Elements for a Claim of Slander Per Se

In Nevada, the elements for a claim slander per se are:

  1. An alleged defamatory oral statement;
  2. That the plaintiff committed a crime, has contracted a loathsome disease, that a woman is unchaste, or an allegation must be one which would tend to injure the plaintiff or his trade, business, profession, or office; and
  3. Proximate cause and damges.

Nev. Ind. Broad. Corp. v. Allen, 99 Nev. 404, 664 P.2d 337 (Nev. 1983).

 

See elements for other claims at the Nevada Law Library

Contract Construction and Interpretation by Courts

The following abstract explains contract construction rules and how they are interpreted by Nevada courts.

AMBIGUOUS CONTRACT

  • If contract is ambiguous, then it will be construed against drafter. Dickinson v. State, Dept. of Wildlife, 110 Nev. 934, 877 P.2d 1059 (1994);
  • Any ambiguity in insurance contract must be interpreted against drafting party and in favor of insured. Farmers Ins. Grp. v. Stonik, 110 Nev. 64, 867 P.2d 389 (1994);
  • Where two interpretations of contract are possible, court will prefer interpretation which gives meaning to both provisions rather than interpretation which renders one of the provisions meaningless. Quirrion v. Sherman, 109 Nev. 62, 846 P.2d 1051 (1993);
  • Court may look to circumstances surrounding execution of contract and subsequent acts or declarations of parties to interpret unclear contract provisions. Trans Western Leasing Corp. v. Corrao Constr. Co., Inc., 98 Nev. 445, 652 P.2d 1181 (1982);
  • In construing ambiguous contract, court should place itself as nearly as possible in situation of parties. Barringer v. Gunderson, 81 Nev. 288, 402 P.2d 470 (1965);
  • The rule that the construction given to a contract by parties should carry great weight applies only to ambiguous contracts and not to contracts which are clear, certain and definite in their terms. Woods v. Bromley, 69 Nev. 96, 241 P.2d 1103 (1952);
  • Where language used in contract is equivocal or ambiguous, subsequent acts or declarations of parties showing practical construction put upon words may be resorted to for purpose of ascertaining their intention. Woods v. Bromley, 69 Nev. 96, 241 P.2d 1103 (1952).

Continue reading Contract Construction and Interpretation by Courts

Elements for the Remedy of Specific Performance

In Nevada, the remedy of specific performance is available where:

  1. Valid contract with reasonably definite and certain terms exists;
  2. Remedy at law is inadequate;
  3. Plaintiff performed his obligations under the contract; and
  4. Court is willing to order specific performance by the non-performing party.

Land America Lawyers Title v. Metro. Land Dev., 2006 WL 2385385 (D. Nev. 2006); Mayfield v. Koroghli, 124 Nev. 34, 184 P.3d 362, 368 (2008); Goldston v. AMA Inv., 98 Nev. 567 (1992); Serpa v. Darling, 107 Nev. 299, 810 P.2d 778 (1991); Stolz v. Grimm, 100 Nev. 529, 689 P.2d 927 (1984); Carcione v. Clark, 96 Nev. 808 (1980); R&S Inv. v. Howard, 95 Nev. 279 (1979); Roth v. Scott, 12 Nev. 1078 (1966); Schwerin v. Slye, 173, Cal. 170 (1916); 17 Am. Jur.2d Contracts, §§ 10, 361, 445 (1964); Restatement (Second) of the Law of Contracts, §§ 1, 9, 17, 71, 224, 235, 346 (1981).

 

See elements for other claims at the Nevada Law Library

The Elements for a Claim of Breach of Contract

BREACH OF CONTRACT

In Nevada, the elements for a claim of breach of contract are:

  1. Valid contract (offer, acceptance, consideration) exists between plaintiff and defendant;
  2. Defendant breached the contract or failed to render performance when it became due;
  3. Defendant’s breach or failure of performance was unexcused;
  4. All conditions precedent to defendant’s duty to perform were fulfilled by plaintiff or were excused;
  5. Plaintiff was damaged by the breach;
  6. Causation and damages were a forseeable consequence of a particular breach (causation is an essential element of liability).

