Court Opinion

ID: 2733630
Source: CourtListenerOpinion
Date Created: 2014-09-17 15:07:27.343751+00
Date Added: 2024-06-11T09:45:22.249272
License: Public Domain

ORDER AFFIRMING IN PART,
                                REVERSING IN PART AND REMANDING

                             These are consolidated appeals from a default judgment in a
                 contract action and a post-judgment order denying a motion to set aside
                 that judgment. Third Judicial District Court, Lyon County; Department
                 One.
                             This matter arises from an action respondents filed against
                 various parties, including appellants.' In conjunction with the second
                 withdrawal of their counsel, the district court warned appellants of the
                 possibility that it would strike their answer and counterclaims and enter
                 default against them if they did not comply with certain requirements
                 imposed by the court, and the court later directed them to show cause why
                 their answer should not be struck. When appellants failed to respond to
                 these orders, the district court struck the answer and counterclaims and
                 entered their default. Appellants later moved to set aside the default, but
                 that motion was denied. The district court then held a prove-up hearing,
                 determined that appellants did not have standing to participate in that
                 hearing, and entered a default judgment in respondents' favor.
                 Appellants' motions to recuse the district court judge and set aside that
                 judgment were later denied. Appellants now challenge these
                 determinations on appeal.
                             Appellants initially challenge the district court's refusal to set
                 aside the default, arguing that they did not act in bad faith, that any delay
                 was excusable, and that there were no discovery violations. NRCP 55
                 authorizes the entry of judgment by default as a sanction when a party

                       "The appeal filed by Rotate Black, LLC and Rotate Black, Inc., was
                 dismissed without prejudice, following their bankruptcy filing.
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                fails to defend a lawsuit against them.     See Landreth v. Malik, 127 Nev.
                         251 P.3d 163, 171-72 (2011). This court reviews a district court's
                refusal to set aside a default under NRCP 55 for an abuse of discretion.
                Id. at , 251 P.3d at 171. Here, appellants repeatedly failed to appear at
                hearings, to timely respond to pleadings or motions, or to heed the district
                court's directives. We therefore affirm the refusal to set aside this default
                as a proper exercise of the district court's discretion. Id.
                            Appellants next challenge the district court's entry of the
                default judgment, arguing that the court improperly refused to allow them
                to participate in the prove-up hearing. As noted in Foster v. Dingwall, 126
                Nev. 227 P.3d 1042, 1049 (2010), generally, when a default
                judgment is sought "for an uncertain or incalculable sum, the plaintiff
                must prove up damages, supported by substantial evidence." When a
                prove-up hearing is required, the district court has wide discretion to
                determine how the hearing will be conducted and the extent to which the
                defaulted party may participate. Id. at , 227 P.3d at 1050. But even in
                the context of a discovery-sanction-based default, where the nondefaulted
                party need only set forth a prima facie case to obtain a default judgment,
                the district court must permit the defaulting party to identify fundamental
                defects in the nonoffending party's case and to present evidence if
                fundamental defects are identified. Id. at , 227 P.3d at 1049-50.
                             Here, far from providing even this opportunity to identify
                defects in respondents' case, the district court simply determined that
                appellants did not have standing to participate in that hearing, at which
                time their attorneys left the courtroom and the district court conducted
                the hearing with only respondents' counsel present. While respondents
                argue that appellants' attorneys voluntarily left and that the absence of a
                hearing transcript must be construed against them, the minutes from the
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                 prove-up hearing plainly reflect the district court's conclusion that
                 appellants lacked standing to participate in this hearing. 2 And because
                 we conclude that the decision to completely bar appellants from
                 participating in the prove-up hearing was an abuse of discretion, id., we
                 reverse the default judgment and remand this matter for further
                 proceedings. Accordingly, we
                                 ORDER the judgment of the district court AFFIRMED IN
                 PART AND REVERSED IN PART AND REMAND this matter to the
                 district court for proceedings consistent with this order. 3

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                                             Hardesty

                 Douglas
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                                                                 Cherry
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                 cc:   Third Judicial District Court Dept. 1
                       David Wasick, Settlement Judge
                       Steven Donald Talbot
                       Belanger & Plimpton
                       Moore Law Group, PC
                       Law Offices of Michael B. Springer
                       Third District Court Clerk

                       2   The district court's default judgment itself is silent on this point.

                       3In light of our decision here, we need not address appellants'
                 challenge to the denial of their NRCP 60(b) motion to set aside the default
                 judgment. Further, we have considered appellants' other arguments on
                 appeal, including those regarding the denial of their motion for the district
                 court judge's recusal, and conclude that they are without merit.
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