Court Opinion

ID: 3179192
Source: CourtListenerOpinion
Date Created: 2016-02-22 15:24:45.701653+00
Date Added: 2024-06-11T12:19:15.291593
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF NEVADA

                   NORTH AMERICAN PROPERTIES, A                          No. 61997
                   PARTNERSHIP COMPOSED OF
                   TIMOTHY S. HEERS; GARY R. HEERS;
                   CHERYL D. NOTLE; TERRIE D.
                   HEERS; AND CATHLEEN J. HEERS,                            FILED
                   Appellants,                                               FEB 1 9 2016
                   vs.
                   MCCARRAN INTERNATIONAL
                   AIRPORT; AND CLARK COUNTY, A
                   POLITICAL SUBDIVISION OF THE
                   STATE OF NEVADA,
                   Respondents.

                                           ORDER OF AFFIRMANCE

                                This is an appeal from a district court summary judgment in a
                   government takings action. Eighth Judicial District Court, Clark County;
                   Jerome T. Tao, Judge.
                                Appellant North American Properties (NAP) owned land close
                   to McCarran Airport. Respondents McCarran International Airport and
                   Clark County (collectively, the County), through Ordinance 1599, imposed
                   certain height restrictions for structures close to McCarran Airport, and a
                   portion of the airspace above NAP's property was encumbered. This court
                   has already held that Ordinance 1599 is a regulatory per se taking.
                   McCarran Int'l Airport v. Sisolak, 122 Nev. 645, 675, 137 P.3d 1110, 1130
                   (2006).
                                NAP sued to recover compensation for the County's taking.
                   During the course of litigation, the district court found that NAP
                   misrepresented when it owned the property and engaged in discovery
                   abuses by failing to disclose evidence that might have shown (1) NAP

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                lacked standing, (2) other necessary parties had an interest in NAP's
                claim, and (3) NAP was judicially estopped from bringing a takings claim.
                Among other documents, NAP failed to timely disclose a deed of trust on
                the property, two ownership transfers, and a bankruptcy involving the
                property.
                            Based on these misrepresentations and discovery abuses, the
                district court sanctioned NAP through its inherent powers and NRCP 37.
                Specifically, the district court applied an adverse inference against NAP,
                concluding that unproduced documents would show NAP lacked standing
                and was judicially estopped from bringing a takings claim. After applying
                these adverse inferences, the district court granted the County's motion
                for summary judgment, holding that NAP did not have standing to sue
                and it was judicially estopped from bringing the takings claim. In light of
                NAP's egregious abuses, we affirm the district court's decision to impose
                case-ending sanctions pursuant to its inherent powers.'
                The record clearly shows that NAP engaged in egregious litigation abuses
                            The district court's decision to sanction NAP was based on two
                principal findings: (1) from 2009 to 2012, NAP misrepresented to the court
                that it owned the property when it filed its complaint and never attempted
                to fix this misrepresentation, even when it was clear the district court was

                       'Having found that the district court did not abuse its discretion in
                issuing case-ending sanctions through its inherent powers, we need not
                address whether the district court abused its discretion in also issuing a
                case-ending sanction pursuant to NRCP 37. See Ash Springs Dev. Corp. ix
                O'Donnell, 95 Nev. 846, 848, 603 P.2d 698, 699-700 (1979) ("Because of our
                disposition, it is unnecessary to reach the other issues raised by the
                parties.").

