Liu v. Christopher Homes, L.L.C.

130 Nev., Advance Opinion
IN THE SUPREME COURT OF THE STATE OF NEVADA
JUN LIU, No. 61435
Appellant,
vs.
CHRISTOPHER HOMES, LLC, A FILED
NEVADA LIMITED LIABILITY
COMPANY; AND CHRISTOPHER MAR 2 7 2014
HOMES RIDGES, LLC, A NEVADA TRAC K. LINDEMAN
CLE 0 SUP E E
LIMITED LIABILITY COMPANY, BY
C
Ad" Oa
ER
Respondents.
Appeal from a district court judgment in a real property
action. Eighth Judicial District Court, Clark County; Susan Johnson,
Judge.
Affirmed in part, reversed in part, and remanded.
Pengilly Robbins Slater and James W. Pengilly and Craig D. Slater, Las
Vegas,
for Appellant.
The Hayes Law Firm and Dale A. Hayes, Jr., Las Vegas,
for Respondents.
BEFORE GIBBONS, C.J., DOUGLAS and SAITTA, JJ.
OPINION
By the Court, SAITTA, J.:
The court in Sandy Valley Associates v. Sky Ranch Estates
Owners Association stated that when a defendant's breach of contract with
a plaintiff causes the plaintiff to incur attorney fees in his or her defense
in a legal dispute that is brought by another party, the plaintiff can
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recover from the defendant the attorney fees as damages that arose from
the breach of the contract. 117 Nev. 948, 957, 35 P.3d 964, 970 (2001).
The Sandy Valley court also stated, "Attorney fees may. . . be awarded as
damages in those cases in which a party incurred the fee . . . in clarifying
or removing a cloud upon the title to property." Id. The court in Horgan
v. Felton retreated from this latter statement about the recovery of
attorney fees in cloud-on-title cases, stating that "in cases concerning title
to real property, attorney fees are only allowable as special damages in
slander of title actions, not merely when a cloud on the title to real
property exists." 123 Nev. 577, 579, 170 P.3d 982, 983 (2007). It held that
slander of title was a prerequisite for a plaintiff to "recover as damages the
expense of legal proceedings necessary to remove a cloud on the plaintiffs
title." Id. at 584-85, 170 P.3d at 987.
Here the district court relied on Horgan in denying appellant
Jun Liu's specially pleaded request to recover attorney fees from
respondents Christopher Homes Ridges, LLC (CHR), and Christopher
Homes, LLC (CH), concluding that because the breach of contract related
to title to real property, and because Liu failed to allege and prove slander
of title, she could not recover the attorney fees that she sought as special
damages. We conclude that the district court erred in rejecting as a
matter of law Liu's claim for attorney fees as special damages, as Horgan
does not apply to preclude such recovery here. Although Horgan held that
slander of title must be pleaded as a prerequisite for a party to recover
attorney fees as damages in an action to clarify or remove a cloud on title
to real property, that opinion did not retreat from the portion of Sandy
Valley which held that a party, such as Liu, may recover attorney fees
incurred in defending against third-party litigation because of CHR's or
CH's breach of contract. Horgan, 123 Nev. at 583-86, 170 P.3d at 986-88.
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Accordingly, we reverse the district court's judgment to the extent that it
• denied Liu's request for special damages and affirm all other aspects of the
district court's judgment. We remand this matter to the district court for
proceedings consistent with this opinion.
FACTS AND PROCEDURAL HISTORY
Liu's appeal only challenges the district court's legal
determinations regarding the recovery of attorney fees as special damages.
Thus, our discussion of the facts is based on the district court's findings of
fact, which Liu does not contest or seek to undo on appeal.
CHR was the developer of a residential community that hired
CH as a general contractor for the construction of homes within its
community CH subcontracted with K&D Construction, LLC, for various
construction services. One of the homes upon which K&D performed its
services was Liu's. Liu had purchased the home from CHR pursuant to a
contract (the Agreement), wherein CHR agreed to convey good and
marketable title to Liu at the close of escrow. As K&D performed its
construction services at CHR's residential community, K&D was neither
timely nor fully paid. As a result, K&D recorded liens on various
properties within CHR's residential community, including Liu's property.
