author: Justice Laurie McKinnon delivered the Opinion of the Court. Chief Justice Mike McGrath, dissenting.

text:
    EXXON MOBIL CORPORATION, Petitioner and Appellant, v. MONTANA DEPARTMENT OF REVENUE, Respondent and Appellee.
    DA 18-0541
    Supreme Court of Montana.
    Submitted on Briefs: May 29, 2019 Decided: July 9, 2019
    For Appellant: Terrence B. Cosgrove, Murry Warhank, Jackson, Murdo & Grant, P.C., Helena, Montana
    For Appellee: Brendan R. Beatty, Derek R. Bell, Special Assistant Attorneys General, Helena, Montana
    For Amicus Council on State Taxation: Brianne C. McClafferty, Frans A. Andersson, Holland & Hart, Billings, Montana
   Justice Laurie McKinnon delivered the Opinion of the Court.

¶1 Exxon Mobil Corporation (ExxonMobil) appeals an order from the First Judicial District Court, Lewis and Clark County, denying ExxonMobil's petition for interlocutory adjudication and affirming the Department of Revenue's (Department) determination that ExxonMobil is entitled to an 80% exclusion from income for the dividends it received from several of its domestic subsidiaries. We reverse.

¶2 ExxonMobil presents three issues for review, but we conclude the following issue is dispositive:

Did the District Court err when it held the dividends at issue were expressly apportionable as income under § 15-31-325, MCA, and therefore, ExxonMobil was not entitled to a 100% income exclusion for the dividends under Internal Revenue Code § 243 ?

¶3 The Department also filed a motion to strike certain portions of ExxonMobil's Reply Brief, which we took under advisement pending our full consideration of this appeal. Because we do not rely on the portions of ExxonMobil's Reply Brief that the Department takes issue with in this Opinion, we do not reach the merits of the Department's motion to strike.

FACTUAL AND PROCEDURAL BACKGROUND

¶4 The material facts in this case are undisputed. In Montana, multinational corporations like ExxonMobil may elect to file their tax returns by apportioning their income attributable to Montana from their domestic subsidiaries while excluding certain activities from their foreign subsidiaries. The Legislature codified this election-known as a water's-edge election -in §§ 15-31-321 to -326, MCA, in 1987. 1987 Mont. Laws 1689 (Ch. 616). A multinational corporation filing under the water's-edge election files a combined return for its affiliated corporations and itself, which the provisions collectively define as the water's-edge combined group . Sections 15-31-321(3), -322, MCA.

¶5 Between 2008 and 2010, the tax years at issue, ExxonMobil engaged in a unitary business in Montana. In 2008, ExxonMobil made a water's-edge election effective for tax years 2008-2010, which allowed it to exclude foreign subsidiaries from its water's-edge combined group return. During that time, ExxonMobil owned several domestic subsidiaries (that is, other corporations incorporated in the United States) that had 20% or less of their payroll and property located inside the United States. These entities are commonly known as 80/20 corporations . Pursuant to applicable Montana law, ExxonMobil excluded both its foreign subsidiaries and its 80/20 corporations from its water's-edge combined group return. These 80/20 corporations earned income and paid dividends to ExxonMobil's water's-edge combined group members.

¶6 On ExxonMobil's 2008-2010 water's-edge combined group returns, it claimed an 80% income exclusion for its 80/20 corporations' after-tax net income under § 15-31-325(2), MCA, but it also claimed a 100% income exclusion for the dividends it actually received by applying a federal deduction for the dividends- Internal Revenue Code (I.R.C.) § 243 -to its Montana taxes. The Department audited ExxonMobil's 2008-2010 water's-edge combined group returns and determined it was only entitled to an 80% exclusion for dividends it actually received from its 80/20 corporations, the same exclusion ExxonMobil received for the 80/20 corporations' after-tax net income. Therefore, the Department found ExxonMobil needed to apportion and pay taxes on 20% of the dividends it actually received from its 80/20 corporations. The parties do not dispute that ExxonMobil should have paid taxes on the remaining 20% of its 80/20 corporations' after-tax net income; however, ExxonMobil argues it should not have to also pay taxes on 20% of the dividends it actually received from its 80/20 corporations. As a result of the audit for those years, the Department assessed ExxonMobil an additional tax of over $4 million.

¶7 ExxonMobil challenged the Department's adjustment after its audit by filing timely appeals with the Department's Office of Dispute Resolution and later the Montana Tax Appeal Board. The parties were unable to reach an agreement on the issue of whether the Department properly denied ExxonMobil's claimed 100% exclusion for dividends received from its 80/20 corporations. As the issue presented a pure legal question of statutory interpretation, ExxonMobil filed a petition for interlocutory adjudication with the District Court. The District Court entered judgment in favor of the Department. ExxonMobil appeals.

STANDARD OF REVIEW

¶8 This case solely presents a legal question of statutory construction. When reviewing an agency's or a district court's conclusion of law, we review the conclusion of law to determine whether it is correct. Bitterroot River Protective Ass'n , ¶ 18 ; Steer, Inc. , 245 Mont. at 474-75, 803 P.2d at 603.

DISCUSSION

¶9 ExxonMobil contends the Department erred by including the actual dividends ExxonMobil received from its 80/20 corporations in its apportionable taxable income. As the parties argue over highly technical provisions in Montana's corporate tax scheme, some background information is helpful to understand the parties' positions.

¶10 Montana imposes an income tax on corporations and similar entities. Section 15-31-101, MCA ; see generally Title 15, chapter 31, MCA. A corporation's income tax is based on its total net income for the taxable period. A corporation computes its net income by first determining its gross income according to the I.R.C. The corporation then adjusts that figure according to specifically enumerated items under § 15-31-113(1), MCA, and applies any pertinent Montana-specific deductions under § 15-31-114, MCA, to reach its net income for Montana tax purposes.

¶11 When corporations like ExxonMobil conduct business outside of Montana, the Legislature may only tax income earned within Montana's boundaries-income attributable to Montana. See Moorman Mfg. Co. v. Bair , 437 U.S. 267, 272-273, 98 S. Ct. 2340, 2344, 57 L.Ed.2d 197 (1978). Any corporation with business activities that are taxable both inside and outside the state must allocate and apportion its net income to Montana to determine its income subject to state taxation. Section 15-31-301(1), MCA. The rule applies to any corporation engaged in a multistate or multinational unitary business encompassing Montana; that is, when "the operation of the business within the state is dependent upon or contributory to the operation of the business outside the state or if the units of the business within and without the state are closely allied and not capable of separate maintenance as independent businesses." Section 15-31-301(2), MCA. To determine the percentage of apportionable income or loss to Montana sources, corporations calculate the average of three figures: their respective percentages of property, payroll, and sales located in or attributable to Montana. Section 15-1-601 art. IV(9), MCA ; see §§ 15-31-305 to -311, MCA.

¶12 A corporation like ExxonMobil carrying on a unitary business must file a combined report based on the income of its unitary business group . The unitary business group comprises the corporation, all unitary affiliates in which the corporation owns more than a 50% interest, and all unitary affiliates owning more than a 50% interest in the corporation. Admin. R. M. 42.26.204. The combined report for unitary business groups is the default method for multistate and multinational corporations to determine their tax liability to Montana. See §§ 15-31-301, -305, MCA.

¶13 Notwithstanding, a multinational corporation may make a water's-edge election, which generally allows it to exclude, for Montana tax purposes, its foreign operations' income or loss from its apportionable income. Section 15-31-322, MCA. The water's-edge election allows a multinational corporation to simplify its reporting requirements and, in many cases, reduces its overall tax burden by allowing the corporation to exclude its foreign subsidiaries' income that it may have already paid foreign taxes on. A multinational corporation making a water's-edge election files taxes on behalf of its water's-edge combined group-all the affiliated corporations § 15-31-322, MCA, requires a return under a water's-edge election to include. For example, most domestic corporations a multinational corporation owns will be a part of its water's-edge combined group, other than its 80/20 corporations that have less than 20% of their payroll and property assignable to locations within the United States. Section 15-31-322(1)(a), MCA. The multinational corporation apportions income, files a return, and pays taxes for those domestic corporations and all other water's-edge combined group members. Section 15-31-322(1), MCA.

¶14 Although a multinational corporation may exclude most of its foreign subsidiaries from the water's-edge combined group (and therefore, may exclude the foreign subsidiaries' income from the group's Montana taxes), the water's-edge combined group may still have to pay taxes on certain activities, such as its receipt of dividends from its foreign subsidiaries. A dividend is a "portion of a company's earnings or profits distributed pro rata to its shareholders, usually in the form of cash or additional shares." Dividend , Black's Law Dictionary (10th ed. 2014); see I.R.C. § 316(a)(2) ("[T]he term 'dividend' means any distribution of property made by a corporation to its shareholders ... out of its earnings and profits of the taxable year ... without regard to the amount of the earnings and profits at the time the distribution was made."). A corporation may or may not issue dividends with the income it earns; some corporations may have income but choose not to issue dividends. Therefore, while net income is a broad concept encompassing a corporation's profits generally, a dividend is only a portion of that net income the corporation issues to a shareholder.

¶15 Montana's water's-edge provisions treat net income earned by a corporation's subsidiary and the dividends the corporation actually receives from the subsidiary differently. In the case of a domestic subsidiary with more than 20% of its property and payroll assignable to United States locations, a multinational corporation must include the domestic subsidiary in its water's-edge combined group and pay taxes on the domestic subsidiary's income; however, when the multinational corporation receives dividends from the domestic subsidiary, those dividends are not considered apportionable income-they are 100% excludable. Sections 15-31-322(1)(a), -325(7), MCA. Barring few exceptions, in the case of a foreign subsidiary, a multinational corporation must not include the foreign subsidiary in the water's-edge combined group; however, when the multinational corporation receives dividends from the foreign subsidiary, those dividends are considered apportionable income and are 80% excludable from income. Sections 15-31-322(1), -325(1), (4), MCA. Finally, while a multinational corporation that owns an 80/20 corporation does not include the 80/20 corporation in its water's-edge combined group, it must treat the 80/20 corporation's after-tax net income as dividends received from a foreign corporation. Sections 15-31-322(1), -325(2), MCA. Accordingly, the 80/20 corporation's after-tax net income is 80% excludable from the water's-edge combined group's apportionable income. Section 15-31-325(2), MCA. ¶16 However, ExxonMobil and the Department dispute whether the water's-edge provisions address actual dividends a multinational corporation receives from its 80/20 corporations, and if so, which percentage of those dividends are excludable (80% or 100%). The parties do not dispute that ExxonMobil can exclude 80% of the after-tax net income of its 80/20 corporations from its apportionable income through § 15-31-325(2), (4), MCA. Rather, they dispute how ExxonMobil should treat the actual dividends it receives from its 80/20 corporations.

