Bank of West Summary Judgment

8/22/2019 Bank of West Summary Judgment

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) ''- :MONUMENT CAPITAL, INC., a Nevada ) jcorporation; THOMAS H. MCCORMICK, )an individual; CRISTEN J. )MCCORMICK, an individual; THE ' )MCCORMICK FAMILY TRUST, a trust ) ' 'situated in the State of Nevada; ) land DOES I-X, inclusive, ) .)Defendants. )) 'PRESENT: EDWARD C. REED. JR . U. S. DISTRICT JUDGEDeputy Clerk: COLLEEN LARSEN Reporter: NONE APPEARINGCounsel for Plaintiffts) NONE APPEARING .Counsel for Defendant ts) NONE APPEARINGMINUTE ORDER IN CHAMBERS

Plaintiff made a loan to a third party, Astoria Lone Mountain, forwhich Defendants served as guarantors. The loan was secured by a Deed ofTrust, Assignment of Leases and Rents, Security Agreement and FixtureFiling in favor of Plaintiff. The loan is in default, and on May 27, 2010,Plaintiff foreclosed on the property. Now pending are two motions forsummary judgment filed by Plaintiff (#24) and Defendants (#23)respectively.Defendants seek summary judgment on the grounds that Plaintiff failedto apply for a deficiency judgment as required under Nevada law. The deadline to amend the pleadings under the scheduling order (#20) wasFebruary 18, 2010. However, Plaintiff was unable to seek a deficiencyjudgment by February 18, 2010, because Plaintiff could not apply for a

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Case 2:09-cv-01889-ECR-PAL Document 36 Filed 12/30/10 Page 1 of 4


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:1deficiency judgment until after the foreclosure sale, which occurred on May27, 2010. NEv. REv. STAT. 5 40.455. Plihtiff'also objects to: theranti-deficiency defense asserted by Defendants in light of exprqssf.waivers: .-contairid ' in the ' Uuzialttk' greerientb pur'porEing to waive *1 U ( ') n# 'riMht' .''Guarantpr E s), may have under the applicable law including, . .witholpt J. . ' . . .imitation, a rkght to a hearing with respect tp the f air market value ofany security npw or hereaf ter .held , f or the Obligations . '' (.Pl . ''s .Opp.. ' ... . . . ' ' ... . . .Exhibit 5, 6, 7 %4.l(k) (#28-7,8,9).) In the event that w'e find the waiverinvalidr Plaintiff requests that we convert the proceedings into adeficiency action, or allow Plaintiff to amend its pleadings to assert acause of action for a 'deficiency judgment.

Under Nev. Rev. Stat. 5 40.453, it is uagainst public policy for anydocument relating to the sale of real property to contain any provisionwhereby a mortgagor or the grantor of a deed of trust or a guarantor orsurety of the indebtedness secured thereby, waives any right secured to the'' The guaranty agreements in this case 1erson by the laws of this state .recite that the purpose of the loan was uto finance the construction ofcertain improvements on the Real Property.'' (Id. % A.) Defendantscontend, however, that the purpose of the loan was ''to pay off the previousloan utilized to acquire the Property and to finance thi improvement of theProperty and construction of 135 homes to be sold . Proceeds from the saleof each home were to be used to repay the Loan.'' (Ds' Reply at 5 (#34).)The Loan Agreement states, in relevant part r that ''the Loan is for thepurpose of financing for-sale new housing only'' and that the Borrower mustdiligently market the lots and units for sale, and to furnish Plaintiffwith reports on a1l sales activities on the property. 'The broad language urelating to the sale of real property'' issatisfied in the case of the loan here and the waiver is invalid . NEv. REv.STAT . 5 4 0 . 4 53 . Whether the loan was made to pay of f the previous loanmade to acquire the prbperty is not apparent f rom the record, but it is 'apparent that the loan was made f or the purpose of constructing real estateunits to be sold as new housing, and the proceeds of such sales weret d to be used in paying of f the loan . The loan, theref ore, is notxpec eessentially dif f erent f rom the typical loan by a mortgagee to a .mortgagor in the case of commercial real estate . Futhermore , the purpose and policybehind the statute declaring waivers of . def iciency .def enses invalid are . .f ully relevant here . Plaintif f held the real property as collateral , andf oreclosed on the property when the loan wnt into def ault . Plaintif f .should not be allowed to seek the f u11 amount of the loan f rom guarantorsf ter f oreclosing and selling the property without a deduction based on theaf air market value or the actual sales price of the property . See FirstInterstate Bank of Nevada v . Shields , 7 30 P . 2d 429, 4 30-31 (Nev . 1986 ) .Even if the quarantv aoreement here does not satisfy the statutory'''' '''' '''' .

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requirement of nrelating to the sale of real property,'? it satisfies '' Shields , in ' Which' th bevda Suprepe 'Court . acknowledged that .'TNevad'a ''s . ' :'2def icienc# legislation is designed to '.achieye f airness to ':11 p#cties to 'a . .

' '. ' . . j , ..'transaction scufed' qiri whole or in part 115/ lrealty . '' Id .' dt 4 31': ' 'To doother.wi se here would aive P1a int i f f .. the ,abi l itv N'to 'manipulate 'sovrces . ofrecovery in order to realize debt satisf acti6n in ramouflts subitahtialiy' g


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IT IS FURTHER ORDERED that. Plaintiff's motion for summarv judqment '' (#2 ) is DENIED as moot. . . ' , - ' .

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..- . . . . . ' LANCE S. WILSON, CLEXK

sv ys/. . oeputy clerk

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