Court Opinion

ID: 8213385
Source: CourtListenerOpinion
Date Created: 2022-10-12 10:07:53.348827+00
Date Added: 2024-06-11T16:42:22.487551
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF NEVADA

                C & A INVESTMENTS, L.L.C.,                No. 79881
                Appellant,
                vs.
                JIANGSON DUKE, LLC; BANK OF
                UTAH, NOT INDIVIDUALLY, BUT
                SOLELY AS REMAINDERMAN                    MED
                TRUSTEE UNDER REMAINDERMAN
                                                          OCT 1 1 2022
                TRUST AGREEMENT (1995-2), DATED
                                                          ELIZADE -i À. BROWN
                AS OF JUNE 13, 1995, AS SUCCESSOR    CL        F  RREME COUP
                TRUSTEE TO WELLS FARGO TRUST                       CLERK
                COMPANY, N.A. (FORMERLY KNOWN
                AS WELLS FARGO BANK NORTHWEST,
                N.A., FORMERLY KNOWN AS FIRST
                SECURITY BANK OF UTAH, N.A.); AND
                NORTHERN NEVADA COMSTOCK
                INVESTMENTS, LLC,
                Res • ondents.
                C & A INVESTMENTS, L.L.C.,                No. 83279
                Appellant/Cross-Respondent,
                vs.
                JIANGSON DUKE, LLC; AND
                NORTHERN NEVADA COMSTOCK
                INVESTMENTS, LLC,
                Respondents/Cross-Appellants,
                and
                BANK OF UTAH, NOT INDIVIDUALLY,
                BUT SOLELY AS REMAINDERMAN
                TRUSTEE UNDER REMAINDERMAN
                TRUST AGREEMENT (1995-2), DATED
                AS OF JUNE 13, 1995, AS SUCCESSOR
                TRUSTEE TO WELLS FARGO TRUST
                COMPANY, N.A. (FORMERLY KNOWN
                AS WELLS FARGO BANK NORTHWEST,
                N.A., FORMERLY KNOWN AS FIRST
                SECURITY BANK OF UTAH, N.A.)
                Res ondent/Cross-Res i ondent.

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                          ORDER AFFIRMING (DOCKET NO. 79881), AND
                    AFFIRMING IN PART, REVERSING IN PART, AND REMANDING
                                      (DOCKET NO. 83279)

                              These are consolidated appeals from a final judgment following
                  a bench trial in a real property dispute and postjudgment orders denying
                  attorney fees, awarding costs, and denying a motion to set aside the
                  judgment under NRCP 60(b)(5) and (6).         First Judicial District Court,

                  Carson City; William A. Maddox, Senior Judge.'
                              The dispute arises from a Reciprocal Easement and Operation
                  Agreement (REOA) that places restrictive covenants on the Northtown
                  Plaza (Plaza) located in Carson City, Nevada. C & A Investments sued to
                  invalidate the REOA restrictions. After a bench trial, the district court
                  entered a final judgment in favor of defendants Jiangson Duke, LLC
                  (Jiangson) and Northern Nevada Comstock Investments, LLC (Cornstock).
                  C & A appealed from the final judgment (Docket No. 79881). Thereafter, it
                  also moved for relief from the judgment under NRCP 60(5) and (6), and
                  Jiangson and Comstock filed motions for attorney fees and costs.          The

                  district court granted in part the motions for costs but denied the motion for
                  attorney fees and the NRCP 60(b) motion. C & A appealed from the order
                  denying the NRCP 60(b) motion, and Comstock appealed from the orders
                  denying attorney fees and partially denying costs.2

                         'Pursuant to NRAP 34(1)(1), we have determined that oral argument
                  is not warranted.

                        2 Jiangson filed a joinder in support of Comstock's arguments
                  regarding attorney fees only.
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                Appeal from the final judgrnent (Docket No. 79881)
                               In its appeal from the final judgment, C & A first argues that
                the district court erred by finding that it had not demonstrated changed
                conditions to warrant invalidating the REOA.3 A restrictive covenant like
                those in the REOA becomes unenforceable when "changed conditions have
                so thwarted the purpose of the . . . limitation that it is of no appreciable
                value to other property owners and it would be inequitable or oppressive to
                enforce the restriction." Gladstone v. Gregory, 95 Nev. 474, 478, 596 P.2d
                491, 494 (1979); Wallace v. St. Clair, 127 S.E.2d 742, 757 (W. Va. 1962)
                ("Changed conditions of the neighborhood will not defeat enforcement of a
                restrictive covenant unless the changes are so radical as practically to
                destroy the essential objects and purposes of the agreement." (quoting
                Rornbauer v. Cornpton Heights Christian Church, 40 S.W.2d 545, 553 (Mo.
                1931))); see also Restatement (Third) of Property (Servitudes) § 7.10 cmt. a
                (2000) (explaining that "Nile test is stringent: relief is granted only if the
                purpose of the servitude can no longer be accornplished[,] . . . serve[s] no
                useful purpose, and would create unnecessary harm to the owner of the
                servient estate"; and further urging courts to "apply the changed-conditions
                doctrine with caution"). "As long as the original purpose of the covenants

