Title: G.C. Wallace, Inc. v. Eighth Judicial Dist. Court

State: nevada

Issuer: Nevada Supreme Court

Document:

427 Nev, Advance Opinion G++
IN THE SUPREME COURT OF THE STATE OF NEVADA.

G.C, WALLACE, INC., No, 56773

Petitioner,

vs,
‘THE EIGHTH JUDICIAL DISTRICT
COURT OF THE STATE OF NEVADA,

 

IN AND FOR THE COUNTY OF
CLARK, AND THE HONORABLE FI L E D
ALLAN R. EARL, DISTRICT JUDGE, oct 06 2011
Respondents,

and Sea.
REEF CENTRA POINT B2348, INC., > ena

Real Party in Interest

 

   

Original petition for a writ of mandamus challenging the

district court's jurisdiction in a real property action.
Petition der

Lionel Sawyer & Collins and Todd M. Touton, Las Vegas,
for Petitioner.

Kolesar & Leatham, Chtd., and Bart K. Larsen, Las Vegas,
for Real Party in Interest.

BEFORE SAITTA, C.J., HARDESTY and PARRAGUIRRE, JU.

OPINION
By the Court, SAITTA, C.J.:

In this original petition for a writ of mandamus, we consider

whether a landlord who seeks summary eviction in justice

ones

court under

 

peel Lee
nee

NRS 40.253" against a tenant is precluded from subsequently bringing a
damages claim in district court for breach of the lease agreement. In the
underlying matter, the landlord prevailed in the summary eviction
proceeding in justice court and thereafter filed a claim for damages in
district court. The tenant filed a motion for summary judgment, arguing,
among other things, that the landlord’s damages claim was barred by the
doctrine of claim preclusion. ‘The district court denied the motion for
summary judgment, and this petition followed.

We first address whether the elements of the doctrine of claim
preclusion as set forth in Five Star Capital Corp. v. Ruby, 124 Nev. 1048,
1054, 194 P.3d 709, 713 (2008), are met. Because we conclude that these
elements are met, we consider whether an exception to claim preclusion
applies—namely, whether the summary eviction scheme provided in NRS
40.253 permits a landlord to bring a summary eviction proceeding in
justice court and subsequently bring a damages claim in district court.

We conclude that although NRS 40.253 is ambiguous on this
point, the purpose and policies underlying the statute reveal that the
Legislature intended to permit a landlord to bring a damages claim in
district court after seeking summary eviction in justice court. ‘Thus,
although such a damages claim would otherwise fall within the purview of
the claim preclusion doctrine, it is exempt from the application of the
doctrine. Consequently, a landlord who seeks summary eviction in justice

{We note that NRS 40.253 has recently been amended. 2011 Nev.
Stat., ch. 56, § 1, at 235-36; 2011 Nev. Stat., ch. 271, § 26, at 1491-92.
This opinion addresses the version of the statute as it existed when the
relevant proceedings underlying this petition took place.

 

 
court is not prevented from subsequently bringing a claim for damages in
district court, as the landlord did here. Accordingly, we deny the petition.

FACTS
Petitioner G.C. Wallace, Inc., fell behind in its $81,000

 

monthly rental payments to real party in interest Reef Centra Point
'B2348, Inc. Reef Centra sought and obtained a summary evietion order in
justice court, Shortly thereafter, Reef Centra filed a complaint in district,
court against G.C. Wallace for damages exceeding $50,000 for breach of
the parties’ lease agreement. G.C. Wallace filed a motion for summary
judgment on the ground that Reef Centra’s claim for damages was
precluded by the doctrine of claim preclusion, among other things. G.C.
Wallace argued that a landlord such as Reef Centra is required to seek
summary eviction in unison with its claim for damages, in either justice
court or in district court, depending on the amount of damages claimed.
G.C. Wallace asserted that by failing to do so, Reef Centra is precluded
from bringing the damages claim underlying this petition. ‘The district
court denied G.C. Wallace's motion. G.C. Wallace now petitions this court
for a writ of mandamus directing the district court to vacate its order
denying G.C, Wallace's motion for summary judgment.
DISCUSSION

G.C. Wallace contends that writ relief is warranted because
the district court abused its discretion in not granting its motion for
summary judgment. Specifically, it asserts that the district court
disregarded controlling statutes and precedent in denying its motion. G.C.
Wallace also asserts that writ relief is warranted because no factual
dispute exists and the justice and district courts are in a state of disarray
regarding summary eviction proceedings.

