Edwards v. Ghandour
| Decision Date | 07 June 2007 |
| Docket Number | No. 44207.,No. 43166.,43166.,44207. |
| Citation | 159 P.3d 1086 |
| Parties | Christopher M. EDWARDS, Appellant, v. ED GHANDOUR; Mountain Lake Development Corporation, A Nevada Corporation; Tanam Corporation, A Nevada Corporation; Anna Ghandour, in Her Official Capacity; and James Waite, Respondents. Christopher M. Edwards, Appellant, v. Mountain Lake Development Corporation, A Nevada Corporation; Ed Ghandour, in His Individual Capacity; Tanam Corporation, A Nevada Corporation; Anna Ghandour, in Her Individual Capacity; Mary Gilanfarr, D/B/A MGI International Real Estate, in Her Individual Capacity; and James Waite, in His Individual Capacity, Respondents. |
| Court | Nevada Supreme Court |
Christopher M. Edwards, in Proper Person.
Beckley Singleton, Chtd., and Bruce T. Beesley, Reno, for Respondents Tanam Corporation, James Waite, and Anna Ghandour.
Dean R. Headley, Tahoe City, California, for Respondents Ed Ghandour and Mountain Lake Development Corporation.
Thomas J. Hall, Reno, for Respondent Mary Gilanfarr, d/b/a MGI International Real Estate.
Before PARRAGUIRRE, HARDESTY and SAITTA, JJ.
These proper person appeals present us with an opportunity to clarify two issues: (1) that our decision in Rickard v. Montgomery Ward & Co.,1 holding that a defendant's bankruptcy operates to toll NRCP 41(e)'s five-year period for bringing an action to trial, applies only to the particular defendant or defendants who have filed for bankruptcy protection, not to defendants who are not bankruptcy debtors; and (2) that an appeal from the district court's final judgment does not affect that judgment's finality for purposes of claim preclusion.
In the proceedings below, appellant Christopher M. Edwards ultimately filed two actions against the same defendants. In Edwards' first action, one defendant, during the proceedings, filed for federal bankruptcy protection. After the bankruptcy court granted Edwards relief from the bankruptcy automatic stay, Edwards voluntarily dismissed that defendant from his action.
The district court entered other interlocutory dismissal orders and default judgments, then ultimately dismissed Edwards' claims against the remaining defendants based on his failure to bring his action to trial within the mandatory five-year period set forth in NRCP 41(e). After this dismissal order was entered, Edwards perfected an appeal. He then filed his second action, asserting the same claims against many of the same defendants; this action was dismissed based upon NRCP 41(e)'s claim-preclusion provision.
Regarding Edwards' failure to bring his first action to trial within five years, our Rickard decision provides that while the bankruptcy automatic stay is in effect, the five-year period under NRCP 41(e) is tolled.2 We now clarify, however, that the tolling effect of the automatic stay applies only to the particular defendant who is engaged in the bankruptcy proceedings, since the automatic stay applies only to actions against the debtor defendant, not nondebtor codefendants.3 Therefore, unless the trial judge separately stays the plaintiff's action with respect to nondebtor defendants, the action may proceed against those defendants, and the five-year period continues to advance. Consequently, in this case, the single defendant's bankruptcy proceedings had no impact on Edwards' case against the other defendants, and the district court properly dismissed Edwards' action based on his failure to bring it to trial within five years.
With respect to Edwards' appeal from the district court's final judgment, we conclude that it did not affect the judgment's finality for purposes of claim preclusion. As judgments dismissing a case for failure to prosecute under NRCP 41(e) are given preclusive effect, the district court properly dismissed Edwards' second action.
Edwards' first case (1998)
Edwards and his two business partners filed a complaint in the first case on October 22, 1998. In their complaint, Edwards and his partners essentially alleged that they were fraudulently induced into leasing restaurant space, and they brought claims for intentional misrepresentation, knowing concealment of material facts, knowingly making false promises, breach of contract, negligence, various violations of Nevada real estate statutes, strict liability, and unjust enrichment against eleven defendants. They later added claims for malicious prosecution and abuse of legal process based upon a counterclaim. Shortly after the complaint was filed, one of Edwards' two business partners informally requested, in a letter, to be removed as a plaintiff.
