Court Opinion

ID: 1043076
Source: CourtListenerOpinion
Date Created: 2013-10-03 16:27:16.471798+00
Date Added: 2024-06-11T13:01:24.699061
License: Public Domain

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                                  129 Nev., Advance Opinion
       IN THE SUPREME COURT OF THE STATE OF NEVADA

MCKNIGHT FAMILY, LLP,                                No. 56527
Appellant,
  vs.
ADEPT MANAGEMENT SERVICES,
                                                          FILED
INC.; NEVADA ASSOCIATION                                   OCT 0 3 2013
SERVICES, INC.; TORREY PINES
HOMEOWNERS ASSOCIATION; AND
DESIGN 3.2 LLC,
Respondents.
ADEPT MANAGEMENT SERVICES,                           No. 57182
INC., A NEVADA NONPROFIT
CORPORATION; NEVADA
ASSOCIATION SERVICES, INC.; AND
TORREY PINES HOMEOWNERS
ASSOCIATION,
Appellants,
  vs.
MCKNIGHT FAMILY, LLP,
Respondent.

           Consolidated appeals from a district court order dismissing a
complaint pursuant to NRS 38.310 and from a post-judgment order
denying a motion for attorney fees and costs. Eighth Judicial District
Court, Clark County; Stefany Miley, Judge.
           Affirmed in part, reversed in part, and remanded.

James S. Kent, Ltd., and James S. Kent, Las Vegas,
for McKnight Family, LLP.

Gibbs, Giden, Locher, Turner, Senet & Wittbrodt LLP and Rich Haskin,
Becky A. Pintar, and Airene Haze, Las Vegas,
for Adept Management Services, Inc., Nevada Association Services, Inc.,
and Torrey Pines Homeowners Association.

                                                                  -   9v99
Design 3.2 LLC,
in Proper Person.

BEFORE THE COURT EN BANC.

                                   OPINION

By the Court, DOUGLAS, J.:
               After unsuccessful settlement negotiations regarding a dispute
over unpaid property assessments, respondents/appellants Torrey Pines
Homeowners Association, Adept Management, and Nevada Association
Services (collectively, TP HOA) sold appellant/respondent McKnight
Family, LLP's properties at a trustee sale. Design 3.2 purchased one of
the properties.
               McKnight filed a complaint naming TP HOA and Design 3.2
as defendants and a motion to set aside the sale based on improper notice.
The district court entered a default judgment against Design 3.2 for failing
to timely answer McKnight's complaint; however, the court later set aside
the default.
               The district court denied McKnight's motion to set aside the
sale, determining that TP HOA properly served McKnight. Further, the
district court dismissed McKnight's complaint because the court
determined that, pursuant to NRS 38.310, the claims should have been
submitted to a form of alternative dispute resolution before being brought
in district court.
               While the district court was correct in determining that most
of McKnight's claims were subject to NRS 38.310, we conclude that the

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                    district court erred to the extent that it dismissed McKnight's claim for
                    quiet title because that claim was not subject to NRS 38.310. Accordingly,
                    we reverse the dismissal of McKnight's quiet title claim. In light of this
                    determination, we also reverse the district court's order denying the
                    motion to set aside the trustee's sale.
                                                       FACTS
                                McKnight owned two properties in a housing community
                    managed by TP HOA. TP HOA placed a lien on McKnight's properties
                    under NRS 116.3116 after a dispute over allegedly unpaid assessments.
                    In response, McKnight filed a complaint and an ex parte application for a
                    temporary restraining order. McKnight alleged seven claims in its
                    complaint, including one for injunctive relief. The district court granted
                    the temporary restraining order and set a preliminary injunction hearing.
                    However, the parties agreed to engage in settlement negotiations and
                    signed a stipulation to halt all litigation and foreclosure proceedings for 30
                    days. As a result, the preliminary injunction hearing was taken off the
                    court's calendar.
                                The settlement negotiations were unsuccessful, and TP HOA
                    sold the properties at a trustee's sale. In response, McKnight filed an
                    amended complaint alleging seven claims: (1) preliminary/permanent
                    injunction, (2) negligence, (3) breach of contract, (4) violation of NAC
                    116.300, 1 (5) violation of NAC 116.341, 2 (6) violation of NRS 116.1113 and

                          IThe Nevada Administrative Code has since been revised. This
                    provision was recodified at NAC 116A.320.