In addition, K&D filed a civil action against CHR, CH, Liu,
and other homeowners. In its complaint, K&D sought to foreclose on its
liens on numerous properties, including Liu's property. Liu filed an
answer to K&D's complaint and a cross-claim against CHR and CH. She
asserted a breach of contract claim against CHR and CH, alleging that
they breached their duty under the Agreement to deliver good and
marketable title when they failed to pay the debts to K&D that resulted in
a lien on her property. Under this claim, Liu tried to recover from CHR
and CH the attorney fees and costs that she allegedly incurred in
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defending herself against K&D's action. She also sought attorney fees
that she incurred in prosecuting her claim for attorney fees.
K&D, CHR, and CH entered into a stipulated agreement that
resolved the payments of the outstanding balances owed to R&D,
dismissed K&D's claims against Liu, and resulted in the discharge and
removal of K&D's liens. After the dismissal of K&D's claims, Liu's claims
against CHR and CH remained, including the claim to recover attorney
fees as damages that allegedly arose from the breach of the Agreement.
Before the district court, Liu contended that, pursuant to
Sandy Valley, she could recover attorney fees as special damages that
were caused by the breach of the Agreement by CH and CHR. The district
court determined otherwise, concluding that CHR, not CH, possessed and
breached a contractual duty to deliver good and marketable title to Liu
when a lien was imposed on Liu's property because of unpaid debts to
K&D. Relying on Horgan, the district court resolved that, as a matter of
law, Liu could not recover attorney fees as special damages According to
the district court's interpretation of Horgan, Liu was required to prove
slander of title in order to recover attorney fees as special damages, which
the district court found that she failed to do. As a result, Liu filed this
appeal challenging the district court's determinations regarding the
recovery of attorney fees as special damages.
DISCUSSION
Liu argues that the district court erred in relying on Horgan
for its conclusion that her failure to assert and prevail on a slander of title
claim prevented her from recovering attorney fees as special damages in
an action that related to the title to real property. She contends that
Horgan does not bar a party from recovering attorney fees as special
damages when the civil action incidentally pertains to title to real
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property. Liu reads Horgan to disallow attorney fees that stem from an
action in which a claimant tries to remove a cloud on title but fails to
prove slander of title. She emphasizes that she did not seek attorney fees
as special damages from an action to remove a cloud on title but rather as
special damages that resulted from CHR's breach of contract. Liu argues
that Sandy Valley permits the recovery of attorney fees as special
damages that arise from a breach of contract and thus her attorney fees
claim below was not barred as a matter of law.
CHR and CH respond that the district court did not err in
finding against Liu on her claim for recovery of attorney fees as special
damages. They read Horgan to provide that a party, such as Liu, who
fails to assert and prevail on a slander of title claim in an action relating
to the title to real property cannot recover attorney fees as special
damages.
These arguments indicate that there is confusion over (a)
Sandy Valley's and Horgan's effect on the law regarding the recovery of
attorney fees as special damages and (b) the extent to which Horgan
retreated from Sandy Valley's discussion about the grounds for recovering
attorney fees as special damages. We take this opportunity to clarify our
precedent. In so doing, because the arguments concern the district court's
application of caselaw to Liu's claims for attorney fees, we review these
legal issues de novo.' See Thomas v. City of N. Las Vegas, 122 Nev. 82, 90,
'In addition to the arguments above, CHR contends that the district
court rejected Liu's claim for attorney fees for reasons other than its
interpretation and application of caselaw, such as insufficient evidence to
support Liu's claim that the breach of the Agreement caused her to incur
attorney fees in defending herself against K&D's action. This contention
continued on next page . . .
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127 P.3d 1057, 1063 (2006) (providing that a denial of attorney fees is
generally reviewed for abuse of discretion but that de novo review applies
when an attorney fees matter concerns questions of law).
