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Federal Deposit Insurance Corporation v. Rhodes

Supreme Court of Nevada

October 30, 2014

FEDERAL DEPOSIT INSURANCE CORPORATION, AS RECEIVER FOR COMMUNITY BANK OF NEVADA, Appellant,
v.
JAMES M. RHODES, Respondent

Appeal from a district court order dismissing a deficiency judgment action as time barred. Eighth Judicial District Court, Clark County; Jessie Elizabeth Walsh, Judge.

Smith Larsen & Wixom and Michael B. Wixom and Katie M. Weber, Las Vegas, for Appellants.

Santoro Whitmire and Nicholas J. Santoro and Jason D. Smith, Las Vegas, for Respondent.

SAITTA, J., Gibbons, C.J., We Concure: Parraguirre, J., Cherry, J. /s/ Pickering, J. Hardesty, J., Douglas, J.

OPINION

Page 962

BEFORE THE COURT EN BANC.

SAITTA, J.:

Under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), appellant Federal Deposit Insurance Corporation (the FDIC) acts as a " conservator or receiver" for failed financial institutions. 12 U.S.C. § 1821(d)(2)(A) (2012). FIRREA extends the time period for the FDIC, in its capacity as the failed institution's conservator or receiver, to bring a contract claim that has otherwise been barred by a state statutory time limitation:

[T]he applicable statute of limitations with regard to any action brought by [the FDIC] as conservator or receiver shall be--

(i) in the case of any contract claim, the longer of--

(I) the 6-year period beginning on the date the claim accrues; or
(II) the period applicable under State law.

12 U.S.C. § 1821(d)(14)(A) (2012) (hereinafter the FDIC extender statute). This statute has been applied to govern the timeliness of the deficiency judgment suits that are brought by the FDIC. See, e.g., Cadle Co. v. 1007 Joint Venture, 82 F.3d 102, 104 (5th Cir, 1996) (in the context of a deficiency judgment suit, indicating that the FDIC extender statute governs the timeliness of " a suit by the FDIC to collect on a note" ); Twenty First Century Recovery, Ltd. v. Mase, 279 Ill.App.3d 660, 665 N.E.2d 573, 576-78, 216 Ill.Dec. 513 (Ill.App.Ct. 1996) (concluding that the FDIC extender statute governed the timeliness of an action for a deficiency judgment); Trunkhill Capital, Inc. v. Wieser, 905 S.W.2d 464, 465-68 (Tex.App. 1995) (concluding that the FDIC extender statute governed an action for a deficiency judgment). However, Nevada provides for a shorter six-month time limitation for deficiency judgment actions under NRS 40.455(1), which states 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. . . .

Page 963

Here, the FDIC filed its claim for a deficiency judgment after NRS 40.455(1)'s six-month deadline but within the FDIC extender statute's six-year time limitation. The district court dismissed the FDIC's deficiency judgment claim as untimely. It concluded that the FDIC needed but failed to meet NRS 40.455(1)'s deadline regardless of the FDIC extender statute.

In this matter, we address whether the FDIC extender statute preempts NRS 40.455(1)'s six-month time limitation. We conclude that it does. The plain meaning of the FDIC extender statute clearly and manifestly mandates that its six-year time limitation governs the timeliness of the FDIC's deficiency-judgment action if that time limitation is longer than " the period applicable under State law." 12 U.S.C. § 1821(d)(14)(A) (2012). Thus, the FDIC extender statute expressly preempts NRS 40.455(1)--the period applicable under Nevada law--regardless of whether the state statute is a statute of limitations or repose. Therefore, because the FDIC filed its deficiency judgment action within the FDIC extender statute's six-year time limitation, the district court erred in dismissing the FDIC's deficiency-judgment action as untimely.

FACTS AND PROCEDURAL HISTORY

In 2005, under a promissory note secured by a deed of trust, Community Bank of Nevada loaned $2,625,000 to Tropicana Durango Ltd., of which respondent James M. Rhodes was a general partner. The deed of trust encumbered a piece of Tropicana Durango's real property for the benefit of Community Bank. Additionally, Rhodes executed a guarantee agreement, under which he guaranteed the repayment of Tropicana Durango's debt to Community Bank.

In August 2009, the Nevada Financial Institutions Division closed and took possession of Community Bank and appointed the FDIC as " receiver/liquidator" for Community Bank. At this time, Tropicana Durango was in default on its 2005 loan. In November 2009, the FDIC recorded a " Notice of Default and Election to Sell," and a trustee's sale was held for the real property that was secured by the deed of trust. The FDIC purchased the real property with a credit bid of $750,000.

In February 2011, after six months but within six years of the trustee's sale, the FDIC filed a suit for a deficiency judgment against Rhodes to recover the money still owed on the 2005 loan after the trustee's sale. In so doing, it contended that its deficiency judgment action was timely because the FDIC extender statute permitted it to bring the action within six years of the date on which it could first bring its deficiency judgment claim, which was the date of the trustee's sale. See Sandpointe Apartments, L.L.C. v. Eighth Judicial Dist Court, 129 Nev. __, __, 313 P.3d 849, 856 (2013) (" The trustee's sale marks the first point in time that an action for deficiency can be maintained ... ." ).

Rhodes filed a motion to dismiss, asserting that NRS 40.455(1) was a statute of repose and that its six-month time limitation for deficiency judgments, which started from the date of the trustee's sale, barred the FDIC's complaint that was filed beyond that time period. In so asserting, Rhodes primarily relied on Resolution Trust Corp. v. Olson, 768 F.Supp. 283, 285-86 (D. Ariz. 1991), which provided that a statute like the FDIC ...


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