133 Nev., Advance Opinion In,
IN THE SUPREME COURT OF THE STATE OF NEVADA
YACOV JACK HEFETZ, No. 70327
Appellant,
vs.
CHRISTOPHER BEAVOR,
D
Respondent. J L 06 2017
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Appeal from a district court order granting a motion to dismiss
and awarding attorney fees in an action seeking to enforce a guaranty
agreement. Eighth Judicial District Court, Clark County; Ronald J.
Israel, Judge.
Reversed and vacated in part.
Cohen Johnson Parker Edwards and H. Stan Johnson, Chris Davis, and
Michael V. Hughes, Las Vegas,
for Appellant.
Dickinson Wright PLLC and Joel Z. Schwarz, Gabriel A. Blumberg, and
Taylor Anello, Las Vegas,
for Respondent.
BEFORE THE COURT EN BANC.
OPINION
By the Court, STIGLICH, J.:
The one-action rule generally requires a creditor seeking to
recover debt secured by real property to proceed against the security first
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prior to seeking recovery from the debtor personally. This opinion
addresses whether the nonwaiver provisions of NRS 40.495ffi) preclude a
party from waiving the one-action rule by failing to assert it in his
responsive pleadings. We hold that the one-action rule must be timely
interposed as an affirmative defense in a party's responsive pleadings or it
is waived. Because respondent Christopher Beavor failed to raise the one-action rule defense until prior to the commencement of the second trial in
the case, the district court erred by granting his motion to dismiss based
on the one-action rule.
FACTUAL AND PROCEDURAL HISTORY
The Herbert Frey Revocable Family Trust (the trust) loaned
Toluca Lake Vintage, LLC (Toluca Lake) $6,000,000, pursuant to a loan
agreement dated March 29, 2007. Appellant Yacov Jack Hefetz (Hefetz)
entered into a participation agreement with the trust and contributed
$2,214,875 toward funding of the loan. The proceeds of the loan were used
to purchase property, as well as the funding of engineering, marketing,
and architects for a planned development of the commercial property. In
relevant part, the loan was secured by the personal residence of
respondent Christopher Beavor and his former wife, Samantha.' In
addition to Beavor's personal residence, the loan was secured by a
personal guaranty agreement, wherein Beavor waived his rights under
Nevada's one-action rule, found in NRS 40.430. One of the provisions of
the loan stated that the loan would default should Toluca Lake file for
bankruptcy.
"Hefetz settled with Samantha Beavor during trial, and she was
dismissed from the action. Therefore, any reference in this opinion to
"Beavor" solely addresses Christopher, unless otherwise stated.
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In 2009, Toluca Lake filed for bankruptcy, thereby defaulting
on the loan, and Beavor refused to repay the loan under the terms of the
personal guaranty agreement. Subsequently, the trust assigned its
interest in the loan, promissory note, deeds of trust, and guaranty to
Hefetz.
Without foreclosing on the property, Hefetz filed a complaint
to recover damages against Beavor for breach of the guaranty agreement. 2
Beavor did not assert the one-action rule in either his answer to the
complaint or his counterclaim. The district court scheduling order
mandated the parties file motions to amend pleadings or add parties on or
before February 21, 2012, and file dispositive motions on or before
June 20, 2012. On April 9, 2012, Beavor filed his first amended
counterclaim, which did not assert the one-action rule.
On May 29, 2012, a stipulation and order to extend discovery
deadlines was entered, extending discovery until July 23, 2012, and the
dispositive motion deadline until August 23, 2012. However, the parties
expressly stipulated that the "deadline for any party to amend the
pleadings has passed" and "[tithe parties do not seek an extension of [the
February 21, 2012,1 date."
2 Hefetz argues that he has not taken any action to foreclose on
Beavor's personal residence because he alleges Beavor's home is
"underwater by an amount in excess of eight hundred thousand dollars
even without considering" the loan at issue here and the deed of trust held
by Hefetz. Thus, Hefetz argues, the deed of trust would be valueless if
Hefetz chose to foreclose. On appeal, the parties do not argue, and we do
not address at this time, the application of NRS 40.459(3), regarding
limitations on the amounts of money judgments where the debt is secured
by a personal place of residence.
