The Power Co. v. Henry , 2014 NV 21 ( 2014 )

130 Nev., Advance Opinion 2.1
IN THE SUPREME COURT OF THE STATE OF NEVADA
THE POWER COMPANY, INC., A No. 59328
NEVADA CORPORATION D/B/A
CRAZY HORSE TOO GENTLEMEN'S
CLUB; AND RICK RIZZOLO,
INDIVIDUALLY,
FILED
Appellants, MAR 27 2014
vs. ACAE K. LINDEMAN
KIRK AND AMY HENRY, HUSBAND CLERK 0
BY
AND WIFE, CHIEF DE ER
Respondents.
Appeal from a district court judgment in a tort action. Eighth
Judicial District Court, Clark County; Timothy C. Williams, Judge.
Affirmed.
Patti, Sgro & Lewis and Anthony P. Sgro, Las Vegas; Rogers,
Mastrangelo, Carvalho & Mitchell, Ltd., and Daniel E. Carvalho and
Charles A. Michalek, Las Vegas,
for Appellants.
Campbell & Williams and Donald J Campbell and Philip R. Erwin, Las
Vegas; Hunterton & Associates and C. Stanley Hunterton, Las Vegas,
for Respondents.
SUPREME COURT
OF
s 1-\ oco?)it
NEVADA
(0) 1947A ce
BEFORE THE COURT EN BANC.'
OPINION
By the Court, DOUGLAS, J.:
In this opinion, we address whether NRCP 41(e)'s provision
requiring dismissal for want of prosecution applies to an action in which
the parties entered into a written and signed settlement agreement before
NRCP 41(e)'s five-year deadline expired, and whether the district court
erred in reducing the parties' settlement agreement to judgment. We hold
that NRCP 41(e) does not apply to such an action and that the district
court did not err in reducing the parties' settlement agreement to
judgment. We therefore affirm the district court's judgment.
FACTS AND PROCEDURAL HISTORY
Respondent Kirk Henry was rendered quadriplegic by a
bouncer at the Crazy Horse Too Gentlemen's Club, which was owned and
operated by appellant The Power Company, Inc. (TPCI). On October 2,
2001, Mr. Henry and his wife, respondent Amy Henry, filed a civil
complaint against TPCI for, among other things, assault, battery, and loss
of consortium. The Henrys later amended their complaint to include
TPCI's president, appellant Rick Rizzolo, and to add causes of action for
negligent hiring, retention, and supervision.
'The Honorable Kristina Pickering voluntarily recused herself from
participation in the decision of this matter.
SUPREME COURT
OF
NEVADA
2
(0) 1947A 0
On August 8, 2006, four years and ten months after the
Henrys filed their action, they entered into a settlement agreement with
TPCI and Rizzolo. 2 The settlement agreement provides that upon TPCI
and Rizzolo's payment of $10 million to the Henrys, the Henrys will
release TPCI and Rizzolo from all liability related to Mr. Henry's injury.
While $1 million was owed to the Henrys at signing, the remaining $9
million was due upon the Crazy Horse Too's sale, regardless of the sale's
net proceeds, per the settlement agreement. TPCI and Rizzolo paid the
Henrys $1 million at signing.
Several months after entering into the settlement agreement,
the Henrys moved the district court to reduce the agreement to judgment.
The district court denied the motion on the grounds that the settlement
agreement had not been breached. Less than a year later, the Henrys
moved the district court to reduce the settlement agreement to judgment
for a second time without success because, according to the district court,
the club had not been sold to trigger the payment of the remaining $9
million owed to the Henrys according to the agreement's terms.
2Two months before entering into their settlement agreement, the
Henrys, TPCI, and Rizzolo participated in a global settlement process with
the federal government relating to federal criminal charges pending
against TPCI and Rizzolo and the potential civil liability to the Henrys.
While TPCI and Rizzolo entered individual plea deals with the federal
government that required them to pay restitution to the Henrys, the
Henrys were not parties to any government agreement.
SUPREME COURT
OF
NEVADA
3
(0) 1947A ce.
Prior to the club's sale, and more than five years after the
Henrys filed their complaint, TPCI and Rizzolo moved the district court to
dismiss the Henrys' action under NRCP 41(e) for want of prosecution on
two occasions. The district court denied the first motion to dismiss,
stating that the motion had no merit insofar as the Henrys had been
diligent in the action. In denying the second motion to dismiss, the
district court concluded that NRCP 41(e) did not apply because the
settlement agreement obviated the need for a trial on the merits.
