Tom v. Innovative Home Systems ( 2016 )

132 Nev., Advance Opinion
IN THE COURT OF APPEALS OF THE STATE OF NEVADA
IS
TIMOTHY TOM, AN INDIVIDUAL, No. 65419
Appellant,
vs.
INNOVATIVE HOME SYSTEMS, LLC,
A NEVADA LIMITED LIABILITY
COMPANY,
Respondent.
TIMOTHY TOM, AN INDIVIDUAL, No. 66006
Appellant,
vs.
INNOVATIVE HOME SYSTEMS, LLC, !LED
A NEVADA LIMITED LIABILITY
COMPANY, MAR 1 0 2016
Respondent.
Consolidated appeals from a district court summary judgment
in a mechanic's lien action and a post-judgment order awarding attorney
fees and costs. Eighth Judicial District Court, Clark County; Adriana
Escobar, Judge.
Reversed in part, vacated in part, and remanded.
Pezzillo Lloyd and Brian J. Pezzillo, Jennifer R. Lloyd, Marisa L. Maskas,
and George E. Robinson, Las Vegas,
for Appellant.
Snell & Wilmer, LLP, and Leon F. Mead II, Las Vegas,
for Respondent.
BEFORE GIBBONS, C.J., TAO and SILVER, JJ.
OPINION
By the Court, GIBBONS, C.J.:
This case involves the foreclosure of a mechanic's lien and a
breach of contract claim relating to work performed on a residence. At
issue here is whether the district court properly granted summary
judgment on both claims based on its conclusion that respondent
Innovative Home Systems, LLC (IHS) did not need a license to perform
the work it bid and completed on appellant Timothy Tom's residence. We
also address the district court's award of attorney fees.
Pursuant to NRS 108.222(2), a contractor must be duly
licensed to have an enforceable mechanic's lien for work it performed. In
addition, NRS 624.320 precludes an unlicensed contractor from bringing
or maintaining an action for the collection of compensation on a contract
for which a license is required. In applying these statutes to the facts of
this case, we conclude that genuine issues of material fact remain
regarding whether IHS's work on Tom's residence required a license and
whether IHS completed the contract in a workmanlike manner, thereby
possibly negating Tom's obligation to make final payment under the
contract. Accordingly, the district court erred in granting summary
judgment on these issues. We therefore reverse the district court's order
granting summary judgment, vacate the award of attorney fees, and
remand this matter to the district court for further action consistent with
this opinion.
BACKGROUND
Tom and IHS entered into a contract in April 2012, in which
IHS agreed to install automation, sound, surveillance, and landscaping
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systems in Tom's residence. IHS began work on the residence soon
thereafter. It is undisputed that IHS did not have an electrical
contractor's license when it bid the contract and began the work. In
September 2012, IHS applied for, and received, an electrical contractor's
license, which IHS contends was needed for other projects it would be
working on, but not for the work on Tom's residence. IHS continued
working on the Tom residence until December 2012. At that time, the
parties disagreed on the performance of the contract, Tom refused to
tender further payment to IHS, and IRS consequently filed a notice of lien
against Tom's residence.
In response, Tom filed a consumer complaint with the Nevada
State Contractors' Board (the Board), a state administrative agency,
alleging that (1) IHS did not complete certain parts of the contract in a
workmanlike manner and (2) IRS bid the job and performed the work
without first obtaining the required electrical license. In response to the
first allegation, an investigator for the Board investigated the matter and
sent IHS a notice to correct, which required IRS to correct nine of the
items listed in the complaint.
The investigator also requested a response to Tom's complaint
from IHS. IHS responded with a letter claiming, among other things, that
it did not need a license to complete the work on Tom's residence. IHS
further stated that "[sp]n occasion, . . . some low voltage wire needs to be
pulled through previously constructed walls for aesthetic purposes to allow
the systems to operate." IRS went on to explain that, "because of
occasional overlap between such activities for which a license may
arguably be required and those for which an exemption may apply, IHS
made the conscious decision to obtain a C-2D low voltage license." IHS
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claimed the overlap would possibly occur in future jobs, but not in this
case.
After IRS purportedly remedied the work items identified by
the investigator, the Board closed the case as resolved through a letter
signed by a compliance supervisor. The Board neither conducted an
adversary proceeding to determine the legal rights of the parties, nor
issued a written decision specifically ruling on the license issue.
IHS then filed a complaint in district court against Tom
alleging breach of contract, breach of the covenant of good faith and fair
dealing, unjust enrichment, foreclosure of notice of lien, and declaratory
relief. IRS also requested attorney fees. After an initial round of
dispositive motions by both parties were denied without prejudice, IHS
filed a renewed motion for summary judgment on its claims, again arguing
that an electrical license was not required for the work performed on
Tom's residence and that its lien was proper and perfected. In support of
this position, IHS's renewed motion cited three advisory opinions written
by the licensing administrator on behalf of the executive officer of the
Board addressing licensing requirements in the context of work performed
by other contractors. IHS also provided additional support for its positions
that IHS's work either did not require a license or fell within an exemption
to the licensing requirement. After a hearing, the district court granted
summary judgment in favor of IHS on the claims of breach of contract,
breach of the covenant of good faith and fair dealing, foreclosure upon the
notice and claim of lien, and declaratory relief. 1
1 The
Honorable James Brennan heard the initial dispositive motions
filed by IRS and Tom. The Honorable Adriana Escobar heard and granted
IHS's renewed motion for summary judgment.
