Court Opinion

ID: 2824829
Source: CourtListenerOpinion
Date Created: 2015-08-11 05:27:57.084029+00
Date Added: 2024-06-11T12:34:14.680993
License: Public Domain

court's findings of fact, conclusions of law, and judgment. When denying
                 Donnelly, GI, and GPC's motion, the district court ordered that Jarman's
                 complaint be amended to include a theory of alter ego liability.
                             Donnelly, GI, and GPC now appeal. While they submitted an
                 appendix on appeal as required by NRAP 30(b)(3), Donnelly, GI, and GPC
                 omitted "portions of the record [that are] essential to determination of
                 issues raised in [their] appeal." NRAP 30(b)(3). These omissions include
                 (1) the transcript of the two-day bench trial on the issue of liability; (2)
                 Jarman's opposition to Donnelly, GI, and GPC's motion to amend the
                 district court's findings of fact and conclusions of law and Donnelly, GI,
                 and GPC's reply in support of this motion; and (3) the transcript of the
                 hearing on Donnelly's motion to amend the district court's findings of fact
                 and conclusions of law.
                             We consider four issues raised on appeal: (1) whether the
                 district court abused its discretion by allowing the Receiver's attorney to      •

                 participate in the trial, (2) whether the district court abused its discretion
                 when providing for the Receiver's compensation, (3) whether the district         •

                 court's oral statements made its subsequent written findings of fact
                 insufficient, and (4) whether the district court abused its discretion in its
                 consideration of evidence of the Receiver's alleged violation of NRS
                 78.670.'

                       iDonnelly, GI, and GPC raise several other issues on appeal: (1)
                 whether the district court abused its discretion by sua sponte appointing a
                 receiver, (2) whether the district court misapplied Nevada's business
                 judgment rule, (3) whether the district court abused its discretion by sua
                 sponte bifurcating the trial into liability and damages phases, and (4)
                 whether the district court abused its discretion by sua sponte ordering
                 that Jarman's complaint be amended to include an alter ego theory of
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                The district court abused its discretion by allowing the Receiver's attorney
                to examine witnesses, but this error was harmless
                             Donnelly, GI, and GPC argue that the district court
                improperly allowed the Receiver's attorney to question witnesses during
                the trial on the issue of damages. Since whether the district court
                improperly allowed the Receiver's attorney to elicit testimony from
                witnesses concerns the admission of evidence, we review the district
                court's decision for an abuse of discretion. M.G. Multi-Family Dev., L.L.C.
                v. Crestdale Assocs., Ltd., 124 Nev. 901, 913, 193 P.3d 536, 544 (2008).
                             Here, the district court allowed the Receiver's attorney to
                examine three witnesses because it found that the Receiver was a party to
                the lawsuit. "In general, a 'party' to litigation is one by or against whom a
                lawsuit is brought or one who becomes a party by intervention,
                substitution, or third-party practice."   Smith v. Bayer Corp., 564 U.S.
                     131 S. Ct. 2368, 2379 (2011) (citation omitted) (internal quotations
                omitted). Because the record does not suggest that the Receiver was a
                named plaintiff or defendant or that he was brought into the case by third-
                party practice, the district court abused its discretion by finding that the
                Receiver was a party.

                ...continued
                liability. Donnelly, GI, and GPC preclude a meaningful review of these
                issues by failing to submit significant portions of the record relevant to
                them. Contrary to the dissent's conclusion that the lack of evidence in the
                record supporting the district court's imposition of alter ego liability shows
                that the district court erred, we must presume that missing portions of the
                record support the district court's order. Cuzze v. Univ. & Ginty. Coll. Sys.
                of Nev., 123 Nev. 598, 603, 172 P.3d 131, 135 (2007). Therefore, we hold
                that these claims are without merit.

