Court Opinion

ID: 6340482
Source: CourtListenerOpinion
Date Created: 2022-05-13 10:06:05.639226+00
Date Added: 2024-06-11T09:01:58.164924
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF NEVADA

                    WLAB INVESTMENT, LLC,                 No. 82835
                    Appellant,
                    vs.
                    TKNR, INC., A CALIFORNIA
                    CORPORATION; CHI ON WONG, A/K/A
                    CHI KUEN WONG, AN INDIVIDUAL;
                    KENNY ZHONG LIN, A/K/A KEN                FILED
                    ZHONG LIN, A/K/A KENNETH ZHONG
                    LIN, A/K/A WHONG K. LIN, A/K/A            MAY 1 2 2022
                    CHONG KENNY LIN, A/K/A ZHONG
                    LIN, AN INDIVIDUAL; LIWE HELEN          Eli
                                                          aray j AETLE CTURT
                                                              rcyr
                    CHEN, A/K/A HELEN CHEN, AN           BY
                                                                        E;
                                                                        C
                                                               DEPUTIT-LH KV‘
                    INDIVIDUAL; YAN QUI ZHANG, AN
                    INDIVIDUAL; INVESTPRO LLC, D/B/A
                    INVESTPRO REALTY, A NEVADA
                    LIMITED LIABILITY COMPANY; MAN
                    CHAU CHENG, AN INDIVIDUAL;
                    JOYCE A. NICKRANDT, AN
                    INDIVIDUAL; INVESTPRO
                    INVESTMENTS LLC, A NEVADA
                    LIMITED LIABILITY COMPANY; AND
                    INVESTPRO MANAGER LLC, A
                    NEVADA LIMITED LIABILITY
                    COMPANY,
                    Res ondents.
                    WLAB INVESTMENT, LLC,                  No. 83051
                    Appellant,
                    vs.
                    TKNR, INC., A CALIFORNIA
                    CORPORATION; CHI ON WONG, A/K/A
                    CHI KUEN WONG, AN INDIVIDUAL;
                    KENNY ZHONG LIN, A/K/A KEN
                    ZHONG LIN, A/K/A KENNETH ZHONG
                    LIN, A/K/A WHONG K. LIN, A/K/A
                    CHONG KENNY LIN, A/KJA ZHONG
                    LIN, AN INDIVIDUAL; LIWE HELEN
                    CHEN, A/K/A HELEN CHEN, AN
                    INDIVIDUAL; YAN le UI ZHANG, AN
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                INDIVIDUAL; INVESTPRO LLC, D/B/A
                INVESTPRO REALTY, A NEVADA
                LIMITED LIABILITY COMPANY; MAN
                CHAU CHENG, AN INDIVIDUAL;
                JOYCE A. NICKRANDT, AN
                INDIVIDUAL; INVESTPRO
                INVESTMENTS LLC, A NEVADA
                LIMITED LIABILITY COMPANY; AND
                INVESTPRO MANAGER LLC, A
                NEVADA LIMITED LIABILITY
                COMPANY,
                Respondents.

                               ORDER AFFIRMING (DOCKET NO. 82835)
                                AND REVERSING (DOCKET NO. 83051)
                           These are consolidated appeals from a district court order
                granting summary judgment in a real property matter (Docket No. 82835)
                and from an order awarding attorney fees (Docket No. 83051). Eighth
                Judicial District Court, Clark County; Adriana Escobar, Judge.'
                           Appellant filed the underlying action, alleging generally that
                respondents had fraudulently induced appellant into purchasing an
                apartment building that contained numerous defects. Generally speaking,
                appellant's complaint alleged that respondents concealed the defects and
                that appellant could not have discovered those defects with due diligence
                before the purchase was completed. The district court granted summary
                judgment for respondents, reasoning, among other things, that (1) appellant
                failed to introduce evidence that respondents were aware of any particular
                defect that they failed to disclose; and (2) appellant failed to introduce
                evidence showing that a professionally conducted inspection would not have

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

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discovered the complained-of defects. Consequently, the district court
granted summary judgment on all 15 of appellant's claims, including its
claim for violation of NRS Chapter 113 (Sales of Real Property—Required
Disclosures). Appellant then appealed that order (Docket No. 82835).
Thereafter, the district court awarded respondents roughly $128,000 in
attorney fees under NRCP 11 based on its perception that appellant's action
was frivolous. Appellant then appealed that order (Docket No. 83051), and
the appeals were consolidated.
Surnmary judgment (Docket No. 82835)
            Appellant contends that summary judgment was improper
because it introduced evidence sufficient to create questions of material fact.
See Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029 (2005)
(reviewing de novo a district court's decision to grant summary judgment
and recognizing that summary judgment is appropriate "when the
pleadings and other evidence on file demonstrate that no genuine issue as
to any material fact remains and that the moving party is entitled to a
judgment as a matter of law" (internal quotation marks and alterations
omitted)). In particular, appellant appears to be contending that there are
genuine issues of material fact regarding (1) whether respondents were
aware of the complained-of defects, and (2) whether appellant was required
to conduct a "professional" inspection to satisfy its due diligence.2
            We disagree. With respect to appellant's first argument,
appellant's opening brief simply reiterates its belief that "[n]umerous issues
of fact exist as to what Defendants knew, what they disclosed and what they

