SORO VS. DIST. CT. (AMERICA FIRST FED. CREDIT UNION)

133 Nev., Advance Opinion 107
IN THE COURT OF APPEALS OF THE STATE OF NEVADA
FRANCO SORO, AN INDIVIDUAL; No. 72086
MYRA TAIGMAN-FARRELL, AN
INDIVIDUAL; ISAAC FARRELL, AN
INDIVIDUAL; KATHY ARRINGTON,
AN INDIVIDUAL; AND AUDIE
F I L Es: Tr')
EMBESTRO, AN INDIVIDUAL, DEC 2 8 2017
Petitioners,
vs.
THE EIGHTH JUDICIAL DISTRICT
COURT OF THE STATE OF NEVADA,
IN AND FOR THE COUNTY OF
CLARK; AND THE HONORABLE
JERRY A. WIESE, DISTRICT JUDGE,
Respondents,
and
AMERICA FIRST FEDERAL CREDIT
UNION, A FEDERALLY CHARTERED
CREDIT UNION,
Real Party in Interest.
Original petition for writ of mandamus and/or prohibition
arising from the district court's denial of a motion to dismiss in a foreclosure
deficiency action.
Petition denied.
Reid Rubinstein Bogatz and Charles M. Vlasic, III, Jaimie Stilz, and I. Scott
Bogatz, Las Vegas,
for Petitioners.
Ballard Spahr, LLP, and Matthew D. Lamb and Joseph P. Sakai, Las Vegas;
Ballard Spahr, LLP, and Mark R. Gaylord, Salt Lake City, Utah,
for Real Party in Interest.
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BEFORE SILVER, C.J., TAO and GIBBONS, JJ.
OPINION
By the Court, SILVER, C.J.:
In this opinion, we determine whether Utah's antideficiency
statute applies extraterritorially to a Nevada deficiency action. Petitioners
moved to dismiss the underlying case on the ground that it was time-barred
by Utah's antideficiency statute, which they maintained applied to the
dispute pursuant to the parties' choice-of-law provision. The district court
considered that statute, concluded it did not apply extraterritorially, and
denied petitioners' motion to dismiss. This original petition for a writ of
mandamus and/or prohibition seeking to compel the dismissal of the
underlying action followed.
The Nevada Supreme Court has notably addressed the
application of antideficiency statutes in Key Bank of Alaska v. Donnels, 106
Nev. 49, 787 P.2d 382 (1990); Branch Banking & Trust Co. v. Windhaven &
Tollway, LLC, 131 Nev. , 347 P.3d 1038 (2015); and Mardian v. Michael
& Wendy Greenberg Family Trust, 131 Nev. , 359 P.3d 109 (2015). Read
together, these cases provide that, in a deficiency action where the parties
have an enforceable choice-of-law provision, before the district court applies
the antideficiency statute from the parties' chosen jurisdiction, the court
must first determine whether that statute, by its terms, has extraterritorial
reach. See Mardian, 131 Nev. at , 359 P.3d at 111-12; Branch Banking,
131 Nev. at , 347 P.3d at 1041-42; Key Bank, 106 Nev. at 52-53, 787 P.2d
at 384-85. In this opinion we clarify that, if a party seeks to apply another
jurisdiction's antideficiency statute to a Nevada deficiency action, and the
courts of that jurisdiction have addressed the statute's extraterritorial
application, we will follow that jurisdiction's determination regarding this
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issue rather than independently construe the antideficiency statute to
assess whether it can be applied extraterritorially. Here, because the Utah
Supreme Court has already determined that Utah's antideficiency statute
does not apply extraterritorially, that decision controls our resolution of this
issue. As a result, we conclude the district court properly denied petitioners'
motion to dismiss and we therefore deny the petition.
FACTS AND PROCEDURAL HISTORY
In 2002, real party in interest America First Federal Credit
Union (America First) loaned petitioners Franco Soro, Myra Taigman-
Farrell, Isaac Farrell, Kathy Arrington, and Audie Embestro (collectively
Soro) $2.9 million for the purchase of a mini-mart business. The loan was
secured by real property in Mesquite, Nevada. The promissory note
specified that Utah law governed the agreement and related loan
documents.
Soro defaulted, and America First proceeded with a nonjudicial
foreclosure sale of the Mesquite property in accordance with Nevada law.
On October 4, 2012, America First purchased the Mesquite property at a
trustee's sale for a little over $1 2 million, resulting in a deficiency on the
loan balance of approximately $2.4 million, including interest and fees.
