Case Title: Gallegos v. Malco Enterprises of Nev., Inc.

Citation: 127 Nev. Adv. Op. No. 51

Docket Number: 55633

State: nevada

Court: Nevada Supreme Court

Date: 2011-08-04T00:00:00Z

Document:
421 Nev, Advance Opinion 51
IN THE SUPREME COURT OF THE STATE OF NEVADA

PEDRO T. GALLEGOS, No, 55633,
INDIVIDUALLY AND AS ASSIGNEE
OF DAVID GONZALEZ; AND DAVID
GONZALEZ, INDIVIDUALLY AND AS
ASSIGNOR, FILED
Appellants,

ve. AUG. 2011
MALCO ENTERPRISES OF NEVADA, hu
INC., D/B/A BUDGET RENT A CAR LAS on
VEGAS; KNIGHT MANAGEMENT
INSURANCE SERVICES, LLC: AND.
FIRST AMERICAN PROPERTY AND
CASUALTY INSURANCE COMPANY,
Respondents.

 

Appeal from a district court summary judgment in an
insurance action, Eighth Judicial District Court, Clark County; Abbi
Silver, Judge.

Reversed and remanded.
& Roca LLP and Daniel F. Polsenberg and Joel D. Henriod, Las

orter & Terry, LLC, and Richard T. Terry, Las Vegas,
for Appellants.

  

Snell & Wilmer, LLP, and Justin L. Carley, Las Vegas,
for Respondents.

 

BEFORE SAITTA, HARDESTY and PARRAGUIRRE, JJ.
OPINION

By the Court, PARRAGUIRRE, J.:

 

 
08 ae

 

In this opinion, we clarify that rights of action held by a
judgment debtor are subject to execution toward satisfaction of a judgment
under NRS 21,080, and may be judicially assigned pursuant to NRS
21.920. Because, in this case, appellant Pedro Gallegos properly asserted

a right of action assigned to him by another district court, we conclude

 

that the district court in the instant action erred in determining that he
lacked standing to bring the claim and in granting summary judgment to

respondents on that basis. Accordingly, we reverse the district court's

 

summary judgment and remand this matter for further proceedings.
FACTS AND PROCEDURAL HISTORY

Gallegos was injured by appellant David Gonzalez in a hit
and-run car accident. At the time of the accident, Gonzalez was driving a
car rented from respondent Malco Enterprises of Nevada, Inc., d.b.a.
Budget Rent A Car of Las Vegas. When renting the car, Gonzalez
purportedly purchased a supplemental renter's liability insurance (RLI)

policy from Budget. This policy was issued by respondent First American

  

Property and Casualty Insurance Company, and was managed by
respondent Knight Management Insurance Services, LLC.

Gallegos sued Gonzalez for injuries resulting from the accident
and ultimately obtained a default judgment against him for over $400,000.
Gonzalez failed to appear at scheduled judgment debtor exams, however,
and Gallegos was unable to collect on the judgment, Accordingly, Gallegos
sought a judicial assignment of Gonzalez’s unasserted claims against
respondents, which was granted. Specifically, the earlier district court
assigned Gonzalez’s unasserted claims for “Breach of Contract, Breach of
Fiduciary Duties, [and] Breach of Duty of Good Faith and Fair Dealing.”

 
‘The assigned claims related to Gonzalez's insurance policy with
respondents.

Gallegos then brought the assigned claims against
respondents in a separate district court action.! Respondents moved for
summary judgment on the basis that the previous district court could not

 

ssign the right of action in a proceeding supplementary to the execution
of the judgment and, thus, Gallegos lacked standing to bring Gonzalez's
claims against respondents, among other things. The district court in the
underlying action concluded that the previous district court's a:

 

‘ignment

order was invalid and thus granted respondents’ motion for summary

 

judgment, vacating the earlier assignment order. Thi
DISCUSSION

On appeal, appellants argue that the district court erred in

ippeal followed.

granting summary judgment because Gonzalez's right of action was
judicially assigned to Gallegos in the proceedings supplementary to the
execution of his judgment against Gonzalez? We review this issue de
novo, See State, Div, of Insurance v. State Farm, 116 Nev. 290, 293, 995
P.2d 482, 484 (2000) (reviewing questions of law de novo); Wood _v.
Safeway, Inc,, 121 Nev. 724, 729, 121 P.8d 1026, 1029 (2005) (reviewing a
district court's grant of summary judgment de nove),

!Gonzalez was also named as a plaintiff, although the reason for this
is unclear from the record.

 

"Because we conclude that the district court erred in granting
summary judgment based upon its determination that Gonzalez’s right of
action was invalidly assigned, we do not addross appellants’ argument
that the district court lacked jurisdiction to vacate the assignment order.