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                            A district court's abuse of discretion does not warrant reversal,
                however, if the error is harmless. NRCP 61. To demonstrate that an error
                is not harmless, a party "must show that the error affects the party's
                substantial rights so that, but for the alleged error, a different result
                might reasonably have been reached."        Wyeth v. Rowatt,    126 Nev. 446,
                465, 244 P.3d 765, 778 (2010). When "inadmissible evidence has been
                received by the [district] court, sitting without a jury, and there is other
                substantial evidence upon which the court based its findings, the [district]
                court will be presumed to have disregarded the improper evidence."
                McMonigle v. McMonigle, 110 Nev. 1407, 1409, 887 P.2d 742, 744 (1994)
                (internal quotations omitted).
                            Here, Donnelly, GI, and GPC did not show that the district
                court's abuse of discretion violated their substantial rights or that it could
                have reasonably altered the outcome of the trial. The Receiver's attorney
                examined the Receiver and cross-examined two of Donnelly's witnesses
                regarding issues that were tangential to the substantive issues in dispute.
                In its order awarding damages, the district court did not rely on the
                evidence developed during the Receiver's attorney's cross-examination.
                Thus, the district court's abuse of discretion was harmless error and does
                not warrant reversal.
                The district court did not abuse its discretion in providing for the Receiver's
                compensation
                            Donnelly, GI, and GPC argue that the Receiver's
                compensation scheme created a conflict of interest because the Receiver
                was to be paid from money obtained by Jarman, and thus, the Receiver
                had an improper incentive to find assets for Jarman to recover. We review
                issues relating to the appointment of a receiver for an abuse of discretion.
                Med. Device Alliance, Inc. v. Ahr,     116 Nev. 851, 862, 8 P.3d 135, 142
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                (2000), abrogated on other grounds by Costello v. Casler, 127 Nev., Adv.
                Op. 36, 254 P.3d 631, 634 n.4 (2011).
                             NRS 78.705, the statute which provides for a receiver's
                compensation, states, in relevant part, that "the district court shall allow a
                reasonable compensation to the receiver for his or her services" and that a
                receiver's compensation shall "be first paid out of the assets [of the
                receivership estate]." Since we interpret clear and unambiguous statutes
                by their plain meaning, Cromer v. Wilson, 126 Nev. 106, 109, 225 P.3d
                788, 790 (2010), we hold that this statute allows the Receiver to be paid
                from GI and GPC's assets.
                             Here, the district court ordered that "[t]he court-appointed
                receiver will be paid first from any recovered proceeds." It also instructed
                the Receiver to evaluate GI and GPC's finances and transactions without
                limiting the Receiver's consideration to assets that might have been
                misappropriated by Donnelly or assets that might rightfully belong to
                Jarman. In its orders, the district court did not identify Jarman as the
                beneficiary of the receivership. Thus, the record contains evidence
                showing that the Receiver was ordered to recover assets without regard to
                who benefited from the recovery of the assets. It does not demonstrate
                that the Receiver was instructed to recover assets solely for Jarman's
                benefit or that the Receiver's compensation was dependent on Jarman's
                recovery of assets. Therefore, Donnelly, GI, and GPC failed to show that
                the Receiver's compensation scheme violated NRS 78.705 or that the
                district court abused its discretion. 2

                      2 Lowder v. All Star Mills, Inc., a case that Donnelly, GI, and GPC
                rely upon, states a general rule that "no one ordinarily may be appointed
                receiver whose personal interests would substantially conflict with his
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                 The district court's oral statements do not demonstrate that its written
                 findings of fact were insufficient
                              Donnelly, GI, and GPC argue that the district court's written
                 findings of fact are insufficient because they are contradicted by the
                 district court's earlier oral pronouncements . 3
                              "A district court's factual determinations will not be set aside
                 unless they are clearly erroneous and not supported by substantial
                 evidence." Dewey v. Redevelopment Agency of Reno,        119 Nev. 87, 93, 64
                 P.3d 1070, 1075 (2003). When a district court tries a case without a jury,
                 "[it] shall find the facts specially and state separately its conclusions of
                 law thereon and judgment shall be entered." NRCP 52(a). While a district
                 court's "findings of fact and conclusions of law [may be] stated orally," id.,
                 a district court that makes an oral decision "remains free to reconsider the
                 decision and issue a different written judgment." Diu. of Child & Family

                 ...continued
                 unbiased judgment and duties as receiver." 309 S.E.2d 193, 198 (N.C.
                 1983). Lowder is unhelpful because it provides no meaningful guidance
                 for our analysis of whether the Receiver had an improper conflict of
                 interest or whether the compensation violated NRS 78.705.

                       3 Inmaking this argument, Donnelly, GI, and GPC briefly identify a
                 legal standard for the sufficiency of evidence. However, they do not argue
                 that there was insufficient evidence to support the district court's written
                 findings. Therefore, they waive this issue on appeal. See Powell u. Liberty
                 Mat. Fire Ins. Co., 127 Nev., Adv. Op. 14, 252 P.3d 668, 672 n.3 (2011)
                 ("Issues not raised in an appellant's opening brief are deemed waived.").
                 To the extent that the mere identification of a legal standard is intended
                 to be an argument about the sufficiency of the evidence presented, it is a
                 noncogent argument and thus is without merit. Edwards v. Emperor's
                 Garden Rest., 122 Nev. 317, 330 n.38, 130 P.3d 1280, 1288 n.38 (2006)
                 (stating that arguments not cogently made need not be considered on
                 appeal).