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A jury trial was held between February 5, 2013, and March 1,
2013, and the jury entered a verdict in favor of Beavor. Subsequently,
Hefetz filed a motion for a new trial, or in the alternative, a motion for
judgment notwithstanding the verdict. The district court granted Hefetz's
motion for a new trial based on Beavor's failure to oppose the motion on its
merits. The new trial was scheduled for a five-week stack, commencing
October 12, 2015. The district court ordered that the deadlines remained
governed by the May 29, 2012, scheduling order, which had deadlines of
July 23, 2012, for discovery, and August 23, 2012, for dispositive motions.
On May 5, 2015, Beavor filed a motion to dismiss Hefetz's
complaint based on the one-action rule, raising the one-action rule defense
for the first time. After a hearing, the district court granted Beavor's
motion to dismiss based on the one-action rule, finding that the one-action
rule could not be waived. The district court later granted Beavor attorney
fees.
Hefetz now appeals and raises the following issues:
(1) whether the district court erred by granting Beavor's motion to dismiss
because Beavor waived the one-action rule defense by not timely asserting
it, and (2) whether the district court abused its discretion by awarding
attorney fees to Beavor.
DISCUSSION
The district court erred by granting Beavor's motion to dismiss
Hefetz argues that the district court erred by granting
Beavor's motion to dismiss because NRS 40.435(2) and NRCP 8(c) and
12(b) together provide that the one-action rule must be timely asserted in
litigation as an affirmative defense and, here, Beavor did not timely assert
the defense because he did not assert it until after the first trial. Beavor
argues that NRS 40.435(3) and NRS 40.495(5)(d) prohibit a waiver of the
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one-action rule prior to the entry of final judgment, his assertion of the
rule is thus timely, and the district court properly dismissed Hefetz's
action under NRS 40.453(2)(a).
"This court reviews de novo a district court's order granting a
motion to dismiss." Moon v. McDonald, Carano & Wilson LLP, 129 Nev.
547, 550,
306 P.3d 406, 408 (2013). Such an order is "rigorously
reviewed[;] [t]o survive dismissal, a complaint must contain some set of
facts, which, if true, would entitle [Hefetz] to relief." In re Amerco
Derivative Litig., 127 Nev. 196, 210-11,
252 P.3d 681, 692 (2011) (citation
and internal quotation marks omitted). When interpreting statutes, "[i]f
the plain meaning of a statute is clear on its face, then [this court] will not
go beyond the language of the statute to determine its meaning." Beazer
Homes Nev., Inc. v. Eighth Judicial Dist. Court, 120 Nev. 575, 579-80,
97
P.3d 1132, 1135 (2004). When construing statutes and rules together, this
court will, if possible, "interpret a rule or statute in harmony with other
rules and statutes ... such that no part of the statute is rendered
nugatory or turned to mere surplusage." Albios v. Horizon Communities,
Inc., 122 Nev. 409, 418,
132 P.3d 1022, 1028 (2006); see also Orion
Portfolio Servs. 2 LLC v. Cty. of Clark, 126 Nev. 397, 403,
245 P.3d 527,
531 (2010) ("This court has a duty to construe conflicting statutes as a
whole, so that all provisions are considered together and, to the extent
practicable, reconciled and harmonized ")
This court has previously harmonized the statutory provisions of the
one-action rule and the NRCP
NRS 40.430 is commonly referred to as Nevada's "one-action
rule." Walters v. Eighth Judicial Dist. Court, 127 Nev. 723, 725,
263 P.3d
231, 232 (2011). The one-action rule provides that "there may be but one
action for the recovery of any debt, or for the enforcement of any right
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secured by a mortgage or other lien upon real estate." NRS 40.430. When
applicable, the one-action rule thus requires that "a creditor. . . seek to
recover on the property through judicial foreclosure before recovering from
the debtor personally." McDonald v. D.P. Alexander & Las Vegas
Boulevard, LLC, 121 Nev. 812, 816,
123 P.3d 748,750 (2005). If a creditor
fails to comply with the one-action rule and sues a debtor personally
without seeking judicial foreclosure, the debtor may assert the one-action
rule as a defense and move to dismiss the action. NRS 40.435.
