Rock Bay, LLC v. Dist. Ct., 129 Nev. Adv. Op. 21 (April 4, 2013)

Before Chief Justice Pickering and Justices Hardesty and Siatta. Opinion by Justice Hardesty In this petition for a writ of prohibition, the Court considered when discovery of a nonparty’s assets is permissible under NRCP 69(a), which allows for post-judgment discovery in aid of execution of a judgment. The creditors had obtained a judgment in Florida against a group of debtors. During the course of the Florida litigation, there was a series of transfers between the debtors and Rock Bay. Rock Bay was an entity that was deeply intertwined with the judgment debtors and the managing member of Rock Bay was Maybourne, Inc., an entity having the same address as the judgment debtors. The judgment creditors domesticated the Florida judgment in Nevada. Shortly thereafter, Rock Bay was dissolved. The judgment creditors subpoenaed Rock Bay’s and Maybourne’s accounting records and Rock Bay’s financial records. Petitioners, Rock Bay and Maybourne moved to quash, which the district court denied. The Court concluded that discovery of a nonparty’s assets under NRCP 69(a) is not permissible absent special circumstances such as situations in which the judgment debtor and the nonparty have a relationship which raises a reasonable suspicion as to the good faith of asset transfers between the two parties or when the nonparty is the alter ego of the judgment debtor. Thus, the Court determined that the subpoenas issued against Rock Bay were permissible even when considering Rock Bay’s privacy interests in financial records because there was a relationship between the judgment debtors and Rock Bay which raised a reasonable suspicion as to the good faith of the transfers between the parties. However, the Court concluded that the district court improperly declined to quash the subpoena issued against Maybourne as there was no evidence that Maybourne ever held or transferred assets with the judgment debtors nor did the judgment creditors ever assert that Maybourne was an alter ego. Petition denied in part and granted in part. (Amanda M. Perach, Associate in the Las Vegas office of McDonald Carano Wilson).