Court Opinion

ID: 2714083
Source: CourtListenerOpinion
Date Created: 2014-08-06 15:20:06.418955+00
Date Added: 2024-06-11T12:50:50.204797
License: Public Domain

130 Nev., Advance Opinion      5
                       IN THE SUPREME COURT OF THE STATE OF NEVADA

                DTJ DESIGN, INC.,                                    No. 57165
                Appellant,
                vs.                                                   FILED
                FIRST REPUBLIC BANK, A NEVADA
                CORPORATION,                                          FEB 1 3 2014
                Respondent.
                                                                     CHIVE" DEPUTY CLERK

                           Appeal from a district court summary judgment, certified as
                final under NRCP 54(b), in a lien foreclosure action. Eighth Judicial
                District Court, Clark County; Timothy C. Williams.
                           Affirmed.

                Martin & Allison, Ltd., and Noah G. Allison and Debra L. Pieruschka, Las
                Vegas,
                for Appellant.

                Gerrard Cox & Larsen and Douglas D. Gerrard and Gary C. Milne,
                Henderson,
                for Respondent.

                BEFORE THE COURT EN BANC.

                                                OPINION
                By the Court, PARRAGUIRRE, J.:
                           In this appeal, we address the registration requirements set
                forth in NRS 623.349(2) in the context of a foreign architectural firm's
                ability to bring or maintain an action in Nevada. We conclude that
                regardless of whether a foreign firm employs a registered architect, NRS
                623.349(2) and NRS 623.357 mandate that the firm be registered in
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                Nevada in order to maintain an action on the firm's behalf. Accordingly,
                we affirm the district court's judgment.
                                  FACTS AND PROCEDURAL HISTORY
                            Appellant Downing, Thorpe & James Design, Inc. (DTJ), is an
                architectural firm incorporated in Colorado. Thomas W. Thorpe is a
                professional architect and one of DTJ's three founding principals. In 1998,
                Thorpe sought reciprocity to practice in Nevada and submitted two
                applications to the State Board of Architecture (the Board). First, he
                submitted an "Application for Architect Registration," which would allow
                him to practice individually as a foreign architect. Second, Thorpe
                submitted an "Application for Registration of a Business and Firm Name
                Approval," which would allow DTJ to practice as a foreign corporation.
                Although the Board approved Thorpe's individual application for
                registration, there is no evidence that the Board ever received or approved
                DTJ's application to practice as a foreign corporation in Nevada.
                            In 2004, DTJ contracted with a Nevada developer to provide
                architectural services for a Las Vegas subdivision owned by Prima
                Condominiums, LLC (Prima). Prima obtained a $14 million loan from
                respondent First Republic Bank in exchange for a promissory note secured
                by a deed of trust on one of the subdivision's units, the Bergamo building.
                As additional security, First Republic demanded an assignment of all
                construction documents associated with the Bergamo building, including
                DTJ's architectural drawings DTJ consented to the assignment in
                exchange for $350,000 of the loan proceeds. The parties agreed that in the
                event of foreclosure, First Republic's access to DTJ's plans was conditioned
                upon DTJ being paid in full for services completed to date. Prima
                subsequently defaulted on its payments.

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                             In July 2008, DTJ recorded a notice of mechanic's lien against
                the property for unpaid services to date. In December 2008, First Republic
                foreclosed and purchased the property at a trustee's sale. DTJ then
                brought an action against First Republic for lien priority and unjust
                enrichment. The district court bifurcated the trial into two phases: lien
                priority (phase one) and lien valuation (phase two). After a hearing on
                phase one, the district court concluded that DTJ was a valid claimant with
                lien priority over First Republic's deed of trust.
                            Prior to phase two, First Republic moved for summary
                judgment, arguing that NRS 623.357 prohibited DTJ from maintaining its
                lien foreclosure action because DTJ had not properly registered as a
                foreign corporation under NRS 623.349(2) or satisfied the state's foreign
                corporation statutory filing requirements under NRS 80.010(1). First
                Republic also argued that DTJ's unjust enrichment claim lacked legal
                basis. The district court concluded that because DTJ had failed to comply
                with Nevada's statutory registration and filing provisions, DTJ was barred
                from maintaining an action against First Republic. The district court
                further concluded that there was no legal basis for DTJ's unjust
                enrichment claim, and it granted First Republic's motion for summary
                judgment. DTJ now brings this appeal.
                                                DISCUSSION
                Standard of review
                            This court reviews orders granting summary judgment de
                novo.   Day v. Zubel, 112 Nev. 972, 977, 922 P.2d 536, 539 (1996).
                Summary judgment is appropriate if, when viewed in the light most
                favorable to the nonmoving party, the record reveals there are no genuine
                issues of material fact and the moving party is entitled to judgment as a