 

 
‘To resolve this appeal, we must determine whether a right of
action held by a judgment debtor is property that can be judicially
assigned in a proceeding supplementary to the execution of a judgment.
Nevada's statutory scheme regarding enforcement of judgments is laid out,
in NRS Chapter 21.? NRS 21.320 provides that a district court “may order
any property of the judgment debtor not exempt from execution . .. to be

applied toward the satisfaction of the judgment.” Accordingly, s0 long

 

right of action is “property... not exempt from execution,” it may be

 

judicially assigned in satisfaction of a judgment. NRS 21.920.

To help us determine whether a right of action is
“property... not exempt from execution,” we turn to NRS 21.080(1). That
statute provides that: “[a]ll goods, chattels, money and other property, real
and personal, of the judgment debtor, or any interest therein of the
judgment debtor not exempt by law, and all property and rights of
property seized and held under attachment in the action, are liable to
NRS 21.080(1). NRS 10.045 further defines “[plersonal
property” as including “money, goods, chattels, things in action and

 

execution.

As a preliminary matter, the district court erroneously focused its
analysis on NRS 21.330. NRS 21.330 allows for execution against
property held by a third party that allegedly belongs to a judgment debtor
and does not apply when a creditor seeks to execute against property held
by the judgment debtor.

In this case, the property at issue is Gonzalez’s right of action
against respondents. While a cause of action will inevitably be asserted

 

against some third party, the right of action itself is the property of the
judgment debtor. Thus, the relevant inquiry is whether a judgment
creditor may execute upon rights of action held by a judgment debtor
pursuant to NRS 21.080.

 

 
evidences of debt.” (Emphasis added.) See also NRS 10.010 (providing
that the definition used in NRS 10.045 applies to the entire statutory title,
including NRS 21.080). A “thing in action,” alternatively referred to as a
“chose in action,” is defined as a “right to bring an action to recover a debt,
money, or thing.” Black's Law Dictionary 1617, 275 (9th ed. 2009).

Based on the above statutory authority, we conclude that
rights of action held by a judgment debtor are personal property subject to
execution in satisfaction of a judgment.

‘This conclusion finds support in caselaw, First, interpreting a
right of action as personal property subject to execution accords with this
state's general policy that statutes specifying the kinds of property that
are subject to execution “must be liberally construed” for the judgment
creditor's benefit. Sportsco Enter. v, Morris, 112 Nev. 625, 630, 917 P.2d
934, 937 (1996). Second, our decision finds considerable support in the
California Court of Appeal's holding in Denham v. Farmers Insurance Co.,
262 Cal. Rptr. 146 (Ct. App. 1989). In Denham, the court analyzed
whether Nevada law permitted “a judgment creditor [to] execute upon a

 

judgment debtor's cause of action against its insurer,” and concluded that
“Nevada law permits execution upon a cause of action.” 262 Cal. Rptr. at
149, 162. We approve of the Denham court's reasoning and conclusion.
Finally, several federal cases applying Nevada law provide additional
support for our holding. See Kelly v. CSE Safeguard Ins, Co,, No. 208-CV-
00088-KJD-RJJ, 2010 WL 3843777, at *2 (D. Nev. Sept. 28, 2010)
(recognizing that “Nevada permits a judgment creditor to execute upon a
judgment debtor's cause of action” and permitting the judgment creditor
assignee to pursue a bad-faith claim against the judgment debtor's insurer

(citing Denham, 262 Cal. Rptr. at 151-52)); e, Wilson v, Bristol West Ins.

 

 

 

 
Group, No. 2:09-CV-00006-KJD-GWF, 2009 WL 3105602, at *2 (D. Nev.
Sept. 21, 2009) (“Nevada does not recognize a right of action by a third-
party claimant against an insurance company for bad faith without a
proper assignment of rights.”)

In light of our conclusion that a district court may as

 

ign a
judgment debtor's right of action to a judgment creditor in execution of a
judgment, we reverse the district court's summary judgment and remand
this matter for further proceedings.‘

Parraguirre

 

whee cect J.

Hardesty

“We note that although Gallegos signed a written release of any
personal claims against respondents, that release did not encompass the
first-party claims that were later assigned to him in execution of his
judgment against Gonzalez. Similarly, the district court's order in a third
related action dismissed only Gallegos’ third-party claims against

 

respondents and did not resolve Gonzalez's first-party claims, Because it,
is the assigned first-party claims that form the basis for the instant
appeal, we conclude that neither the release nor the district court order in
the third action support the district court's grant of summary judgment.