Justia Business Law Opinion SummariesArticles Posted in Nevada Supreme Court
In re Cay Clubs
After Appellants purchased condominiums and engaged in related transactions at the Las Vegas Cay Club resort, Appellants filed suit against dozens of defendants, including Cay Clubs, Jeffrey Aeder, and JDI Loans, LLC and JDI Realty, LLC (together, the JDI entities), alleging that Defendants engaged in wrongdoings while abandoning a plan to improve Las Vegas Cay Club and leaving Appellants with “worthless property.” Appellants claimed that they bought the condominiums on the belief that a partnership between Cay Clubs and the JDI entities existed that would provide the expertise and resources to execute the resort’s transformation. Aeder and the JDI entities successfully moved for summary judgment with respect to their liability under Nev. Rev. Stat. 87.160(1), which codifies the partnership-by-estoppel doctrine. The Supreme Court reversed after clarifying the meaning and application of section 87.160(1), holding that the district court erred in granting summary judgment to the JDI entities with regard to their liability under the partnership-by-estoppel doctrine. View "In re Cay Clubs" on Justia Law
Loeb v. First Judicial Dist. Court
Petitioner brought a shareholder derivative suit on behalf of real party in interest Universal Travel Group (UTG) against the officers and directors of the UTG (collectively, the Jiang parties). The Jiang parties all resided in China. When Petitioner was unable to locate the Jiang parties' addresses, Petitioner moved the district court pursuant to Nev. R. Civ. P. 4(e)(1) to permit service by publication. UTG opposed the motion, arguing that Petitioner was required to comply with the terms of the Hague Convention (Convention). UTG later provided Petitioner with the Jiang parties' addresses in China. The district court denied Petitioner's motion to permit service of publication, concluding that such service was not allowed by the Convention when a defendant's address is known. The district court then ordered to serve the Jiang parties in compliance with the terms of the Convention. Petitioner filed this petition for a writ of mandamus or prohibition, arguing that the terms of the Convention did not apply in this case. The Supreme Court denied the petition, holding that, based on the plain language of Rule 4(e)(1), a party residing outside of the United States whose address is known must be served according to the terms of the Convention. View "Loeb v. First Judicial Dist. Court" on Justia Law
Rock Bay, LLC v. Dist. Court
Judgment creditors obtained judgments in Florida against Jeffrey Kirsch and various entities he created (collectively, judgment debtors). Kirsch also created Rock Bay, a Nevada company. After the Florida litigation began, a series of monetary transfers occurred between Rock Bay and the judgment debtors. When the judgment creditors were unsuccessful in executing their judgments on the judgment debtors' assets, they domesticated the Florida judgments in Nevada. Kirsch voluntarily dissolved Rock Bay one week later. The judgment creditors then served a subpoena on a Las Vegas accounting firm that performed accounting services for the judgment debtors and Rock Bay, seeking records related to the judgment debtors and Rock Bay. Rock Bay unsuccessfully moved to quash the subpoena on the ground that it was not a party to the underlying litigation. The Supreme Court found the district court did not exceed its authority over Rock Bay, holding that discovery of a nonparty's assets under Nev. R. Civ. P. 69(a) is not permissible absent special circumstances, including those in which the relationship between the judgment debtor and the nonparty raises reasonable suspicion as to the good faith of asset transfers between the two, or in which the nonparty is the alter ego of the judgment debtor. View "Rock Bay, LLC v. Dist. Court" on Justia Law
Consipio Holding, BV v. Carlberg
Appellants Consipio Holding, BV; Ilan Bunimovitz; Tisbury Services, Inc.; and Claudio Gianascio (collectively, Consipio) are shareholders of Private Media Group, Inc. (PRVT). In August 2010, Consipio filed a complaint in the Nevada district court, seeking injunctive relief and the appointment of a receiver for PRVT. Consipio also asserted derivative claims on behalf of PRVT against PRVT's former CEO and president, Berth H. Milton, Jr., and against officer and director respondents Johan Carlberg (PRVT director), Peter Dixinger (PRVT director), Bo Rodebrant (PRVT director), Johan Gillborg (former PRVT CFO), and Philip Christmas (PRVT subsidiary CFO). The claims focused on respondents' alleged conduct in assisting Milton, Jr., to financially harm PRVT for their personal gain. The complaint alleged that respondents assisted Milton, Jr., in obtaining significant loans for himself and entities he controls. It further stated that respondents failed to demand repayment on these loans and that they helped Milton, Jr. by removing funds from PRVT and concealing the wrongdoing. Given these allegations, Consipio contended that respondents collectively were guilty of misfeasance, malfeasance, and breach of their fiduciary duties. The issue before the Supreme Court was whether Nevada courts could properly exercise personal jurisdiction over nonresident officers and directors who directly harm a Nevada corporation. The Court concluded that they can. In this case, the district court failed to conduct adequate factual analysis to determine whether it could properly exercise personal jurisdiction over the respondents before dismissing the complaint against them. Accordingly, the Supreme Court vacated the dismissal order and remanded this case to the district court for further proceedings. View "Consipio Holding, BV v. Carlberg" on Justia Law
Club Vista Fin. Servs., LLC v. Dist. Court
Petitioners Club Vista Financial Services and others (Club Vista) entered into a real estate development project with real parties in interest Scott Financial Corporation and others (Scott Financial). When a loan guaranteed by some of the Petitioners went into default, Club Vista filed an action against Scott Financial. During discovery, Scott Financial obtained a deposition subpoena for Club Vista's attorney, K. Layne Morrill. An Arizona court granted Morrill's motion to quash the subpoena. The Nevada district court, however, denied Morrill's motion for a protective order and permitted Scott Financial to depose Morrill as to the factual matters supporting the allegations in the complaint. The Supreme Court granted Morrill's petition for writ of mandamus or prohibition in part after adopting the framework espoused by the Eighth Circuit Court of Appeals in Shelton v. American Motors Corp., which states that the party seeking to depose opposing counsel must demonstrate that the information sought cannot be obtained by other means, is relevant and nonprivileged, and is crucial to the preparation of the case. Because the district court did not analyze the Shelton factors, the Court directed the district court to evaluate whether, applying the Shelton factors, Scott Financial may depose Morrill. View "Club Vista Fin. Servs., LLC v. Dist. Court" on Justia Law
Weddell v. H20, Inc.
