Court rules FDIC can seek repayment of loan to developer Rhodes

CARSON CITY — The Nevada Supreme Court on Thursday revived an effort by the FDIC to recover more than $2 million that Las Vegas developer James Rhodes borrowed from a now-closed bank.

The 4-3 decision reversed a lower court finding that the Federal Deposit Insurance Corporation failed to seek repayment of the funds in the time allowed under state law.

The FDIC had taken over the closing out of the assets of the Community Bank of Nevada after it was closed by the Nevada Financial Institutions Division in 2009.

The bank in 2005 had loaned $2.6 million to Tropicana Durango Ltd., where Rhodes was a general partner. Rhodes had guaranteed repayment of the debt.

The land backing the loan was foreclosed on by the FDIC in 2011 and the agency bought it at auction for $750,000. The agency then sought repayment of the outstanding amount owed to the bank.

Rhodes argued the FDIC action was time barred, and a lower court agreed.

But the majority Supreme Court opinion, written by Justice Nancy Saitta and concurred in by Justices James Hardesty, Kristina Pickering and Michael Douglas, found that a federal statute extending a state time limitation cited by Rhodes in support of his position pre-empts the state statute.

The case was ordered back to Clark County District Court for further proceedings.

In the dissent written by Chief Justice Mark Gibbons with Justices Ron Parraguirre and Michael Cherry in support, he said the lower court’s decision should be affirmed because the FDIC failed to raise the pre-emption argument in the District Court proceedings.

Gibbons also argued that the federal statute did not pre-empt the state statute with the shorter time frame.

Contact Capital Bureau reporter Sean Whaley at swhaley@reviewjournal.com or 775-687-3900. Find him on Twitter: @seanw801.