“A writ of mandamus is available to compel the performance of
an act that the law requires as a duty resulting from an office, trust, or

3

 

 

 
station or to control an arbitrary or capricious exercise of discretion.
International Game Tech. v, Dist. Ct,, 124 Nev. 193, 197, 179 P.3d 556,
558 (2008) (citations omitted). When an adequate and speedy legal
remedy exists, however, writ relief is not available. Id, As we have
explained, an appeal typically is an adequate and speedy legal remedy. Id.
Furthermore, even if an appeal does not constitute an adequate and
speedy legal remedy in a particular case, we generally will not exercise our
that challenge

district court orders denying motions for summary judgment, unless: (1)

  

discretion to consider petitions for extraordinary writ rel

no factual dispute exists and summary judgment is clearly required by a
statute or rule or (2) an important issue of law requires clarification and
judicial economy favors granting the petition. Id, at 197-98, 179 P.3d at
558-59.

Here, an appeal is not an adequate and speedy legal remedy
given the infancy of the underlying litigation and considerations of sound
judicial administration. In addition, G.C. Wallace's petition raises several
important issues of law regarding summary eviction proceedings that will
likely recur. As noted by the district court in its order denying G.C.
Wallace's motion for summary judgment, “the entire area of law
surrounding Summary Eviction and which Court has jurisdiction over it is
currently creating both confusion and debate among the Bench and Bar of
the Highth Judicial District.” ‘Thus, G.C. Wallace's petition raises issues
requiring clarification, and judicial economy warrants entertaining this
petition. Moreover, G.C. Wallace and Reef Centra do not dispute the

salient facts of this matter. Accordingly, we exercise our discretion to

consider G.C. Wallace's petition.

 

 
Claim preclusion and summary eviction proceedings

G.C, Wallace asserts that the district court manifestly abused
its discretion by not granting its motion for summary judgment. It
contends that when a landlord such as Reef Centra seeks summary
eviction in justice court under NRS 40.253, the doctrine of claim
preclusion prevents the landlord from subsequently bringing a claim for
damages. G.C. Wallace argues that Reef Centra could have joined a claim
for damages of less than $10,000 with the summary eviction proceeding in
justice court but, instead, chose to separately pursue a claim for damages
in district court. It also argues that Reef Centra could have joined its
claim for damages in excess of $10,000 with a request for summary
eviction in district court, but failed to do so. In sum, according to G.C.
Wallace, Reef Centra’s decision to avail itself of the summary eviction
proceeding in the justice court is fatal to its subsequent claim for damages
in district court.

Reef Centra asserts that the elements of claim preclusion are
not satisfied and, even if they are, summary eviction proceedings should
be exempt from the normal preclusion rules that might otherwise apply.

Whether claim preclusion is available is a question of law

reviewed de novo. See Five Star Capital Corp. v. Ruby, 124 Nev. 1048,
1058, 194 P.3d 709, 715 (2008); University & Cmty. Coll, Sys. v. Sutton,

120 Nev. 972, 984, 103 P.3d 8, 16 (2004) (reviewing de novo whether issue
preclusion is available). Similarly, “[s}tatutory interpretation is a question
of law that we review de novo, even in the context of a writ petition’
International Game Tech,, 124 Nev. at 198, 179 P.3d at 559.

