Month: September 2015

Can a lender seek a deficiency judgment when the property foreclosed upon is in another state?

Posted on by Jeff Jaeger

Mardian v. Greenberg Family Trust (Nev. Supreme Ct. – Sep. 24, 2015)

The issue is whether NRS 40.455(1) permits deficiency judgments in Nevada when the property foreclosed upon was in another state.

In September 2007, Joshua Tree, LLC, executed a promissory note in the amount of $1,100,000 in favor of the Greenberg Family Trust (Greenberg). The note was secured by a deed of trust encumbering 280 acres of undeveloped real property located in Arizona, and also by personal guaranties, each for the full amount of the note, from the Mardians. Both guaranties stated that they were governed by Nevada law and waived the one-action rule found in NRS 40.430.

The parties agree that Joshua Tree defaulted on the loan and the guaranties were not upheld. In March 2009, Greenberg filed a complaint against the Mardians for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. Greenberg then initiated foreclosure proceedings. A month later, Greenberg purchased the property at auction for $37,617. The property was then relisted for sale at $2,520,000. The price was subsequently reduced and, at the time this appeal was filed, the property had not yet sold.

In December 2009, the Mardians moved the district court to dismiss the underlying complaint for the entire amount due under the promissory note or, alternatively, for summary judgment because a deficiency application for the balance due on the loan was time-barred. Greenberg opposed the motion. At a hearing, the district court determined that it would not apply the limitations period in NRS 40.455 because the property was located in Arizona and sold pursuant to Arizona law, not Nevada law. Therefore, the district court indicated, neither Arizona’s nor Nevada’s limitations period applied. The court later entered an order denying the Mardians’ motion.

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Does a party’s failure to sign an arbitration agreement make it unenforceable?

Posted on by Jeff Jaeger

Mike v. Eighth Jud. Dist. Ct. (Nev. Supreme Ct. – Sep. 24, 2015)

Petitioners Mika, Harter, and Tallman sought writs of mandamus directing the district court to vacate its orders compelling arbitration of their claims against their former employer, CPS Security (USA), Inc., and certain of its agents and associates (collectively, CPS). All three petitioners signed the same long- form arbitration agreement, which included a clause waiving the right to initiate or participate in class actions. They urged the Supreme Court of Nevada to invalidate the agreement because, among other issues, it was not countersigned by CPS.

The issue is whether CPS’s failure to sign the long-form agreement made it unenforceable and that the short-form agreement, which CPS did sign and which did not include a class action waiver clause, therefore controlled.

CPS provided security services to construction companies in Nevada and elsewhere. Petitioners worked 50 to 70 hours per week for CPS as trailer guards. As a condition of their employment, CPS required petitioners to sleep overnight in small trailers located at its work sites. CPS did not pay petitioners for their sleep time except when they were called out to respond to an alarm or other activity at the site. Petitioners alleged, and CPS denied, that they are owed at least the minimum wage for the required on-site sleep time, whether called out during the night or not, as well as overtime pay.

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When does a subordination agreement affect the priority of a mechanic’s lien?

Posted on by Jeff Jaeger

In re Manhattan W. Mechanic’s Lien Litig. (Nev. Supreme Ct. – Sep. 24, 2015)

The issue is whether a subordination agreement that subordinates a lien for original land financing to a new construction deed of trust affects the priority of a mechanic’s lien for work performed after the date of the original loan but before the date of the construction deed of trust.

Gemstone Apache, LLC (Apache), intended to develop a mixed-use property (Manhattan West) in Las Vegas. Real party in interest Scott Financial Corporation (SFC) made multiple loans to Apache for this purpose. The first three loans, which were recorded in July 2006, totaled $38 million (the Mezzanine Deeds of Trust) and financed the purchase of the property. In April 2007, petitioner APCO Construction (APC0),1the contractor hired by Apache, began construction on Manhattan West, setting the priority date for mechanic’s lien services. In May and October of 2007, the Mezzanine Deeds of Trust were amended to secure additional funds for the project.

