United States District Court, D. Nevada
M Navarro, Chief Judge
matter involves Wells Fargo Bank, N.A.'s (“Wells
Fargo's”) post-foreclosure deficiency action
against Alireza Kaveh, et al.
(“Defendants”). (See Compl, ECF No. 1).
On April 8, 2016, the Court granted Wells Fargo's Partial
Motion for Summary Judgment and, in accordance with Nevada
law, set a hearing to determine the fair market value of the
property at the time of the foreclosure sale. (ECF No. 69).
on September 19, 2016, the Court heard representations from
the parties and their respective expert witnesses on this
issue. (ECF Nos. 87, 89). At the conclusion of the hearing,
the Court ordered that both parties submit closing briefs to
the Court. Upon review of all relevant evidence in the
record,  the Court now finds that the fair market
value of the property at the time of the foreclosure sale was
$4, 020, 000.
case arises from a guaranty obligation the Defendants entered
into with Wells Fargo. On March 16, 2009, Craig 95, LLC
(“Craig 95”) and Wells Fargo entered into a loan
agreement (the “Loan”) in the principal amount of
$7, 527, 000. (Austin Decl. ¶ 7, ECF No. 57). The Loan
was secured by a plot of partially-developed commercial real
property located in Clark County, Nevada, commonly known as
the Craig Marketplace (the “Property”). (Compl.
¶ 17). On March 16, 2009, Defendants agreed to guaranty
the Loan. (Repayment and Completion Guaranty, Ex. 4 to Austin
Decl., ECF No. 57). The Loan required the Defendants or Craig
95 to satisfy its repayment terms in full by the maturity
date, March 1, 2011. (Austin Decl. ¶ 17). In the
Guaranty, the Defendants waived their rights under
Nevada's One Action Rule, thereby allowing Wells Fargo to
sue the Defendants before foreclosing on the Property.
(Repayment and Completion Guaranty § 6, Ex. 4 to Austin
Defendants failed to satisfy the indebtedness by the maturity
date. (Austin Decl. ¶ 19). Wells Fargo filed its
Complaint against the Defendants on August 16, 2013,
asserting multiple claims of breach of guarantee. (Compl. pp.
9-12, ECF No. 1). On or about March 27, 2015, the Property
was sold at a trustee's sale for $3, 550, 000.00. (Austin
Decl. ¶ 31). However, Wells Fargo claimed that this
amount failed to satisfy the full indebtedness of $10, 660,
838.65 that was owed by Defendants as of the date of the
trustee's sale. (Pl.'s MSJ 2:12-15, ECF No. 56).
April 8, 2016, the Court granted Wells Fargo's Partial
Motion for Summary Judgment. In this Order, the Court
determined that: (1) Wells Fargo sufficiently applied for a
deficiency judgment; (2) the Defendants are jointly and
severally liable for the debt owed to Wells Fargo; and (3)
any interest on a deficiency judgment would accrue at 9.5%.
Pursuant to N.R.S. 40.457(1), the Court held a hearing to
determine the fair market value of the property for purposes
of calculating the deficiency judgment.
law defines fair market value “as the price which a
purchaser, willing but not obliged to buy, would pay an owner
willing but not obliged to sell, taking into consideration
all the uses to which the property is adapted and might in
reason be applied. Unruh v. Streight, 615 P.2d 247,
249 (Nev. 1980). In the context of a foreclosure sale,
however, the sale price is not necessarily an indication of a
property's fair market value. See Halfon v. Title
Ins. & Trust Co., 634 P.2d 660, 661 (Nev. 1981). In
those cases, fair market value is determined by the court.
Branch Banking & Trust Co. v. Smoke Ranch Dev.,
LLC, 92 F.Supp.3d 998, 1001 (D. Nev. 2015).
Revised Statute § 40.457 governs the procedure for
determining the fair market value. It states that
“before awarding a deficiency judgment . . . the court
shall hold a hearing and shall take evidence presented by
either party concerning the fair market value of the property
sold as of the date of foreclosure sale or trustee's
sale.” Nev. Rev. Stat. § 40.457(1). An evidentiary
hearing is mandatory. Branch Banking & Trust Co. v.
Pebble Creek Plaza, LLC, 46 F.Supp.3d 1061, 1076 (D.
Nev. 2014) (“In no unclear terms, NRS § 40.457(1)
requires the Court to hold a hearing and consider all
relevant evidence in determining the fair market value of the
hearing, the court may “consider all relevant evidence
in determining the value of the property.”
Unruh, 615 P.2d at 249; Tahoe Highlander v.
Westside Fed. Sav., 588 P.2d 1022, 1024 (Nev. 1979).
Additionally, “[u]pon application of any party made at
least 10 days before the date set for the hearing the court
shall, or upon its own motion the court may, appoint an
appraiser to appraise the property sold as of the date of the
foreclosure sale or trustee's sale.” Nev. Rev.
Stat. § 40.457(2). To support a calculation of fair
market value, a party must provide evidence “which a
reasonable mind might accept as adequate to support [its]
conclusion.” State Emp't Sec. Dep't v.
Hilton Hotel Corp., 729 P.2d 497, 498 (Nev. 1986).
support of their respective valuations, each party submitted
appraisal reports created by expert witnesses. Wells Fargo
identified Petra Latch, MAI, as its expert valuation witness.
Ms. Latch prepared both a self-contained appraisal report
(the “Latch Appraisal”) and a rebuttal report
(the “Latch Rebuttal”). According to Ms. Latch,
the relevant fair market value of the Property at the time of
the foreclosure sale was $4, 020, 000.00. (See Ex.
1, Latch Appraisal p. 145)
identified Charles Jack, MAI, as their expert valuation
witness. Mr. Jack also prepared an appraisal report (the
“Jack Appraisal”). According to Mr. Jack, the
relevant fair market value at the time of the foreclosure
sale was $8, 450, 000.00. (See Ex. 100, Jack
Appraisal p. ...