Six months after the foreclosure sale, America First filed a
deficiency action in Nevada under NRS 40.455(1). Soro then moved to
dismiss the action pursuant to NRCP 12(b)(1), arguing that the agreement's
forum selection clause divested Nevada of jurisdiction. The district court
agreed, but on appeal the Nevada Supreme Court reversed, concluding that
the forum selection clause was permissive and Nevada was a proper forum
for a deficiency action. See Am. First Fed. Credit Union v. Soro, 131 Nev.
, 359 P.3d 105 (2015).
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On remand, Soro filed another motion to dismiss, this time
under NRCP 12(b)(5), arguing America First's deficiency action was time-
barred by Utah's three-month statute of limitations. Critically, although
Nevada's antideficiency statute allows a party to bring a deficiency action
within six months of the property's foreclosure sale, Utah's antideficiency
statute imposes a three-month statute of limitations. See NRS 40.455(1);
Utah Code Ann § 57-1-32 (LexisNexis 2010). The district court concluded
that Utah's antideficiency statute does not apply extraterritorially and
denied the motion. Thereafter, Soro petitioned for a writ of mandamus
and/or prohibition seeking to overturn the denial of the motion to dismiss.
ANALYSIS
In the petition, Soro contends that the district court should
have dismissed the deficiency action because the complaint is time-barred
by Utah's antideficiency statute. Specifically, Soro asserts that, under Key
Bank and Mardian, the parties' choice-of-law provision in the promissory
note requires the district court to apply Utah law, and consequently,
America First was required to bring the deficiency action within three
months of the foreclosure sale pursuant to Utah Code Ann § 57-1-32
(LexisNexis 2010). Soro further contends that the district court erred by
concluding that Utah Code Ann. § 57-1-32 (LexisNexis 2010) does not apply
extraterritorially because, under Key Bank and Branch Banking, the Utah
statute is illustrative, not exclusive. America First counters that Mardian
and Branch Banking are inapposite and that, under Key Bank, Utah's
antideficiency statute does not apply extraterritorially.
Propriety of writ relief
We first consider whether the petition for writ relief is proper.
The grant of a writ petition is extraordinary relief that is rarely warranted,
and, for reasons ofjudicial economy, we do not often entertain writ petitions
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challenging the denial of a motion to dismiss. See Smith v. Eighth Judicial
Dist. Court, 113 Nev. 1343, 1344-45, 950 P.2d 280, 281 (1997).
Nevertheless, we may exercise our discretion to consider petitions in cases
where "an important issue of law needs clarification and considerations of
sound judicial economy and administration militate in favor of granting the
petition." State, Office of the Attorney Gen. v. Eighth Judicial Dist. Court
(Anzalone), 118 Nev. 140, 147, 42 P.3d 233, 238 (2002).
Key Bank, Branch Banking, and Mardian address the effect of
a valid choice-of-law provision on a deficiency action and set forth a
framework for analyzing the antideficiency statute from the chosen
jurisdiction to determine whether it can apply extraterritorially. This case,
however, presents a new situation because the Utah Supreme Court has
already analyzed the extraterritorial application of the antideficiency
statute at issue here, Utah Code Ann. § 57-1-32 (LexisNexis 2010), in
Bullington v. Mize, 478 P.2d 500 (Utah 1970). Our supreme court has not
addressed whether Nevada courts, in determining the extraterritorial reach
of another state's antideficiency statute, must follow that jurisdiction's
dispositive caselaw. We therefore exercise our discretion to address the
petition and clarify this point in Nevada law. See Anzalone, 118 Nev. at
147, 42 P.3d at 238. We review de novo the district court's decision. See
Buzz Stew, LLC v. City of N. Las Vegas, 124 Nev. 224, 228, 181 P.3d 670,
672 (2008) (addressing questions of law de novo); see also Parametric Sound
Corp. v. Eighth Judicial Dist. Court, 133 Nev. „ 401 P.3d 1100, 1104
(2017) (reviewing a question of law de novo in the context of a writ petition).
Whether Utah's antideficiency statute applies
The question before this court is whether Utah Code Ann.
§ 57-1-32 (LexisNexis 2010) applies to bar America First's deficiency action.
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Although Soro frames this issue as a conflict-of-laws question, contending
that the parties' choice-of-law provision requires this court to apply Utah
Code Ann. § 57-1-32 (LexisNexis 2010), 1 this argument bypasses the
underlying question of whether that statute can project extraterritorially.