Ultimately, the Crazy Horse Too sold at a nonjudicial
foreclosure sale for $3 million. 3 Having received no payment from TPCI
and Rizzolo for the $9 million owed after the club's sale, the Henrys filed a
third motion to reduce the settlement agreement to judgment. The district
court granted that motion. TPCI and Rizzolo appeal the judgment and
raise arguments regarding the district court's denials of their two motions
to dismiss under NRCP 41(e).
3 TPCI and Rizzolo suggest that the nonjudicial foreclosure sale did
not constitute a sale for the purpose of the settlement agreement, but they
fail to support this contention with sufficient argument or legal authority,
and so we do not address it in this opinion. See Edwards v. Emperor's
Garden Rest., 122 Nev. 317, 330 n.38, 130 P.3d 1280, 1288 n.38 (2006)
(declining to consider an issue when the party failed "to cogently argue,
and present relevant authority, in support of his appellate concerns").
SUPREME COURT
OF
NEVADA
4
( 0) 1947A e
DISCUSSION
The district court properly denied TPCI and Rizzolo's two motions to
dismiss for want of prosecution under NRCP 41(e)
This court reviews questions of law de novo. Garcia v.
Prudential Ins. Co. of Am., 129 Nev. , 293 P.3d 869, 872 (2013).
The question of law before us is whether NRCP 41(e) requires dismissal of
an action in which the parties have entered into a written and signed
settlement agreement concerning the action within five years after the
plaintiffs filed the complaint.
TPCI and Rizzolo argue that NRCP 41(e)'s language required
the district court to grant their motions to dismiss for want of prosecution
regardless of the settlement agreement because the Henrys failed to bring
the case to trial within five years of filing their complaint. According to
TPCI and Rizzolo, it follows that the district court's reduction of the
settlement agreement to judgment after the five-year rule had been
invoked was void. The Henrys argue that the application of NRCP 41(e) to
an action in which the parties have entered into a written and signed
settlement agreement is a matter of first impression, and that we should
follow the California courts by determining that a valid settlement
agreement nullifies a provision mandating dismissal for want of
prosecution. See Gorman v. Holte, 211 Cal. Rptr. 34 (Ct. App. 1985)
(concluding that a settlement agreement renders California's mandatory
dismissal-for-want-of-prosecution provision legally irrelevant).
In Nevada, a district court is required to dismiss an action
that has not been brought to trial within five years after the plaintiff filed
the complaint, unless the parties stipulate in writing to extend the time
for trial. NRCP 41(e) (stating that such an action "shall be dismissed by
SUPREME COURT
OF
NEVADA
5
(0) 1947A e
the court"). Dismissal for want of prosecution under NRCP 41(e) is
mandatory, and the court may not examine the equities of a case to
determine whether the time should be extended. Monroe v. Columbia
Sunrise Hasp. Ctr., 123 Nev. 96, 99-100, 158 P.3d 1008, 1010 (2007).
When a motion to dismiss under NRCP 41(e) is improperly denied, the
district court lacks any further jurisdiction, rendering its subsequent
orders going to the merits of the action void. Cox v. Eighth Judicial Dist.
Court, 124 Nev. 918, 925, 193 P.3d 530, 534 (2008). Therefore, if NRCP
41(e) applies here, the district court should have dismissed the Henrys'
action and the district court's judgment on the settlement agreement is
void.
This court has not addressed whether NRCP 41(e) applies
when the parties have entered into a written and signed settlement
agreement that resolves all of the issues raised in the complaint. TPCI
and Rizzolo contend that this court's holding in Smith v. Garside, 81 Nev.
312, 402 P.2d 246 (1965), controls our decision in this matter. In Smith,
this court held that the plaintiffs failure to bring her case to trial within
the mandatory time period under NRCP 41(e) required dismissal of her
case for want of prosecution when a proper trial date was vacated in light
of a settlement understanding that was never completed. 81 Nev. at 313-
14, 402 P.2d at 246-47. In concluding that the settlement understanding
did not remove the action from the scope of NRCP 41(e), the court stated
that once the agreement was reached, the plaintiff was obligated to
complete the agreement and obtain a dismissal of the case on that ground.
