THE STATE OF NEVADA DEPARTMENT OF BUSINESS AND INDUSTRY, FINANCIAL INSTITUTIONS DIVISION, Appellant,
DOLLAR LOAN CENTER, LLC, A DOMESTIC LIMITED LIABILITY COMPANY, Respondent.
from a district court order in a proceeding under NRS 29.010.
Eighth Judicial District Court, Clark County; Mark R. Denton,
Paul Laxalt, Attorney General, Lawrence J.C. VanDyke,
Solicitor General, William J. McKean, Chief Deputy Attorney
General, David J. Pope, Senior Deputy Attorney General, and
Rickisha L. Hightower- Singletary and Vivienne Rakowsky,
Deputy Attorneys General, Carson City, for Appellant.
Holland & Hart LLP and Patrick John Reilly and Erica C.
Smit, Las Vegas, for Respondent.
THE COURT EN BANC.
appeal, we must determine whether a payday loan licensee can
sue to collect on the recovery of a loan made for the purpose
of refinancing prior loans under NRS 604A.480(2). We conclude
that NRS 604A.480(2)(f) bars a licensee from bringing any
type of enforcement action on a refinancing loan made under
NRS 604A.480(2). Because the district court erred in
concluding that NRS 604A.480 does not prohibit certain payday
loan licensees from filing suit against borrowers who default
on the loans, we reverse.
to a so-called "debt treadmill, " the 2005
Legislature enacted Assembly Bill (A.B.) 384, later codified
as NRS Chapter 604A, to regulate the payday loan industry.
See A.B. 384, 73d Leg. (Nev. 2005); 2005 Nev. Stat.,
ch. 414, at 1683.
in the statutory scheme is the regulation of deferred deposit
loans and high-interest loans. Id. Deferred deposit
loans are those in which the borrower provides a check or
authorization for the electronic transfer of funds on a
future date in exchange for a loan. NRS 604A.050. A
high-interest loan is a loan that charges an annual interest
rate greater than 40 percent. NRS 604A.0703. Both deferred
deposit and high-interest loans generally have an original
loan term limited to 35 days. NRS 604A.408. If a borrower
cannot repay the loan within 35 days, NRS 604A.480 is
implicated. When the Legislature passed A.B. 384, it included
a provision which allowed for a refinancing agreement with a
60-day extension beyond the term of the original loan. NRS
604A.480(1); see 2005 Nev. Stat., ch. 414, at 1683.
subsection 1 of NRS 604A.480, a licensee must not
"establish or extend the period for the repayment,
renewal, refinancing or consolidation of an outstanding loan.
. . beyond 60 days after the expiration of the initial loan
period, " Further, the licensee must "not add any
unpaid interest or other charges accrued during the original
term of the outstanding loan or any extension of the
outstanding loan to the principal amount of the new deferred
deposit loan or high-interest loan." Id.
However, under NRS 604A.480(2), certain new deferred deposit
or high-interest loans are exempt from subsection 1's
604A.480(2) allows a licensee to offer a new loan to satisfy
an outstanding loan for a period of not less than 150 days
and at an interest rate of less than 200 percent. NRS
604A.480(2)(a)(1), (3). However, the licensee must follow all
of the specific requirements in NRS 604A.480(2) for the new
loan to be exempted from the provisions of subsection 1. The
requirement at issue in this appeal is NRS 604A.480(2)(f),
which permits a loan to be made under subsection 2 so long as
the licensee "[d]oes not commence any civil action or
process of alternative dispute resolution on a defaulted loan
or any extension or repayment plan thereof."
the years, NRS 604A.480(2)(f) has been interpreted by
appellant Nevada Department of Business and Industry,
Financial Institutions Division (the FID); the Office of the
Attorney General; and the Legislative Counsel Bureau (LCB).
In December 2009, the FID issued a declaratory order and
advisory opinion regarding mandatory disclosures for loans
made pursuant to NRS 604A.480(2). State, Dep't of Bus.
& Indus., Fin. Inst. Div., Declaratory Order and Advisory
Opinion Regarding Mandatory Disclosures for Loans Made
Pursuant to NRS 604A.480 (2009). In that opinion, the FID
stated that "civil action and alternative dispute
resolution are specifically prohibited in loans made pursuant
to NRS 604A.480." Id. at 5. The FID also
determined that a "consumer should not feel that he is
subject to civil action when, in fact such actions are
prohibited by law." Id. at 6.
in October 2012, the Office of the Attorney General responded
to a request for an opinion on whether the language in NRS
604A.480(2)(f) applies only to actions to collect on the
outstanding loan, or also to the new loan being used to pay
the balance of an outstanding loan. 2012-06 Op. Att'y
Gen. 1 (2012). Referencing both the FID opinion and the
legislative history and public policy behind NRS Chapter
604A, id. at 1-3, the Attorney General concluded
that NRS 604A.480(2)(f) "applies to both an outstanding
loan as well as a new loan" used to pay off the
outstanding loan, id. at 4.
in July 2011, the LCB issued an opinion that the restrictions
and requirements in subsection 2 "are not affirmative
prohibitions against a licensee." Letter from Brenda J.
Erdoes, Legislative Counsel, to Assemblyman Marcus Conklin
(July 26, 2011) (discussing the provisions of NRS 604A480).
The LCB further determined that subsection 2(f) does not
prohibit licensees from "commencing any civil action or
process of alternative dispute resolution against a customer
who subsequently defaults" on a new loan made under NRS
Dollar Loan Center (DLC) sought judicial interpretation of
NRS 604A.480(2)(f) by filing a declaratory relief action
against FID in the district court. The parties thereafter
agreed to convert the controversy into a proceeding under NRS
the district court concluded that NRS 604A.480(2)
"contains no prohibition of any kind against a licensee,
but are merely the conditions precedent that must be
satisfied for a licensee to be exempt from" NRS
604A.480(1)'s requirements, FID filed this appeal.
parties in this appeal disagree as to whether: (1) NRS
604A.480(2)(f) bars a licensee that provides a loan under NRS
604A.480(2) from bringing any type of enforcement action on
that refinanced loan when the debtor defaults; or (2) the
provision operates as a condition precedent to making a
refinancing loan under that statute, and therefore, does not
bar a subsequent action to enforce the refinanced loan. We
are presented with the narrow question of whether a ...