Siragusa v. Brown

• Decision Date: 30 December 1998
• Docket Number: No. 27904,27904
• Citation: 114 Nev. 1384,971 P.2d 801
• Court: Nevada Supreme Court
• Parties: , RICO Bus.Disp.Guide 9685 Joanne SIRAGUSA, Appellant, v. Patricia L. BROWN; Patricia L. Brown, Limited, a Nevada Corporation; and Beckley, Singleton, Delanoy, Jemison & List, CHTD., a Nevada Corporation, Respondents. Tom Grimmett as Trustee for the Bankruptcy Estate of Vincent Siragusa, Appellant, v. Patricia L. Brown; Patricia L. Brown, Limited, a Nevada Corporation, Respondents.

Page 801

971 P.2d 801

114 Nev. 1384, RICO Bus.Disp.Guide 9685

Joanne SIRAGUSA, Appellant, v.Patricia L. BROWN; Patricia L. Brown, Limited, a Nevada

Corporation; and Beckley, Singleton, Delanoy,

Jemison & List, CHTD., a Nevada

Corporation, Respondents.

Tom Grimmett as Trustee for the Bankruptcy Estate of Vincent

Siragusa, Appellant, v.Patricia L. Brown; Patricia L. Brown, Limited, a Nevada

Corporation, Respondents.

No. 27904.

Supreme Court of Nevada.

Dec. 30, 1998.

Rehearing Denied May 5, 1999.

Rumph & Peyton, Las Vegas, for appellant Siragusa.

Alverson, Taylor, Mortensen, Nelson & Sanders and Daniel D. Heaton, Las Vegas, for appellant Grimmett.

Rawlings, Olson, Cannon, Gormley & Desruisseaux and Don F. Shreve, Las Vegas, for respondent Brown.

Beckley, Singleton, Jemison, Cobeaga & List, Las Vegas; Pearson, Patton, Shea, Foley & Kurtz, Las Vegas, for respondent Beckley, et al.

OPINION

ROSE, J.

Pursuant to a divorce settlement agreement, appellantJoanne Siragusa(Joanne) perfected a UCC lien on the assets of her ex-husband, Vincent Siragusa, M.D./Siragusa, Chtd. (Vince), relating to several medical practice partnerships.Vince defaulted on marital debts owed to Joanne; Joanne then received a $1.3 million judgment against Vince.Before she could enforce her UCC lien, Vince filed for bankruptcy and alleged that he no longer had any medical practice assets, and that he had transferred his interests to one of his partners free of Joanne's lien.

Joanne and the trustee of Vince's bankruptcy estate, appellantTom Grimmett(the trustee), filed suit against respondent law firm Beckley, Singleton, Delanoy, Jemison & List, Chtd. (Beckley), and its agent and shareholder, Patricia L. Brown/Patricia L. Brown, Ltd.(Brown), ¹ the attorney for the medical practice partnerships.The complaint alleged that Brown had masterminded a scheme to defraud Joanne of her rights in Vince's medical practice partnership assets in violation of state and federal law.The district court granted summary judgment against Joanne and dismissed her complaint as being barred by the statute of limitations and/or insufficiently pleaded.Joanne appeals from the district court's summary judgment and dismissal of her claims against Brown.We conclude that the district court erred in granting summary judgment against Joanne and in dismissing her state civil Racketeer Influenced and Corrupt Organization (RICO) and tort causes of action.

FACTS

In 1983, Joanne and Vince entered into a property settlement agreement incident to their divorce.Vince, John Bowers, M.D., and Paul Heeren, M.D., were one-third partners in Heart Institute of Nevada and two related entities--Heart Institute Properties and Heart Institute Catherization Laboratory (collectively "HIN" or the "medical practice partnerships").Pursuant to the divorce property settlement, Vince received his HIN partnership interest, valued at $2.4 million, as his sole property.To satisfy Joanne's community property interests Vince agreed to pay Joanne $1.2 million pursuant to a promissory note secured by a UCC lien on all of his interest in the medical practice partnership.

By May of 1987, Vince had defaulted on his debt to Joanne.On November 5, 1987, Joanne obtained a $1.3 million judgment against Vince in state court for breach of his property settlement obligations.On November 10, 1987, prior to the judgment having been reduced to writing and prior to Joanne enforcing her lien on Vince's partnership interests, Vince filed for bankruptcy.

Brown was the attorney for the medical practice partnerships.In November of 1987, Brown merged her law firm with that of Beckley.²Prior to Vince's filing for bankruptcy, Joanne's counsel had corresponded with Brown regarding Joanne's interest in Vince's share of HIN and a planned reorganization of the medical practice partnerships.HIN was purportedly being reorganized due to severe financial difficulties.