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                Servs. v. Eighth Judicial Dist. Court, 120 Nev. 445, 451, 92 P.3d 1239,
                1243 (2004).
                               Here, the district court orally stated that it was relying only
                on the Receiver's written reports to enter a judgment for Jarman against
                Donnelly, GI, and GPC and that it was giving no weight to Donnelly's
                personal financial statements. In its subsequent written order, the
                district court identified testimony developed at trial to support its
                judgment and stated that it gave some weight to Donnelly's personal
                financial statements. Since a district court may "reconsider [an oral]
                decision and issue a different written judgment," id., the district court's
                oral statements do not limit its consideration of this evidence in its
                subsequent written order. Therefore, the district court's oral statements
                do not demonstrate that its subsequent written findings were insufficient. 4
                The district court did not abuse its discretion in its consideration of the
                Receiver's alleged violation of NRS 78.670
                               Donnelly, GI, and GPC argue that the district court
                improperly ignored evidence suggesting that the Receiver violated NRS
                78.670. While we review the district court's decision to exclude evidence
                for an abuse of discretion, see Hansen v. Universal Health Servs. of Nev.,
                Inc., 115 Nev. 24, 27, 974 P.2d 1158, 1159-60 (1999), we do not reweigh the
                evidence on appeal.     Yamaha Motor Co., U.S.A. v. Arnoult,    114 Nev. 233,
                238, 955 P.2d 661, 664 (1998).

                     4 To  the extent that Donnelly, GI, and GPC contend that the district
                court improperly weighed the evidence, their argument is without merit
                because we do not reweigh evidence on appeal. See Yamaha Motor Co.,
                U.S.A. v. Arnoult, 114 Nev. 233, 238, 955 P.2d 661, 664 (1998).

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                             Here, Donnelly, GI, and GPC presented testimony regarding
                the Receiver's conduct that purportedly violated NRS 78.670. Since the
                district court did not exclude this testimony, it was admitted.       See, e.g.,
                Harris v. Steele, 506 So. 2d 542, 545 (La. Ct. App. 1987) (identifying "the
                basic evidentiary rule that everything not excluded is admitted").
                Therefore, to the extent that Donnelly, GI, and GPC's argument is based
                on the district court's refusal to admit evidence, it is without merit.
                             To the extent that Donnelly, GI, and GPC challenge the
                weight that the district court assigned to the evidence of the Receiver's
                purported violation of NRS 78.670, their argument is also without merit
                because we do not reweigh evidence on appeal. Yamaha Motor Co., 114
                Nev. at 238, 955 P.2d at 664. Therefore, the district court did not abuse
                its discretion with regard to Donnelly, GI, and GPO's evidence of the
                Receiver's alleged violation of NRS 78.670.
                Conclusion
                             The district court abused its discretion by allowing the
                Receiver's attorney to participate in the trial on the issue of damages
                because the Receiver was not a party. However, this abuse was harmless
                error. The district court did not abuse its discretion in providing for the
                Receiver's compensation because the compensation arrangement complied
                with NRS 78.705. Furthermore, the district court's oral statements do not
                limit the sufficiency of its subsequent written findings of fact. Finally, the
                district court did not abuse its discretion in its consideration of Donnelly,

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                 GI, and GPC's evidence regarding the Receiver's alleged violation of NRS
                 78.670 because it admitted this evidence. 5 Therefore, we
                             ORDER the judgment of the district court AFFIRMED.

                                                    Gibbons

                 PICKERING, J., concurring in part and dissenting in part:
                             Although the question is very close, due to the lack of
                 connection between the claims, as pleaded, and the final judgment, as
                 entered, I cannot find an abuse of discretion by the district judge in
                 proceeding as she did and therefore would affirm as to the entity
                 appellants based on the final sentence of NRCP 54(c) and cases decided
                 under that provision of the rule. See also NRCP I5(b). I dissent, however,
                 as to the alter ego finding because, even viewed expansively, the record
                 does not support imposition of personal liability on Donnelly on that legal
                 theory and no alternate basis for imposing personal liability was
                 articulated by the district court in its final judgment and findings. The
                 lack of transcript for the first phase of the trial does not affect the
                 analysis, since findings were entered following that part of the case and

                      5 We have considered the parties' remaining arguments and conclude
                 that they are without merit.

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                 they do not support recovery on an alter ego theory. For these reasons, I
                 respectfully concur in part and dissent in part.

                 cc: Hon. Nancy L. Allf, District Judge
                      Robert F. Saint-Aubin, Settlement Judge
                      Peel Brimley LLP/Henderson
                      Day & Nance
                      Eighth District Court Clerk

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