                                                       131 Nev., Advance Opinion el
                            IN THE SUPREME COURT OF THE STATE OF NEVADA


                     U.S. BANK NATIONAL ASSOCIATION,                     No. 62112
                     AS TRUSTEE FOR THE REGISTERED
                     HOLDERS OF ML-CFC COMMERCIAL
                     MORTGAGE TRUST 2007-7
                     COMMERCIAL MORTGAGE PASS-                                FILED
                     THROUGH CERTIFICATES SERIES
                     2007-7, BY AND THROUGH MIDLAND                           MAR 0 5 2015
                     LOAN SERVICES, AS ITS SPECIAL
                     SERVICER,
                     Appellant,
                     vs.
                     PALMILLA DEVELOPMENT CO., INC.,
                     A NEVADA CORPORATION; AND
                     HAGAI RAPAPORT, AN INDIVIDUAL,
                     Respondents.


                                Appeal from a district court order granting summary
                     judgment in a deficiency judgment action. Eighth Judicial District Court,
                     Clark County; Jerome T. Tao, Judge.
                                Reversed and remanded.

                     Lewis Roca Rothgerber LLP and Joel D. Henriod, Daniel F. PoIsenberg,
                     and Robert M. Charles, Jr., Las Vegas,
                     for Appellant.

                     Deaner, Malan, Larsen & Ciulla and Brent A. Larsen, Las Vegas; Law
                     Offices of Thomas D. Beatty and Thomas D. Beatty, Las Vegas,
                     for Respondents.




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                   BEFORE HARDESTY, C.J., DOUGLAS and CHERRY, JJ.

                                                    OPINION


                   By the Court, DOUGLAS, J.:
                               This case presents the question of whether MRS 40.455, which
                   governs the award of deficiency judgments, applies when a court-
                   appointed receiver sells real property securing a loan. More specifically,
                   the parties dispute whether MRS 40.455(1)'s six-month filing deadline
                   bars the mortgagee's recovery of any deficiency after such a receiver's sale
                   when the application for a deficiency judgment is made more than six
                   months after a purchase and sale agreement is entered into and judicial
                   approval of said agreement is sought and given. We hold that a receiver
                   sale of real property that secures a loan is a form of judicial foreclosure,
                   and thus, to the extent that proceeds from such a sale are deficient, MRS
                   40.455 applies. We further hold that the relevant triggering event for the
                   purposes of NRS 40.455(1)'s six-month time frame, when a receiver sale of
                   real property securing a loan is at issue, is the date of the close of escrow
                   rather than the date a purchase and sale agreement is formed or judicially
                   sanctioned. And because, here, the mortgagee applied for a deficiency
                   judgment within six months from when escrow closed on the sale in
                   question, that application was timely. We therefore reverse the district
                   court's grant of summary judgment and remand for further proceedings
                   consistent with this opinion.
                                    FACTS AND PROCEDURAL HISTORY
                               Respondent borrower, Palmilla Development Co., took out a
                   loan for $20.15 million from the predecessor-in-interest of appellant U.S.


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                  Bank.' The loan was secured by a deed of trust on a development of
                  townhomes and personally guaranteed by respondent Hagai Rapaport,
                  Palmilla's president. U S Bank became the legal holder of the loan note
                  and all beneficial interest under thefl deed of trust, following which
                  Palmilla defaulted and Rapaport failed to fulfill his guarantor obligations.
                  U.S. Bank then instituted the underlying action seeking to appoint a
                  receiver in order to collect rents from, to market, and to sell the secured
                  property.
                                Following the district court's approval of this request, the
                  receiver, through a real estate marketing company, listed the subject
                  property and, over the course of several months, obtained 31 offers to
                  purchase the property. From these offers, the receiver identified what it
                  believed to be the best offer and entered into a purchase and sale
                  agreement with that third-party purchaser for $9.5 million on February 5,
                  2010. U.S. Bank filed a motion to approve the sale, which the district
                  court granted on March 26, 2010. Escrow closed on June 7, 2010, when
                  the purchaser paid the agreed upon price and obtained the deed to the
                  property.
                                On November 24, 2010, U.S. Bank filed an amended
                  complaint, which sought to recover the amount of Palmilla's indebtedness
                  that the net proceeds of the receiver sale did not satisfy. Respondents
                  filed a motion for summary judgment, arguing that the relief sought in the


                        1 The appellant's full name is listed as U.S. Bank National
                  Association, as trustee for the Registered Holders of ML-CFC Commercial
                  Mortgage Trust 2007-7 Commercial Mortgage Pass-Through Certificate
                  Series 2007-7, by and through Midland Loan Services, as its Special
                  Servicer.