In December 1987, after Vince had filed for bankruptcy, Brown met with the trustee.In January 1988, Vince filed his schedules and statement of affairs with the bankruptcy court, which asserted that Vince no longer had any interest in HIN.Attached to this schedule was a several hundred page "Addendum," prepared by Brown, explaining that Vince had been forced to terminate his interest in HIN in September 1987--prior to filing for bankruptcy--because he had defaulted on the HIN partnership agreements.Vince's bankruptcy petition and related documents asserted that his marital payment obligations pursuant to the divorce decree were no longer secured by Joanne's lien.

On May 4, 1988, Vince was released from all dischargeable debts in the bankruptcy.On June 24, 1988, Joanne filed an application in bankruptcy court to examine Vince, Bowers, Heeren, and Brown, concerning the termination of Vince's partnership interest, the reorganization of HIN, and to subpoena related documents.In her application, Joanne explained that information in the "Addendum" and other documents was "incomplete and inconsistent with information previously obtained from [Vince] in the divorce proceedings."Joanne stated that it was necessary to immediately examine Brown "as to the acts, conduct, property and financial condition of [Vince]."

On May 2, 1989, Joanne filed an adversary complaint in bankruptcy court against Vince, Bowers, Heeren, HIN, and "Doe"defendants.The adversary complaint alleged that Joanne's UCC lien was valid, and that Vince had fraudulently conveyed his interest in the partnerships to the remaining members of HIN under the auspices of a forced sale default provision in Vince's partnership contract.Joanne further alleged that Vince, Bowers, and Heeren had conspired to defraud Joanne of her rights pursuant to the divorce agreement, and asked that Vince's bankruptcy discharge be revoked.

The adversary complaint referred to HIN's counsel on several occasions, noting that Brown had told Joanne's counsel, prior to Vince's filing for bankruptcy, that the reorganization of HIN would not affect Joanne's interest.Joanne also raised the issue of whether "backdated" documents had been used in the reorganization.Finally, the adversary complaint alleged that through discovery, Joanne had discovered evidence of fraud, "including material misstatements and omissions in the ... Addendum" which was prepared by Brown.

In December of 1990, pursuant to an affidavit, Heeren described a scheme allegedly "masterminded" by Brown and Bowers, wherein Brown and the three doctors executed a "paper" reorganization so as to insulate HIN from any of Vince's divorce liabilities to Joanne.According to Heeren, in numerous meetings Brown and Bowers explained the following: By utilizing backdated documents, it was to appear that Vince had been "thrown out" of the medical practice partnerships ninety days before he filed for bankruptcy; Vince and Heeren were to temporarily transfer all of their interest in the partnerships to Bower's alter ego corporation, Cardiology Associates of Nevada (CAN); ³"all of the preexisting ownership interests" of Bowers, Heeren, and Vince "would be fully and completely restored once Ms. Siragusa's divorce claims had been resolved;" and Heeren and Vince would continue to receive their partnership share of profits as independent contractor/employees of HIN in the interim.

According to Joanne, Heeren's affidavit was her first notice that Brown was involved in a conspiracy to defraud her of her interest in Vince's HIN assets.On December 1, 1990, the federal statutes were changed to allow supplemental jurisdiction in the bankruptcy court.Invoking this federal jurisdiction, on February 28, 1991, Brown was joined as a "Doe"defendant in the adversary bankruptcy complaint on theories of fraud and conspiracy.Brown sought dismissal on statute of limitation grounds; however, the bankruptcy court adopted Joanne's argument that the complaint against Brown and Beckley "related back" to the original 1989 complaint.

On August 22, 1993, pursuant to an order of the bankruptcy court recommending withdrawal of reference, the federal district court dismissed Joanne's claims against Brown for lack of subject matter jurisdiction.The federal district court concluded that Joanne could not argue simultaneously that Brown was brought into the action in 1989 for statute of limitation purposes, but was not brought in until after 1990 for supplemental jurisdiction purposes.

In the fall of 1993, Joanne filed a complaint in the instant state action against Brown alleging sixteen causes of action including claims for fraud, conspiracy, and violations of state and federal RICO laws.Joanne filed a similar action in federal district court.On March 14, 1994, the federal action was dismissed on the grounds that the federal RICO claims were barred by the statute of limitations and that the federal court lacked subject matter jurisdiction over the remaining state claims.The court of appeals affirmed the federal district court's decision.Grimmett v. Brown, 75 F.3d 506(9th Cir.1996), cert. dismissed, 519 U.S. 233, 117 S.Ct. 759, 136 L.Ed.2d 674(1997) .⁴

The state district court(the "district court") subsequently granted summary judgment against Joanne, concluding that the federal RICO and state law tort claims were barred by the statute of limitations.The district court concluded that the statute of limitations for these claims accrued no later than May 1989, when she filed her adversary complaint in the bankruptcy action.Since no applicable limitations period was greater than four years, the lower court concluded that because Joanne's claims were not filed before May 1993, they were untimely.The district court rejected Joanne's fraudulent concealment and equitable tolling defenses to the statute of limitations.

The state RICO claims were also dismissed on statute of limitations grounds and/or for failure to plead a sufficient pattern of continuous racketeering...