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                  matter of law. Pegasus v. Reno Newspapers, Inc., 118 Nev. 706, 713, 57
P.3d 82, 87 (2002).
                  The district court properly concluded that DTJ was barred from
                  maintaining its action against First Republic
                               The district court concluded that DTJ failed to comply with the
                  requirements of both NRS 623.349(2) and NRS 80.010(1). Noncompliance
                  with either provision would preclude DTJ from bringing or maintaining an
                  action in Nevada, and we begin by addressing the district court's
                  application of NRS 623.349(2).
                               The practice of architecture in Nevada is governed by the
                  provisions of NRS Chapter 623. NRS 623.357 provides that "[n]o person
                  [or] firm. . may bring or maintain any action. . . for the collection of
                  compensation" for architectural services without first "alleging and proving
                  that such plaintiff was duly registered under this chapter at all times
                  during the performance of such act or contract." Accordingly, DTJ was
                  required to plead and prove that it was properly registered pursuant to
                  NRS Chapter 623 as part of its prima facie case seeking compensation for
                  its architectural services.
                               With regard to the registration process, NRS 623.349 provides:
                                     1. Architects. . . may join or form a
                              partnership, corporation, limited-liability company
                              or other business organization or association with
                              registrants and licensees outside of their field of
                              practice, or with persons who are not registered or
                              licensed, if control and two-thirds ownership of the
                              business organization or association is held by
                              persons registered or licensed in this State
                              pursuant to the applicable provisions of this
                              chapter
                                     2. If a partnership, corporation. . . or other
                               form of business organization or association wishes

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                             to practice pursuant to the provisions of this
                             section, it must:
                                  (a) Demonstrate to the Board that it is in
                             compliance with all provisions of this section.
                                  (b) Pay the fee for a certificate of registration
                             pursuant to NRS 623.310.
                                   (c) Qualify to do business in this State.
                 (Emphases added).
                             On appeal, DTJ argues that the district court's application of
                 NRS 623.349(2) was flawed because the statutory registration requirement
                 applies only to natural persons and a corporation is incapable of
                 registration. See NRS 623.190 (defining applicant as "[ably person who is
                 at least 21 years of age . . . and who meets the requirements for education
                 and practical training established by the Board"). We disagree, as NRS
                 623.349(2) expressly sets forth registration requirements applicable to
                 corporations, and NRS Chapter 623's provisions otherwise apply to
                 registrants as people and businesses, interchangeably.         See, e.g., NRS
                 623.357 ("No person, firm, . . . or other organization may bring or maintain
                 any action" in Nevada without proof of registration); NRS 623.350(2)
                 (referring to "a business organization or association which holds a
                 certificate issued pursuant to NRS 623.349"). Thus, we conclude that NRS
                 623.349's registration requirements apply to foreign architectural firms.
                             Next, DTJ contends that NRS 623.349(2) does not preclude an
                 unregistered firm from foreclosing on a lien for work that was performed
                 by a registered architect.' This argument is unpersuasive.

