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Does Nevada recognize a cause of action for third-party retaliatory discharge?

Posted on by Jeff Jaeger

Brown v. Eddie World, Inc. (Nev. Supreme Ct. – Apr. 16, 2015)

Brown was employed by Eddie World, Inc., as assistant manager of a candy store. The store was located on property owned by Stagecoach Hotel and Casino, Inc., and both corporations (collectively, Stagecoach) were under common ownership and management. Stagecoach knew that Brown was engaged to Allen. Brown did not allege that Stagecoach ever employed Allen. Allen filed a complaint with the Nevada Gaming Control Board (NGCB) regarding some of Stagecoach’s slot machines. Shortly after the NGCB informed Stagecoach that Allen filed the complaint, Stagecoach began assigning Brown’s job responsibilities to other employees. Within weeks, Stagecoach terminated Brown’s employment.

Brown filed a complaint in district court alleging that Stagecoach terminated her employment in retaliation for Allen’s complaint to the NGCB and that discharging her was therefore tortious and in violation of public policy. Stagecoach moved to dismiss Brown’s complaint for failure to state a claim pursuant to NRCP 12(b)(5). The district court granted Stagecoach’s motion because Nevada had not recognized a cause of action for third-party retaliatory discharge. Brown appealed.

On appeal, Brown asked the Nevada Supreme Court to recognize, for the first time, a common law cause of action for third-party retaliatory discharge.

The Court indicated that enforcing Nevada’s gaming laws is a sufficiently strong and compelling public policy to support a claim for tortious discharge. However, tortious discharge requires an employer employee relationship. Here, Brown had not alleged that Stagecoach ever employed Allen. Thus, this most basic requirement of an employment relationship involving Allen, the person whose acts led to the challenged retaliation, were not satisfied.

The Court reasoned that if it were to recognize Brown’s claim, the theory of third-party retaliatory discharge would have no logical stopping point. Allen was neither a Stagecoach employee nor under any obligation to report perceived violations of Nevada’s gaming regulations to the NGCB. Therefore, the Court declined to recognize a common law cause for third-party retaliatory discharge.

Are conversations during deposition breaks privileged?

Posted on by Jeff Jaeger

Coyote Springs Inv. v. Eighth Jud. Dist. Ct. (Nev. Supreme Ct. – Apr. 2, 2015)

The issue is whether a private communication between a witness and an attorney during a requested break in the witness’s deposition is entitled to protection from discovery under the attorney-client privilege.

Coyote Springs sued BrightSource, arguing that a lease’s termination was ineffective without payment of the termination fee. In preparation for trial, the parties deposed Whittemore, the former co-owner and manager of Coyote Springs. Whittemore testified that he and Coyote Springs’ general counsel, Cargill, negotiated the lease for Coyote Springs. Whittemore’s deposition was continued and resumed nearly six months later, and BrightSource’s counsel further questioned Whittemore about his approval of term sheets and the lease summary. After BrightSource’s counsel completed this round of questioning, Coyote Springs’ litigation counsel suggested taking a break and requested a conference room for him, Whittemore, and Cargill. BrightSource’s counsel objected to any discussion during the break regarding questions that Whittemore had been asked. Coyote Springs’ litigation counsel and Cargill then met with Whittemore in a conference room.

Following Whittemore’s depositions, BrightSource filed a motion in limine to exclude Whittemore’s post-conference testimony and to “elicit at trial the substance of what was said during the private conference.” At a hearing on the motion, the district court concluded that “in general. . . you can’t do your witness prep during breaks” and explained that “if [Whittemore] talk[ed] about it at a deposition break and it wasn’t part of his preparation that was done ahead of time, it may be fair game” for inquiry.

At the close of BrightSource’s case, Coyote Springs made an oral motion for reconsideration of the Whittemore deposition issue. The district court denied the oral motion at the time, but the judge stated that she would reconsider after hearing closing arguments. The court stayed the entry of its findings of fact and conclusions of law pending resolution of the Coyote Springs’ petition.

