Year: 2015

Can a court consider the facts of a case to determine a person’s eligibility for a treatment program?

Posted on by Jeff Jaeger

Cassinelli (Dominic) v. State (Nev. Ct. App. – Aug. 27, 2015)

Cassinelli pleaded guilty to coercion and preventing or dissuading a person from testifying. The guilty plea resulted from allegations made by Cassinelli’s long-time girlfriend that he had sexually abused her. Cassinelli requested the district court to defer sentencing and assign him to a treatment program for alcohol abuse under NRS Chapter 458 rather than impose a term of incarceration.

The issue is whether NRS 458.300(1)(d) precludes eligibility for a drug or alcohol treatment program for the crime of coercion, where the acts underlying the crime fall within the definition of domestic violence, but the defendant had not pleaded guilty to a charged felony which constitutes domestic violence as set forth in NRS 33.018.

Cassinelli and the victim were involved in a romantic relationship from 2006 to 2012. They had two children together. During that time, Cassinelli was employed as a police officer in Winnemucca, Nevada.

At the preliminary hearing, testimony established that the pair engaged in sadomasochistic sex acts. The victim testified that she consented in the beginning of the relationship, but over time, the violence escalated to the point where she no longer wished to participate in sadomasochistic sex acts. Eventually the victim took the couple’s children and moved away. After the victim discovered that Cassinelli began seeing another woman, the victim reported to the Winnemucca Chief of Police that Cassinelli had sexually assaulted her. Although the victim had accused him of domestic violence in the past, Cassinelli had no convictions on his record.

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What must a court consider before permitting withdrawal of a guilty plea?

Posted on by Jeff Jaeger

Stevenson v. State (Nev. Supreme Ct. – Aug. 13, 2015)

NRS 176.165 allows a defendant who has pleaded guilty, but not been sentenced, to petition the district court to withdraw his plea. The issue is whether a district court must consider the totality of the circumstances to determine whether permitting withdrawal of a guilty plea before sentencing would be fair and just.

Stevenson was charged with numerous offenses relating to his sexual attacks of three women between 2007 and 2009. The evidence against him appeared to be strong, consisting of identifications by the women and a DNA match. The cases were consolidated, and Stevenson chose to represent himself. As trial approached, he attempted to obtain a surveillance video of the Cheetahs gentlemen’s club parking lot where one of the women was sexually assaulted. When it became clear that the State had lost the video, Stevenson moved to dismiss the charges. The district court denied his motion on March 9, 2011. On November 9, shortly before trial was set to begin, Stevenson informed the district court that Cheetahs still had the actual machine that the club had used to record surveillance footage. According to Stevenson, the manager had unplugged the machine when the video had been requested, but it required a password that she did not know and therefore she could not retrieve the recording. Stevenson argued that the video should exist on the machine’s hard drive and he would not be ready for trial until he saw it. The parties decided that a computer technician would attempt to break into the machine and access the video overnight. The next day, without any explanation, Stevenson pleaded guilty to two counts of attempted sexual assault.

On February 21, 2012, before sentencing, Stevenson moved to withdraw his plea on the ground that he had been misled about the existence of the video. According to Stevenson, he had only pleaded guilty because his court-appointed standby counsel told him that the video could not be viewed unless the machine was sent back to the company that made it, which would take several months and could erase the video. But, after he pleaded guilty, Stevenson allegedly learned that the video could be extracted in mere days and there was no risk of damaging it in the process. The district court conducted an evidentiary hearing regarding this claim where Stevenson’s investigator, the computer technician, and Cheetahs’ manager testified. After their testimony, the district court denied Stevenson’s motion pursuant to Crawford v. State, 117 Nev. at 718, 30 P.3d 1123 (2001), finding that his plea was entered into knowingly, voluntarily, and intelligently. Stevenson appealed.

Stevenson argued that Crawford’s exclusive focus on whether the plea was knowing, voluntary, and intelligent lacked foundation in NRS 176.165. He pointed out that, before Crawford, the Nevada Supreme Court had interpreted NRS 176.165 to permit the withdrawal of a guilty plea before sentencing for any “fair and just” reason, which included reasons beyond just whether the plea was validly entered.