As we have explained, “this court must give [a statute's) terms
their plain meaning, considering its provisions as a whole so as to read
them in a way that would not render words or phrases superfluous or

 

oe
make a provision nugatory.” Southern Nev, Homebuilders _v. Clark
County, 121 Nev. 446, 449, 117 P.3d 171, 173 (2005) (internal quotation
omitted). “When a statute is clear and unambiguous, we give effect to the
plain and ordinary meaning of the words and do not resort to the rules of
construction.” Cromer v, Wilson, 126 Nev. __, __, 225 P.3d 788, 790
(2010), When a statute is ambiguous, however, meaning it is capable of
more than one reasonable interpretation, we ascertain the Legislature's
intent by analyzing the statute's legislative history and construing the
statute in accordance with reason and public policy. Great Basin Water

‘Network v, State Engr, 126 Nev. _, _, 234 P.3d 912, 918 (2010). In
addition, “we must construe ambiguous statutes so as to avoid absurd
results.” Star Ins. Co. v. Neighbors, 122 Nev. 773, 776, 138 P.3d 507, 510
(2006).

Claim preclusion

We apply a three-part test to determine the availability of
claim preclusion: “(1) the parties or their privies are the same, (2) the final
judgment is valid, and (3) the subsequent action is based on the same
claims or any part of them that were or could have been brought in the
first case.” Five Star, 124 Nev. at 1054, 194 P.3d at 713 (footnote omitted).

Here, there is no question that the first element of claim
preclusion from Five Star is met because the parties in the summary
eviction proceeding and the action for damages are identical. The second
element is also satisfied. Because Reef Centra did not claim damages in
the summary eviction proceeding, the justice court had jurisdiction, and
accordingly, it entered a valid order of summary eviction. See NRS
4.370(1)(g) Gustice courts have jurisdiction over “actions for the possession
of lands and tenements whore the relation of landlord and tenant exists,

when damages claimed do not exceed $10,000 or when no damages are

 

 
 

claimed"); Five Star, 124 Nev. at 1054 n.27, 194 P.3d at 718 n.27 (a

judgment is considered valid unless the case was dismissed without

   

prejudice due to, for example, lack of jurisdiction, improper venue, or
failure to join a party).

With respect to the third element of claim preclusion, Reef
Centra contends that its damages claim could not have been brought in
the justice court due to the $10,000 jurisdictional limitation on the justice
court imposed by NRS 4.370(1)(g). It is well-settled, however, that a
jurisdictional limit alone does not, for purposes of claim preclusion,
prevent a claim from being brought. See Restatement (Second) of
Judgments § 24 emt. g (1982) (preclusive effect attaches, “although the
first action is brought in a court which has no jurisdiction to give a
judgment for more than a designated amount,” because “{tJhe plaintiff,
having voluntarily brought his action in a court which can grant him only
limited relief, cannot insist upon maintaining another action on the
claim”); see also Five Star, 124 Nev. at 1054, 194 P.3d at 713 (claim
preclusion can apply when the later action is based upon “the same claims
or any part of them” that could have been brought in the earlier action
(emphasis added)); Vincent v. Clean Water Action Project, 939 P.2d 469,
473 (Colo. Ct. App. 1997) (‘We do not believe that a damage limitation
equates to deprivation of a remedy or an inability of a party to obtain the
full measure of relief contemplated by [the] Restatement.” (internal
quotation omitted)); Cruz v. FTS Construction Inc., 142 P.3d 365, 371
(NM. Ct. App. 2006) (‘A plaintiff cannot avoid the application of res
judicata where he or she brought a prior suit on the same cause of action
in a court with a jurisdictional limit.”), Although a summary eviction
proceeding itself does not result in a judgment for damages, NRS 40.253,

 
nothing prevented Reef Centra from simultaneously asserting a damages
claim for less than $10,000 in the justice court.

Reef Centra also purports that the third element of Five Star
is not met because its damages claim was not based upon the same claim
that it brought in the summary eviction proceeding. To the contrary, all
claims “based on the same facts and alleged wrongful conduct” that were
or could have been brought in the first proceeding are subject to claim
preclusion. Five Star, 124 Nev. at 1058, 194 P.3d at 715. G.C. Wallace's
default gave rise to Reof Centra’s summary eviction action as well as its
damages claim for a breach of the parties’ lease. In other words, the
damages claim and summary eviction proceeding are based upon an
identical set of facts and could have been brought simultaneously. ‘Thus,
the elements of claim preclusion from Five Star are present, and
accordingly, Reef Centra's damages claim is subject to claim preclusion,
unless, as we discuss below, an exception applies.