Coyote Springs argued that writ relief was warranted because its attorney-client privilege was not waived when its witness and its counsel had privileged communications during a deposition break. BrightSource asserted that the private conference with Whittemore was not privileged because there was discussion about Whittemore’s substantive testimony in order to prepare him for examination or to refresh his recollection.

The Nevada Supreme Court found that Coyote Springs’ record of the deposition conference was insufficient to show that the communication was privileged. Specifically, the Court held that attorneys may confer with witnesses during an unrequested recess or break in a discovery deposition. The Court also held that attorneys may not request a break to confer with witnesses in a discovery deposition unless the purpose of the break is to determine whether to assert a privilege. The Court additionally held that once the deposition proceedings resume after a private conference that is requested to determine whether to assert a privilege, the attorney must place the following on the record: (1) the fact that a conference took place; (2) the subject of the conference; and (3) the result of the conference, specifically, the outcome of the decision whether to assert a privilege. The Court stressed that counsel must make a record of the confidential communications promptly after the deposition resumes in order to preserve the attorney-client privilege.

Thus, the Court found that the communications between Whittemore and Coyote Springs’ counsel during the break in Whittemore’s deposition were not privileged because Coyote Springs requested a break in the proceedings, failed to make a record of the result reached in the conference, and failed to make a prompt record of the communications.

Can a guilty plea for a drug offense be used to deny unemployment benefits?

Posted on by Jeff Jaeger

Hohenstein v. State, Emp’t Sec. Div. (Nev. Supreme Ct. – Apr. 2, 2015)

NRS 453.3363 affords certain first-time drug offenders the opportunity to avoid a criminal conviction if the offender pleads guilty, then successfully completes a probationary period. Upon successfully completing probation, the offender is discharged and the charges are dismissed. Addressing the civil consequences of such a plea to the offender who successfully completes probation, NRS 453.3363(4) provides: [D]ischarge and dismissal under this [statute] is without adjudication of guilt and is not a conviction for purposes. . . of employment, civil rights or any statute or regulation or license or questionnaire or for any other public or private purpose.”

The issue is how does this statute apply to a public school teacher who was terminated after pleading guilty but before completing probation, specifically, whether a guilty plea pursuant to NRS453.3363 may be used to deny unemployment benefits to the terminated teacher.

Hohenstein, a teacher for the Washoe County School District (WCSD), was arrested for and pleaded guilty to possessing marijuana in his residence in violation of NRS 453.336. Because this was his first offense, the district court did not enter a judgment of conviction. Instead, it suspended Hohenstein’s sentence and placed him on probation for a period not to exceed 3 years. Per NRS 453.3363(1), if Hohenstein fulfilled the conditions of probation, the criminal proceedings would be dismissed in accordance with NRS 453.3363(3).

On learning of Hohenstein’s arrest the WCSD suspended him and began termination proceedings, during which Hohenstein entered his guilty plea. The WCSD specified its final grounds for terminating Hohenstein, consistent with NRS 391.31297, as: (1) immorality, (2) conviction of a felony or of a crime involving moral turpitude, and (3) any cause which constitutes grounds for revocation of a teaching license.

Hohenstein sought unemployment benefits. After a hearing, the Employment Security Division (ESD) denied Hohenstein benefits on finding that his guilty plea established that the WCSD had terminated Hohenstein for “workplace misconduct,” to wit: he had committed immoral conduct under NRS 391.31297(1)(b), which disqualified him from eligibility for unemployment benefits under NRS 612.385. Hohenstein filed an unsuccessful petition for judicial review, then appealed.

The Nevada Supreme Court determined that the WCSD relied on Hohenstein’s guilty plea as grounds both for terminating him and for establishing that his termination was misconduct-based, making him ineligible for unemployment compensation. The WCSD thus equated Hohenstein’s guilty plea with a felony conviction and persuaded the ESD that Hohenstein’s termination was felony-based.

