Year: 2015

Is it a constitutional error when a judge fails to swear in potential jurors?

Posted on by Jeff Jaeger

Barral v. State (Nev. Supreme Ct. – July 23, 2015)

The issue is whether a district court commits structural error when it fails to administer an oath to the jury panel, pursuant to NRS 16.030(5), prior to commencing voir dire.

Barral was charged with sexually assaulting a child. His case proceeded to a jury trial. At the beginning of voir dire, both the prosecution and defense explained to the potential jurors the importance of answering their questions honestly. After questioning the first potential juror, the following bench conference took place:

MR. BECKER [for Barral]: My recollection may not be correct, but I think it’s possible that the panel was not sworn in.
THE COURT: They aren’t.
MR BECKER: Okay.
THE COURT: I don’t swear them in until the end.
MR. BECKER: Okay. In other words, admonish [the jury] that they are to give truthful answers to all the questions—
MS. FLECK [for the State]: Yeah[.]
MR. CASTILLO [for Barral]: That’s fine.

….

THE COURT: —I won’t swear them in.
MR. BECKER: Okay.
THE COURT: Because the ones who are sworn in; that’s the panel.
MR. BECKER: Right.

….

MS. FLECK: But do we have to give them the oath that they have to tell the truth[?]
THE COURT: No.
MS. FLECK: Or no?
THE COURT: No.
MS. FLECK: Okay.
THE COURT: No.
MS FLECK: Okay.

The court then proceeded with voir dire. The district court clerk swore in the petit jury at the beginning of the second day of trial. After both parties rested and presented closing arguments, the jury deliberated for approximately three hours and returned guilty verdicts on both charges. Following a post-trial motion for acquittal that the court denied, Barral appealed.

Barral claimed that the district court committed structural error requiring reversal when it failed to comply with NRS 16.030(5) and administer the oath to the jury venire before voir dire. He argued that the court’s error compromised his right to trial by an impartial jury because potential jurors may not have felt obligated to respond truthfully during voir dire, as the court did not place them under oath. The State contended that the potential jurors understood that they were required to answer truthfully because the court and counsel for both sides repeatedly stressed to the venire the importance of answering their questions honestly. The State also argued that the court’s error did not undermine the framework of the trial.

The Nevada Supreme Court noted that although NRS 16.030(5) is articulated in the civil practice section of the Nevada Revised Statutes, it applies to criminal proceedings through NRS 175.021(1). The Court explained that NRS 16.030(5) does not give the district courts discretion: “the judge or the judge’s clerk shall administer an oath or affirmation.” Thus, the Court concluded that the district court violated NRS 16.030(5) in the instant case when, according to its apparent general preference, it failed to administer the oath to the venire. Neither party disputed that the district court erred by violating NRS 16.030(5). However, a district court’s error will not always entitle a convicted defendant to a new trial. The type of relief, if any, to which a criminal defendant is entitled following a trial court’s violation of NRS 16.030(5) was an issue of first impression for the Court.

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May a third party be joined to a divorce action?

Posted on by Jeff Jaeger

Anderson v. Sanchez (Nev. Ct. App. – July 23, 2015)

This case involves the enforceability of a divorce settlement agreement in the face of a claim that the agreement distributes property belonging to a third party. The issue is whether the district court erred in denying a party’s motion to set aside the parties’ settlement agreement, and join his sister to the underlying divorce proceeding, because she claimed an interest in property that was treated as community property in the settlement agreement.

This case arose out of a divorce between Mark and Sophia. Mark filed a complaint for divorce in March 2012. Thereafter, the parties immediately agreed to participate in mediation before retired district court judge Robert Gaston, but not pursuant to a court order or district court rule, which can be used to set the parameters of the mediation. At the conclusion of the mediation, the parties executed a written Memorandum of Understanding (MOU), which provided the framework for dividing their various assets and debts. The award of the Wilson property, a residence located on East Wilson Avenue, Orange, California, was the only term of the MOU challenged on appeal. Under the terms of the MOU, Mark was to receive the Wilson property in exchange for the payment of a portion of his retirement funds to Sophia.

