Saticoy Bay LLC v. JPMorgan Chase Bank, N.A.

• Decision Date: 26 January 2017
• Docket Number: No. 68431,68431
• Citation: 133 Nev. Adv. Op. 3,388 P.3d 226
• Parties: Saticoy Bay LLC Series 2021 Gray Eagle Way, Appellant, v. JPMorgan Chase Bank, N.A., Respondent.
• Court: Nevada Supreme Court

388 P.3d 226

133 Nev. Adv. Op. 3

Saticoy Bay LLC Series 2021 Gray Eagle Way, Appellant,

v.JPMorgan Chase Bank, N.A., Respondent.

No. 68431

Supreme Court of Nevada.

Filed January 26, 2017

Law Offices of Michael F. Bohn, Esq., Ltd., and Michael F. Bohn, Las Vegas, for Appellant.

Smith Larsen & Wixom and Chet A. Glover and Kent F. Larsen, Las Vegas, for Respondent.

BEFORE HARDESTY, PARRAGUIRRE and PICKERING, JJ.

OPINION

By the Court, HARDESTY, J.:

In this appeal, we determine whether the district court properly dismissed a complaint in intervention with prejudice when it dismissed the original action for failure to prosecute pursuant to NRCP 41(e). We conclude that, while dismissal of the complaint in intervention was mandatory under NRCP 41(e), the district court abused its discretion in dismissing the complaint in intervention with prejudice.

FACTS AND PROCEDURAL HISTORY

This appeal involves the dismissal of an action contesting ownership of real property consisting of three separate lots: Lot 21, Lot 22, and Lot 26 (the Property) in Las Vegas. Appellant Saticoy Bay LLC Series 2021 Gray Eagle Way (Saticoy) allegedly obtained title to the Property by way of a homeowner association foreclosure deed on Lots 21 and 26 recorded on August 26, 2013, and a quitclaim deed from the same homeowner association on Lot 22 recorded on December 3, 2013. On September 5, 2012, respondent JPMorgan Chase Bank, N.A. (JPMorgan) was assigned the beneficial interest of a deed of trust recorded against the Property on January 4, 2007.

On April 20, 2009, the Canyon Gate Master Association's (CGMA) foreclosure agent recorded a notice of delinquent assessment lien against Lots 21, 22, and 26. On September 8, 2009, CGMA recorded a notice of default and election to sell Lots 21, 22, and 26. On December 15, 2009, Susan Louise Hannaford filed a complaint against CGMA challenging an arbitration award relating to the Property.

On May 23, 2013, CGMA recorded a notice of foreclosure sale of Lots 21 and 26 and scheduled the sale for July 18, 2013. Saticoy appeared at the foreclosure sale and purchased Lots 21 and 26. On August 5, 2013, Saticoy moved to intervene in the action initiated by Hannaford's complaint. The motion was unopposed, and the district court entered an order granting the motion. On September 30, 2013, Saticoy filed its complaint in intervention seeking injunctive relief, quiet title, declaratory relief, and issuance of a writ of restitution.

On October 18, 2013, CGMA recorded a notice of foreclosure sale of Lot 22. CGMA purchased Lot 22 at the foreclosure sale on November 21, 2013. Saticoy purportedly purchased Lot 22 from CGMA by way of a quitclaim deed recorded December 3, 2013.

On November 6, 2014, JPMorgan filed an answer to Saticoy's complaint in intervention. On March 17, 2015, the district court entered an order to show cause directing the parties to show why the action should not be dismissed pursuant to NRCP 41(e) for failure to bring the action to trial within five years after Hannaford's complaint was filed. At the show cause hearing, the district court determined that the action should be dismissed, but requested that the parties brief the issue of whether the dismissal should be with or without prejudice. After briefing was completed, the district court entered an order dismissing Hannaford's complaint and Saticoy's complaint in intervention with prejudice, finding that (1) neither Hannaford nor Saticoy had "taken affirmative steps to adequately prosecute [the] case," (2) Saticoy's "excuse that it intervened only nineteen months [before the date of the order to show cause was] an inadequate excuse for delay," (3) Saticoy's case lacks merit, and (4) NRS 116.3116(6)'s¹ three-year limitation period for foreclosing an HOA lien had run. Saticoy appeals the district court's decision.

DISCUSSION

Mandatory dismissal under NRCP 41(e) includes complaints in intervention brought in an original action

Under NRCP 41(e), "[a]ny action heretofore or hereafter commenced shall be dismissed by the court in which the same shall have been commenced ... unless such action is brought to trial within 5 years after the plaintiff has filed the action." The district court does not have discretion to dismiss an action pursuant to NRCP 41(e). Johnson v. Harber , 94 Nev. 524, 526, 582 P.2d 800, 801 (1978). We have previously explained that

NRCP 41(e) gives five years for a trial of an "action", not of a "claim." Unlike a claim, an action includes the original claim and any crossclaims, counterclaims, and third-party claims.... Thus, the original claim and any crossclaims, counterclaims and third party claims are all part of one "action."