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                  amended complaint was, in essence, an application for a deficiency
                  judgment under NRS 40.455(1), which U.S. Bank was precluded from
                  seeking because (1) the receiver sale was not a "foreclosure sale or
                  trustee's sale held pursuant to NRS 107.080," and absent either of those
                  two types of sales, NRS 40.455(1) does not permit a deficiency judgment;
                  and (2) even if NRS 40.455(1) could be used to seek a deficiency judgment
                  following a receiver sale of real property securing a loan, U.S. Bank failed
                  to comply with the section's time frame for so seeking. The district court
                  granted respondents' motion, holding that, although U.S. Bank could
                  utilize NRS 40.455(1) to seek a deficiency judgment following a receiver
                  sale of real property securing a loan, U.S. Bank had to abide by NRS
                  40.455(1)'s six-month time frame in so doing, and that more than six
                  months had passed between the date U.S. Bank filed its amended
                  complaint and the date the district court approved the purchase and sales
                  agreement. This appeal followed.
                                                 DISCUSSION
                  A receiver sale of real property securing a loan is a "foreclosure sale" within
                  the meaning of NEW 40.455(1)
                              U.S. Bank's appeal raises questions of statutory
                  interpretation; our review is, therefore, de novo. Pankopf v. Peterson, 124
                  Nev. 43, 46, 175 P.3d 910, 912 (2008). As relevant to this appeal, NRS
                  40.455(1) states that
                              [LT]pon 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 if it
                              appears from the sheriffs return or the recital of
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                            consideration in the trustee's deed that there is a
                            deficiency of the proceeds of the sale and a balance
                            remaining due to the judgment creditor or the
                            beneficiary of the deed of trust, respectively.
                NRS 40.455(1) (emphasis added). As a preliminary matter, we must
                determine whether this section applies when the deficiency application in
                question is brought following a receiver sale of real property securing a
                loan. And, because we agree with respondents that NRS 40.455(1) only
                applies when there is a deficiency in the proceeds of a "foreclosure sale or
                [a] trustee's sale held pursuant to NRS 107.080," we therefore must
                resolve whether a receiver sale of real property securing a loan qualifies as
                either.
                            We reject outright the proposition that such a sale is a
                "trustee's sale held pursuant to NRS 107.080." NRS 107.080 confers upon
                a trustee the "power of sale" in a nonjudicial foreclosure proceeding,
                wherein, it is almost so intuitive as to go without saying, "frilo judicial
                proceeding is required." Restatement (Third) of Property (Mortgages) §
                8.2 cmt. a (1997). But, in the context of receiver sales of real property
                securing a loan, a court "in which an action is pending" appoints the
                receiver in question, MRS 32.010(2), and thus, involvement of the judicial
                machinery in such circumstances is clearly contemplated. Indeed, as is
                evident from this court's recitation of the facts, here U S Bank's initiation
                of a judicial proceeding prompted the sale in question, and judicial
                approval of the purchase price was required, sought, and given. Inasmuch
                as the requirements in power of sale statutes like NRS 107.080 are only
                intended to ensure that "the mortgagee accomplishes the same purposes
                achieved by judicial foreclosure without the substantial additional burdens
                that the latter type of foreclosure entails," Restatement (Third) of Property

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                 (Mortgages) § 8.2 cmt. a (1997), their application in circumstances, such as
                 these, where the judicial process is invoked would be needlessly
                 duplicative. We therefore cannot accept a reading of NRS 40.455(1) that
                 includes a receiver sale of real property securing a loan as a "trustee's sale
                 held pursuant to NRS 107.080." NRS 40.455(1); J.E. Dunn Nw., Inc. v.
                 Corus Constr. Venture, LLC, 127 Nev. „ 249 P.3d 501, 505 (2011)
                 (noting that this court's interpretations should avoid absurd results). 2
                             This leaves only the former prospect, that is, that a receiver
                 saleS of real property securing a loan is a "foreclosure sale" within NRS
                 40.455(1)'s meaning. NRS 40.455 does not define "foreclosure sale," but a
                 different section in the same subchapter does. In particular, NRS
                 40.462(4) defines the phrase as "the sale of real property to enforce an
                 obligation secured by a mortgage or lien on the property, including the
                 exercise of a trustee's power of sale pursuant to NRS 107.080." Likewise,
                 Black's defines a foreclosure sale as "[Ole sale of mortgaged property,
                 authorized by a court decree or a power-of-sale clause, to satisfy the debt."
                 Black's Law Dictionary 1455 (9th ed. 2009). But, to the extent that NRS
                 40.455(1) bifurcates "foreclosure sale[s]" from nonjudicial trustees' sales
                 held pursuant to NRS 107.080, within the section's confines, "foreclosure
                 sale" must mean, more limitedly, only the former type of sale—namely, a
                 sale of real property held to enforce an obligation secured by a mortgage or
                 lien, other than those trustee's sales authorized by NRS 107.080.