Horgan's partial abrogation of Sandy Valley
Generally, attorney fees are not recoverable "absent authority
under a statute, rule, or contract." Albios v. Horizon Communities, Inc.,
122 Nev. 409, 417, 132 P.3d 1022, 1028 (2006). But, la] s an exception to
the general rule," attorney fees may be awarded "as special damages in
limited circumstances." Horgan, 123 Nev. at 583, 170 P.3d at 986.
The court in Sandy Valley made three significant statements
about the grounds for recovering attorney fees as special damages. 117
Nev. at 956-57, 35 P.3d at 969-70. First, the court stated that attorney
fees may be recovered as special damages when they are pleaded as such
pursuant to NRCP 9(g) and are a "natural and proximate consequence of
the injurious conduct." Id. at 956-57, 35 P.3d at 969. Second, the court
explained that
[alttorney fees may be an element of damage in
cases when a plaintiff becomes involved in a
third-party legal dispute as a result of a breach
of contract .. . [and] [t]he fees incurred in
defending. . . the third-party action could be
damages in the proceeding between the plaintiff
and the defendant [who breached the contract].
Id. at 957, 35 P.3d at 970. Third, the Sandy Valley court stated the
following about the recovery of attorney fees as special damages in actions
. . . continued
lacks merit because the district court rejected Liu's attorney fees claim
solely as a matter of law.
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concerning a cloud on title to real property: "[alttorney fees may. ... be
awarded as damages in those cases in which a party incurred the
fees . . . in clarifying or removing a cloud upon the title to property." Id.
The Horgan court revisited Sandy Valley in addressing a
matter involving the recovery of attorney fees that were accumulated in
seeking declaratory relief to remove a cloud on title to real property.
Horgan, 123 Nev. at 579-80, 583-86, 170 P.3d at 983-84, 986-88. In
clarifying Sandy Valley, the Horgan court retreated from the third
statement above concerning the award of attorney fees in cloud-on-title
actions. Horgan, 123 Nev. at 579, 588, 170 P.3d at 983, 988. In doing so,
it did not retreat from the Sandy Valley court's position regarding the
recovery of attorneyS fees as damages that are caused by injurious conduct
or a breach of contract. Id. Disapproving of Sandy Valley's broad
statement that "latttorney fees may. . . be awarded as damages in those
cases in which a party incurred the fees . . . in clarifying or removing a
cloud upon the title to property," the Horgan court stated that "in cases
concerning title to real property, attorney fees are only allowable as special
damages in slander of title actions, not merely when a cloud on the title to
real property exists." Id. at 579, 583, 170 P.3d at 983, 986 (alterations in
original) (second emphasis added) (quoting Sandy Valley, 117 Nev. at 957,
35 P.3d at 970). When read in isolation, this statement conveys that in
any action that merely relates to title, clarification of title, or removal of a
cloud on title to real property, a party can recover attorney fees as special
damages only if he or she asserts and prevails on a slander of title claim.
See id. Thus, when read by itself, this statement appears to support the
district court's determination that Liu could not recover attorney fees.
However, the meaning and effect of Horgan cannot be
ascertained by reading one statement to the exclusion of the rest of the
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opinion. See Orr v. Allen, 248 U.S. 35, 36 (1918) (indicating that language
in an opinion must not to be taken out of context or segregated from the
remainder of the opinion); Mashpee Tribe v. New Seabury Corp., 592 F.2d
575, 585 (1st Cir. 1979) ("Different sections of an opinion should be read as
consistent with each other."). Rather, Horgan "must be read as a whole,
without particular portions read in isolation, [so as] to discern the
parameters of its holding." Fisher v. Big Y Foods, Inc., 3 A.3d 919, 926-27
(Conn. 2010).
The remainder of the Horgan court's opinion indicates that it
did not hold that a party in any matter that relates to title to real property
must prevail on a slander of title claim in order to recover attorney fees as
special damages. 123 Nev. at 583-86, 170 P.3d at 986-88. Rather, the
Horgan court contemplated a party's ability to recover attorney fees as
special damages that were incurred in a specific type of civil action that is
brought by that party: an action to clarify or remove a cloud on title. Id.