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Since the court found a valid contract existed, it denied IHS's
unjust enrichment claim; however, it stated that, if the contract had been
deemed unenforceable, it would have granted summary judgment to IHS
for unjust enrichment. Even though discovery had not yet commenced,
the court also denied Tom's motion for discovery pursuant to NRCP 56(f),
stating that he failed to demonstrate that any discovery would lead to
admissible evidence that would create a genuine issue of material fact.
The district court did not rule on IHS's alternative theory of exemption.
The district court relied on two aspects of the Board's actions
in determining that IHS did not need a license. First, the court concluded
that if IRS needed a license to perform the work on Tom's residence, the
Board was required, pursuant to NRS 624.212(1), to order IRS to cease
and desist its work upon learning IHS was operating without a license.
Because it did not do so and instead closed Tom's complaint, the district
court determined that the Board "necessarily found that a license was not
necessary" for the work IHS performed. Second, the court relied on the
Board's advisory opinions, which determined that no license was needed
when answering licensing questions regarding work on unrelated matters
and concluded that those opinions were persuasive authority. Based on
these conclusions, the district court awarded IRS the full lien amount of
$23,674.67 and ordered the residence sold to satisfy payment of the lien
and the impending attorney fees and costs. Tom subsequently appealed
this determination, which is pending before this court in Docket No.
65419.
Thereafter, the district court filed an order awarding IRS
$1,144.37 in costs and $35,350.00 in attorney fees pursuant to NRS
18.010(2)(b) and NRS 108.237(1)—an amount less than IRS requested.
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Tom then appealed the order awarding IHS its attorney fees and costs,
which is before us in Docket No. 66006, and his two appeals were
subsequently consolidated.
ANALYSIS
Throughout the proceedings before the Board, in the district
court action, and now before this court, Tom has steadfastly maintained
that IRS was required to have an electrical license in order to bid on and
perform the work on his residence. And this position lies at the heart of
Tom's argument that, without the required license, IRS cannot enforce its
mechanic's lien or maintain an action against him to collect compensation
on the parties' contract. In response to these assertions, IRS contends
that it did not need an electrical license to perform the work or
alternatively, that the work it performed was exempt from the license
requirement.
Tom also argues that the district court erred in basing its
decision to grant summary judgment on the licensing issue on the Board's
resolution of Tom's administrative complaint and the Board's advisory
opinions. He further asserts that genuine issues of material fact remain
regarding whether IHS completed its obligations under the contract, thus
precluding summary judgment on that issue. And because he claims
summary judgment was improper, Tom argues that the award of attorney
fees to IHS was also improper. IHS contends that there were no genuine
issues of material fact remaining and therefore, granting judgment as a
matter of law in its favor was appropriate, as was the award of attorney
fees.
We review a district court's grant of summary judgment de
novo. Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029
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(2005). A district court's award of attorney fees is reviewed for an abuse of
discretion. Kahn v. Morse & Mowbray, 121 Nev. 464, 479, 117 P.3d 227,
238 (2005).
Before addressing the parties' specific arguments regarding
the district court rulings at issue here, we first provide a brief discussion
of Nevada's licensing scheme. A general understanding of this scheme
and the statutes involved in this case will provide necessary background,
as well as a starting point, for considering the issues presented on appeal.
Nevada's licensing laws
"The primary purpose of Nevada's licensing statutes is to
protect the public against both faulty construction and financial
irresponsibility." MGM Grand Hotel, Inc. v. Imperial Glass Co., 533 F.2d
486, 489 (9th Cir. 1976) (relying in part on Nev. Equities, Inc. v. Willard
Pease Drilling Co., 84 Nev. 300, 303, 440 P.2d 122, 123 (1968)). Licensing
statutes allow Nevada to "exercis[e] its regulatory power over
[contractors'] operations and effectuat[e] its consumer protection goals."
Interstate Commercial Bldg. Servs., Inc. v. Bank of Am. Nat'l Tr. & Say.
Ass'n, 23 F. Supp. 2d 1166, 1173 (D. Nev. 1998) (citing NRS 624.260(1)
(1997)2 (requiring applicants "to show such a degree of experience,
financial responsibility and such general knowledge. . . [as is] necessary
for the safety and protection of the public" in order to obtain a contractor's
license)). Thus, to protect consumers, NRS 624.320 serves as an absolute
bar on the recovery of contract claims brought by unlicensed contractors or
2 Whilethis statute has subsequently been amended, the subsection
relied on by the federal district court in Interstate Commercial did not
change. See 2015 Nev. Stat., ch. 359, § 2, at 2005.
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contractors not properly licensed for the duration of work requiring such a
license. See Magill v. Lewis, 74 Nev. 381, 384, 387, 333 P.2d 717, 718-19,
720 (1958) (recognizing that NRS 624.320 essentially nullifies contracts
with unlicensed contractors). Further, under NRS 108.222(2), unlicensed
contractors are also unable to obtain an enforceable lien against the
subject property.
