Butwinick v. Hepner

• Decision Date: 27 December 2012
• Docket Number: No. 56303.,56303.
• Citation: Butwinick v. Hepner, 291 P.3d 119, 128 Nev. Adv. Op. 65 (Nev. 2012)
• Parties: Todd BUTWINICK, An Individual; and Nevada Furniture Incorporated, A Nevada Corporation, Appellants, v. Charles HEPNER, An Individual; Tracy Hepner, An Individual; and Nevada Furniture Idea, Inc., A Nevada Corporation, Respondents.
• Court: Nevada Supreme Court

291 P.3d 119

128 Nev. Adv. Op. 65

Todd BUTWINICK, An Individual; and Nevada Furniture Incorporated, A Nevada Corporation, Appellants,

v.Charles HEPNER, An Individual; Tracy Hepner, An Individual; and Nevada Furniture Idea, Inc., A Nevada Corporation, Respondents.

No. 56303.

Supreme Court of Nevada.

Dec. 27, 2012.

Nevada Furniture Incorporated, Las Vegas, in Proper Person.

Todd Butwinick, Las Vegas, in Proper Person.

Marquis Aurbach Coffing and Frank M. Flansburg III and Jason M. Gerber, Las Vegas, for Respondents.

BEFORE CHERRY, C.J., DOUGLAS, SAITTA, GIBBONS, PICKERING, HARDESTY and PARRAGUIRRE, JJ.

OPINION

PER CURIAM:

This case comes before the court on the respondents' motion to substitute themselves as the real parties in interest and to dismiss the appeal.Respondents acquired appellants' rights and interests in the underlying district court action at a judgment execution sale.Appellants oppose the motion.In moving to substitute in as real parties in interest and dismiss the appeal, respondents seek to foreclose appellants' defenses to respondents' own claims, which were successfully litigated in the district court, and the decision on those claims timely appealed.Although Nevada's judgment execution statutes permit a judgment creditor to execute on a debtor's personal property, including the right to bring an action to recover a debt, money, or thing, those statutes do not include the right to execute on a party's defenses to an action, and permitting a judgment creditor to execute on a judgment in such a way would cut off a debtor's defenses in a manner inconsistent with due process principles.Thus, we deny respondents' motion.

FACTS AND PROCEDURAL HISTORY

Underlying breach of contract action

RespondentsCharles Hepner, Tracy Hepner, and Nevada Furniture Idea, Inc., brought the underlying action against appellantsTodd Butwinick and Nevada Furniture, alleging breach of contract and fraud- and tort-based claims related to an asset purchase and sale agreement, under which respondents purchased two furniture stores from appellants.Appellants answered and filed a counterclaim, arguing that respondents failed to make payments on the promissory note used for the owner-financed purchase of the stores, and seeking to foreclose on the promissory note, which was secured by respondents' real property located in Tennessee.¹Appellants also alleged defamation, unjust enrichment, and bad faith, and they sought damages as well as injunctive and declaratory relief.Following a bench trial, the district court entered judgment for respondents.It held that appellants misrepresented information about the furniture stores, materially breached the asset purchase sale agreement, and fraudulently induced respondents into executing the agreement.In its judgment, the district court allowed respondents to rescind the agreement, awarded them $735,835.84 in damages, and denied any relief to appellants on their counterclaims.This appeal followed.

Writ of execution and motions seeking to stay execution

Although they appealed the judgment, appellants did not obtain a stay of execution.Thus, despite the pending appeal, respondents obtained a writ of execution on the judgment, allowing them to execute against appellantTodd Butwinick's personal property.The writ directed the Clark County Sheriff to “levy and seize upon any and all causes of action, claims, allegations, assertions and/or defenses of Todd Butwinick,” including the underlying district court action.Appellants unsuccessfully attempted to restrain the sale and quash the writ of execution.

Motion to substitute as real parties in interest and dismiss appeal

At the sheriffs sale, respondents purchased, for $5,000, appellants' rights and interests in the district court action.Respondents now move to substitute as real parties in interest under NRAP 43 and to dismiss the appeal under NRAP 42(b), on the basis that they acquired appellants' claims and defenses at the sheriffs sale.Respondents assert that appellants received adequate notice of the sale and could have either obtained a stay of execution against their assets by posting a supersedeas bond or bid at the sheriffs sale.²Respondents argue that NRS 10.045(defining personal property) and NRS 21.080(1)(describing property liable to execution) allow them to execute against appellants' counterclaims and defenses as personal property and no exemption from execution applies.

In opposition, appellants argue that unless the motion is denied, their right to appeal will be eliminated and the judgment will remain permanently unreviewed.They continue that granting the motion would damage the integrity of the appellate process because any party who ends up as a judgment debtor would lose his or her right to appeal unless he or she has the resources to post a bond.Finally, they note that respondents have provided no authority to establish that appellants' defenses to any underlying lawsuit are personal property subject to execution during the pendency of an appeal.

DISCUSSION

Under NRS 10.045, “ ‘[p]ersonal property’ includes ... things in action,” and NRS 21.010 provides that “the party in whose favor judgment is given may, at any time before the judgment expires, obtain the issuance of a writ of execution for its enforcement.”In Gallegos v. Malco Enterprises of Nevada,127 Nev. ––––, 255 P.3d 1287(2011), this court determined that “rights of action held by a judgment debtor are personal property subject to execution in satisfaction of a judgment.”Id. at ––––, 255 P.3d at 1289.That decision explained that statutes specifying the kinds of property subject to execution must be construed liberally for the judgment creditor's benefit.Id.

Respondents base their motion to substitute and dismiss on their purchase of appellants' claims and defenses at the sheriff's sale.As appellants note, respondents have cited no authority to support the proposition that appellants' defenses to respondents' underlying lawsuit constitute a “thing in action” subject to execution under NRS 21.080andNRS 10.045.Appellants did not bring the action on which respondents recovered judgment; appellants were the defendants, who lost.Thus, they did not bring an action to recover a debt, money, or things, but were defending against appellants' claims that the furniture stores were sold as a result of misrepresentations and fraud.Thus, this case differs from those relied on by respondents, where the acquired cause of action was that of the underlying plaintiff, who lost in the trial court.SeeRMA Ventures California v. SunAmerica Life Ins.,576 F.3d 1070(10th Cir.2009)(interpreting Utah law, to permit a defendant to execute against the plaintiff's claims for breach of contract and fraud, which were disposed of on summary judgment in the district court and pending appeal, in satisfaction of an attorney fees award that was not appealed);Applied Medical Technologies, Inc. v. Eames,44 P.3d 699(Utah2002)(granting a defendant judgment creditor's motion to dismiss an appeal, after the defendant purchased at a constable's sale claims asserted against him by the plaintiff judgment debtor).Respondents have offered no authority, nor have we found any, to support the proposition that a litigant's defenses are assignable.Cf.Achrem v. Expressway Plaza Ltd.,112 Nev. 737, 917 P.2d 447(1996)(explaining that the rights to a tort action are not assignable);Maxwell v. Allstate Ins. Co.,102 Nev. 502, 728 P.2d 812(1986)(same);Prosky v. Clark,32 Nev. 441, 109 P. 793(1910)(explaining that rights of...