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Does loss of income include more than just salary for a self-employed workers’ compensation claim?

Posted on by Jeff Jaeger

Mensah v. CorVel Corp. (Nev. Supreme Ct. – Aug. 6, 2015)

In this workers’ compensation case, a self-employed injured worker challenged an appeals officer’s order that denied him temporary total and partial disability benefits on the basis that he could not establish a loss of any income without evidence of a salary.

The issue is for self-employed individuals, does the lack of a salary associated with typical employment prevent an average monthly wage calculation for the purpose of determining lost income and rendering a workers’ compensation benefit decision.

Mensah was a self-employed delivery driver who contracted with FedEx Home Delivery for one of its delivery routes. Under his service contract, he was required to maintain workers’ compensation insurance, which he did through CorVel Corporation. While delivering packages, Mensah fell and injured his shoulder. Mensah’s workers’ compensation claim for his shoulder injury was accepted, and he received medical treatment. He was later released to light-duty work, but with his physical restrictions, he could not complete his delivery route and instead hired a replacement driver until he canceled the service contract. Mensah requested temporary disability benefits, which were denied on the basis that he continued to receive the same compensation under the FedEx service contract as he did before the injury occurred. Mensah administratively appealed, and the appeals officer denied both temporary total disability benefits (TTD) and temporary partial disability benefits (TPD) because Mensah did not produce any documentation showing that he had paid himself a salary of $1,425 per week as he claimed, and thus, any difference between his pre-injury and post-injury income could not be determined. The district court denied Mensah’s petition for judicial review. Mensah appealed.

The Nevada Supreme Court explained that generally, an employee who is injured by accident arising out of and in the course of employment is entitled to receive as TPD the difference between the wages earned after the injury and the benefits that the injured person would be entitled to receive if temporarily totally disabled, when the wages are less than the amount of those benefits. “Wages” means the amount of money that an employee receives for the time the employee worked. The statutes, however, do not specifically explain how a self-employed person’s wages are to be calculated.

The Court noted that Mensah suffered an industrial injury. This made him eligible to receive temporary disability benefits, calculated based on any loss in wages caused by the injury. The appeals officer concluded that Mensah was not entitled to those benefits because his salary could not be established from his personal and corporate income tax filings and he could not produce any paystubs or other evidence of a salary. But, Mensah was self-employed, and thus, the Court believed it was reasonable that he did not pay himself a salary in the typical sense.

The Court explained that the record clearly showed that Mensah received compensation from FedEx Home Delivery under his service contract, and he paid another employee to complete his delivery route during the time that he was medically restricted from doing so, demonstrating a loss to Mensah’s business income. And, although substantial evidence supported the appeals officer’s determination that Mensah had not established that he received a salary from his business, the appeals officer did not determine whether the documentation—including the Form 1099-MISC showing Mensah’s compensation from FedEx Home Delivery, the copies of paystubs showing wages paid to the replacement driver, and financial statements indicating Mensah’s business income and expenses—credibly established a loss to Mensah’s earnings, which may consist of more than just salary.

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Does filing a postjudgment motion move the deadline for filing a motion for attorney fees?

Posted on by Jeff Jaeger

Barbara Ann Hollier Trust v. Shack (Nev. Supreme Ct. – Aug. 6, 2015)

The issue is whether the filing of a postjudgment motion that tolls the time to appeal also tolls NRCP 54(d)(2)(B)’s 20-day deadline to move for attorney fees.

Nicolle and her father, William (the Shacks), doing business as Kids Care Club, entered into a “Lease Option Agreement and Contract of Sale” (the lease) with Acadian Realty, Inc. Under the terms of the lease, the Shacks rented a commercial property in Las Vegas (the property) for three years. Upon execution of the lease, the Shacks owed $100,000 for a security deposit and $100,000 in option money. The nonrefundable $100,000 in option money acted as consideration for Acadian Realty not selling the property during the three-year lease and could be applied against the purchase price later if the Shacks chose to purchase the property.