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                relying on it; and (2) NAP failed to disclose and review for relevancy a
                huge cache of documents held in Arizona until after the close of discovery,
                and a substantial number of those documents were later found to be
                relevant. We conclude the record substantially and clearly supports the
                district court's findings   See Weddell v. H20, Inc., 128 Nev. 94, 101, 271
                P.3d 743, 748 (2012) (stating that a district court's factual findings will be
                upheld unless they are clearly erroneous or unsupported by substantial
                evidence).
                             First, the record plainly supports the district court's
                conclusion that NAP affirmatively misrepresented its ownership to the
                court and then failed to correct that misrepresentation even after it was
                clear the court was relying on it. NAP's initial complaint says "[a]t all
                relevant times, [NAP] has been the owner" of the property. In opposition
                to a motion challenging its standing, NAP stated "the County tax records
                show NAP as the record title owner at the time of the taking alleged and
                no other transactions are at issue." At a hearing on a motion to dismiss
                NAP's complaint for lack of standing, NAP's counsel said NAP "is the
                name of the entity that has always owned this property .... [NAP is] the
                name of the partnership that owns this property." NAP's amended
                complaint repeats that "[a]t all relevant times, NAP has been the owner"
                of the property. NAP also claimed that "[t]here is no genuine dispute" that
                "[p]laintiffs own" the property. Based on these representations, the
                district court granted NAP's motion for partial summary judgment
                regarding standing, finding that "[t]he [p]laintiffs in this case are the
                owners of' the property. The record does not show any effort by NAP to
                correct the district court's misconception of the property's actual
                ownership history.

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                            Additionally, the record clearly supports the district court's
                conclusion that NAP (1) did not produce documents related to its standing
                until the County brought forth newly discovered documents showing that
                the district court might have incorrectly held that NAP had standing; (2)
                provided an enormous number of relevant documents after the close of
                discovery, just days before trial; and (3) failed to review a large cache of its
                documents for relevancy. On June 8, 2012, the County brought a motion
                for summary judgment challenging the district court's earlier conclusion
                that NAP had standing to sue. This is the first time the record indicates
                NAP did not own the property when it filed suit. Discovery closed three
                weeks later on June 29, 2012. On August 7, 2012, the district court
                specifically ordered production of documents related to (1) the property's
                sale to NAP, Inc., and a third party during bankruptcy; (2) Household
                Bank's deed of trust; and (3) NAP, Inc.'s bankruptcy. At a September 12,
                2012, hearing, one of NAP's general partners disclosed, for the first time,
                that "millions of documents, literally," regarding businesses owned and
                operated by the general partners, including NAP, were held in a storage
                facility in Arizona, and no one had disclosed those documents or reviewed
                them for relevancy. At a September 19, 2012, status check, NAP's counsel
                informed the court that NAP had produced 22 banker boxes of relevant
                material, and that a significantly greater number of documents remained
                that needed to be reviewed for relevancy and disclosed.
                            Therefore, the record supports the district court's
                determination that "the Plaintiff affirmatively misrepresented its standing
                to the Court, induced the Court to grant partial summary judgment based
                upon that misrepresentation, knew that the Court relied upon its
                misrepresentations, and then failed to produce documents in its possession