See Key Bank, 106 Nev. at 52-53, 787 P.2d at 384-85 (considering whether
Alaska's antideficiency statute applied to a Nevada deficiency action where
Alaska law otherwise governed the lawsuit). In short, if Utah's statute
cannot apply extraterritorially, then there is no conflict of law.
We begin our analysis by reviewing the three cases upon which
Soro and America First rely: Key Bank, Branch Banking, and Mardian. In
Key Bank, the parties contracted for a loan secured by a deed of trust on
real property in Nevada. Id. at 51, 787 P.2d at 383. Under a choice-of-law
provision contained in the promissory note, Alaska law governed the debt
memorialized in that document. See id. at 52, 787 P.2d at 384. The
borrowers in Key Bank defaulted, and the lender foreclosed on the property
and later sued in Nevada to recover the deficiency. See id. at 51, 787 P.2d
at 383. The parties disputed whether Alaska's antideficiency statute
applied in light of their choice-of-law provision. Id. at 52, 787 P.2d at 384.
The Nevada Supreme Court determined that Alaska law governed the
action pursuant to the parties' choice-of-law provision, but ultimately
concluded Alaska's antideficiency statute did not apply extraterritorially to
bar the action. Id. at 52-53, 787 P.2d at 384-85. In reaching this decision,
the court scrutinized the statute's structure and language and determined
While America First disputes whether the Utah statute has
extraterritorial reach, it does not dispute the enforceability of the
underlying choice-of-law provision.
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that the statute showed "a clear intent to limit the effect of the statute to
foreclosures" within Alaska. 2 Id. at 53, 787 P.2d at 384-85. Thus, under
Key Bank, the parties' valid choice-of-law provision will control, but, before
applying the chosen jurisdiction's antideficiency statute to a Nevada
deficiency action, the court must determine whether that statute, by its
terms, can apply extraterritorially.
While Key Bank dealt with the extraterritorial application of
another state's antideficiency statute to a Nevada deficiency action
involving Nevada real property, Branch Banking and Mardian dealt with
the application of Nevada's antideficiency statute, NRS 40.455, to Nevada
deficiency actions where the foreclosure took place in another state. In
these latter cases, the parties secured their loans with real property outside
Nevada. Mardian, 131 Nev. at , 359 P.3d at 110; Branch Banking, 131
Nev. at 347 P.3d at 1039. The parties in Branch Banking agreed
Nevada law would govern the note, but Nevada and Texas would both have
jurisdiction in the event of a future dispute, 131 Nev. at „ 347 P.3d
at 1039, 1042, whereas in Mardian the parties' agreement included a
Nevada choice-of-law provision, 131 Nev. at , 359 P.3d at 110. In each
case, the borrower defaulted and the lender sued the borrower in Nevada to
recover for a deficiency following the property's foreclosure sale. Mardian,
131 Nev. at , 359 P.3d at 110-11; Branch Banking, 131 Nev. at 347
P.3d at 1039.
2The court based its decision on the antideficiency statute's use of
offsetting commas to highlight other Alaskan statutes, including a statute
that expressly referenced deed of trust conveyances of property located
specifically in Alaska. Id. at 52-53, 787 P.2d at 384-85.
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Branch Banking scrutinized NRS 40.455, Nevada's
antideficiency statute, which at that time allowed for a deficiency judgment
"within 6 months after the date of the foreclosure sale or the trustee's sale
held pursuant to NRS 107.080." 131 Nev. at , 347 P.3d at 1040. The
court considered whether this statute allowed a deficiency action to proceed
in Nevada where the lender foreclosed on property located in another state
and consequently did not foreclose "pursuant to NRS 107.080." Id. at ,
347 P.3d at 1039. After examining the structure of the statute and its
context in the statutory scheme, the court concluded the statute did not bar
the Nevada deficiency action. See id. at , 347 P.3d at 1041-42. In
particular, the court reasoned that NRS 40.455(1) did not specifically
address nonjudicial foreclosure sales involving property within another
state, and Nevada's statutory scheme contemplates a party's ability to
foreclose on property located in another state and thereafter bring a
deficiency action in Nevada. See id. at , 347 P.3d at 1041. Thus, Branch
Banking provides additional framework for interpreting an antideficiency
statute to determine whether it will bar a deficiency action.