Nicolle leased the property with the intent of opening and operating a child daycare facility, but the property needed extensive work prior to opening. During the reconstruction, the Shacks encountered numerous problems, which included asbestos, electrical wiring not being up to code, and the property not being connected to the Las Vegas valley water line. During this process, tensions between the parties rose and reached a breaking point when, according to the Shacks, Lawson, the owner of Acadian Realty, refused to sign documents required by the City of Las Vegas in order for construction to be completed.

The first trial

The Shacks filed a complaint against Acadian Realty, the Barbara Ann Haler Trust (the actual owner of the property), and Lawson, both individually and as the trustee of the trust (collectively referred to as Lawson). In June 2008, the parties proceeded to trial on the Shacks’ claims for breach of contract and breach of the implied covenant of good faith and fair dealing and Lawson’s counterclaims for breach of contract, intentional misrepresentation, and abuse of process.

Following the conclusion of the trial, but before the jury rendered a verdict, the district court dismissed Lawson’s abuse of process claim. The jury, however, already had the verdict form, which included a line for damages related to the abuse of process claim. Nevertheless, the trial judge stated that “if the jury comes back with an award on abuse of process, it will just be stricken.”

During a post-trial hearing regarding the fact that the jury wrongly awarded attorney fees and the abuse of process claim had been dismissed as a matter of law, the district court stated:

At any rate, here’s what I’m going to do. The case is a mess. I mean truly, the case is a mess. How it got that way the Lord only knows, but it’s been a series of one-step decisions at a time . . . . I’m going to order that Mrs. Lawson gets the $100,000 which was required as the second payment for the option money. She complied with her option agreement in that she never listed the property and it was never sold during the term of the lease, so I’m saying just exactly what Mr. Shack said. The money’s in an account; she can pick it up anytime she wants to. So I’m going to enforce what he told us in sworn testimony, so the $100,000 that’s been sitting in some title company or some escrow account somewhere in California gets paid to Mrs. Lawson.

Additionally, the district court affirmed the damages awarded to the Shacks and clarified that the $100,000 going to Lawson would be treated as an offset. Both parties appealed the final judgment along with other orders.

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Is the identification of a suspect handcuffed in front of a police car unnecessarily suggestive?

Posted on by Jeff Jaeger

Johnson v. State (Nev. Ct. App. – July 30, 2015)

Johnson was convicted of various criminal offenses following a trial, during which the jury was permitted to hear testimony regarding an out-of-court “show-up” identification and the victims identified him in court as the perpetrator of the offenses. In the show-up, Johnson was handcuffed, placed in front of a police car, and illuminated with a spotlight to be viewed by witnesses who then identified him as the perpetrator of the crimes.

The issue is whether the show-up was improperly conducted in violation of Johnson’s constitutional due process rights.

One evening, Raebel and Valdez were walking to a bar in downtown Las Vegas when they noticed two men, later identified as Johnson and his brother, Humes, following them. Raebel viewed the two men directly as they approached for about a second and a half while Valdez saw them through his peripheral vision for one second. Suspicious, Raebel moved her purse from her hip to the front of her body with both hands.

Without warning, Humes punched Valdez in the head, causing him to fall to the ground. At the same time, Johnson grabbed Raebel from behind, covering her mouth with one hand and gesturing with the other to indicate he was carrying a firearm. Johnson removed Raebel’s purse from her shoulder and pushed her to the ground. Raebel screamed as she fell and Johnson responded by punching her in the face. While both Raebel and Valdez lay helpless on the sidewalk, Humes demanded that Valdez give him everything and in response Valdez emptied his pockets, throwing his wallet and cell phone on the sidewalk. Valdez’ wallet was unique and easily identifiable because it was constructed entirely out of duct tape. Johnson and Humes then tried to escape by running southbound. Raebel was bruised and Valdez was bleeding from a gash in his forehead. The entire incident lasted about thirty seconds.

Within minutes, police officers from the Las Vegas Metropolitan Police Department (LVMPD) arrived at the scene. Raebel and Valdez told the police they were attacked by two black males about six feet tall, with one slightly taller than the other, and described their clothing and the direction in which they fled. Based upon those descriptions, the police issued a radio broadcast to search for two black males about six feet tall wearing dark pants and hoodies who ran southbound from the scene, with the taller male wearing a black hooded sweatshirt and the shorter of the males wearing a brown sweatshirt. The broadcast also alerted officers to look for a stolen purse, wallet, and other property.

