Harris v. Meiling
| Decision Date | 18 August 2020 |
| Docket Number | Case No. 3:19-cv-00339-MMD-CLB |
| Parties | MARC HARRIS, an individual, on behalf of himself and all others similarly situated, Plaintiff, v. DEAN MEILING, et al., Defendants. |
| Court | U.S. District Court — District of Nevada |
Before the Court are two motions for attorneys' fees by Defendant Kaempfer Crowell, LTD ("Kaempfer") (ECF No. 134) ("Kaempfer Motion") and Defendants Chemeon Surface Technology LLC, DSM P GP LLC, DSM Partners, LP, Dean Meiling, Madylon Meiling, and Suite B LLC (collectively the "the Meilings") (ECF No. 136) ("Meiling Motion")1; and the Meilings' Motion to Re-Tax Costs ("Re-Tax Motion") (ECF No. 161). For the reasons explained below, the Court will deny the Kaempfer Motion and Meiling Motion but will grant the Re-Tax Motion.
This is the second attempted class action filed by Plaintiff Marc Harris on behalf of a group of investors who lost money investing in Metalast International, LLC ("Metalast"). See Jerry Alexander, et al. v. Dean Meiling, et al., Case No. 3:16-cv-00572-MMD-CBC (D. Nev. filed October 3, 2016) ("Alexander"). Plaintiff alleged that Defendants conspired and took Metalast through a state receivership proceeding, taking control of Metalast at adiscount. (ECF No. 10 at 8-9.) Plaintiff referred to this as the "Fraudulent Scheme" (Id. at 9).
Based on the Fraudulent Scheme, Plaintiff brought state law claims for: (1) financial elder abuse in violation of California Welfare and Institutions Code § 15610.30; (2) breach of fiduciary duty; (3) constructive fraud: (4) intentional misrepresentation; (5) professional negligence; (6) constructive trust; (7) violation of California Business and Professions Code § 17200; (8) misappropriation; and (9) conversion. (Id. at 13-26.)
The Court later dismissed all claims as barred by the four-year statute of limitations. (ECF No. 124 at 1-2.) See also Harris v. Meiling, Case No. 3:19-cv-339-MMD-CBC, 2019 WL 5684175, at *1 (D. Nev. Oct. 31, 2019). The Fraudulent Scheme allegedly occurred between April and December 2013. (ECF No. 124 at 3.) The statute of limitations began running on October 28, 2013, when Plaintiff submitted a pro se filing in the state court receivership proceeding (ECF No. 48-19 (the "2013 Opposition")), which contained factual assertions similar to the allegations in the First Amended Complaint ("FAC") (ECF No. 10) .2 (ECF No. 124 at 11.) As such, Plaintiff was aware, or should have been aware, of the factual basis for this case on October 28, 2013, but he filed this action over four years later on March 18, 2019 (id.).
"'In an action involving state law claims, [federal courts] apply the law of the forum state to determine whether a party is entitled to attorneys' fees, unless it conflicts with a valid federal statute or procedural rule.'" Cataphora Inc. v. Parker, 848 F. Supp. 2d 1064, 1067 (N.D. Cal. 2012) ().
Under Nevada law, "[t]he compensation of an attorney and counselor for his or her services is governed by agreement, express or implied, which is not restrained by law." NRS § 18.010(1). A party prevails under NRS § 18.010 "'if it succeeds on any significant issue in litigation which achieves some of the benefit it sought in bringing suit,'" Valley Electric Ass'n v. Overfield, 106 P.3d 1198, 1200 (Nev. 2005) (quoting Women's Fed. Sav. & Loan Ass'n of Cleveland v. Nevada Nat. Bank, 623 F. Supp. 469, 470 (D. Nev. 1985)).
Alternatively, "the court may make allowance for attorney's fees to a prevailing party" when it finds that the opposing party's claim was "brought or maintained without reasonable ground or to harass the prevailing party." NRS § 18.010(2)(b). Such a finding, however, must be supported by evidence in the record. Chowdry v. NVLH, Inc., 851 P.2d 459, 464 (Nev. 1993). The claim will only be found frivolous if it is not well grounded in fact or is not warranted by existing law or by a good faith argument for the extension, modification, or reversal of existing law. Simonian v. Univ. & Cmty. Coll. Sys. of Nevada, 128 P.3d 1057, 1063 (Nev. 2006). The fact that the claim did not prevail, or even the fact that a claim was determined to be without merit "alone is insufficient for a determination that the motion was frivolous, warranting sanctions." Rivero v. Rivero, 216 P.3d 213, 234 (Nev. 2009). Rather, the reasonableness of the plaintiff's claims "depends on the actual circumstances of the case." Bergmann v. Boyce, 856 P.2d 560 (Nev. 1993), superseded by statute on other grounds as stated in In re DISH Network Derivative Litig., 401 P.3d 1081, 1093 n.6 (Nev. 2017).