Although Edwards and his partners were initially represented by counsel, counsel was disbarred during the district court proceedings and moved to withdraw. After counsel withdrew, Edwards filed an amended complaint in proper person. Edwards, who was not authorized to practice law on behalf of his business partners and ostensibly knew of one partner's request to be removed as a plaintiff, nevertheless named both business partners as plaintiffs in his amended complaint. Based upon Edwards' proper person status, the district court ruled that the amended complaint would relate solely to Edwards and removed the business partners from the caption. Even so, it later determined that the earlier complaint remained effective as to the business partners.
Bankruptcy proceedings
In March 2000, one of the defendants filed for federal bankruptcy protection, thus commencing the automatic bankruptcy stay. Approximately one year later, in April 2001, the federal bankruptcy court entered an order granting the parties in Edwards' action relief from the bankruptcy stay. In June 2001, even though the automatic stay had by that time been lifted, the district court acknowledged the stay and ordered the proceedings in Edwards' action stayed until the bankruptcy court lifted the automatic stay.
Purportedly because his attorney had been disbarred and had withdrawn, Edwards did not notify the district court that the automatic bankruptcy stay had been lifted until the court entered its own stay order. Although he filed a notice in the district court, Edwards did not move for a trial setting or to set aside the district court's stay order. Not knowing the true status of the bankruptcy stay, the district court entered an order in April 2002, refusing to consider any further pleadings until the bankruptcy stay was lifted. When it realized its error, the district court entered an order rescinding its previous stay orders. Later, Edwards stipulated to dismiss his complaint as to the defendant who had filed for bankruptcy protection, and this defendant was formally dismissed from the action.
After the district court rescinded its stay orders, Edwards' business partner who had previously requested to be removed as a plaintiff filed for federal bankruptcy protection. As a result, Edwards filed, in the district court action, a notice of this bankruptcy petition as well as a motion to stay the district court proceedings as of the date of the bankruptcy filing. Edwards also sought to have all pleadings and orders filed after that date declared void. The district court declined to retroactively stay the proceedings and denied Edwards' motions.
District court's rulings with respect to Edwards' claims
Following its decision to deny Edwards' motions, the district court dismissed two other defendants and entered default judgments against two others. Finally, in March 2004, the district court dismissed the action against the remaining defendants under NRCP 41(e)'s five-year rule because trial had not commenced before the period expired on October 22, 2003. Edwards, in proper person, then timely appealed, challenging that order. His appeal was docketed as No. 43166.
Edwards' second case (2004)
In April 2004, shortly before he filed his notice of appeal from the district court's NRCP 41(e) dismissal order, Edwards, in proper person, filed a complaint in the district court that was nearly identical to his 1998 complaint. This second complaint, as subsequently amended, added a cause of action for breach of the implied covenant of good faith and fair dealing and was filed against six of the eleven defendants named in the 1998 complaint.4 Edwards' 2004 complaint explained that it was filed to meet the six-year statute of limitations for contract actions, which governed the commercial lease being challenged in his original case. Edwards also stated in his 2004 complaint that "[t]he facts of this complaint overlap and expand upon the facts in [the 1998 case]."
The defendants did not answer and instead filed motions to dismiss the second case based on NRCP 41(e)'s claim-preclusion provision, which states that a dismissal under the rule is "a bar to another action upon the same claim for relief against the same defendants unless the court otherwise provides." Edwards opposed the motion.
In September 2004, the district court entered an order dismissing Edwards' second case against all but one defendant on the basis of claim preclusion. One month later, the district court entered a similar order dismissing the last remaining defendant, Mary Gilanfarr, also based on claim preclusion.
Gilanfarr subsequently moved for attorney fees under NRCP 68 and NRS 17.115(4), contending that Edwards had rejected her earlier offer of judgment. The district court granted the motion, which Edwards opposed, and awarded Gilanfarr attorney fees and costs under NRCP 68. Edwards has appealed from the dismissal order and the attorney fees award, and this appeal was docketed as No. 44207.
In resolving these appeals, we first consider whether, and to what extent, the defendant's and plaintiff business partner's bankruptcy stays in Edwards' first case impacted the running of NRCP 41(e)'s five-year time period. As a defendant's bankruptcy filing triggers the automatic stay only as to that defendant, the filing has...
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