                          2 Recodified   at NAC 116A.345.

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                NRS 116.3103, and (7) slander of title/wrongful foreclosure/quiet title. All
                seven claims were alleged in the original complaint; the only difference in
                the amended complaint was McKnight's addition of Design 3.2, LLC, as a
                defendant because Design 3.2 purchased one of the properties at the
                trustee's sale.
                             The district court entered a default judgment against Design
                3.2 for failing to timely answer McKnight's complaint but later set aside
                the judgment. The parties briefed and argued the default judgment issue
                at an evidentiary hearing. At the hearing, Design 3.2 argued that the
                district court should set aside the default judgment because McKnight did
                not properly serve it with the amended complaint. The district court
                determined it would set aside the default judgment due to the Nevada
                Supreme Court's "liberal" attitude regarding setting aside a default if the
                motion to set aside the default is brought within "the six-month time
                frame." The district court later issued an order granting Design 3.2's
                motion to set aside the default, but did not determine whether McKnight
                properly served Design 3.2.
                             Additionally, McKnight requested that the district court set
                aside the trustee's sale due to improper notice. McKnight alleged that TP
                HOA did not send notice of the sale via certified or registered mail, as
                Nevada law requires. In response, TP HOA filed a notice of compliance
                with the district court, which included two notices of delinquent
                assessment, two notices of default and election to sell, and two notices of
                sale. Additionally, the document contained several receipts for certified
                mail and sworn affidavits stating that each notice was sent to McKnight
                via certified mail. In light of the evidence TP HOA presented, the district

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court determined that TP HOA provided McKnight with proper notice of
the sale and denied McKnight's motion to set aside the trustee's sale.
              Further, the district court dismissed McKnight's amended
complaint because it determined the parties were required to participate
in alternative dispute resolution under NRS 38.310 before McKnight could
bring the claims in district court.
              After the district court dismissed McKnight's complaint, TP
HOA moved for attorney fees. The district court denied the motion
without prejudice, pending the resolution of this appea1. 3
                                DISCUSSION
The district court erred in dismissing McKnight's entire complaint
              The district court's decision to dismiss McKnight's complaint
pursuant to NRS 38.310 involves an issue of statutory interpretation;
thus, we review this issue de novo. See Hamm v. Arrowcreek Homeowners'
Ass'n, 124 Nev. 290, 295, 183 P.3d 895, 899 (2008).
              NRS 38.310 states:
                     1. No civil action based upon a claim
              relating to:
                     (a) The interpretation, application or
              enforcement of any covenants, conditions or
              restrictions applicable to residential property. . .

                    ••••
              may be commenced in [state court] unless the
              action has been submitted to mediation or

