STATE, DEP'T. OF BUS. AND INDUS., FIN. INST. DIV. VS. DOLLAR LOAN CTR., LLC
Citation2017 NV 103
Date Filed2017-12-26
Docket70002
Cited0 times
StatusPublished
Full Opinion (html_with_citations)
133 Nev., Advance Opinion 103
IN THE SUPREME COURT OF THE STATE OF NEVADA
THE STATE OF NEVADA No. 70002
DEPARTMENT OF BUSINESS AND
INDUSTRY, FINANCIAL
INSTITUTIONS DIVISION,
Appellant, FILE
vs.
DOLLAR LOAN CENTER, LLC, A DEC 2 6 2017
DOMESTIC LIMITED LIABILITY ELJZABETN A. BROWN
CLERK OF SUPREME COURT
COMPANY, BY
---25-144--
DE.PUTY CLERK
Resnondent.
Appeal from a district court order in a proceeding under NRS
29.010. Eighth Judicial District Court, Clark County; Mark R. Denton,
Judge.
Reversed and remanded.
Adam Paul Laxalt, Attorney General, Lawrence J.C. VanDyke, Solicitor
General, William J. McKean, Chief Deputy Attorney General, David J.
Pope, Senior Deputy Attorney General, and Rickisha L. Hightower-
Singletary and Vivienne Rakowsky, Deputy Attorneys General, Carson
City,
for Appellant.
Holland & Hart LLP and Patrick John Reilly and Erica C. Smit, Las
Vegas,
for Respondent.
BEFORE THE COURT EN BANC.
OPINION
By the Court, HARDESTY, J.:
In this appeal, we must determine whether a payday loan
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refinancing prior loans under NRS 604A.480(2). We conclude that NRS
604A.480(2)(0 bars a licensee from bringing any type of enforcement
action on a refinancing loan made under NRS 604A.480(2). Because the
district court erred in concluding that NRS 604A.480 does not prohibit
certain payday loan licensees from filing suit against borrowers who
default on the loans, we reverse.
I.
Responding to a so-called "debt treadmill," the 2005
Legislature enacted Assembly Bill (A.B.) 384, later codified as NRS
Chapter 604A, to regulate the payday loan industry. See A.B. 384, 73d
Leg. (Nev. 2005); 2005 Nev. Stat., ch. 414, at 1683.
Included in the statutory scheme is the regulation of deferred
deposit loans and high-interest loans Id. Deferred deposit loans are
those in which the borrower provides a check or authorization for the
electronic transfer of funds on a future date in exchange for a loan. NRS
604A.050. A high-interest loan is a loan that charges an annual interest
rate greater than 40 percent. NRS 604A.0703. Both deferred deposit and
high-interest loans generally have an original loan term limited to 35
days. NRS 604A.408. If a borrower cannot repay the loan within 35 days,
NRS 604A.480 is implicated. When the Legislature passed A.B. 384, it
included a provision which allowed for a refinancing agreement with a 60-
day extension beyond the term of the original loan. NRS 604A.480(1); see
2005 Nev. Stat., ch. 414, at 1683.
Under subsection 1 of NRS 604A.480, a licensee must not
"establish or extend the period for the repayment, renewal, refinancing or
consolidation of an outstanding loan. . . beyond 60 days after the
expiration of the initial loan period." Further, the licensee must "not add
any unpaid interest or other charges accrued during the original term of
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the outstanding loan or any extension of the outstanding loan to the
principal amount of the new deferred deposit loan or high-interest loan."
Id. However, under NRS 604A.480(2), certain new deferred deposit or
high-interest loans are exempt from subsection l's restrictions.
NRS 604A.480(2) allows a licensee to offer a new loan to
satisfy an outstanding loan for a period of not less than 150 days and at an
interest rate of less than 200 percent. NRS 604A.480(2)(a)(1), (3).