We have previously held, however, that in litigation the one-action rule may be waived if it is not timely asserted. Keever v. Nicholas
Beers Co., 96 Nev. 509, 513 n.1,
611 P.2d 1079, 1082 n.1 (1980). This
holding is contemplated by NRS 40.435(2), which provides that "[iff the
provisions of NRS 40.430 are timely interposed as an affirmative
defense . ," then the court may, on an appropriate motion, either
ismiss the proceeding" or "[g]rant a continuance" so that the action
may be converted into one that complies with the one-action rule. While
NRS 40.435(2) does not address what is meant by "timely interpos[ing]"
the one-action rule "as an affirmative defense," NRCP 8(b) and 12(c), and
our interpretation of them, govern the timely assertion of affirmative
defenses, including the one-action rule. See Webb v. Clark Cty. Sch. Dist.,
125 Nev. 611, 620,
218 P.3d 1239, 1245 (2009) (holding that a party may
waive a statutory affirmative defense if the party fails to timely raise it);
Clark Cty. Sch. Dist. v. Richardson Constr., Inc., 123 Nev. 382, 395 & n.25,
168 P.3d 87, 96 & n.25 (2007) ("Under NRCP 8(c), a defense that is not set
forth affirmatively in a pleading is waived."); Elliot v. Resnick, 114 Nev.
25, 30,
952 P.2d 961, 964 (1998) ("If affirmative defenses are not pleaded
or tried by consent, they are waived.").
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The litigation waiver provision in NRS 40.435(2) contrasts
with the statutory provisions prohibiting the pre-litigation waiver of the
one-action rule by agreement. NRS 40.453(1) provides that a debtor may
not waive the provisions of the one-action rule in "any document relating
to the sale of real property." We have harmonized these conflicting
statutes by holding that, while a debtor may be precluded from waiving
the one-action rule in documents "relating to the sale of real property," he
may waive the rule, intentionally or not, by failing to timely raise it as an
affirmative defense after the commencement of litigation. See Nev.
Wholesale Lumber Co. v. Myers Realty, Inc., 92 Nev. 24, 28,
544 P.2d 1204,
1207 (1976) (holding that a debtor may waive the one-action rule in
litigation by failing to timely assert it, "even though NRS 40.453 precludes
a [debtor] from waiving a right secured by the laws of the state in any
document relating to the sale of real property"); see also Keever, 96 Nev. at
513 n.1,
611 P.2d at 1082 n.1 (1980) (explaining that the one-action rule
may be waived in litigation, but not in documents "relating to the sale of
real property" (quoting NRS 40.453(1))).
These statutory provisions governing pre- and intra-litigation
waiver dovetail with the sanctions aspect of the one-action rule. As we
have explained, the one-action rule "does not provide a complete
affirmative defense to a separate personal action on the debt, wherever
commenced," because the one-action rule "does not excuse the underlying
debt." Bonicamp v. Vazquez, 120 Nev. 377, 382-83,
91 P.3d 584, 587
(2004). Instead, the one-action rule prohibits a creditor from "first seeking
the personal recovery and then attempting, in an additional suit, to
recover against the collateral." Id. at 383,
91 P.3d at 587. Thus, when
suing a debtor on a secured debt, a creditor may initially elect to proceed
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against the debtor or the security. If the creditor sues the debtor
personally on the debt, the debtor may then either assert the one-action
rule, forcing the creditor to proceed against the security first before
seeking a deficiency from the debtor, or decline to assert the one-action
rule, accepting a personal judgment and depriving the creditor of its
ability to proceed against the security. NRS 40.435(3); Bonicamp, 120
Nev. at 383,
91 P.3d at 587; Nev. Wholesale Lumber Co.,
92 Nev. at 30,
544
P.2d at 1208; see also Keever,
96 Nev. at 513,
611 P.2d at 1082 ("The right
to waive the security is the debtor's, not the creditor's.").
NRS 40.495(5) does not alter the previously explained balance in the
one-action rule.
We have not addressed, however, the effect of NRS 40.495(5)
and whether its language stating that the one-action rule "may not be
waived" in the enumerated circumstances 3 conflicts with our prior
interpretation of the one-action rule. 4 Beavor argues that NRS
40.495(5)(d) prohibits a waiver of the one-action rule before the forced
waiver of the rule under NRS 40.435(3) at the entry of final judgment. We
disagree.
