Sportsco Enterprises v. Morris

Citation112 Nev. 625,917 P.2d 934
Decision Date30 May 1996
Docket NumberNo. 25592,25592
Parties, 110 Ed. Law Rep. 448 SPORTSCO ENTERPRISES, Appellant, v. William W. MORRIS, William P. Morris, Jaymie Bodensteiner, Dawn Dudas and Wesley Ann Morris, Respondents.
CourtSupreme Court of Nevada

Foley & Jones, Las Vegas, for Respondents.

OPINION

ROSE, Justice:

In April 1989, respondent William W. Morris executed a confession of judgment of $750,000 in favor of Sportsco Enterprises, Inc. (Sportsco). In October 1989, Morris assigned part of his rights in a private sports box at the University of Nevada, Las Vegas (UNLV) to a friend for $32,000 and the remainder of those rights to his children for lesser or no consideration. Sportsco sued Morris and his children for fraudulent transfer pursuant to NRS Chapter 112, the Uniform Fraudulent Transfer Act, and for fraud. The district court entered judgment in favor of Morris on both causes of action.

We conclude that the district court erred in concluding that Morris's interest in the box was not property liable to execution or capable of fraudulent transfer. We therefore reverse its judgment and remand the case for further proceedings in regard to Sportsco's action for fraudulent transfer.

FACTS

In August 1988, respondent Morris entered into a "license agreement" with the Board of Regents of the University of Nevada System (the University), on behalf of UNLV, for the use of a private box at the Thomas and Mack Center. The purpose of the agreement was for Morris to view UNLV basketball games. The agreement was for a five-year period, beginning on July 1, 1988, and ending on June 30, 1993. Morris agreed to pay the University $24,750 a year as a "license fee" and to purchase a minimum of ten and a maximum of twenty season basketball tickets for seating in the box. Under the agreement, Morris had the right to exclusive use of the private box during basketball games and other public events at the center, he could "sublicense" that use to third parties whom he chose, and he was under no obligation to "sublicense" to the University when he did not purchase tickets to such events. When the center was used for convention purposes, Morris had the right to demand $4,000 a day in return for use of the box. At all other times, Morris was "entitled to the sole and exclusive right of access" to the box, subject to University approval, which could not be unreasonably withheld. Morris had the right to furnish and improve the box as he saw fit as long as the improvements met University standards and building and fire codes. Any improvements became the property of the University at the expiration of the term of the agreement.

On April 17, 1989, Morris executed a confession of judgment of $750,000 in favor of Sportsco in an unrelated matter. Almost six months later, on October 11, 1989, Morris assigned part of his rights in the box to a friend, C. Jay Nady. The written assignment provided that Morris assigned Nady four seats and an undivided "twenty-five percent" interest in the box for the remaining term of Morris's "lease" of the box from the University. Although the assignment referred to the "remaining four year term" of the lease, less than three years and nine months remained in that term. The assignment provided that Nady also receive four season tickets to UNLV basketball games and two season parking passes for parking in the private box owners' designated parking area. It also provided that Nady had the right to lease the box if Morris or his wife or his children did not exercise the option to renew the lease. 1 In exchange, Nady paid Morris $8,000 per year in advance as "rent" for the box, for a total of $32,000.

Also on October 11, 1989, Morris executed assignments of equal interests in his remaining rights to the box to each of his four children. Each child was assigned four seats Five months later, on March 20, 1990, Sportsco issued a Notice of Sheriff's Sale of Personal Property Under Execution concerning Morris's interest in the box. Pursuant to a sheriff's certificate of sale dated May 24, 1990, Sportsco became the owner of Morris's agreement with the University to use the box.

                and an undivided "18.75 percent" interest in the box for the remaining term of Morris's "lease."   Each child also received four season tickets to UNLV basketball games and two season parking passes for parking in the private box owners' designated parking lot.  Each assignment provided that the assignee child pay twenty-five percent of the "rent" per year for three years.  Each child acknowledged that Nady had the right to lease the assignee's portion of the box if the assignee chose not to exercise the option to renew the lease.  Each assignment stated that "for valuable consideration ... the parties agree as follows."   No amount of consideration was stated, and Morris admitted in his answer that he [112 Nev. 629] assigned his remaining rights in the box to his children for no consideration.  (However, according to the terms of the assignments, the children agreed collectively to pay the rent for three years.  If this assumption of part of Morris's rent obligation occurred, it constituted some consideration.)
                