In early 2008, Gemstone Development West, LLC (GDW), purchased Manhattan West from Apache, assuming Apache’s loan obligations. To obtain financing for construction, GDW borrowed an additional $110,000,000 from SFC (the Construction Deed of Trust), recording the deed of trust on February 7, 2008. As part of the overall transaction, SFC and GDW entered into a subordination agreement subordinating the Mezzanine Deeds of Trust to the Construction Deed of Trust. SFC indicated that its intent for the subordination agreement was for SFC to determine in what order SFC’s debts would be satisfied. The subordination agreement did not state whether the subordination was complete or partial, nor did it address the priority of any potential mechanics’ liens.

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When does a mutual mistake at the time a contract is made provide a ground for rescission?

Posted on by Jeff Jaeger

Land Baron Invs. v. Bonnie Springs Family LP (Nev. Supreme Ct. – Sep. 17, 2015)

This case arises from a failed land sale contract. The issue is whether a mutual mistake will provide a ground for rescission where one of the parties bears the risk of mistake.

In 2004, Land Baron Investments, Inc., contracted to purchase land for $17,190,000 from Bonnie Springs Family Limited Partnership and Bonnie Springs Management Company (collectively, Bonnie Springs) for the express purpose of building a subdivision. The property lies next to the Bonnie Springs Ranch, beyond the outskirts of Las Vegas and is surrounded largely by undeveloped land.

Prior to signing the purchase agreement, Land Baron verified that Bonnie Springs had title to the property but did not inquire into water or access rights or do any other due diligence. Land Baron drafted the purchase agreement, which stated that Bonnie Springs would allow Land Baron to use some of its treated wastewater for landscaping, but did not mention access or water rights or make the contract contingent upon its ability to secure access, water, or any other utility necessary for the planned subdivision. Immediately after signing the agreement and while the sale was pending, Land Baron also began listing and relisting the property for sale, first as a single piece of property and then as separate parcels. However, obtaining access and water proved to be difficult, and beginning in December 2004, the parties amended the purchase agreement five times to extend the escrow period, with Land Baron paying a nonrefundable fee of $50,000 for each extension.

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Can a plaintiff appeal a court order that dismisses a complaint?

Posted on by Jeff Jaeger

Bergenfield v. BAC Home Loans Servicing (Nev. Supreme Ct. – Sep. 10, 2015)

The issue is whether a plaintiff can appeal from a district court order that dismisses a complaint but allows the plaintiff leave to amend.

The Bergenfields filed a complaint against BAC Home Loans Servicing, LP, asserting fraud and consumer fraud. BAC moved to dismiss the complaint. The district court granted BAC’s motion to dismiss but allowed the Bergenfields leave to file an amended complaint. The Bergenfields then filed a first amended complaint, once again asserting fraud and consumer fraud. Again, the district court dismissed it, allowing the Bergenfields leave to amend. However, instead of filing a second amended complaint, the Bergenfields appealed. The Nevada Supreme Court issued an order to show cause why the appeal should not be dismissed for lack of jurisdiction.

The Court noted that in the United States Court of Appeals for the Ninth Circuit, an order dismissing a complaint with leave to amend is not final and, thus, not appealable. A plaintiff, who has been given leave to amend, may not file a notice of appeal simply because he does not choose to file an amended complaint. A plaintiff must obtain a further district court determination. A plaintiff obtains such a determination by filing in writing a notice of intent not to file an amended complaint. Filing of such notice gives the district court an opportunity to reconsider, if appropriate, but more importantly, to enter an order dismissing the action, one that is clearly appealable.

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Can a court be prohibited from staying an administrative board’s decision?

Posted on by Jeff Jaeger

Tate v. State, Bd. of Med. Exam’rs (Nev. Supreme Ct. – Sep. 10, 2015)

NRS 630.356(1) grants physicians the right to judicial review of Nevada State Board of Medical Examiners final decisions, while NRS 630.356(2) simultaneously prohibits district courts from entering a stay of the Board’s decision pending judicial review. The issue is whether this prohibition violates the Nevada Constitution’s separation of powers doctrine.