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                      for over eighteen months that could have revealed the misrepresentation."
                      Having concluded that the district court's factual description of NAP's
                      misconduct is supported by substantial evidence, we must now determine
                      whether the district court imposed an appropriate sanction.
                      The district court did not abuse its discretion in imposing case-ending
                      sanctions against NAP
                                     District courts in Nevada may sanction abusive litigation
                      practices through their inherent powers.       Young v. Johnny Ribeiro Bldg.,
                      Inc., 106 Nev. 88, 92, 787 P.2d 777, 779 (1990). A court's inherent power
                      to sanction is designed "to protect the dignity and decency of its
                      proceedings and to enforce its decrees, and thus it may issue contempt
                      orders and sanction or dismiss an action for litigation abuses."       Halverson
                      v. Hardcastle, 123 Nev. 245, 261, 163 P.3d 428, 440 (2007). Generally,
                      "this court will not reverse sanctions absent a clear showing of abuse of
                      discretion."    Hamlett v. Reynolds, 114 Nev. 863, 865, 963 P.2d 457, 458
                      (1998). However, case-ending sanctions require "a somewhat heightened
                      standard of review." Foster v. Dingwall, 126 Nev. 56, 65, 227 P.3d 1042,
                      1048 (2010). That somewhat-heightened review requires this court to
                      determine whether (1) the sanction is just and relates to the specific
                      conduct at issue; and (2) the district court engaged in an express,
                      thoughtful, and preferably written analysis of all material factors.        Id.;
                      Young, 106 Nev. at 92-93, 787 P.2d at 779-80. Such factors might include:
                                     [1] the degree of willfulness of the offending party,
                                     [2] the extent to which the non-offending party
                                     would be prejudiced by a lesser sanction, [3] the
                                     severity of the sanction of dismissal relative to the
                                     severity of the discovery abuse, [4] whether any
                                     evidence has been irreparably lost, [5] the
                                     feasibility and fairness of alternative, less severe
                                     sanctions, such as an order deeming facts relating
                                     to improperly withheld or destroyed evidence to be
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                                  admitted by the offending party, [6] the policy
                                  favoring adjudication on the merits, [7] whether
                                  sanctions unfairly operate to penalize a party for
                                  the misconduct of his or her attorney, and [8] the
                                  need to deter both the parties and future litigants
                                  from similar abuses.
                      Young, 106 Nev. at 93,787 P.2d at 780.
                                  First, we conclude that the district court's case-ending
                      sanctions were both just and sufficiently related to NAP's underlying
                      misconduct. NAP's misrepresentations and evasive discovery practices
                      were not related to some tangential issue, but its actual ability to bring a
                      claim against the County. NAP's abuses directly impaired the district
                      court's ability to determine whether NAP (1) had standing to sue, (2) failed
                      to join additional parties with an interest in the takings claim, and (3) was
                      judicially estopped from asserting the takings claim based on
                      representations made during bankruptcy proceedings. Each of these
                      issues speaks directly to NAP's ability to prosecute a claim at all, and, in
                      the absence of abusive litigation practices, each is typically dealt with in
                      the early stages of litigation, not days before trial. Thus, it was just for
                      the district court to impose a case-ending sanction against NAP, which
                      finagled its way deep into the litigation process through misrepresentation
                      and selective disclosure. Moreover, a case-ending sanction is sufficiently
                      related to NAP's abusive conduct because the issues NAP manipulated—
                      standing, failure to join a necessary party, and judicial estoppel—each
                      speak directly to NAP's ability to invoke the judicial process.
                                  Next, we conclude the district court's 13-page order provided a
                      careful and thorough analysis of its rationale for disposing of NAP's claim.
                      Although the district court's order never directly discusses Young, its
                      analysis touches all but one of the Young factors. See Young, 106 Nev. at

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                93-94, 787 P.2d at 780 (showing that district courts are not required to
                consider every Young factor so long as the case-ending sanction's rationale
                is carefully and thoughtfully explained).
                            First, the district court discussed the degree of NAP's
                willfulness, noting that it "affirmatively misrepresented its ownership"
                and made misrepresentations "in connection with facts that no party could
                plausibly claim to have forgotten." Moreover, NAP's failure to disclose
                documents was an act of "active concealment" that was "intentional or at
                least highly reckless." In other words, NAP's misrepresentations were
                non-negligent, and its discovery abuses were willful.
                            Second, the district court discussed how a lesser sanction
                would prejudice the County, concluding that the problems NAP caused
                were "substantial and uncorrectable at this stage of the litigation."
                Specifically, NAP produced an enormous number of relevant documents
                "on the virtual eve of trial," thereby placing an onerous and undue burden
                on the County to review and prepare those documents for trial. And
                although the district court's sanctions had the effect of ending NAP's case
                against the County, the district court actually did impose lesser sanctions
                than outright dismissal. Instead, it deemed evidence related to NAP's
                misconduct adverse. Thus, the district court properly considered lesser
                sanctions and found them appropriate.
                            Third, the district court expressly found that a severe sanction
                was warranted because NAP's course of conduct represented "a very
                serious violation of both the letter and spirit of the rules of discovery."
                According to the district court's analysis, NAP affirmatively
                misrepresented its standing, induced the district court to grant partial
                summary judgment based on the misrepresentations, knew the district

