Donnelly v. Jarman

 court's findings of fact, conclusions of law, and judgment. When denying
Donnelly, GI, and GPC's motion, the district court ordered that Jarman's
complaint be amended to include a theory of alter ego liability.
Donnelly, GI, and GPC now appeal. While they submitted an
appendix on appeal as required by NRAP 30(b)(3), Donnelly, GI, and GPC
omitted "portions of the record [that are] essential to determination of
issues raised in [their] appeal." NRAP 30(b)(3). These omissions include
(1) the transcript of the two-day bench trial on the issue of liability; (2)
Jarman's opposition to Donnelly, GI, and GPC's motion to amend the
district court's findings of fact and conclusions of law and Donnelly, GI,
and GPC's reply in support of this motion; and (3) the transcript of the
hearing on Donnelly's motion to amend the district court's findings of fact
and conclusions of law.
We consider four issues raised on appeal: (1) whether the
district court abused its discretion by allowing the Receiver's attorney to •
participate in the trial, (2) whether the district court abused its discretion
when providing for the Receiver's compensation, (3) whether the district •
court's oral statements made its subsequent written findings of fact
insufficient, and (4) whether the district court abused its discretion in its
consideration of evidence of the Receiver's alleged violation of NRS
78.670.'
iDonnelly, GI, and GPC raise several other issues on appeal: (1)
whether the district court abused its discretion by sua sponte appointing a
receiver, (2) whether the district court misapplied Nevada's business
judgment rule, (3) whether the district court abused its discretion by sua
sponte bifurcating the trial into liability and damages phases, and (4)
whether the district court abused its discretion by sua sponte ordering
that Jarman's complaint be amended to include an alter ego theory of
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The district court abused its discretion by allowing the Receiver's attorney
to examine witnesses, but this error was harmless
Donnelly, GI, and GPC argue that the district court
improperly allowed the Receiver's attorney to question witnesses during
the trial on the issue of damages. Since whether the district court
improperly allowed the Receiver's attorney to elicit testimony from
witnesses concerns the admission of evidence, we review the district
court's decision for an abuse of discretion. M.G. Multi-Family Dev., L.L.C.
v. Crestdale Assocs., Ltd., 124 Nev. 901, 913, 193 P.3d 536, 544 (2008).
Here, the district court allowed the Receiver's attorney to
examine three witnesses because it found that the Receiver was a party to
the lawsuit. "In general, a 'party' to litigation is one by or against whom a
lawsuit is brought or one who becomes a party by intervention,
substitution, or third-party practice." Smith v. Bayer Corp., 564 U.S.
131 S. Ct. 2368, 2379 (2011) (citation omitted) (internal quotations
omitted). Because the record does not suggest that the Receiver was a
named plaintiff or defendant or that he was brought into the case by third-
party practice, the district court abused its discretion by finding that the
Receiver was a party.
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liability. Donnelly, GI, and GPC preclude a meaningful review of these
issues by failing to submit significant portions of the record relevant to
them. Contrary to the dissent's conclusion that the lack of evidence in the
record supporting the district court's imposition of alter ego liability shows
that the district court erred, we must presume that missing portions of the
record support the district court's order. Cuzze v. Univ. & Ginty. Coll. Sys.
of Nev., 123 Nev. 598, 603, 172 P.3d 131, 135 (2007). Therefore, we hold
that these claims are without merit.
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A district court's abuse of discretion does not warrant reversal,
however, if the error is harmless. NRCP 61. To demonstrate that an error
is not harmless, a party "must show that the error affects the party's
substantial rights so that, but for the alleged error, a different result
might reasonably have been reached." Wyeth v. Rowatt, 126 Nev. 446,
465, 244 P.3d 765, 778 (2010). When "inadmissible evidence has been
received by the [district] court, sitting without a jury, and there is other
substantial evidence upon which the court based its findings, the [district]
court will be presumed to have disregarded the improper evidence."
McMonigle v. McMonigle, 110 Nev. 1407, 1409, 887 P.2d 742, 744 (1994)
(internal quotations omitted).
Here, Donnelly, GI, and GPC did not show that the district
court's abuse of discretion violated their substantial rights or that it could
have reasonably altered the outcome of the trial. The Receiver's attorney
examined the Receiver and cross-examined two of Donnelly's witnesses
regarding issues that were tangential to the substantive issues in dispute.