After the parties executed the MOU, Mark filed a notice of withdrawal of his signature, stating, without any explanation or citation to law, that he was revoking his signature from the MOU. In response, Sophia filed a motion to enforce the MOU, asserting that the parties had entered into a legally binding contract and requesting that the district court enter a divorce decree based on the terms of the MOU. Mark then filed, among other things, an opposition to the motion to enforce, a countermotion to set aside and deem the MOU unenforceable, and a countermotion for joinder of his sister, Cheryl. Cheryl also filed a motion to intervene in the divorce proceeding based on the same factual allegations set forth in Mark’s opposition and countermotion regarding joinder, and she asked for a finding and order that the Wilson property was held in constructive trust, declaratory relief, an injunction, and attorney fees.

In his opposition and countermotions, Mark argued that the MOU was void because it improperly distributed property that did not belong to Mark and Sophia. Further, Mark argued the MOU was subject to rescission because it was based on a mutual mistake, a misrepresentation, or unconscionable terms. In support of these arguments, Mark alleged Cheryl had an ownership interest in the Wilson property, which he and Cheryl had received as beneficiaries of the Jack and Lavonne Trust, which previously held that property. Mark claimed he and Cheryl had agreed Cheryl would keep the Wilson property in exchange for Mark receiving other trust assets. Cheryl currently lives on the Wilson property.

Continuing his arguments in support of joinder and setting aside the MOU, Mark alleged that, between May 2005 and May 2006, he and Sophia entered into two agreements with Cheryl in which Cheryl allowed them to use the Wilson property as collateral to secure loans. In order to obtain financing, the second agreement required Mark and Cheryl, as trustees of the Jack and Lavonne Trust, to convey the Wilson property to Mark and Sophia. Mark and Sophia then transferred the Wilson property to their own newly created trust, the Anderson Trust. The Anderson Trust provided that the Wilson property was to be conveyed to Cheryl should she survive both Mark and Sophia. Additionally, David, Cheryl’s son, was named as a beneficiary of the Anderson Trust, should he survive Cheryl, Mark, and Sophia. The Anderson Trust was not made a party in this case. None of Mark and Sophia’s five other properties are held in a trust.

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Must a court strike a juror whose background implies bias, but asserts they can be impartial?

Posted on by Jeff Jaeger

Sanders v. Sears-Page (Nev. Ct. App. – July 16, 2015)

When a juror is biased against a party, that juror must be struck from the jury. The issue is whether the district court erred in declining to strike an empaneled juror whose background experience implied bias, but who asserted he could be impartial.

This case arises from a jury trial on a personal injury claim for damages following a 2009 car accident. Sears-Page made a right turn from a left-hand lane and hit Toni Sanders’ car. Initially, the accident appeared minor as neither party claimed injuries at the scene. A few days later, Sanders purportedly began experiencing neck pain that worsened over time. Sanders and her husband, Robert, sued Sears-Page for negligence to recover damages, including medical expenses. Sears-Page admitted liability but denied causation and damages.

Sanders’ injuries

The central issues at trial involved whether the accident had caused or contributed to Sanders’ injury and, if so, whether Sanders’ claimed medical expenses were reasonable. Sanders, who had chronic back pain, had previously experienced neck pain in 2004 from a bone spur. But, she denied having neck pain in the years immediately preceding the accident, and two of her treating physicians testified the accident with Sears-Page caused Sanders’ 2009 neck pain. Both doctors also testified Sanders’ medical procedures and surgeries following the accident to alleviate pain were reasonably necessary.

To support her claimed damages, Sanders presented medical records and bills from Nevada Spine Clinic. Those records were generated primarily by treatment from Doctors Grover, Ghuman, and Rosler, but many records were generated by other doctors and medical professionals at Nevada Spine Clinic. Of the people who treated Sanders at Nevada Spine Clinic, only Dr. Grover testified at trial. Dr. Grover was one of several doctors at that clinic who treated Sanders for chronic back pain before the 2009 accident and also treated her for neck pain after the accident, and testified all of Sanders’ medical bills from Nevada Spine Clinic were reasonable.

