Court Opinion

ID: 8209272
Source: CourtListenerOpinion
Date Created: 2022-09-27 10:07:15.938282+00
Date Added: 2024-06-11T16:41:39.464909
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF NEVADA

                    DAVID J. MITCHELL; LAS VEGAS                                No. 80693
                    LAND PARTNERS, LLC; MEYER
                    PROPERTY LTD.; ZOE PROPERTY,
                    LLC; LEAH PROPERTY, LLC; WINK                               FILE
                    ONE, LLC; AQUARIUS OWNER, LLC;
                                                                                SEP 2    2022
                    LVLP HOLDINGS, LLC; AND LIVE
                                                                                         BROWN
                    WORKS TIC SUCCESSOR, LLC,                              CL           EME COURT

                    Appellants,                                           BY
                                                                                 DEP
                    vs.
                    RUSSELL L. NYPE; REVENUE PLUS,
                    LLC; AND SHELLEY D. KROHN,
                    Res ondents.

                           ORDER AFFIRMING IN PART, VACATING IN PART, AND
                                            REMANDING

                                This is an appeal from a final judgment in an action for
                    fraudulent conveyance, civil conspiracy, and alter ego liability.           Eighth
                    Judicial District Court, Clark County; Elizabeth Goff Gonzalez, Judge.
                                This case concerns respondents Russell Nype and Revenue
                    Plus, LLC's (collectively Nype), ongoing attempt to collect an approximately
                    $2.6 million judgment that they had previously been awarded against
                    appellant Las Vegas Land Partners, LLC (LVLP), and several other related
                    entities owned by appellants David Mitchell and Barnet Liberman.' Nype

                          1Although   Liberman and related entity Casino Coolidge, LLC, did not
                    participate in this appeal, we nevertheless elect to treat them as appellants.
                    See Bullion Mining Co. v. The Croesus Gold & Silver Mining Co., 3 Nev.

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               was unsuccessful in collecting the original judgment and discovered that
               Mitchell and Liberman had taken deliberate steps to divert assets away
               from LVLP and the other original judgment debtors to other companies they
               owned or managed, including appellants Meyer Property, Ltd.; Zoe
               Property, LLC; Leah Property, LLC; Wink One, LLC; Aquarius Owner,
               LLC; LVLP Holdings, LLC; and Live Works TIC Successor, LLC (all
               appellants collectively referred to as Mitchell). Mitchell's actions effectively
               made the original judgment debtors insolvent and prevented Nype from
               satisfying the original judgment. Upon discovering Mitchell's deliberate
               conduct, Nype instituted the instant action against Mitchell, asserting
               claims for declaratory relief, fraudulent conveyance, civil conspiracy,
               constructive trust, and alter ego liability. The district court found in favor
               of Nype on his claims of fraudulent conveyance, civil conspiracy, and alter
               ego liability and awarded Nype a total of $15,148,339 in compensatory
               damages and roughly $4.5 million in attorney fees and costs as special
               damages.
                           Mitchell now argues, among other things, that these two
               awards were in error.         As we explain below, the district court's
               compensatory damages award was erroneous because it exceeded the
               amount of damages Nype actually suffered.         Further, we conclude that
               while the district court properly awarded Nype attorney fees and costs, the
               amount of the award was nevertheless erroneous because the district court
               did not properly consider the factors set forth in Brunzell v. Golden Gate
               National Bank, 85 Nev. 345, 455 P.2d 31 (1969).

               336, 340 (1867) (stating a judgment reversed as to one appellant may also
               be reversed to a non-party who is jointly liable for the same injury).