However, the licensee must follow all of the specific requirements in NRS
604A.480(2) for the new loan to be exempted from the provisions of
subsection 1. The requirement at issue in this appeal is NRS
604A.480(2)(f), which permits a loan to be made under subsection 2 so long
as the licensee "[Woes not commence any civil action or process of
alternative dispute resolution on a defaulted loan or any extension or
repayment plan thereof"
Over the years, NRS 604A.480(2)(f) has been interpreted by
appellant Nevada Department of Business and Industry, Financial
Institutions Division (the FID); the Office of the Attorney General; and the
Legislative Counsel Bureau (LCB). In December 2009, the FID issued a
declaratory order and advisory opinion regarding mandatory disclosures
for loans made pursuant to NRS 604A.480(2). State, Dep't of Bus. &
Indus., Fin. Inst. Div., Declaratory Order and Advisory Opinion Regarding
Mandatory Disclosures for Loans Made Pursuant to NRS 604A.480 (2009).
In that opinion, the FID stated that "civil action and alternative dispute
resolution are specifically prohibited in loans made pursuant to NRS
604A.480." Id. at 5. The FID also determined that a "consumer should
not feel that he is subject to civil action when, in fact such actions are
prohibited bylaw," Id. at 6.
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Similarly, in October 2012, the Office of the Attorney General
responded to a request for an opinion on whether the language in NRS
604A.480(2)(f) applies only to actions to collect on the outstanding loan, or
also to the new loan being used to pay the balance of an outstanding loan.
2012-06 Op. Att'y Gen. 1 (2012). Referencing both the FID opinion and
the legislative history and public policy behind NRS Chapter 604A, id. at
1-3, the Attorney General concluded that NRS 604A.480(2)(0 "applies to
both an outstanding loan as well as a new loan" used to pay off the
outstanding loan, id. at 4.
However, in July 2011, the LCB issued an opinion that the
restrictions and requirements in subsection 2 "are not affirmative
prohibitions against a licensee." Letter from Brenda J. Erdoes, Legislative
Counsel, to Assemblyman Marcus Conklin (July 26, 2011) (discussing the
provisions of NRS 604A.480). The LCB further determined that
subsection 2(0 does not prohibit licensees from "commencing any civil
action or process of alternative dispute resolution against a customer who
subsequently defaults" on a new loan made under NRS 604A.480(2). Id.
Respondent Dollar Loan Center (DLC) sought judicial
interpretation of NRS 604A.480(2)(f) by filing a declaratory relief action
against FID in the district court. The parties thereafter agreed to convert
the controversy into a proceeding under NRS 29.010. 1
1 NRS 29.010 states that
[p]arties to a question in difference, which might
be the subject of a civil action, may, without
action, agree upon a case containing the facts upon
which the controversy depends, and present a
submission of the same to any court which should
have jurisdiction if an action had been brought.
But it must appear, by affidavit, that the
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After the district court concluded that NRS 604A.480(2)
"contains no prohibition of any kind against a licensee, but are merely the
conditions precedent that must be satisfied for a licensee to be exempt
from" NRS 604A.480(1)'s requirements, FID filed this appeal.
The parties in this appeal disagree as to whether: (1) NRS
604A.480(2)(f) bars a licensee that provides a loan under NRS 604A.480(2)
from bringing any type of enforcement action on that refinanced loan
when the debtor defaults; or (2) the provision operates as a condition
precedent to making a refinancing loan under that statute, and therefore,
does not bar a subsequent action to enforce the refinanced loan. We are
presented with the narrow question of whether a licensee can sue to collect
on the recovery of a loan under NRS 604A.480(2) made for the purpose of
refinancing prior loans. 2
. • . continued
controversy is real, and the proceedings in good
faith, to determine the rights of the parties. The
court shall thereupon hear and determine the case
and render judgment thereon, as if an action were
pending
2 Following oral argument, FID sought clarification concerning the
application of NRS 604A.480(2)(f) to original loans purportedly made
pursuant to NRS 604A.480(2). By the terms of the statute, the proceeds of
a "new deferred deposit loan or high-interest loan" made under either
subsection 1 or 2 of MRS 6044.480 are for "the repayment, renewal,
refinancing or consolidation of an outstanding loan" only. Thus, we
conclude that original loans can't be made pursuant to NRS 604A.480(2).
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A.
This court reviews questions of statutory construction de novo.