Sears-Page denied Sanders’ injuries occurred as a result of the automobile accident. Instead, Sears-Page asserted Sanders’ symptoms arose from a preexisting degenerative medical condition. In opening statements, Sears-Page emphasized that Dr. Grover sold Sanders spine surgery and the doctors at Nevada Spine Clinic encouraged unnecessary surgery and medical procedures for their own financial gain. Sears-Page argued she should not have to pay for Sanders’ unnecessary medical expenses, which were purposely inflated by Nevada Spine Clinic.

During trial, Sears-Page’s retained medical experts, Dr. Schifini and Dr. Duke, both testified Sanders’ medical records showed a preexisting degenerative condition that developed over the course of several years, and her post-accident medical records were devoid of trauma to her neck. Both experts opined the accident did not cause Sanders’ medical condition or contribute to her current neck pain. Dr. Duke further noted Sanders’ medical history prior to the accident included treatment for neck pain in 2004 and 2009, which supported his opinion that Sanders’ degenerative condition alone caused her current neck pain.

Both experts testified Sanders’ surgery and medical procedures performed by Nevada Spine Clinic doctors were unnecessary and unreasonable. Further, they emphasized the clinic doctors’ fees were significantly higher than average doctor’s fees. Sears-Page argued Nevada Spine Clinic’s physicians’ practice of referring patients like Sanders to medical facilities owned by the physicians not only benefited the physicians financially, but also inflated Sanders’ medical bills.

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Must a non-native English speaker be assisted by an interpreter during a police interrogation?

Posted on by Jeff Jaeger

Gonzales v. State (Nev. Ct. App. – July 2, 2015)

The issue is whether the district court erred in ruling that a defendant’s confession was admissible even though English was not his native language and he was not provided with the assistance of an interpreter during his police interrogation.

Michelle was in the garage of her home vacuuming her car while her 22-month-old daughter Abigail napped inside the house. Three people, a woman and two men, entered through the open garage door and accosted Michelle. The shorter of the two men, later identified as Gonzales, was wearing a mask and had the hood of his sweatshirt pulled over his head so that Michelle could not immediately see his face. Gonzales pointed a gun at Michelle and told her, “we want your guns, we want your money.” The woman motioned for Michelle to go inside the house, and she complied.

At gunpoint, Michelle led the trio to the master bedroom, where they ransacked the room in search of valuables. The trio asked Michelle where any guns and money were kept, but Michelle answered that she did not know because her husband had recently moved his guns in order to prevent Abigail from accidentally finding them. The woman responded by calling Michelle stupid for not knowing where anything was. Eventually, after searching the entire room, the perpetrators found a safe and forced Michelle to open it. The perpetrators then forced Michelle to hold laundry baskets for them to fill with items from the safe.

Michelle asked if she could go get Abigail, but the perpetrators refused. Following repeated and increasingly insistent requests by Michelle, Gonzales eventually gave permission and Michelle retrieved her daughter. At some point Gonzales and the female perpetrator split up to search other rooms of the house while the taller man stayed in the master bedroom with Michelle and Abigail. The taller man continued searching the master bedroom and eventually discovered a hidden firearm owned by Michelle’s husband.

After a few minutes, the woman called Michelle to another room, where Michelle watched her go through the drawers of a desk. Michelle asked the taller man why they were there, and he replied that they had been hired to “come get your guns and money.” The trio then scattered throughout the house in search of more valuables, leaving Michelle and Abigail alone. Michelle ran to a side door that she had previously left unlocked, but apparently had been locked by the perpetrators during the crime, unlocked it, and fled the house with Abigail to a neighbor’s residence where she called 9-1-1. Police officers arrived moments later and quickly located the woman and the taller man who had accompanied Gonzales. They also found a car parked in Michelle’s driveway in which documents bearing Gonzales’ name were later discovered.