Under this statutory scheme, anyone engaging in the business
or acting in the capacity of a contractor, 3 or submitting a bid on a project,
must be licensed unless they are exempt from licensure. NRS 624.700(1).
And, relevant to the specific issues presented here, an electrical license is
required for the "installation, alteration and repair of systems that use
fiber optics or do not exceed 91 volts, including telephone systems, sound
systems, cable television systems, closed circuit video systems, satellite
dish antennas, instrumentation and temperature controls, computer
networking systems and landscape lighting." NAC 624.200(2)(d).
Thus, if IHS performed any of the work described in NAC
624.200(2)(d) on Tom's residence, it needed an electrical license in order to
bid on and perform the work. See NRS 624.700(1)(b) (bidding); NRS
624.700(1)(a) (performing). But an exemption to the licensure
requirement exists when the project is limited to the "sale or installation
of any finished product. . . which is not fabricated into and does not
become a permanent fixed part of the structure." NRS 624.031(6).
3A contractor is anyone who, "acting solely in a professional
capacity, . . . submits a bid to, or does himself[,] . . . construct, alter, repair,
add to, subtract from, improve, move, wreck or demolish any building."
NRS 624.020(2).
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With this background information in mind, we now turn to
Tom's challenges to the district court's grant of summary judgment to IHS
and award of attorney fees in favor of IHS. We first examine the district
court's summary judgment decision, beginning with the determination
that IHS was not required to possess an electrical license in order to bid
on or perform work on Tom's residence. We will then determine the
propriety of the court's grant of summary judgment on IRS's breach of
contract claim. We conclude our review of the issues presented by
examining the award of attorney fees to IRS.
Licensure
To resolve the licensing issue, the district court relied on the
Board's resolution of Tom's complaint, which the court found
determinative of whether IHS needed a license for the work it performed
on Tom's residence, thus giving that resolution preclusive effect. The
district court further concluded that the advisory opinions provided by
IHS also demonstrated that IRS did not need a license for the work it
performed. Tom asserts that the district court erred in its reliance on
these documents, but IRS counters that such reliance was proper because
the documents demonstrated that IHS was not required to have a license,
making the grant of summary judgment in its favor on that issue
appropriate.
We begin our examination of these issues by considering
whether the district court properly concluded that the Board's resolution
of Tom's administrative complaint was dispositive evidence that IRS did
not need a license for the work performed on Tom's residence. Thereafter,
we turn to the district court's reliance on the advisory opinions issued by
the Board as further demonstrating that IRS did not need a license.
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Summary judgment is appropriate "when the pleadings and
other evidence on file demonstrate" that no genuine issues of material fact
remain "and that the moving party is entitled to a judgment as a matter of
law." Wood, 121 Nev. at 729, 121 P.3d at 1029 (internal quotation marks
omitted). In reviewing a motion for summary judgment, "the evidence,
and any reasonable inferences drawn from it, must be viewed in a light
most favorable to the nonmoving party." Id. "The party moving for
summary judgment bears the initial burden of production to show the
absence of a genuine issue of material fact." Cuzze v. Univ. & Cmty. Coll.
Sys. of Nev., 123 Nev. 598, 602, 172 P.3d 131, 134 (2007). Only if the
moving party meets its burden of production does the burden shift to the
opposing party "to show the existence of a genuine issue of material fact."
Id. (citing Celotex Corp. v. Catrett, 477 U.S 317, 331 (1986) (Brennan, J.,
dissenting) (rejecting the majority's application of the summary judgment
rule to the facts at hand, but not its explanation of the rule)).
The district court's reliance on the Board's decision
In concluding that a license was not required for the work IHS
performed on Tom's residence, the district court relied heavily on the
Board's decision to close Tom's complaint without ordering IHS to cease all
work under the contract. Specifically, the district court noted that NRS
624.212 required the Board to take such action if a license was required,
and that its failure to do so indicated that the Board had "necessarily
found that a license was not necessary for the work performed by IHS."
While not stated in these exact terms, the district court essentially held
that the Board's decision was entitled to preclusive effect on the question
of whether a license was required so as to bar Tom from relitigating that
issue. Tom argues that because there was no final decision resulting from
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a contested case on the license issue, the district court should not have
viewed the Board's actions as determinative of the licensing issue, while
IHS contends the district court did not err by doing so. We start our
discussion of this issue by analyzing issue and claim preclusion and how
those legal principles apply in the administrative context.
"Claim and issue preclusion can apply in the administrative
context ``[w]hen an administrative agency is acting in a judicial capacity
and resolves disputed issues of fact properly before it which the parties
have had an opportunity to litigate." Holt v. Reg'l Tr. Servs. Corp., 127
Nev. 886, 891, 266 P.3d 602, 605 (2011) (alteration in original) (quoting
United States v. Utah Constr. & Mining Co., 384 U.S. 394, 422 (1966)); see
also Britton v. City of N. Las Vegas, 106 Nev. 690, 692, 799 P.2d 568, 569
(1990) ("It is a well-settled rule of law that res judicata may apply to
administrative proceedings."). Thus, "[a] n agency decision can result in
issue or claim preclusion as to a subsequent decision made by another
court or a different agency." Redrock Valley Ranch, LLC v. Washoe Cty.,
127 Nev. 451, 459, 254 F'.3d 641, 646 (2011).
In order for either doctrine to apply to bar the relitigation of a
claim or issue, all the elements of the particular doctrine must be met.
