Court Opinion

ID: 2825529
Source: CourtListenerOpinion
Date Created: 2015-08-11 06:13:31.238082+00
Date Added: 2024-06-11T10:26:42.449382
License: Public Domain

filed seeking relief against other directors for allegedly improper corporate
                   acts. The Burns were not served, and Allen moved to dismiss the case
                   based upon both NRS 41.660, Nevada's anti-SLAPP statute, and NRCP
                   12(b)(5) for failure to state a claim. The district court granted Allen's
                   motion, denying relief under NRS 41.660 but dismissing the causes of
                   action against him under NRCP 12(b)(5). Allen subsequently moved for
                   attorney fees under NRS 18.010(2)(b), which the district court denied. The
                   district court later dismissed the Burns from the action because Drake had
                   failed to serve them.
                               These appeals followed, with Drake challenging the dismissal
                   of the lawsuit and Allen challenging the denial of the anti-SLAPP portion
                   of his motion to dismiss and the denial of his attorney fee request. We
                   review de novo a district court's order granting a motion to dismiss, Moon
                   v. McDonald, Carano & Wilson LLP, 129 Nev. Adv. Op. No. 56, 306 P.3d
                   406, 408 (2013), but we review the district court's order denying attorney
                   fees for an abuse of discretion.   Bobby Berosini, Ltd. v. PETA,     114 Nev.
                   1348, 1354, 971 P.2d 383, 387 (1998).
                   Docket No. 64854
                               During briefing, Allen moved to dismiss Drake's appeal
                   because Drake sold his shares in HCS and is no longer a shareholder. The
                   third, eighth, and ninth causes of action are derivative in nature and
                   brought by Drake on behalf of HCS. 1 Assuming, without deciding, that

                         'Regarding the third cause of action, Drake did not allege that a
                   contract existed between himself and Allen, which is required for Drake to
                   maintain a direct action against Allen for a contractual breach of the
                   covenant of good faith and fair dealing. Hilton Hotels Corp. v. Butch Lewis
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                 Drake properly brought these claims without making the demand on the
                 board required in derivative litigation because HCS was a six-shareholder
                 corporation, Drake may no longer maintain these causes of action because
                 he sold his shares of stock in the corporation. NRCP 23.1; Keever v.
                 Jewelry Mountain Mines, Inc., 100 Nev. 576, 577-78, 688 P.2d 317, 317-18
                 (1984). Thus, we grant Allen's September 29, 2014, motion to dismiss
                 Drake's appeal with regard to these causes of action. We deny the motion
                 as to the other causes of action.
                             Starting with Allen's cross-appeal, when considering a motion
                 made under Nevada's Anti-SLAPP statute, the district court must
                 determine (a) if "the claim is based upon a good faith communication in
                 furtherance of the right to petition," and (b) "whether the plaintiff has
                 established by clear and convincing evidence a probability of prevailing on
                 the claim." NRS 41.660(3)(a)-(b); see John v. Douglas Cnty. Sch. Dist., 125
                 Nev. 746, 752, 219 P.3d 1276, 1281 (2009). In this case, the first, second,
                 fourth, fifth, and sixth causes of action are based upon Allen's "good faith
                 communication in furtherance of the right to petition" because they are
                 based on the filing of the Allen/Burns complaint. See JSJ Ltd. P'ship v.
                 Mehrban, 141 Cal. Rptr. 3d 338, 345 (Ct. App. 2012) ("Filing a lawsuit is
                 an act in furtherance of the constitutional right of petition, regardless of

                 ...continued
                 Prods., Inc., 107 Nev. 226, 234, 808 P.2d 919, 923-24 (1991). Similarly,
                 regarding the eighth cause of action, Drake does not allege that an
                 attorney-client relationship existed between himself and Allen, which is
                 required for Drake to maintain a direct malpractice action against Allen.
                 Hewitt v. Allen, 118 Nev. 216, 220-21, 43 P.3d 345, 347 (2002).

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                   whether it has merit."). These claims also lack a probability of success on
                   the merits because they are based upon Allen's alleged ulterior motive to
                   dissolve HCS. In this regard, assuming that Allen desired to dissolve
                   HCS, persons holding ten percent or more of the outstanding stock in a
                   corporation may seek judicial dissolution of the corporation under NRS
                   78.650, and thus, seeking such dissolution is not an act that would subject
                   them to liability. See also NRS 78A.140(1)(a) (permitting a stockholder in
                   a close corporation to petition the court to appoint a receiver and dissolve
                   the corporation); Bedore v. Familian, 122 Nev. 5, 10, 125 P.3d 1168, 1171-
                   72 (2006). Therefore, the district court should have granted Allen's anti-
                   SLAPP motion as to the first, second, fourth, fifth, and sixth causes of
                   action. Accordingly, we affirm the dismissal of these causes of action, but
                   for different reasons than those stated by the district court. In light of this
                   order, we remand this matter to the district court for consideration of
                   Allen's request for attorney fees and costs under NRS 41.670.
                               Regarding Drake's appeal, we affirm the dismissal of the
                   seventh and last remaining cause of action because Drake asserted this
                   cause of action only against Mr. Burns, whom he failed to serve.
                   Docket No. 65602
                               Turning to the appeal in Docket No. 65602, the grant or denial
                   of attorney fees under NRS 18.010(2)(b) is within the discretion of the
                   district court. We conclude that the district court did not abuse its
                   discretion when it denied Allen's requested attorney fees because the non-
                   SLAPP causes of action were not maintained without reasonable grounds.
                   NRS 18.010(2)(b); Bobby Berosini, 114 Nev. at 1354-55, 971 P.2d at 387.

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                        Accordingly, we affirm the district court's order denying attorney fees
                        under NRS 18.010(2)(b).
                                    It is so ORDERED. 2

                                                                         J.
                                                  Parraguirre

                   C.
                          Tho
                        Douglas
                                                     J.                                   , J.

                        cc: Hon. Scott N. Freeman, District Judge
                             Richard W. Drake
                             Kent Law
                             Washoe District Court Clerk

                             2 In his motions and oppositions, Drake alleges, and Allen disputes,
                        that this case was settled in conjunction with the settlement of the
                        Allen/Burns complaint and with Drake's sale of his stock shares to Allen
                        and the Burns. Whether this is true is unclear, however, because Drake
                        and Allen have submitted conflicting and incomplete documents and
                        limited argument regarding whether the settlement included this matter.
                        Accordingly, we decline to consider the settlement issue. Drake may raise
                        this argument on remand in the district court.

                              We have considered the parties' other arguments and conclude that
                        they lack merit.

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