                      3C   &A alternatively argues that the REOA does not restrict gaming.
                The district court did not resolve this argument—it denied C & A's NRCP
                15(b) motion to include this claim in its complaint because the claim was
                not timely raised or tried by consent. Because the district court did not
                resolve this claim and because C & A does not challenge the denial of its
                NRCP 15(b) motion, we decline to consider C & A's argument that the REOA
                does not restrict gaming. See 9352 Cranesbill Tr. v. Wells Fargo Bank, N.A.,
                136 Nev. 76, 82, 459 P.3d 227, 232 (2020) (declining to address an issue that
                the district court did not resolve); Powell v. Liberty Mut. Fire Ins. Co., 127
                Nev. 156, 161 n.3, 252 P.3d 668, 672 n.3 (2011) (concluding that issues not
                raised on appeal are generally deemed waived).
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                         can still be accomplished and substantial benefit will inure to the restricted
                         area by their enforcement, the covenants stand even though the subject
                         property has a greater value if used for other purposes." W. Land Co. v.
                         Truskolaski, 88 Nev. 200, 205, 495 P.2d 624, 627 (1972) (quoting W.
                         Alameda Heights Homeowners Ass'n v. Bd. of Cty. Cornin'rs, 458 P.2d 253,
                         256 (Colo. 1969)); see also Gladstone, 95 Nev. at 479, 596 P.2d at 494
                         (holding that an increased monetary value without the restriction did not
                         justify invalidating the restriction based on changed conditions).
                                     In reviewing the district court's judgment, we give deference to
                         its factual findings that are supported by substantial evidence but review
                         its legal conclusions de novo. See W. Land Co., 88 Nev. at 205, 495 P.2d at
                         627 (reviewing the district court's factual findings for substantial evidence
                         supporting its decision regarding the enforceability of a restrictive
                         covenant); see also U.S. Bank, Nat'l Ass'n ND v. Res. Grp., LLC, 135 Nev.
                         199, 200-01, 444 P.3d 442, 445 (2019) (reviewing a "district court's legal
                         conclusions de novo but giv[ing] deference to its factual findings unless they
                         are clearly erroneous or not supported by substantial evidence"). Here, the
                         trial evidence supports the district court's decision. The stated purpose of
                         the REOA restrictions is to provide for the "operation and maintenance
                         thereon of retail mercantile businesses, financial institutions and related
                         facilities common to family-type retail shopping centers." The evidence
                         reflected that, since 1999, C & A has continuously leased space in the Plaza
                         to family-oriented, retail commercial businesses.         Additionally, trial

                         testimony showed the property owners benefited from the restrictions tying
                         the properties together by creating a theme for the Plaza and the types of
                         services available there and giving tenants confidence regarding the type of
                         future tenants they could expect at the Plaza. Further evidence showed

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                    that the combination of these factors increased the market value of the
                    properties at the Plaza. Although the court heard evidence regarding the
                    economic recession that hit retail commercial businesses in the area
                    beginning in 2006, it also heard evidence that the area was recovering and
                    would return to historic norms within a few years.          Thus, substantial

                    evidence supports the district court's findings that the REOA's purpose "has
                    not been thwarted because the Plaza remains a viable family-oriented
                    retail/commercial shopping center," and that the REOA's restrictions
                    continue to benefit the parcel owners.
                                   Lastly, the record reflects that enforcing the REOA restrictions
                    would not be inequitable or oppressive because, as the district court found,
                    C & A was on notice of several factors affecting the Plaza when it acquired
                    its interest in the Plaza and C & A knew of the restrictions when it entered
                    into the REOA.       See Wood v. Dozier, 464 So. 2d 1168, 1170 (Fla. 1985)
                    (holding that even if changed conditions "would ordinarily be sufficient to
                    grant relief from enforcing the covenants," the fact that the party was on
                    notice when he purchased the property precluded relief (quoting Allen v.
                    Avondale Co., 185 So. 137, 138 (Fla. 1938))). For example, when acquiring
                    its interest in the Plaza, C & A knew that Krnart was experiencing financial
                    difficulties nationally—ultimately leading to store closures and bankruptcy.
                    C & A was also aware that a freeway bypass was going to be constructed
                    around Carson City, and that traffic to the Plaza would diminish once that
                    opened. And while the restrictions may prohibit a more profitable use of
                    the property, that is an insufficient basis to invalidate the restrictions under
                    the doctrine of changed conditions. See Truskolaski, 88 Nev. at 205, 495
                    P.2d at 627.