      2To  the extent that appellant has raised other arguments challenging
the district court's summary judgment, we are not persuaded that those
arguments warrant reversal.

                                       3
covered up." But beyond this statement, appellant's opening brief fails to
cite to any evidence in the record that might raise an inference that
respondents were aware of a particular complained-of defect, such that a
genuine issue of material fact existed regarding the viability of appellant's
NRS Chapter 113 claim or any of the related claims. See Nelson v. Heer,
123 Nev. 217, 224, 163 P.3d 420, 425 (2007) (holding that for purposes of a
claim under NRS Chapter 113, in order for a seller to be "aware" of a defect
such that the seller is obligated to disclose it, the seller must be able to
"realize, perceive, or have knowledge of that defect or condition"); Land
Baron Invs. Inc. v. Bonnie Springs Farn. LP, 131 Nev. 686, 696, 356 P.3d
511, 518 (2015) ("[Common law] [n]ondisclosure arises where a seller is
aware of materially adverse facts that could not be discovered by the buyer
after diligent inquiry." (Emphasis added and internal quotation marks
omitted)). Similarly, appellant's summary judgment opposition failed to
identify any evidence that might raise such an inference. Based on this
appellate argument and lack of identifiable record evidence, we are unable
to conclude that the district court erred in finding that no genuine issue of
material fact existed regarding respondents awareness of the complained-
of defects.   See NRAP 28(a)(10)(A) (requiring briefs to cite to relevant
portions of the record)3; Schuck v. Signature Flight Support of Nev., Inc.,

      3Appellant's opening brief does cite to an affidavit from appellant's
manager that was submitted in conjunction with appellant's motion to
reconsider the district court's summary judgment. However, the manager's
affidavit submitted in conjunction with appellant's summary judgment
opposition did not include the statements upon which appellant relies on
appeal, and appellant has not argued that the district court improperly
denied its motion for reconsideration. Relatedly, although appellant's reply
brief attempts for the first time to identify specific defects of which
respondents were aware, we decline to specifically address those

                                     4
                  126 Nev. 434, 438, 245 P.3d 542, 545 (2010) C[A] district court is not
                  obligated to wade through and search the entire record for some specific
                  facts which might support the nonmoving party's claim."); see also Johnson
                  v. Cambridge Indus., Inc., 325 F.3d 892, 901 (7th Cir. 2003) ([S]ummary
                  judgment is the 'put up or shut up moment in a lawsuit, when a party must
                  show what evidence it has that would convince a trier of fact to accept its
                  version of events.").
                              With respect to appellant's second argument, appellant appears
                  to be contending that its manager's own inspection was sufficient to satisfy
                  the due diligence requirement in the parties' Residential Purchase
                  Agreement, such that any defect he did not discover was not "within the
                  reach of the diligent attention and observation of the buyer."4 Cf. Frederic

                  arguments. Francis v. Wynn Las Vegas, LLC, 127 Nev. 657, 671 n.7, 262
                  P.3d 705, 715 n.7 (2011) (explaining why this court generally declines to
                  consider arguments raised for the first time in a reply brief).

                         'With the possible exception of its claim for violation of NRS Chapter
                  645, all the claims in appellant's operative complaint appear to be based on
                  the allegation that respondents knowingly did not disclose the complained-
                  of defects. If so, appellant's second argument appears to be moot in light of
                  our rejection of appellant's first argument. See Wood, 121 Nev. at 731, 121
                  P.3d at 1031 (The substantive law controls which factual disputes are
                  material and will preclude summary judgment; other factual disputes are
                  irrelevant."); Bulbman, Inc. v. Nev. Bell, 108 Nev. 105, 111, 825 P.2d 588,
                  592 (1992) (observing that "[w]here an essential element of a claim for relief
                  is absent, the facts, disputed or otherwise, as to other elements are rendered
                  immaterial and summary judgment is proper."). Nonetheless, in the event
                  we are misconstruing appellant's claims and arguments, we address
                  appellant's second argument.