Continue reading The Elements for a Claim of Breach of Contract

Contractual Ambiguity or Contra Proferentem, The Ambiguity Doctrine

In Nevada, contractual ambiguity, also known as contra proferentem or the “ambiguity doctrine,” will determine how a court decides a contract dispute.  The doctrine does not apply absent a material ambiguity in the agreement at issue, and where the intent of the parties is impossible to ascertain by resort to the four corners of the document, plus all available extrinsic evidence, including the subsequent conduct of the parties.  Moreover, the doctrine is one of last resort;  it does not apply in cases involving sophisticated parties. Continue reading Contractual Ambiguity or Contra Proferentem, The Ambiguity Doctrine

Elements for a Claim of Intentional Interference with Contractual Relations

In Nevada, the elements for a claim of intentional interference with contractual relations are:

  1. A valid and existing contract between plaintiff and a third party;
  2. Defendant had knowledge of the valid contract or had reason to know of its existence;
  3. Defendant committed intentional acts intended or designed to disrupt the contractual relationship or to cause the contracting party to breach the contract;
  4. Actual disruption of the contract (the contracting party breached the contract);
  5. The breach was caused by the wrongful and unjustified conduct;
  6. Causation and damage.

Klein v. Freedom Strategic Partners, LLC, 595 F. Supp. 2d 1152 (D. Nev. 2009); Blanck v. Hager, 360 F. Supp.2d 1137 (D. Nev. 2005); Nat. Right to Life P.A. Com. v. Friends of Bryan, 741 F.Supp. 807, 813 (D. Nev. 1990); J.J. Industries, LLC v. B. Bennett, 19 Nev. 269, 71 P.3d 1264, 1268 (2003); Wichinsky v. Mosa, 109 Nev. 84, 88, 847 P.2d 727 (1993); Sutherland v. Gross, 105 Nev. 192, 772 P.2d 1287, 1288 (Nev. 1989); M & R Inv. Co. v. Goldsberry, 707 P.2d 1143 (Nev. 1985).  The court must ask whether the defendant pursued an improper objective of harming the plaintiff or used wrongful means that in fact caused an injury to the contractual relationship.  Nat’l Right to Life P.A. Com. v. Friends of Bryan, 741 F.2d 807 (D. Nev. 1998).

 

See elements for other claims at the Nevada Law Library

What Should You do if You Have Been Sued?

What Should You do if You Have Been Sued?
What Should You do if You Have Been Sued?

“NOTICE!” YOU HAVE BEEN SUED.”

These are words none of us ever wants to see.  However, lawsuits are almost an inevitable cost of conducting business in today’s environment.  A recent statistic suggests that over 120,000 Nevada businesses were sued last year alone in Nevada Courts.  An old, but unfortunately true adage to keep in mind: “there are only two types of businesses … those that have been sued already and those that will be sued.”  While I am not sure the future is quite that bleak, all professionals should know what their options and responsibilities are once they have been served with a copy of a complaint.  More importantly, you should know what you can do to help avoid suits. Continue reading What Should You do if You Have Been Sued?

The Elements for a Claim of Battery

In Nevada, the elements for a claim of civil battery are:

  1. Willful and unlawful use of force or violence upon the person of another (causing a harmful or offensive contact with another person);
  2. Defendant intended to cause harmful or offensive contact;
  3. Such contact did occur; and
  4. Causation and damages.

Graham v. Connor, 490 U.S. 386, 109 S. Ct. 1865 (1989); Yada v. Simpson, 112 Nev. 254, 913 P.2d 1261; Switzer v. Rivera, 174 F. Supp.2d 1097, 1109 (D. Nev. 2001); Burns v. Mayer, 175 F. Supp. 2d 1259 (D. Nev. 2001) Murphy v. S. Pac. Co., 31 Nev. 120, 101 P. 322, 334 (1909); Restatement (Second) of Torts, §§ 13 and 18 (1965).

 

See elements for other claims at the Nevada Law Library

Are Minimum Wage Laws that Discriminate Against Franchises “Industry-Specific” for the Purposes of Item 1?

By Guest Blogger Matthew Kreutzer

The top stories in the franchise world continue to be about efforts by the cities of Seattle, Chicago, and others in raising the minimum wage with laws that discriminate against small business owners who own franchises.  These laws are a serious concern for franchisees and franchisors alike.