Upon review of the ESD’s decision, the Nevada Supreme Court adopted the reasoning and interpretation offered in Tate v. Board of Education of Kent County, 485 A.2d 688 (Md. Ct. Spec. App. 1985) and held that, since NRS 453.3363(4) forestalls a final judgment of conviction “for purposes of employment, civil rights or any statute or regulation or license or questionnaire or for any other public or private purpose” if the offender successfully completes probation, the guilty plea may not be used to establish misconduct based grounds for termination for purposes of denying unemployment compensation during the probationary period. The Court reversed the district court’s order denying judicial review and remanded with instructions that the district court remand to the ESD to determine, without considering Hohenstein’s guilty plea, whether the WCSD met its burden to demonstrate that Hohenstein committed disqualifying misconduct under NRS 612.385 for which he was terminated.

Is Nevada’s criminal sentencing statute unconstitutional?

Posted on by Jeff Jaeger

Pitmon v. State (Nev. Ct. App. – Mar. 26, 2015)

When a criminal defendant stands convicted of two or more felony criminal offenses and has already been sentenced to a term of imprisonment for one of those offenses, NRS 176.035(1) expressly permits a district court to order that the sentence for the second offense be imposed either concurrently or consecutively to the first sentence.

The issue is whether NRS 176.035(1) violates the Due Process Clause of the United States and Nevada Constitutions because it fails to articulate any pre-existing and reviewable criteria to guide the district court in deciding whether the second sentence should be imposed concurrently or consecutively.

Pitmon was originally charged in three separate cases with multiple counts of attempted lewdness with a child under the age of 14. The charges in two of those cases were eventually consolidated together into a single case (the first case), leaving two cases pending. Following negotiations with the district attorney, Pitmon agreed to enter a plea of guilty in each case to one count of attempted lewdness with a child under the age of 14, and all other pending charges and counts were to be dismissed after rendition of sentence.

Pitman was sentenced in the first case and received the maximum possible sentence, which was a minimum term of 8 years and a maximum term of 20 year’ imprisonment. Two days later, he appeared for sentencing in his second case and again received the maximum possible sentence. Additionally, the district judge in his second case ordered that the sentence be served consecutively to the sentence previously imposed in the first case.

Pitmon appealed arguing that NRS 176.035(1) fails to comply with the Due Process Clause because an ordinary citizen facing sentencing for different offenses cannot reasonably understand or anticipate whether the sentences are likely to be imposed concurrently or consecutively. Pitmon also contended that Nevada’s sentencing scheme is invalid because it lacks meaningful appellate review of any sentence imposed by a district court, no matter how arbitrary that sentence may have been.

Citing a Ninth Circuit case, the Nevada Court of Appeals believed that the imposition of consecutive sentences for the commission of two separate crimes would represent an outcome reasonably to be expected by persons of ordinary intelligence. See Fierro v. MacDougall, 648 F.2d 1259, 1260 (9th Cir. 1981) (concluding that, even where the legislature did not authorize the imposition of consecutive sentences, the due process clause permitted judge to impose consecutive sentences because “[t]he imposition of consecutive sentences is nothing more than the imposition, for each crime, of the sentence fixed by legislative act. Such sentencing [constitutes] literal compliance with that which the legislature has prescribed.”). Thus, the Court concluded that NRS 176.035(1) is not unconstitutionally vague in violation of the Due Process Clause of the U.S. and Nevada Constitutions.

To the extent that Pitmon asserted that his sentences were unconstitutional as applied to him, the Court concluded that the sentences imposed were not unreasonably disproportionate to the offenses to which Ptimon pleaded guilty, even though he received the maximum sentences.

Nevada Supreme Court explores the rule against perpetuities

Posted on by Jeff Jaeger

Bullion Monarch v. Barrick Goldstrike (Nev. Supreme Ct. – Mar. 26, 2015)

Does Nevada’s Rule Against Perpetuities apply to an area-of-interest provision in a commercial mining agreement?