Respondent Michael Stewart and appellant Rolland Weddell entered into a business relationship concerning a number of different projects. After their business relationship collapsed, Weddell filed a complaint asserting numerous claims against Sewart. Stewart asserted numerous counterclaims. The district court found in Stewart's favor on all counts. The Supreme Court reversed in part, holding that pursuant to Nev. Rev. Stat. 86.401, a judgment creditor may obtain the rights of an assignee of the member's interest, receiving only a share of the economic interests in a limited-liability company, and thus, the judgment creditor and holder of a charging order against Weddell's membership interests was entitled to Weddell's economic interest in appellant Granite Investment Group, LLC but not Weddell's managerial rights. The Court affirmed in all other aspects, holding (1) parties should only file a notice of pendency when the action directly involves real property, and therefore, the notice of pendency filed by Weddell, which involved an option to purchase a membership interest in Respondent Empire Geothermal Power, LLC, was unenforceable; and (2) substantial evidence existed to support the district court's finding that Weddell had no ownership interest in respondent H2O, Inc.
Webb v. Shull
This was an appeal and cross-appeal from a district court judgment awarding appellant homebuyer treble damages against respondent seller, a limited liability company, but refusing to find that the individual respondent, a former manager of the limited liability company, was liable for the judgment as the company's alter ego. The Supreme Court (1) affirmed the district court's award of treble damages under Nev. Rev. Stat. 113.150(4), which awards treble damages for a seller's delayed disclosure or nondisclosure of property defects, despite the court's failure to make a finding that the seller acted willfully, as the legislature did not intend to imply a heightened level of mental culpability to the statute; and (2) vacated the portion of the court's judgment concerning the alter ego issue, as the court failed to explain its reasoning for denying alter ego status. Remanded.
Canarelli v. Dist. Court
At issue in this case was whether the district court had the authority to appoint an unwilling director trustee of a dissolved corporation for the purpose of defending actions against the corporation that arose post-dissolution and after completion of the winding-up process. Lawrence Canarelli, the trustee in this case, filed a writ for extraordinary relief compelling the district court to vacate its order appointing him as trustee in the underlying matters. The Supreme Court granted the trustee's petition and issued a writ of mandamus, holding that Canarelli could not be compelled by the district court to act as director trustee for the dissolved corporation under the relevant statutes.
Smith v. Kisorin USA, Inc.
Appellants Wade and Brenda Smith owned shares of common stock in Pachinko World. Cede & Co. held the shares in street name, making appellants the beneficial owners. After Pachinko World merged into Kisorin, Kisorin sent out a dissenters' rights notice to the minority stockholders. Instead of giving direct notice to appellants, Kisorin provided Cede & Co. with the dissenter's notice. As a result, appellants sent their dissenter's demand forms outside the 45-day period allotted. Kisorin informed appellants that Wade Smith's demand for payment was past due and he would be paid the merger consideration set forth in the notice. Kisorin subsequently filed a petition in the district court for a declaratory judgment. Both parties then moved for summary judgment. The district court entered summary judgment against appellants, and appellants appealed. At issue was whether a corporation is required to deliver a dissenters' rights notice to all stockholders, irrespective of whether the stockholders hold the stock in street name or are beneficial stockholders. The Supreme Court affirmed, holding that due to the impracticality of delivering notice to beneficial owners, Nevada corporations are required to send dissenters' notices only to record stockholders, including those holding the stock in street name.
In re AMERCO Derivative Litigation
The Shoen family controls AMERCO. AMERCO engaged in numerous business transactions with SAC entities, which are real estate holding companies controlled by AMERCO shareholder and executive Mark Shoen. Based on several of those transactions, Appellants-Shareholders filed an underlying shareholder derivative lawsuit against AMERCOâs former and current directors and the SAC entities, primarily for breach of fiduciary duty. However, appellants failed to make a demand for corrective action on AMERCOâs board of directors. Subsequently, AMERCO moved to dismiss the lawsuit. Appellants appealed, and the Supreme Court reversed that decision and remanded the case for further proceedings. On remand, the district court again granted AMERCOâs motion to dismiss, this time because of a settlement agreement that dated back to 1995 in which shareholders agreed not to bring shareholder derivative lawsuits against AMERCO. Appellants sought the Supreme Courtâs review of the district courtâs second dismissal of their case. They asked whether the settlement bars their present lawsuit against AMERCO. The Supreme Court found that the settlement does not bar Appellantsâ case. The Court again reversed the district courtâs decision, and remanded the case for further proceedings.