Sandpointe Apts. v. Eighth Jud. Dist. Ct., 129 Nev. Adv. Op. 87 (Nov. 14, 2013)

Before the Court en banc. Opinion by Justice Saitta. Justices Cherry and Parraguirre dissented.
In this writ petition, the Court held that NRS 40.459(1)(c), which was added to Nevada’s law by Assembly Bill 273, may not apply retroactively to limit the amount of a deficiency judgment that can be recovered by persons who acquired the right to obtain the judgment from someone else who held that right. The protections of NRS 40.459(1)(c) are therefore only applicable to judicial foreclosures or trustee’s sales occurring on or after the effective date (June 10, 2011) of the statute. Petitioner Sandpointe Apartments, LLC (“Sandpointe”) received a loan from Silver State Bank in 2007 for the construction of an apartment complex. The loan was secured via a deed of trust on the real property and backed by a personal guarantee from Petitioner Stacy Yahraus-Lewis. Silver State Bank closed in 2008 and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver. After Sandpointe had already defaulted on its loan in 2009, the FDIC sold the loan and personal guarantee to Multibank, which then transferred its interest in the loan and guarantee to its wholly owned subsidiary, real party in interest, CML-NV Sandpointe, LLC (“CML-NV”). In early 2011, CML-NV foreclosed on Sandpointe’s loan and purchased the real property securing the loan at a trustee’s sale. Subsequently on June 10, 2011, the Governor signed Assembly Bill 273 into law, which had been unanimously passed by the Nevada Legislature. The relevant provision, codified as NRS 40.459(1)(c), provides that if “the person seeking the [deficiency] judgment acquired the right to obtain the judgment from a person who previously held that right,” then the person seeking the deficiency judgment may only recover “the amount by which the amount of the consideration paid for that right exceeds the fair market value of the property sold at the time of sale or the amount for which the property was actually sold, whichever is greater, with interest from the date of sale and reasonable costs.” CML-NV filed a complaint against Sandpointe and Yahraus-Lewis for deficiency and breach of guaranty on June 27, 2011. At a hearing on cross-motions for summary judgment, the district court concluded that NRS 40.459(1)(c) only applies to loans entered into after June 10, 2011. Thereafter, Sandpointe and Yahraus-Lewis petitioned the Supreme Court for a writ of mandamus or prohibition directing the district court to apply NRS 40.459(1)(c) to CML-NV’s deficiency judgment. Nevada statutes are presumed to operate only prospectively unless the Legislature clearly manifests an intent to apply the statute retroactively or it clearly appears from the statute itself that the Legislature’s intent cannot be implemented in the absence of retroactivity. A statute has retroactive effect when it takes away or impairs vested rights acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past. The Court held that the right to a deficiency judgment is a vested right as of the date of a trustee’s sale, which is when the amount of a deficiency is fixed. Related statutes, such as NRS 40.462(1), provide that the right to receive proceeds from a foreclosure sale vests at the time of the sale. Thus, the Court found it logical that the right to a judgment for the amount not received in a foreclosure sale would arise, and vest, on the same date as the right to receive amounts received from the sale. Applying NRS 40.459(1)(c) to deficiencies arising from sales prior to the enactment of the statute would affect vested rights and therefore would have an impermissible retroactive effect. An investigation into legislative intent was considered unwarranted by the majority as NRS 40.459(1)(c)’s provision that it becomes effective upon passage and approval is plain and unambiguous. Even if legislative history were consulted though, the majority noted that the author of Assembly Bill 273 stated on several occasions that the legislation could not be applied retroactively. Moreover, the presumption against retroactivity was not considered rebutted simply because the statute would have a broader impact if applied to transactions prior to 2011 as prospective application could still accomplish the legislative intent with respect to many loans. The Court rejected Petitioners’ argument that NRS 40.459(1)(c) is not retroactive because the statute merely clarifies existing law. Although another statute, NRS 40.451, limits a lien amount to the amount of consideration paid, the Court noted that the lien amount is only one factor determining the total amount of indebtedness, which is the figure used to determine the deficiency judgment amount. Additionally, the Court distinguished NRS 40.459(1)(c) as applicable to guarantors unlike NRS 40.451. Justices Cherry and Parraguirre dissented from the majority holding and would have granted the writ petition on the basis that the real party in interest had not yet obtained a deficiency judgment. The dissent argued that NRS 40.459(1)(c) applies at the time that a deficiency judgment is lawfully obtained and that until such judgment, a creditor only has a contingent remedy for potential deficiency and not a vested right. The dissent found persuasive the statement in the Legislative Counsel Digest that the provisions of Assembly Bill 273 would “apply to a deficiency judgment awarded on or after” the effective date and the Legislature’s corresponding declaration in its amicus curiae brief that it intended NRS 40.459(1)(c) to apply to every deficiency judgment awarded on or after the effective date. Noting the policy rationales of stopping profiteering activities and ensuring fairness to all parties to a transaction secured by realty, the dissent criticized the majority opinion for ignoring these objectives and denying protection to borrowers and guarantors who were the intended beneficiaries of the legislation. Petition denied. (Adam Hosmer-Henner, Associate in the Reno office of McDonald Carano Wilson.)