An_exception to claim preclusion applies to_summary_eviction
proceedings

Broadly speaking, the three-part claim preclusion test is
rooted in the Restatement (Second) of Judgments. See id. at 1054 n.27,
194 P.3d at 713 n.27. In Five Star, although we had no need to discuss
each of the numerous exceptions to the doctrine of claim preclusion, we
Id, at 1058, 194 P.3d
at 716 (noting that there is “a publie policy exception to claim preclusion in

acknowledged that exceptions to the doctrine exis

 

cases involving a determination of paternity”),

‘The exception relevant to this petition is that contained in the
Restatement (Second) of Judgments, which provides, in pertinent part,
that claim preclusion

does not apply to extinguish the claim, and part or
all of the claim subsists as a possible basis for a

 

 
second action by the plaintiff against the
defendant [if]:

(@) ... {I]t is the sense of the [statutory]
scheme that the plaintiff should be permitted to
split his claim .

Restatement (Second) of Judgments § 26(1)(4) (1982).

Comment e of the Restatement elaborates upon this exception,
explaining that adjudication of a particular claim should not be precluded
when it appears “from a consideration of the entire statutory scheme that
litigation, which on ordinary analysis might be considered objectionable as
repetitive, is here intended to be permitted.” Illustration 5 furnishes the
following instructive example that applies the exception contained in
section 26(1)(A):

For nonpayment of rent, landlord A brings a

summary action to dispossess tenant B from

leased premises, A succeeds in the action. A then

brings an action for payment of the past due rent.

‘Phe action is not precluded if, for example, the

statutory system discloses a purpose to give the

landlord a choice between, on the one hand, an

action with expedited procedure to reclaim

possession which does not preclude and may be

followed by a regular action for rent, and, on the

other hand, a regular action combining the two

demands.
Restatement (Second) of Judgments § 26 emt. ¢, illus. 5 (1982).

Accordingly, we consider whether it appears from an
examination of the summary eviction procedure set forth in NRS 40.253
that Reef Centra’s separate damages claim is intended to be permitted.
NRS 40.253(1) introduces summary evietion as a form of relief that may be

sought “in addition to the remedy (contained in the provisions governing

unlawful detainer actions).”. Not surprisingly, the summary eviction

 

 
on

procedure is triggered when the tenant defaults in his or her rental
payments and the landlord serves upon the tenant a written notice
requiring the tenant to pay rent or surrender the property within five
days, NRS 40.253(1)(a). The tenant may contest the eviction by filing,
within five days, a countervailing affidavit stating that he or she is not in
default. NRS 40.253(3)(b). If the tenant contests the eviction, the
landlord may file a “complaint for eviction to the justice court . . . or to the
district court ..., whichever has jurisdiction over the matter.” NRS
40.253(6)(a). Thereafter, the court must conduct a hearing to consider
only whether there is a legal defense to the alleged unlawful detainer of
the property or the sufficiency of the landlord's notice. NRS 40.258(6). If
the tenant has no defense to the alleged unlawful detainer, “the court may
issue a summary order for removal of the tenant

 

The parties each interpret the provisions of NRS 40.253
differently. On the one hand, G.C. Wallace points out that NRS 40.253(6)
makes a sweeping statement that summary eviction proceedings may be
sought in justice court “or” in district court, “whichever has jurisdiction
over the matter.” This language suggests that the Legislature
contemplated that damages claims should be brought in conjunction with
summary eviction proceedings because, under NRS 4.370(1)(g), the
amount of damages claimed is the manner in which jurisdiction is
determined. Thus, although NRS 40.253 does not expressly provide that
landlords must bring their claims in unison, according to G.C. Wallace, the
statute could reasonably be interpreted as requiring that a damages claim
be brought simultaneously with a summary eviction proceeding, in either
the district court or the justice court.