NRS 40.495(5) is an exception to NRS 40.495(2) ("Except as
otherwise provided in subsection 5 . ."), which is itself an exception to
NRS 40.453 ("Except as otherwise provided in NRS 40.495. ."). Before
3 Hefetz does not refute that Beavor does, in fact, fall within the
enumerated provisions of NRS 40.495(5)(a)-(d). Indeed, it does not appear
that this question was a disputed question of fact below.
4 The Legislature enacted the relevant language of NRS 40.495(5) in
1989, after our opinions in Keever v. Nicholas Beers Co., 96 Nev. 509,
611
P.2d 1079 (1980), and Nevada Wholesale Lumber Co. v. Myers Realty, Inc.,
92 Nev. 24, 544 P.24 1204 (1976).
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the enactment of NRS 40.495(2) and (5), NRS 40.453 prohibited the waiver
of the one-action rule in all circumstances in "any document relating to the
sale of real property." Through NRS 40.495(2), the Legislature has
provided for exceptions to NRS 40.453 permitting waiver of the one-action
rule and in turn provided in NRS 40.495(5) for exceptions to the exception
when the rule may not be waived.
We previously interpreted NRS 40.453 in harmony with NRS
40.435(2), which governs asserting the one-action rule in litigation. We
stated that a debtor "may waive the benefits of the statute by failing to
call the court's attention to the security on the note, even though NRS
40.453 precludes a mortgagor or trustor from waiving a right secured by
the laws of the state in any document relating to the sale of real property."
Nev. Wholesale Lumber Co., 92 Nev. at 28,
544 P.2d at 1207; see also
Keever, 96 Nev. at 513 n.1,
611 P.2d at 1082 n.1. Thus, we gave meaning
to both NRS 40.435(2), which is specific to waiver during litigation, and
NRS 40.453, which is specific to waiver in documents concerning the sale
of real property. NRS 40.495(2) and (5), however, are exceptions to and
extensions of NRS 40.453, detailing who, when, and how the one-action
rule may be waived in documents concerning the sale of real property.
Nothing in NRS 40.495(2) or (5) references waiver during litigation. Thus,
as we have previously held, these statutes govern waiver in different
circumstances, and based on their plain language, they can be interpreted
to work harmoniously together. See Albios, 122 Nev. at 418,
132 P.3d at
1028.
Moreover, interpreting NRS 40.495(5) broadly as Beavor
suggests would render portions of the one-action rule superfluous. If NRS
40.495(5) permitted waiver at any time during litigation until a final
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judgment was entered, then NRS 40.435(2), specifying that the one-action
rule must be "timely interposed as an affirmative defense," would be
meaningless. Accordingly, we conclude that, based on the plain language
of the statutory scheme, NRS 40.495(5) does not govern waiver during
litigation. See Beazer Homes Neu., 120 Nev. at 579-80, 97 P.3d at 1135.
Beavor's argument also misinterprets NRS 40.435(3), which
provides that
Mlle failure to interpose, before the entry of a final
judgment, the provisions of NRS 40.430 as an
affirmative defense in such a proceeding waives
the defense in that proceeding. Such a failure
does not affect the validity of the final judgment,
but entry of the final judgment releases and
discharges the mortgage or other lien.
Beavor focuses on the first sentence, arguing that he has the right to
assert the one-action rule until final judgment, but ignores the import of
the second sentence.
First, the language of NRS 40.435(3)'s first sentence does not
support Beavor's argument. Beavor argues that the one-action rule "can
be interposed at any point prior to entry of a final judgment." But the first
sentence actually says that if the one-action rule has not been asserted
prior to the entry of final judgment, then the rule is waived. The first
sentence does not prohibit waiver of the one-action rule earlier in
litigation through other means—if it did, it would again render NRS
40.435(2), requiring the timely assertion of the rule, superfluous.