Id. at 314, 402 P.2d at 247. Notably, the Smith opinion did not discuss the
legal principles underlying such a requirement or the consequences of its
SUPREME COURT
OF
NEVADA
6
(0) 1947A
application. See id. Thus, we take this opportunity to clarify Smith and
address the effect of a settlement agreement on the application of NRCP
41(e)'s mandatory dismissal provision.
In Smith, although the plaintiff asserted that a settlement
was reached, there was no indication that a binding settlement agreement
was formed, such as by putting the terms of the agreement into the record
or by reducing the agreement to writing. See EDCR 7.50 (providing that
an agreement or stipulation between the parties or their attorneys will not
be effective "unless the same shall, by consent, be entered in the minutes
in the form of an order, or unless the same is in writing subscribed by the
party against whom the same shall be alleged, or by the party's attorney");
see also DCR 16. Absent an enforceable settlement agreement, the parties'
unconsummated settlement understanding had no effect on the
proceedings, and NRCP 41(e) applied. See Smith, 81 Nev. at 314, 402 P.2d
at 247.
Had the Smith parties entered into a written and signed
settlement agreement before NRCP 41(e)'s time period elapsed, the
situation would have been different. An enforceable settlement agreement
"has the attributes of a judgment in that it is decisive of the rights of the
parties and serves to bar reopening of the issues settled." See Gorman,
211 Cal. Rptr. at 37. Based on this reasoning, California courts have held
that California's mandatory dismissal-for-want-of-prosecution provision
does not apply to a case when there is an existing, valid settlement
SUPREME COURT
OF
NEVADA
7
(0) 1947A ce0
agreement to the dispute that leaves no issues to be tried. 4 See Gorman,
211 Cal. Rptr. at 36-37.
The California courts' reasoning regarding settlement
agreements is consistent with this court's treatment of district court
orders granting summary judgment. In addressing the effect of a
summary judgment motion on the application of NRCP 41(e)'s dismissal
provision, this court has looked to the California courts' definition of a
trial as "the examination before a competent tribunal, according to the
law of the land, of questions of fact or of law put in issue by pleadings, for
the purpose of determining the rights of the parties." See United Ass'n of
Journeymen and Apprentices of the Plumbing and Pipe Fitting Indus., 105
Nev. 816, 819-20, 783 P.2d 955, 957 (1989) (quoting Bella Vista Dev. Co. v.
Superior Court of Cal., 36 Cal. Rptr. 106, 109 (Ct. App. 1963)). Applying
that definition, this court has concluded that a case was "brought to trial"
under NRCP 41(e) when a plaintiff filed a summary judgment motion
before the expiration of the five-year rule and the district court
subsequently granted that motion because "the granting of a motion for
summary judgment involves first finding that no triable issues of fact
remain and then determining the rights of the parties by applying the law
4Although the relevant California provisions are different from the
Nevada statute insofar as the California provisions include an exception
under which dismissal is not required if, for any reason, bringing the
action to trial "was impossible, impracticable, or futile," Cal. Civ. Proc.
Code § 583.340(c) (West 2011), the Gorman court did not rely on this
exception when reaching its decision. See Gorman, 211 Cal. Rptr. at 36-
37.
SUPREME COURT
OF
NEVADA
8
(0) 1947A 04r(i.
to the facts." See United Ass'n of Journeymen, 105 Nev. at 820, 783 P.2d
at 957.
While a settlement agreement will not necessarily involve a
judicial determination, it does resolve the relative legal rights and
liabilities of the parties, eliminating the need to try any issues resolved by
the agreement. See id. Accordingly, we conclude that, when the parties
have entered into a binding settlement agreement that resolves all of the
issues pending in the action, eliminating the need for a trial, the case has
been "brought to trial" within the meaning of NRCP 41(e). Thus, the
district court here did not err in denying TPCI and Rizzolo's motions to
dismiss the Henrys' action under NRCP 41(e) because the Henrys, TPCI,
and Rizzolo entered into an enforceable settlement agreement resolving
the pending issues within five years of the Henrys filing their complaint.
See EDCR 7.50. And because the NRCP 41(e) motions were properly
denied, the district court retained jurisdiction over the matter until the
final judgment was entered. 5 Cf. Cox, 124 Nev. at 925, 193 P.3d at 534.