On the other hand, Reef Centra emphasizes that NRS 40.253
does not provide that a judgment for damages may be entered or that

10

 

 
damages are recoverable if a landlord prevails in a summary eviction
proceeding. Although a damages claim can be brought at the same time
as a summary eviction proceeding, a landlord who prevails in the
summary eviction proceeding can recover only immediate possession of the
property. The absence of a provision in NRS 40,253 for monetary recovery
makes perfect sense because all that generally can be resolved in
summary eviction proceedings is whether the landlord is entitled to
immediate possession. See Lippis v, Peters, 112 Nev. 1008, 1012, 921 P.2d
1248, 1251 (1996) (discussing the limited nature of summary eviction
proceedings). Indeed, the reason the summary eviction procedure in NRS
40.253 is able to operate expeditiously is because all that is resolved is
immediate possession. Additionally, a special complaint must be filed for
summary eviction proceedings, NRS 40.253(5)(a), and separate justice
court rules apply in such proceedings. JCRCP 101-105. But even more
importantly, under NRS 40.253(1), a landlord may seek summary eviction
“in addition to” an unlawful detainer action. (Emphasis added.) In sum,
Reef Centra asserts that there are strong indications in NRS 40.253 that
the Legislature intended to permit summary eviction proceedings to be
litigated separately.

We conclude that both of the above interpretations are
reasonable—that is, NRS 40.253 can be reasonably interpreted as
requiring possession and damages to be litigated simultaneously, but it
also can be reasonably interpreted as providing landlords with the choice
to litigate possession and damages separately. Because there is more than
one reasonable interpretation of NRS 40.253, we conclude that it is
ambiguous. Although the parties each contend that the legislative history
of NRS 40.253 supports their respective positions, we conclude that the
legislative history of the statute is inconclusive as to whether the

u

 

ene

 
 

Logislature intended to create a scheme in which a landlord is permitted
to bring a claim for damages separately from a summary eviction
proceeding. See Hearings on A.B. 216 Before the Assembly Judiciary
Comm,, 66th Leg. (Nev., February 1 and March 22, 1991). Thus, we
determine the Legislature's intent by construing NRS 40.253 in
accordance with reason, public policy, and in a manner that avoids an
absurd result. See Great Basin Water Network v, State Bng's, 126 Nev.
—+ — 284 P.3d 912, 918 (2010); Star Ins. Co, v, Neighbors, 122 Nev.
718, 716, 138 P.3d 507, 510 (2006),

A special appreciation of the unique nature of summary
eviction proceedings is vital to properly construing NRS 40.253. In
‘enacting NRS 40,253, the Legislature created a swift and straightforward
procedure for determining who is entitled to immediate possession. See
Lippis, 112 Nev. at 1011, 921 P.2d at 1250 CNRS 40.253 is quite simple
and quite adequate for its purpose.”). If we construed NRS 40.253 to
require simultaneous litigation of all claims arising from the tenant's
default, we would eviscerate the utility and the very purpose of justice
court summary eviction proceedings. Landlords secking damages in
‘excess of $10,000 would be forced to entirely forego the speedy resolution
of possession in justice court or forfeit their claims for damages in excess
‘of $10,000. Such a result would entirely defeat the purpose of the
summary eviction scheme, transforming it into a trap that would snare
the very individuals that it was designed to serve.