¶17 Did the District Court err when it held the dividends at issue were expressly apportionable as income under § 15-31-325, MCA, and therefore, ExxonMobil was not entitled to a 100% income exclusion for the dividends under Internal Revenue Code § 243 ?

¶18 In Baker Bancorporation v. Dep't of Revenue , 202 Mont. 94, 98, 657 P.2d 89, 91 (1982), we reaffirmed several older cases that stated corporations are entitled to all I.R.C. deductions when filing their state taxes unless the Montana Legislature expressly provides otherwise. The Department denied six holding companies' deduction claims for dividends they received from their subsidiary corporations under I.R.C. § 243. The holding companies appealed the Department's denial. I.R.C. § 243 allowed (and still allows) corporations to deduct 100% of the dividends they receive from subsidiaries in which they owned 80% or more of the voting stock. See I.R.C. §§ 243, 1504(a) ; Baker Bancorporation , 202 Mont. at 99, 657 P.2d at 92. We stated, "[T]his Court has consistently held that the definition of gross income and net income for state corporation license tax purposes is dependent upon and incorporates by reference the provisions of the [I.R.C.] except as expressly provided otherwise, as in the case of the exempt interest exclusion and the dividend deduction." Baker Bancorporation , 202 Mont. at 98, 657 P.2d at 91 (quoting Lazy JD Cattle Co. v. State Bd. of Equalization , 161 Mont. 40, 45, 504 P.2d 287, 290 (1972) ). Thus, we concluded that because no provision of Montana's corporate tax scheme expressly proscribed I.R.C. § 243 deductions, the appellant companies were entitled to the federal deductions when filing their Montana taxes. Baker Bancorporation , 202 Mont. at 98-99, 657 P.2d at 92. Baker Bancorporation continues to apply today: unless the Legislature expressly provides otherwise, a corporation is entitled to the federal dividend deduction under I.R.C. § 243.

¶19 The Department argues § 15-31-325, MCA, expressly provides otherwise-that corporations filing under the water's-edge election are not entitled to the federal dividend deduction under I.R.C. § 243. ExxonMobil contends § 15-31-325(5), MCA, expressly allows for a 100% income exclusion for actual dividends received from 80/20 corporations. In the alternative, ExxonMobil maintains § 15-31-325, MCA, neither addresses the dividends at issue nor I.R.C. § 243. Therefore, ExxonMobil continues, even if it is not entitled to a 100% exclusion under § 15-31-325(5), MCA, it is entitled to a 100% deduction under I.R.C. § 243 for its Montana taxes. After reviewing the plain language of the statute, we conclude § 15-31-325, MCA, addresses neither I.R.C. § 243 nor actual dividends received from 80/20 corporations.

¶20 We begin with some foundational standards of statutory construction:

In the construction of a statute, the office of the judge is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted or to omit what has been inserted. Where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all.

Section 1-2-101, MCA. Further, when construing a statute, we pursue the intention of the Legislature if possible. "When a general and particular provision are inconsistent, the latter is paramount to the former, so a particular intent will control a general one that is inconsistent with it." Section 1-2-102, MCA. We also presume the Legislature is aware of existing law when it enacts or revises statutes, including our decisions interpreting individual statutes. Musselshell Ranch Co. v. Seidel-Joukova , 2011 MT 217, ¶ 14, 362 Mont. 1, 261 P.3d 570 (quoting Swanson v. Hartford Ins. Co. , 2002 MT 81, ¶ 22, 309 Mont. 269, 46 P.3d 584 ). Where a statute imposing a tax is susceptible to two constructions and legislative intent is in doubt, we resolve the doubt in favor of the taxpayer; on the other hand, where a statute granting an exemption or deduction is susceptible to two constructions and legislative intent is in doubt, we resolve the doubt in favor of the taxing power. Compare W. Energy Co. v. Dep't of Revenue , 1999 MT 289, ¶ 10, 297 Mont. 55, 990 P.2d 767, with State ex rel. Anderson v. State Bd. of Equalization , 133 Mont. 8, 13, 319 P.2d 221, 224 (1957). But in either case, where the statute's plain language is clear, we will simply "ascertain and declare what is in terms or in substance contained therein." Section 1-2-101, MCA.

¶21 In full, § 15-31-325, MCA, provides:

For purposes of [§§] 15-31-321 through 15-31-326, [MCA,] dividends must be treated as follows:
(1) Dividends received from corporations incorporated outside the United States, to the extent taxable, are considered income subject to apportionment.
(2) The after-tax net income of United States corporations excluded from eligibility as affiliated corporations under [§] 15-31-322(1)[, MCA,] and possession corporations described in [ I.R.C. §§ 931 to 934, 936 ] are considered dividends received from corporations incorporated outside the United States.
(3) Amounts included in income under [ I.R.C. §§ 951 to 962, 964 ] are considered dividends from corporations incorporated outside the United States.
(4) Eighty percent of all dividends apportionable under this section must be excluded from income subject to apportionment.
(5) "Deemed" distributions, as set forth in [ I.R.C. § 78 ], and corresponding amounts with respect to dividends considered received under subsection (2) of this section must be excluded from the income of the water's-edge combined group.
(6) The dividends apportionable under this section are in lieu of any expenses attributable to dividend income.
(7) A dividend from a corporation required to be combined in the water's-edge combined group must be eliminated from the calculation of apportionable income.

¶22 Foremost, nothing in the statute expressly prevents multinational corporations from utilizing I.R.C. § 243 deductions. Nevertheless, if the statute provides an alternative method for categorizing and including (or excluding) actual dividends from 80/20 corporations in a water's-edge combined group's income, then, presumably, the Legislature has expressly proscribed I.R.C. § 243 deductions for the dividends at issue.

¶23 We address each subsection in turn. Subsection (1) refers only to corporations "incorporated outside the United States," whereas 80/20 corporations are domestic. Subsection (3) similarly only refers to foreign corporations: I.R.C. §§ 951 to 962, and 964, only regulate foreign corporations. Subsection (6) is explanatory and allows a water's-edge combined group to apportion dividends in lieu of expenses attributable to dividend income. Subsection (7) exempts dividends received only from members of the water's-edge combined group, and not 80/20 corporations. Subsection (4) excludes 80% of dividends apportionable under § 15-31-325, MCA, but does not apportion dividends itself or address dividends not covered by other subsections. This leaves only Subsections (2) and (5).

¶24 Subsection (2) clearly refers to the after-tax net income of domestic corporations excluded from eligibility as affiliated corporations, which includes 80/20 corporations. Subsection (2) states a water's-edge combined group must treat the after-tax income from its 80/20 corporations as dividends received from foreign corporations for Montana tax purposes. Nothing in the text of Subsection (2) addresses the actual dividends 80/20 corporations might distribute to the water's-edge combined group, however.

¶25 Subsection (5) addresses deemed distributions under I.R.C. § 78 and "corresponding amounts with respect to dividends considered received under subsection (2)." ExxonMobil argues this language refers to actual dividends from 80/20 corporations. For this to be true, the "corresponding amounts" of deemed distributions under I.R.C. § 78 "considered received under subsection (2)" must refer to actual dividend distributions from 80/20 corporations. To explore ExxonMobil's argument, we must untangle what deemed distributions under I.R.C. § 78 are.

¶26 From 2008-2010, I.R.C. §§ 901, 902, and 960 (2010) generally allowed a domestic corporation to receive a federal tax credit for taxes its foreign subsidiary paid to a foreign government. I.R.C. § 78 (2010) required the domestic corporation receiving the federal foreign tax credit to "gross-up" its income (i.e., increase its net income value) by an amount equal to the credit. The statute required the domestic corporation to deem the amount of the credit as a dividend received from its foreign subsidiary (a deemed distribution). Practically speaking, the deemed distributions reflected what the foreign subsidiary paid in foreign taxes. If the foreign subsidiary did not have to pay foreign taxes, then, theoretically, it could have distributed that additional available income to its domestic owner. Because I.R.C. §§ 901, 902, and 960 (2010) allowed the domestic corporation to receive a tax credit for the foreign taxes its foreign subsidiary paid, I.R.C. § 78 (2010) required the domestic corporation to treat the credit as though it were a distribution from the foreign subsidiary-that is, a deemed distribution.

¶27 Returning to Subsection (5), the text simply allows a water's-edge combined group to exclude I.R.C. § 78 (2010) deemed distributions from the group's income. Because 80/20 corporations could also receive a foreign tax credit and be subject to the gross-up provisions under I.R.C. § 78 (2010), Subsection (5) also allows the water's-edge combined group to exclude the 80/20 corporations' I.R.C. § 78 (2010) deemed distributions from the group's apportionable income. Therefore, the "corresponding amounts with respect to dividends considered received under subsection (2)" only refer to whatever deemed distributions the 80/20 corporations might have received pursuant to I.R.C. § 78 (2010) with respect to the 80/20 corporations' after-tax net income. ExxonMobil incorrectly argues this language encompasses actual dividends a water's-edge combined group received from 80/20 corporations. Subsection (5) makes no mention of such actual dividends; Subsection (5) is nothing more than an income exclusion for the federal gross-up for foreign tax credits under I.R.C. § 78. Accordingly, having reviewed each subsection of § 15-31-325, MCA, we conclude none of them expressly address actual dividends received from an 80/20 corporation. Moreover, we conclude the Legislature did not expressly prohibit I.R.C. § 243 deductions.

¶28 The Department points us to the statute's prefatory language stating "dividends must be treated as follows" and asks us to conclude the language evinces a legislative intent to comprehensively address all dividends received by a water's-edge combined group, regardless of form. The Department argues this broad language indicates ExxonMobil cannot utilize I.R.C. § 243 deductions because the Legislature expressly provided for the treatment of all dividends under the statute; therefore, ExxonMobil is entitled to exclude only 80% of the dividends it received from its 80/20 corporations from its apportionable income under § 15-31-325(4), MCA.

¶29 The Department's position, however, would require this Court to "insert what has been omitted" into the framework of § 15-31-325, MCA. See § 1-2-101, MCA. The particular provisions of § 15-31-325, MCA, (e.g., Subsections (1), (2), and (3)) specifically address which dividends are "apportionable under [the] section," and those dividends are 80% excludable from the water's-edge combined group's apportionable income. See 15-31-325(4), MCA. However, none of the three subsections that affirmatively incorporate certain dividends into apportionable income address actual dividends from 80/20 corporations. In fact, none of the statute's subsections do. Even if the Department's contention that the statute generally addresses these types of dividends were true, there would be no way for us to determine whether the dividends are includable or excludable from income without adding language to the statute itself. The Department essentially asks us to insert language into the statute that apportions actual dividends from 80/20 corporations, and we decline to do so. See § 1-2-101, MCA.

