Drake v. Allen C/W 65602 ( 2015 )

 filed seeking relief against other directors for allegedly improper corporate
acts. The Burns were not served, and Allen moved to dismiss the case
based upon both NRS 41.660, Nevada's anti-SLAPP statute, and NRCP
12(b)(5) for failure to state a claim. The district court granted Allen's
motion, denying relief under NRS 41.660 but dismissing the causes of
action against him under NRCP 12(b)(5). Allen subsequently moved for
attorney fees under NRS 18.010(2)(b), which the district court denied. The
district court later dismissed the Burns from the action because Drake had
failed to serve them.
These appeals followed, with Drake challenging the dismissal
of the lawsuit and Allen challenging the denial of the anti-SLAPP portion
of his motion to dismiss and the denial of his attorney fee request. We
review de novo a district court's order granting a motion to dismiss, Moon
v. McDonald, Carano & Wilson LLP, 129 Nev. Adv. Op. No. 56, 306 P.3d
406, 408 (2013), but we review the district court's order denying attorney
fees for an abuse of discretion. Bobby Berosini, Ltd. v. PETA, 114 Nev.
1348, 1354, 971 P.2d 383, 387 (1998).
Docket No. 64854
During briefing, Allen moved to dismiss Drake's appeal
because Drake sold his shares in HCS and is no longer a shareholder. The
third, eighth, and ninth causes of action are derivative in nature and
brought by Drake on behalf of HCS. 1 Assuming, without deciding, that
'Regarding the third cause of action, Drake did not allege that a
contract existed between himself and Allen, which is required for Drake to
maintain a direct action against Allen for a contractual breach of the
covenant of good faith and fair dealing. Hilton Hotels Corp. v. Butch Lewis
continued on next page...
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Drake properly brought these claims without making the demand on the
board required in derivative litigation because HCS was a six-shareholder
corporation, Drake may no longer maintain these causes of action because
he sold his shares of stock in the corporation. NRCP 23.1; Keever v.
Jewelry Mountain Mines, Inc., 100 Nev. 576, 577-78, 688 P.2d 317, 317-18
(1984). Thus, we grant Allen's September 29, 2014, motion to dismiss
Drake's appeal with regard to these causes of action. We deny the motion
as to the other causes of action.
Starting with Allen's cross-appeal, when considering a motion
made under Nevada's Anti-SLAPP statute, the district court must
determine (a) if "the claim is based upon a good faith communication in
furtherance of the right to petition," and (b) "whether the plaintiff has
established by clear and convincing evidence a probability of prevailing on
the claim." NRS 41.660(3)(a)-(b); see John v. Douglas Cnty. Sch. Dist., 125
Nev. 746, 752, 219 P.3d 1276, 1281 (2009). In this case, the first, second,
fourth, fifth, and sixth causes of action are based upon Allen's "good faith
communication in furtherance of the right to petition" because they are
based on the filing of the Allen/Burns complaint. See JSJ Ltd. P'ship v.
Mehrban, 141 Cal. Rptr. 3d 338, 345 (Ct. App. 2012) ("Filing a lawsuit is
an act in furtherance of the constitutional right of petition, regardless of
...continued
Prods., Inc., 107 Nev. 226, 234, 808 P.2d 919, 923-24 (1991). Similarly,
regarding the eighth cause of action, Drake does not allege that an
attorney-client relationship existed between himself and Allen, which is
required for Drake to maintain a direct malpractice action against Allen.
Hewitt v. Allen, 118 Nev. 216, 220-21, 43 P.3d 345, 347 (2002).
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whether it has merit."). These claims also lack a probability of success on
the merits because they are based upon Allen's alleged ulterior motive to
dissolve HCS. In this regard, assuming that Allen desired to dissolve
HCS, persons holding ten percent or more of the outstanding stock in a
corporation may seek judicial dissolution of the corporation under NRS
78.650, and thus, seeking such dissolution is not an act that would subject
them to liability. See also NRS 78A.140(1)(a) (permitting a stockholder in
a close corporation to petition the court to appoint a receiver and dissolve
the corporation); Bedore v. Familian, 122 Nev. 5, 10, 125 P.3d 1168, 1171-
72 (2006). Therefore, the district court should have granted Allen's anti-
SLAPP motion as to the first, second, fourth, fifth, and sixth causes of
action. Accordingly, we affirm the dismissal of these causes of action, but
for different reasons than those stated by the district court. In light of this
order, we remand this matter to the district court for consideration of
Allen's request for attorney fees and costs under NRS 41.670.
Regarding Drake's appeal, we affirm the dismissal of the
seventh and last remaining cause of action because Drake asserted this
cause of action only against Mr. Burns, whom he failed to serve.
Docket No. 65602
Turning to the appeal in Docket No. 65602, the grant or denial
of attorney fees under NRS 18.010(2)(b) is within the discretion of the
district court. We conclude that the district court did not abuse its
discretion when it denied Allen's requested attorney fees because the non-
SLAPP causes of action were not maintained without reasonable grounds.
NRS 18.010(2)(b); Bobby Berosini, 114 Nev. at 1354-55, 971 P.2d at 387.
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Accordingly, we affirm the district court's order denying attorney fees
under NRS 18.010(2)(b).
It is so ORDERED. 2
J.
Parraguirre
C.
Tho
Douglas
J. , J.
cc: Hon. Scott N. Freeman, District Judge
Richard W. Drake
Kent Law
Washoe District Court Clerk
2 In his motions and oppositions, Drake alleges, and Allen disputes,
that this case was settled in conjunction with the settlement of the
Allen/Burns complaint and with Drake's sale of his stock shares to Allen
and the Burns. Whether this is true is unclear, however, because Drake
and Allen have submitted conflicting and incomplete documents and
limited argument regarding whether the settlement included this matter.
Accordingly, we decline to consider the settlement issue. Drake may raise
this argument on remand in the district court.
We have considered the parties' other arguments and conclude that
they lack merit.
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