Justia Business Law Opinion Summaries

Articles Posted in Supreme Court of Nevada
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The case involves Capital Advisors, LLC, and Danzig, Ltd., minority shareholders of Cam Group, Inc. (CAMG), who filed a shareholder derivative action against nine CAMG officers and directors. The defendants included Wei Heng Cai (Ricky) and Wei Xuan Luo (Tracy), who were the only ones to proceed to trial. The plaintiffs alleged that Ricky arranged for a $1.85 million unsecured loan at zero-percent interest to a company called Parko Ltd., and Tracy, as CFO, failed to stop the loan. The loan allegedly drained approximately 80% of the cash reserves for the consolidated CAM companies. Ricky later resigned from CAMG to focus on developing business opportunities for another company, National Agricultural Holdings Limited (NAHL), and his own company, Precursor Management Inc. (PMI).The district court granted a motion for judgment as a matter of law in favor of Ricky and Tracy, dismissing all causes of action. The court found that officers and directors of a parent company cannot be held liable for actions taken by a wholly owned subsidiary without piercing the corporate veil. The court also awarded Ricky and Tracy over $2 million in attorney fees and costs.The Supreme Court of Nevada affirmed in part, reversed in part, vacated in part, and remanded the case for further proceedings. The court held that officers and directors of a parent company who allow a wholly owned subsidiary to take action adverse to the parent can be held liable without use of the alter ego doctrine. The court also held that shareholders may file derivative suits against officers and directors of a parent company based on wrongful actions that occurred at a wholly owned subsidiary of a wholly owned subsidiary without asserting alter ego. The court concluded that the district court erred by finding that officers and directors of a parent company cannot be held liable for actions taken by a wholly owned subsidiary without piercing the corporate veil. The court also found that the plaintiffs presented sufficient evidence to defeat a motion for judgment as a matter of law as to some of their causes of action. View "CAPITAL ADVISORS, LLC VS. CAI" on Justia Law

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The case revolves around a personal injury claim filed by Laura Graham against International Property Holdings, LLC (IPH) and its sole member, Ovidiu Ene. Graham sustained injuries when she tripped and fell over a sprinkler box on IPH's property. During the trial, Graham moved to assert that Ene was the alter ego of IPH, meaning he should be held personally liable for the injuries she sustained on the company's property.The district court found that Ene, as the sole member and manager of IPH, was indeed the alter ego of the company. The court based its decision on several factors: Ene had his own personal gate code to the property and used it for personal reasons without paying IPH or the property management company; Ene's father maintained a garden and a chicken coop on the property; the property's insurance was in Ene's name; and Ene remained the guarantor on the mortgage loan for the property.The Supreme Court of Nevada, however, disagreed with the district court's findings. The court clarified that the alter ego analysis for a limited liability company is the same as the analysis applied to a corporation. The court found that substantial evidence did not support the district court's determination that Ene was the alter ego of IPH. The court concluded that while Ene did influence and govern IPH, there was not a unity of interest and ownership such that Ene and IPH were inseparable. Furthermore, the court found no evidence that recognizing IPH as a separate entity from Ene would sanction fraud or promote injustice. As a result, the Supreme Court of Nevada reversed the district court's judgment and remanded for further proceedings. View "Ene v. Graham" on Justia Law

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In a divorce case, the Supreme Court of Nevada was asked to consider whether a law firm, established by one spouse before the marriage and incorporated under a different name during the marriage, constitutes that spouse’s separate property. Robert Draskovich, a practicing criminal lawyer since 1997, married Laurinda Draskovich in 2012, at which point he had a 65% ownership stake in a firm. In 2018, that firm dissolved, and Robert incorporated the Draskovich Law Group (DLG) as his wholly owned corporation.During their divorce proceedings in 2022, DLG was the primary asset in dispute. The district court concluded that DLG was community property, based on the fact that DLG was incorporated during the marriage. The district court also rejected Laurinda’s request for alimony, in part because it determined that the share of community assets distributed to Laurinda would provide sufficient support through passive income.Upon appeal, the Supreme Court of Nevada held that the district court erred in determining that the law firm was entirely community property. The court found that the law firm was a continuation of the spouse’s original, separate property law practice, and thus, the presumption of community property does not properly apply. Therefore, the Court reversed the portion of the divorce decree pertaining to the DLG interests and remanded for further proceedings. The Court also vacated the district court’s alimony determination to be reconsidered in light of the changed circumstances surrounding DLG. View "Draskovich v. Draskovich" on Justia Law

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The Supreme Court reversed the order of the district court concluding that the claims against Appellant did not fall within the categories of claims subject to Nevada's anti-SLAPP statutes without further analysis, holding that remand was required.In the underlying lawsuit, TMM, Inc. (TMMI) filed a third-party complaint against Appellant asserting claims for trade libel, misappropriation of trade secrets, conversion, injunctive relief, abuse of process, and alter ego liability. Appellant filed an anti-SLAPP special motion to dismiss, which the district court denied. The Supreme Court reversed and remanded the case for further proceedings, holding (1) the district court erred in finding that the subject claims did not fall within the categories of claims subject to the anti-SLAPP statute; (2) Appellant met his burden under the first prong of the anti-SLAPP analysis; and (3) the district court applied an incorrect standard in evaluating TMMI's claims under the second prong of the anti-SLAPP analysis. View "Panik v. TMM, Inc." on Justia Law