¶30 Though complex, § 15-31-325, MCA, is clear, not susceptible to multiple constructions, and its plain language makes no reference to I.R.C. § 243 or actual dividends a water's-edge combined group receives from 80/20 corporations. We presume the Legislature was fully aware of Baker Bancorporation , 202 Mont. at 98-99, 657 P.2d at 92, where we affirmed I.R.C. § 243 deductions were available to Montana taxpayers, when the Legislature enacted the water's-edge legislation and the dividend scheme. See Musselshell Ranch Co. , ¶ 14. The Legislature knew that if it did not expressly prohibit the I.R.C. § 243 deduction, then corporations could still avail themselves of it. It did not address the I.R.C. § 243 deduction in § 15-31-325, MCA, nor did it address the treatment of actual dividends from 80/20 corporations elsewhere in the water's-edge provisions. See generally §§ 15-31-321 to -326, MCA. Therefore, I.R.C. § 243 is still applicable. We conclude ExxonMobil may deduct the actual dividends it receives from its 80/20 corporations for purposes of Montana taxation through I.R.C. § 243. The District Court erred when it affirmed the Department's determination that ExxonMobil was only entitled to an 80% exclusion for the dividends it received from its 80/20 corporations.

CONCLUSION

¶31 Unless the Legislature expressly provides otherwise, a corporation is entitled to federal deductions for purposes of computing its Montana tax liability, including the federal dividend deduction under I.R.C. § 243. The plain language of § 15-31-325, MCA, does not expressly proscribe I.R.C. § 243 deductions, nor does it address whether water's-edge combined groups should include or exclude 80/20 corporations' actual dividends from the group's combined income. Therefore, multinational corporations filing under the water's-edge provisions may exclude actual dividends they receive from 80/20 corporations under I.R.C. § 243. The Department erred by determining ExxonMobil was entitled to only an 80% exclusion for the dividends at issue, and the District Court erred by affirming the Department's determination. We reverse and hold ExxonMobil correctly excluded 100% of the actual dividends it received from its 80/20 corporations when it filed its water's-edge combined group returns for tax years 2008-2010.

We concur:

JIM RICE, J.

BETH BAKER, J.

DIRK M. SANDEFUR, J.

Chief Justice Mike McGrath, dissenting.

¶32 The District Court was correct. The plain meaning of the relevant statutes is clear and unambiguous. It is undisputed that dividends received are income. Section 15-31-325(4), MCA, provides that 80% of those dividends must be excluded from income. It stands to reason that if 80% are excluded, then 20% of the received dividends must be included. As such, I.R.C. § 243 does not apply and the majority's reliance on Baker Bancorporation is misplaced.

¶33 As noted, for taxable years 2008-2010 Exxon Mobil made a water's-edge election, which allows them to exclude foreign incorporated entities and domestic incorporated but foreign operating entities that had less than 20% of their payroll and property within the United States. In computing the combined income for the water's-edge group, Exxon correctly included the after-tax net income it received from the 80/20 companies, and then excluded 80%. However, for dividends received from these 80/20 companies, Exxon claimed a 100% deduction. The Department contends, and the District Court held, that only 80% of dividends may be deducted pursuant to § 15-31-325(4), MCA.

¶34 The taxation of dividends for water's-edge purposes is expressly addressed by § 15-31-325, MCA. Section 15-31-325(4), MCA, provides, "[e]ighty percent of all dividends apportionable under this section must be excluded from income subject to apportionment."

¶35 If the intent of the Legislature can be determined from the plain meaning of the words used, the plain meaning controls, and this Court need go no further nor apply any other means of interpretation. Bullock v. Fox , 2019 MT 50, ¶ 52, 395 Mont. 35, 435 P.3d 1187 ; Mont. Vending, Inc. v. Coca-Cola Bottling Co. , 2003 MT 282, ¶ 21, 318 Mont. 1, 78 P.3d 499.

¶36 Montana law does address the appropriation of dividend income; thus, the federal dividend deduction under I.R.C. § 243 does not apply.

¶37 Generally, in considering a tax statute that is susceptible of two constructions questions as to persons or property to be included in the tax should be resolved in favor of the taxpayer. Cherry Lane Farms of Mont. v. Carter , 153 Mont. 240, 249, 456 P.2d 296, 301 (1969). However, questions of whether a taxpayer is entitled to a particular deduction is resolved in favor of the Department. State ex rel. Anderson v. State Bd. of Equalization , 133 Mont. 8, 13, 319 P.2d 221, 224 (1957).

¶38 This dispute should be resolved in favor of the Department. I dissent.

      The District Court held the Department's interpretation of the statutes warranted a deferential standard of review, citing Somont Oil Co. v. King , 2012 MT 207, ¶ 18, 366 Mont. 251, 286 P.3d 585 ("We apply a deferential standard of review to an agency's interpretation in matters of its expertise."). However, "no discretion is involved when a tribunal arrives at a conclusion of law-the tribunal either correctly or incorrectly applies the law." Bitterroot River Protective Ass'n v. Bitterroot Conservation Dist. , 2008 MT 377, ¶ 18, 346 Mont. 507, 198 P.3d 219 (quoting Steer, Inc. v. Dep't of Revenue , 245 Mont. 470, 474, 803 P.2d 601, 603 (1990) ). The parties do not dispute the issue on appeal is purely one of statutory construction. The District Court accordingly erred when it deferred to the Department's interpretation of the statutes. We therefore review the Department's and the District Court's conclusions of law to determine whether they are correct. Bitterroot River Protective Ass'n , ¶ 18.

      While the foreign subsidiary is not included in the water's-edge combined group, § 15-31-325(3), MCA, may still consider the income the foreign subsidiary earns to be a dividend from a foreign corporation. Nevertheless, the water's-edge provisions treat the foreign subsidiary's income differently than the income earned by corporations includable in the water's-edge combined group.

      The Tax Cuts and Jobs Act, Pub. L. No. 115-97, § 131 Stat. 2054 (2017), repealed I.R.C. § 902 and amended I.R.C. §§ 78, 901, and 960. The current provisions still allow for a federal tax credit for taxes a domestic corporation's foreign subsidiary pays to a foreign government and still require the domestic corporation to gross-up its income by the credit amount. I.R.C. §§ 78, 901, 960 (2017).


source: Caselaw Access Project

license: Public Domain

text:
    Jenni ADAMS and her minor children Dillon Thomas, Denver Thomas and Kennedy Adams; Karen Dewalt and her minor children Keenan Dewalt, Trevor Wolff and Oscar Wolff; Shawna Rich; Ryan Hostetler and his minor children Jessy Hostetler and Demon Hostetler; Bonnie Foster and her minor children Ayden Rael and Shauna Rael; Mark Bitterman; Frank Tholt; Krystal Chatterley and her minor children Lillie Raedel and Ariana Chatterley; Jarod Daniels and his minor children Shaynne Fixel, Jesse Daniels and Tanner Daniels; Debra Moore; Lesha White and her minor children Daryl White and Lesha White and Psalms White, Plaintiffs, v. TWO RIVERS APARTMENTS, LLLP, HRC Two Rivers, LLC, HRC Cottages Inc., the Richman Group, USA International Housing Tax Credit Fund and John Does 1-5, Defendants.
    HRC Two Rivers, LLC., HRC Cottage Inc., USA Institutional Two Rivers, LLC., Third-Party Plaintiffs and Appellants, v. Aultco Construction, Inc., Respondent, Third Party Defendant, Appellee and Cross Appellant.
    DA 18-0508
    Supreme Court of Montana.
    Submitted on Briefs: May 15, 2019 Decided: July 9, 2019
    For Appellants: Michael O'Brien, St. Peter Law Office, PC, Missoula, Montana
    For Appellee: Christopher W. Froines, Froines Law Office, PC, Missoula, Montana
   Justice Beth Baker delivered the Opinion of the Court.

¶1 HRC Two Rivers LLC and HRC Cottages Inc. (collectively the "General Partners") appeal the Fourth Judicial District Court, Missoula County, order dismissing their Third-Party Complaint against Aultco Construction Inc. as barred by the principles of res judicata and collateral estoppel. The General Partners assert that a prior suit by their partnership entity does not preclude the General Partners from pursuing their claims against Aultco. We affirm.

PROCEDURAL AND FACTUAL BACKGROUND

¶2 Two Rivers Apartments LLLP (Two Rivers Apartments) contracted with Aultco Construction Inc. (Aultco) to build an eight-plex apartment building in St. Regis. HRC Two Rivers LLC and HRC Cottages Inc. are general partners of Two Rivers Apartments. USA Institutional Two Rivers LLC is a limited partner of Two Rivers Apartments. In 2015, Two Rivers Apartments filed suit against Aultco, alleging negligent construction resulting in mold in the attic of the apartments (the "Two Rivers case"). After two years, the parties signed a mutual release and settlement agreement and agreed to dismiss with prejudice. The District Court so ordered.

¶3 The apartment tenants then filed suit against Two Rivers Apartments and the General Partners, alleging that Two Rivers Apartments failed to give them the statutorily required disclosure of mold testing and its results. The General Partners filed a Third-Party Complaint against Aultco for contribution and indemnity if the General Partners were found liable for damages caused by Aultco's negligent conduct.

¶4 Aultco moved to dismiss the Third-Party Complaint based on res judicata. The District Court granted Aultco's motion on the grounds of either res judicata or collateral estoppel. Reasoning that Aultco's negligence in this case has been litigated, settled, and dismissed with prejudice, and considering that the entities are so intertwined as effectively to be one, the court held that res judicata and collateral estoppel had been satisfied.

STANDARDS OF REVIEW

¶5 We review de novo a district court's ruling on a M. R. Civ. P. 12(b)(6) motion to dismiss. W. Sec. Bank v. Eide Bailly, LLP , 2010 MT 291, ¶ 18, 359 Mont. 34, 249 P.3d 35. We also review de novo a district court's interpretation and application of a statute; the court's application of claim preclusion or issue preclusion is a question of law that we review for correctness. Brilz v. Metro. Gen. Ins. Co. , 2012 MT 184, ¶ 13, 366 Mont. 78, 285 P.3d 494.