The Horgan court stated that a "plaintiff may recover as
damages the expense of legal proceedings necessary to remove a cloud on
the plaintiffs title" when he or she prevails on a slander of title claim. Id.
at 584-85, 170 P.3d at 987 (emphasis added). It stated that "attorney fees
are only available as special damages in slander of title actions and not
simply when a litigant seeks to remove a cloud upon title." Id. at 586, 170
P.3d at 988 (emphasis added). In asserting these conclusions, the Horgan
court primarily relied on authorities that permit the award of attorney
fees as special damages to parties who brought claims to clarify or remove
a cloud on title, accrued attorney fees in bringing those claims, and
prevailed on a slander of title claim. See id. at 584-86, 170 P.3d at 987-88
(citing: Wright v. Rogers, 342 P.2d 447, 449, 457 (Cal. Ct. App. 1959)
(providing that in an action to remove a cloud on title, the plaintiff may
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recover attorney fees as special damages if he or she prevails on a slander
of title claim); Price v. Tyler, 890 So. 2d 246, 248-49, 251, 253 (Fla. 2004)
(explaining that parties cannot recover attorney fees as special damages
that were accrued in declaratory relief and quiet title actions absent a
slander of title); Rayl v. Shull Enters., Inc., 700 P.2d 567, 573 (Idaho 1984)
(concluding that a plaintiff who sought to remove a cloud on his title was
entitled to attorney fees as special damages that arose from the slander of
title); Paulson v. Kustom Enters., Inc., 483 P.2d 708, 715-16 (Mont. 1971)
(remanding a matter to allow parties to recover attorney fees accrued in
removing a cloud on title resulting from slander); Den-Gar Enters. v.
Romero, 611 P.2d 1119, 1121, 1124 (N.M. Ct. App. 1980) (providing that
plaintiffs who sought to remove a cloud on title through a quiet title action
could recover attorney fees under a slander of title claim); Peckham v.
Hirschfeld, 570 A.2d 663, 667-70 (R.I. 1990) (providing the same); Dowse v.
Doris Trust Co., 208 P.2d 956, 958-59 (Utah 1949) (concluding that a
plaintiff was entitled to special damages, including attorney fees, in an
action to remove a cloud on his title because the defendant slandered it);
and Rorvig v. Douglas, 873 P.2d 492, 494, 497-98 (Wash. 1994) (providing
the same)).
Thus, the Horgan court's holding that one must prevail on a
slander of title claim to recover attorney fees as special damages is one
that applies to the recovery of attorney fees that are accrued from
pursuing an action to clarify or remove a cloud on title. Generally, an
action to clarify or remove a cloud on title is either an action in equity or
an action for declaratory relief See MacDonald v. Krause, 77 Nev. 312,
317-18, 362 P.2d 724, 727 (1961) (identifying actions to quiet title and to
remove clouds on title as actions in equity); Kress v. Corey, 65 Nev. 1, 25-
26, 189 P.2d 352, 363-64 (1948) (stating that a cloud on title may be
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removed by a declaratory judgment). Hence, when discussing the recovery
of attorney fees as damages that arose from actions to clarify or remove a
cloud on title, the Horgan court was not concluding that a slander of title
claim is a prerequisite to recovering attorney fees as special damages in
all civil actions that relate to title to real property. See 123 Nev. at 579,
583-86, 170 P.3d at 983, 986-88. Rather, as revealed by its language and
the authorities it relied on, the Horgan court held that slander of title is a
prerequisite to a party's recovery of attorney fees that were amassed in
asserting claims to clarify or remove a cloud on title, such as declaratory
or equitable relief claims. Id.
In explaining its analysis and conclusions, the Horgan court
stated that when a plaintiff incurs attorney fees as a result of a
defendant's intentional effort to cloud title, the plaintiff deserves the fees
because he or she had no choice but to litigate. Id. at 585-86, 170 P.3d at
987-88. Otherwise, absent slander of title, the plaintiff shoulders the debt
for the attorney fees that he or she risked accruing when deciding to
clarify or remove a cloud on title by suing the defendant. See id.