For claim preclusion to apply, (1) the same parties or their privies must be
involved in both cases, (2) a valid final judgment must be entered in the
first case, and (3) the subsequent action must be "based on the same
claims or any part of them that were or could have been brought in the
first case." Alcantara ex rel. Alcantara v. Wal-Mart Stores, Inc., 130 Nev.
, 321 P.3d 912, 915 (2014) (internal quotation marks omitted).
Similarly, for issue preclusion to apply,
11
(1) the issue decided in the prior litigation must be
identical to the issue presented in the current
action; (2) the initial ruling must have been on the
merits and have become final;. . . (3) the party
against whom the judgment is asserted must have
been a party or in privity with a party to the prior
litigation; and (4) the issue [must have been]
actually and necessarily litigated.
Id. at , 321 P.3d at 916 (first alteration in original) (internal quotation
marks omitted).
Having laid out the elements for both claim and issue
preclusion, we must now determine if the Board's resolution of Tom's
administrative complaint met these elements such that it barred Tom
from relitigating the licensing issue in the district court. To do so, we
must first examine the Board's statutory powers and its role in resolving
the complaints and issues presented to it before addressing the specific
Board decision at issue here.
The Board
The Board consists of seven members, NRS 624.040, and is an
administrative agency within the meaning of the Administrative
Procedure Act (APA). Thus, it must comply with the Act's provisions. See
NRS 233B.031 (defining an agency as "an agency, bureau, board,
commission, department, division, officer or employee of the Executive
Department of the State Government authorized by law to make
regulations or to determine contested cases"); NRS 624.100(1) (authorizing
the Board to make reasonable regulations necessary to carry out the
provisions of NRS Chapter 624); NRS 233B.039 (listing those agencies
that are exempted from the requirements of the APA and not including
the Nevada State Contractors' Board amongst the exempted agencies).
Additionally, the Board's enforcement actions are authorized by Chapter
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624 of the Nevada Revised Statutes, see NRS 624.040-.212, the chapter
which also governs contractors' licenses. See NRS 624.240-.288. As
directed by statute, the Board designates one or more of its employees to
investigate any form of construction fraud, NRS 624.165(1)(a), which in
this case, is defined as "a person engaged in construction
knowingly . . . [acting] as a contractor without. . . [p] ossessing a
contractor's license." NRS 624.165(3)(e)(1).
In that vein, after the Board receives a written complaint, it
must "investigate the actions of any person acting in the capacity of a
contractor, with or without a license." NRS 624.160(4). If the Board's
investigation reveals that the contractor submitted a bid on a project or
performed work without the proper license, the Board must issue a cease-
and-desist order to stop the unlicensed work. NRS 624.212(1).
Further, "[t]he Board is vested with all of the functions and
duties relating to the administration of [NRS Chapter 6241." NRS
624.160(1). This includes adjudicating contested cases. See NRS
233B.121; see also NRS 624.170(2)(c) (permitting the Board to "[i]ssue
subpoenas for the attendance of witnesses and the production of records,
books and papers in connection with any hearing, investigation or other
proceeding of Board"); MRS 624.510(8) 4 (providing that the Board may
award attorney fees incurred in contested cases under certain
circumstances). A contested case is defined as a proceeding "in which the
legal rights, duties or privileges of a party are required by law to be
determined by an agency after an opportunity for hearing, or in which an
4This statute has since been amended, but the relied-upon
subsection was not altered. See 2015 Nev. Stat., ch. 359, § 6, at 2010.
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administrative penalty may be imposed." NRS 233B.032. Parties to
contested cases have statutory rights to: (1) receive notice of the
proceeding; (2) be represented by counsel; and (3) respond to and present
evidence. NRS 233B.121(1)-(4).
Related to its investigative duties and ability to resolve
contested cases, the Board can also make findings of fact regarding the
issues presented to it. NRS 233B.125; see also Dickinson v. Am. Med.
Response, 124 Nev. 460, 469, 186 P.3d 878, 884 (2008) (stating that the
agency's factual findings are "crucial to the administrative process").
Indeed, when resolving contested cases resulting in a final decision, NRS
233B.125 requires the Board to "include findings of fact and conclusions of
law, separately stated," either on the record or in writing. But see NRS
233B.121(5) (stating that an administrative agency may make an informal
disposition in certain circumstances and if it does, "the parties may waive
the requirement for findings of fact and conclusions of law").
The Board's decision on Tom's administrative complaint
With regard to the agency decision relied on by the district
court in granting IHS's motion for summary judgment, the Board
conducted an investigation on Tom's complaint and issued a notice to
correct to IHS. Although the notice to correct stated IHS's failure to
comply could result in a fine, it cited NAC 624.700(3), which permits the
Board to take action after an investigation, as opposed to after a
proceeding in a contested case. Additionally, that regulation does not
allow for the imposition of a fine itself, but rather allows the Board to
require the contractor to show cause why disciplinary action, which could
include a fine, should not be issued, demonstrating that further
procedures are required before such discipline is imposed. See NAC
624.700(3)(c). Thus, the notice from the investigator in this case directing
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IRS to make certain repairs did not determine the legal rights, duties, or
privileges of either party. See NRS 233B.032. The Board's letter closing
the complaint similarly did not attempt to determine the rights, duties, or
privileges of either party; instead, the letter simply stated that the issues
identified in Tom's complaint appeared to have been resolved. See id.