The Ninth Circuit Court of Appeals certified two questions to the Nevada Supreme Court concerning Nevada’s rule against perpetuities. The first question asked whether Nevada’s Rule Against Perpetuities applies to an area-of-interest provision in a commercial mining agreement. The second asked whether, if the rule applies, courts may reform such agreements under NRS 111.1039(2).

Bullion Monarch Mining, Inc. (Bullion), alleged that Barrick Goldstrike Mines, Inc. (Barrick), owes royalty payments to Bullion under an area-of-interest provision in a 1979 agreement. According to Bullion, its predecessor-in-interest entered into the agreement with a mine operator, Barrick’s predecessor-in interest, to develop Bullion’s predecessor’s mining claims in the Carlin Trend.

The area-of-interest provision required the mine operator to pay Bullion a royalty on production resulting from the operator’s mining claims that the operator might subsequently acquire within the area of interest. Under the agreement, Bullion is to receive royalty payments on production from after-acquired claims in the area of interest for 99 years

Bullion filed suit in Nevada federal district court seeking royalty payments on production from after-acquired claims in the area of interest. Barrick argued that it did not owe royalties because the area-of-interest provision was void under the rule against perpetuities. Bullion responded that the rule did not apply to area-of-interest royalty agreements. In the alternative, Bullion sought reformation of the agreement under NRS 111.1039(2).

The federal district court granted summary judgment to Barrick based on the rule against perpetuities. Bullion appealed. The Ninth Circuit Court of Appeals then certified the questions to the Nevada Supreme Court.

The Court noted that the rule against perpetuities was developed to promote public policy by ensuring that property remained alienable and that applying the rule to area-of-interest royalty agreements does not further public policy. The Court further reasoned that the Nevada Legislature has said as much by exempting commercial, nondonative transfers from the statutory rule against perpetuities. Thus, the Court held that Nevada’s common-law rule against perpetuities does not extend to area of-interest royalties created by commercial mining agreements. Since the Court answered the first question in the negative, it did not consider the second.

Do the Nevada Rules of Appellate Procedure allow for the imposition of attorney fees on a party who seeks to voluntarily dismiss a nonfrivolous writ petition after an answer has been filed?

Posted on by Jeff Jaeger

Breeden v. Eighth Jud. Dist. Ct. (Nev. Supreme Ct. – Mar. 5, 2015)

Attorney Breeden filed a petition in the Nevada Supreme Court for extraordinary writ relief, challenging a district court order adjudicating attorney liens and distributing settlement funds in a personal injury action. The real party in interest, Gonzalez, was Breeden’s former client. As ordered, Gonzalez filed an answer to Breeden’s writ petition. Breeden also had a separate contract action underway against Gonzalez and others, seeking to enforce an alleged fee-sharing agreement.

After receiving Gonzalez’s answer, Breeden decided it was more prudent to pursue the contract action than writ relief and moved to dismiss the writ petition under NRAP 42(b). Gonzalez opposed the motion. She asked that the Court resolve the petition on the merits but, if the Court does not, that it require Breeden to pay her costs and attorney fees.

The Court noted that a lawyer seeking to recover fees may proceed by separate contract action or by lien proceeding, depending on circumstances. For this reason, the Court declined to perpetuate the undecided writ proceeding if Breeden wished to abandon it in favor of his currently stayed contract action. The Court went on to decide whether it may condition the dismissal on Breeden repaying Gonzalez for the costs and attorney fees she incurred defending this now-abandoned writ petition.

Comparing NRAP 38 with Rule 38 of the Federal Rules of Appellate Procedure, which authorizes fee-shifting but limits the authorization to frivolous filings, the Court reasoned that it does not make sense to penalize a party who voluntarily dismisses a nonfrivolous appeal when, under Rule 38, the same party with the same nonfrivolous appeal would not have to pay the other side’s fees if he or she stayed with the appeal to the bitter end. Thus, the Court held that NRAP 42(b) does not provide authority for routine awards of attorney fees as a condition of voluntary dismissal, but that attorney fees may be awarded under NRAP 38 if an appeal or writ proceeding is frivolous.