A few moments later, patrolling officers saw Johnson and his brother emerge from an alley two or three blocks south of the crime scene and jaywalk diagonally across an intersection. The other end of the alley was a dead end blocked by a chain-link fence and shrubbery. According to the officers, Johnson was wearing a dark black sweatshirt with a hood on it and dark jeans, while his brother was wearing a black sweatshirt, but it was faded so it actually looked brown in the light and he was also wearing jeans. Deciding that the duo matched the description to a tee and suspicious as to what the two had been doing in a dead-end alley, the officers detained the men for questioning When they looked in the alley, the officers saw Raebel’s purse, car keys, some makeup containers, and Valdez’ unique duct tape wallet scattered on the ground. The officers handcuffed the two men and issued Miranda warnings to them. Officers later found Valdez’ cell phone in Humes’ pocket.

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How long does a recipient of an HOA’s notice of contract termination have to take legal action?

Posted on by Jeff Jaeger

Double Diamond v. Second Jud. Dist. Ct. (Nev. Supreme Ct. – July 30, 2015)

NRS 116.3105(2) permits a homeowners’ association that provides at least 90 days’ notice to terminate any contract that is not in good faith or was unconscionable to the units’ owners at the time entered into. The issue is whether the 90 days’ notice operates as a statute of limitations or a notice for the recipient to commence litigation.

In 1996, Rowe, the developer of Double Diamond Ranch Master Association (the Association) entered into a Maintenance and Operation Agreement (Maintenance Agreement) with the City of Reno. Because the property was in a flood zone, the Federal Emergency Management Agency required the developer to obtain a Letter of Map Revision and enter into the Maintenance Agreement prior to developing the South Meadows and Double Diamond Ranch homes in Reno, Nevada. The Maintenance Agreement required, among other obligations, that the Association maintain certain flood control channels, provide rock rip-rap protection in the Double Diamond/South Meadows area, and file an annual report.

In February 2012, the Association gave notice to the City that it was terminating the contract pursuant to NRS 116.3105(2). This statute permits homeowners’ associations to terminate at any time a contract that was entered into by a declarant if the contract was (1) unconscionable to the units’ owners at the time entered into, and (2) the association provides 90 days’ notice to the recipient. In its notice, the Association claimed that it should not have been a party to the Maintenance Agreement because Mr. Rowe signed the agreement on the Association’s behalf one day before the Association legally came into being. Further, the Association claimed that Mr. Rowe entered into the Maintenance Agreement for his own benefit, in order to develop the adjacent property as he desired. Finally, the Association claimed that the City never sought to enforce the Maintenance Agreement and only learned about its existence recently. Later that month, the City rejected the Association’s notice of termination.

In October 2013, the City brought an action against the Association seeking specific performance of the Maintenance Agreement. The Association moved to dismiss the complaint for failure to state a claim for relief and failure to join indispensable parties. More specifically, the Association argued that the contract was invalid as the Association had statutorily terminated the Maintenance Agreement 20 months before. The Association also contended that it did not own the property at issue, and other indispensable parties were necessary, such as the land owner and Mr. Rowe, the developer.

At the hearing on the motion, the Association argued that the statute required the recipient of the notice of contract termination to file suit within 90 days. More specifically, the Association argued that the burden shifted to the recipient to bring a cause of action within that time if it questioned an association’s claim of unconscionability or lack of good faith. The district court ultimately denied the Association’s motion to dismiss. The court determined that there were several genuine issues of material fact; for example, whether the Association, including the property owners, benefited from the Maintenance Agreement and whether the parties’ agreement was unconscionable. Further, the court stated that the statute provided no guidance as to when a recipient must pursue legal action, and instead, the City’s letter rejecting the Association’s notice of termination provided enough notice to the Association that a justiciable controversy may exist as a result. Thereafter, the Association petitioned the Nevada Supreme Court for a writ of mandamus or prohibition directing the district court to vacate its order denying the Association’s motion to dismiss and to order dismissal instead.