While police officers worked to establish a perimeter around the house, Gonzales voluntarily approached a police detective parked on the street and spontaneously uttered, in English, “I was involved. It was me. I was involved.” He was immediately arrested and searched, and property belonging to Michelle and her husband was found on his person. After the search, Gonzales asked, again in English, to be placed into the police car rather than be left standing in the street, and officers complied. Gonzales remained seated in the police car for approximately one hour with one back door open and the air conditioner turned on while the police continued to investigate the scene.

Gonzales was then transported to police headquarters and interrogated by Detective Flynn. Prior to the interrogation, Detective Flynn administered warnings, in English, pursuant to Miranda v. Arizona, 384 U.S. 436 (1966). In English, Gonzales stated that he understood his rights and agreed to be questioned. Flynn repeated the warnings again, in slightly different and less formal language, later during the questioning Gonzales, whose native language is Tagalog, never requested the assistance of an interpreter, and none was provided. The entire interrogation was conducted in English and tape-recorded. Gonzales subsequently confessed to the offenses in detail in English.

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Must the court hold an oral hearing before withholding target notice of a grand jury proceeding?

Posted on by Jeff Jaeger

State v. Beaudion (Nev. Supreme Ct. – July 2, 2015)

NRS 172.241 affords the target of a grand jury investigation the opportunity to testify before them unless, after holding a closed hearing on the matter, the district court determines that adequate cause exists to withhold target notice. In this case, the district judge supervising the grand jury entered an order authorizing the State to withhold target notice based on the district attorney’s written request and supporting affidavit, without conducting a face-to-face oral hearing. The issue is whether this procedure satisfies NRS 172.241’s closed hearing requirement.

NRS 172.241(1) provides that a person whose indictment the district attorney intends to seek may testify before the grand jury if the person requests to do so and executes a valid waiver in writing of the person’s constitutional privilege against self-incrimination. To facilitate exercise of this right, NRS 172.241(2) requires the district attorney to give the target reasonable notice, sometimes called Marcum notice, of the grand jury proceeding, unless the court determines that adequate cause exists to withhold notice. Addressing the circumstances in which target notice may be withheld, NRS 172.241(3) specifies that the district attorney may apply to the court for a determination that adequate cause exists to withhold notice, if the district attorney determines that the target poses a flight risk, cannot be located or, as relevant here, that the notice may endanger the life or property of other persons.

The State alleged that Beaudion committed battery causing substantial bodily harm constituting domestic violence against his then-girlfriend when he tied her to their bed and poured boiling water over her exposed torso, burning her so severely that she required skin grafts. The State further alleged that Beaudion intimidated or threatened the victim with additional harm if she cooperated in his prosecution.

Initially, the State attempted to proceed against Beaudion by information, rather than indictment. Each time the date scheduled for the preliminary hearing arrived, the victim failed to appear and, eventually, she vanished. After three failed attempts at conducting the preliminary hearing, the State dismissed its criminal complaint against Beaudion without prejudice.

Several years later, detectives located the victim. The district attorney’s office renewed its efforts to charge Beaudion, this time utilizing the grand jury, which conducts its proceedings largely in secret. Before presenting its case against Beaudion to the grand jury, the district attorney’s office submitted a written application to the court supervising the grand jury for permission to withhold target notice from Beaudion. As grounds for withholding target notice, the application asserted that Beaudion would threaten or harm the victim and/or her family to prevent the victim from testifying if Beaudion knew the grand jury was considering his indictment. The ex parte application was supported by an affidavit from the prosecutor relating that previously the Defendant intimidated the victim to the point where she would not appear for court; that, when the victim had to be hospitalized for her burns, Beaudion had driven her from Nevada to California to avoid being caught for committing the crimes in this case; and that there was a good faith basis to believe that if the Defendant learns of the State’s intentions of indicting him he will again intimidate or harm the victim to prevent her from testifying. After considering the written application and supporting affidavit, but without holding an oral hearing, the court entered a written order finding cause for and authorizing the State to proceed without notice to Beaudion.