Is a new notice of sale required if the time or place of a trustee’s sale changes after a third oral postponement?

Posted on by Jeff Jaeger

JED Prop. v. Coastline RE Holdings NV Corp. (Nev. Supreme Ct. – Mar. 5, 2015)

To foreclose on real property in Las Vegas that was used to secure a debt by JED Property, LLC, Coastline RE Holdings recorded a notice of a trustee’s sale. The trustee’s sale was orally postponed three times before the property was sold, with the sale occurring on the date and at the place set by the third oral postponement.

Coastline initiated a civil action against JED. JED filed a counterclaim against Coastline asserting wrongful foreclosure because Coastline violated NRS 107.082(2) when it orally postponed the sale three times without effectuating a written notice of the sale’s time and place. Coastline then filed a motion for summary judgment, arguing that JED premised its counterclaims on an erroneous interpretation of NRS 107.082(2). The district court granted summary judgment in favor of Coastline upon concluding that the three oral postponements did not trigger NRS 107.082(2)’s notice requirement because the sale occurred on the date set by the third oral postponement. JED appealed.

On appeal, JED argued that the district court’s reading of NRS 107.082(2) deviated from the statute’s plain meaning, which JED reads as requiring a written notice of new sale information upon the third oral postponement of the sale. Coastline contended that NRS 107.082(2) unambiguously permits three oral postponements of a sale and requires the notice of any new sale information only for postponements that follow the third oral postponement.

Citing NRS 107.082(2), the Nevada Supreme Court held that as long as the information regarding the sale’s date, time, and place remains the same after the third oral postponement, there is no new sale information to provide that would require a new notice. However, if the sale’s date, time, or location changes after the third oral postponement, then there is new sale information. Thus, if the sale’s date, time, or location changes after the third oral postponement, NRS 107.082(2) requires that this new sale information be noticed as provided in NRS 107.080(4).

The Court affirmed the district court’s granting of summary judgment in favor of Coastline noting that JED failed to submit any evidence that the day, time, or place of the trustee’s sale in this case changed after the third postponement.

Can a bank recover a deficiency from a court appointed receiver’s sale of real property securing a $20.15 million loan?

Posted on by Jeff Jaeger

U.S. Bank Nat’l Ass’n v. Palmilla Dev. Co. (Nev. Supreme Ct. – Mar. 5, 2015)

“Palmilla Development Co., took out a loan for $20.15 million from the predecessor-in-interest of appellant U.S. Bank. The loan was secured by a deed of trust on a development of townhomes and personally guaranteed by respondent Hagai Rapaport, Palmilla’s president. U S Bank became the legal holder of the loan note and all beneficial interest under thefl deed of trust, following which Palmilla defaulted and Rapaport failed to fulfill his guarantor obligations. U.S. Bank then instituted an action seeking to appoint a receiver in order to collect rents from, to market, and to sell the secured property.”

Following the district court’s approval of U S Bank’s request, the receiver, through a real estate marketing company, listed the subject property and, over the course of several months, obtained 31 offers to purchase the property. From these offers, the receiver identified what it believed to be the best offer and entered into a purchase and sale agreement with that third-party purchaser for $9.5 million on February 5, 2010. U.S. Bank filed a motion to approve the sale, which the district court granted on March 26, 2010. Escrow closed on June 7, 2010, when the purchaser paid the agreed upon price and obtained the deed to the property.

The bank filed an amended complaint seeking the recover the deficiency from the proceeds of the receiver’s sale. Palmilla filed a motion for summary judgment arguing that that the relief sought in the amended complaint was, in essence, an application for a deficiency judgment under NRS 40.455(1), which U.S. Bank was precluded from seeking because (1) the receiver sale was not a “foreclosure sale or trustee’s sale held pursuant to NRS 107.080,” and absent either of those two types of sales, NRS 40.455(1) does not permit a deficiency judgment; and (2) even if NRS 40.455(1) could be used to seek a deficiency judgment following a receiver sale of real property securing a loan, U.S. Bank failed to comply with the section’s time frame for so seeking.