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Can the State appeal an order granting a prejudgment motion for a new criminal trial?

Posted on by Jeff Jaeger

State v. Harris (Nev. Supreme Ct. – July 30, 2015)

The issue is whether the Nevada Supreme Court has jurisdiction to review the State’s appeal from an order granting a prejudgment motion for a new trial in a criminal matter.

On October 2, 2013, a jury returned verdicts finding Harris guilty of first-degree murder, child abuse and neglect with the use of a deadly weapon, and two counts of child abuse and neglect. Prior to sentencing, Harris filed a timely motion for a new trial, which the district court granted. Pursuant to NRS 177.015(1)(b), the State appealed from the order granting the motion for a new trial. In State v. Lewis, 124 Nev. 132, 178 P.3d 146 (2008), the Nevada Supreme Court previously held that NRS 177.015(1)(b) only permits appeals from district court orders resolving post-conviction motions for a new trial. Therefore, the Nevada Supreme Court in this case ordered the State to show cause why the appeal should not be dismissed for lack of jurisdiction.

The State argued that the Lewis holding was based on a rationale that has no application to its right to appeal in a criminal case. The State, therefore, requested the Court to revisit Lewis as it related to appeals from orders granting prejudgment motions for a new trial.

The plain language of NRS 17.015

NRS 177.015(1)(b) provides, in relevant part, that any aggrieved party, whether it is the State or the defendant, may appeal “from an order of the district court. . . granting or refusing a new trial.” Thus, the Court determined that the plain language of NRS 177.015(1)(b) clearly authorized an appeal from an order granting a motion for a new trial and did not limit the right to an appeal based on when the motion was filed or when the order resolving it was entered.

State v. Lewis and NRS 177.015(1)(b)

The Court explained that the Nevada Supreme Court has had a prior opportunity to consider the State’s right to appeal pursuant to NRS 177.015(1)(b) from a prejudgment order granting relief. The Lewis court held that the State did not have a statutory right to appeal from an order granting a presentence motion to withdraw a guilty plea. In reaching this decision, the Lewis court observed that Nevada Rule of Appellate Procedure NRAP 3A, which governs civil appeals, used language similar to the provision in NRS 177.015(1)(b) regarding an appeal from an order granting or refusing a new trial and that the language in NRAP 3A had been interpreted to only allow for an appeal from an order denying a post-judgment motion for a new trial. Noting these similarities and that the Nevada Supreme Court had treated a motion to withdraw a guilty plea as tantamount to a motion for a new trial, the Lewis court stated that it saw no reason to construe the same language in NRS 177.015(1)(b) in an inconsistent manner.

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What is the effect on a foreclosure when a promissory note and deed of trust are split?

Posted on by Jeff Jaeger

In re Montierth (Nev. Supreme Ct. – July 30, 2015)

The United States Bankruptcy Court for the District of Nevada certified two questions of law to the Nevada Supreme Court concerning the legal effect on a foreclosure when the promissory note and the deed of trust are split at the time of foreclosure. The bankruptcy court asked what occurs when the promissory note and the deed of trust remain split at the time of the foreclosure and whether recordation of an assignment of a deed of trust is a purely ministerial act that would not violate the automatic stay.

In June 2005, the Montierths signed a promissory note in favor of 1st National Lending Services for $170,400. The note provided that the lender may transfer the note. The note was subsequently transferred to Deutsche Bank.

The note was secured by a deed of trust on the Montierths’ property in Logandale, Nevada. The beneficiary of the deed of trust was Mortgage Electronic Registration Systems, Inc. (MERS), solely as nominee for lender and lender’s successors and assigns. Additionally, the deed of trust provided:

MERS holds only legal title to the interests granted by Borrower in this Security Instrument; but, if necessary. . . , MERS (as nominee for Lender and Lender’s successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument.

The Montierths’ last payment on the note was made in June 2009. Deutsche Bank recorded a notice of default and initiated foreclosure. The Montierths opted into Nevada’s Foreclosure Mediation Program (FMP), but the first two mediation attempts were unsuccessful. The Montierths petitioned for judicial review of the attempted mediation, and the district court found that Deutsche Bank failed to participate in the mediation in good faith.