Tate is a surgeon licensed in Nevada. In February 2010, he was scheduled to perform a surgery at Valley Hospital at around 4 p.m. When he arrived to prepare for the surgery, members of the surgical team thought Dr. Tate smelled of alcohol. The hospital halted surgery preparations and asked Dr. Tate to submit to alcohol tests, which he did, admitting that he had consumed some alcohol during his lunch break. Dr. Tate’s blood alcohol level was .06 percent.

The Nevada State Board of Medical Examiners found that Dr. Tate had violated NAC 630.230(1)(c) by rendering services to a patient while under the influence of alcohol and in an impaired condition. The Board suspended Dr. Tate’s license for six months, issued a public reprimand, ordered him to complete an alcohol diversion program and pay $35,564.44 in investigation and prosecution costs and a $5,000 fine, and to complete continuing medical education on the subject of alcohol.

Dr. Tate petitioned for judicial review of the Board’s decision. He also requested a preliminary injunction to stay the sanctions and prevent the Board from filing a report with the National Practitioner Data Bank while judicial review was pending. Medical Boards are required by 45 C.F.R. §§ 60.5(d) and 60.8(a) to report sanctions to the National Practitioner Data Bank, which disseminates information of physician misconduct to health-care entities, including hospitals. In denying injunctive relief, the district court stated that, even though it thought the injunction was clearly warranted, NRS 630.356(2) precluded such action. Dr. Tate appealed the district court’s denial of his injunction request.

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When can a court terminate parental rights?

Posted on by Jeff Jaeger

In re Parental Rights as to A.P.M. (Nev. Supreme Ct. – Sep. 10, 2015)

The issues are (1) whether the district court may terminate the parental rights of a parent who has completed a case plan for reunification and (2) whether the district court must wait the entire 20 months before applying both the presumption of token efforts in NRS 128.109(1)(a) and the presumption that termination of parental rights is in the best interest of the child in NRS 128.109(2).

Arli and his wife Abigail had three children together: J.M., A.P.M., and E.M.M. From July 2006 to November 2011, seven separate incidents occurred in which one of the three children swallowed foreign objects, such as coins, magnets, and batteries. All of these swallowing incidents happened while Arli was at work and Abigail was at home with the children. On the latest occasion, doctors had to surgically remove a large battery that was lodged in E.M.M.’s throat. Following E.M.M.’s surgery, the doctors grew concerned that Abigail was forcing her children to swallow foreign objects. The doctors explained that three-year-old E.M.M. swallowing the large battery was the equivalent of an adult swallowing a golf ball, making it highly unlikely that he swallowed it on his own. Due to their concerns, the doctors initiated a child protective services investigation.

In November 2011, the Clark County Department of Family Services (DFS) removed A.P.M. and E.M.M. from their parents’ home pursuant to NRS Chapter 432B. In July 2012, the juvenile court entered an order granting DFS legal custody of the children, and the children were placed in foster care. Arli and Abigail were issued case plans containing objectives for them to complete in order to regain custody of their children. Arli’s case plan required that he take parenting classes and participate in counseling. Almost immediately, Arli successfully completed the parenting classes and was participating in the required counseling. Despite these efforts, however, the juvenile court reviewed Arli’s and Abigail’s progress and determined that the children should remain in foster care.

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What acts constitute an entry into a building for purposes of a burglary statute?

Posted on by Jeff Jaeger

Merlino v. State (Nev. Ct. App. – Sep. 10, 2015)

Under Nevada law, a person commits the crime of burglary when he or she enters a building with the intent to commit a predicate crime inside the building. The issue is whether NRS 193.0145, NRS 205.060(1), and NRS 205.060(5), which define the acts that can constitute an entry into a building for purposes of the burglary statute, encompass selling stolen property through the retractable sliding tray of a pawn shop’s drive-through window.