The NRS 40.435(3) waiver of the one-action rule at final
judgment is nevertheless necessary because NRS 40.435(2) does not force
a waiver of the rule at any set point during litigation. While NRCP 8(c)
generally requires a party to timely assert affirmative defenses in a
responsive pleading or waive them, Clark Cty. Sch. Dist., 123 Nev. at 395
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& n.25, 168 P.3d at 96 & n.25, this does not categorically prohibit a party
from attempting to raise an affii 'native defense later in litigation. A party
may attempt to revive a defense by moving to amend his or her complaint
under NRCP 15. See State, Univ. & Cmty. Coll. Sys. v. Sutton, 120 Nev.
972, 987-88,
103 P.3d 8, 18-19 (2004) ("NRCP 15(b) allows a party to move
to amend its pleadings to conform to the evidence presented at trial.");
Elliot, 114 Nev. at 30,
952 P.2d at 964 ("If affirmative defenses are not
pleaded or tried by consent, they are waived.").
Second, the cutoff of the right to assert the one-action rule
after final judgment permits the triggering of the sanctions portion of the
rule in the second sentence of NRS 40.435(3). Under this provision, once
the rule's protection has been waived, the debtor may prohibit the creditor
from proceeding against the security. Bonicamp, 120 Nev. at 382,
91 P.3d
at 587 C" [F] allure to assert NRS 40.430 as an affirmative defense [in a
separate action that violates NRS 40.430] does not result in a waiver of all
protection under that statute and leaves the debtor or his successor in
interest free to invoke the sanction aspect of the "one-action" rule."
(quoting Nev. Wholesale Lumber, 92 Nev. at 30,
544 P.2d at 1208)). Thus,
NRS 40.435(3) does not conflict with other rules and statutes by
prohibiting the waiver of the one-action rule until final judgment, but
triggers a definitive waiver at final judgment so that the sanctions portion
of the rule can take effect. Accordingly, we conclude that NRS 40.435(3)
does not prohibit a waiver of the one-action rule during litigation prior to
final judgment. 5
We perceive no conflict between the statutory provisions of the one-
5
action rule and the NRCP because the statutes and the rules work
harmoniously together. As there is no conflict, we need not consider
continued on next page...
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Beavor waived the one-action rule defense by failing to timely
interpose it
Turning to the facts of this case, Beavor failed to assert the
one-action rule as a defense in his answer, counterclaim, amended
counterclaim, opposition to Hefetz's motion for partial summary judgment,
at the first trial, or in his opposition to Hefetz's motion for a new trial.
During this time, the deadlines to amend the pleadings and for dispositive
motions passed. Even after the motion for new trial was granted, the
district court ordered that those deadlines remained in effect.
Because Beavor did not assert the one-action rule as a defense
in his responsive pleadings, he failed to timely interpose the one-action
rule defense as required by NRS 40.435(2) and NRCP 8(c). Therefore, the
district court erred by granting Beavor's motion to dismiss, and we reverse
the district court's order. In doing so, we also vacate the district court's
award of attorney fees and costs to Beavor. See Schwabacher & Co. v.
Zobrist, 97 Nev. 97, 97-98,
625 P.2d 82, 82 (1981) (reversing award to
...continued
whether any portions of the one-action rule violate separation of powers.
See State v. Connery, 99 Nev. 342, 345,
661 P.2d 1298, 1300 (1983) ("[Tthe
legislature may not enact a procedural statute that conflicts with a preexisting procedural rule, without violating the doctrine of separation of
powers . ."); see also Seisinger v. Siebel, 203 P.3d 483, 489 (Ariz. 2009)
("[A] determination that a statute and court rule cannot be harmonized is
but the first step in a separation of powers analysis. If there is a
conflict. . . we must then determine whether the challenged statutory
provision is substantive or procedural." (citations omitted)).
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defendant for attorney fees and costs when the district court erred in
granting motion to dismiss "because the basis for the order no longer
exists").
CONCLUSION
The district court erred by granting a motion to dismiss in
favor of Beavor because Beavor failed to timely interpose the one-action
rule defense. Accordingly, we reverse the district court order granting the
motion to dismiss and vacate its award of attorney fees to Beavor.
Stiglich
C.J.
Ch-e-rry
J.
Douglas
etifsaa6flemo
Gibb
Pickering
ft-L c-e2-4A , J
Hardesty
, J.
Parraguirre
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