In its order awarding damages, the district court did not rely on the
evidence developed during the Receiver's attorney's cross-examination.
Thus, the district court's abuse of discretion was harmless error and does
not warrant reversal.
The district court did not abuse its discretion in providing for the Receiver's
compensation
Donnelly, GI, and GPC argue that the Receiver's
compensation scheme created a conflict of interest because the Receiver
was to be paid from money obtained by Jarman, and thus, the Receiver
had an improper incentive to find assets for Jarman to recover. We review
issues relating to the appointment of a receiver for an abuse of discretion.
Med. Device Alliance, Inc. v. Ahr, 116 Nev. 851, 862, 8 P.3d 135, 142
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(2000), abrogated on other grounds by Costello v. Casler, 127 Nev., Adv.
Op. 36, 254 P.3d 631, 634 n.4 (2011).
NRS 78.705, the statute which provides for a receiver's
compensation, states, in relevant part, that "the district court shall allow a
reasonable compensation to the receiver for his or her services" and that a
receiver's compensation shall "be first paid out of the assets [of the
receivership estate]." Since we interpret clear and unambiguous statutes
by their plain meaning, Cromer v. Wilson, 126 Nev. 106, 109, 225 P.3d
788, 790 (2010), we hold that this statute allows the Receiver to be paid
from GI and GPC's assets.
Here, the district court ordered that "[t]he court-appointed
receiver will be paid first from any recovered proceeds." It also instructed
the Receiver to evaluate GI and GPC's finances and transactions without
limiting the Receiver's consideration to assets that might have been
misappropriated by Donnelly or assets that might rightfully belong to
Jarman. In its orders, the district court did not identify Jarman as the
beneficiary of the receivership. Thus, the record contains evidence
showing that the Receiver was ordered to recover assets without regard to
who benefited from the recovery of the assets. It does not demonstrate
that the Receiver was instructed to recover assets solely for Jarman's
benefit or that the Receiver's compensation was dependent on Jarman's
recovery of assets. Therefore, Donnelly, GI, and GPC failed to show that
the Receiver's compensation scheme violated NRS 78.705 or that the
district court abused its discretion. 2
2 Lowder v. All Star Mills, Inc., a case that Donnelly, GI, and GPC
rely upon, states a general rule that "no one ordinarily may be appointed
receiver whose personal interests would substantially conflict with his
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The district court's oral statements do not demonstrate that its written
findings of fact were insufficient
Donnelly, GI, and GPC argue that the district court's written
findings of fact are insufficient because they are contradicted by the
district court's earlier oral pronouncements . 3
"A district court's factual determinations will not be set aside
unless they are clearly erroneous and not supported by substantial
evidence." Dewey v. Redevelopment Agency of Reno, 119 Nev. 87, 93, 64
P.3d 1070, 1075 (2003). When a district court tries a case without a jury,
"[it] shall find the facts specially and state separately its conclusions of
law thereon and judgment shall be entered." NRCP 52(a). While a district
court's "findings of fact and conclusions of law [may be] stated orally," id.,a district court that makes an oral decision "remains free to reconsider the
decision and issue a different written judgment." Diu. of Child & Family
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unbiased judgment and duties as receiver." 309 S.E.2d 193, 198 (N.C.
1983). Lowder is unhelpful because it provides no meaningful guidance
for our analysis of whether the Receiver had an improper conflict of
interest or whether the compensation violated NRS 78.705.
3 Inmaking this argument, Donnelly, GI, and GPC briefly identify a
legal standard for the sufficiency of evidence. However, they do not argue
that there was insufficient evidence to support the district court's written
findings. Therefore, they waive this issue on appeal. See Powell u. Liberty
Mat. Fire Ins. Co., 127 Nev., Adv. Op. 14, 252 P.3d 668, 672 n.3 (2011)
("Issues not raised in an appellant's opening brief are deemed waived.").
To the extent that the mere identification of a legal standard is intended
to be an argument about the sufficiency of the evidence presented, it is a
noncogent argument and thus is without merit. Edwards v. Emperor's
Garden Rest., 122 Nev. 317, 330 n.38, 130 P.3d 1280, 1288 n.38 (2006)
(stating that arguments not cogently made need not be considered on
appeal).