Furthermore, the investigator's act of issuing a letter directing
IRS to respond to the complaint falls far short of compliance with the
notice and hearing requirements mandated in NRS 233B.121 for contested
cases. There was no notice of a hearing sent to the parties, no ability for
Tom to present evidence or witnesses in response to IHS's letter, 5 and no
administrative record that complied with the statute. See NRS
233B.121(2), (4), (7); see also Private Investigator's Licensing Bd. v.
Atherley, 98 Nev. 514, 515, 654 P.2d 1019, 1020 (1982) (concluding that
when a proceeding relating to the licensing process does not require notice
and an opportunity for a hearing, it does not constitute a contested case
under the APA).
Finally, the Board did not issue findings of fact and
conclusions of law pursuant to NRS 233B.125. And neither party argues,
and the record does not support, that the circumstances required in NRS
233B.121(5) were met, allowing the Board to issue an informal disposition.
Thus, we conclude, as argued by Tom, that the Board's decision cannot be
characterized as a final decision resolving a contested case.
5Although IHS submitted documentation to support the assertions
raised in its response letter to the Board, it is unclear whether Tom
submitted additional documentation with the complaint or in response to
IHS's letter.
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Having determined that there was no actual litigation and no
final decision made on the merits of the case by the Board, we conclude
that no preclusive effect could be given to the Board's decision on Tom's
complaint. 6 See Alcantara, 130 Nev. at , 321 P.3d at 915-16; see also
Britton, 106 Nev. at 693, 799 P.2d at 569-70 (stating that an
administrative decision can have a preclusive effect on a future case only if
it resulted in a final judgment on the merits). And it follows that, because
the Board's decision was not entitled to preclusive effect on the issues
presented to the district court, the district court erred in granting
summary judgment in favor of IHS on this basis. 7 We now turn to the
6 IHS argues, and the district court concluded, that Tom had to seek
judicial review pursuant to NRS Chapter 233B because the Board's
actions constituted a final decision. IHS therefore maintains that this
court should defer to the Board's decision and that this is not a preclusion
issue. Because we have already concluded that the Board's decision did
not constitute a final decision resulting from a contested case, and because
this case is not an appeal from a petition for judicial review of an agency
decision, deference to the agency is not appropriate. See NRS
233B.135(2)-(3) (providing that, in the judicial review process, the burden
of proof is on the party challenging the agency decision and that the
district court should not substitute its judgment for that of the agency on
questions of fact).
7 IHS also argues that summary judgment is supported because,
pursuant to its complaint form, the Board may not request an unlicensed
contractor to complete work, but here, the Board requested IHS to address
nine of Tom's complaint items. IHS further argues that summary
judgment is supported by the Board's failure to order IHS to cease work on
Tom's residence. Because we conclude that the Board's action of closing
Tom's complaint should not have been given preclusive effect, we also
conclude that neither the Board's actions in ordering IHS to address nine
of the complaint items nor the Board's failure to order IHS to cease work
on Tom's residence should be given preclusive effect because the elements
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other basis for the district court's grant of summary judgment—the
Board's advisory opinions.
The district court's reliance on advisory opinions addressing other
matters
The district court explicitly relied on three advisory opinions, 8
which did not directly involve Tom or IHS but discussed work arguably
resembling the work IHS performed on Tom's residence, as providing a
legal basis for granting summary judgment on the licensing issue. Tom
argues that the district court clearly erred in relying on the advisory
opinions because of the disclaimer contained in each opinion limiting them
to the specific facts and circumstances provided to the Board, a point
which IHS concedes on appeal. IHS counters, however, that reliance on
these advisory opinions was still proper because they are in accord with
other jurisdictions dealing with the same issue and that the opinions also
provide insight into whether a license was needed for the work IHS
performed.
...continued
for claim and issue preclusion have not been met. See Alcantara, 130 Nev.
at ,321 P.3d at 915-16; Britton, 106 Nev. at 693, 799 P.2d at 569-70.
8 The APA mandates that each administrative agency provide for the
issuance of advisory opinions regarding "the applicability of any statutory
provision, agency regulation or decision of the agency." NRS 233B.120.
The Board may provide advisory opinions, NRS 624.160(3), to any person
who files a petition regarding "the applicability of any provision of Chapter
624 of NRS." NAC 624.120. Although NRS 233B.120 states that
declaratory orders disposing of petitions have the same status as agency
decisions, it is silent as to the legal effect of advisory opinions. NRS
233B.038(2)(f), however, provides that an advisory opinion that is not of
general applicability is not enforceable as a regulation. But see NRS
233B.038(1)(a) (providing that an agency's statement of general
applicability interpreting a statute is enforceable as a regulation).
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We disagree with IHS's position. First, all three opinions
contain disclaimers that limit their use. Two of the three advisory
opinions state:
The foregoing opinion applies only to the specific
facts and circumstances defined herein. Facts and
circumstances that differ from those in this
opinion may result in an opinion contrary to this
opinion. No inferences regarding the provisions of
[the NRS] quoted and discussed in this opinion
may be drawn to apply generally to any other facts
and circumstances.