United Ass'n of Journeymen & Apprentices of the Plumbing & Pipe Fitting Indus. v. Manson , 105 Nev. 816, 820, 783 P.2d 955, 957–58 (1989).

We have not, however, decided whether complaints in intervention filed in the original action fall into the Manson framework. Thus, as a preliminary issue in this case, we must first address whether complaints in intervention are part of the original action for purposes of NRCP 41(e)'s mandatory dismissal.

NRCP 24 is instructive in deciding whether a complaint in intervention is part of the original action for purposes of NRCP 41(e). NRCP 24, which governs complaints in intervention, permits parties, under certain circumstances, "to intervene in an action " NRCP 24(a)–(b) (emphasis added). Similarly, this court has treated parties in intervention under NRCP 24 as intervenors in the original action. See Las Vegas Police Protective Ass'n Metro., Inc. v. Eighth Judicial Dist. Court , 122 Nev. 230, 239, 130 P.3d 182, 189 (2006) ("Generally, an intervenor is afforded all the rights of a party to the action...." (internal quotation marks omitted)); Estate of LoMastro v. Am. Family Ins. Grp. , 124 Nev. 1060, 1067–68, 195 P.3d 339, 345 (2008) ("[W]hen an intervenor intervenes, it is bound by all prior orders and adjudications of fact and law as though [it] had been a party from the commencement of the suit." (second alteration in original) (internal quotation marks omitted)).

The practice of treating complaints in intervention as part of the original action is also typical in other jurisdictions. See, e.g., Schneider v. Dumbarton Developers, Inc. , 767 F.2d 1007, 1017 (D.C. Cir. 1985) ("When a party intervenes, it becomes a full participant in the lawsuit and is treated just as if it were an original party."); Conseco v. Wells Fargo Fin. Leasing, Inc. , 204 F.Supp.2d 1186, 1193 (S.D. Iowa 2002) ("A party, once allowed to intervene, may litigate fully as if it were an original party."); Taylor–West Weber Water Improvement Dist. v. Olds, 224 P.3d 709, 712 (Utah 2009) (holding that third-party intervenors have the same status as original parties); see also 7C Charles A. Wright, Arthur R. Miller & Mary K. Kane, Federal Practice and Procedure § 1920, at 609 (3d ed. 1998) ("Unless conditions have been imposed, the intervenor is treated as if the intervenor were an original party....").

Thus, we conclude that complaints in intervention are part of the original action for purposes of mandatory dismissal under NRCP 41(e). Because Saticoy failed to timely prosecute its claims in intervention, dismissal was mandatory.

The district court's dismissal of Saticoy's complaint in intervention with prejudice, however, was an abuse of discretion

"A district court has broad, but not unbridled, discretion in determining whether dismissal under NRCP 41(e) should be with or without prejudice." Monroe v. Columbia Sunrise Hosp. & Med. Ctr ., 123 Nev. 96, 102–03, 158 P.3d 1008, 1012 (2007). The parties agree that the district court acted within its discretion when it dismissed Hannaford's claims with prejudice. Thus, we only consider whether the district court abused its discretion when it dismissed Saticoy's complaint in intervention with prejudice.

Saticoy argues that the district court abused its discretion because it failed to properly apply the Monroe factors relevant to a determination of dismissal with or without prejudice. Under Monroe , "[f]actors relevant to the district court's exercise of that discretion include the underlying conduct of the parties, whether the plaintiff offers adequate excuse for the delay, whether the plaintiff's case lacks merit, and whether any subsequent action following dismissal would not be barred by the applicable statute of limitations." Id. at 103, 158 P.3d at 1012 (footnote omitted). We will defer to the district court's findings of fact unless they are clearly erroneous or not supported by substantial evidence. See Weddell v. H20, Inc. , 128 Nev. 94, 101, 271 P.3d 743, 748 (2012). We review the district court's legal conclusions de novo. Id.

Conduct of the parties and adequacy of excuse for delay

The district court decided to dismiss with prejudice, in part, because it found that Saticoy had not taken adequate steps to prosecute its claims, and it offered no adequate excuse for delay. We disagree.

We have stated that "[t]he duty rests upon the plaintiff to use diligence and to expedite his case to a final determination." Moore v. Cherry , 90 Nev. 390, 395, 528 P.2d 1018, 1021 (1974). However, "[b]ecause the law favors trial on the merits, ... dismissal with prejudice may not be warranted where ... delay is justified by the circumstances of the case." Home Sav. Ass'n v. Aetna Cas. & Sur. Co. , 109 Nev. 558, 563, 854 P.2d 851, 854 (1993). In deciding whether circumstances justify dismissal with prejudice, we consider "the conduct and good faith belief of the parties." Id. The circumstances of this case are such that dismissal with prejudice is not warranted.

Saticoy purportedly acquired its interest in Lots 21 and 26 of the Property at the foreclosure sale held in July 2013. Saticoy promptly filed a motion to intervene in August 2013 and filed its complaint in intervention on September 30, 2013. JPMorgan filed an answer to Saticoy's complaint over a year later on November 6, 2014. Thus,...