In Mardian, the supreme court considered the effect of the
parties' choice-of-law provision and thereafter determined whether the
deficiency action was time-barred by Nevada's antideficiency statute. 131
Nev. at , 359 P.3d at 111-12. The court in Mardian applied Key Bank to
conclude that the parties' choice-of-law provision controlled and extended
Key Bank's holding to statutory limitations periods, thus requiring the
parties to abide by the limitations period set forth in Nevada's
antideficiency statute. Id. at ,359 P.3d at 111. The court next addressed
whether Nevada's antideficiency statute barred the action where the
subject property was outside the forum and the lender did not follow
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Nevada's foreclosure procedures. Id. at , 359 P.3d at 111-12. Citing to
Branch Banking, and without interpreting Nevada's antideficiency statute,
the court in Mardian concluded that the lender's foreclosure in another
state pursuant to that state's foreclosure rules did not bar the action. Id. at
, 359 P.3d at 112. But citing to Nevada law addressing NRS 40.455's
statute of limitations, the court ultimately concluded that the lender's
failure to apply for a deficiency judgment within the statutory limitations
period barred the action. Id. at , 359 P.3d at 112-13. Thus, Mardian
reinforces that parties in a deficiency action are generally bound by their
choice-of-law provision. 3
In sum, under Key Bank, Branch Banking, and Mardian, the
court presiding over a deficiency action must first determine whether the
parties have an enforceable choice-of-law provision and, if so, thereafter
determine whether the chosen jurisdiction's antideficiency statute can
apply extraterritorially. On the second step, Key Bank and Branch Banking
provide a framework for analyzing the statute's structure, language, and
context to make that detei mination. But these cases do not address
whether, before analyzing another state's antideficiency statute, Nevada
courts must first consider whether the chosen jurisdiction's courts have
already determined the statute's extraterritorial reach and, if so, apply that
ruling.
In considering this question, we again turn to Mardian. There,
the Nevada Supreme Court, in addressing whether Arizona or Nevada law
applied, held "that because of the choice-of-law provision, Nevada law-
3 We have considered the arguments asserting that Mardian is
inapplicable in the present case and reject those arguments as without
merit in accordance with our decision.
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particularly Nevada's limitations period, see NRS 40.455(1)—applie[d] in
thlat] case." Mardian, 131 Nev. at ,359 P.3d at 111. And as detailed
above, in determining whether the lender timely applied for a deficiency
judgment, the court considered Nevada caselaw construing the applicable
statute of limitations. See id. at , 359 P.3d at 112-13. Thus, Mardian
demonstrates that, when parties in a deficiency action have a valid choice-
of-law provision, their chosen state's antideficiency statutes, as well as its
caselaw interpreting those statutes, will control the action. This
implication is echoed in other Nevada cases where our supreme court has
applied another state's caselaw based on a choice-of-law provision. See
Pentax Corp. v. Boyd, 111 Nev. 1296, 1299-1301, 904 P.2d 1024, 1026-28
(1995) (applying Colorado's statutes and caselaw pursuant to a choice-of-
law provision); Tipton v. Heeren, 109 Nev. 920, 922 n.3, 923-24, 859 P.2d
465, 466 n.3, 466-67 (1993) (concluding that a Wyoming choice-of-law
provision controls, and considering Wyoming caselaw in construing
Wyoming's statutes). In the present context, we therefore hold that if the
parties have a valid choice-of-law provision, and the controlling state's
courts have addressed whether that state's antideficiency statute projects
extraterritorially, we will adhere to that caselaw and not independently
interpret the statute.
Here, the parties agree their choice-of-law provision is valid,
and we therefore conclude Utah law governs the deficiency action. Thus,
we must next determine whether Utah Code Ann. § 57-1-32 (LexisNexis
2010), Utah's antideficiency statute, may apply extraterritorially to a
deficiency action in Nevada. That statute states, in relevant part, that "[alt
any time within three months after any sale of property under a trust deed
as provided in [Utah Code Ann. §§l 57-1-23, 57-1-24, and 57-1-27
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[(LexisNexis 2010)1, an action may be commenced to recover the balance
due." The parties expend significant energy applying the analyses of the
statutes at issue in Key Bank and Branch Banking to Utah Code Ann. § 57-
1-32 (LexisNexis 2010) to argue whether that statute is illustrative or
exclusive. However, in Buffington, 478 P.2d 500, the Utah Supreme Court
previously addressed whether this statute applies extraterritorially, and we
need not embark upon an exhaustive analysis of the statute under the
framework set forth in Key Bank and Branch Banking if Buffington is
determinative here.