On August 22, 1990, Sportsco filed a complaint against Morris and his children, claiming two causes of action: fraudulent transfer pursuant to NRS Chapter 112, the Uniform Fraudulent Transfer Act, and fraud. On September 14, 1990, Sportsco filed an application for a temporary restraining order and a motion for a preliminary injunction. That same day, the district court entered an Order to Show Cause and Temporary Restraining Order. Six months later, on March 20, 1991, the district court denied Sportsco's motion for a preliminary injunction, stating that it was not satisfied that the rights to the box constituted a property interest subject to execution.

A bench trial was conducted on November 22, 1993. On February 7, 1994, the district court filed an Order and Judgment and its Findings of Fact and Conclusions of Law. The court entered judgment in favor of the defendants, dismissed Sportsco's complaint with prejudice, and ordered that execution documents concerning the box be considered void. The district court concluded: the assignments executed by Morris on October 11, 1989, assigning his interests in the box to Nady and Morris's children were valid and enforceable assignments; the defendants' rights to the box were not property which could be the subject of a fraudulent transfer or the subject of execution; and Sportsco did not meet its burden of proving fraud.

DISCUSSION

This court will not set aside a district court's findings of fact unless they are clearly erroneous. Hermann Trust v. Varco-Pruden Buildings, 106 Nev. 564, 566, 796 P.2d 590, 592 (1990). Questions of law such as interpretation of statutory provisions are reviewed de novo by this court. SIIS v. United Exposition Services Co., 109 Nev. 28, 30, 846 P.2d 294, 295 (1993).

Property Interest

In the instant case, the district court concluded that the rights in the box were not property for purposes of either execution or the Uniform Fraudulent Transfer Act. We conclude that the district court erred as a matter of law and that Morris's interest in the private sports box in this case was property by statutory definition and under relevant case law.

NRS 21.080(1) provides:

All goods, chattels, moneys and other property, real and personal, of the judgment debtor, or any interest therein of the judgment debtor not exempt by law, and all property and rights of property seized and held under attachment in the action, shall be liable to execution.... [S]hares and interests in any corporation or company, and debts and credits and other property not capable of manual delivery, may be attached in execution in like manner as upon writs of attachments....

In NRS 21.090, the Legislature provided express exemptions from execution for some property interests. None of these exemptions Statutes permitting execution against specified kinds of property must be liberally construed for the benefit of creditors. 33 C.J.S. Executions § 18 (1942). The general rule is that "if the interest is assignable or transferable, it is subject to execution." 30 Am.Jur.2d Executions and Enforcement of Judgments § 165 (1994). "[W]hen property or a right in or to property is salable it is seizable, and ... the sheriff can sell upon execution and convey 'any property, real or personal, tangible or intangible, which may be sold and transferred by the owners thereof at voluntary sale.' " Gordon v. Rees, 154 Pa.Super. 594, 36 A.2d 841, 843 (1944) (quoting Brennan v. Pittston Brewing Corp., 344 Pa. 495, 26 A.2d 334, 335 (1942)). In this case, Morris's interest was transferable and, whether deemed an interest in real property or some kind of intangible personal property, was an asset liable to execution pursuant to NRS 21.080(1). Cf. Greear v. Greear, 303 F.2d 893, 896 (9th Cir.1962) (holding that NRS 21.080 authorizes the execution upon all property except spendthrift trusts and therefore seems to contemplate the ability to reach all other equitable interests).

apply to Morris's interest in the private box. "Of course, all personal property and salable real estate owned by a judgment debtor is subject to execution unless specifically exempted by statute." Krysmalski by Krysmalski v. Tarasovich, 424 Pa.Super. 121, 622 A.2d 298, 310 n. 7, appeal denied, 535 Pa. 675, 636 A.2d 634 (1993).

The definition of property in regard to fraudulent conveyances is, if anything, even broader than the definition of property for execution. NRS 112.150(10) defines property as "anything that may be the subject of ownership." Morris clearly owned some kind of interest in the box: he was able to sell part of that interest to Nady for $32,000. That interest included the right to exclusive use of the private box...

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