In brief, these laws (which are written substantially the same way in the different cities that have adopted them) require small businesses to raise the minimum wage of their workers from the current level to $15 an hour. Under these new ordinances, businesses with more than 500 employees have 3 to 4 years to increase the minimum wage to the new $15/hour level, while “small businesses,” defined as businesses with fewer than 500 employees, have up to 7 years to reach the new level.

The problem? For the purpose of calculating the “500 employees” number, all franchises in the same system are counted together. The net result of this is that these locally-owned small businesses with a few employees, which also happen to be franchises, are being discriminated against as compared to their non-franchised counterparts.

After reading some of my blog posts on the subject, another franchise attorney (one who exclusively represents franchisees) commented to me that these laws, which treat franchises differently than similarly situated non-franchise small businesses, could arguably be viewed as “industry specific” laws for the purposes of Item 1 of a franchisor’s Franchise Disclosure Document (FDD). I can see the argument on both sides of that point.

The Federal Trade Commission‘s (FTC) Franchise Rule requires a franchisor to state in Item 1 of its FDD “any laws or regulations specific to the industry in which the franchise business operates.” The FTC has elaborated on this requirement by saying that laws applying to all businesses generally do not need to be disclosed; instead, “only laws that pertain solely and directly to the industry in which the franchised business is a part must be disclosed in Item 1.”

The minimum wage laws adopted by some cities like Seattle target franchises by treating them differently from other similarly-situated small businesses; laws that are specific to a certain “industry” are the types of laws that need to be disclosed in Item 1.

So, the question then becomes: is franchising as a whole an “industry?” Are these the types of laws the FTC was contemplating when creating the Item 1 disclosure requirement? Should Item 1 of a franchisor’s FDD should disclose these laws?

I can see the arguments on both sides. On the one hand, franchising itself isn’t really an “industry.” Merriam-Webster defines “industry” as “a department or branch of a craft, art, business, or manufacture; especially: one that employs a large personnel and capital especially in manufacturing.” In that sense, franchise systems are not part of the same “industry” because they are diverse, representing businesses in a multitude of different streams of commerce (like retail, food service, personal services, and business services just to name a few).

However, Merriam-Webster does recognize an alternative definition. “Industry” can also be defined as “a distinct group of productive or profit-making enterprises <ex: the banking industry>.” In that sense, franchising could be considered an industry because franchise companies are in a distinct group that has its own set of goals, concerns, and issues. It is in this sense that the International Franchise Association and business periodicals regularly refer to franchising as an “industry.

In its guidance, the FTC hasn’t specified which of these definitions it meant when it created the Item 1 disclosure requirement. The better argument, in my view, is that the FTC didn’t intend to single out franchising as a whole as its own “industry” when it created the Item 1 disclosure requirement. That is because the FTC itself, in its rulemaking process, used the word “industry” a number of times, but used it in different contexts. Specifically, the FTC repeatedly referred to franchising itself as an “industry,” and then in other contexts that are clearly different, it talked about the franchisor’s duty to disclose certain information unique to “industry” in which the franchisee’s business will operate. It is clear from the context of the FTC’s guidance that the two uses of the word are different from one another.

Based on the contextual distinction between the two uses and definitions of the word “industry” by the FTC in its rulemaking, I think the more convincing legal argument is that a franchisor does not have to disclose minimum wage laws that discriminate against the franchise “industry” as a whole.

But, from a practical and informational perspective (and considering the purpose of the Franchise Rule), I think a good argument can be made that these laws should be disclosed anyway (even if disclosure is not legally required). That a franchisee may be required to pay its employees a higher minimum wage than his or her similarly situated non-franchise competitors is something that she or he would certainly want to know.

As a result, I am recommending to my franchisor clients that, when they update their FDDs for 2015, they include a disclosure in Item 1 that says:

Some jurisdictions have passed laws that require businesses to pay their employees a higher minimum wage than what is required under federal law, which laws may disproportionately affect franchised businesses.

It’s a simple enough disclosure to include. Moreover, it would certainly help a franchisor in later defending against a legal claim by a franchisee that the franchisor knew about, but didn’t disclose, the existence of these laws prior to the franchisee committing to buy the business.

What do you think? Do you think these discriminatory minimum wage laws must be, or should be, disclosed in Item 1?