DISCUSSION

¶6 The District Court concluded that, because of their interest in Two Rivers Apartments, the General Partners had the opportunity to be included as plaintiffs in the Two Rivers case but chose not to be. The court reasoned that the President of both Two Rivers Apartments and of each of the General Partners, Jim Morton, testified in his deposition that he was the person who made the decision to bring the previous lawsuit against Aultco-choosing whom to include as parties in the original suit but providing no explanation why the General Partners were not named. The District Court concluded further that the General Partners "are so intertwined with Two Rivers [Apartments] as to be the same entity." Because "[t]he matter of Aultco's negligence in this case has been litigated, settled, and dismissed with prejudice," the court dismissed the General Partners' third-party claims based on res judicata, collateral estoppel, or both.

¶7 A final judgment may have a preclusive effect on future litigation by way of either res judicata or collateral estoppel. See Baltrusch v. Baltrusch , 2006 MT 51, ¶¶ 15-18, 331 Mont. 281, 130 P.3d 1267. The two doctrines are based on a judicial policy favoring a definite end to litigation, "whereby we seek to prevent parties from incessantly waging piecemeal, collateral attacks against judgments." Baltrusch , ¶ 15 (internal citation omitted). Although similar, the two doctrines are not the same. See Baltrusch , ¶¶ 15-18. The District Court order overlapped the two doctrines; we consider each in turn. See Baltrusch , ¶¶ 15-18.

¶8 Res judicata, or claim preclusion, bars a party from relitigating a matter that the party already had the opportunity to litigate. Baltrusch , ¶ 15. "This includes claims that were or could have been litigated in the first action." Brilz , ¶ 21 (emphasis in original). Res judicata applies if five elements have been satisfied: (1) the parties or their privies are the same; (2) the subject matter of the present and past actions is the same; (3) the issues are the same and relate to the same subject matter; (4) the capacities of the persons are the same in reference to the subject matter and to the issues between them; and (5) a final judgment has been entered on the merits in the first action. Bugli v. Ravalli County , 2018 MT 177, ¶ 9, 392 Mont. 131, 422 P.3d 131.

¶9 Collateral estoppel, or issue preclusion, is a form of res judicata, and bars the reopening of an issue that has been litigated and resolved in a prior suit. Baltrusch , ¶ 15. Collateral estoppel has four elements: (1) the identical issue raised was previously decided in a prior adjudication; (2) a final judgment on the merits was issued in the prior adjudication; (3) the party against whom the plea is now asserted was a party or in privity with a party to the prior adjudication; and (4) the party against whom preclusion is now asserted was afforded a full and fair opportunity to litigate the issue. McDaniel v. State , 2009 MT 159, ¶ 28, 350 Mont. 422, 208 P.3d 817. To determine whether the issue decided in the prior adjudication is identical to the issue raised in the present case, we compare the pleadings, evidence, and circumstances surrounding the two actions. McDaniel , ¶ 33.

¶10 On appeal, the General Partners challenge the res judicata elements whether the claims in the previous case are the same as those in this case and whether there was a final judgment on the merits binding the General Partners. The General Partners challenge the collateral estoppel elements whether the identical issue previously was decided, whether there was a final judgment on the merits, and whether the General Partners had a full and fair opportunity to litigate.

¶11 Preclusion under either res judicata or collateral estoppel requires a final judgment on the merits. Bugli , ¶ 9 ; McDaniel , ¶ 28. "Voluntary dismissal of an action with prejudice constitutes a final judgment on the merits." Touris v. Flathead County , 2011 MT 165, ¶ 15, 361 Mont. 172, 258 P.3d 1.

The General Partners argue that neither doctrine was satisfied because there was no final judgment in the prior lawsuit as it relates to the General Partners. They argue that the parties' intent governs whether a settlement agreement is a final judgment. The General Partners maintain that because the settlement agreement did not have the word "partners" in it, the parties intended for the General Partners to not be participants in the final judgment.

¶12 The settlement in the Two Rivers case involved two separate written release agreements. The first, stating the terms of the settlement between Two Rivers Apartments and two defendants other than Aultco, provided that the parties expressly agreed to release "the other Parties, as well as the other Parties' respective officers, directors, shareholders, trustees, partners , members, predecessors, successors, employees, attorneys, insurers, representatives, and agents ...." (Emphasis added). In the separate mutual settlement agreement between Two Rivers Apartments and Aultco, the agreement did not specifically identify "partners" as one of the affiliated entities being released. Given the list of parties in the agreement as a whole, however, and the fact that the agreement did not expressly reserve or indicate the parties' intent to reserve any rights of the General Partners, we agree with the District Court that the agreement contained insufficient language to support a conclusion that the parties intended to exclude the General Partners from the final settlement agreement and to reserve their right to litigate with Aultco. The agreement plainly intended to bind Two Rivers Apartments and its privies to the settlement.

¶13 The District Court properly concluded that the release operated as effectively on the General Partners as it did on Two Rivers Apartments. The concept of privity in the context of a judgment "applies to one whose interest has been legally represented at trial." Denturist Ass'n of Mont. v. State , 2016 MT 119, ¶ 14, 383 Mont. 391, 372 P.3d 466 (internal citation omitted); see also Taylor v. Sturgell , 553 U.S. 880, 894, 128 S. Ct. 2161, 2172, 171 L.Ed.2d 155 (2008) ("[A] nonparty may be bound by a judgment because she was 'adequately represented by someone with the same interests who [wa]s a party' to the suit." (internal quotations and citation omitted)). Privity exists where "two parties are so closely aligned in interest that one is the virtual representative of the other." Denturist Ass'n of Mont. , ¶ 14 (internal citation and quotation omitted). Privity exists between Two Rivers Apartments and the General Partners because the interests of the entities in the litigation are "closely aligned." Two Rivers Apartments, the entity in which both HRC Two Rivers LLC and HRC Cottages Inc. are general partners, made the same allegation that the General Partners now make: Aultco's negligence caused mold in the apartments. See Denturist Ass'n of Mont. , ¶ 15. The parties reached a settlement on that claim and stipulated that the case would be dismissed with prejudice. Although the District Court did not analyze whether there was a final judgment on the merits, element five of res judicata and element two of collateral estoppel both are satisfied because a binding settlement agreement that dismissed the case with prejudice is a final judgment on the merits. Touris , ¶ 15.

¶14 We turn next to whether the issue and claim in this action are the same as in the Two Rivers case. The General Partners argue that claim preclusion is not proper because the General Partners' claims are not the same claims Two Rivers Apartments made in the Two Rivers case.

The General Partners reason that Two Rivers Apartments made three claims against Aultco in the Two Rivers case: breach of contract, breach of warranty, and negligence. The General Partners maintain that in this case they have made two claims against Aultco: common law indemnity and contributory negligence. The claims thus are not identical, which is required for claim preclusion.

¶15 The General Partners also argue that issue preclusion is not proper because the issue the General Partners raise is not the same issue litigated in the previous lawsuit. The General Partners claim that the relevant issue in the previous lawsuit was whether Aultco was liable for mold in the attic. In the instant matter, the General Partners maintain that the issue the tenants raise is whether Two Rivers Apartments and its privies are liable for not providing notice of the mold to the tenants. The issue the General Partners raise in their Third-Party Complaint is whether, if the General Partners are held liable for failing to provide notice, Aultco is responsible to indemnify the General Partners or contribute to payment of damages.

¶16 Comparing the pleadings, the allegations made in the Two Rivers Complaint and Jury Demand are identical to those made in the General Partners' Third-Party Complaint. See McDaniel , ¶ 33. The Third-Party Complaint alleges that Aultco "failed to build the building in compliance with the specifications and drawings [and that its] failure to construct according to specifications and drawings caused mold to grow in attic spaces." The Third-Party Complaint also alleges that equipment Aultco used was not of good quality, new, or free from defect, and that the construction and services were not in compliance with the requirements of the warranty agreement. Count I claims that Aultco is liable to the tenants as a result of its negligence and that the General Partners are entitled to indemnity from Aultco. Count II claims that Aultco's negligence was the cause of the tenants' damages and Aultco therefore is contributorily liable. The Two Rivers Complaint and Jury Demand alleged that Aultco's negligence, breach of warranty, and failure to construct the building in compliance with the specifications caused mold to grow in the attic spaces. Substantively the General Partners' precise claims were alleged in the Two Rivers Complaint and Jury Demand-Aultco's negligent construction. The District Court did not err in concluding that the same claim of negligence was alleged in the Two Rivers case and in the current case.

¶17 The issue the tenants raise in the case at hand is whether they were notified about mold in the apartments. The issue on which the General Partners are attempting to sue Aultco, however, is the cause of that mold-whether Aultco is responsible for the mold and for the resulting injury. This is the same issue that was litigated and voluntarily settled with prejudice in the Two Rivers case. The General Partners' Third-Party Complaint and the Two Rivers Complaint and Jury Demand have substantively the same allegations. The General Partners do not raise a new issue or claim for purposes of res judicata or collateral estoppel analysis. The District Court correctly concluded that the issues and claims were the same for preclusion purposes.

¶18 Finally, the District Court concluded that the General Partners had a full and fair opportunity to litigate the issues raised in the previous case. Preventing repeated litigation of the same claims serves to "conserv[e] judicial resources." Baltrusch , ¶ 15 ; see also Denturist Ass'n of Mont., ¶ 15. The burden is on the party attempting to defeat the application of collateral estoppel to establish the absence of a full and fair opportunity to litigate. McDaniel , ¶ 42.

¶19 The purpose of the partnership is to operate the apartment complex in which the General Partners have an interest. Morton, the entities' common president, testified that the decision to file the lawsuit was a "combination of the partners' interest." It was Morton's decision as president and representative of the partnership, as well as members of the HRC Cottages Inc. board, to bring the suit and to name the parties. The General Partners offer no explanation why they did not participate as plaintiffs in the Two Rivers case, even though they are privies of Two Rivers Apartments and thus had the opportunity to be named parties. The General Partners allege that neither they nor Two Rivers Apartments were afforded an opportunity to seek indemnification or contribution from Aultco for failing to provide notice of mold to its tenants and should not be barred from doing so now. Yet the General Partners did not seek indemnification or contribution from Aultco for failing to provide notice. Their Third-Party Complaint seeks indemnification or contribution for Aultco's alleged faulty construction that caused the mold-the very issue and claim litigated and settled in the Two Rivers case. The General Partners had the opportunity to pursue their claims against Aultco in the Two Rivers case but inexplicably chose not to be included. The General Partners have not met their burden of establishing the absence of a full and fair opportunity to litigate. The fifth element of collateral estoppel therefore is satisfied.