                       Because such receiver sales are not "held pursuant to NRS
                       2
                 107.080," any failures alleged by respondents of U.S. Bank to meet NRS
                 107.080's requirements are beside the point.

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                             A sale directed by a court-appointed receiver plainly falls
                 within this definition. Pursuant to NRS 32.010(2), the statute under
                 which the instant receiver was appointed, a court may appoint a receiver
                             ... [fin an action by a mortgagee for the
                             foreclosure of the mortgage and sale of the
                             mortgaged property, where it appears that the
                             mortgaged property is in danger of being lost,
                             removed or materially injured, or that the
                             condition of the mortgage has not been performed,
                             and that the property is probably insufficient to
                             discharge the mortgage debt.
                 Inasmuch as NRS 32.010(2) states that a receiver may be appointed "in an
                 action by a mortgagee for the foreclosure of the mortgage," it plainly
                 envisages that a receiver sale of real property securing a loan is one of
                 foreclosure. Indeed, the request for receiver under the section is only
                 ancillary to such a sale.   See 2 Baxter Dunaway, The Law of Distressed
                 Real Estate § 16:32 (2014). And as this court has previously recognized,
                 any property "[e]ntrusted to [a receiver's] care is regarded as being in
                 custodia legis"; put differently, "the court itself [has] the care of the
                 property by its receiver." Bowler v. Leonard, 70 Nev. 370, 383, 269 P.2d
                 833, 839 (1954) (internal quotations omitted). Even further, a receiver is
                 merely the court's "creature or officer, having no powers other than those
                 conferred upon him by the order of his appointment."           Id. (internal
                 quotations omitted). Thus, real property that secures a loan and is sold in
                 a receiver sale is undoubtedly "sold through a court proceeding" inasmuch
                 as the receiver, for all intents and purposes, acts as a court's proxy,
                 facilitating the sale of property in the appointing court's care and only
                 with its approval. See id.; see also Campbell v. Parker, 45 A. 116, 118 (N.J.
                 Ch. 1900) ("[If a sale by a sheriff, by virtue of a writ directed to him by
                 this court, is a judicial sale, a fortiori one made by a receiver, who is
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                   appointed by this court, and who is in a sense an arm of the court, and, so
                   to speak, a part of it, is also a judicial sale."); Dunaway, supra, § 16:32
                   (identifying a receiver sale as a method of judicial foreclosure); 2 Clark on
                   Receivers § 482 (3d ed. 1959) ("A receiver's sale is a judicial sale.").
                                In light of the strength of this reasoning, we reject
                   respondents' arguments that a receiver sale of real property securing a
                   loan is not a form of judicial foreclosure sale because, as occurred here, the
                   property may not be sold at a public auction, cf. NRS 40.430(4) (indicating
                   that a judicial foreclosure sale "must be conducted in the same manner as
                   the sale of real property upon execution, by the sheriff'); NRS 21.150
                   (indicating that sales of property under execution shall be made at
                   auction to the highest bidder"), or because there may be instances where,
                   as here, no "judgment" is entered prior to the sale. Such arguments
                   unnecessarily elevate form over substance. We therefore hold that a
                   receiver sale of real property securing a loan is a "foreclosure sale" within
                   the meaning that NRS 40.455(1) ascribes to the phrase.
                   NRS 40.455(1)'s six-month time frame was satisfied in the instant action
                                Thus having determined that NRS 40.455(1) governs actions
                   for deficiency judgments following a receiver sale of real property securing
                   a loan, we turn to the question of whether NRS 40.455(1), which requires
                   an application for a deficiency judgment to be made "within 6 months after
                   the date of the foreclosure sale," offers any relief to the respondents in the
                   instant case. Specifically, respondents argue that U.S. Bank's filing for
                   deficiency on November 24, 2010, was untimely pursuant to NRS
                   40.455(1), because the date of the "foreclosure sale" fell either on February
                   5, 2010, when the receiver entered into the purchase and sale agreement