The Standard for the Appointment of a Receiver in Nevada

In Nevada, the appointment of a receiver over a business may be appropriate if:

  1. The appointment of a receiver is governed by statute and is appropriate only under circumstances described in statute.  State ex rel. Nenzel v. Second Jud. Dist. Ct., 49 Nev. 145, 155, 241 P. 317 (1925); Shelton v. Second Jud. Dist. Ct., 49 Nev. 487, 494, 185 P.2d 320 (1947);
  2. Any stockholder may apply if the corporation is insolvent. NRS 78.347;
  3. Any holder of 1/10 of a corporation’s issued and outstanding stock may apply for the appointment of a receiver when a corporation has been mismanaged. NRS 78.650.  A showing of any one of the ten circumstances enumerated in the statue will authorize the appointment of a receiver upon application by a ten-percent shareholder. Transcontinental Oil Co. of Nev. v. Free, 80 Nev. 207, 210-11, 391 P.2d 317, 319 (1964);
  4. A holder of 1/10 of issued stock may apply for appointment of a receiver of a solvent corporation where the business is being conducted at a great loss, the operation is prejudicial to creditors or stockholders such that the business cannot be conducted with safety to the public. NRS 78.630;
  5. The Court must consider the entire circumstances of the case when considering the appointment of a receiver. Bowler v. Leonard, 70 Nev. 370, 383 (1954);
  6. A Receiver may be appointed when a corporate is in imminent danger of insolvency. NRS 32.010;
  7. A Receiver is a neutral party appointed by the court to preserve, protect, and administer the business’ assets for benefit the business. In all cases, directors or trustees who have been guilty of no negligence nor active breach of duty must be preferred over all others in making the appointment of a receiver. NRS 78.650.  Peri-Gil Corp. v. Sutton, 84 Nev. 406, 411 422 P.2d 35, 38 (1968).  Such directors have a right to be heard as to their qualifications. Shelton v. Second Jud. Dist. Ct., 64 Nev. 487, 492-93, 185 P.2d 320, 323 (1947); and
  8. Appointment of a receiver is appropriate when the business’ property at issue is at risk of waste, loss of income, or is insufficient to secure a debt. NRS 32.010; NRS 107.100;

Continue reading The Standard for the Appointment of a Receiver in Nevada

The Doctrine of Anticipatory Repudiation

In Nevada, anticipatory repudiation is a statement by an obligor to an obligee indicating that the obligor will commit a breach that would of itself give the obligee claim for damage for total breach of the contract, or a voluntary affirmative act which renders the obligor unable or apparently unable to perform. Restatement (Second) of Contracts § 250. Concerning anticipatory repudiation, the Uniform Commercial Code first defines the term and then provides the remedies. Repudiation occurs when either party repudiates the contract with respect to a performance not yet due which will substantially impair the value of the contract to the other. NRS 104.2610. For its remedies, the non-breaching party may (1) wait for a commercially reasonable time for a performance, or (2) resort to any remedy for breach, or (3) suspend his own performance. Id.

The Doctrine of Anticipatory Repudiation applies only before the breacher has received all of his performance. Restatement (Second) of Contracts § 253(1); 11 S. Williston, Contracts §§ 1300, 1326 (3d Ed. 1968); 4 A. Corbin, Contracts § 963 (1951). Strangely, the major exception to the Doctrine illustrates the doctrine’s rationale. An anticipatory repudiation can only exist when both parties have not fully performed their duties. Therefore, anticipatory repudiation does not apply when the non-­breaching party has fully performed and the breaching party owes only installment payments. Restatement of Contracts (Second) § 243. The only remedy, therefore, to the injured party in this situation is to wait for the time of performance to sue for damages. Farnsworth, Contracts § 8.20, 630 (1982). In Brown Papermill Co. v. Irvin, the Eighth Circuit declared that the doctrine of anticipatory breach does not apply to a bilateral contract which has become unilateral by complete performance on one side, leaving only an obligation to pay money one day in the future on the other. Brown, 146 F.2d 232 (8th Cir. 1944).

In Nevada, anticipatory repudiation exists where a party demonstrates a definite unequivocal and absolute intent not to perform a substantial portion of a contract.  Kahle v. Kostiner, 85 Nev. 355, 345, 455 P.2d 42, 44 (1969); NRS 104A.2402; NRS 104.2610.