¶20 The District Court did not err in concluding that all elements of res judicata and collateral estoppel were satisfied. As privies of Two Rivers Apartments, the General Partners could have joined the previous case and now are precluded from relitigating the claims and issues voluntarily dismissed with prejudice against Aultco following the settlement agreement.

¶21 The General Partners maintain that even if the District Court correctly applied the elements of res judicata and collateral estoppel, this Court should adopt an exception to those doctrines when the parties expressly or tacitly agree to split the claim pursuant to Restatement (Second) of Judgments, § 26. The General Partners argue that the absence of the word "partners" from the settlement agreement tacitly preserves the claims between the General Partners and Aultco by splitting the claims. The General Partners concede that they cannot speculate why Aultco omitted "partners" from the release it prepared but maintain that the omission constitutes a tacit agreement.

¶22 The doctrines of res judicata and collateral estoppel "deter plaintiffs from splitting a single cause of action into more than one lawsuit ... thereby conserving judicial resources and encouraging reliance on adjudication by preventing inconsistent judgments." Baltrusch , ¶ 15 (internal citations omitted). By its terms, the settlement agreement does not relieve Two Rivers Apartments or its privies from being bound by the choice of finality of the judgment and the settlement agreement. There is no language or other indication that the parties expressly or tacitly intended to split the claim or to preserve the General Partners' right to sue Aultco. Under the facts of this case, we decline to adopt Restatement (Second) of Judgments § 26 as an exception to res judicata and collateral estoppel.

CONCLUSION

¶23 The District Court did not err in dismissing the General Partners' Third-Party Complaint against Aultco on the grounds of res judicata and collateral estoppel. The General Partners are privies of Two Rivers Apartments and had a full and fair opportunity to litigate their claims in the Two Rivers case. Res judicata and collateral estoppel preclude the General Partners from bringing their Third-Party Complaint when Aultco's negligence has been litigated, settled, and dismissed with prejudice. We affirm.

We Concur:

MIKE McGRATH, C.J.

INGRID GUSTAFSON, J.

JAMES JEREMIAH SHEA, J.

JIM RICE, J.

      In a similar case, USA Institutional Two Rivers, LLC v. Aultco Construction, Inc. , No. DA 19-0047, the district court dismissed USA Institutional Two Rivers LLC's Third-Party Complaint against Aultco. This Court stayed the appeal in that case on motion of USA Institutional Two Rivers LLC.


author: By the Court, STIGLICH, J.:

text:
    PARDEE HOMES OF NEVADA, Appellant, v. James WOLFRAM, an Individual; Angela L. Limbocker-Wilkes, as Trustee of the Walter D. Wilkes and Angela L. Limbocker-Wilkes Living Trust, a Nevada Trust; and Walter D. Wilkes and Angela L. Limbocker-wilkes Living Trust, a Nevada Trust, Respondents.
    No. 72371
    Supreme Court of Nevada.
    FILED JULY 03, 2019
    McDonald Carano LLP and Pat Lundvall and Rory T. Kay, Las Vegas, for Appellant.
    The Jimmerson Law Firm, P.C., and James M. Jimmerson and James J. Jimmerson, Las Vegas, for Respondents.
    BEFORE HARDESTY, STIGLICH and SILVER, JJ.
   By the Court, STIGLICH, J.:

Nevada adheres to the American Rule of attorney fees-attorney fees may not be awarded unless there is a statute, rule, or contract providing for such an award. This court, however, has recognized a narrow and limited exception for attorney fees as special damages. We have outlined certain requirements for pleading and proving attorney fees as special damages, and we have recognized scenarios that may warrant such fees. We take this opportunity to clarify that attorney fees incurred by a plaintiff in bringing a two-party breach-of-contract claim against a defendant do not constitute special damages under the narrow and limited exceptions recognized by this court. Because the attorney fees at issue here do not fall into any of the narrow and limited exceptions that permit attorney fees as special damages, we reverse the portion of the district court's judgment awarding attorney fees as special damages. We affirm the portion of the district court's award of attorney fees that was based on the parties' contractual prevailing party provision and remand the matter because the prevailing parties may be entitled to additional attorney fees in light of this opinion.

BACKGROUND

In the 1990s, Coyote Springs Investment, LLC (CSI), began planning a development project called "Coyote Springs," to be located over thousands of acres of undeveloped land in Lincoln and Clark Counties of Nevada. Real estate brokers James Wolfram and Walter Wilkes introduced appellant Pardee Homes of Nevada (Pardee) to CSI to initiate Pardee's purchase of portions of Coyote Springs. Pardee and CSI subsequently entered into an agreement (Option Agreement) wherein Pardee agreed to purchase from CSI certain lands designated for the development of single-family residences. Pardee's purchase was to be paid in installments. Additionally, the agreement gave Pardee a 40-year option to purchase other designated property.

To compensate Wolfram and Wilkes for procuring Pardee's purchase of real property from CSI, Pardee agreed to pay the brokers specified commissions for purchases made pursuant to Pardee and CSI's Option Agreement (Commission Agreement). Additionally, Pardee agreed to keep the brokers reasonably apprised of all matters related to their commission payments and to provide the brokers with documentation corresponding to Pardee's purchases under the Option Agreement. Wolfram and Wilkes received commissions from March 2005 through March 2009 totaling $2,632,000.

Pardee and CSI amended the Option Agreement several times after its inception. Wolfram and Wilkes received the first two amendments to the Option Agreement as well as the Amended and Restated Option Agreement (AROA), but they did not receive any further amendments to the AROA before they filed the underlying lawsuit. When Wolfram and Wilkes requested information to verify the types of property Pardee was purchasing from CSI and to confirm that its commission payments were accurate, Pardee provided some information concerning its acquisition of property for single-family residences but not all of the requested information. Wolfram and Wilkes continued to ask Pardee for additional information regarding land acquisitions and designations, requested the same from the title companies processing the payments, and attempted to obtain it themselves by searching public records. Wolfram and Wilkes also retained an attorney to seek the requested information.

Because Wolfram and Wilkes were unable to obtain the sought-after information, they filed suit against Pardee. In the complaint, they alleged three causes of action pertaining to Pardee's obligations under the Commission Agreement: (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, and (3) an accounting. Subsequently the district court, despite Pardee's opposition, granted leave for Wolfram and Wilkes to file an amended complaint to plead attorney fees as special damages. Pardee raised a counterclaim of breach of the implied covenant of good faith and fair dealing against Wolfram and Wilkes.

After a bench trial, the district court found in favor of Wolfram and Wilkes on their causes of action and against Pardee on its counterclaim. Specifically, the district court held Pardee breached the Commission Agreement and the implied covenant of good faith and fair dealing by failing to keep Wolfram and Wilkes reasonably informed per the terms of the contract and by refusing to provide Wolfram and Wilkes with the requested documentation. The district court concluded there was a special relationship between Pardee and the brokers insofar as the respondents had to rely upon Pardee to keep them reasonably informed of any developments at Coyote Springs that could impact their commission payments.

The district court ordered an accounting, demanding that Pardee provide Wolfram and Wilkes-and their successors or assigns-all future amendments made to the AROA and to continue to keep the respondents reasonably informed under the Commission Agreement. Additionally, the district court awarded Wolfram and Wilkes attorney fees on two grounds: (1) $135,500 as special damages, concluding that Wolfram and Wilkes were forced to file suit against Pardee in order to get the information to which they were entitled pursuant to the Commission Agreement; and (2) $428,462.75 because Wolfram and Wilkes were the prevailing parties pursuant to the Commission Agreement.

DISCUSSION

Pardee claims the district court erred in two ways: (1) in awarding Wolfram and Wilkes attorney fees as special damages, and (2) in determining Wolfram and Wilkes were the prevailing parties entitled to attorney fees pursuant to the Commission Agreement.

Attorney fees as special damages

First, Pardee claims the district court erred in awarding attorney fees as special damages to Wolfram and Wilkes pursuant to Sandy Valley Associates v. Sky Ranch Estates Owners Association, 117 Nev. 948, 960, 35 P.3d 964, 971 (2001), receded from on other grounds by Horgan v. Felton, 123 Nev. 577, 170 P.3d 982 (2007), and Liu v . Christopher Homes , LLC, 130 Nev. 147, 321 P.3d 875 (2014). Pardee argues Wolfram and Wilkes are not entitled to special damages here because a two-party breach-of-contract action does not fit into one of the illustrations discussed in Sandy Valley. Wolfram and Wilkes counter Sandy Valley and its progeny do not stand for the proposition that only three limited exceptions exist to the American Rule of attorney fees; rather, according to Wolfram and Wilkes, those cases permit attorney fees as special damages where the fees are incurred as a "natural and proximate consequence" of another party's wrongful conduct. Sandy Valley , 117 Nev. at 957, 35 P.3d at 969.

"Generally, we review decisions awarding or denying attorney fees for a manifest abuse of discretion. But when the attorney fees matter implicates questions of law, the proper review is de novo." Thomas v. City of N. Las Vegas, 122 Nev. 82, 90, 127 P.3d 1057, 1063 (2006) (internal citations omitted). Because the issue of attorney fees as special damages involves a question of law, we review this issue de novo. Id.

Nevada adheres to the American Rule that attorney fees may only be awarded when authorized by statute, rule, or agreement. Id. This court has recognized exceptions to this general rule; one such exception is for attorney fees as special damages. See Sandy Valley, 117 Nev. at 960, 35 P.3d at 971 (emphasizing that attorney fees as special damages, as with any other element of damages, must be pleaded under NCRP 9(g) and then proven at trial by competent evidence).

In Sandy Valley, this court considered an award of attorney fees as special damages in an action involving title to real property where those fees were not requested until after trial. Id. at 958-60, 35 P.3d at 970-71. We concluded the district court erred in considering attorney fees as special damages because the issue was neither pleaded nor proven by competent evidence at trial. We stressed that future litigants could not obtain attorney fees as special damages without complying with NRCP 9(g). See id . at 959-60, 35 P.3d at 971. Sandy Valley 's comment that attorney fees as special damages are "foreseeable damages arising from tortious conduct or a breach of contract," and a "natural and proximate consequence of ... injurious conduct" did not expand the scope of the scenarios that warrant attorney fees as special damages. See id . at 956-57, 35 P.3d at 969. Sandy Valley 's holding embraced the general concept that attorney fees as special damages, as with any other item of damages, must be pleaded and proven by competent evidence. Therefore, to the extent Sandy Valley has been read to broadly allow attorney fees as special damages whenever the fees were a reasonably foreseeable consequence of injurious conduct, we disavow such a reading.