Pub. Emps.' Ret. Sys. of Nev. v. Reno Newspapers, Inc., 129 Nev. 833, 836,
313 P.3d 221, 223 (2013). "[S]tatutes with a protective purpose should be
liberally construed in order to effectuate the benefits intended to be
obtained." Cote H. v. Eighth Judicial Dist. Court, 124 Nev. 36, 40,175 P.3d 906, 908
(2008) (internal quotation marks omitted). Furthermore,
statutory interpretation must "not render any part of the statute
meaningless," or "produce absurd or unreasonable results." Orion Portfolio
Servs. 2, LLC v. Cty. of Clark ex rel. Univ. Med. Ctr. of S. Nev., 126 Nev.
397, 403,245 P.3d 527, 531
(2010).
B.
The Legislature enacted laws in 2005 governing deferred
deposit and high-interest loans, codified as NRS Chapter 604A. See A.B.
384, 73d Leg. (Nev. 2005); 2005 Nev. Stat., ch. 414, at 1683. The policy
purpose of NRS Chapter 604A was to stop the "debt treadmill" where a
borrower is unable to repay a loan and often takes out a larger loan to
cover the principal, interest, and fees from the unpaid original loan. See,
e.g., Hearing on A.B. 384 Before the Senate Comm. on Commerce & Labor,
73d Leg. (Nev., May 6, 2005). We, therefore, view the refinancing
provisions of NRS 604A.480 as having a protective purpose requiring a
liberal construction to effectuate its intended benefits. See Cote H., 124
Nev. at 40,175 P.3d at 908
.
NRS 604A.408(1) provides a maximum term of 35 days for an
original deferred deposit or a high-interest loan. When a borrower cannot
pay the loan in full within 35 days, "the repayment, renewal, refinancing
or consolidation" of an outstanding loan may not be extended beyond 90
days. NRS 604A.408(3). Thereafter, under NRS 604A.480, the borrower
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may take out a new deferred deposit or high-interest loan and use the
proceeds of that loan to repay or refinance the balance of an outstanding
loan. NRS 604A.480 offers two loan options for when a licensee and
borrower enter into an agreement to use a new loan to satisfy an existing
loan. The first option, under subsection 1, restricts the term of the new
loan to 60 days and prohibits the licensee from "add[ing] any unpaid
interest or other charges accrued during the original term of the
outstanding loan .. . to the principal amount of the new deferred deposit
loan or high-interest loan." The second option, under subsection 2,
exempts the new loan from subsection l's restrictions where the licensee
meets certain requirements, including the requirement relevant to this
appeal—that the licensee "[d] oes not commence any civil action or process
of alternative dispute resolution on a defaulted loan or any extension or
repayment plan thereof," NRS 604A.480(2)(f).
We conclude that the plain language of NRS 604A.480(2)
expressly permits a licensee to offer a new deferred deposit or high-
interest loan that is not subject to the sixty-day restriction or principal-
adjustment prohibition of subsection 1. However, when the licensee does
so, the licensee is subject to all of the statute's limitations, including NRS
604A.480(2)(f), which bars a licensee from pursuing "any civil action or
process of alternative dispute resolution on a defaulted loan or any
extension or repayment plan thereof." (Emphasis added.)
NRS 604A.065 defines "[e[xtension" as "any extension or
rollover of a loan beyond the date on which the loan is required to be paid
in full under the original terms of the loan agreement." Based on a plain
reading, we conclude that this statutory definition applies to extensions of
the original loan. And, construing the statutes as a whole, we further
conclude that, if a licensee issues a new deferred deposit loan or a new
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high-interest loan to a borrower in order to pay the balance of an
outstanding loan on terms set forth in NRS 604A.480(2)(a), 3 the licensee
foregoes the right to file a civil action or institute alternative dispute
resolution proceedings on that new loan pursuant to NRS 604A.480(2)(f).
See Banegas v. State Indus. Ins. Sys., 117 Nev. 222, 229,19 P.3d 245, 250
(2001) ("Words within a statute must not be read in isolation, and
statutes must be construed to give meaning to all of their parts and
language within the context of the purpose of the legislation.").
C.