Here, Liu was not a plaintiff who incurred attorney fees by
asserting equitable or declaratory relief claims to clarify or remove a cloud
on title. Rather, she pleaded to recover attorney fees as special damages
that she allegedly incurred defending against K&D's civil action as a
result of CHR's breach of the Agreement. Thus, the attorney fees that Liu
incurred in her defense against K&D's action and her claim for attorney
fees were not within the purview of Horgan's requirement that a party
who brought an action to clarify or remove a cloud on title must prove
slander of title in order to recover the attorney fees that he or she incurred
in the action. See Horgan, 123 Nev. at 583-86, 170 P.3d at 986-88.
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The portion of Sandy Valley that Horgan did not overturn
When revisiting and abrogating Sandy Valley, the Horgan
court only overturned the analysis and conclusion in Sandy Valley that
concerned the recovery of attorney fees that are accumulated in actions to
clarify or remove a cloud on title to real property. Horgan, 123 Nev. at
579, 583-86, 170 P.3d at 983, 986-88. The court did not retreat from
Sandy Valley's conclusion that a party to a contract may recover, as
special damages, the attorney fees that arise from another party's breach
of the contract when the breach causes the former party to incur attorney
fees in a legal dispute brought by a third party. See Horgan, 123 Nev. at
579, 583-86, 170 P.3d at 983, 986-88 (omitting from its discussion Sandy
Valley's language that concerns the recovery of attorney fees as special
damages that arise from a breach of contract); Sandy Valley, 117 Nev. at
957, 35 P.3d at 970. Thus, this portion of Sandy Valley was not undercut
by Horgan. In unity with the various jurisdictions that have held the
same, we maintain that a party to a contract may recover from a
breaching party the attorney fees that arise from the breach that caused
the former party to accrue attorney fees in defending himself or herself
against a third party's legal action. See, e.g., Masonic Temple Ass'n of
Crawfordsville v. Ind. Farmers Mitt. Ins. Co., 837 N.E.2d 1032, 1039 (Ind.
Ct. App. 2005) (providing that when the defendant's breach of contract
caused the plaintiff to engage in litigation with another party, the
attorney fees from that litigation "may be recovered as an element
of ... damages from [the] defendant's breach of contract"); Pac. Coast Title
Ins. Co. v. Hartford Accident & Indem. Co., 325 P.2d 906, 907-08 (Utah
1958) (providing the same); Fid. Nat'l Title Ins. Co. of N.Y. v. S. Heritage
Title Ins. Agency, Inc., 512 S.E.2d 553, 558 (Va. 1999) (concluding that
attorney fees incurred in litigation caused by a party's breach of contract
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can be recovered as special damages); Kremers-Urban Co. v. Am. Emp'rs
Ins, Co., 351 N.W.2d 156, 168 (Wis. 1984) (recognizing that attorney fees
and expenses incurred in third-party litigation are recoverable "when they
are the natural and proximate result of the breach of contract or other
wrongful act" that caused the plaintiff to be involved in litigation with
other parties).
In light of the above, Sandy Valley permits, and Horgan does
not bar, Liu's claim to recover attorney fees as special damages that were
purportedly sustained in defending herself against K&D's suit, which was
allegedly caused by CHR's breach of the Agreement. Accordingly, we hold
that the district court erred in relying on Horgan to conclude that Liu
cannot recover attorney fees as special damages. 2
The district court must revisit Liu's claim for attorney fees
Determining whether a party's breach of contract caused
another party to incur attorney fees in defending himself or herself from a
third party's complaint involves factual inquiries. See Frantz v. Johnson,
2It appears that Liu also relies on Sandy Valley for the contention
that she can recover attorney fees and costs that she incurred when
prosecuting her claim against CHR to recover attorney fees as special
damages—in addition to the attorney fees that she incurred when
defending herself against K&D's action. Sandy Valley does not support
this contention. See 117 Nev. at 957, 35 P.3d at 970. It only provides for
the recovery of attorney fees as special damages that are incurred in
defending against third-party litigation that is caused by a breach of
contract. Id. Because Liu has not provided any other salient authority in
support of her argument, we do not address the recovery of attorney fees
and costs that are incurred when prosecuting a claim for attorney fees as
special damages. Edwards v. Emperor's Garden Rest., 122 Nev. 317, 330
n.38, 130 P.3d 1280, 1288 n.38 (2006) (providing that this court need not
address an argument that is not cogently made).
