MICHAEL A. MUNOZ AND SHERRY L. MUNOZ, HUSBAND AND WIFE, Appellants,
BRANCH BANKING AND TRUST COMPANY, INC., A NORTH CAROLINA CORPORATION, Respondent
Appeal from a post-judgment deficiency judgment in a judicial foreclosure action. Tenth Judicial District Court, Churchill County; Thomas L. Stockard, Judge.
Law Offices of John J. Gezelin and John J. Gezelin, Reno, for Appellants.
Sylvester & Polednak, Ltd., and Jeffrey R. Sylvester and Allyson R. Noto, Las Vegas, for Respondent.
Saitta, J. We concur: Hardesty, C.J., Parraguirre, J., Douglas, J., Cherry, J., Gibbons, J., Pickering, J.
BEFORE THE COURT EN BANC.
Pursuant to the Supremacy Clause of the United States Constitution, " state laws that conflict with federal law are without effect." Altria Grp., Inc. v. Good, 555 U.S. 70, 76, 129 S.Ct. 538, 172 L.Ed.2d 398 (2008) (internal quotations omitted). One of the purposes of the federal Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), Pub. L. No. 101-73, 103 Stat. 183 (codified as amended in scattered sections of 12 U.S.C.), is " to facilitate the purchase and assumption of failed banks as opposed to their liquidation." FDIC v. Newhart, 892 F.2d 47, 49 (8th Cir. 1989).
At issue here is whether NRS 40.459(1)(c)'s limitation on the amount of a deficiency judgment that a successor creditor can recover conflicts with FIRREA's purpose of facilitating the transfer of the assets of failed banks to other institutions. Because NRS 40.459(1)(c) limits the value that a successor creditor can recover on a deficiency judgment, its application to assets transferred by the Federal Deposit Insurance Corporation (FDIC) frustrates the purpose of FIRREA. Therefore, we hold that NRS 40.459(1)(c) is preempted by FIRREA to the extent that NRS 40.459(1)(c) limits deficiency judgments that may be obtained from loans transferred by the FDIC.
FACTUAL AND PROCEDURAL HISTORY
In 2007, appellants Michael A. and Sherry L. Munoz borrowed money from Colonial Bank and granted Colonial Bank a security interest in their real property. In 2009, the FDIC placed Colonial into receivership and assigned the Munozes' loan to respondent Branch Banking and Trust Company, Inc. (BB& T). In 2011, NRS 40.459(1)(c), which implements certain limitations on the amount of a deficiency judgment that can be recovered
by an assignee creditor, became effective. 2011 Nev. Stat., ch. 311, § § 5, 7, at 1743, 1748. In 2012, after the Munozes had defaulted on their loan, BB& T instituted an action for a judicial foreclosure of the secured property, which the Munozes did not oppose. The property was sold for less than the value of the outstanding loan at a sheriffs sale in 2013. BB& T then filed a motion seeking a deficiency judgment against the Munozes for the remaining balance of the loan. Reasoning that NRS 40.459(1)(c) did not apply retroactively to the Munozes' loan, which was originated and assigned before the statute's effective date, the district court awarded a deficiency judgment to BB& T for the full deficiency ...