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                            The compensatory damages award to Nype was erroneous
                            Mitchell argues that the district court's approximately $15
                million award to Nype in compensatory damages is erroneous because the
                amount awarded exceeds the actual injury Nype suffered as a result of
                Mitchell's conspiratorial conduct.     Mitchell contends that the amount
                awarded is equal to all of the profits he received during the conspiratorial
                time period. He posits that the awarded amount, instead, should not exceed
                the original judgment because that is the only injury Nype suffered:
                            Nype    replies   that   the   district   court's   award   properly
                compensates him for the injury suffered as a result of the conspiratorial
                conduct. Namely, Nype contends that the award properly compensates him
                for (1) the amount of the previous judgment, (2) lost business opportunities,
                and (3) the emotional injury that he suffered.
                            The appropriateness of a damages award presents a mixed
                question of law and fact.     "Whether a party is entitled to a particular
                measure of damages is a question of law reviewed de novo." Dynalectric Co.
                of Nev., Inc. v. Clark & Sullivan Constructors, Inc., 127 Nev. 480, 483, 255
                P.3d 286, 288 (2011) (internal quotation marks omitted).           Further, the
                actual amount of damages awarded is a question of fact reviewed for an
                abuse of discretion. Flamingo Realty, Inc. v. Midwest Dev., Inc., 110 Nev.
                984, 987, 879 P.2d 69, 71 (1994).
                            Historically, an award of compensatory damages is proper when
                the award is limited to the amount representing the actual injury or loss
                caused by the tortfeasor's wrongful conduct. Quigley v. Cent. Pac. R.R. Co.,
                11 Nev. 350, 371 (1876). "The damage for which recovery may be had in a
                civil [conspiracy] action is not the conspiracy itself but the injury to the
                plaintiff produced by specific overt acts." Aldabe v. Adams, 81 Nev. 280,

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                 286, 402 P.2d 34, 37 (1965) (internal quotation marks omitted), overruled
                 on other grounds by Siragusa•v. Brown, 114 Nev. 1384, 1393, 971 P.2d 801,
                 807 (1998).
                               Having considered the parties' briefs and their supporting
                 documentation, we conclude that the district court's compensatory damages
                 award goes beyond merely compensating Nype for the injury he suffered.
                 The district court awarded Nype $15,148,339 in compensatory damages
                 relating to Mitchell's conspiracy to circumvent the satisfaction of the $2.6
                 million judgment. While the district court did not explain how this amount
                 properly compensates Nype, it did determine that $15,148,339 represented
                 the amount that Mitchell and Liberman received from the appellant entities
                 as distributions from 2007 to 2016. Although it is not clear if this was the
                 basis for the district court's award, relying on this figure would be
                 erroneous. The injury Nype suffered because of Mitchell's conspiracy to
                 evade satisfying the original judgment is not the amount of distributions
                 Mitchell and Liberman received during the period of the ongoing
                 conspiracy. Rather, the actual injury Nype suffered is the value of the
                 original judgment, $2.6 million, along with whatever costs were incurred,
                 post-judgment, attempting to satisfy the original judgment.2 The injury a
                 plaintiff suffers is not simply the amount a defendant may have available

                       2 We recognize that Nype's injury is presently greater than just the
                 original $2.6 million judgment because of the ongoing accrual of interest.
                 Further, as we discuss below, Nype's injury also includes the attorney fees
                 and costs incurred in litigating the instant appeal. Thus, on remand an
                 appropriate award will consist of two components: (1) the original judgment,
                 plus appropriate interest; and (2) costs and fees incurred post-judgment
                 while attempting to satisfy the original judgment, including the costs and
                 fees associated with this second suit.

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                         to satisfy a judgment, obtained because of their tortious conduct.3 Miller v.
                         Schnitzer, 78 Nev. 301, 311 n.1, 371 P.2d 824, 830 n.1 (1962) (explaining
                         "compensatory damages are designed to make the plaintiff whole for her
                         injury, without reference to the defendant's ability to pay"), abrogated on
                         other grounds by Ace Truck and Equip. Rentals, Inc. v. Kahn, 103 Nev. 503,
                         507-08, 746 P.2d 132, 135-36 (1987), abrogated on other grounds by Bongiovi
                         v. Sullivan, 122 Nev. 556, 583, 138 P.3d 433, 452 (2006). Further, we reject
                         Nype's argument that the district court's award properly compensates him
                         for other types of injuries he suffered, including lost business opportunities
                         and emotional distress. Neither the district court's order nor the record on
                         appeal demonstrates that Nype has presented sufficient evidence to support
                         his claim that he suffered these types of injuries in a manner that would be
                         compensable.
                                      In   summary,    the   district   court's   award   goes   beyond
                         compensating Nype for the injuries actually suffered, and instead affords
                         him a significant windfall.     Accordingly, we vacate the district court's
                         compensatory damages award and remand the                  issue for further
                         consideration.
                                      The district court's decision to award respondent attorney fees
                         was proper

                               3The   district court's award effectively operates as a disgorgement
                         award, which is a measure of damages that is only available where
                         statutorily authorized and is not a theory of recovery for a private plaintiff.
                         Although LVLP's trustee was permitted to participate in the proceedings,
                         the trustee did not assert a disgorgement claim and, therefore, recovery
                         measured in this manner is not appropriate.