Therefore, in addition to the parties' concessions on appeal that the
opinions' applications are limited to their facts, the opinions themselves
caution against applying inferences to factually dissimilar circumstances.
Moreover, IHS's reliance on Walker v. Thornsberry, 158 Cal.
Rptr. 862 (Ct. App. 1979), is unavailing. While the Walker court did
decide a licensure issue similar to the one at issue here, the fact that that
court concluded that a license was not required for the installation of a
prefabricated bathroom, see id. at 865, is not a reason to conclude that the
advisory opinions in this case are instructive because Walker does not
resolve the deficiencies present in the advisory opinions relied upon by
IHS. The first deficiency, addressed above, is that the opinions are limited
to their facts. The second deficiency, discussed in more detail below, is
that the work discussed in those opinions was dissimilar to the work
performed by IHS.
Below, the district court gave the advisory opinions persuasive
effect because it found that the advisory opinions were factually similar to
IHS's work; therefore, it concluded that IHS did not need a license for the
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work performed on Tom's residence'. 9 We disagree with the district court's
interpretations and conclude that the advisory opinions are not
persuasive.
9 The
substance of the advisory opinions consists merely of a question
and an answer. The first opinion states:
ISSUE: Would a Nevada State [Contractor's]
license be required to install a new phone system
for the Carson City School System utilizing
existing cabling infrastructure?
ADVISORY OPINION: Based upon the
information provided, the Board opined that a
[Contractor's] license would not be required to set
components in place and plug the equipment into
existing outlets. A C-2 (Electrical) or a C-2(e)
Signal Systems classification would be required if
any electrical work is performed.
The second opinion states:
ISSUE: Would a Nevada State [Contractor's]
license be required to install component
communication equipment into metal cabinets in
police dispatch rooms.
ADVISORY OPINION: Based upon the
information provided, a [Contractor's] license
would not be required to set components in place
and plug the equipment into existing outlets. A
C-2 (Electrical) or a C-2(e) Signal Systems
classification would be required if any electrical
work is performed.
The third opinion states:
ISSUE: Is a [Contractor's] license required to
perform the installation of pet containment
systems that consist of low-voltage wiring that is
plugged into a lightning protector and then into a
grounded outlet?
continued on next page...
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First, in reviewing the questions addressed in the advisory
opinions, it is clear that all three are factually dissimilar to the case at
bar. One opinion answers whether a license would be necessary to install
a new phone system utilizing an existing cabling infrastructure. Another
opinion answers whether a license would be required to install component
communication equipment into metal cabinets. And the last opinion
answers whether a license would be required to install a pet containment
system consisting of plugging low-voltage wiring into a lightning protector.
Thus, the opinions do not appear to be sufficiently similar to the case at
bar to be persuasive because none of them discuss whether a contractor's
license is required to install automation, sound, surveillance, and
landscaping systems like the systems IHS installed at Tom's residence.
See generally Univ. & Cmty. Coll. Sys. of Nev. v. DR Partners, 117 Nev.
195, 203-04, 18 P.3d 1042, 1047-48 (2001) (stating that nonbinding
opinions of the attorney general that do not support the assertion for
which they are presented are not persuasive).
Second, the opinions are very brief, each consisting only of a
one-sentence statement of the issue and one or two sentences for the
opinion. There is not a section for a description of the facts, only a few
words within the issue statement. Even if the type of work in the advisory
opinions was factually similar to some of the work IHS performed, the
advisory opinions could not cover the entire scope of work contemplated by
...continued
ADVISORY OPINION: Based upon the
information provided, the Board opined that a
[Contractor's] license would not be required to
perform the installation of the PetSafe pet
containment systems.
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the contract with JETS—installation of automation, sound, surveillance,
and landscaping systems. Further, two of these opinions, wherein the
Board opined that the work described did not require an electrical license,
included a statement of the general principle that "[an electrical license]
would be required if any electrical work is performed" (emphasis added),
an issue that was not explored by the district court. Thus, the advisory
opinions lack the factual detail necessary for the opinions to be used as
persuasive authority. But see Pyramid Lake Paiute Tribe of Indians v.
Washoe Cty., 112 Nev. 743, 748, 918 P.2d 697, 700 (1996) (providing that
an agency's interpretation of a statute is not controlling, but can be
persuasive).
In sum, we conclude that the district court erred in treating
the Board's letter closing Tom's complaint as dispositive of the license
issue. We further conclude that the advisory opinions do not support
granting IRS summary judgment on that issue. Thus, when viewing all of
this evidence in the light most favorable to Tom, we conclude that IRS
failed to meet its initial burden of production to show the absence of a
genuine issue of material fact regarding whether it needed a license. See
Cuzze, 123 Nev. at 602, 172 P.3d at 134. Additionally, the contract itself,
and its multiple revisions, when construed in a light most favorable to
Tom, are also sufficient to create a genuine issue of material fact
regarding whether a license was needed. See id. Therefore, we reverse
the district court's grant of summary judgment on the lien claim, as that
decision was premised on the conclusion that IRS did not need a license
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for the work it performed on Tom's residence. 1° We next address whether
summary judgment was proper on IHS's breach of contract claim.