5 To the extent that the Smith opinion suggests that a plaintiff who
has entered into an enforceable settlement agreement must promptly
dismiss his or her complaint, such a dismissal would deprive the district
court of jurisdiction over the parties, see SFFP, L.P. v. Second Judicial
Din. Court, 123 Nev. 608, 173 P.3d 715 (2007), potentially requiring a
party to initiate a new action in contract to enforce the agreement if the
other party fails to perform. In light of this and other legitimate reasons
why an action might remain in the district court when the parties have
entered into a settlement agreement, we clarify that it is within the
district court's purview to determine, on a case-by-case basis, whether
judicial economy is best served by allowing an action to remain pending
continued on next page . .
SUPREME COURT
OF
NEVADA
9
(0) I947A er>
The district court properly granted the Henrys' motion to reduce the
settlement agreement to a judgment
TPCI and Rizzolo alternatively argue that, even if the district
court did not err by declining to dismiss the case under NRCP 41(e), the
court was precluded from reducing the settlement agreement to judgment
in a summary proceeding without considering their contract defenses or
resolving existing factual disputes. Specifically, TPCI and Rizzolo contend
that their performance under the agreement was contingent on Rizzolo
having one year to operate the club so that there would be sufficient
proceeds, either generated from the club's sale or saved during the year of
operation, to pay the Henrys what was owed. The Henrys contend that
the district court properly reduced the settlement agreement to judgment
because the agreement's terms were unambiguous and did not include the
contingencies alleged by TPCI and Rizzolo.
A settlement agreement is a contract governed by general
principles of contract law. May v. Anderson, 121 Nev. 668, 672, 199 P.3d
1254, 1257 (2005). Like a contract, the interpretation of a settlement
agreement is reviewed de novo. See id. We have stated that contracts will
be construed from their written language and enforced as written. Kaldi
v. Farmers Ins. Exch., 117 Nev. 273, 278, 21 P.3d 16, 20 (2001). Thus,
when a contract's language is unambiguous, this court will construe and
...continued
after a settlement agreement has been reached but before the parties have
completely performed their obligations.
SUPREME COURT
OF
NEVADA
10
(0)107A
enforce it according to that language. See In re Amerco Derivative Litig.,
127 Nev. „ 252 P.3d 681, 693 (2011). A district court can grant a
party's motion to enforce a settlement agreement by entering judgment on
the instrument if the agreement is either reduced to a signed writing or
entered in the court minutes in the form of an order, see Resnick v.
Valente, 97 Nev. 615, 616, 637 P.2d 1205, 1206 (1981); see also EDCR 7.50;
DCR 16, so long as the settlement agreement's material terms are certain.
May, 121 Nev. at 672, 119 P.3d at 1257.
Here, the settlement agreement's language is unambiguous.
TPCI and Rizzolo agreed to pay the Henrys $10 million in exchange for a
release of all liability related to Mr. Henry's injury at the Crazy Horse Too
upon the club's sale. While the settlement agreement stated that the sale
of the Crazy Horse Too would be consistent with the terms of TPCI and
Rizzolo's federal plea agreements, the terms of the settlement agreement
do not make payment contingent on Rizzolo's management of the Crazy
Horse Too for one year or on the generation of sufficient proceeds to pay
the settlement amount. Instead, the settlement agreement unequivocally
states that TPCI and Rizzolo were• required to pay the remaining $9
million to the Henrys regardless of the sufficiency of the proceeds from the
club's sale. Thus, the district court properly determined that the
settlement agreement must be enforced according to its clear language, see
In re Amerco Derivative Litig., 127 Nev. at , 252 P.3d at 693, which
requires TPCI and Rizzolo to pay the Henrys $9 million upon the sale of
the Crazy Horse Too. Because the Crazy Horse Too was sold, TPCI and
Rizzolo are obligated to pay the Henrys $9 million.
SUPREME COURT
OF
NEVADA
e, 11
(0) 1947A
The parties entered into a written and signed settlement
agreement with unambiguous material terms. Accordingly, the district
court did not err in reducing the settlement agreement to judgment on the
Henrys' motion. 6 See Resnick, 97 Nev. at 616, 637 P.2d at 1206.
Based on the foregoing, we affirm the judgment of the district
court.
, J.
We concur:
C.J.
, J.
Hardesty
t.
Parraguirre
C
Cheny..„..
zit. J.
7" 1t
-
St
Saitta
6 We
have considered all of TPCI and Rizzolo's remaining arguments
and find that they lack merit.
SUPREME COURT
OF
NEVADA
12
CO) 1947A e