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.

The first appeal

On appeal, the Nevada Supreme Court entered an order of reversal and remand. The order reached two conclusions: (1) the jury damages award amounts were not supported by the evidence, and (2) the district court cannot accept a verdict with interlineations on the verdict form. As to the first conclusion, the court reasoned that it could not determine how the jury arrived at the damages figure because there was no indication as to what comprised the jury’s award. Later, the court denied a petition for rehearing but clarified that “this matter is remanded for a new trial solely on the issue of [the Shacks’] damages claims.”

The second trial

During the second jury trial, after the Shacks rested their case, Lawson moved under Nevada Rules of Civil Procedure (NRCP) Rule 50 for a directed verdict, which the district court denied. The jury subsequently returned a verdict for $371,400 in damages on Shack’s breach of contract and breach of the implied covenant of good faith and fair dealing claims. The jury awarded the Shacks $147,200 on their breach of contract claim: $50,000 for the security deposit, and $97,200 for other costs related to the business. The jury also awarded the Shacks $224,200 on their breach of the implied covenant of good faith and fair dealing claim: $50,000 for the security deposit, $124,200 for rent, and $50,000 for construction settlement costs. A number of post-trial motions followed.

Lawson first moved for judgment notwithstanding the verdict, or alternatively a new trial, which the district court denied. Lawson then moved for $47,164.08 in prejudgment and post-judgment interest on the $100,000 offset it received in the first trial. The district court denied this motion, finding that the offset and the alleged interest were not recoverable because this court’s reversal and remand order eliminated the $100,000 offset. Finally, Lawson moved for a new trial on its breach of contract and abuse of process counterclaims, which the district court denied.

The Shacks moved for costs requesting $19,214.93 in costs for their current law firm and $4,618.51 in costs for their former law firm. The district court awarded the Shacks’ current law firm $16,217.53 in costs and their former law firm $2,683.51 in costs, for a total of $18,901.04. The Shacks also moved for $400,222 in attorney fees. Lawson opposed the motion, arguing, among other things, that the Shacks were time-barred from requesting attorney fees under NRCP 54(d)(2)(B) because the motion for attorney fees was filed more than 20 days after the notice of entry of judgment was served. The district court disagreed and found the motion timely, reasoning that Lawson’s motion for judgment notwithstanding the verdict or for a new trial tolled the deadline for filing the motion. Consequently, the district court awarded the Shacks the entire $400,222 requested.

Lawson appealed, challenging the district court’s (1) denial of its motion for judgment notwithstanding the verdict, (2) denial of its motion for a new trial, (3) denial of its motion for relief from judgment, (4) denial of its motion for prejudgment and post-judgment interest on the offset, (5) award of costs to the Shacks, and (6) award of attorney fees to the Shacks.

On appeal, the Nevada Supreme Court addressed, among other issues, whether the filing of a post-judgment motion that tolls the time to appeal also tolls NRCP 54(d)(2)(B)’s 20-day deadline to move for attorney fees.

Lawson argued that NRCP 54(d)(2)(B) mandated that a prevailing party must move for attorney fees within 20 days of the entry of judgment with no exception. Lawson asserted that the Shacks missed this filing deadline because the notice of entry of judgment was served on January 9, 2013, and the Shacks’ filed their motion for attorney fees on March 4, 2013.

In response, the Shacks argued that NRCP 54(d)(2)(B)’s 20-day deadline did not begin to run until the judgment is final and appealable. They contended that, here, the judgment was tolled when Lawson filed her NRCP 50 and NRCP 59 motions, and thus, they had 20 days from the resolution of those motions to file a motion for attorney fees. Further, the Shacks contended that federal courts have adopted this approach and that it best satisfies the purpose of NRCP 54(d)—to resolve fee disputes in a timely manner and avoid piecemeal litigation.

In reply, Lawson argued that tolling cannot apply because the January 9, 2013, judgment was a final judgment. Further, Lawson asserted that the Shacks’ reliance on federal law was misplaced because Nevada’s rule contains the sentence, “[t]he time for filing a motion may not be extended by the court after it has expired,” while the federal rule does not. Lawson also argued that tolling is impractical.