Breach of contract
IHS's breach of contract claim is based on its assertion that it
completed its contractual obligations, but Tom did not make a final
payment. Tom argues that IHS never completed the work on his
residence; therefore, final payment was not required. To support his
assertion, Tom filed an affidavit describing the unfinished work, which
included issues with the equipment rack ventilation system, the sprinkler
system, the sidelight window switchable smart tint, and a failure to honor
a warranty and provide wiring diagrams to some of the systems as
promised.
IHS, on the other hand, relies on the closure of Tom's Board
complaint to support its assertion that it finished all contractual
obligations in a workmanlike manner. It further states that had it not
completed the work in question, Tom would have filed another complaint
with the Board and since no such complaint was filed, IHS maintains that
it satisfied its contractual obligations. In its order, the district court found
that IRS had resolved the items that the Board directed it to correct
before closing Tom's complaint, that there was no evidence that Tom
"insisted that additional problems remained after IHS complied with the
10 IHS also argues on appeal that, pursuant to NRS 47.250(16), this
court should apply a disputable presumption that the Board followed the
law in this case. IRS waived this argument, however, because it was not
raised in the district court, and we therefore decline to consider it. See
Old Aztec Mine, Inc. v. Brown, 97 Nev. 49, 52, 623 P.2d 981, 983 (1981) ("A
point not urged in the trial court . . . is deemed to have been waived and
will not be considered on appeal.").
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[Board's] correction directive," and that Tom's affidavit failed to create a
genuine issue of material fact that IHS had not completed its portion of
the contract.
Looking at IHS's evidence on the contract claim, we conclude
that it has not met its burden of proving that no genuine issue of material
fact exists regarding whether the contract was completed. See id. First,
while the Board's letter stated it was closing the complaint because it
appeared that the issues raised therein were resolved, it does not state
that IRS fully completed its obligations under the contract. And, although
Tom certainly could have filed a second complaint with the Board
regarding any remaining issues, he was under no obligation to do so as he
also had the right to pursue those claims in court. Thus, the closing of
Tom's Board complaint is not dispositive evidence that IHS completed the
contract.
Additionally, when viewing the competing affidavits from IRS
and Tom, and the additional evidence, in a light most favorable to Tom, it
is apparent that genuine issues of material fact remain regarding whether
IHS satisfied all of its obligations under the contract such that Tom would
be required to pay IRS in full." Thus, summary judgment on this issue
was improper as well. See id. Therefore, regarding the district court's
"For example, IRS's affidavit stated that it included an item on a
revised contract, at Tom's request, that was actually supposed to be
completed by another contractor and thus, was not IRS's responsibility.
Tom's affidavit, however, asserts that IRS was to complete that item and
failed to do so. Tom's statement, plus the contract from IHS including the
disputed item, creates a genuine issue of material fact as to whether IHS
completed its obligations under the contract. See Cuzze, 123 Nev. at 602,
172 P.3d at 134.
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grant of summary judgment, there remain genuine issues of fact as to
whether IHS needed a contractor's license and whether Tom breached his
contractual obligations. Because these disputed facts are material to the
success of the mechanic's lien and breach of contract claims, summary
judgment was inappropriate in this case and we reverse that decision. 12
See id.
Attorney fees
After granting summary judgment in favor of IRS, the district
court also awarded attorney fees to IRS. On appeal, Tom raises three
separate challenges to this award. First, Tom argues that the district
court improperly awarded attorney fees under NRS 18.010(2)(b) because
there were reasonable grounds for Tom's claims and his defenses were not
raised to harass IRS. Second, Tom maintains that the district court
improperly awarded attorney fees under NRS 108.237 because a portion of
the award requested was incurred during the administrative process and
outside of court proceedings. 13 Third, Tom claims that the district court
'Because we conclude that genuine issues of material fact remain
pending below such that summary judgment was inappropriate, we need
not address Tom's additional argument that the district court abused its
discretion in denying his NRCP 56(f) motion for a continuance to obtain
discovery in order to oppose the motion. We do note, however, that
discovery had not even commenced in this case when the district court
granted summary judgment.
13 Thedistrict court did not identify if it was awarding attorney fees
associated only with IRS's complaint before the district court, or if it was
also awarding attorney fees IRS incurred in defending the action brought
by Tom before the Board, as was requested by IHS in its fees motion.
While we need not rule on this issue at this juncture, we urge the district
court to be aware of this distinction if the parties request an award of
attorney fees under NRS 108.237(1) during the proceedings on remand.
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abused its discretion by not making any findings regarding the Brunzell
factors. 14 Because of our conclusion that summary judgment was
inappropriate in this case, the award of attorney fees is necessarily
vacated; therefore, we do not address this issue.
CONCLUSION
Because genuine issues of material fact remain as to whether
IHS needed a license to perform certain work under the contract and
whether IHS completed the contract, we reverse the district court's order
granting summary judgment in IHS's favor. Accordingly, we also vacate
the award of attorney fees and remand this case to the district court for
further proceedings consistent with this opinion.
Gibbons
I concur:
J.