Deutsche Bank then filed another notice of default, and the Montierths again elected to mediate. Less than two weeks before the scheduled mediation, the Montierths filed for bankruptcy. At the time the Montierths filed for bankruptcy, the note and the deed of trust were separate—Deutsche Bank held the note and MERS was the beneficiary of the deed of trust.

After the Montierths filed for bankruptcy, MERS assigned its interest in the deed of trust to Deutsche Bank on November 25, 2011, but the assignment was not recorded until December 23, 2011. Prior to the recordation of the assignment, Deutsche Bank filed a proof of claim in the Montierths’ bankruptcy, claiming that it was a secured creditor.

On September 5, 2012, Deutsche Bank filed a motion for relief from the automatic bankruptcy stay so that it could foreclose on the Montierths’ property. The Montierths objected to Deutsche Bank’s standing to bring the motion. The Montierths also objected to Deutsche Bank’s proof of claim insofar as it alleged secured creditor status. Both objections were premised on the argument that Deutsche Bank was not a secured creditor because it did not have a unified note and deed of trust when the bankruptcy petition was filed and the automatic stay precluded the reunification of the instruments.

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Can an insurer circumvent Nevada’s absolute-liability statute?

Posted on by Jeff Jaeger

Torres v. Nev. Direct Ins. Co. (Nev. Supreme Ct. – July 30, 2015)

The issue is whether an injured party may assert NRS 485.3091, Nevada’s absolute-liability statute, in order to sue a tortfeasor’s insurer after obtaining a judgment against the tortfeasor, and whether an injured party can pursue a bad faith claim against the insurer.

In April 2006, Perez-Castellano was driving a vehicle owned by Mollinedo-Cruz and insured by Nevada Direct Insurance Company (NDIC) when he crashed into Torres’ car, injuring Torres. Neither Mollinedo-Cruz nor Perez-Castellano contacted NDIC. Torres filed a complaint against Mollinedo-Cruz and Perez-Castellano for negligence, negligent entrustment, and punitive damages stemming from the car accident. Mollinedo-Cruz and Perez-Castellano answered the complaint, denying all of the allegations and raising several affirmative defenses. Mollinedo-Cruz and Perez-Castellano then stopped participating in the action.

NDIC subsequently filed a complaint for declaratory relief against Mollinedo-Cruz, Perez-Castellano, and Torres. NDIC argued that because Mollinedo-Cruz violated the policy in failing to cooperate with the post-accident investigation, NDIC was not responsible for his defense or indemnification in Torres’s suit against Mollinedo-Cruz. NDIC made an offer of judgment for $1 more than Mollinedo-Cruz’s policy limit to Torres, but she declined the offer. The district court entered default judgments against Mollinedo-Cruz and Perez-Castellano in the declaratory relief case and concluded that NDIC was not obligated to defend or indemnify either of them for the accident with Torres. But, the district court concluded that the default judgments did not apply to and are not binding on Torres and she could pursue any and all claims/defenses available to her under Mollinedo-Cruz’s insurance policy. Torres subsequently acquired a default judgment against Mollinedo-Cruz and Perez-Castellano in her original liability action.

Torres then filed a new complaint against NDIC. Torres claimed that NDIC breached the insurance policy when it failed to pay her claim, she was entitled to damages based on a theory of promissory estoppel, and NDIC breached the implied covenant of good faith and fair dealing. NDIC filed a motion to dismiss Torres’ promissory estoppel and breach of the implied covenant of good faith and fair dealing claims for failure to state a claim. The district court denied NDIC’s motion on Torres’ promissory estoppel claim, but granted the motion on Torres’ claim that NDIC breached the implied covenant of good faith and fair dealing.

At the conclusion of a two-day bench trial, the district court entered judgment in favor of NDIC. The district court concluded that Torres was neither a named contracting party nor an intended third-party beneficiary of the insurance contract. The court further concluded that Torres was not a judgment creditor of NDIC because NDIC obtained its default judgment that it had no duty to defend or indemnify anyone for the accident with Torres before Torres obtained her default judgment against Mollinedo-Cruz and Perez-Castellano. The court also concluded that NDIC fulfilled any obligations under the insurance contract because NDIC made an offer of judgment for the policy limit to Torres, which she rejected.