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Servs. v. Eighth Judicial Dist. Court, 120 Nev. 445, 451, 92 P.3d 1239,
1243 (2004).
Here, the district court orally stated that it was relying only
on the Receiver's written reports to enter a judgment for Jarman against
Donnelly, GI, and GPC and that it was giving no weight to Donnelly's
personal financial statements. In its subsequent written order, the
district court identified testimony developed at trial to support its
judgment and stated that it gave some weight to Donnelly's personal
financial statements. Since a district court may "reconsider [an oral]
decision and issue a different written judgment," id., the district court's
oral statements do not limit its consideration of this evidence in its
subsequent written order. Therefore, the district court's oral statements
do not demonstrate that its subsequent written findings were insufficient. 4
The district court did not abuse its discretion in its consideration of the
Receiver's alleged violation of NRS 78.670
Donnelly, GI, and GPC argue that the district court
improperly ignored evidence suggesting that the Receiver violated NRS
78.670. While we review the district court's decision to exclude evidence
for an abuse of discretion, see Hansen v. Universal Health Servs. of Nev.,
Inc., 115 Nev. 24, 27, 974 P.2d 1158, 1159-60 (1999), we do not reweigh the
evidence on appeal. Yamaha Motor Co., U.S.A. v. Arnoult, 114 Nev. 233,
238, 955 P.2d 661, 664 (1998).
4 To the extent that Donnelly, GI, and GPC contend that the district
court improperly weighed the evidence, their argument is without merit
because we do not reweigh evidence on appeal. See Yamaha Motor Co.,
U.S.A. v. Arnoult, 114 Nev. 233, 238, 955 P.2d 661, 664 (1998).
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Here, Donnelly, GI, and GPC presented testimony regarding
the Receiver's conduct that purportedly violated NRS 78.670. Since the
district court did not exclude this testimony, it was admitted. See, e.g.,
Harris v. Steele, 506 So. 2d 542, 545 (La. Ct. App. 1987) (identifying "the
basic evidentiary rule that everything not excluded is admitted").
Therefore, to the extent that Donnelly, GI, and GPC's argument is based
on the district court's refusal to admit evidence, it is without merit.
To the extent that Donnelly, GI, and GPC challenge the
weight that the district court assigned to the evidence of the Receiver's
purported violation of NRS 78.670, their argument is also without merit
because we do not reweigh evidence on appeal. Yamaha Motor Co., 114
Nev. at 238, 955 P.2d at 664. Therefore, the district court did not abuse
its discretion with regard to Donnelly, GI, and GPO's evidence of the
Receiver's alleged violation of NRS 78.670.
Conclusion
The district court abused its discretion by allowing the
Receiver's attorney to participate in the trial on the issue of damages
because the Receiver was not a party. However, this abuse was harmless
error. The district court did not abuse its discretion in providing for the
Receiver's compensation because the compensation arrangement complied
with NRS 78.705. Furthermore, the district court's oral statements do not
limit the sufficiency of its subsequent written findings of fact. Finally, the
district court did not abuse its discretion in its consideration of Donnelly,
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GI, and GPC's evidence regarding the Receiver's alleged violation of NRS
78.670 because it admitted this evidence. 5 Therefore, we
ORDER the judgment of the district court AFFIRMED.
Gibbons
PICKERING, J., concurring in part and dissenting in part:
Although the question is very close, due to the lack of
connection between the claims, as pleaded, and the final judgment, as
entered, I cannot find an abuse of discretion by the district judge in
proceeding as she did and therefore would affirm as to the entity
appellants based on the final sentence of NRCP 54(c) and cases decided
under that provision of the rule. See also NRCP I5(b). I dissent, however,
as to the alter ego finding because, even viewed expansively, the record
does not support imposition of personal liability on Donnelly on that legal
theory and no alternate basis for imposing personal liability was
articulated by the district court in its final judgment and findings. The
lack of transcript for the first phase of the trial does not affect the
analysis, since findings were entered following that part of the case and
5 We have considered the parties' remaining arguments and conclude
that they are without merit.
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they do not support recovery on an alter ego theory. For these reasons, I
respectfully concur in part and dissent in part.
cc: Hon. Nancy L. Allf, District Judge
Robert F. Saint-Aubin, Settlement Judge
Peel Brimley LLP/Henderson
Day & Nance
Eighth District Court Clerk
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