Fed. Deposit Ins. Corp. v. Rhodes

336 P.3d 961

130 Nev. Adv. Op. 88

FEDERAL DEPOSIT INSURANCE CORPORATION, As Receiver for Community Bank of Nevada, Appellant

v.James M. RHODES, Respondent.

No. 59309.

Supreme Court of Nevada.

Oct. 30, 2014.

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.

BEFORE THE COURT EN BANC.

OPINION

By the Court, 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, 216 Ill.Dec. 513, 665 N.E.2d 573, 576–78 (1996) (concluding that the FDIC extender statute governed the timeliness of an action for a deficiency judgment); Trunkhill Capital, Inc. v. Jansma, 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....

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(l )'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 extender statute could not elongate the time to file an action that was otherwise barred by a state statute of repose.

The district court granted Rhodes' motion and dismissed the FDIC's complaint in its entirety. In so doing, it concluded that “the 6 month period after the date of the foreclosure sale or the trustee's sale to bring an application for a deficiency judgment under NRS 40.455 is a substantive statute of repose” with which the FDIC needed but failed to comply. This appeal followed.

DISCUSSION

The FDIC argues that the district court erred in dismissing its claim for a deficiency judgment, contending that the FDIC extender statute preempts NRS 40.455(1), regardless of whether the latter is a statute of limitations or repose. In addition, the FDIC specifically contests Rhodes' reliance on Olson for his motion to dismiss the deficiency judgment claim, asserting that the Olson court erroneously interpreted other authorities for the conclusion that federal statutes cannot control over state statutes of repose.

Rhodes responds that the district court did not err in determining that NRS 40.455(1) was a statute of repose that barred the FDIC's complaint. As to the FDIC's preemption arguments, Rhodes argues that the FDIC waived these arguments because it did not assert them before the district court. In the alternative, he contends that if the preemption issue was not waived, NRS 40.455(1) is a statute of repose that is not preempted by the FDIC extender statute because the latter's statutory language only mentions a statute of limitations and not a statute of repose. Regarding Olson, Rhodes asserts that the Olson court correctly concluded that a federal agency must comply with state statutes that create substantive conditions for an action under state law. Accordingly, Rhodes maintains that NRS 40.455(1)'s six-month time limitation is a condition precedent for a deficiency judgment action and, as a result, it is a statute of repose that imposes a substantive time limitation that the FDIC failed to meet.

The parties raise issues that concern the preemption doctrine and the meaning of a federal statute and a state statute. Thus, de novo review governs our analysis and resolution of the issues that are before us. See Nanopierce Techs., Inc. v. Depository Trust & Clearing Corp., 123 Nev. 362, 370, 168 P.3d 73, 79 (2007) (providing that whether a federal statute preempts a state statute is a question of law that is reviewed de novo); Washoe Med. Ctr. v. Second Judicial Dist. Court, 122 Nev. 1298, 1302, 148 P.3d 790, 792 (2006) (providing that de novo review applies to statutory interpretation issues).

The parties' arguments inherently concern preemption

In arguing that the issue of preemption was waived, Rhodes correctly notes that we generally do not address arguments that are made for the first time on appeal and which were not asserted before the district court. Old Aztec Mine, Inc. v. Brown, 97 Nev. 49, 52, 623 P.2d 981, 983 (1981). But we disagree with Rhodes' contention that the preemption issue was not raised below.

As they did before the district court, the parties on appeal dispute whether the timeliness of the FDIC's deficiency judgment action is governed by NRS 40.455(1) or the FDIC extender statute. The issue of whether an action is governed by a state statutory time limitation or federal statutory time limitation is inherently a matter that concerns the preemption doctrine. See, e.g., Waldburger v. CTS Corp., 723 F.3d 434, 438, 442–44 (4th Cir.2013) (employing the preemption doctrine to resolve a conflict between a federal statutory time limitation and a state statute of repose), rev'd on other grounds, 573 U.S. ––––, 134 S.Ct. 2175, 189 L.Ed.2d 62 (2014) ; In re Countrywide Fin. Corp. Mortg.–Backed Sec. Litig., 966 F.Supp.2d 1018, 1024–30 (C.D.Cal.2013) (doing the same with respect to the FDIC extender statute and a state statute of repose). Although neither party explicitly invoked the preemption doctrine before the district court, their arguments concerned a potential conflict between a federal statute and state statute and thus implicated the doctrine. Moreover, in contesting Rhodes' motion to dismiss its complaint, the FDIC cited to two authorities that concerned...