In a famous rationalization of the rule and its exception, the Sixth Circuit explained as follows:

In the ordinary case of . . . executory contracts, the plaintiff may say . . . (now, by your repudiation, you have put it out of my power further to perform, and hence you cannot be permitted to say that you have not received . . . consideration for your future act . , ,) [But if] his part of the contract has been executed by the plaintiff, he has nothing to do but wait, . . . and hence he will have no estoppel to rely upon to precipitate the defendant’s obligation.

Federal Life Ins. Co. v. Rascoe, 12 F.2d 693 (6th Cir. 1926).

The Elements for the Claim of Alter Ego (Piercing the Corporate Veil)

In Nevada, the elements for a claim of alter ego or piercing the corporate veil are:

  1. Corporation must be influenced and governed by the person asserted to be its alter ego;
  2. There must be a unity of interest and ownership such that the corporation and person are inseparable from another;
  3. Facts are such that adherence to the corporate fiction of a separate entity under the circumstances would sanction a fraud or promote injustice;
  4. There is no litmus test for determining when the corporate fiction should be disregarded (there are as many as 14 factors that courts may consider, including undercapitalization, comingling of funds, failure to observe corporate formalities, loans to or from the corporation without sufficient consideration, and generally treating the assets of the corporation as the assets of the person); and
  5. A showing that recognizing separate corporate existence, would bring about an inequitable result is sufficient for the claim to lie.

Brown v. Kinross Gold U.S.A., Inc., 531 F. Supp. 2d 1234 (D. Nev. 2008); In re Nat’l Audit Defense Network, 367 B.R. 207 (Bankr. D. Nev. 2007); LFC Mktg. Grp. v. Loomis, 116 Nev. 896, 8 P.3d 841 (2000); Polaris Indus. Corp. v. Kaplan, 103 Nev. 598, 601-02, 747 P.2d 884, 887 (1987); Ecklund v. Nevada Wholesale Lumber Co., 93 Nev. 196, 197, 562 P.2d 479, 479-80 (1977) (quoting McCleary Cattle Co. v. Sewell, 73 Nev. 279, 282, 317 P.2d 957, 959 (1957)); accord Lorenz v. Beltio, Ltd., 114 Nev. 795, 807, 963 P.2d 488, 496 (1998). “Each of these requirements must be present before the alter ego doctrine can be applied.” N. Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 520-21, 471 P.2d 240, 243 (1970) (emphasis added). The party asserting the alter ego theory and attempting to pierce the corporate veil bears the burden of proving each of these elements by a preponderance of the evidence. LFC Mktg. Grp. v. Loomis, 8 P.3d 841, 846 (Nev. 2000).

The Nevada Supreme Court has held that, though generally “[t]he corporate cloak is not lightly thrown aside,” nevertheless there are some situations in which blind “adherence to the fiction of a separate entity [of the corporation] [would] sanction a fraud or promote injustice.” Baer v. Amos J. Walker, Inc., 85 Nev. 219, 220, 452 P.2d 916, 916 (1969). The court has therefore carved out an exception to the general rule of faithfully respecting the corporate form and corporate independence, i.e., the so-called “alter ego” exception, by which the corporate veil can be pierced.  Id.  The Supreme Court of Nevada, in the matter of McCleary Cattle Co. v. Sewell, adopted a three prong test for ignoring the separate existence of a corporation in determining “alter ego liability.” McCleary, 73 Nev. 279 at 282, 317 P.2d 957 (1957). This test has since been codified in by Nevada Statute, NRS 78.747:

  1. Except as otherwise provided by specific statute, no stockholder, director or officer of a corporation is individually liable for a debt or liability of the corporation, unless the stockholder, director or officer acts as the alter ego of the corporation.
  2. A stockholder, director or officer acts as the alter ego of a corporation if:

(a)       The corporation is influenced and governed by the stockholder, director or officer;

(b)       There is such unity of interest and ownership that the corporation and the stockholder, director or officer are inseparable from each other; and

(c)       Adherence to the corporate fiction of a separate entity would sanction fraud or promote a manifest injustice.

NRS 78.747(l)-(2). The elements of an alter ego claim must be proven by a preponderance of the evidence.  Truck Ins. Exch. v. Palmer J. Swanson. Inc., 124 629, 635, 189 P.3d 656, 660 (2008).