Based on Sandy Valley , Horgan , and Liu, the district court erroneously concluded Wolfram and Wilkes were entitled to attorney fees as special damages under Wolfram and Wilkes' two-party breach-of-contract action. Sandy Valley discussed three scenarios in which attorney fees as special damages may be appropriate. Id. at 957-58, 35 P.3d at 970. Sandy Valley , however, does not support an award of attorney fees as special damages where a plaintiff merely seeks to recover fees incurred for prosecuting a breach-of-contract action against a breaching defendant. Liu , 130 Nev. at 155 n.2, 321 P.3d at 880 n.2 (observing Sandy Valley did not permit a plaintiff to recover attorney fees as special damages in a suit for breach of contract). Under Wolfram and Wilkes' theory, any breach-of-contract suit would warrant attorney fees as special damages because it would be foreseeable that an aggrieved party would retain the services of an attorney to remedy a breach. This conflicts with our caselaw. Rather, we reiterate that attorney fees as special damages are an exception to the American rule that each party assumes their own attorney fees. Accordingly, we determine the district court erred in awarding Wolfram and Wilkes attorney fees as special damages.

Attorney fees pursuant to prevailing party provision

Next, Pardee contends the district court abused its discretion by finding Wolfram and Wilkes were the prevailing parties pursuant to the parties' Commission Agreement. Pardee acknowledges Wolfram and Wilkes prevailed on all three of their causes of action, as well as against Pardee's counterclaim. However, Pardee posits Wolfram and Wilkes unsuccessfully sought substantial unpaid commission payments, which the district court found were not due because Pardee had paid all commission payments owed, and thus, Pardee was the prevailing party.

Whether a contract authorizes attorney fees is a question of law reviewed de novo. See Lehrer McGovern Bovis, Inc . v. Bullock Insulation , Inc ., 124 Nev. 1102, 1115, 197 P.3d 1032, 1041 (2008). "Parties are free to provide for attorney fees by express contractual provisions." Davis v. Beling , 128 Nev. 301, 321, 278 P.3d 501, 515 (2012). "[T]he initial focus is on whether the language of the contract is clear and unambiguous; if it is, the contract will be enforced as written." Id.

The Commission Agreement unambiguously provides, "[i]n the event either party brings an action to enforce its rights under this Agreement, the prevailing party shall be awarded reasonable attorney fees and costs." Thus, the district court did not err in finding attorney fees were authorized under the parties' contract. See Lehrer , 124 Nev. at 1115, 197 P.3d at 1041. "A party prevails 'if it succeeds on any significant issue in litigation which achieves some of the benefit it sought in bringing suit.' " Las Vegas Metro. Police Dep't v. Blackjack Bonding, Inc., 131 Nev. 80, 90, 343 P.3d 608, 615 (2015) (emphasis in original).

Pardee's assertion the respondents filed the underlying suit because they claimed they were owed unpaid compensation-a claim the district court found was without merit-is not compelling. Wolfram and Wilkes prevailed on each cause of action they brought as well as on Pardee's counterclaim. Further, the complaint and the evidence presented at trial demonstrate Wolfram and Wilkes sought information through an accounting, which was eventually granted by the district court. It is inconsequential to the prevailing party determination that the brokers artfully framed their complaint in a limited way. The complaint requests information; the district court granted this request. It is beyond the scope of prevailing party determination to consider if Wolfram and Wilkes' underlying motivation was to discover they were owed unpaid commissions because that was not one of their claims. Accordingly, the district court did not abuse its discretion in concluding that Wolfram and Wilkes were the prevailing parties under the Commission Agreement as this holding is neither clearly erroneous nor unsupported by the evidence. See Davis , 128 Nev. at 314, 278 P.3d at 510.

In sum, we conclude the district court erred in awarding Wolfram and Wilkes attorney fees in the amount of $135,500 as special damages for Wolfram and Wilkes' two-party breach-of-contract action. We conclude, however, the district court did not abuse its discretion in awarding $428,462.75 in attorney fees to Wolfram and Wilkes as the prevailing parties on the contract action because Wolfram and Wilkes succeeded on all three causes of action brought against Pardee in addition to Pardee's counterclaim against them. Finally, because Wolfram and Wilkes may be entitled to additional attorney fees as prevailing parties in light of this court's reversal of the attorney fee special damages award, we remand to the district court to consider these fees under a prevailing party analysis. Accordingly, we affirm the portion of the district court's judgment awarding attorney fees to the prevailing parties, we reverse the portion of the judgment awarding attorney fees as damages, and we remand for further proceedings consistent with this opinion.

We concur:

Hardesty, J.

Silver, J.

      Walter Wilkes passed away in April 2014. Wilkes' rights under the contract at issue were assigned to respondent The Walter D. Wilkes and Angela L. Limbocker-Wilkes Living Trust, with respondent Angela L. Limbocker-Wilkes acting as trustee.

      Wolfram and Wilkes never received these amendments directly from Pardee; rather, they filed the underlying lawsuit against Pardee, subpoenaed the title company handling their commission payments, and obtained the amendments.

      First, "cases when a plaintiff becomes involved in a third-party legal dispute as a result of a breach of contract or tortious conduct by the defendant." Id. at 957, 35 P.3d at 970. Second, "cases in which a party incurred the fees in recovering real or personal property acquired through the wrongful conduct of the defendant or in clarifying or removing a cloud upon the title to property." Id ., partially abrogated by Horgan, 123 Nev. at 586, 170 P.3d at 988 (clarifying that "attorney fees [in actions to clear a clouded title] are now only available as special damages in slander of title actions"). Third, injunctive or declaratory relief actions compelled "by the opposing party's bad faith conduct." Id. at 958, 35 P.3d at 970. These narrow exceptions in which attorney fees as special damages may be warranted are well established in Nevada's jurisprudence. See, e.g., Michelsen v. Harvey , 110 Nev. 27, 29, 866 P.2d 1141, 1142 (1994) ("As an exception to the general rule, it is well-settled in Nevada that attorney's fees are considered an element of damages in slander of title actions."), receded from in Horgan, 123 Nev. 577, 170 P.3d 982 ; Lowden Inv. Co . v. Gen . Elec. Credit Co., 103 Nev. 374, 380, 741 P.2d 806, 809 (1987) (providing that "attorney's fees attributable to plaintiff's litigation with other parties may be recovered as damages when defendant's conduct caused the litigation"); Von Ehrensmann v. Lee , 98 Nev. 335, 337-38, 647 P.2d 377, 378-79 (1982) ("Where equitable relief is sought, an award of attorneys' fees is proper if awarded as an item of damages.").

      Alternatively, Wolfram and Wilkes contend they are entitled to attorney fees as special damages because the district court ordered injunctive relief as a result of Pardee's wrongful withholding of information that respondents were entitled to under their contract. See Sandy Valley , 117 Nev. at 958, 35 P.3d at 970. We reject this argument insofar as Wolfram and Wilkes did not address how the district court's order on their accounting at law claim amounted to injunctive or equitable relief. They did not challenge the district court's classification of their accounting claim as an accounting at law claim and did not discuss this classification with respect to equitable accounting.


text:
    SATICOY BAY LLC SERIES 9050 W WARM SPRINGS 2079, Appellant, v. NEVADA ASSOCIATION SERVICES ; James P. Markey; and Ditech Financial LLC, Respondents.
    No. 74153
    Supreme Court of Nevada.
    FILED JULY 03, 2019
    Law Offices of Michael F. Bohn, Ltd., and Michael F. Bohn, Henderson, for Appellant.
    Law Office of John W. Thomson and John W. Thomson, Henderson; Messner Reeves LLP and Brigette E. Foley, Las Vegas, for Respondent James P. Markey.
    Wolfe & Wyman LLP and Colt B. Dodrill, Las Vegas, for Respondent Ditech Financial LLC.
    Christopher V. Yergensen, Las Vegas, for Respondent Nevada Association Services.
    BEFORE HARDESTY, STIGLICH and SILVER, JJ.
   By the Court, STIGLICH, J.:

In SFR Investments Pool 1, LLC v . U.S. Bank, N.A. , 130 Nev. 742, 334 P.3d 408 (2014), this court held that NRS 116.3116(2) (2013) provided a homeowners' association (HOA) with a "superpriority" lien that, when properly foreclosed, extinguished a first deed of trust and vested title in the foreclosure sale purchaser "without equity or right of redemption," NRS 116.31166(3) (1993). In the wake of SFR Investments , Nevada's Legislature enacted substantial amendments to NRS Chapter 116's HOA foreclosure sale statutes, in part, by creating a statutory right for homeowners, holders of a recorded security interest, and successors in interest to redeem property within a 60-day time frame after such a sale. We are asked to consider for the first time the application of this amendment. Because we conclude that the homeowner in this matter complied with the redemption statute at issue, we affirm the district court's grant of summary judgment in favor of the homeowner.

FACTS AND PROCEDURAL HISTORY

Appellant Saticoy Bay LLC Series 9050 W Warm Springs 2079 purchased property owned by respondent James Markey for $48,600 at an HOA foreclosure sale in November 2015. After the foreclosure sale, Nevada Association Services (NAS), the entity that conducted the sale, distributed $4,564.23 of sale proceeds to pay off the HOA lien and satisfy costs associated with the sale. It then held the remaining proceeds of the sale in its trust account. Within 60 days of the foreclosure sale, Markey notified NAS that he intended to redeem the property pursuant to Nevada's newly enacted HOA foreclosure sale redemption statute, NRS 116.31166(3) (2015). NAS in turn notified Saticoy Bay of Markers intent to redeem, but neither NAS nor Markey provided Saticoy Bay with a certified copy of the deed on the property.

NAS provided Markey with the figures that encompassed the redemption amount. Pursuant to NRS 116.31166(3), the redemption amount is calculated as the sum of (1) the purchase price of the property at the foreclosure sale, (2) the HOA lien and costs, (3) reimbursement for reasonable maintenance costs, and (4) statutory interest accumulated from the date of the HOA foreclosure sale to the date of redemption. NAS informed Markey that it would direct the remaining proceeds of the sale it held in trust toward the full redemption amount and instructed Markey to supply the remainder. Further, NAS informed Markey that as soon as he sent the remainder of the redemption amount, NAS would return to Saticoy Bay the proceeds of the sale held in trust along with the remainder of the redemption amount from Markey (together, the full redemption amount).