The Court noted that many federal courts have implemented tolling under similar circumstances. Like NRCP 54(d)(2)(B), FRCP 54(d)(2)(B) mandates that “[u]nless a statute or a court order provides otherwise, [a] motion [for attorney fees] must, . . be filed no later than 14 days after the entry of judgment.” Faced with the same question presented here, “whether the [FRCP] 54(d)(2)(B) time limit is tolled pending the outcome of post-trial motions under [FRCP] 50 or [FRCP] 59,” the United States Court of Appeals for the Ninth Circuit in Bailey v. Cnty. of Riverside, 414 F.3d 1023 (9th Cir. 2005) determined that an “[FRCP] 54(d)(2)(B) motion for fees is timely if filed no later than 14 days after the resolution of [an FRCP] 50(b), [FRCP] 52(b) or [FRCP] 59 motion.” The Ninth Circuit reasoned that these post-trial motions suspend the finality of a district court’s judgment, for appellate purposes, because the judgment was not appealable during the pendency of the post-trial motions. This same reasoning has been implemented by the United States Courts of Appeals for the Second, Sixth, and Eleventh Circuits.

The Court explained that Nevada’s definition of a final judgment aligns with the aforementioned federal courts’ reasoning for adopting tolling. The Court has previously stated that, for appellate purposes, “a final judgment is one that disposes of all the issues presented in the case, and leaves nothing for the future consideration of the court, except for post-judgment issues such as attorney’s fees and costs.” Accordingly, the Court concluded that a post-judgment motion that tolls NRAP 4(a)’s deadline to appeal also tolls NRCP 54(d)(2)(B)’s filing deadline for a motion for attorney fees until the pending post-judgment tolling motion is decided.

Further, the Court explained that the adoption of tolling aligns with Nevada’s policy interests. Nevada has an interest in promoting judicial economy by avoiding the specter of piecemeal appellate review. The Court recognized that both approaches that the parties argued—tolling and no tolling—are imperfect as to judicial economy. Nevertheless, the Court concluded that tolling furthers its policy against piecemeal litigation more so than the alternative.

The Court also recognized that the federal rule and the Nevada rule differ due to Nevada’s inclusion of the sentence, “[t]he time for filing the motion may not be extended by the court after it has expired.” The Court concluded that this extra sentence had no effect on tolling. This extra sentence prevents a district court judge from granting a litigant a second chance at filing a motion for attorney fees if the litigant missed the filing deadline. But, tolling moves the deadline for filing a motion for attorney fees to 20 days after the resolution of the last post-judgment tolling motion. For example, a district court would have no need to extend the time to file a motion for attorney fees if the motion is filed 190 days after judgment was entered, but only 18 days after an order deciding a Rule 50(b) motion was entered, because the motion would have been filed within the 20-day deadline with a couple days to spare. Once the 20-day period expires, however, the extra sentence in Nevada’s statute would then prohibit any type of extension.

Finally, the Court disagreed with Lawson that tolling is impractical. Lawson essentially contended that a judgment is not final until it includes the verdict and award of attorney fees and costs. Lawson argued that implementing this rule would allow a party to move for attorney fees after the 30-day notice of appeal deadline expires, rendering the opposing party unable to appeal an award of attorney fees. Along with the fact that tolling has apparently functioned in the four aforementioned federal circuits, which have similar appellate rules, for many years without such problems arising, an order awarding attorney fees is a special order entered after final judgment, and is substantively appealable on its own. Thus, the Court explained that Lawson may appeal an award of attorney fees even after the deadline to file a notice of appeal from the final judgment has passed.

Consequently, due to the similarity between FRCP 54(d)(2)(B) and NRCP 54(d)(2)(B), the persuasive and applicable reasoning of the Second, Sixth, Ninth, and Eleventh Circuits, and the Court’s policy against piecemeal litigation, the Court held that an NRCP 54(d)(2)(B) motion for attorney fees is timely if filed no later than 20 days after the resolution of a postjudgment tolling motion. Therefore, the Court concluded that the district court did not err in finding the Shacks’ motion for attorney fees timely.

Visit the Nevada Appellate Report for more legal news.