The victim testified before the grand jury, which returned a true bill, and the State filed an indictment against Beaudion in district court. Under local court rule EDCR 1.31, the case was administratively assigned to a different department of the district court than had impaneled the grand jury and so had issued the order dispensing with target notice. Beaudion filed a motion to dismiss in the department of the district court to which his criminal case was assigned. He argued that the order authorizing the district attorney’s office to withhold Marcum notice was deficient because it had not been preceded by the closed hearing required by NRS 172.241(4) and that this deficiency invalidated the indictment.

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When are an independent contractor’s actions within the scope of a specialized repair?

Posted on by Jeff Jaeger

D & D Tire v. Ouellette (Nev. Supreme Ct. – July 2, 2015)

In Nevada, employers and coemployees of a person injured in the course of employment are immune from liability for the injury under the exclusive remedy provision of the workers’ compensation statutes. Additionally, some subcontractors and independent contractors are accorded the same status as employers or coemployees of the injured employee and are thus immune from liability. However, a subcontractor or independent contractor is not considered to be a statutory employee when it is performing a major or specialized repair that the injured worker’s employer is not equipped to handle with its own work force.

The issue is when is an independent contractor’s actions within the scope of a major or specialized repair so as to prevent it from claiming immunity as a statutory employer or coemployee.

Ouellette was employed by Allied Nevada Gold Corporation (Allied) to perform tire service work, including the installation, removal, repair, and replacement of tires on various pieces of mining equipment. Purcell Tire & Rubber Company was a commercial tire retailer. Among other things, it provided tire changing and repair services to mining companies.

As part of his job, Ouellette drove and operated a tire changing boom truck owned by Purcell and leased to Allied. When a problem developed with the boom truck’s power take off unit (PTO), Purcell contacted an independent repair company, Dakota Diesel, who sent repairman Durick to make specialized repairs to the PTO. Purcell, as owner of the truck, also sent Wintle, a tire technician for Purcell with responsibilities similar to those of Ouellette, to assist with the repairs.

After the initial repairs were completed, Wintle and Durick filled the truck with hydraulic oil. Wintle then got into the truck to move it to another area before testing the PTO. While backing up the truck, Wintle struck and pinned Ouellette against a dumpster, causing Ouellette to suffer a shoulder injury.

Ouellette filed a personal injury claim against Purcell. At trial, Purcell moved for a judgment as a matter of law on the grounds that it was a statutory employee of Allied and was thus immune from liability under the Nevada Industrial Insurance Act (NIIA). The district court denied Purcell’s motion. Purcell also requested a mere happening jury instruction, which the district court declined to give. The jury returned a verdict in favor of Ouellette. Purcell then renewed its motion for judgment as a matter of law on the grounds that it was a statutory employee of Allied. Alternatively, it moved for a new trial, arguing that the district court’s error in refusing to give Purcell’s mere happening jury instruction materially affected its substantial rights. The district court denied Purcell’s motion. Purcell appealed

Purcell argued that the district court erred in denying its motion for judgment as a matter of law because Purcell was a statutory employee of Allied at the time of Ouellette’s injury and would thus be immune from liability for the injury under the NIIA. Purcell also argued that the district court abused its discretion by refusing to give a mere happening jury instruction.

Ouellette argued that the district court did not err in denying Purcell’s motion for judgment as a matter of law because Purcell was performing a specialized repair at the time of Ouellette’s injury and thus was not a statutory employee of Allied. Ouellette also argued that the district court did not err in refusing to give Purcell’s proffered jury instruction because it misstated Nevada law and was adequately covered by other instructions given to the jury.

An independent contractor is not immune from liability when performing specialized repairs

In Nevada, employers and coemployees of a person injured in the course of employment are immune from liability under the NIIA. Additionally, the NIIA is uniquely different from industrial insurance acts of some states in that sub-contractors and independent contractors are accorded
the same status as employees and are immune from liability.

However, the Nevada Supreme Court explained that not all types of subcontractors and independent contractors are considered to be statutory employees under NRS 616A.210. A subcontractor or independent contractor is not a statutory employee if it is not in the same trade, business, profession or occupation as the employer of the injured worker.

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Is dismissal under NRS 18.130 appropriate if a nonresident plaintiff files security prior to dismissal?