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                   with the third-party purchaser or, at the very latest, March 26, 2010, the
                   date when the district court approved the sale.
                               When the sale in question is a trustee's sale conducted
                   pursuant to NRS 107.080, this court has held that the date of the sale for
                   the purposes of NRS 40.455(1)'s time frame is that on which the auction
                   was conducted.    Sandpointe Apartments, LLC v. Eighth Judicial Dist.
                   Court, 129 Nev. „ 313 P.3d 849, 856 (2013); Walters v. Eighth
                   Judicial Dist. Court, 127 Nev. , 263 P.3d 231, 234 (2011). But the
                   transaction that we presently consider was orchestrated pursuant to the
                   method of judicial foreclosure sanctioned by NRS 32.010, not NRS
                   107.080. When a sale is conducted pursuant to NRS 107.080, it makes
                   sense that the close of the auction triggers the start of NRS 40.455(1)'s
                   time frame—the winning bidder typically pays the bid price at the
                   auction's conclusion. See Roark v. Plaza Say. Ass'n, 570 S.W.2d 825, 830
                   (Mo. Ct. App. 1978) ("The trustee must be able to exercise discretion in
                   requiring bidders to satisfy him that they will be able to pay their bid in
                   cash."); 2 Michael T. Madison, et al., Law of Real Estate Financing § 12:57
                   (2014) (collecting cases and noting that the trustee has discretion to
                   require bidders to prove their ability to immediately pay the bid price).
                   But, as discussed above, in the context of receiver sales of property
                   securing a loan, an element of judicial review and approval is added
                   separate and apart from any requirements that NRS 107.080 places on
                   trustee's sales such that payment is not immediately made when a
                   contract for purchase and sale is formed. Thus, other jurisdictions have
                   reasoned that, where such judicial review and approval is mandated, a
                   prospective purchaser's submission of the highest bid is merely an
                   irrevocable offer to purchase, and have rejected the idea that any right to

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                 deficiency judgment vests by virtue of the seller's acceptance of said offer
                 alone. See, e.g., Leggett v. Ogden, 284 S.E.2d 1, 3 (Ga. 1981); Commercial
                 Credit Loans, Inc. v. Espinoza, 689 N.E.2d 282, 285 (Ill. App. Ct. 1997).
                 We likewise hold that the receiver's mere entry into an agreement with a
                 prospective purchaser in a receiver sale of real property securing a loan
                 does not commence NRS 40.455(1)'s applicable six-month time frame.
                             Neither, in our view, does the date that judicial approval is
                 given begin NRS 40.455(1)'s time frame in the context of such a receiver
                 sale. It has been said that a judicial foreclosure sale is not "legally
                 complete or binding until the purchaser has actually paid the amount bid."
                 In re Grant, 303 B.R. 205, 210 (Bankr D Nev. 2003) (internal citations
                 omitted); see Matter of Kleitz, 6 B.R. 214, 218 (Bankr. D. Nev. 1980). Prior
                 to that time, if the court becomes satisfied that the purchaser will not or
                 cannot pay the bid amount, the property must be re-advertised and re-
                 sold. See Dazet v. Landry, 21 Nev. 291, 293-94, 30 P. 1064, 1066 (1892),
                 criticized on other grounds by Golden v. Tomiyasu, 79 Nev. 503, 512, 387
                 P.2d 989, 993 (1963). Accordingly, in the context of receiver sales of real
                 property securing loans, even after the sale has received judicial sanction,
                 the mortgagee has no certainty as to whether that sale will come to
                 fruition and thus cannot be sure of the existence of any deficiency
                 resulting therefrom. It is this assurance of a recoverable deficiency's
                 existence that triggers a mortgagee's opportunity to seek it and
                 commences the applicable six-month limitations period, see Sandpointe,
                 129 Nev. at 313 P.3d at 856 ("The trustee's sale marks the first point
                 in time that an action for deficiency can be maintained and commences the




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                      applicable six-month limitations period."), and therefore, we hold that in
                      the context of receiver sales of real property securing loans, it is not until
                      the actual exchange of money, the close of escrow, that NRS 40.455(1)'s
                      six-month time limit begins.
                                   To be clear, we do not abrogate or overrule Sandpointe, only
                      clarify that when a receiver conducts a sale of real property securing a
                      loan, NRS 40.455(1) applies, and the triggering event for NRS 40.455(1)'s
                      time frame is the date that escrow closes and payment is made. Given
                      that, here, less than six months had elapsed between the payment of funds
                      on June 7, 2010, and U.S. Bank's application for a deficiency judgment on
                      November 24, 2010, U.S. Bank complied with NRS 40.455(1)'s requisite
                      time frame. The district court therefore erred in granting summary
                      judgment on those grounds; we reverse and remand for proceedings
                      consistent with this opinion.



                                                              .D.7
                                                                 1 4
                                                           Douglas
                                                                                           J.



                      We concur:


                            sa■■
                      Hardesty


                        Ova                           J.
                      Cherry




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