Markey sent the remainder of the redemption amount to NAS, and NAS sent a check to Saticoy Bay for the full redemption amount. Saticoy Bay, however, refused the check because it believed that the money had to come directly from Markey, not NAS, and because Markey could not use proceeds from the sale to redeem the property. NAS sent another check, this time in Markey's name, to Saticoy Bay on the last day of the redemption period, but Saticoy Bay again rejected it. Respondent Ditech Financial LLC-the bank servicing the mortgage on Markey's property-also expressed interest in redeeming the property prior to Markey's notice. However, when Ditech learned of Markey's intent to redeem, it abandoned those efforts. Ditech later memorialized that position when it notified NAS that to the extent Ditech had any interest in the proceeds of the sale NAS held in its trust account, Ditech authorized Markey to use those funds to redeem the property. When Saticoy Bay sought a foreclosure deed for the property, NAS refused, arguing that Markey's redemption was successful and that the foreclosure sale was terminated.

Saticoy Bay filed a complaint in the district court seeking quiet title to the property, declaratory relief, and specific performance. Ditech moved for summary judgment, which Markey joined, arguing that the plain language of NRS 116.31166(3) and (4) did not prevent unit owners from using the proceeds of an HOA foreclosure sale to exercise their redemption rights, and that it was "immaterial" that Markey did not provide a certified copy of his deed when he sought redemption. Saticoy Bay opposed and countermoved for summary judgment, arguing that Markey failed to comply with NRS 116.31166(3) because the checks came from NAS and not Markey I directly, that NAS and Markey failed to comply with NRS 116.31164(7)(b), and that NRS 116.31166(4) mandated strict compliance. The district court concluded that NAS's "tender to Saticoy Bay of the full redemption amount of $50,052.16 via cashier's check on behalf of Markey immediately extinguished Saticoy Bay's interest in the property." It also found that "the amount, time, and manner of the tender was sufficient" to satisfy the redemption statute. Consequently, the district court granted summary judgment to Ditech and Markey, terminated the foreclosure sale, and quieted title in favor of Markey subject to Ditech's first deed of trust.

Saticoy Bay appeals from the order granting summary judgment and raises two primary arguments: (1) Markey did not comply with the HOA foreclosure sale redemption statute when he directed NAS to put the proceeds of the foreclosure sale toward redemption of the property, and (2) Markey did not comply with the notice provision of the redemption statute when he failed to produce a certified copy of the deed with his notice to redeem. Saticoy Bay argues that this failure to comply with the statutory requirements renders the redemption invalid, and therefore, the district court erred in granting summary judgment to Ditech and Markey.

DISCUSSION

Generally, "[t]his court reviews a district court's grant of summary judgment de novo, without deference to the findings of the lower court." Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029 (2005). Pursuant to NRCP 56(c), summary judgment is proper when no genuine issue of material fact remains and the movant "is entitled to a judgment as a matter of law." Id. (internal quotation omitted). And this court views the evidence in a light most favorable to the nonmoving party. Id. Further, issues of statutory construction are reviewed de novo. Leven v. Frey , 123 Nev. 399, 402, 168 P.3d 712, 714 (2007). "Similarly, whether a statute's procedural requirements must be complied with strictly or only substantially is a question of law subject to [this court's] plenary review." Id.

Markey complied with the HOA foreclosure redemption provision

In 2015, NRS Chapter 116 was amended to include NRS 116.31166(3) in order to afford property owners, holders of a recorded security interest, and successors in interest a right to redeem the properties after delinquent HOA payments result in an HOA foreclosure sale. Legislative Counsel Bureau Research Division, Policy and Program Report: Housing 3-4 (Apr. 2016). In relevant part, the statute provides that a unit owner, holder of a recorded security interest in the unit, or successor in interest of those persons may redeem the property within 60 days after the HOA foreclosure sale "by paying: (a) [t]he purchaser the amount of his or her purchase price, with interest at the rate of 1 percent per month thereon in addition, to the time of the redemption, plus" additional fees, taxes, assessments, and liens that vary depending on the circumstances. NRS 116.31166(3).

Saticoy Bay argues that Markey did not comply with NRS 116.31166(3) because he was not permitted to use the funds held in trust by NAS-funds provided by Saticoy Bay to NAS for the foreclosure sale price-to "pay ... [t]he purchaser the amount of his or her purchase price" to redeem the property. NRS 116.31166(3). In furtherance of this argument, Saticoy Bay looks to NRS 116.31164(7), which states:

7. After the sale , the person conducting the sale shall:
(a) Comply with the provisions of subsection 2 of NRS 116.31166 ; and
(b) Apply the proceeds of the sale for the following purposes in the following order :
(1) The reasonable expenses of sale;
(2) The reasonable expenses of securing possession before sale, holding, maintaining, and preparing the unit for sale, including payment of taxes and other governmental charges, premiums on hazard and liability insurance, and, to the extent provided for by the declaration, reasonable attorney's fees and other legal expenses incurred by the association;
(3) Satisfaction of the association's lien;
(4) Satisfaction in the order of priority of any subordinate claim of record; and
(5) Remittance of any excess to the unit's owner .

NRS 116.31164(7) (emphases added). Saticoy Bay argues that after the foreclosure sale, NAS was obligated to distribute the proceeds of the sale immediately according to the distribution order in NRS 116.31164(7). Given the distribution order and that a deed of trust encumbered the property, Saticoy Bay argues the proceeds should have been distributed immediately to Ditech, the servicer for the deed of trust beneficiary. See NRS 116.31164(7)(b)(4)-(5). Because, on behalf of Markey, NAS directed the remaining proceeds of the sale back to Saticoy Bay to satisfy the redemption and not toward the order of distribution, Saticoy Bay claims NAS and Markey improperly bypassed NRS 116.31164(7)(b)-(4).

Reviewing Saticoy Bay's argument de novo as it presents issues of statutory interpretation, Zohar v . Zbiegien, 130 Nev. 733, 737, 334 P.3d 402, 405 (2014), we first look to the statute's plain language to decipher legislative intent. See Robert E. v. Justice Court , 99 Nev. 443, 445, 664 P.2d 957, 959 (1983). If the statute's language is clear and unambiguous, we do not look beyond it. Id.

As an initial matter, NRS 116.31164(7) contains more than an order of distribution provision. Indeed, subsection (7)(a) directs the person conducting the sale, here NAS, to also comply with NRS 116.31166(2) "[a]fter the sale." NRS 116.31164(7)(a). NRS 116.31166(2) in turn directs NAS to provide the purchaser, here Saticoy Bay, with a certificate of sale and, among other things, "[a] statement that the unit is subject to redemption." NRS 116.31166(2)(a)(4). Receipt of such certificate of sale in exchange for the purchase price provides purchasers with a recorded interest in the property until the redemption period expires. See NRS 116.31166(2)(b) ; NRS 116.31166(7). "After the sale," the person conducting the sale must also comply with NRS 116.31164(7)(b) and distribute the proceeds of the sale in a particular order. This distribution begins with the "reasonable expenses of [the] sale," expenses associated with preparing the unit for sale, and satisfaction of the HOA's lien, and concludes with satisfying claims of record on the unit and remitting any excess to the prior unit owner. See NRS 116.31164(7)(b).

We conclude that NAS complied with the plain language of these provisions, whether or not it explicitly invoked the statute. After Saticoy Bay tendered the $48,600 purchase price at the HOA foreclosure sale, NAS distributed $4,564.23 pursuant to NRS 116.31164(7)(b)(1)-(3) to pay off the HOA lien and costs associated with the sale. It was for this reason that NAS only held $44,035.77 in trust-it had not yet distributed the remainder of the proceeds of the sale pursuant to NRS 116.31164(7)(b)(4)-(5).

This court agrees with Saticoy Bay that the statute required NAS to distribute the proceeds of the sale to Ditech immediately following the sale, however, Ditech's receipt or non-receipt of the proceeds is not for Saticoy Bay to dispute. Critically, the relevant provisions are silent in terms of granting an HOA foreclosure sale purchaser authority to direct how the proceeds are distributed. And Saticoy Bay has not identified any language in the statute that gives it such authority. Rather, the statute explicitly places responsibility on the person conducting the sale (here, NAS) to distribute the proceeds of the sale pursuant to NRS 116.31164(7)(b). Absent any such authorization to the purchaser, common sense dictates that Saticoy Bay does not have such authority. In this, Saticoy Bay errs by continuing to characterize the purchase price funds as "its" money. Indeed, once Saticoy Bay received the certificate of sale, it received all it was entitled to at that time under the redemption statute-an interest in the property. Therefore, whether the proceeds of the sale must be distributed toward a subordinate claim of record pursuant to subsection 4, such as that of Ditech here, or to Markey as remittance of any excess proceeds pursuant to subsection 5, is not for Saticoy Bay to assert because those funds no longer belong to Saticoy Bay. See Beazer Homes Holding Corp . v. Eighth Judicial Dist. Court , 128 Nev. 723, 731, 291 P.3d 128, 133 (2012) ("[A] party generally has standing to assert only its own rights and cannot raise the claims of a third party not before the court."); see also Chapman v. Deutsche Bank Nat'l Tr . Co. , 129 Nev. 314, 318, 302 P.3d 1103, 1106 (2013) ("[E]ach party must plead and prove his or her own claim to the property in question." (internal quotation omitted)). Rather, that argument is for Ditech to make.

Here, however, the record demonstrates that Ditech authorized NAS to use any sale proceeds Ditech may have had a superior interest in under NRS 116.31164(7)(b)(4) for the benefit of Markey to redeem. Simply put, Ditech waived the very argument Saticoy Bay attempts to assert, and under the unique circumstances of this case, Markey was entitled to use the excess proceeds of the sale to redeem the property. Specifically, after receiving the fees from Markey, NAS tendered a check for a total of $50,052.16 to Saticoy Bay before the redemption period expired. That sum included the return of the $48,600 purchase price (less the $4,564.23 HOA lien and costs associated with the sale), as well as $6,016.39 tendered by | Markey for the above-mentioned lien and costs and expenses. Therefore, Saticoy Bay received what NRS 116.31166(3) requires if the homeowner chooses to redeem.

In sum, we conclude that in light of Ditech having allowed Markey to use sale proceeds to which Ditech was otherwise entitled, Markey complied with the redemption provision when he tendered the statutorily mandated fees and costs described above and Saticoy Bay received all to which it was entitled pursuant to the redemption statute.

Markey substantially complied with the HOA foreclosure sale notice of redemption provision

The redemption statute also includes a notice requirement. Under NRS 116.31166(4), a unit owner is obligated to provide notice of redemption to the person who conducted the HOA foreclosure sale-here, NAS-as well as the person who purchased the property at the sale-here, Saticoy Bay. NRS 116.31166(4). Where, as here, the unit owner is redeeming the unit, the notice of redemption "must" be accompanied by "a certified copy of the deed to the unit...." NRS 116.31166(4)(a). Markey did not provide a certified copy of his deed in conjunction with his redemption notice.

