Canarelli v. Eighth Judicial Dist. Court of Nevada
| Decision Date | 10 November 2011 |
| Docket Number | No. 57032.,57032. |
| Parties | Lawrence CANARELLI, Petitioner, v. The EIGHTH JUDICIAL DISTRICT COURT OF the STATE of Nevada, In and for The COUNTY OF CLARK; and The Honorable Susan Johnson, District Judge, Respondents,andAmerican West Homes, Inc.; Michael A. and Spring H. Stacy; Andrea and Mark Barbuti; Marjorie I. and Michael J. Bryant; Arpina and Roland Devio; Cindy and Robert Dodge; Andre Farkas; Emery J. Hefley; Erin Oxley–Huerta; Kimberly R. and Randy D. Johnson; Robert Marshall; Leo J. and Theresa G. Millette; Iona and Richard L. Quisol; Hedy and Ward S. Reimer; Margaret and Verdell Singleton; Rebecca and William Wright; Demler A. and Virginia Zamora; Patricia J. Alders; James Barton; Larry J. and Darlene L. Crow; Rosemary Driggers; Drew A. and Laurel L. Erickson; Kevin and Carolyn Frazier; Sonya M. Henson–Brown; Michael and Robyn Kacman; Robert and Norma Jandle; Terry and Stacy Moll; Carol A. Quiles; Lori Rives; Frank E. and Margaret M. Russo; Mark and Joanne Schwartz; Ricky Gowdy; James W. and Ina L. Skoglund; Wesley C. Davis; Steve and Jennifer Verweyst; Johnny and Anna Billings; James A. and Darlene J. Mason; Angelito and Joy D. Pasion; Thomas F. Jannazzo; Dora and Michael D. Colford, Sr.; Gregory Aram; Elizabeth Atkins; Judith Arnold; Stacey Audiss; Norma and Bienvenido Batac; Carmen L. Bruce; Salvatore and Maribel Capano; Susan J. and John Catone; Mark P. Cruz; Kevin Dalton; Ester Delrosario; Jose Diaz; Oscar and Jacqueline Diaz; Robert K. and Sheila E. Duncan; Miguel Elias; Matthew Eschker; Amos Foster; Analia and James Gibson; Diane and Jerome Giuliano; Ester M. and Julius C. Gomez; Elizabeth and Francisco Gonzales; Kenneth W. Gustafson; Emily L. Halsey; Dennis Heim; Bonni And Daniel K. Itakura; Karen and Augustine A. Jimenez; Richard and Roberta Kennett; Rachelle and Scott Larsen; Chris and Donna Lee; King Keung Lee; Wai Ho Lo; Deborah K. and Paul E. Lofgreen; Denise McCutchen; Guy R. and Phyllis Medlin; Maria and Michael G. Mitchell; Alphonso and Wipha Monterio; Franklyn and Melanie Mueller; Brenda R. And Rodrigo A. Reano; Brian and Traci Ann Reyes; Gordon S. Rombough; Debra Ruano; Jeanette A. and Richard D. Sackol; Gloria C. and Joseph Salazar, Jr.; Michael E. Sanford; William Smith; Norma and Victor Soriano; Oscar Tejada; Alexander and Lucia Torno; Alphonso and Maria Vancheri; Frank J. Washko, Jr.; and Guadalupe Weatherly, Real Parties in Interest. |
| Court | Nevada Supreme Court |
OPINION TEXT STARTS HERE
Greenberg Traurig, LLP, and Mark E. Ferrario and Tami D. Cowden, Las Vegas, for Petitioner.
Lee, Hernandez, Brooks, Garofalo & Blake, APC, and David S. Lee, Las Vegas, for Real Party in Interest American West Homes, Inc.
Shinnick, Ryan & Ransavage, P.C., and Duane E. Shinnick, Eric Ransavage, and Bradley S. Rosenberg, Las Vegas, for Real Parties in Interest.BEFORE THE COURT EN BANC.
In this petition for extraordinary writ relief, we must determine whether the district court may appoint an unwilling director trustee of a dissolved corporation for the purpose of defending actions against the corporation that arose post-dissolution and after completion of the winding-up process. To resolve this issue, we must construe Nevada's corporate survival statutes and, in particular, NRS 78.600, which allows the district court to “continue the directors trustees as provided in NRS 78.590 upon dissolution.” We conclude that NRS 78.600 does not confer authority upon the district court to appoint an unwilling director trustee of a dissolved corporation because, once the director trustee has completed winding up the affairs of the corporation as provided for in NRS 78.590, his or her power to act on behalf of the corporation terminates. Thus, writ relief is appropriate here.