The district court granted Palmilla’s motion, holding that, although U.S. Bank could utilize NRS 40.455(1) to seek a deficiency judgment following a receiver sale of real property securing a loan, U.S. Bank had to abide by NRS 40.455(1)’s six-month time frame in so doing, and that more than six months had passed between the date U.S. Bank filed its amended complaint and the date the district court approved the purchase and sales agreement.

On appeal, the Nevada Supreme Court held that a receiver sale of real property securing a loan is a “foreclosure sale” within the meaning that NRS 40.455(1) and that NRS 40.455(1) governs actions for deficiency judgments following a receiver sale of real property securing a loan. The court further held that in the context of receiver sales of real property securing loans, it is not until the actual exchange of money, the close of escrow, that NRS 40.455(1)’s six-month time limit begins.

The Court reversed and remanded the matter noting that less than six months had elapsed between the payment of funds on June 7, 2010, and U.S. Bank’s application for a deficiency judgment on November 24, 2010, U.S. Bank complied with NRS 40.455(1)’s requisite time frame.

Nevada Supreme Court conducts a minimum contacts test

Posted on by Jeff Jaeger

Fulbright & Jaworski v. Eighth Jud. Dist. Ct. (Nev. Supreme Ct. – Feb. 5, 2015)

This case should be of special interest to those of us who did not get enough civ pro in law school.

The issue is whether a Texas-based law firm’s representation of a Nevada client in a Texas matter, by itself, provides a basis for specific personal jurisdiction in Nevada.

After extensive analysis, the Court concluded that an out-of-state law firm that is solicited by a Nevada client to represent the client on an out-of-state matter does not subject itself to personal jurisdiction in Nevada simply by virtue of agreeing to represent the client.

 

Doctor claims venue not appropriate for subpoena contempt petition issued by the Nevada State Board of Medical Examiners

Posted on by Jeff Jaeger

Jones v. State, Bd. of Med. Exam’rs (Nev. Supreme Ct. – Feb. 5, 2015)

On appeal, a doctor argues that the district court failed to consider NRS Chapter 13, including the doctrine of forum non conveniens, in denying her motion to change venue of a subpoena contempt petition arising from her failure to comply with an administrative subpoena issued by the Nevada State Board of Medical Examiners.

“After a preliminary investigation, respondent Nevada State Board of Medical Examiners filed an administrative complaint against appellant Carmen Jones, M.D., alleging among other things that Dr. Jones aided a third party in the unauthorized practice of medicine. In furtherance of the Board’s investigation, it issued a subpoena to Dr. Jones to obtain patient records in accordance with NRS 630.140(1)(b), which authorizes the Board to issue administrative subpoenas to compel the production of documents. When Dr. Jones failed to comply with the subpoena, the Board petitioned the Second Judicial District Court, located in Washoe County, for an order compelling compliance with its administrative subpoena under NRS 630.140 and NRS 630.355.”

Dr. Jones filed a motion to change the venue of the subpoena contempt petition to the Eighth Judicial District Court, which is located in Clark County, arguing that the petition to enforce the subpoena should have been brought in Clark County where she resides and practices medicine.

The district court denied Dr. Jones’s motion for a change of venue finding that under NRS 630.355(1), venue in the Second Judicial District Court was proper.

The Nevada Supreme Court affirmed the district court’s order holding that NRS 630.355(1) means that venue for a contempt proceeding brought by the Board under that statute is proper in the county where the administrative work of the Board is taking place.

In this case, the Board’s administrative work, including its filing of a formal complaint and its previous issuance of an order of summary suspension of Dr. Jones’s license, took place in the Board’s Washoe County office.