In determining whether there is such unity of interest and ownership that the corporation and the stockholder, director or officer are inseparable from each other, courts will consider whether there was:

  1. Majority ownership and pervasive control of the affairs of the corporation. McCleary Cattle Co. v. C.A. Sewell, 73 Nev. 279, 281, 317 P.2d 957, 959 (1957) overruled on other grounds by Callie v. Bowling, 123 Nev. 181, 160 P.3d 878 (2007)(holding that an order adding president as a party to domesticated foreign judgment violated president’s due process rights)); Carson Meadows Inc. v. Pease, 91 Nev. 187, 191,533 P.2d 458, 460-61 (1975); Ecklund v. Nevada Wholesale Lumber Co., 93 Nev. 196, 197-99, 562 P.2d 479, 479-81 (1977); Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).
  2. Thin capitalization. Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).
  3. Nonobservance of corporate formalities or absence of corporate records. Ecklund v. Nevada Wholesale Lumber Co., 93 Nev. 196, 197-99, 562 P.2d 479, 479-81 (1977); Roland v. Lepire, 99 Nev. 308, 316-18, 662 P.2d 1332, 1337-38 (1983) (no alter ego because of lack of fraud/injustice); Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).
  4. No payment of dividends. Roland v. Lepire, 99 Nev. 308, 316-18, 662 P.2d 1332, 1337-38 (1983) (no alter ego because of lack of fraud/injustice).
  5. Nonfunctioning of officers and directors. SEC v. Elmas Trading Corp., 620 F. Supp 231, 233-34 (D. Nev. 1985); DeWitt Truck Brokers. Inc. v. W. Ray Flemming Fruit Co., 540 F. 2d 681, 686-87 (4th Cir. 1976); Nat’l. Elevator Indus. Pension Health Benefit and Educ. Funds v. Lutvk, 332 F.3d 188, 194 (3rd Cir. 2003); Hildreth v. Tidewater Equip. Co., Inc., 378 Md. 724, 735-736, 838 A.2d 1204, 1210 (Md. 2003); Yankee Microwave, Inc. v. Petricca Commc’n Sys., Inc., 53 Mass. App. Ct. 497, 521, 760 N.E.2d 739, 758 (Mass. App. Ct. 2002); Pepsi-Cola Metro Bottling Co. v. Checkers. Inc., 754 F.2d 10, 14-16 (1st Cir.1985); 1 W. FLETCHER, CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS § 41.30 at 430 (rev. vol. 1983) (cited by Wilcor Constr. and Dev. Corp. v. Hemphill, 872 F.2d 432 (9th Cir. 1989)).
  6. Insolvency of the corporation at the time of the litigated transaction; Roland v. Lepire, 99 Nev. 308, 316-18, 662 P.2d 1332, 1337-38 (1983) (no alter ego because of lack of fraud/injustice).
  7. Siphoning of corporate funds or intermingling of corporate and personal funds by the dominant shareholder(s). Carson Meadows, Inc. v. Pease, 91 Nev. 187, 191,533 P.2d 458, 460-61 (1975) Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).
  8. Use of the corporation in promoting fraud. Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).
  9. The authorized diversion of an entity’s funds;
  10. Ownership of the entity by one person or one family. Roland v. Lepire, 99 Nev. 308, 316-18, 662 P.2d 1332, 1337-38 (1983)(no alter ego because of lack of fraud/injustice); Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).
  11. The use of the same address for the individual and entity. Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).
  12. Employment of the same attorneys and employees.
  13. Formation or use of the entity to transfer to it the existing liability of another person or entity.
  14. The failure to maintain arm’s length relationship between related entities. McCleary Cattle Co. v. C.A. Sewell, 73 Nev. 279, 317 P.2d 957 (1957) (overruled on other grounds by Callie v. Bowling, 123 Nev. 181, 160 P.3d 878 (2007)(holding that an order adding president as a party to domesticated foreign judgment violated president’s due process rights)); Arlington Med. Bldg., Inc. v. Sanchez Constr. Co., 86 Nev. 515, 522-23, 471 P.2d 240, 244-45, n.3 (1970).

