S. Highlands Cmty. Ass'n v. Eighth Judicial Dist. Court of State

• Decision Date: 10 November 2014
• Docket Number: No. 61940,No. 62587,61940,62587
• Parties: SOUTHERN HIGHLANDS COMMUNITY ASSOCIATION, Petitioner, v. THE EIGHTH JUDICIAL DISTRICT COURT OF THE STATE OF NEVADA, IN AND FOR THE COUNTY OF CLARK; AND THE HONORABLE SUSAN SCANN, Respondents, and PREM DEFERRED TRUST; ELSINORE, LLC; MONTESA, LLC; KING FUTTS PFM, LLC; AND HIGHER GROUND, LLC, ON BEHALF OF THEMSELVES AND AS REPRESENTATIVES OF THE CLASS HEREIN DEFINED, Real Parties in Interest. PREM DEFERRED TRUST, ON BEHALF OF ITSELF AND AS REPRESENTATIVES OF THE CLASS AS HEREIN DEFINED, Petitioner, v. THE EIGHTH JUDICIAL DISTRICT COURT OF THE STATE OF NEVADA, IN AND FOR THE COUNTY OF CLARK; AND THE HONORABLE SUSAN SCANN, DISTRICT JUDGE, Respondents, and SOUTHERN HIGHLANDS COMMUNITY ASSOCIATION, Real Party in Interest.
• Court: Nevada Supreme Court

SOUTHERN HIGHLANDS COMMUNITY ASSOCIATION, Petitioner, v. THE EIGHTH JUDICIAL DISTRICT COURT OF THE STATE OF NEVADA,IN AND FOR THE COUNTY OF CLARK;AND THE HONORABLE SUSAN SCANN, Respondents,

and

PREM DEFERRED TRUST; ELSINORE, LLC; MONTESA, LLC;

KING FUTTS PFM, LLC; AND HIGHER GROUND, LLC,

ON BEHALF OF THEMSELVES AND AS REPRESENTATIVES OF THE

CLASS HEREIN DEFINED, Real Parties in Interest.

PREM DEFERRED TRUST, ON BEHALF OF ITSELF AND AS

REPRESENTATIVES OF THE CLASS

AS HEREIN DEFINED, Petitioner, v. THE EIGHTH JUDICIAL DISTRICT COURT OF THE STATE OF NEVADA,IN AND FOR THE COUNTY OF CLARK;

AND THE HONORABLE SUSAN SCANN, DISTRICT JUDGE, Respondents,

and

SOUTHERN HIGHLANDS COMMUNITY ASSOCIATION, Real Party in Interest.

No. 61940

No. 62587

SUPREME COURT OF THE STATE OF NEVADA

November 10, 2014

An unpublished order shall not be regarded as precedent and shall not be cited as legal authority. SCR 123.

ORDER GRANTING IN PART AND DENYING IN PART PETITIONS FOR WRITS OF MANDAMUS OR PROHIBITION

These are consolidated original petitions for writs of mandamus or prohibition challenging district court orders granting and then denying sequential motions to dismiss for failure to comply with NRS 38.310's arbitration requirements in a real property action.

At foreclosure auctions, Prem Deferred Trust and others purchased real property located in the Southern Highlands Community. Afterwards, Southern Highlands Community Association sought to collect from Prem and other purchasers the full amount of past due assessments, together with all accrued interest, fees, and other charges. Prem and the remaining real parties in interest, however, refused to pay, or paid and now seek to recoup, all sums greater than the amount given superpriority status by NRS 116.3116(2).

Prem initially sought, on behalf of itself and others similarly situated, to arbitrate the disputes with Southern Highlands before the Nevada Real Estate Division (NRED) under NRS 38.310. NRS 38.310 requires claims involving the interpretation of homeowners' association covenants, conditions, and restrictions (CC&Rs) to be submitted to NRED for arbitration or mediation before either party may institute a civil action in district court.¹ After refusing to rule on the merits of the claims as theypertained to claimants other than Prem, the arbitrator ruled against Prem. Prem then sued Southern Highlands in district court, seeking to resolve the disputes as a class action.

Southern Highlands filed a motion to dismiss the class allegations and all claims that were not individually submitted to NRED for arbitration or mediation. The district court initially granted Southern Highlands' motion to dismiss the claims that directly involved the CC&Rs, and with leave of the court, Prem ultimately filed a second amended complaint, omitting reference to the CC&Rs. Southern Highlands again moved to dismiss the class allegations against all plaintiffs except for Prem, but the district court denied its motion. Southern Highlands consequently filed the writ petition in Docket No. 61940, seeking a writ of mandamus or prohibition directing the district court to grant its motion to dismiss the second amended complaint because the dispute involved the interpretation of the CC&Rs and thus had to be submitted to NRED for arbitration or mediation first under NRS 38.310. Prem then filed the writ petition in Docket No. 62587 in February 2013, belatedly challenging the district court's February 2012 order dismissing its original complaint nearly one year earlier.

These writ petitions were consolidated and, as requested, answers and replies were filed. Having considered the parties' arguments therein and for the reasons explained below, we grant in part and deny in part Southern Highlands' petition. We refuse to consider the petition filed by Prem.