N. Lake Tahoe Fire v. Washoe Cnty. Comm'rs, 129 Nev. Adv. Op. 72 (Oct. 3, 2013)

Before Justices Hardesty, Parraguirre, and Cherry. Opinion by Justice Cherry.
In this writ petition, the Court addressed the conflict between Washoe County and the governmental units to which Washoe County distributes property taxes it collects. The dispute arose because, in a series of previous cases, Washoe County was ordered to refund excessive property tax payments to property owners in Incline Village and Crystal Bay because the taxes were based upon improper appraisals. Washoe County withheld a pro rata share of the amounts it needed to refund, plus interest, from distributions made to its taxing units, including petitioner the North Lake Tahoe Fire Protection District (the “FPD”). The FPD petitioned for mandamus, arguing that Washoe County exceeded its authority when it withheld payments. After reviewing Nevada’s political question jurisprudence, the Court expressly adopted the factors from the United States Supreme Court’s decision in Baker v. Carr, 369 U.S. 186 (1962), to help determine if a case presents a political question inappropriate for judicial review. Concluding that the Washoe County Commissioner’s had discretion to make a policy decision regarding the tax refund liability, the Court determined that the Commissioner’s decision presented an issue that had no judicially discoverable or manageable standards for resolution and was impossible to decide without an initial policy determination of the type not suited to the courts. As such, the Court held that the writ petition presented a political question inappropriate for judicial review and denied the writ. Petition denied. (Kerry S. Doyle, Associate in the Reno office of McDonald Carano Wilson.)

Ivey v. Dist. Ct., 129 Nev. Adv. Op. 16 (March 28, 2013)

Before the Court en banc. Opinion by Justice Gibbons.
In this original petition for a writ of mandamus or prohibition, the Court considered whether the district court’s failure to order recusal of a family court judge in connection with certain campaign contributions by parties and attorneys involved in the action violated the petitioners due process rights or Nevada law. Petitioner Luciaetta Ivey and her then spouse, Phil Ivey, filed a joint petition for divorce in the Eighth Judicial District; the case was assigned to Judge William Gonzalez. The parties entered into a marital settlement agreement that set forth, among other things, the monthly alimony payment to Luciaetta. After entry of the divorce decree, Judge Gonzalez successfully ran for re-election. During the campaign for reelection, the Phil, his attorney, his attorney’s wife, and his attorney’s law partner and Luciaetta’s law firm made various cash donations exceeding $10,000 and in-kind contributions to Judge Gonzalez’s campaign. The total cash contributions represented approximately 14% of all contributions to the campaign; the in-kind contributions totaled 25% of all in-kind contributions; Phil’s cash contribution alone equaled 7% of all cash contributions. After the election, a dispute arose over the monthly alimony payments and Judge Gonzalez was assigned to hear Luciaetta’s motion to reopen discovery. Luciaetta sought Judge Gonzalez’s recusal from the new proceeding arguing that the campaign contributions created an appearance of impropriety that resulted in a denial of Due Process and violated Nevada law. Relying on Caperton v. A. T. Massey Coal Co., 556 U.S. 868 (2009), the Court held that denial of the motion to disqualify did not violate Luciaetta’s due process rights because the size of the contributions at issue, compared to the total sum spent during the campaign, and the effect that contribution may have had on the election’s outcome, did not rise to a level “where the probability of actual bias is too high to ensure the protection of” Luciaetta’s rights. The Court concluded that the amount of donations by the spouse and attorney’s did not rise to the “exceptional” level that existed in Caperton, nor was the timing suspicious because the contributions were made after the entry of the divorce decree. Luciaetta also argued that Judge Gonzalez’s disqualification was required under NRS 1.230 and the Rule 2.11 of the Nevada Code of Judicial Conduct (NCJC) (now the Revised Nevada Code of Judicial Conduct). Because the contributions made were within the statutory limits for campaign contributions and the timing of the contributions was not suspicious, the Court rejected Luciaetta’s argument. In a concurring opinion, Justice Hardesty (joined by Chief Justice Pickering, and Justices Parraguirre and Douglas) wrote to address criticism of the NCJC. Justice Hardesty noted that the Nevada Supreme Court initiated a thorough review of the NCJC in 2009 which included a study on campaign finance rules in light of the Caperton decision. Despite public comments, the Court voted to adopt the RNCJC without inclusion of the committee’s recommendations on this issue. In a second concurring opinion, Justice Saitta wrote separately to voice concerns with the current judicial campaign contribution rules. Writ petition denied. (Kristen T. Gallagher, Associate in the Las Vegas office of McDonald Carano Wilson).