Posted on by Jeff Jaeger

Biscay v. MGM Resorts Int’l (Nev. Supreme Ct. – July 2, 2015)

The issue is whether dismissal is appropriate under NRS 18.130(4) when a nonresident plaintiff files security with the court clerk for the defendant’s costs more than 30 days after receiving notice that the security is required, but before the district court has dismissed the case.

Biscay slipped and fell at a hotel owned by MGM Resorts International (MGM). Biscay filed a complaint against MGM for various torts relating to her fall. On September 26, 2012, MGM filed a demand for security of costs pursuant to NRS 18.130. Over six months later, Biscay filed a notice stating that she had filed the required security with the court clerk. Nine days after Biscay filed her bond, MGM moved the court to dismiss the case pursuant to NRS 18.130(4), which the district court ultimately did.

The district court concluded that NRS 18.130(4) required that plaintiffs file security with the court clerk within 30 days of receiving notice that security is required. Thus, the district court concluded that even though Biscay filed the required bond before MGM moved the court to dismiss the case, dismissal was appropriate because Biscay filed her bond well outside of 30 days from receiving notice that security was required. Biscay appealed.

Biscay argued that pursuant to NRS 18.130(4), dismissal is inappropriate as long as the plaintiff files the required security with the court clerk before the case is dismissed.

NRS 18.130 allows defendants to protect themselves from the dangers of litigating against nonresident plaintiffs. In cases where security is required by the defendant, all proceedings in the action are stayed until tthe plaintiff files the security. NRS 18.130(4) provides that after the lapse of 30 days from the service of notice that security is required, upon proof thereof, and that no undertaking as required has been filed, the court or judge may order the action to be dismissed.

Based on a plain reading, the Nevada Supreme Court concluded that neither NRS 18.130(1) nor 18.130(4) gives a mandatory time frame in which the security must be filed. Instead, upon providing proof that 30 days has passed and no security has been filed, the defendant may move to dismiss the case or the district court may dismiss the case on its own. Thus, the 30-day requirement is a prerequisite for dismissal, not filing the security. The Court explained that once 30 days has passed, the defendant has the right to ask the district court to dismiss the case, or the district court has the authority to dismiss the case on its own. Until the case is dismissed, however, the plaintiff is still free to file the security.

The Court concluded that it is an abuse of discretion for the district court to dismiss the case if the plaintiff has filed the required security with the court clerk at any time before the court dismisses the case. Accordingly, because Biscay filed her bond before the case was dismissed, the Court found that the district court abused its discretion in granting MGM’s motion to dismiss.

Can a child custody decree prohibit a child’s visitation to a non-Hague signatory country?

Posted on by Jeff Jaeger

Davis v. Ewalefo (Nev. Supreme Ct. – July 2, 2015)

As stipulated in a child custody decree, both parents have joint legal custody of their eight-year-old son, E.D., and the mother, Ewalefo, has primary physical custody. In dispute are the visitation rights of the father, Davis. The decree granted Davis unsupervised visitation, but specified that visitation cannot occur in Africa, where Davis lives and works; it also included a provision that forbade E.D. from traveling outside the United States except on court order or with both parents’ consent.

The issue is whether the decree can prohibit the child’s visitation in Rwanda and Uganda on the grounds that neither country is a signatory to the Hague Convention on the Civil Aspects of International Child Abduction.

Ewalefo and Davis came to court in agreement that it was in E.D.’s best interest that they share joint legal custody, with Ewalefo exercising primary physical custody. They differed on visitation. The parents also disagreed on, but ultimately worked out details relating to, notice of visitation, holidays, Skype sessions, and other matters.