Merlino and her boyfriend, Byrd, befriended neighbor Wilson and would occasionally visit her in her apartment. During their visits, Merlino would sometimes bring Wilson food, clean her apartment, and run errands for her. Wilson eventually noticed that some jewelry was missing from her apartment and reported the theft, informing detectives with the Las Vegas Metropolitan Police Department that Merlino and Byrd might be responsible for the missing items. During their investigation, the detectives learned that Merlin had pawned items matching the descriptions of Wilson’s missing jewelry. Wilson identified the pawned items as belonging to her and indicated that Merlino did not have permission to possess those items. Merlino was subsequently charged by way of indictment with conspiracy to commit a crime, grand larceny, and three counts of burglary. She was convicted on all counts but on appeal challenged only her conviction on count five, one of the three counts of burglary.

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When does a sudden emergency excuse a driver’s negligence?

Posted on by Jeff Jaeger

Frazier v. Drake (Nev. Ct. App. – Sep. 3, 2015)

This matter arises from a personal injury action following a motor vehicle accident in which a vehicle was rear-ended by a semitrailer. Evidence was presented at trial indicating that bees flew into the cabin of the semitrailer, and one bee landed on the eye of the driver. The issue is whether the district court properly instructed the jury on sudden emergencies.

Drake was an employee of MS Concrete Company, Inc. On the day of the incident, Drake was driving an MS Concrete semitrailer truck on a major road in North Las Vegas. As he was driving, bees flew into the truck’s cabin, and one bee purportedly landed on his eye. While Drake attempted to remove the bee from his eye, he failed to observe a stoplight and rear-ended Frazier and Keys, whose vehicle was stopped at the light. Frazier and Keys (collectively referred to as Frazier, except where the context requires otherwise) suffered injuries in the accident and subsequently initiated the underlying personal injury action against Drake and MS Concrete (collectively referred to as Drake).

During the trial, Drake presented his defense that the bee landing on his eye constituted a sudden emergency rendering him unable to avoid the accident. Based on this defense, Drake sought to have the jury instructed that, if it found that the bee landing on his eye constituted a sudden emergency, he only had a duty of care equal to that of a reasonable person faced with the same situation. Over Frazier’s objections, the court instructed the jury on sudden emergencies, and the jury ultimately found in favor of Drake. Frazier then moved for a new trial, arguing that the sudden emergency instructions should not have been given and that the jury ignored the court’s instruction regarding Drake’s standard of care in reaching its verdict. Drake opposed this motion, which the district court ultimately denied. Frazier appealed.

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When is a guilty plea the product of coercion?

Posted on by Jeff Jaeger

State v. Smith (Nev. Supreme Ct. – Sep. 3, 2015)

Smith pleaded no contest to one count of child abuse resulting in substantial bodily harm. The State argued that the district court abused its discretion when it found that the actions of the Washoe County Department of Social Services (DSS) coerced Smith into pleading no contest. The issue is whether the district court abused its discretion in concluding that those actions amounted to coercion and that Smith’s no-contest plea was therefore involuntary.

Smith’s two-month-old daughter suffered a spiral fracture of her femur on November 30, 2010, purportedly while in Smith’s care. Smith always maintained his innocence of child abuse, but DSS concluded that Smith broke the leg in an act of child abuse and sought and obtained legal custody over the infant. Smith’s wife often had physical custody of their daughter, but at times DSS sought and/or obtained physical custody of the infant and placed her in foster care. As noted in the district court order partially granting Smith’s habeas petition, DSS indicated that it would consent to returning both physical and legal custody to Smith’s wife but that doing so was solely dependent upon Smith’s incarceration. After Smith was sentenced to prison in May 2012, DSS closed the case and returned legal and physical custody of the infant to Smith’s wife.

Smith filed a timely post-conviction petition for a writ of habeas corpus in which he argued that he should be allowed to withdraw his no-contest plea because it was coerced and thus not voluntary. Based on the facts above, the district court concluded that Smith was coerced into pleading no contest and issued an order partially granting the petition, directing the judgment of conviction and sentence be set aside, and concluding that he be allowed to withdraw his no-contest plea. The State appealed.

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