Peck v. Crouser, 129 Nev. Adv. Op. 12 (Feb. 28, 2013)

Before the Court en banc. Opinion by Justice Gibbons.
In this appeal, the Nevada Supreme Court considered whether the court has jurisdiction over an appeal from a post-judgment order in the district court that designated a party as a “vexatious litigant.” To resolve this question, the court first considered whether this type of post-judgment order is appealable under NRAP 3A(b). The court concluded that the only possible vehicles for this appeal were special orders after final judgment under NRAP 3(b)(8) and injunctions under NRAP 3A(b)(3). However, neither of these provisions applies to orders designating a party as a vexatious litigant. Special orders are limited to decisions that affect the rights of a party to the action and arise out of the judgment, and a declaration that a party is a vexatious litigant arises out of the United States and Nevada Constitutions, case law, statutes, and court rules. Injunctions are governed by NRCP 65, which does not apply to vexatious litigation orders. Accordingly, these orders are not directly appealable and the court dismissed the appeal for lack of jurisdiction. However, the court concluded that a writ is the appropriate way to challenge a vexatious litigant order because such orders relate to whether the district court abused its discretion in issuing the order. Dismissed. (Seth T. Floyd, Associate in the Las Vegas office of McDonald Carano Wilson.)

Las Vegas v. Cliff Shadows Prof'l Plaza, 129 Nev. Adv. Op. 2 (January 31, 2013)

Before the Court en banc. Opinion by Justice Saitta.
In this appeal, the Court dealt with two issues: 1) whether land in question was subject to an easement that the City was entitled to use; and 2) whether the City’s use constituted a taking. In 1956, the federal Bureau of Land Management (“BLM”) conveyed property by patent “subject to a right-of-way not exceeding 33 feet in width, for roadway and utility purposes.” In 2008, the City designated a 40-foot-wide strip of the property for use in the Cliff Shadows Parkway Improvement Plan. The City planned to use the 33 feet of right-of-way plus an additional 7 feet. The 33-foot easement was the subject of the takings analysis. The district court found that the City was not entitled to use the easement because it was not specifically named in the federal land patent. The district court also determined that the City’s use of the easement constituted a taking and that the easement should be disregarded when calculating just compensation, awarding full market value to the property owner. The Nevada Supreme Court reversed based on its interpretation of the language of the grant and the interpretation of similar language from other jurisdictions, determining that the language of the land patent did create an easement that the City could use. The use of the term “right-of-way” refers to an easement, and the use of “subject to” creates that easement. The Court further stated that any ambiguities in federal land patents are construed in favor of the government. The Court further found that the City’s use of the property was within the scope of the easement, although the interpretation of an easement is strictly construed in favor of the landowner. The property owner unsuccessfully argued that the easement could only be used if the City’s improvements directly benefited the property owner. The Court held that a taking does not occur when the government uses its own previously created easement without exceeding the easement’s scope. The easement existed when the property owner purchased the property. Because the City utilized a valid easement, the Court did not analyze the issue regarding the calculation of just compensation. Reversed in part, vacated in part, and remanded. (Joseph P. Schrage, Associate in the Las Vegas office of McDonald Carano Wilson).