Silver
14Althoughwe conclude that an award of attorney fees is premature
at this time, we note that the district court failed to analyze the Brunzell
factors in its award. See Brunzell v. Golden Gate Nat'l Bank, 85 Nev. 345,
349, 455 P.2d 31, 33 (1969) (identifying factors a district court must
consider when making an award of attorney fees); see also Shuette v.
Beazer Homes Holdings Corp., 121 Nev. 837, 865, 124 P.3d 530, 549 (2005)
(providing that an award of attorney fees will be deemed reasonable "as
long as the court provides sufficient reasoning and findings in support of
its ultimate determination").
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TAO, J., concurring:
I join wholeheartedly in every aspect of the majority's very
thorough and well-reasoned opinion, but write separately to address a
matter that, historically, the Nevada Supreme Court has not explained as
clearly as it perhaps should have. The Nevada Supreme Court has held
that advisory opinions issued by executive-branch boards can be deemed
"persuasive." Following this principle, the majority concludes that the
advisory opinions cited by respondent are not sufficiently persuasive to
govern the outcome of this appeal. I fully agree with the majority's
conclusion, but my concern is that the Nevada Supreme Court has not
always given clear guidance regarding whether, when, and why courts
should follow such advisory opinions.
Used imprecisely, words can obscure as much as they explain.
We say that a judicial opinion can be "persuasive," and we say that an
executive-branch board advisory opinion can be "persuasive." In both
instances, we use the same word—but we really mean two very different
things. If one were to read the supreme court's precedent too loosely, one
might come away thinking that we apply the same thought process in both
contexts when we not only do not, but cannot.
When we read judicial opinions with an eye toward deciding
whether to follow them or not, we are exploring the reasoning of other
judges who are similarly situated to us, have similar powers and limits,
and who are allowed to consider the same things as we could have
considered under the rules of evidence, procedure, jurisdiction (both
personal and subject matter), standing, mootness, ripeness, waiver and
preservation of issues, and all of the other established doctrines of
justiciability that govern what courts do and how they do it. A judicial
opinion is an expression of how a judge understood a principle of law and
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applied it to a set of judicially admissible facts. We consider a judicial
opinion to be persuasive, meaning worth extending and applying to other
cases with different facts, when it accords with our own sense of what the
law means and how we would have likely addressed the same question
under the same rules and constraints when faced with a comparable set of
facts admitted into evidence.
But executive-board advisory opinions are nothing like judicial
opinions. Executive boards do not operate under the same rules of
evidence or procedure that courts do, they are not constrained by the same
jurisdictional and constitutional constraints that courts are, and they may
consider things that would never be admitted as evidence in a court of law.
In disciplinary matters, the board is simultaneously the prosecutor who
decides to bring the action, the judge of how the hearing will be conducted
and what evidence will be considered, and the jury who decides the truth
of the charge. The very fact that boards can issue "advisory" opinions at
all—unbound by judicial considerations of ripeness, mootness, standing, or
justiciability—symbolizes one fundamental difference between the
operation of a board and the operation of a court.
Courts give deference to executive boards, but not because
they act like courts; in many ways boards could not operate less like
courts, and we need to be careful when applying judicial doctrines like
collateral estoppel, res judicata, and "law of the case" to board actions in
the same way that we apply them to judicial decisions. Rather, courts give
deference to executive boards because they have subject-matter expertise
that judges do not. Boards are essentially panels of experts licensed in the
field and appointed to regulate the standards of their own profession.
Unlike courts run by generalist judges whose principal (or only) training is
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in the law, Nevada boards are purposefully structured to include
nonlawyer members who lack legal training but who have personal
familiarity with the area over which the board exercises jurisdiction,
whether the subject matter relates to contractor licensing, osteopathic
practices, the qualifications of massage therapists, or any of the other
myriad subject areas and professions licensed and supervised by state
executive boards in Nevada. By virtue of their experience, board members
know things about the subject matter that judges likely will not know and
that could never be admitted into evidence in a court governed by rules of
evidence. Even board members who have law degrees will likely know
more than most judges do about board licensing and discipline, because a
court like ours confronts a licensing question perhaps once in a blue moon,
if that; but the very purpose of a board is to grapple with the same
questions over and over, frequently in disputes that would never reach a
court.
So, when we say that an advisory opinion issued by a board is,
or is not, persuasive, we should not mean that we have reviewed the
board's reasoning and picked apart its written opinion in the same manner
as we would a judicial opinion, focusing on the clarity of its internal logic
or the fairness of its ultimate outcome. Instead, what we should mean is
something very different: that the board has, or has not, brought its
superior subject-matter expertise to bear on the question at hand in a way
that enlightens us and helps us resolve the case before us.
In this particular case, this distinction makes no difference
because the advisory opinions relied upon here are not persuasive in
either sense of the term; they are so narrowly drafted that they are not
guideposts to much of anything useful in this case. But that will not
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always be true, and there likely will be cases in which thinking about the
board's opinion as an example of legal reasoning, and thinking about it
instead as an exercise in subject-matter expertise, may lead to very
different views on whether we should give weight to what the board
thought or did. To the extent that our role includes providing guidance to
the public on how questions like this will be analyzed and resolved, we
should be clear on precisely what we are saying or else we risk confusing
the issue more than clarifying it, even on questions like this one where the
potential confusion originates with the words used by the Nevada
Supreme Court.
J.
Tao
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