In regard to Torres’ promissory estoppel argument, the district court determined that letters sent from NDIC to Torres indicating that it was reviewing her medical records and it would review the demand and contact Torres’ counsel with an offer did not amount to a promise to pay any amount, and that none of the correspondence between NDIC and Torres precluded Torres from taking action. Torres appealed.

Torres argued that the district court erred when it failed to apply NRS 485.3091 to her action. Torres also argued that the district court erred when it considered the statutory offer of judgment made in the separate declaratory relief action and concluded it satisfied NDIC’s obligations under NRS 485.3091.

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Can a court set aside a judgment solely based on new or changed precedent?

Posted on by Jeff Jaeger

Ford v. Branch Banking & Trust Co. (Nev. Supreme Ct. – July 23, 2015)

Nevada Rule of Civil Procedure (NRCP) 60(b)(5) allows the district court to set aside a judgment when, in material part, a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that an injunction should have prospective application. The issue is whether new or changed precedent from the Nevada Supreme Court justifies NRCP 60(b)(5) relief.

In 2004, the Fords guaranteed two commercial loans made by Colonial Bank. The FDIC subsequently acquired the loans when it was appointed as the receiver for Colonial Bank. The FDIC, in turn, assigned the loans to Branch Banking and Trust Company (BB&T) in August 2009. The properties securing the commercial loans were foreclosed August 29, 2011, and BB&T brought a breach of guaranty action against the Fords in December 2011. After a partial summary judgment hearing, the district court determined that the amount of damages was the only issue remaining for trial.

At trial, the parties disputed whether NRS 40.459(1)(c) (2013) (current version codified at NRS 40.459(3)(c)), which reduces the amount of some deficiency judgments, could limit the amount the Fords owed BB&T. The district court concluded that former NRS 40.459(1)(c) only applied prospectively. Further, it concluded the statute would have an impermissible retroactive effect if applied to loans, like this one, that were assigned before NRS 40.459(1)(c) took effect on June 10, 2011. Therefore, NRS 40.459(1)(c) could not apply to the Fords’ loans, and they were liable for the full deficiency. The Fords never appealed the district court’s final judgment.

More than one year after the district court entered its judgment, the Nevada Supreme Court published Sandpointe Apartments v. Eighth Judicial District Court, 129 Nev., Adv. Op. 87, 313 P.3d 849 (2013). Sandpointe holds that NRS 40.459(1)(c) only applies prospectively, and an application of the statute is prospective if there has been no foreclosure sale on the underlying loan as of June 10, 2011, the date the statute was enacted. Whether or when a loan is assigned is not material. Therefore, the Court noted that the district court erred in holding that NRS 40.459(1)(c) would be retroactive if applied to the Fords’ loans because the foreclosure sale occurred August 29, 2011, more than two months after NRS 40.459(1)(c) took effect. Shortly after the Sandpointe opinion was published, the Fords asked the district court to set aside the judgment against them pursuant to NRCP 60(b)(5). The district court denied the Fords’ motion, holding that NRCP 60(b)(5) was not an appropriate avenue for seeking relief based on new or changed precedent. The Fords appealed that decision.

On appeal, the Fords argued they can invoke NRCP 60(b)(5) to set aside the judgment against them because (1) Sandpointe reversed a prior judgment upon which the judgment against them was based, and (2) it was no longer equitable to enforce the judgment against them in light of this court’s Sandpointe opinion.

The Nevada Supreme Court explained that the material portions of NRCP 60(b)(5) allow the district court to set aside a judgment when [1] a prior judgment upon which the challenged judgment is based has been reversed or otherwise vacated, or [2] it is no longer equitable that an injunction should have prospective application. Rule 60(b) of the Nevada Rules of Civil Procedure is modeled on Rule 60(b) of the Federal Rules of Civil Procedure, as written before the FRCP’s amendment in 2007. Federal cases interpreting the Federal Rules of Civil Procedure are strong persuasive authority, because the Nevada Rules of Civil Procedure are based in large part upon their federal counterparts.

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