Education Init. v. Comm. to Protect Nev. Jobs, 129 Nev. Adv. Op. 5 (Jan. 31, 2013)

Before the Court en banc. Opinion by Justice Hardesty.
In this appeal, the Court considered the proper standard of review to be applied when reviewing the adequacy of a ballot initiative’s description of effect. NRS 295.009, the statute at issue in this appeal, sets forth two requirements that the proponent of a ballot initiative must satisfy: (1) the proposed law must embrace only “one subject,” and (2) when gathering petition signatures, the proponent’s petitions must include, “in not more than 200 words, a description of the effect of the initiative or referendum if the initiative or referendum is approved by the voters.” In resolving whether The Education Initiative PAC’s description of effect for its proposed ballot initiative violated NRS 295.009, the Court examined the function of a description of effect in the initiative process and how a court should analyze a description of effect in reviewing a challenge to the sufficiency of the description. The Court also considered whether the initiative violates the single-subject rule. First, the Court found that because a description of effect serves a limited purpose to facilitate the initiative process, a description of effect must be straightforward, succinct, and a nonargumentative summary of what the initiative is designed to achieve and how it intends to reach those goals. Second, the Court found that the description of effect cannot constitutionally be required to delineate every effect that an initiative will have due to its limited purpose and its 200-word limitation. Thus, the Court held that in reviewing an initiative’s description of effect, a district court must take a “holistic approach” to determine whether the description is a straightforward, succinct, and nonargumentative summary of an initiative’s purpose and how that purpose is achieved, and must also use that approach to determine whether the information contained in the description is correct and does not misrepresent what the initiative will accomplish and how it intends to achieve those goals. Finally, the Court confirmed that a ballot initiative satisfies the single-subject requirement when the initiative’s proposed parts are “functionally related and germane to each other and the initiative’s purpose of subject.” Affirmed in part and reversed in part. (Amanda C. Yen, Associate in the Las Vegas office of McDonald Carano Wilson.)

Attorney General v. Gypsum Resources, 129 Nev. Adv. Op. 4 (Jan. 31, 2013)

Before the Court en banc (Justice Pickering recused). Opinion by Justice Parraguirre.
This case addresses the constitutionality of Nevada Senate Bill No. 358, 72d Leg. (Nev. 2003). The bill relates to rezoning land in certain areas adjacent to Red Rock Canyon National Conservation Area (“Red Rock”), including 2,500 acres owned by Respondent. The case was proceeding in federal court and, upon finding no clearly controlling precedent on the state constitutional issues, the Ninth Circuit Court of Appeals certified four questions to the Nevada Supreme Court. The questions are: (1) does S.B. 358 violate Art. 4, Sec. 20 of the Nevada Constitution because it is a “local or special law” that “regulat[es] county … business”?; (2) does S.B. 358 violate Art. 4, Sec. 21 of the Nevada Constitution because a general law could have been made “applicable”?; (3) does S.B. 358 violate Art. 4, Sec. 25 of the Nevada Constitution by establishing a “system of County . . . Government” that is not “uniform through the State”?; and (4) if S.B. 358 would otherwise violate Art. 4, Secs. 20, 21, or 25 of the Nevada Constitution, does it fall within an applicable exception and so remain valid? With respect to the first question, the Court establishes two criteria for determining whether a law regulates or affects county business: (1) whether the challenged law governs a single item or project rather than multiple items or projects; and (2) whether the law’s effect is temporary rather than permanent. The Court concludes that S.B. 358 is a local law operating over a particular locality that regulates Clark County’s business by permanently divesting the County of its zoning power over the adjacent lands to Red Rock, and therefore violates the Nevada Constitution. Regarding the second question, the Court states that a law that is either local or special may be upheld where: (1) it does not come within any of the cases enumerated in Art. 4, Sec. 20 of the Nevada Constitution; and (2) a general law could not have been made applicable. The Court concludes that S.B. 358 is a local law and falls within one of Section 20’s enumerated cases and therefore is unconstitutional. With respect to the third question, the Court found that Section 25 of the Nevada Constitution is violated because S.B. 358 divests Clark County of its exclusive control over zoning of lands adjacent to Red Rock. Addressing the last question, the Court concludes that S.B. 358 does not fall within any recognized exception to the Nevada Constitution and thereby remains invalid. Thus, the first three certified questions were answered in the affirmative and the last certified question answered in the negative. (Lisa Wiltshire, Associate in the Reno office of McDonald Carano Wilson.)