Southern Highlands' petition warrants the court's consideration

Mandamus relief is available to compel an act that is required by law or to control an arbitrary or capricious abuse of discretion. NRS 34.160; see also Int'l Game Tech., Inc. v. Second Judicial Dist. Court, 124Nev. 193, 197, 179 P.3d 556, 558 (2008).² Because a writ petition seeks an "extraordinary remedy, we will exercise our discretion to consider such a petition only when there is no plain, speedy and adequate remedy in the ordinary course of law or there are either urgent circumstances or important legal issues that need clarification in order to promote judicial economy and administration." Cheung v. Eighth Judicial Dist. Court, 121 Nev. 867, 869, 124 P.3d 550, 552 (2005) (internal quotations omitted). "[W]hether an appeal is an adequate and speedy remedy necessarily turns on the underlying proceedings' status, the types of issues raised in the writ petition, and whether a future appeal will permit this court to meaningfully review the issues presented." Rolf Jensen & Assocs. v. Eighth Judicial Dist. Court, 128 Nev. ___, ___, 282 P.3d 743, 745-46 (2012) (internal quotations omitted).

As to Prem's petition, the doctrine of laches bars our consideration. Laches precludes review of a writ petition when there is an inexcusable delay in seeking relief, waiver can be implied from the petitioner's knowing acquiescence in existing conditions, and the real party in interest is prejudiced thereby. Bldg. & Constr. Trades Council of N. Nev. v. State ex rel. Pub. Works Bd., 108 Nev. 605, 611, 836 P.2d 633, 637 (1992). By waiting nearly one year after the challenged order was entered, Prem unreasonably delayed filing its writ petition, which concerns a complaint that in the interim was amended twice. Because ofthe delay and the current status of the case, we decline to exercise our discretion to review its petition or the merits of the arguments therein.³ See State v. Eighth Judicial Dist. Court, 116 Nev. 127, 134-35, 994 P.2d 692, 697 (2000) (concluding that an eleven-month delay alone precluded consideration of a petition).

Addressing Southern Highlands' writ petition will prevent the district court from adjudicating matters that must first be submitted to an arbitrator or mediator, thereby advancing the interests of judicial economy. Cheung, 121 Nev. at 869, 124 P.3d at 552. While we generally review district court orders challenged in a writ petition for an arbitrary or capricious abuse of discretion, we nevertheless review issues of law, including statutory interpretation, de novo, even in the context of a writ petition. Int'l Game Tech., 124 Nev. at 197-98, 179 P.3d at 558-59.

Some of the claims in the second amended complaint fall within the scope of NRS 38.310's arbitration and mediation requirement

Southern Highlands asserts that all of the claims in the second amended complaint must be dismissed under NRS 38.310 to the extent that they are brought by parties who failed to first submit the claims to an arbitrator or mediator, because the claims all involve theinterpretation or administration of the CC&Rs and the lien statute, NRS 116.3116(2). Prem and the remaining real parties in interest argue that they complied with NRS 38.310 or are not required to comply. They contend that the principle of vicarious exhaustion excuses those parties who did not arbitrate or mediate their claims because Prem arbitrated on their behalf. Prem and the remaining real parties in interest also argue that requiring numerous parties to submit their claims to an arbitrator or mediator is futile.

While we disagree with Southern Highlands that any interpretation of NRS 116.3116(2) necessarily involves reference to the CC&Rs and arbitration under NRS 38.310, we agree that NRS 38.310 requires the dismissal of some, but not all, of the claims in the second amended complaint. We disagree with Prem and the remaining real parties in interest's contentions that NRS 38.310 was satisfied or that it was futile to adhere to the statute's requirements.

NRS 38.310 governs disputes requiring interpretation, application, or enforcement of the CC&Rs

Before instituting a civil action requiring the interpretation, application, or enforcement of CC&Rs, the matter must be submitted to arbitration or mediation before the NRED:

1. No civil action based upon a claim relating to:

(a) The interpretation, application or enforcement of any [CC&Rs] applicable to residential property or any bylaws, rules or regulations adopted by an association; . . .

. . .

may be commenced in any court in this State unless the action has been submitted to mediationor arbitration pursuant to the provisions of NRS 38.300 to 38.360, inclusive . . . .

NRS 38.310(1) (2009) (amended 2013) (emphases added). Thus, if an action involves ascertaining the meaning of the language in the CC&Rs or "bylaws, rules or regulations," the action is within the scope of NRS 38.310's mediation and arbitration requirement. See Black's Law Dictionary 837 (8th ed. 2004) (defining "interpretation" as "the ascertainment of meaning to be given to words"); see also We The People Nev. ex rel. Angle v. Miller, 124 Nev. 874, 881, 192 P.3d 1166, 1170 (2008) (explaining that this court interprets unambiguous language "in accordance with its plain meaning"). Any action based on such claims that were not arbitrated or mediated must be dismissed: "A court shall dismiss any civil action which is commenced in violation of the provisions of subsection 1." NRS 38.310(2) (2009) (amended 2013).

While Southern Highlands asserts that adjudicating the second amended complaint requires looking to the CC&Rs, Prem and the other remaining real parties in interest argue that the district court will look only to Southern Highlands' periodic budget, nothing else, to resolve the claims about Southern Highlands' imposition and collection of assessments. Resolving NRS 38.310's effect on the second amended complaint requires an inquiry into the complaint's substance and the substantive laws relevant to the lien-related allegations and claims asserted. See Nev. Power Co. v. Eighth Judicial Dist. Court, 120 Nev. 948, 960, 102 P.3d 578,...