Saticoy Bay argues that because the redemption statute's notice provision includes the word "must," strict compliance with the statute is required and Markey failed to comply when he did not provide a certified copy of the deed, which rendered the redemption invalid. See NRS 116.31166(4). It also argues that NRS 116.31166(4) mandates strict compliance in order to give "each sentence, phrase, and word" of the subsection independent meaning. Bd. of Cty. Comm'rs of Clark Cty. v. CMC of Nev., Inc., 99 Nev. 739, 744, 670 P.2d 102, 105 (1983). Further, Saticoy Bay argues that because this court previously held that a statute requiring the provision of a certified copy of a deed of trust warrants strict compliance in the foreclosure mediation context, the same should be required in the HOA foreclosure redemption context.

"To determine whether a statute and rule require strict compliance or substantial compliance, this court looks at the language used and policy and equity considerations." Leyva v. Nat'l Default Servicing Corp ., 127 Nev. 470, 475-76, 255 P.3d 1275, 1278 (2011). "In so doing, [this court] examine[s] whether the purpose of the statute or rule can be adequately served in a manner other than by technical compliance with the statutory or rule language." Id. at 476, 255 P.3d at 1278. This court has recognized as a "general tenet that Time and manner' requirements are strictly construed, whereas substantial compliance may be sufficient for 'form and content' requirements." Leven , 123 Nev. at 408, 168 P.3d at 718. Moreover, "[s]ubstantial compliance may be sufficient to avoid harsh, unfair[,] or absurd consequences." Leyva , 127 Nev. at 475, 255 P.3d at 1278 (internal quotation omitted). Substantial compliance requires that a party (1) have actual knowledge, and (2) not suffer prejudice. Hardy Cos., Inc. v. SNMARK, LLC , 126 Nev. 528, 536, 245 P.3d 1149, 1155 (2010). In the context of NRS 116.31166(4), actual knowledge entails knowledge of the unit owner's intent to redeem and knowledge of the unit owner's authority to redeem.

To be sure, in the foreclosure mediation context, we have held that the statutory requirement to produce a certified copy of a deed of trust mandates strict compliance (analyzing the requirements of NRS 107.086(5)-(6) ); Leyva, 127 Nev. at 476, 255 P.3d at 1279 ; Pasillas v. HSBC Bank USA, 127 Nev. 462, 465-67, 255 P.3d 1281, 1284-85 (2011). The Leyva court reasoned that strict compliance was required because NRS 107.086(5) states that the beneficiary of the deed of trust (i.e., lender) "shall" bring the deed of trust to the mediation. Leyva , 127 Nev. at 476, 255 P.3d at 1279 ; see also FMR 13.7(a). Also, that "[t]he legislative intent behind requiring a party to produce the assignments of the deed of trust ... is to ensure that whoever is foreclosing actually owns the note." Leyva, 127 Nev. at 476, 255 P.3d at 1279 (internal quotations omitted). Indeed, in Leyva, the bank attempting to participate in the mediation was not the original named beneficiary on the deed of trust and did not provide a written assignment but was nonetheless attempting to foreclose on the property. Id. Evidence of the identity of the deed of trust beneficiary was therefore crucial to ensuring that the bank was authorized to foreclose on the property, so much so that in the foreclosure mediation context, a foreclosing party's failure to strictly comply with the statute and ''bring the required documents to the mediation is a sanctionable offense under NRS 107.086 and the [Foreclosure Mediation Rules]." Id. at 480, 255 P.3d at 1281 (emphasis added).

Conversely, no equivalent ramification is evident in NRS Chapter 116 when a certified copy of a deed is not provided during redemption. Rather, the remedies suggest strict compliance is not necessary in that "[t]he remedies provided by [NRS Chapter 116] must be liberally administered to the end that the aggrieved party is put in as good a position as if the other party had fully performed." NRS 116.1114. In this sense, NRS 107.086 and the applicable Foreclosure Mediation Rules are construed against the lenders (i.e., beneficiaries of the deed of trust) attempting to foreclose on a home, see Leyva , 127 Nev. at 476, 255 P.3d at 1279 (concluding that " NRS 107.086 and the FMRs necessitate strict compliance" to adequately serve the purpose of the statute and rules), while NRS Chapter 116's redemption statute is construed in favor of the unit owner attempting to redeem his or her property. See Hearing on S.B. 306 Before the Senate Judiciary Comm., 78th Leg. (Nev., Apr. 7, 2015) (statement of Senator Aaron D. Ford); see also Hearing on S.B. 306 Before the Assembly Judiciary Comm., 78th Leg. (Nev., Apr. 28, 2015) (statement of Jonathan Gedde, Chairman, Board of Governors, Nevada Mortgage Lenders Association) ("Nevada homeowners benefit by the changes made in this bill as well. Taking away someone's property that is worth hundreds of thousands of dollars is not a matter that should be taken lightly and there are quite a few consumer protections in this bill."). Further, if a unit owner substantially complies with the redemption statute's notice provision, the purchaser is "put in as good a position as if the other party had fully performed," NRS 116.1114, because a successful redemption results in the purchaser receiving repayment of the purchase price, reimbursement for other costs and assessments, and also payment of monthly interest on the purchase price. NRS 116.31166(3). We conclude that substantial compliance with NRS Chapter 116's redemption statute's notice requirement is sufficient because "the purpose of [ NRS 116.31166(4) ] can be adequately served in a manner other than by technical compliance with the statutory or rule language." Leyva , 127 Nev. at 476, 255 P.3d at 1278.

Turning to the case before us, Saticoy Bay had actual knowledge of Markey's intent to redeem the property when NAS emailed Saticoy Bay of Markey's intent. Further, Saticoy Bay does not argue on appeal that Markey is not the unit owner of the property; rather Saticoy Bay merely argues that Markey did not strictly comply with NRS 116.31166(4) by providing a certified copy of the deed. Saticoy Bay also has not demonstrated that it was prejudiced by Markey's failure to provide a certified copy of the deed. First, the only time Saticoy Bay communicated any objection to Markey's notice of redemption and the lack of a certified copy of the deed was the day after the 60-day redemption period expired, despite the fact that Saticoy Bay had been communicating with NAS about Markey's intent to redeem for almost a month. Second, Saticoy Bay failed to articulate how the lack of a certified copy of the deed caused it harm, except that it was unable to frustrate Markey's redemption on the ground that he did not strictly comply with the statute. This objection too is unavailing, as successful redemption by Markey resulted in Saticoy Bay receiving all of the benefits of redemption pursuant to NRS 116.31166, namely the payment of its purchase price and interest at the rate of one percent per month. Accordingly, we conclude that Markey substantially complied with NRS 116.31166(4) and that his substantial compliance was sufficient to satisfy the statute's requirements. Hardy Cos. , 126 Nev. at 536, 245 P.3d at 1155.

Based on the above, we find no error in the district court's ruling below, and we affirm the district court's summary judgment.

We concur:

Hardesty, J.

Silver, J.

      All ensuing references to the statutes in NRS Chapter 116 are to the 2015 versions of those statutes.

      Meaning, "[t]he amount of any assessment, taxes or payments toward liens which were created before the purchase and which the purchaser may have paid thereon after the purchase, and interest on such amount." NRS 116.31166(3)(a)(1).

      Pursuant to the redemption statute, Saticoy Bay was entitled to receive a certificate of sale after the sale took place, but it was not entitled to receive the foreclosure deed until the redemption period expired without the property being redeemed. Compare NRS 116.31166(2), with NRS 116.31166(7).

      The redemption statute is effective only as to foreclosure sales that occurred after October 1, 2015. See 2015 Nev. Stat., ch. 266, §§ 6, 9, at 1342, 1349. The HOA foreclosure sale here occurred on November 20, 2015.

      Saticoy Bay does not argue on appeal that a certificate of sale was not delivered pursuant to NRS 116.31166(2), and the record contains a certificate of foreclosure sale subject to redemption that was recorded on November 23, 2015.

      Similarly, Saticoy Bay lacks standing to assert its alternative argument that NAS was required to release the proceeds of the sale to Markey after the sale regardless of NRS 116.31164(7)(b) 's distribution order and only then would Markey be free to submit the redemption payment personally to Saticoy Bay using the funds. See Beazer Homes Holding Corp ., 128 Nev. at 731, 291 P.3d at 133. In any event, Saticoy Bay rejected a check coming "from" Markey when NAS sent the second check in his name. Forderer v. Schmidt , 154 F. 475, 477 (9th Cir. 1907) (explaining that tender I made by a third party at a debtor's request is sufficient tender).

      Saticoy Bay argues that Ditech was not the servicer of the loan at the time of the redemption period because the assignment of the deed of trust from Quicken Loans (the original owner of the loan) to Ditech was not recorded until April 2016. It argues that because Ditech was not the servicer when Ditech authorized Markey to use any funds, Ditech did not have the authority to make such authorization. However, Saticoy Bay waived the right to argue this issue because Saticoy Bay failed to raise it below. See Old Aztec Mine , Inc. v. Brown , 97 Nev. 49, 52, 623 P.2d 981, 983 (1981) ("A point not urged in the trial court, unless it goes to the jurisdiction of that court, is deemed to have been waived and will not be considered on appeal.").

      Saticoy Bay does not reasonably challenge that the checks were sent or received. Rather, Saticoy Bay merely argues that the checks are not included in the record on appeal. However, the record does contain emails from Saticoy Bay's counsel to NAS's counsel dated January 15, 2016, where Saticoy Bay references the January 15 check that was delivered by NAS. Further, in a January 20 email from NAS's counsel to Saticoy Bay's counsel, NAS's counsel explained that the January 19 check had been returned by Saticoy Bay's office that evening.

      We further conclude that NAS was permitted to tender the redemption amount on Markey's behalf. It is well-settled that tender "need not be made by [a debtor] personally. If made by a third person at his request it is sufficient....." Forderer v. Schmidt , 154 F. 475, 477 (9th Cir. 1907) (quoting 2 Parsons on Contract 639 (9th ed.)); see also NRS 116.1108 (stating that supplemental general principles of law are applicable to NRS Chapter 116); Restatement (Third) of Prop.: Mortgages § 6.4(a), (e) & cmt. a (Am. Law Inst. 1997) (explaining that the full payment of a mortgage by a nonassuming grantee nevertheless extinguishes the mortgage).

      Saticoy Bay also argues that if Markey and Ditech claim that excess proceeds of the sale could be used to redeem the property, they would therefore be estopped from attacking the validity of the sale. However, we need not reach this issue, as Markey's redemption does not attack the validity of the sale.