In Buffington, the Utah Supreme Court considered whether
Texas or Utah law applied to a deficiency action. 478 P.2d at 501. There,
the borrower secured a deed of trust with real property in Texas. Id. After
the borrower defaulted, the lenders foreclosed on the property, purchased it
for $25,000, and sued in Utah to recover the unpaid balance. Id. at 500-01.
The borrower argued the purchase price was unconscionably low; but while
Utah law took into account the property's fair market value in a deficiency
action, Texas law did not. Id. at 501-02. In determining the underlying
conflict of law question, the Utah Supreme Court addressed the 1953
version of Utah Code Ann. § 57-1-32 as a whole and considered whether "the
language of [that statute] express [es] a legislative intent to extend its
protection to all debtors whose obligations are secured by trust deeds,
regardless of the situs of the land." Id. at 503. Noting that the statute's
language "refers solely to the sale of property situated within Utah," the
Utah Supreme Court concluded "the entire statutory scheme concerning
trust deeds. . . could not have any extra-territorial effect," and, therefore,
the court held "the statutory protection extended solely to debtors whose
obligations were secured by trust deeds on land in Utah." Id.
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As the relevant portion of Utah Code Ann. § 57-1-32 (LexisNexis
2010) has remained substantively unchanged since Bullington was
decided,4 we conclude that Bullington's analysis still applies. And although
Bullington concerned fair market value rather than the limitations period,
the Utah Supreme Court addressed the statute as a whole and concluded
that "the entire statutory scheme" does not have extraterritorial effect. 478
P.2d at 503. Thus, while Bullington did not specifically address the choice-
of-law issue presented here, that difference does not change our analysis.
Indeed, our application of Bullington to this matter is consistent with
4VVhen Bullington was decided, the statute in relevant part read:
At any time within three months after any
sale of property under a trust deed, as hereinabove
provided, an action may be commenced to recover
the balance due upon the obligation for which the
trust deed was given as security. . . .
Bullington, 478 P.2d at 503 (quoting former Utah Code Ann § 57-1-32
(1953)). In comparison, Utah Code Ann. § 57-1-32 (LexisNexis 2010) now
reads, in relevant part:
At any time within three months after any
sale of property under a trust deed as provided in
Sections 57-1-23, 57-1-24, and 57-1-27, an action
may be commenced to recover the balance due upon
the obligation for which the trust deed was given as
security. . . .
(Emphasis added.)
We have carefully reviewed the referenced statutes and their
revisions since Bulling-ton, and note those statutes still demonstrate the
requirement of a substantial connection to Utah. Therefore, in the absence
of any clear change in the statutory scheme or a pronouncement from the
Utah Supreme Court indicating the law on this point has changed,
Bullington remains in force and guides the outcome here pursuant to the
parties' choice-of-law provision.
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Utah's long-standing presumption against giving its statutes
extraterritorial effect absent clear language requiring a contrary result. See
Nevares v. M.L.S., 345 P.3d 719, 727 (Utah 2015) (explaining that, under
Utah law, "unless a statute gives a clear indication of an extraterritorial
application, it has none" (internal quotation marks omitted)).
Because Utah's Supreme Court has decided Utah Code Ann.
§ 57-1-32 (LexisNexis 2010) does not project itself extraterritorially, we
follow that precedent and do not independently construe the statute. The
foreclosed-upon property was located in Nevada, not Utah, and pursuant to
Bullington, Utah Code Ann. § 57-1-32 (LexisNexis 2010) does not apply.
Bullington, 478 P.2d at 503. Accordingly, America First was not barred by
Utah's three-month statute of limitations and timely filed its deficiency
action in Nevada within the controlling six-month limitations period. We
therefore conclude the district court correctly denied Soro's motion to
dismiss, as America First timely filed suit in this case.
CONCLUSION
When a party seeks to apply another state's antideficiency
statute to a Nevada deficiency action pursuant to a valid choice-of-law
provision, the Nevada court must first look to the chosen jurisdiction's
caselaw before independently construing the statute. If the courts of the
chosen jurisdiction have already determined whether the statute projects
extraterritorially, the Nevada court must apply that law. Under Utah law,
Utah Code Ann. § 57-1-32 (LexisNexis 2010) does not apply
extraterritorially and, therefore, does not bar the underlying action.
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Accordingly, the district court properly denied the motion to dismiss and, as
a result, we deny this petition. 5
Lit) C.J.
Silver
We concur:
J.
Tao
Gibbons
5 111light of this opinion, we vacate the stay imposed on the district
court proceedings in this matter, Eighth Judicial District Court Case No.
A-13-679511-C, by our April 6,2017, order.
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