Dynamic Transit v. Trans Pac. Ventures, 128 Nev. Adv. Op. 69 (Dec. 27, 2012)

Before Justices Douglas, Gibbons, and Parraguirre. Opinion by Justice Parraguirre.
In this appeal from an amended judgment following a bench trial, the Court examined whether the Carmack Amendment preempted a shipper’s state-law claim for conversion. Respondents/Cross-Appellants purchased a luxury sports car and contracted with Nex-Day Auto Transport to facilitate its delivery to Washington State. Nex-Day then advertised the job on an industry website, and received an offer from Appellants/Cross-Respondents to transport the car. Nex-Day faxed a work order to Appellants, and required a signed copy to complete the agreement, which Nex-Day never received. Nex-Day faxed Appellants a cancellation, and proceeded to solicit other carriers. The following day, a driver employed by Appellants arrived at the car dealership and loaded the vehicle onto a carrier, despite the protests of a dealership representative. Appellants then transported the car to Washington State, but instead of completing delivery, they held the car as ransom, demanding that Nex-Day pay for past-due invoices for prior work Appellants had performed for Nex-Day. Nex-Day failed to pay these past-due amounts, and the car was ultimately transported to a storage facility in Missouri. Respondents brought an action against Appellants, claiming, among other things, conversion and fraud. Nearly a year and a half after filing its answer, Appellants filed a motion to dismiss under NRCP 12(b)(5) on the basis that Respondents’ claims were preempted by the federal Carmack Amendment, which limits liability for interstate cargo carriers solely to the “actual loss or injury” to goods that occurs during interstate transit. The district court denied the motion, on the basis that the Carmack Amendment did not apply in instances of conversion and fraud. The Court examined Ninth Circuit precedent in affirming the district court’s judgment, holding that in instances of “true conversion,” such as occurred in this case, the Carmack Amendment does not preempt state law conversion claims. It noted, however, that other federal case law suggested that fraud claims are typically preempted. The Court quickly rejected Appellants’ claim that the district court’s judgment was not supported by substantial evidence, and upheld the district court’s award of compensatory and punitive damages. It noted that three other arguments made by Appellants had not been preserved for appeal because Appellants did not raise these arguments at trial, and failed to provide relevant authority for these arguments on appeal. Affirmed in part and dismissed in part. (Jeff S. Riesenmy, Associate in the Las Vegas office of McDonald Carano Wilson.)

In re Contested Election of Mallory, 128 Nev. Adv. Op. 41 (Aug. 9, 2012)

Before the Court en banc. Opinion by Justice Saitta.
Respondent Arthur E. Mallory (“Respondent”) is Churchill County’s district attorney. He was first elected to the office in 1998 and was elected to a fourth consecutive four-year term of office in 2010. Following the most recent reelection, Appellant John O’Connor (“Appellant”) filed a petition to set aside Respondent’s reelection due to term limitations under the Nevada Constitution. The issue presented in this appeal is whether the office of district attorney is a state office for the purpose of determining whether district attorneys are subject to term limits under the “state office” portion of Article 15, Section 3(2) of the Nevada Constitution. Under Article 15, Section 3(2) of the Nevada Constitution, individuals elected to a “state office” or “local governing body” may only serve for 12 years unless the Constitution provides otherwise. The Nevada Supreme Court determined, without need to rely on Secretary of State v. Burk, 124 Nev. 579, 188 P.3d 1112 (2008), as done by the district court, that Article 4, Section 32 of the Nevada Constitution addresses the Legislature’s authority to provide for and abolish certain county offices including “District Attorneys.” By identifying district attorneys as county officers, it necessarily follows that the office of district attorney cannot be considered a “state office.” Thus, the office of district attorney is not subject to the term-limit provision of Article 15, Section 3(2). Affirmed. (Lisa M. Wiltshire, Associate in the Reno office of McDonald Carano Wilson LLP).