Real party in interest American West Homes, Inc., was formed as a Nevada corporation in 1990. Prior to 2004, American West constructed homes in two residential developments in Las Vegas. On January 29, 2004, the corporation filed a certificate of dissolution with the Secretary of State pursuant to NRS 78.580 and dissolved. After the dissolution, certain American West directors, including petitioner Lawrence Canarelli, remained as trustees pursuant to NRS 78.585 and participated in winding up corporate affairs. They completed the winding-up process in March 2008, when all assets were distributed, and Canarelli officially resigned as a director trustee on June 24, 2009.
Meanwhile, on November 18, 2008, over four years after dissolution and several months after wind up, a group of homeowners filed a construction defect complaint against American West. On July 1, 2009, shortly after Canarelli resigned, a second group of homeowners filed a separate construction defect complaint against American West.1 Both complaints were served on Canarelli, and after being served, he filed motions to quash service and dismiss the complaints, arguing that his duties as a trustee concluded when the wind-up process was completed and American West's debts were extinguished and its property was distributed to the shareholders. The district court denied the motions to quash service and dismiss the complaints in both cases, finding that service upon Canarelli was effective pursuant to NRS 78.750(2) 2 because he had been an officer and director of American West. 3
The plaintiffs in each case then filed motions to appoint Canarelli to continue as a trustee pursuant to NRS 78.600. They argued that the statutory dissolution process requires director trustees to continue service for the purpose of defending claims against the former corporation, and, pursuant to Beazer Homes Nevada, Inc. v. District Court, 120 Nev. 575, 97 P.3d 1132 (2004), post-dissolution claims may be filed indefinitely, limited only by the applicable statutes of limitations and repose. Furthermore, they argued that Canarelli should continue as trustee because he profited from his position as a director of American West. In his opposition, Canarelli argued that the corporate dissolution statutes do not permit the district court to force him to act as trustee and that requiring him to serve as trustee would be a form of indentured servitude. The district court reluctantly granted the motions to appoint Canarelli as trustee, finding that it was constrained by Beazer's holding that allows post-dissolution claims to be filed indefinitely. Canarelli then filed this writ petition seeking this court's intervention by way of extraordinary relief.
Canarelli petitions this court for either a writ of certiorari 4 or a writ of mandamus compelling the district court to vacate its order appointing him as trustee in the underlying matters. “ ‘A writ of mandamus is available to compel the performance of an act that the law requires as a duty resulting from an office, trust, or station or to control an arbitrary or capricious exercise of discretion.’ ” Williams v. Dist. Ct., 127 Nev. ––––, ––––, 262 P.3d 360, 364 (2011) (quoting International Game Tech. v. Dist. Ct., 124 Nev. 193, 197, 179 P.3d 556, 558 (2008)); see also NRS 34.160. A writ of mandamus will not issue if the “ ‘petitioner has a plain, speedy, and adequate remedy in the ordinary course of law.’ ” Williams, 127 Nev. at ––––, 262 P.3d at 364 (quoting Mineral County v. State, Dep't of Conserv., 117 Nev. 235, 243, 20 P.3d 800, 805 (2001)); see NRS 34.170. Because Canarelli is not a party to the construction defect actions below, he cannot appeal the final judgment and he has no other adequate remedy at law. See Walton v. District Court, 94 Nev. 690, 693, 586 P.2d 309, 310 (1978) (). Therefore, we exercise our discretion to consider Canarelli's petition for a writ of mandamus. See Mineral County, 117 Nev. at 243, 20 P.3d at 805 ().
In his writ petition, Canarelli makes several arguments in support of his position that the district court cannot force him to serve as a director trustee for purposes of defending the underlying construction defect actions on behalf of American West. He primarily argues that: (1) forcing him to act as director trustee constitutes indentured servitude in violation of the Thirteenth Amendment to the United States Constitution; (2) this court erred in Beazer Homes Nevada, Inc. v. District Court, 120 Nev. 575, 97 P.3d 1132 (2004), by concluding that post-dissolution claims are limited only by the statutes of limitation or repose of the underlying claim; and (3) the term “continue” in NRS 78.600 does not allow the district court to appoint a director trustee who previously resigned from that post several years after the corporation dissolved. In considering Canarelli's arguments, however, we must examine NRS 78.585, 78.590, and 78.600 in the context of Nevada's overall corporate survival scheme and the statutory obligations of director trustees upon dissolution. In Nevada, corporate survival and director trustees' post-dissolution duties are two separate concepts.
The district court cannot require Canarelli to continue as director trustee
In granting the motions to appoint Canarelli to continue as director trustee of American West, the district court noted that it had to harmonize the applicable statutes with this court's holding in Beazer. Canarelli argues that the statutes do not give the district court discretion to force him to “continue” as director trustee after he resigned from that post. We review the “district court's conclusions of law, including statutory interpretations, de novo.” Borger v. Dist. Ct., 120 Nev. 1021, 1026, 102 P.3d 600, 604 (2004).
To resolve this writ petition, we examine NRS 78.585, 78.590, and 78.600 to determine whether a district court may appoint an unwilling director trustee of a dissolved corporation to continue as a director trustee...
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