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                                C & A next argues that the district court erred by not finding

                abandonment of the REOA restrictions based on prior violations of those
                restrictions.     To support a finding of abandonment, a party must show
                violations of the restrictions that are so substantial and general that they
                "frustrate the original purpose of the agreement." W. Land Co., 88 Nev. at
                207, 495 P.2d at 628. Furthermore, abandonment "must be established by
                clear and unequivocal evidence of acts of a decisive nature." Tornpkins v.
                Buttrum Constr. Co. of Neu., 99 Nev. 142, 145, 659 P.2d 865, 867 (1983)
                (quoting Lindner v. Woytowitz, 378 A.2d 212, 216 (Md. Ct. Spec. App. 1977)).
                As evidence of abandonment, C & A alleged that the restrictions had been
                violated in five instances.      The first two alleged violations include a

                nonprofit tenant that supplies food to local children and a pizza parlor, both
                of which purportedly violate the REOA restriction on certain food providers.
                The remaining three alleged violations include a fitness center located in a
                portion of the abandoned anchor tenant building, gaining machines in the
                anchor tenant building until 2003, and gaming machines currently in a
                tenant restaurant. Notably, the gaming machines at issue were operated
                under a limited gaming license that permits no more than fifteen gaming
                machines.       These violations, even taken together, neither frustrate the
                Plaza's ability to operate and maintain "retail mercantile businesses,
                financial institutions and related facilities comrnon to family-type retail
                shopping centers,' nor do they constitute "clear and unequivocal evidence
                of acts" to abandon the restrictions, Tompkins, 99 Nev. at 145, 659 P.2d at
                867. We thus conclude that these violations, occurring over the span of
                nearly three decades, do not equate to abandonment because they were not

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                "so general as to frustrate the original purpose" of the agreement.4 See W.
                Land Co., 88 Nev. at 207, 495 P.2d at 628.      Thus, we affirm the final

                judgment.
                Appeal frorn the order denying the NRCP 60(b) motion (Docket No. 83279)
                            C & A argues that the district court erred by denying its motion
                for relief from the judgment under NRCP 60(b)(5) and (6) because it did not
                apply the correct standards.5    Reviewing for an abuse of discretion, .see

                Rodriguez v. Fiesta Palms, LLC, 134 Nev. 654, 656, 428 P.3d 255, 257 (2018)
                (holding that we review a district court's NRCP 60(b) determination for an
                abuse of discretion), holding modified on other grounds by Willard v. Berry-
                Hinckley Indus., 136 Nev. 467, 469 P.3d 176 (2020), we agree, see In re

                             we conclude that the violations do not support a finding of
                      4 Because
                abandonment, we need not address the district court's application of the
                REOA's non-waiver provision.

                      5Contrary   to Comstock's argument, we conclude that C & A timely
                filed its motion. The final judgment was predicated, at least in part, on
                testimony that the economy in the area would bounce back within a year or
                two. C & A took on that prediction in its NRCP 60(b) motion with an
                affidavit from a cornmercial real estate agent, stating that conditions had
                deteriorated, not improved, over that time. Given the basis for the motion,
                it was filed within a reasonable time for purposes of NRCP 60(b)(5) and (6).
                See NRCP 60(b)(5), (6) (requiring that motions filed under those subsections
                be filed within "a reasonable time"); United States v. Holtzman, 762 F.2d
                720, 725 (9th Cir. 1985) (holding that "[w]hat constitutes reasonable time
                [under FRCP 60(b)(5) and (6)] depends on the facts of each case" and citing
                a case holding that there is "no outside time limit on reasonable time," and
                several others concluding that motions filed within four to six years were
                not unreasonable); cf. McClendon v. Collins, 132 Nev. 327, 330, 372 P.3d
                492, 494 (2016) (noting that the "fflederal cases interpreting the Federal
                Rules of Civil Procedure are strong persuasive authority, because the
                Nevada Rules of Civil Procedure are based in large part upon their federal
                counterparts" (internal quotation marks omitted)).
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                Halverson, 123 Nev. 493, 510, 169 P.3d 1161, 1173 (2007) (recognizing that
                a district court "abuses its discretion when, among other things, it applies
                an incorrect legal standard").
                            Here, the district court denied C & A's NRCP 60(b) motion
                relying on the test outlined in Gladstone v. Gregory, 95 Nev. 474, 596 P.2d