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                            Mitchell contends that Nype was erroneously allowed to seek
                recovery of attorney fees and costs as special damages.
                            This court reviews a party's eligibility to recover attorney fees,
                as it implicates a question of law, de novo.      Pardee Homes of Nev. v.
                Wolfram, 135 Nev. 173, 176, 444 P.3d 423, 425-26 (2019). Attorney fees
                may be awarded as either (1) "fees as a cost of litigation" or (2) "fees as an
                element of damage [s]." Sandy Valley Assocs. v. Sky Ranch Estates Owners
                Ass'n, 117 Nev. 948, 955, 35 P.3d 964, 968-69 (2001), receded from on other
                grounds by Horgan v. Felton, 123 Nev. 577, 170 P.3d 982 (2007), and Liu v.
                Christopher Homes, LLC, 130 Nev. 147, 321 P.3d 875 (2014); see also
                Sumner Hill Homeowners' Ass'n, Inc. v. Rio Mesa Holdings, LLC, 141 Cal.
                Rptr. 3d 109, 138 (Ct. App. 2012) (explaining attorney fees may be awarded
                as damages or as fees, with the latter concerning an attorney's mode of
                compensation and the former concerning "damages wrongfully caused by
                [the] defendant's improper actions." (alteration in the original) (internal
                quotation marks omitted)). Where attorney fees are awarded under the first
                basis, this court has adopted the American Rule—recovery is prohibited
                absent authorization by agreement, statute or rule. Pardee Homes of Nev.,
                135 Nev. at 177, 444 P.3d at 426.
                            Nevada's flagship case addressing attorney fees as an element
                of damages is Sandy Valley. In Sandy Valley, we did not adopt an express
                test for determining when attorney fees are considered an element of
                damages, but instead expressed that such fees are recoverable when the
                fees are "the natural and proximate consequence of the [defendant's]
                injurious conduct." 117 Nev. at 957, 35 P.3d at 969. We also provided the
                following three examples of when attorney fees may be considered a
                recoverable element of damages: (1) "when a party claims it has incurred

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                   attorney fees as foreseeable damages arising from tortious •conduct or a
                   breach of contract," id. at 956, 35 P.3d at 969; (2) when a party incurs fees
                   "in recovering real or personal property acquired through the wrongful
                   conduct of the defendant or in clarifying or removing a cloud upon the title
                   to property," id. at 957, 35 P.3d at 970; or (3) in "actions for declaratory or
                   injunctive relief.... when the actions were necessitated by the opposing
                   party's bad faith conduct," id. at 958, 35 P.3d at 970.
                               Since Sandy Valley, we have clarified when attorney fees as
                   special darnages are appropriate. For instance, the ability to recover under
                   the first example has been narrowed by requiring that the resulting
                   attorney fees arise from more than simply the costs incurred as part of
                   prosecuting a breach-of-contract action." Wolfram, 135 Nev. at 178, 444
                   P.3d at 426. Similarly, with respect to the second example, attorney fees
                   are allowable only as special damages in slander of title actions rather than
                   all actions prosecuting issues regarding a cloud on title. Horgan v. Felton,
                   123 Nev. 577, 586, 170 P.3d 982, 988 (2007). Specifically, we stated that
                               attorney fees are permissible as special damages
                               [only] in slander of title actions because "the
                               defendant . . . by intentional and calculated action
                               leaves the plaintiff with only one course of action:
                               that is, litigation ....     Fairness requires the
                               plaintiff to have some recourse against the
                               intentional malicious acts of the defendant."
                   Id. at 585, 170 P.3d at 987-88 (quoting Rorvig v. Douglas, 873 P.2d 492, 497
                   (Wash. 1994); see also Sumner Hill Homeowners' Ass'n, 141 Cal. Rptr. 3d at
                   138 (reaching the same conclusion). Since Sandy Valley, we have narrowly
                   construed a party's ability to recover attorney fees as special damages to
                   instances where attorney fees were incurred because, as a result of the
                   defendant's intentional efforts, the plaintiff had no other choice but to

