retroactivity, NRS 40.459(1)(c) only applies prospectively. We therefore conclude that the limitations in NRS 40.459(1)(c) apply to sales, pursuant to either judicial foreclosures or trustee's sales, occurring on or after the effective date of the statute. We further conclude that in cases where application of NRS 40.459(1)(c) would not have a retroactive effect, it applies to any transfer of the right to obtain a deficiency judgment, regardless of when the right was transferred. Accordingly, we deny extraordinary writ relief.
FACTS AND PROCEDURAL HISTORY
In 2007, Silver State Bank loaned $5,135,000 to petitioner Sandpointe Apartments, LLC, for the construction of an apartment complex. Sandpointe obtained the loan by executing a promissory note in favor of Silver State Bank, secured by, among other things, a deed of trust to the real property acquired with the loan funds. The deed of trust contained a power of sale provision. Petitioner Stacy Yahraus-Lewis personally guaranteed the loan.
In 2008, the Nevada Financial Institutions Division closed Silver State Bank and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. In 2009, Sandpointe's loan matured, and Sandpointe defaulted by failing to repay the loan in full. In 2010, pursuant to a large structured sale, the FDIC sold the loan and the guarantee to Multibank. Multibank, in turn, transferred its interest in the loan and the guarantee to its wholly owned subsidiary, real party in interest CML-NV Sandpointe, LLC, a single purpose entity created by Multibank to facilitate and pursue collections on the loan. In early 2011, CML-NV elected to pursue its rights under the deed of trust's power of sale provision, and a trustee's sale was held at which CML-NV purchased the property securing the loan for a credit bid of $1,440,000.
Shortly thereafter, the Nevada Legislature unanimously passed Assembly Bill 273,
which, in relevant part, limits the amount of a deficiency judgment that can be recovered by persons who acquired the right to obtain the judgment from someone else who held that right. On June 10, 2011, the Governor signed Assembly Bill 273 into law, and the relevant provision was codified as NRS 40.459(1)(c).
On June 27, 2011, CML-NV filed a complaint in district court against Sandpointe and Yahraus-Lewis for deficiency and breach of guaranty. Yahraus-Lewis later moved for partial summary judgment, requesting that the district court apply the limitation contained in NRS 40.459(1)(c) to CML-NVs action. CML-NV opposed the motion and filed a countermotion for partial summary judgment, arguing that NRS 40.459(1)(c) could not apply retroactively to the action.
The district court held a hearing on the motion and countermotion, at which time the court granted CML-NVs countermotion for summary judgment, concluding that NRS 40.459(1)(c) only applies to loans entered into after June 10, 2011. Arguing that the district court incorrectly determined that applying NRS 40.459(1)(c) in this instance would constitute retroactive operation of the statute and that, even if the court was correct, the statute allows for retroactive application, Sandpointe and Yahraus-Lewis now petition this court for a writ of mandamus or prohibition directing the district court to apply the limitation contained in NRS 40.459(1)(c) to CML-NV's deficiency judgment.
" A writ of mandamus is available to compel the performance of an act that the law requires as a duty resulting from an office, trust, or station or to control an arbitrary or capricious exercise of discretion." Int'l Game Tech., Inc. v. Second Judicial Dist. Court, 124 Nev. 193, 197, 179 P.3d 556, 558 (2008); NRS 34.160. " A writ of prohibition is appropriate when a district court acts without or in excess of its jurisdiction.... Because both writs of prohibition and writs of mandamus are extraordinary remedies, we have complete discretion ... whether to consider them." Cote H. v. Eighth Judicial Dist. Court, 124 Nev. 36, 39, 175 P.3d 906, 907-08 (2008). We have long recognized that writ relief is not appropriate when there is an adequate and speedy remedy at law available. Int'l Game Tech., 124 Nev. at 197, 179 P.3d at 558; see NRS 34.170; NRS 34.330. Therefore, " [w]e generally will not exercise our discretion to consider petitions for extraordinary writ relief that challenge district court orders denying motions for summary judgment, unless summary judgment is clearly required by a statute or rule, or an important issue of law requires clarification." ANSE, Inc. v. Eighth Judicial Dist. Court, 124 Nev. 862, 867, 192 P.3d 738, 742 (2008).
This petition arises from the Legislature's recent amendments to the statutes governing deficiency judgments. As noted by the district court, the interpretation of the amendments raises important issues that affect many people in this state. Given the current economic climate of this state, these issues will undoubtedly recur, and they have already created considerable confusion in the lower courts. Indeed, although NRS 40.459(1)(c) was enacted less than two years ago, its application has already resulted in conflicting decisions in the district courts. Because there are important issues of law with statewide impact requiring clarification, and because an appeal from the final judgment would not constitute an adequate and speedy legal remedy, given the urgent need for resolution of these issues, we elect to exercise our discretion to entertain the merits of the petition.
Policy underlying Assembly Bill 273 and NRS 40.459(1)(c)
The recent recession severely affected Nevada's real estate market. As a result, a large secondary market emerged wherein various entities, including collection companies, would purchase distressed loans at deep discounts. These entities would then exercise their power of sale or judicially foreclose on the collateral securing the loans and seek deficiency judgments against the debtors and guarantors based upon the full indebtedness. See Hearing on A.B. 273 Before the Assembly Commerce and Labor Comm., 76th Leg. (Nev., March 23, 2011).
In response, following the 2011 legislative session, Assembly Bill 273 was signed into law. It is codified, in pertinent part, in NRS 40.459, which is entitled " Limitations on amount of money judgment." Subsection (1)(c)— the subject of the present litigation— provides that " [i]f the person seeking the judgment acquired the right to obtain the judgment from a person who previously held that right," then the person seeking the judgment may only recover
the amount by which the amount of the consideration paid for that right exceeds the fair market value of the property sold at the time of sale or the amount for which the property was actually sold, whichever is greater, with interest from the date of sale and reasonable costs[.]
During a committee hearing on Assembly Bill 273, Assemblyman Marcus Conklin, primary sponsor of the bill, described the intent of Assembly Bill 273 as follows:
We are preventing a creditor from profiting from a judgment in excess of the amount the creditor paid for the ...