It is not necessary that the plaintiff prove actual fraud in order to recover against a corporate alter ego. It is enough if the recognition of the two entities as separate would result [in an injustice. In determining whether adherence to the corporate fiction of a separate corporate entity would sanction a fraud or promote an injustice, courts consider whether: (1) the facts are such that adherence to the fiction of a separate corporate entity would sanction a fraud or promote an injustice; (2) the family of controlling officers benefits from the controlling officer’s/entity’s actions; (3) the plaintiff will be able to recover damages against the corporate defendant or whether the corporate defendant is insolvent; because the entity cannot pay, will support the finding of injustice; and (4) the corporate entity was undercapitalized. Finally, alter ego recovery has been granted specifically because the corporation obtained a loan, did not use the loan for its specified purpose, and was unable to repay the loan.  See In re Erdman, 236 B.R. 904 (Bankr. N.D. 1999).

Elements for the Civil Claim of Aiding and Abetting a Tort

In Nevada, the elements for a claim of civil aiding and abetting the commission of a tort are:

  1. A primary tortfeasor committed a tort against a plaintiff;
  2. The defendant knew that the primary tortfeasor’s conduct was a breach of duty
  3. Defendant intentionally and substantially assists or encourages another’s conduct in breaching a duty to a third person;
  4. The duty to a third person is actually breached; and
  5. Causation and damages.

See 74 Am. Jur. 2d Torts § 61(2013); K. Las Vegas, Ltd. P’ship v. Simon Prop. Grp., Inc., 460 F. Supp. 2d 1246 (D. Nev. 2006); Dow Chem. Co. v. Mahlum, 114 Nev. 1468, 970 P.2d 98, 113 (1998) (citing in re Temporomandibular Joint (TMJ) Implants Prods. Liab. Litig., 113 F.3d 1484, 1495 (8th Cir. 1997)) overruled in part on other grounds by GES, Inc. v. Corbitt, 117 Nev. 265, 21 P.3d 11 (2001); Halberstam v. Welch, 705 F.2d 472, 477 (D.C. Cir. 1983).

 

See elements for other claims at the Nevada Law Library

Elements for the Claim of Accord & Satisfaction

In Nevada, the elements for an accord and satisfaction are:

  1. A person against whom a claim is asserted and who has a bona fide dispute over an unliquidated amount;
  2. Proves a good faith tender of an instrument to the claimant in full settlement of the entire disputed amount;
  3. An understanding by the creditor of the transaction as such, and acceptance of the payment. (There must be a meeting of the minds with regard to a resolution of the claim); and
  4. The claim is discharged.

NRS 104.3311; Pierce Lathing Co. v. ISEC, Inc., 114 Nev. 291, 956 P.2d 93 (1998); Walden v. Backus, 81 Nev. 634 (1965) (“Accord” is an agreement whereby one of the parties undertakes to give or perform, and the others to accept, in satisfaction of a claim, liquidated or in dispute, and arising either from contract or from tort, something other than or different from what s/he is, or considers himself/herself, entitled to); Mountain Shadows v. Kopsho, 92 Nev. 599 (1976).

 

See elements for other claims at the Nevada Law Library

Elements of the Remedy of an Accounting

In Nevada, the elements required to allow a remedy of an accounting are:

  1. A fiduciary relationship exists between plaintiff and defendant;
  2. The relationship between plaintiff and defendant is founded in trust and confidence; and
  3. Defendant has a duty to render an accounting to plaintiff to determine damages resulting from any misallocation of funds.

NRS 78; G. K. Las Vegas, Ltd. P’ship v. Simon Prop. Grp., Inc., 460 F. Supp. 2d 1246 (D. Nev. 2006); Foley v. Mowbray, 109 Nev. 116 (1993); In re Maxim Integrated Prod., Inc., Deriv. Lit., 574 F. Supp. 2d 1046 (N.D. Cal. 2008)(citing Carlson v. Hallinan, 925 A.2d 506, 538 n. 211-12 (Del. Ch. 2006)). 1 Am. Jur. 2d Accounts & Accounting § 55.

 

See elements for other claims at the Nevada Law Library

Claim for Abuse of Process

In Nevada, the elements for a claim of abuse of process are:

  1. Filing of a lawsuit made with ulterior purpose other than to resolving a dispute;
  2. Willful act in use the use of legal process (subsequent to the filing of the suit) not proper in the regular conduct of the proceeding; and
  3. Damages as a direct result of abuse.