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                      litigate. See Liu v. Christopher Homes, LLC, 130 Nev. 147, 155-56, 321 P.3d
                      875, 880 (2014) (holding appellant could properly seek attorney fees as
                      special damages in a third-party breach of contract action against
                      respondent).
                                  In conclusion, a common thread runs throughout Sandy Valley
                      and its progeny—attorney fees are special damages only when, due to a
                      defendant's intentional wrongful conduct, litigation is absolutely necessary
                      to vindicate the party's rights.
                                  Mitchell contends that because Nype's action was not of the
                      type given as an example in Sandy Valley, his attorney fees were simply a
                      cost of litigation and, therefore, should not have been recoverable.       We
                      disagree. While couched in varying causes of action, the gravamen of Nype's
                      complaint seeks to recover a previous judgment against LVLP, which up to
                      this point Nype has been unsuccessful in collecting because Mitchell has
                      deliberately acted in such a manner so as to prevent Nype from satisfying
                      the original judgment. Numerous similarities can be drawn between Nype's
                      situation and a cause of action for slander of title. Specifically, much like a
                      plaintiff who is compelled to litigate to clear title to property because of a
                      defendant's intentional action, here, for Nype to satisfy the original
                      judgment against LVLP, it has become absolutely necessary for him to bring
                      this instant action against Mitchell, Liberman, and all of the related
                      appellant entities to satisfy the original judgment. Mitchell's actions have
                      made the present action absolutely necessary. Nype's expenses amount to
                      more than just the cost of litigation, and instead constitute a portion of the
                      damages that have been proximately caused by Mitchell's deliberate
                      actions. Thus, while there are undoubtedly differences between Nype's
                      action and an action for slander of title, the similarities, as they relate to

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                  this issue, are significant. As such, we conclude that Nype was properly
                  eligible to recover attorney fees as special damages.4
                               However, While we conclude that Nype could properly seek to
                  recover attorney fees incurred in the present litigation5 as special damages,
                  we nevertheless vacate the district court's award on the grounds that the
                  district court failed to conduct a proper analysis of the appropriate fees
                  under Brunzell. Cf. Gunderson v. D.R. Horton, Inc., 130 Nev. 67, 82, 319
                  P.3d 606, 616 (2014) (stating a district court's failure to analyze the
                  appropriateness of an award of attorney fees under Brunzell constitutes an
                  abuse of discretion).
                               Accordingly, while we conclude Nype could seek recovery of
                  attorney fees, we nevertheless vacate the district court's judgment with
                  respect to its award of attorney fees. On remand, the district court is to
                  reconsider the appropriate amount of attorney fees in light of the Brunzell
                  factors and the foregoing discussion. Accordingly, we

                        4Alternatively,Mitchell argues that Nype failed to sufficiently plead
                  the request for attorney fees as special damages under NRCP 9(g). We
                  disagree. We construe Rule 9(g) liberally as necessitating that a party need
                  only "notify the opposing party and the court of the nature of the damages
                  and enable the preparation of a responsive pleading." 5A Charles Alan
                  Wright, Arthur R. Miller & A. Benjamin Spencer, Federal Practice and
                  Procedure § 1311 (4th ed. Update 2022). Nype, by requesting attorney fees
                  as part of each cause of action in the complaint, sufficiently satisfied this
                  standard.

                        5Our conclusion above only permits Nype to recover the fees and costs
                  incurred in this second suit. Any attorney fees and costs incurred while
                  obtaining the original judgment are not recoverable.

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                             ORDER the judgment of the district court AFFIRMED IN
                PART AND VACATED IN PART AND REMAND this matter to the district
                court for further proceedings consistent with this order.67

                                        Parraguirre

                                          , J.                                        J.
                Hardesty

                                            J.
                Cad.ish                                    Pickering

                                            ,
                Herndon

                cc:   Hon. Jerry Wiese, II, Chief Judge
                      Eighth Judicial District Court, Dept. 11
                      Paul M. Haire, Settlement Judge
                      E. Brent Bryson, P.C.
                      Cohen Johnson, LLC
                      John W. Muije & Associates
                      Eighth District Court Clerk

                      6We   have also considered Mitchell's other arguments, including the
                challenge to the sufficiency of the evidence, and conclude each of those
                arguments are without merit. As such, we affirm the district court's order
                in all other respects.

                      7The  Honorable Abbi Silver, Justice, voluntarily recused herself from
                participation in the decision of this matter.

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