Davis lives and works in Africa, making frequent face-to-face and unscheduled visitation impossible. Before initiating this action, Davis worked with Ewalefo in an effort to establish reasonable visitation and was met, the district court orally found, with multiple instances of Ewalefo finding reasons to alter or minimize contact. In his complaint, Davis sought a decree awarding him up to four two-week blocks of unsupervised visitation per school year, to occur wherever E.D. is then attending school; in addition, he asked that E.D. be allowed to spend all but two weeks of his summers in Africa. Ewalefo agreed to Davis having unsupervised visitation but asked that it occur in the United States and be limited, initially, to three two-week blocks of time per year. Somewhat inconsistently, Ewalefo suggested as an appropriate condition of joint legal custody that, If a trip is made overseas, the addresses and telephone numbers at which the minor child will reside must be provided within 30 days prior to the minor child leaving the United States.

The facts elicited at the evidentiary hearing showed that, although a United States citizen, Davis has significant international ties, especially to Africa. Davis was born and raised in Nigeria to American missionaries, who now live in Texas. He graduated with a bachelor’s of science degree from Texas A&M University, and then went to work for the U.S. Department of Defense in its reconstruction efforts in Iraq. This was followed by project-management work for Texas A&M in the Democratic Republic of Congo (DRC), supporting construction and road improvement projects there. After Davis and Ewalefo separated, he married Marilena, a German national who had been a schoolmate of his growing up in Nigeria. Marilena now also works for Texas A&M on DRC project supervision. Davis owns a house in Texas, which he rents out.

Like Davis, Ewalefo is well-educated, with a bachelor’s of science degree, and has international ties. Her father was born and raised in Nigeria, a country she visited as a child. When E.D. was three years old, he and his parents went to Kenya for vacation, where the family visited a game reserve. E.D. has also traveled to Europe with his mother. Ewalefo acknowledged that, at least before the formal custody proceedings began, she was agreeable to E.D. traveling overseas to visit Davis, so long as she was the boy’s traveling guardian, and at one point had been open to living overseas with Davis and E.D.

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Must a bank statement contain check images to provide notice of unauthorized transactions?

Posted on by Jeff Jaeger

C. Nicholas Pereos, Ltd. v. Bank of Am. (Nev. Supreme Ct. – July 2, 2015)

Williams, a long-time employee of Pereos, Ltd., law firm, was a signator on the firm’s operating account with Bank of America. In September 2006, the firm’s solo practitioner, Pereos, removed Williams as a signator on the account, leaving Pereos as the sole signator. Pereos told Williams to let the Bank of America account “run itself out” to cover any outstanding checks, but he never took any action to affirmatively close the account.

In 2010, Pereos discovered that Williams had been embezzling money since 2006. Despite being removed as a signator on the account, Williams deposited checks made out to Pereos, Ltd. into the Bank of America account and would then write and sign checks for her own personal use. Pereos notified the bank of the unauthorized transactions on January 28, 2010. The next month, Pereos, Ltd. filed a complaint against Bank of America based on Williams’ use of unauthorized signatures to withdraw funds from the account from 2006 to 2010. When it was discovered that Williams had enrolled the Pereos, Ltd. account in online banking and the bank statements had not been mailed, Pereos amended the complaint to include an allegation that Bank of America had failed to make Pereos, Ltd.’s statements available as required by NRS 104.4406(1).

Bank of America moved to dismiss the amended complaint, or alternatively for summary judgment, on the ground that Pereos, Ltd.’s claims for unauthorized transactions were time-barred either because they were not reported by Pereos, Ltd. within 30 days under NRS 104.4406(4)(b) or within the one-year period of repose under NRS 104.4406(6). The bank argued that, notwithstanding Pereos, Ltd.’s contention that the account statements were not mailed to it, Pereos’ deposition testimony revealed that Pereos had on occasion personally picked up some of Pereos, Ltd.’s bank account statements from Bank of America in 2006, 2007, and 2008. The bank attached copies of the account’s statements to its motion and argued that the unauthorized transactions were contained in the bank statements that were made available to Pereos. In opposition, Pereos, Ltd. argued that the statements he obtained were insufficient to provide it with notice of the unauthorized signatures as they were only a single page or two-page document that showed check numbers and the amount of the check, and balances and nothing more. Moreover, he contended that the statements were insufficient because they did not contain a copy of the canceled checks. Pereos also argued that his claims for unauthorized checks cashed within the year preceding his notification to the bank were not time-barred. Conversely, Bank of America argued that, because the same wrongdoer committed all of the wrongful transactions, all claims were time-barred by Pereos, Ltd.’s failure to give the bank notice within 30 days after receiving the account statements.