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The Supreme Court held that a commercial property insurance policy did not provide coverage for the economic losses JGB Vegas Retail Lessee, LLC suffered when COVID-19 forced JGB to shut down abruptly.JGB was insured under a policy with Starr Surplus Lines Insurance Co. amidst the closures and accompanying financial troubles of the COVID-19 pandemic, JGB filed a claim with Starr seeking coverage for lost business income, extra expenses, and other applicable coverage. When Starr did not respond JGB brought suit, claiming that the presence of COVID-19 on the property created the requisite "direct physical loss or damage" covered under the policy. Starr moved for summary judgment, which the district court granted in part. Thereafter, Starr filed the instant petition seeking a writ of mandamus challenging the denial of summary judgment on the remaining claims. The Supreme Court affirmed, holding that the district court erred in denying summary judgment because JGB's claims for losses resulting from COVID-19 were excluded from coverage. View "Starr Surplus Lines Insurance Co. v. District Court" on Justia Law

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The Supreme Court answered a certified question by concluding that a series LLC created pursuant to Nev. Rev. Stat. 86.296 must be sued in its own name for the court to obtain jurisdiction over it, so long as the series LLC has observed the corporate formalities provided for in Nev. Rev. Stat. 86.296(3).The United States Court of Appeals for the Ninth Circuit certified to the Supreme Court the question of whether, under Nevada law, a series LLC created pursuant to section 86.296 must be sued in its own name for the court to obtain jurisdiction over it, or whether the master LLC under which the series is created may be sued instead. The Supreme Court answered the question as set forth above, holding that the master LLC may not be legally responsible for the acts of the series LLC and that if a series LLC has observed corporate formalities, it should be the named entity in a lawsuit against the series LLC. View "Federal Housing Finance Agency v. Saticoy Bay LLC" on Justia Law

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The Supreme Court issued a writ of mandamus directing the district court to vacate its order waiving the obligation of the real party in interest stockholders (RPIs) to provide consents from their stockholders of record until step four of the four-step process outlined in Nev. Rev. Stat. 92A.410-.440 and after petitioner corporation's merger vote was held, holding that the district court erred.At issue was the statutory process by which a stockholder who objects to a proposed merger may seek the fair value of the stockholder's shares from the corporation if the stockholder believes the proposed price for those shares is inadequate. In the event stockholders own their shares indirectly, the beneficial stockholders must obtain the stockholder of record's consent before dissenting from the merger. The Supreme Court held (1) Nev. Rev. Stat. 92A.400(2)(a), when read in conjunction with the four-step process outlined in sections 92A.410-.440, unambiguously requires a beneficial holder to obtain the record holder's consent at step two before the vote on the merger is held; and (2) therefore, the district court here erred in construing the statutes as permitting RPIs to submit their consents after the merger vote was taken and in waiving RPIs statutory obligation to obtain those consents. View "Aerogrow International, Inc. v. District Court" on Justia Law

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The Supreme Court denied the petition filed by NuVeda, LLC for a writ of prohibition and/or mandamus asking the Supreme Court to disqualify Judge Elizabeth Gonzalez from presiding over a contempt hearing and to order the Chief Judge of the Eighth Judicial District Court to randomly reassign that hearing to another judge, holding that NuVeda was not entitled to relief.In this business dispute, NuVeda moved for a change of judge thirty-seven days after the court set a date for a trial on NuVeda's alleged contempt. The district court denied the motion as untimely. NuVeda petitioned for extraordinary writ relief. The Supreme Court denied the relief, holding (1) motions for a change of judge under Nev. Rev. Stat. 22.030(3) must be made with reasonable promptness under the circumstances; and (2) the district court did not erroneously determine that the motion in this case was untimely. View "NuVeda, LLC v. Eighth Judicial District Court" on Justia Law

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In these consolidated appeals concerning whether shareholders had a right to dissent from a corporate merger and seek fair value for their shares the Supreme Court reversed the decision of the district court granting summary judgment in favor of Respondent, holding that Appellants had the right to obtain an appraisal of the fair value of their shares.Appellants held shares of Respondent's stock and sought to exercise dissenters' rights when Respondent commenced a corporate merger offering per-share compensation that Appellants concluded were inadequate. The district court granted summary judgment for Respondent, finding that Respondent was a covered security and thus the market-out exception applied. The Supreme Court reversed, holding that Appellants had a right to dissent from the merger and obtain an appraisal of the fair value of their shares because the Board, in its resolution, approved a right to dissent for dissenting shareholders. View "Pope Investments, LLC v. China Yida Holding, Co." on Justia Law

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The Supreme Court affirmed the judgment of the district court dismissing Appellant's shareholder complaint against Appellees, the individual directors of a corporation and its controlling stockholder, holding that Appellant failed to rebut the business judgment rule and allege particularized facts demonstrating the requisite breach of fiduciary duty.In her complaint, Appellant alleged breach of fiduciary duty and sought damages from a merger. The district court dismissed the complaint for failure to state a claim, determining that the business judgment rule applied. The Supreme Court affirmed, holding (1) Nev. Rev. Stat. 78.138 and Chur v. Eighth Judicial District Court, 458 P.3d 336 (Nev. 2020), foreclose the inherent fairness standard that previously allowed a shareholder to automatically rebut the business judgment rule and shift the burden of proof to the director; and (2) the district court properly dismissed Appellant's complaint. View "Guzman v. Johnson" on Justia Law