                491 (1979) for whether changed conditions justify nonenforcement of an
                otherwise valid restrictive covenant. However, under NRCP 60(b)(5), the
                district court must address the threshold issue of whether the judgment is
                prospective in nature. See NRCP 60(b)(5) (providing that the district court
                may relieve a party. .. from a final judgment" where, in relevant part,
                applying it prospectively is no longer equitable"); Maraziti v. Thorpe, 52
                F.3d 252, 254 (9th Cir. 1995) (explaining the standard used in determining
                whether a judgment has prospective application for purposes of FRCP
                60(b)); cf. McClendon v. Collin.s, 132 Nev. 327, 330, 372 P.3d 492, 494 (2016).
                And if the judgment has prospective application, the court then must
                determine whether the facts warrant relief from the judgment under NRCP
                60(b)(5). That inquiry is fact intensive. Brown v. Tenn. Dep't of Fin. &
                Admin., 561 F.3d 542, 545 (6th Cir. 2009) ("Whether prospective
                enforcement is no longer equitable under Rule 60(b)(5) is a fact-intensive

                inquiry within the broad equitable powers of a district court."). The district
                court, thus, abused its discretion by applying the incorrect legal standard.
                In re Halverson, 123 Nev. at 510, 169 P.3d at 1173.
                            Additionally, if C & A is not entitled to relief under NRCP

                60(b)(5), the district court had to determine whether, under NRCP 60(b)(6),
                 any other reason [justified] relief." See Vargas v. J Morales Inc., 138 Nev.,
                Adv. Op. 38, 510 P.3d 777, 781 (2022) (holding "that relief may not be sought
                under NRCP 60(b)(6) when it would have been available under NRCP

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                60(b)(1)-(5)"). The district court did not do so here. Specifically, the district
                court did not conduct a fact-intensive inquiry to determine whether the case
                meets the "exceptional or extraordinary circumstances" that would justify
                NRCP 60(b)(6) relief. Blue Diamond Coal Co. v. Trs. of UMWA Combined
                Benefit Fund, 249 F.3d 519, 529 (6th Cir. 2001) (providing that courts must
                "intensively balance numerous factors" when considering FRCP 60(6)(6)'s
                application); cf. McClendon, 132 Nev. at 330, 372 P.3d at 494. We therefore
                reverse the district court's order denying the NRCP 60(b) motion and
                remand for the district court to apply the relevant standards under NRCP
                60(b)(5) and (6) in the first instance and to conduct an evidentiary hearing,
                if necessary. See Borhan v. Allison, 541 F. App'x 740, 741 (9th Cir. 2013)
                (remanding for the district court to hold an FRCP 60(b)(6) evidentiary
                hearing to resolve factual issues in the first instance).
                Appeal from the postjudgrnent orders regarding attorney fees and costs
                (Docket No. 83279)
                             Jiangson    and   Comstock     argue   that    the   district   court

                erroneously determined that the REOA did not provide a basis for attorney
                fees. In particular, they argue that they were the prevailing parties and the
                attorney fee provision broadly permits recovery in "any action to enforce"
                the RE0A.6 We conclude that the attorney fee provision may be interpreted

                      6 Comstock  and Jiangson further argue that it is irrelevant whether
                the attorney fees here were incurred offensively or defensively. However,
                they rely on distinguishable authority that addresses a California statute
                that permitted a prevailing party to recover attorney fees incurred in
                enforcing a contract regardless of "whether he or she is the party specified
                in the contract or not." Shadoan v. World Say. & Loan Ass'n, 268 Cal. Rptr.
                207, 212 (Ct. App. 1990) (citing Cal. Civ. Code § 1717(1)). Unlike the
                California statute at issue in Shadoan, NRS 18.010(1) limits attorney fees
                as prescribed by the parties' agreement. NRS 18.010(1) ("The compensation
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                     in two ways: (1) that a party may recover attorney fees only when filing an
                     action to enforce the REOA or (2) that a party also may recover attorney
                     fees when the REOA is used as a defense, such as here. The contractual
                     provision therefore is ambiguous. Anvui, LLC u. G.L. Dragon, LLC, 123
                     Nev. 212, 215, 163 P.3d 405, 407 (2007) (holding that a contract is
                     ambiguous if it may reasonably be interpreted in more than one way).
                     Given that ambiguity, we conclude that the district court did not abuse its
                     discretion by denying the request for attorney fees. See Pardee Homes of
                     Nev. v. Wolfram, 135 Nev. 173, 176, 444 P.3d 423, 425-26 (2019) (reviewing
                     the denial of attorney fees for a manifest abuse of discretion, but reviewing
                     de novo the question of whether a contract authorizes attorney fees); Davis
                     v. Beling, 128 Nev. 301, 321, 278 P.3d 501, 515 (2012) (holding that the
                     threshold issue for determining whether an attorney fee provision will be
                     enforced is "whether the language . . . is clear and unambiguous").
                                 Comstock also argues that the district court erred by limiting
                     its recovery of costs.7 Reviewing for an abuse of discretion, we disagree. See
                     Cadle Co. v. Woods & Erickson, LLP, 131 Nev. 114, 120, 345 P.3d 1049, 1054
                     (2015). With respect to the requested costs for expert John S. Wright, an
                     MAI certified appraiser, Comstock did not demonstrate that the costs were