LaMantia v. Redisi, 118 Nev. 27, 30, 38 P.3d 877, 897 (2002); Dutt v. Kremp, 111 Nev. 567, 894 P.2d 354, 360 (Nev. 1995) overruled on other grounds by LaMantia v. Redisi, 118 Nev. 27, 30, 38 P.3d 877, 897 (2002)); Laxalt v. McClatchy, 622 F.Supp. 737, 751 (1985) (citing Bull v. McCuskey, 96 Nev. 706, 709, 615 P.2d 957, 960 (1980); Nevada Credit Rating Bureau, Inc. v. Williams, 88 Nev. 601 (1972); 1 Am. Jur. 2d Abuse of Process.

 

See elements for other claims at the Nevada Law Library

No More Deficiency Judgments in Nevada

What is a Deficiency Judgment?

Most homes in Nevada have loans against them for an amount greater than the actual market value of the home.  If a homeowner owes $200,000 and the property is sold at foreclosure for $100,000, there is a $100,000 deficiency owed by the borrower.  Nevada laws generally provide that the lender can sue the borrower or guarantor for this deficiency after the foreclosure and obtain a judgment against the borrower or guarantor for the same.  This is known as a deficiency judgment.  As of October 1, 2009, however, lenders who are a financial institution may not seek a deficiency judgment in some circumstances.

What is a “Financial Institution”?

A “financial institution” is defined in the new law in broad terms as applying to any entity required to be licensed or registered under state or federal law to loan money.  The definition specifically excludes credit unions from this definition, meaning that they are still free to seek deficiency judgments.   This law applies prospectively, meaning that it only applies to loans written and secured by real property after October 1, 2009.  Further, it only applies where: 1) the real property is a single-family dwelling and the debtor owns the real property; 2) the debtor used the loan to purchase the property; 3) the debtor occupied the property continuously after obtaining the loan; and 4) the debtor did not refinance the property after obtaining the loan from the judgment creditor.

Lenders are no longer able to sue the homeowner if the foreclosure sale does not yield enough money to cover the debt.  This is a significant development in Nevada law.  While its full effects are not known, this law will surely result in changes in how and whether financial institutions lend money for homes in Nevada.  Further, one may anticipate that credit unions may eventually have a market advantage over other financial institutions, as their risk will be less because of their ability to seek and obtain deficiency judgments.  Since the law does not have a sunset clause, this is not a temporary advantage, although in the current market, it is doubtfully much of an advantage at all.  To combat this advantage, other financial institutions are sure to find other ways to level the playing field, such as requiring personal guarantees from all borrowers.

 

 

How Do Creditors Collect on Their Judgments?

 

With the economic downturn, clients are increasingly asking specific questions about the rights and remedies of creditors.

As a caveat, this article is not intended to include everything that one might need to know about collecting against judgments.  These remedies can be affected by many other laws not discussed here, including but not limited to claims by creditors of preferential or fraudulent transfer, or bankruptcy.  The intent of this article is to explain some basic information about types of creditors and types of remedies available to judgment creditors. Continue reading How Do Creditors Collect on Their Judgments?

Punitive Damages in Nevada

The following abstract explores the law regarding punitive damages in Nevada.  This article was last updated in 2013.  Use with caution.

Introduction

Punitive damages are not designed to compensate a party, but are awarded for the sake of example and by way of punishing the defendant.  NRS 42.010(1).  By assessing the gravity of the injury, punitive damages serve as a vehicle for a community to express outrage or distaste for a defendant’s misconduct while warning others that such wrongdoing will not be tolerated.  Ace Truck v. Kahn, 103 Nev. 503, 506, 746 P.2d 132, 134 (1987).  Allowing punitive damages provides a benefit to society by punishing undesirable conduct that is not punishable by the criminal law.  Id.  Therefore, the party whose conduct was so outrageous as to merit punishment by means of punitive damages is obligated to bear the burden of paying the award, which effectuates the goals of punishment of and deterrence.  New Hampshire Ins. Co. v. Gruhn, 99 Nev. 771, 774, 670 P.2d 941, 943 (1983). Continue reading Punitive Damages in Nevada