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                      court had relied on those misrepresentations, and then failed to disclose
                      documents that would reveal the misrepresentations for 18 months. We
                      believe the district court's conclusion—that NAP's course of conduct
                      warranted severe sanctions—is sound and supported by the record.
                                  Fourth, the district court did not conclude that evidence was
                      irreparably lost. However, the overarching theme of its order is that
                      NAP's misconduct placed an enormous and unfair burden on the County to
                      go through a huge number of newly produced documents before a trial
                      date only two weeks away. In other words, the evidence was not
                      irreparably lost, but NAP's abusive conduct greatly undermined the utility
                      of that evidence by robbing the County of the opportunity to carefully
                      review and consider it before trial.
                                  Fifth, the district court considered and adopted a lesser
                      sanction than outright dismissal, instead opting to deem certain concealed
                      evidence as adverse to NAP's claims. The district court's decision to
                      impose that adverse inference at summary judgment had the effect of
                      resolving three contested issues that NAP spent many months improperly
                      obfuscating—NAP's standing, other parties' potential interest in the
                      litigation, and judicial estoppel—in the County's favor. Although imposing
                      these sanctions effectively ended the case, the adverse inference was still a
                      narrower and lesser sanction than an outright dismissal.
                                  Sixth, the district court's order implicitly considered the
                      judiciary's policy favoring adjudication on the merits. Specifically, the
                      court concluded that by concealing a huge number of documents until just
                      before trial, NAP had irreparably prejudiced the court. In other words,
                      NAP's conduct irreparably prejudiced the district court's ability to perform

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                its adjudicative duties by misrepresenting facts that had great bearing on
                the merits of the case.
                              Seventh, the district court's sanction did not punish NAP for
                its counsel's misconduct. Indeed, the district court expressly found that
                "Plaintiff's counsel was not complicit," and NAP "failed to produce those
                documents despite repeated written requests by its attorney to do so."
                Therefore, the district court's sanction expressly punishes NAP for its own
                misconduct.
                              Finally, the district court's order does not discuss deterring
                litigation misconduct as a rationale for imposing sanctions against NAP.
                However, this court does not require district courts to consider every
                Young factor, so long as the district court's analysis is thoughtfully
                performed. See Young, 106 Nev. at 93-94, 787 P.2d at 780.
                              In sum, we conclude that the district court's sanction order
                resulted from a written, careful, and thorough examination of the relevant
                factors, as required by      Young. Id.     at 92-93, 787 P.2d at 779-80.
                Specifically, the district court found NAP's misconduct was non-negligent
                and willful, irreparably prejudiced the County and court, severely
                undermined the proceedings, greatly impaired the utility of the withheld
                evidence, and could not be blamed on NAP's counsel. Moreover, the
                district court's sanction, although effectively case-ending, was narrower
                and less severe than an outright dismissal with prejudice.
                              Thus, having reviewed the district court's order, we conclude it
                did not abuse its discretion by using its inherent powers to sanction NAP,
                even under the heightened standard of review for case-ending sanctions.
                              NAP also argues that the district court abused its discretion
                by imposing case-ending sanctions without first holding an evidentiary

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                   hearing. We disagree. The record reflects multiple hearings during which
                   NAP—either through its counsel, its partners, or both—presented its
                   contentions regarding whether it misrepresented its standing and
                   committed discovery violations. Therefore, the district court did not abuse
                   its discretion because it provided NAP with more than one meaningful
                   opportunity to present evidence and arguments regarding its misconduct
                   before issuing case-ending sanctions.
                               Accordingly, we
                               ORDER the judgment of the district court AFFIRMED.

                                                      Parraguirre

                                                                 aa-spc               J.
                                                      Hardesty

                                                                                      J.

                                                                                      J.

                                                                                      J.

                                                      Gibbons

                                                                                  ,   J.

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                  cc:   Eighth Judicial District Court Dept. 20
                        Ara H. Shirinian, Settlement Judge
                        Efrem A. Rosenfeld & Associates
                        Paul C. Ray, Chtd.
                        Mark R. Smith
                        Thompson & Heers, PC
                        Clark County District Attorney/Civil Division
                        Brownstein Hyatt Farber Schreck, LLP/Las Vegas
                        Henderson City Attorney
                        Kilpatrick, Adler & Bullentini
                        Joshua D. Weber
                        Reno City Attorney
                        Fennemore Craig Jones Vargas/Reno
                        Pisanelli Bice, PLLC
                        Eighth District Court Clerk

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