DLC argues that the plain meaning of NRS 604A.480(2)
allows for a civil action on the original loan being refinanced or on a new
subsection 2 loan because the conditions in subsections 2(a)-(f) serve as
conditions precedent for a licensee to offer an extension or repayment loan
for a longer term. In making this argument, DLC contends that
subsection 2(1) applies to the original loan on which the licensee has not
previously sued. We disagree. Such an interpretation would be contrary
to the legislative purpose of the statute and would create absurd results as
it would incentivize licensees to perpetuate the "debt treadmill" by making
3 The terms of a new loan under subsection 2 may include an interest
rate of "less than 200 percent" and a repayment term of "not less than 150
days." NRS 604A.480(2)(a).
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additional loans under subsection 2 with a longer term and a much higher
interest rate, which the licensee could ultimately enforce by a civil action.
See Orion Portfolio, 126 Nev. at 403,245 P.3d at 531
(stating that statutes
should be interpreted so as not to "produce absurd or unreasonable
results"). The bar against future civil action on loans made under
subsection 2(f) puts an end to the debt treadmill.
We thus reverse the district court's order and remand this
matter to the district court to enter a judgment consistent with this
opinion.
Hardesty
We concur:
( 94
, C.J.
Cherry
Dougla
J.
Gibbons
J.
Stiglich
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PICKERING, J., dissenting:
I would affirm the district court's decision, which correctly
analyzes NRS 604A.480 according to its text and established rules of
statutory interpretation.
NRS Chapter 604A regulates the payday and title lending
industry. With certain exceptions, Nevada law generally prohibits a lender
who is subject to Chapter 604A from issuing a new loan to pay off an existing
deferred deposit or high-interest loan. NRS 604A.430(1). Two of those
exceptions are set forth in NRS 604A.480, the statute at issue in this appeal.
NRS 604A.480 reads in full as follows:
1. Except as otherwise provided in
subsection 2, if a customer agrees in writing to
establish or extend the period for the repayment,
renewal, refinancing or consolidation of an
outstanding loan by using the proceeds of a new
deferred deposit loan or high-interest loan to pay the
balance of the outstanding loan, the licensee shall
not establish or extend the period beyond 60 days
after the expiration of the initial loan period. The
licensee shall not add any unpaid interest or other
charges accrued during the original term of the
outstanding loan or any extension of the
outstanding loan to the principal amount of the new
deferred deposit loan or high-interest loan.
2. This section does not apply to a new
deferred deposit loan or high-interest loan if the
licensee:
(a) Makes the new deferred deposit loan or
high-interest loan to a customer pursuant to a loan
agreement which, under its original terms:
(1) Charges an annual percentage rate of
less than 200 percent:
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(2) Requires the customer to make a
payment on the loan at least once every 30
days;
(3) Requires the loan to be paid in full
in not less than 150 days; and
(4) Provides that interest does• not
accrue on the loan at the annual percentage
rate set forth in the loan agreement after the
date of maturity of the loan;
(b) Performs a credit check of the customer
with a major consumer reporting agency before
making the loan;
(c) Reports information relating to the loan
experience of the customer to a major consumer
reporting agency;
(d) Gives the customer the right to rescind
the new deferred deposit loan or high-interest loan
within 5 days after the loan is made without
charging the customer any fee for rescinding the
loan;
(e) Participates in good faith with a
counseling agency that is:
(1) Accredited by the Council on
Accreditation of Services for Families and
Children, Inc., or its successor organization;
and
(2) A member of the National
Foundation for Credit Counseling, or its
successor organization; and
(f) Does not commence any civil action or
process of alternative dispute resolution on a
defaulted loan or any extension or repayment plan
thereof.
(emphasis added).