                        As for appellant's NRS Chapter 645 claim, we affirm the district
                  court's summary judgment based on its finding that appellant did not rely
                  on any representations from the broker respondents, which is a finding that

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& Barbara Rosenberg Living Tr. v. MacDonald Highlands Realty, LLC, 134
Nev. 570, 578-79, 427 P.3d 104, 111 (2018) (observing that a seller is not
liable for nondisclosure of a known condition materially affecting the
property's value if the condition is also "within the reach of the diligent
attention and observation of the buyer"). Admittedly, this court has not
expanded on the meaning of "within the reach of the diligent attention and
observation of the buyer." Id. However, appellant's manager acknowledged
in his deposition that before appellant purchased the building, the manager
had access to the same parts of the building that appellant's own expert had
when the expert conducted his own inspection as part of this litigation, with
the implication being that a "professionar pre-purchase inspection would
have discovered the complained-of defects alleged in appellant's complaint.
Thus, absent any authority suggesting that "diligent attention and
observation of the buyee would encompass a non-professional or unlicensed
inspection, we are unable to conclude that the "inspection" conducted by
appellant's manager—and his failure to discover the complained-of
defects—provides a basis for holding respondents liable for nondisclosure of
those alleged defects.5
            Accordingly, and to the extent that appellant's second argument
implicates an issue of "material!' fact, Wood, 121 Nev. at 731, 121 P.3d at
1031 ("The substantive law controls which factual disputes are material and

appellant does not meaningfully contest on appeal. Powell v. Liberty Mut.
Fire Ins. Co., 127 Nev. 156, 161 n.3, 252 P.3d 668, 672 n.3 (2011) (providing
that issues not raised by a party on appeal are deemed waived).

      51nthis, we note that the subject property was a 63-year-old
apartment building that, by appellant's own admission, "should have been
condemned!' before appellant purchased it.

                                     6
will preclude summary judgment . . . ."), we conclude that the district court
correctly found that no genuine issue of material fact existed to justify
denying summary judgment. We therefore affirm the district court's
summary judgment in Docket No. 82835.
Attorney fee award (Docket No. 83051)
            Appellant contends that the district court's award of attorney
fees as a sanction under NRCP 11 must be reversed because the district
court imposed that sanction in contravention of NRCP 11's explicit and
mandatory procedural requirements. We agree. In particular, respondents
did not serve notice of their motion at least 21 days before they filed the
motion with the district court and the motion was not made separately from
their summary judgment motion as required by NRCP 11(c)(2). The
purpose of that provision is to allow the offending party to correct or
withdraw a problematic pleading, and appellant was not afforded the
benefit of that provision, which would have allowed appellant to avoid
sanctions under that rule.6 Radcliffe v. Rainbow Constr. Co., 254 F.3d 772,
789 (9th Cir. 2001) (concluding that a defendant did not comply with the
federal analog to NRCP 11 when it sought Rule 11 sanctions as part of a
motion for summary judgment and did not serve the motion on the plaintiffs
within Rule 11's 21-day advance service provision); see also Barber v. Miller,
146 F.3d 707, 710-11 (9th Cir. 1998) C[W]arnings [are] not motions . . . , and

      6Although    the summary judgment originally entered by the district
court directed respondents to prepare an order to show cause, the district
court's amended summary judgment removed that provision such that the
district court did not order appellant to show cause why it should not be
sanctioned. See NRCP 11(c)(3) (providing that the court, on its own, may
order a party to "show cause why conduct specifically described in the order
has not violated Rule 11(b)").

                                      7
                [Rule 111 requires service of a motion."). Thus, before sanctions may be
                imposed against an offending party, that party must be given "notice and a
                reasonable opportunity to respond." NRCP 11(c)(1). Here, respondents
                failed to comply with the mandatory procedural requirements of NRCP
                11(c), which precludes the imposition of sanctions under NRCP 11.7 We
                therefore reverse the district court's May 25, 2021, order in Docket No.
                83051 insofar as that order awarded respondents attorney fees.
                           It is so ORDERED.8

                                      -IP   OICOi.0644.2"17, 1.
                                         arraguirre        .

                                         ,   J
                                                 .                                  Sr. J.
                Herndon

                cc:   Hon. Adriana Escobar, District Judge
                      James A. Kohl, Settlement Judge
                      Day & Nance
                      Michael B. Lee, P.C.
                      Eighth District Court Clerk

                      %Respondents contend that the district court could have awarded the
                same sanctions under NRS 7.085 or NRS 18.010(2)(b). However, the district
                court expressly granted "attorneys fees and costs pursuant to Rule 11,"
                which required respondents to follow the appropriate procedures for the
                award to have been appropriate.

                      8The Honorable Mark Gibbons, Senior Justice, participated in the
                decision of this matter under a general order of assignment.

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