Kaempfer argues that it is entitled to attorneys' fees under NRS § 18.010(2)(b) because Plaintiff had no reasonable grounds for bringing this action—(1) Plaintiff's claims were barred by the statute of limitations; and (2) Kaempfer argues that it was only counsel of record after the asset sale in the state receivership had concluded.3 (ECF No. 134 at 4-5.) The Court disagrees.
According to Plaintiff, the 2013 Opposition was not evidence that Plaintiff—who was pro se at the time—suspected or should have suspected any fraud. (ECF No. 143 at 8.) Instead, Plaintiff argues that the opposition "was a request to the State Court that the sale be slowed down to give Plaintiff and others a chance to participate in the sale." (Id.) Furthermore, Plaintiff named Kaempfer in the action because Kaemper "was an agent and representative of entities that owed fiduciary duties to Plaintiff and participated in concealing the following material facts from the Plaintiff and Class." (Id. at 4.) Although Plaintiff's arguments were not successful—and maybe even weak—they were at least reasonably disputed. See McDonald v. Palacios, Case No. 2:09-cv-1470-MMD-PAL, 2016 WL 5346067, at *23 (D. Nev. Sept. 23, 2016) (); Arndell v. Robison, Belaustegui, Sharp & Low, Case No. 3:11-cv-469-RCJ-VPC, 2013 WL 1121802, at *2 (D. Nev. Mar. 14, 2013) (). Accordingly, the Court denies the Kaempfer Motion.
The Meilings contend that they are entitled to attorneys' fees against: Plaintiff under NRS § 18.010(2)(b) and Metalast's Operating Agreement; and Plaintiff's counsel, MarcLazo, under 28 U.S.C. § 1927. For the reasons explained below, the Court will deny the Meiling Motion.
Like Kaempfer, the Meilings argue that, under NRS § 18.010(2)(b), Plaintiff had no reasonable grounds for bringing this action, which was barred by the statute of limitations, or for specifically bringing the elder abuse claim, given that Plaintiff is not an elder. (No. 136 at 9, 11.) But the Court rejects the first argument for the same reasons discussed above. Moreover, even if Plaintiff is not an elder, the Meilings have not shown that none of the other class members are elders who can bring elder abuse claims. Alternatively, the Meilings argue that Plaintiff filed this case—which is duplicative of Alexander—to circumvent the stay in Alexander and harass the Meilings by forcing them to defend a second class action. (ECF No. 136 at 10-11.) Plaintiff responds that, unlike Alexander, putative class members in this action were only the elderly investors of Metalast who brought their claims under the statutory scheme allowing recovery by elders who have been financially abused. (ECF No. 142 at 6.) The Meilings counter that Plaintiff fails to explain why he did not assert those claims in Alexander. (ECF No. 147 at 6.) Nevertheless, Plaintiff's failure to bring those claims in Alexander is, at worst, inefficient. The Court cannot infer an intent to harass based on these limited facts.
Finally, the Meilings argue that they are entitled to attorneys' fees under section 12.2 of the Metalast Operating Agreement (ECF No. 136 at 11). That section provides that, "[i]n the event any party hereto should commence legal proceedings to enforce any of the terms of this Operation Agreement, the prevailing party in the legal proceeding shall be entitled to a reasonable sum as attorneys' fees." (ECF No. 20-1 at § 12.2.) To establish their standing to enforce section 12.2, the Meilings rely on the FAC, which alleges that the Meilings are subject to the terms and conditions of the Operating Agreement. (ECF No. 136 at 11.) But even if this were true, it does not establish that they are parties to the agreement or are entitled to enforce it. Moreover, unlike with a motion to dismiss, the Court need not accept the allegations as true when evaluating a motion for attorneys' fees.
The Meilings also seek to hold Lazo jointly and severally liable for attorneys' fees, arguing that Lazo filed this action to harass the Meilings despite knowing that the duplicative Alexander was pending. (ECF No. 136 at 12-13 (citing to 28 U.S.C. § 1927).) But the Court cannot find that was an intent to harass, based on the same reasons mentioned above. The Meilings also argue that Lazo acted unreasonably and vexatiously when he, without any legal basis, filed a motion to remand, opposed transfer of this action to this Court, and then suddenly stipulated to the transfer of this action. (Id.) But the Meilings' contention is conclusory—they have not shown that the motion and opposition lacked legal basis. And the Court is hesitant to infer any ill intent based off the parties' stipulation, which could have been entered into for a variety sound reasons.
In sum, the Court will deny the Meiling Motion.
Rule 54(d)(1) of the Federal Rules of Civil Procedure ("FRCP") states that, "[u]nless a federal statute,...
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