The district court granted summary judgment in favor of Bank of America, finding that it was irrelevant whether Pereos, Ltd. Received copies of the checks because NRS 104.4406(1) does not require the inclusion of check images. Moreover, the district court found that there was no dispute that the bank statements received by Pereos contained item numbers, amounts, and dates of payment, and thus, the account statements Pereos received were sufficient to notify him of the unauthorized activity on the firm’s account. Accordingly, all claims were time-barred under NRS 104.4406(4)(b) and NRS 104.4406(6). Pereos appealed.

The Nevada Supreme Court explained that Nevada’s version of the Uniform Commercial Code generally absolves a bank of liability for payment on an unauthorized transaction when it provides the customer with information that would allow the customer to identify any unauthorized transactions, such as an account statement, and the customer then fails to timely act in response to unauthorized transactions reflected therein.

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Is a debtor subject to criminal contempt for refusal to participate in a debtor’s examination?

Posted on by Jeff Jaeger

Alper v. Eighth Jud. Dist. Ct. (Nev. Supreme Ct. – June 25, 2015)

A bankruptcy court entered an order lifting an automatic stay to permit the district court to determine whether a judgment debtor’s prior refusals to participate in debtor’s examinations in the district court were subject to criminal contempt. The automatic stay provisions of 11 U.S.C. § 362(b)(1) of the Bankruptcy Code do not stay the commencement or continuation of a criminal action or proceeding against the debtor.

The issue is whether the subsequent district court order finding the judgment debtor in contempt, but allowing him to avoid incarceration by participating in a debtor’s examination, exceeded the scope of the bankruptcy court’s lift stay order.

In August 2010, the district court entered judgment in excess of $16,000,000 against Plise and in favor of Alper. Thereafter, Alper obtained an order for examination of Plise’s assets and liabilities to satisfy the judgment.

Plise did not attend the first scheduled debtor’s examination, and Alper moved for an order to show cause why Elise should not be held in contempt of court. The district court ordered Plise to appear, produce documents, and fully comply with the order or he would be held in contempt of court.

Plise appeared at the next scheduled exam, but asserted a Fifth Amendment privilege in response to every question except his name. Alper filed a status report indicating Plise did not produce the documents the court previously ordered him to produce, nor did he answer questions during the exam. At a subsequent status hearing, the district court ordered Plise to answer Alper’s questions. Alper scheduled a new debtor’s examination, and Plise requested several continuances, but ultimately Plise did not appear. Fifteen days later, Alper sought an order to show cause why Plise should not be held in contempt of court. But, two days before the hearing on that motion, Plise filed a bankruptcy petition.

Alper participated in the bankruptcy proceeding, and as a result, obtained an order from the bankruptcy court granting relief from the automatic stay and allowing the district court to conduct a hearing and enter an order with regard to the alleged criminal contempt of Plise. Alper again moved in district court for an order to show cause as to why Plise should not be held in contempt for his failure to appear at the debtor’s examination. Plise opposed any order for contempt, arguing that, based on its punishment, contempt is a misdemeanor and the statute of limitations had run on any of Plise’s alleged contemptuous conduct.

At the hearing, the district court found Plise guilty of contempt of court and sentenced Plise to 21 days incarceration. However, the district court also provided that Plise could purge his contempt and be released from confinement if he fully participated in a judgment debtor examination. In doing so, he could avoid serving the remainder of his sentence.

Alper filed a writ petition arguing that the district court exceeded the scope of the bankruptcy court’s order granting relief from the automatic stay, thereby violating 11 U.S.C. § 362(a), when it conditionally allowed Plise to avoid criminal contempt punishment, thus transforming the contempt proceeding from criminal to civil. Plise responded by arguing that the statute of limitations had already run on any criminal contemptuous conduct. Plise also argueed that Alper waived his argument by not objecting during the sentencing.

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