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116 Nev. 455, 468, 999 P.2d 351, 359 (2000) (indicating that causation is
an issue of fact). In our appellate capacity, we do not resolve matters of
fact for the first time on appeal. See Round Hill Gen. Improvement Dist. v.
Newman, 97 Nev. 601, 604, 637 P.2d 534, 536 (1981) (noting that "an
appellate court is not an appropriate forum in which to resolve disputed
questions of fact").
'When the district court determined that Horgan barred Liu's
claim to recover attorney fees as special damages, it also found that CHR
breached its contract with Liu by leaving its debts to K&D unpaid. But,
because it erroneously reasoned that Horgan disposed of Liu's attorney
fees claim as a matter of law, the district court did not resolve whether the
evidence before it proved that CHR's breach of the Agreement caused Liu
to accumulate the attorney fees in defending her interests against K&D's
suit. We do not resolve this factual issue that the district court did not
reach, as doing so would require us to inappropriately weigh the evidence
and resolve questions of fact for the first time on appeal. It is up to the
district court on remand to resolve these questions.
CONCLUSION
In light of our analysis and determinations above, we reverse
the district court's findings of fact, conclusions of law, and judgment on
Liu's claim for the recovery of attorney fees as special damages that
allegedly arose from CHR's breach of the Agreements All other aspects of
3 The dissent disagrees with our conclusions, relying on a
concurrence in Horgan which noted that there are claims, other than
slander of title, under which a party can recover attorney fees as special
damages, such as "actions for malicious prosecution, abuse of process,
wrongful attachment, trademark infringement, false imprisonment or
arrest." 123 Nev. at 587, 170 P.3d at 988-89 (Maupin, J., concurring). The
continued on next page . . .
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the district court's judgment are affirmed. We remand this matter for
further proceedings that are consistent with this opinion.
Saitta
I concur:
, J.
. . . continued
dissent appears to conclude that because the Horgan concurrence did not
include a breach of contract claim within its list, it is persuasive authority
that attorney fees that arise from a breach of contract cannot be recovered
as special damages. We disagree. We do not read the Horgan concurrence
as conveying a comprehensive and exclusive list of claims on which a party
can recover attorney fees as special damages. Rather, the Horgan
concurrence stressed that the Horgan opinion did not preclude the
recovery of attorney fees as special damages in circumstances other than
those presented in that appeal. Id. In so doing, it offered examples of
claims under which one may recover attorney fees. Id. Thus, like the
Horgan concurrence, we conclude that Horgan does not bar the recovery of
attorney fees in circumstances that are not addressed in Horgan, such as
the circumstances that are present in this appeal.
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GIBBONS, C.J., dissenting:
As the majority notes, we concluded in Horgan v. Felton, 123
Nev. 577, 579, 170 P.3d 982, 983 (2007), that "in cases concerning title to
real property, attorney fees are only allowable as special damages in
slander of title Actions, not merely when a cloud on the title to real
property exists." In Horgan, the concurrence noted that there are other
types of cases that allow attorney fees as damages, such as "actions for
malicious prosecution, abuse of process, wrongful attachment, trademark
infringement, false imprisonment or arrest." Id. at 587, 170 P.3d at 989
(Maupin, J., concurring). Breach of contract is not one of the exceptions
specified in Horgan and should fall into the same category as actions to
quiet title. This would further address our concern in Horgan that the
scope of real property cases where attorney fees are available as special
damages was "inadvertently expanded." Id. at 586, 170 P.3d at 988. For
this reason, I conclude that the district court• correctly interpreted the
holding of Horgan, and I would affirm the district court's denial of
attorney fees.
C.J.
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