Court of Appeals Division One holds that: (1) a six-year statute of limitations governs judicial foreclosure; (2) the statute of limitations for enforcement of guaranty, absent agreement to the contrary, is identical to enforcement of the underlying note; and (3) a class action notice with an opportunity to opt out satisfied a deed of trust requirement that majority of lenders initiate default action.

Two different LLCs executed two promissory notes in favor of multiple lenders on two plots of undeveloped land in Mohave County, Arizona.  Some, but not all, of the lenders contributed to both notes.  Both notes were guaranteed by a developer.  The LLCs made some payments on the notes and then stopped paying in 2008.  The lenders filed two separate class action lawsuits to foreclose on the two plots and recover any deficiency.  The LLCs and the guarantor moved to dismiss the class action lawsuits, claiming they were barred by Arizona’s four-year statute of limitations and that the lenders did not obtain a majority agreement to declare a default under the deeds of trust.  Those motions were denied, and the lenders moved for summary judgment to establish the amounts due under the notes, proceed with a sale of the plots, and establish liability against the LLCs and the guarantor for deficiency.  The LLCs and the guarantor appealed, and those appeals were consolidated.  While the appeals were pending, the plots were sold, a large deficiency resulted, and the lenders moved for judgment on the pleadings.  The superior court granted that motion; the LLCs and the guarantor appealed the judgment on the pleadings.

On appeal, the LLCs and the guarantor claimed that the lenders’ claims were governed by a four-year statute of limitations and that the lenders had failed to obtain written consent of 51% of the lenders as required by Nevada law.  The Court of Appeals first concluded that the lawsuits were timely filed for both the judicial foreclosure and guaranties.  The Court of Appeals held that a six-year statute of limitations governed the judicial foreclosure action because it was more specific than the four-year statute of limitations, consistent with the UCC, and in line with other states’ interpretations of similar statutes of limitations.  The Court of Appeals also held that the six-year statute of limitations governed the enforcement of the guaranty because, absent an agreement of the parties stating otherwise, the statute of limitations for both the guaranty and underlying note should be identical.  Regarding the lenders’ ability to assert default despite lacking a majority of promissory note interests, the Court of Appeals concluded that the lenders had standing because payments had ceased, a class action notice with an opportunity to opt out complied with the deed of trust’s majority consent requirement, and Nevada law did not otherwise apply.

Judge Winthrop authored the opinion; Chief Judge Thumma and Judge Cruz joined.