G.C. Wallace has failed to cite even a single case holding that
a landlord's failure to seek damages simultaneously with a summary
eviction proceeding bars later recovery for those damages. Indeed, one
court has suggested that no such authority exists. See Norris v. Green.
656 A.2d 282, 286 n.5 (D.C. 1995) (there is “no authority” for the

 

 
om <a

proposition that a landlord’s “failure to ask for back rent along with the
possessory action bars a later recovery for that rent”). Additionally,
commentators have specifically warned against applying preclusive effect
to summary eviction proceedings. See Kimberly E. O'Leary, The
Inadvisability of Applving Preclusive Doctrines to Summary Evictions, 30
U, Tol. L. Rev. 49, 72 (1998) (“[The realities of landlord-tenant practice
make the use of preclusive doctrines in these actions especially
problematic.”); Rosemary Smith, Locked Out; The Hidden Threat of Claim
Preclusion for Tenants in Summary Process, 15 Suffolk J. Trial & App.
Advoc. 1, 25 (2010) (“[T]he very purpose of an expedited proceeding would
be undermined if lawyers felt obligated to append a multitude of related
claims, lest they be barred by claim preclusion from raising them in a

separate action."). Another reason that we reject the position advanced by

 

G.C. Wallace is that it would lead to the unreasonable result of having an
overburdened district court system and an underutilized justice court
system. In sum, preventing a landlord from bringing a damages claim
after a summary eviction proceeding goes against reason and public policy
and would render an absurd result.

‘The foregoing, in connection with the well-established canon of
statutory construction providing that statutory provisions must not. be
rendered superfluous, demonstrates that a landlord seeking repossession
and damages has at least four options. ‘The landlord may seek, in district
court, summary eviction along with a damages claim in excess of $10,000.
NRS 4.370(1)(@); see NRS 40.253(6)(a). Or, the landlord may seek, in
justice court, summary eviction along with a damages claim for less than
$10,000. NRS 4.370(1)(g); see NRS 40.253(6)(a). ‘The landlord also has

13

 

 
the option to seek summary eviction in justice court and thereafter bring a

 

claim for damages in excess of $10,000 in district court.? Finally, the

landlord may seck summary eviction in justice court and thereafter bring
a separate damages claim for less than $10,000 in justice court. Providing
landlords with these options preserves the summary eviction scheme and
also comports with the statutory language of NRS 40.253 that permits
summary evictions to be sought in either justice court or district court.

Accordingly, NRS 40.263 must be construed as exempting
summary eviction proceedings from the doctrine of claim preclusion in
some instances.* Thus, a landlord who seeks summary eviction in justice
court is not prevented from subsequently bringing a claim for damages in
district court, as Reef Centra did here. As a result, the district court
properly denied G.C. Wallace's motion for summary judgment.

8We note that this option does not run afoul of Article 6, Section 6(1)
of the Nevada Constitution, which provides, in pertinent part, that “[the
District Courts. . . have original jurisdiction in all cases excluded by law
from the original jurisdiction of justices’ courts.” As we have explained,
this provision prevents the district court and justice court from exercising
concurrent jurisdiction. K.J.B. Ine, v. District Court, 103 Nev. 473, 475,
745 P.2d 700, 701 (1987). When a landlord seeks summary eviction in
justice court and thereafter secks damages in district court, the courts are
not exercising concurrent jurisdiction because the justice court is
considering only the summary eviction proceeding and the district court is
considering the separate and distinct damages claim. See generally id, at
476, 745 P.2d at 702 (indicating that a landlord's damages claim could
proceed in district court simultaneously with the landlord’s unlawful
detainer action in justice court).

We note this caveat because preclusive effect would most likely
attach to claims that are actually litigated during the summary eviction
proceeding. See Sewell v. Clean Cut Mgmt., Inc., 621 N.W.2d 222, 25
(Mich. 2001) (although a summary eviction judgment does not bar other
claims and remedies, it is conclusive on claims that are actually litigated).

u

 

 
CONCLUSION
Although the doctrine of claim preclusion would ordinarily

prevent a landlord from bringing a damages claim in district court after
previously seeking summary eviction in justice court, an exception to
claim preclusion applies in such a circumstance. Consequently, because
G.C, Wallace is not entitled to the extraordinary relief requested, we deny
this petition. p

    

Cs.
Saitta

We concur:
Mate 4,
Hardesty

4
Parraguirre

‘We have carefully considered G.C. Wallace's other contentions and
conclude that they are without merit.

15

 

om