      3 Our decision to reverse and remand this matter for further
proceedings renders the attorney fees issue moot. See Personhood Nev. v.
Bristol, 126 Nev. , , 245 P.3d 572, 574 (2010).
                             arbitration pursuant to the provisions of NRS
                             38.300 to 38.360, inclusive. . . .
                Under NRS 38.300(3), a civil action includes "an action for money
                damages or equitable relief," but not "an action in equity for injunctive
                relief in which there is an immediate threat of irreparable harm, or an
                action relating to the title to residential property."
                             McKnight argues that NRS 38.310(2) prohibits the district
                court from dismissing a complaint once it commences, irrespective of
                whether the complaint violates NRS 38.310(1). NRS 38.310(2) states that
                "[a] court shall dismiss any civil action which is commenced in violation of
                the provisions of [NRS 38.310(1)1." McKnight's argument is meritless
                because NRS 38.310(2)'s language does not determine when a court can
                dismiss a civil action; rather, it mandates the court to dismiss any civil
                action initiated in violation of NRS 38.310(1). Therefore, the district court
                had the authority to dismiss the complaint. The only remaining issue
                regarding the complaint is whether the district court erred in dismissing
                every claim. To make such a determination, we must analyze each claim
                under NRS 38.310.
                             An action is exempt from the NRS 38.310 requirements if the
                action relates to an individual's right to possess and use his or her
                property. In Hamm, this court determined that a lien on a property does
                not present an immediate danger of irreparable harm nor is it related to
                an individual's title to property for NRS 38.310 purposes because a lien
                exists separate from the property, and the right to use and dispose of the
                property remains with the owner until the lien is enforced at foreclosure
                proceedings. 124 Nev. at 298-99, 183 P.3d at 901-02. Contrarily, this
                court determined that a threat of foreclosure constitutes a danger of

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irreparable harm because land is unique.     Id. at 297, 183 P.2d at 901.
With these principles in mind, we now analyze the claims McKnight
alleged in its amended complaint.
     Injunctive relief claim
             The injunctive relief claim was properly dismissed because
McKnight did not face an immediate threat of irreparable harm. The
amended complaint superseded all claims for relief alleged in the original
complaint.   See Las Vegas Network, Inc. v. B. Shawcross & Assocs.,      80
Nev. 405, 407, 395 P.2d 520, 521 (1964). McKnight filed its amended
complaint after TP HOA sold the properties at the trustee sale; thus,
McKnight no longer faced the foreclosure threat. Without some
immediate threat of a future irreparable harm, the injunctive relief claim
is subject to NRS 38.310. Therefore, the district court properly dismissed
it. See Hamm, 124 Nev. at 297-98, 183 P.3d at 901.
     Negligence, breach of contract, NAG, and NRS claims
             The negligence, breach of contract, NAC, and NRS claims are
civil actions as defined in NRS 38.300. Therefore, the district court
properly dismissed these claims. The negligence claim does not affect the
title to the properties, rather it concerns payments McKnight made to TP
HOA. The breach of contract claim is related to obligations and duties set
forth in the CC&Rs, and the alleged NAC and NRS violations required the
district court to interpret regulations and statutes that contained
conditions and restrictions applicable to residential property. Thus, these
claims fell under NRS 38.310's purview. Additionally, McKnight sought
money damages for its NRS claims, so those claims are civil actions as
defined in NRS 38.300(3).

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      Slander of title
            Slander of title involves false and malicious communications
that disparage a person's title in land and cause special damages. Higgins
v. Higgins, 103 Nev. 443, 445, 744 P.2d 530, 531 (1987). Slander of title is
an NRS 38.300(3) civil action because it exists separate from the title to
land. Similar to the lien in Hamm, slander of title may cloud an
individual's title, perhaps resulting in a lower sale price.   See Hamm, 124
Nev. at 298-99, 183 P.3d at 901-02. However, slander of title does not
infringe upon an individual's right to use or dispose of his or her property.
Thus, the district court correctly dismissed this claim because the claim is
subject to NRS 38.310 and must be submitted to alternative dispute
resolution prior to being brought in district court.
      Wrongful foreclosure
            Wrongful foreclosure is a civil action subject to NRS 38.310's
requirements because deciding a wrongful foreclosure claim against a
homeowners' association involves interpreting covenants, conditions, or
restrictions applicable to residential property. See Long v. Towne, 98 Nev.
11, 14, 639 P.2d 528, 530 (1982) (finding no impropriety where "the lien
foreclosure sale was conducted under authority of the CC&Rs and in
compliance with NRS 107.080"). A wrongful foreclosure claim challenges
the authority behind the foreclosure, not the foreclosure act itself.     See
Collins v. Union Fed. Say. & Loan, 99 Nev. 284, 304, 662 P.2d 610, 623
(1983). To determine whether an individual violated any conditions or
failed to perform any duties required under an association's CC&Rs, a
court must interpret the CC&Rs to determine their applicability and
enforceability regarding the individual. This type of interpretation falls