                     IDTJ also argues that NRS 623.349(2) impermissibly conflicts with
                 NRS 108.243, which allows a mechanic's lien to be assigned "in the same
                 manner as any other chose in action." Because DTJ failed to raise this
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                                 NRS 623.349(1) allows registered architects to partner with
                     unregistered architects and form a business organization to practice in
                     Nevada, so long as the registered architects satisfy a two-thirds ownership
                     requirement. In order for a foreign business to operate as a separate entity
                     in Nevada, it must satisfy the requirements found in NRS 623.349 by
                     demonstrating to the Board that registered architects within the firm
                     satisfy the two-thirds ownership provision under NRS 623.349(1), and that
                     the business is qualified to do business in this state and has paid the
                     requisite registration fee under NRS 623.349(2)(a)-(c).      See also NRS
                     623.349(2)(d) and (e) (corporation and partnership requirements).
                                 Here, the record shows that despite Thorpe's registration
                     status, DTJ itself had not complied with NRS 623.349(2)'s provisions.
                     Moreover, the Board's executive testified that it never received DTJ's
                     application and that even if it had, the Board would have denied DTJ's
                     request because Thorpe did not satisfy the two-thirds ownership
                     requirement under NRS 623.349(1). Thus, Thorpe's individual status has
                     no bearing on whether DTJ, a separate entity, may bring or maintain an
                     action for compensation for its services.
                                 Also, to the extent that DTJ argues that Thorpe should
                     individually be able to foreclose on the lien as a registered architect, we
                     disagree. The record shows that DTJ, not Thorpe, entered into the
                     development contract, which was signed by Steven James as DTJ's
                     principal-in-charge. James is not registered in Nevada, and Thorpe

                     ...continued
                     argument in district court, we will not consider it on appeal.      Old Aztec
                     Mine, Inc. v. Brown, 97 Nev. 49, 52, 623 P.2d 981, 983 (1981).

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                testified that he did not become coprincipal on the project with James until
                nearly a year after the development contract was signed.
                             Because NRS 623.357 expressly provides that business
                organizations must allege and prove that they have registered with the
                Board in order to maintain any action for collecting compensation for their
                services, we conclude that the burden was on DTJ to prove its registration
                status and that First Republic was not required to plead DTJ's failure to
                register as an affirmative defense.   Cf. NRCP 9(a). Further, because the
                record shows that DTJ failed to comply with the provisions set forth in
                NRS 623.349(2), we conclude that NRS 623.357 prohibits DTJ from
                bringing or maintaining an action in Nevada for compensation for its
                architectural services and summary judgment in First Republic's favor was
                proper based solely on this ground.
                             In reaching this conclusion, we decline to revisit the district
                court's finding that DTJ similarly failed to satisfy the foreign corporation
                filing requirements of NRS 80.010(1). We further decline to revisit the
                district court's dismissal of DTJ's unjust enrichment claim for lack of a
                legal basis. Although the parties and the district court only addressed
                whether there was a legal basis for DTJ's unjust enrichment claim, we
                conclude that this claim is also barred by NRS 623.357 due to DTJ's failure
                to prove its registration status.
                            This conclusion is not altered by our holding in Loomis v. Lange
                Financial Corp., 109 Nev. 1121, 1128, 865 P.2d 1161, 1165 (1993) (citing
                Nev. Equities v. Willard Pease Drilling, 84 Nev. 300, 303, 440 P.2d 122, 123
                (1968)), which recognized a substantial compliance exception in addressing
                the viability of an unlicensed contractor's equitable causes of action in a
                contract claim. Although DTJ may have attempted to register in 1998,
                there is nothing in the record to suggest that the application was ever
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                   received or approved, nor does the record show that DTJ ever attempted to
                   remediate the situation. Rather, DTJ has been involved with at least four
                   similar development projects over the past 15 years, despite its
                   noncompliance with NRS 623.349. Accordingly, we conclude that the
                   district court's dismissal was proper.       Id.; see also Interstate Commercial
                   Bldg. Servs., Inc. v. Bank of Am. Nat'l Trust & Say. Ass'n,      23 F. Supp. 2d
1166, 1175 (D. Nev. 1998) (discussing the substantial compliance exception
                   for an unlicensed contractor's equitable claims);         Hotel Riviera Inc. v.
                   Torres, 97 Nev. 399, 403, 632 P.2d 1155, 1158 (1981) ("If a decision below is
                   correct, it will not be disturbed on appeal even though the lower court
                   relied upon wrong reasons.")

                                                          Parraguirre

                                                   C.J.
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