                     of an attorney and counselor for his or her services is governed by
                     agreement, express or implied, which is not restrained by law.").

                           7To the extent that Cornstock argues that it was entitled to the full
                     amount of costs requested because C & A did not move to retax costs, we
                     disagree. In deciding whether and how much to award as costs, the district
                     court must follow guiding legal principles, a clear disregard of which would
                     be an abuse of discretion. See Ozawa v. Vision Airlines, Inc., 125 Nev. 556,
                     563, 216 P.3d 788, 793 (2009) (explaining that a clear disregard of guiding
                     legal principles may constitute an abuse of discretion in the context of
                     awarding costs).
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                reasonable" or "necessary."8    See Cadle Co., 131 Nev. at 120, 345 P.3d at

                1054 (holding that "costs must be reasonable, necessary, and actually
                incurred"); Bobby Berosini, Ltd. v. People for the Ethical Treatment of
                Animals, 114 Nev. 1348, 1352-53, 971 P.2d 383, 385-86 (1998) (holding that
                a district court may not award costs without evidence to determine whether
                the costs were reasonable); see also Frazier v. Drake, 131 Nev. 632, 651, 357
                P.3d 365, 378 (Ct. App. 2015) (holding that "before any award of expert
                witness fees as costs may be made under NRS Chapter 18, the district court
                must have evidence before it demonstrating that the costs were reasonable,
                necessary, and actually incurred that goes beyond a mere memorandum of
                costs" (internal quotation marks omitted)). Thus, the district court did not
                abuse its discretion by limiting the cost award to the statutory rate for
                experts. See NRS 18.005 (setting a statutory rate of $1500 per expert);
                Cadle Co., 131 Nev. at 120, 345 P.3d at 1054. And because Comstock's
                expert Gary Johnson, a commercial real estate agent, did not provide
                justifying documentation beyond his billing statement, which did not
                provide an itemized breakdown of costs, the district court similarly did not
                abuse its discretion by limiting his associated costs. See Village Builders
                96, L.P. v. U.S. Labs., Inc., 121 Nev. 261, 276-78, 112 P.3d 1082, 1092-93
                (2005) (explaining that providing justification for each copy made or call
                placed is necessary in order for the district court to properly assess whether

                      8Although  Comstock argues for the first time on appeal that these
                costs were reasonable compared to other experts in the field, this assertion
                is without evidentiary support in the record. We therefore cannot consider
                it. See Old Aztec Mine, Inc. u. Brown, 97 Nev. 49, 52, 623 P.2d 981, 983
                (1981) ("A point not urged in the trial court . . . is deemed to have been
                waived and will not be considered on appeal.").
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the cost was actually incurred and reasonable); Cadle Co., 131 Nev. at 120,
345 P.3d at 1054.
              For the reasons set forth in this order, we
              ORDER the judgment of the district court in Docket No. 79881
AFFIRMED, the judgment of the district court denying NRCP 60(b) relief
in Docket No. 83279 REVERSED AND REMANDED for proceedings
consistent with this order, and the judgments of the district court regarding
attorney fees and costs in Docket No. 83279 AFFIRMED.9

                          Parraguirre

          -                 , J.                                      Sr.J.
Herndon

cc:   Chief Judge, The First Judicial District Court
      Hon. William A. Maddox, Senior Judge
      Madelyn Shipman, Settlement Judge
      Allison MacKenzie, Ltd.
      Lemons, Grundy & Eisenberg
      Mahe Law, Ltd.
      Guild, Gallagher & Fuller, Ltd.
      Midtown Reno Law
      Carson City Clerk

      9The   Honorable Mark Gibbons, Senior Justice, participated in the
decision of this matter under a general order of assignment.

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