The district court read NRS 604A.480 as permitting two types
of arrangements by which a Chapter 604A lender can extend or make a new
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loan to pay off an existing deferred deposit or high-interest loan. First, the
lender can enter into a Subsection 1 agreement by which the "customer
agrees in writing to establish or extend the period for the repayment,
renewal, refinancing or consolidation of an outstanding loan by using the
proceeds of a new deferred deposit loan or high-interest loan to pay the
balance of the outstanding loan." If the customer agrees to such an action
on an outstanding loan, then what the district court referred to as the
"Subsection 1 Prohibitions" apply. The Subsection 1 Prohibitions provide
that, as part of an agreement entered into under NRS 604A.480(1), the
lender "shall not" (i) "establish or extend the period beyond 60 days after
the expiration of the initial loan period" or (ii) "add any unpaid interest or
other charges accrued during the original termS of the outstanding loan or
any extension of the outstanding loan to the principal amount of the new
deferred deposit loan or high-interest loan."
Second, the lender and consumer can agree to a new loan that
meets thefl requirements of Subsection 2 of NRS 604A.480. Subsection 2
creates an alternative to a Subsection 1 agreement that avoids the
Subsection 1 Prohibitions but imposes additional, different conditions.
Under Subsection 2, a lender can offer its borrower a new loan to pay off an
outstanding loan—including one as to which the lender and borrower have
entered into a failed extension or renewal plan under Subsection 1—without
being subject to Subsection l's single-shot sixty-day limitation or rule
against adding unpaid interest from the original loan to the principal of the
new loan. See also NRS 604A.430(1)(c) (permitting a $50 fee to be charged
for preparing documents in connection with an NRS 604A.480(2) loan). But,
to issue a new loan to pay off an existing loan under Subsection 2, the lender
must comply with all the conditions precedent listed in the six lettered
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subparagraphs of Subsection 2. NRS 604A.480(2) ("This section does not
apply to a new deferred deposit loan or high-interest loan if the
licensee. . . .") (emphasis added). Each of the lettered subparagraphs is
phrased in the present tense, as of the date the lender "[m]akes the new
deferred deposit loan or high-interest loan," NRS 604A.480(2)(a), including
the condition precedent that the lender "[d]oes not commence any civil
action or process of alternative dispute resolution on a defaulted loan or any
extension or repayment plan thereof." NRS 604A.480(2)(f). Consistent with
its structure and verb tense, the district court concluded:
Subsection 2 contains no prohibition of any kind
against a licensee [NRS Chapter 604A licensed
lender], but are merely the conditions precedent
that must be satisfied for a licensee [lender] to be
exempt from the Subsection 1 Prohibitions. NRS
604A.480 therefore contains no prohibition against
a licensee from initiating civil suits or alternate
dispute resolution proceedings against a debtor that
is in default. Rather, NRS 604A.480 only provides
that a licensee cannot be exempt from the
requirements set forth in NRS 604A.480(1) "if' the
licensee has already commenced any civil action or
process of alternative dispute resolution against a
debtor.
(emphasis added).
The majority takes a different tack. In its view, the purpose of
NRS Chapter 604A is to prevent the consumer debt treadmill. Consistent
with that perceived purpose, it reads Subsection 2 to require, not just that
the lender not have strong-armed the customer-in-default by suing him on
the defaulted loan (or any extension or repayment plan thereof) before
making the new loan, but that the lender agree, in making the Subsection
2 loan, never to sue on the debt, old or new. But this reading cannot be
squared with the text of NRS 604A.480(2) and the verb tenses it employs.
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Even more fundamentally, it cannot be squared with NRS 604A.415, which
authorizes lenders to resort to civil actions to collect loans made under NRS
Chapter 604A with no exception for NRS 604A.480(2) loans. Nor does it
make common sense: What lender will make a new loan to pay off an
existing loan knowing that, in doing so, the loan being made cannot be
collected upon default? Is such an arrangement even a loan?
I agree with the district court, which read NRS 604A.480(2) to
require, as one of its several conditions precedent, that the lender not have
sued on the defaulted loan being paid off with the proceeds of the NRS
604A.480(2) loan being made. See K Mart Corp. v. Cartier, Inc., 486 U.S.
281, 291 (1988) ("In ascertaining the plain meaning of the statute, the court
must look to the particular statutory language at issue, as well as the
language and design of the statute as a whole.") (Kennedy, J.). This reading
is consistent with the statute's text, gives effect to all its terms, and makes
practical sense. As I would affirm, not reverse, I respectfully dissent.
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