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                under NRS 38.310. Therefore, the court acted properly in dismissing the
                wrongful foreclosure action.
                      Quiet title claim
                             Unlike McKnight's other causes of action, the quiet title claim
                is exempt from NRS 38.310. A quiet title claim requires the court to
                determine who holds superior title to a land parcel.          See NRS 40.010.
                Such a claim directly relates to an individual's right to possess and use his
                or her property. Therefore, it is not a civil action as defined in NRS
                38.300(3) and, accordingly, is exempt from NRS 38.310. Thus, the district
                court erred in dismissing the quiet title claim, and we reverse the
                dismissal of this claim.
                Motion to set aside the sale of the properties
                             In light of our decision regarding McKnight's quiet title claim,
                we also reverse the district court's order denying McKnight's motion to set
                aside the sale of the properties. While we disagree with McKnight's
                assertion that the district court erred in its findings of fact in its order
                denying the motion to set aside the trustee's sale, we nevertheless reverse
                the district court's order denying the motion, because depending on the
                quiet title claim's outcome, the question of whether the sale should be set
                aside is still open. On remand, the district court should reconsider the
                motion to set aside once it resolves the quiet title claim.
                Default judgment
                            A court's decision regarding a motion to set aside a default
                judgment will not be disturbed absent an abuse of discretion.       Minton v.
                Roliff, 86 Nev. 478, 481, 471 P.2d 209, 210 (1970). A trial court may abuse
                its discretion when it acts "in clear disregard of the guiding legal

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principles."    Bergmann v. Boyce, 109 Nev. 670, 674, 856 P.2d 560, 563
(1993).
               In Moseley v. Eighth Judicial District Court, this court
determined that it could not resolve a writ petition in its entirety because
the district court failed to find whether a party—in seeking relief from a
motion to dismiss—established excusable neglect. 124 Nev. 654, 668, 188
P.3d 1136, 1146 (2008). The factual issue of excusable neglect was critical
to whether the party was entitled to relief from the dismissal; thus,
without the issue resolved, this court could not properly review the
petition. See id.
               We cannot determine whether the district court abused its
discretion in setting aside the default judgment against Design 3.2
because the court did not make the necessary findings of fact. The motion
to set aside the default judgment was based on the alleged fact that
McKnight failed to serve Design 3.2. However, McKnight maintains it
properly served Design 3.2, and McKnight supports its assertion with the
process server's affidavit. Under NRCP 60(c), a district court may set
aside a default judgment if a defendant is "not personally served with
summons and complaint." Thus, similar to the factual issue of excusable
neglect in Moseley, the issue of whether McKnight served Design 3.2 is
critical to whether Design 3.2 is entitled to relief from the default
judgment. Further, this court cannot "resolve disputed questions of fact."
Round Hill Gen. Improvement Dist. v. Newman,        97 Nev. 601, 604, 637
P.2d 534, 536 (1981) (internal citations omitted). Consequently, we vacate
the district court's order granting Design 3.2's motion and remand the
issue to the district court to determine whether McKnight properly served
Design 3.2.

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                                                 CONCLUSION
                                We affirm the district court's dismissal of all of McKnight's
                claims other than the quiet title claim. We reverse the district court's
                decisions to dismiss McKnight's quiet title claim, and to deny McKnight's
                motion to set aside the foreclosure sale, we vacate the district court's order
                to grant Design 3.2's motion to set aside the default judgment, and we
                remand this matter to the district court for further proceedings consistent
                with this opinion.

                                                      Douglas
                                                                    krs
                We concur:

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