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McKnight Family, LLP v. Adept Management Services, Inc.

Supreme Court of Nevada

October 3, 2013

MCKNIGHT FAMILY, LLP, Appellant,
v.
ADEPT MANAGEMENT SERVICES, INC.; NEVADA ASSOCIATION SERVICES, INC.; TORREY PINES HOMEOWNERS ASSOCIATION; AND DESIGN 3.2 LLC, Respondents. ADEPT MANAGEMENT SERVICES, INC., A NEVADA NONPROFIT CORPORATION; NEVADA ASSOCIATION SERVICES, INC.; AND TORREY PINES HOMEOWNERS ASSOCIATION, Appellants,
v.
MCKNIGHT FAMILY, LLP, Respondent.

Consolidated appeals from a district court order dismissing a complaint pursuant to NRS 38.310 and from a post-judgment order denying a motion for attorney fees and costs. Eighth Judicial District Court, Clark County; Stefany Miley, Judge.

James S. Kent, Ltd., and James S. Kent, Las Vegas, for McKnight Family, LLP.

Gibbs, Giden, Locher, Turner, Senet & Wittbrodt LLP and Rich Haskin, Becky A. Pintar, and Airene Haze, Las Vegas, for Adept Management Services, Inc., Nevada Association Services, Inc., and Torrey Pines Homeowners Association.

Design 3.2 LLC, in Proper Person.

BEFORE THE COURT EN BANC.

OPINION

DOUGLAS, J.

After unsuccessful settlement negotiations regarding a dispute over unpaid property assessments, respondents/appellants Torrey Pines Homeowners Association, Adept Management, and Nevada Association Services (collectively, TP HOA) sold appellant/respondent McKnight Family, LLP's properties at a trustee sale. Design 3.2 purchased one of the properties.

McKnight filed a complaint naming TP HOA and Design 3.2 as defendants and a motion to set aside the sale based on improper notice. The district court entered a default judgment against Design 3.2 for failing to timely answer McKnight's complaint; however, the court later set aside the default.

The district court denied McKnight's motion to set aside the sale, determining that TP HOA properly served McKnight. Further, the district court dismissed McKnight's complaint because the court determined that, pursuant to NRS 38.310, the claims should have been submitted to a form of alternative dispute resolution before being brought in district court.

While the district court was correct in determining that most of McKnight's claims were subject to NRS 38.310, we conclude that the district court erred to the extent that it dismissed McKnight's claim for quiet title because that claim was not subject to NRS 38.310. Accordingly, we reverse the dismissal of McKnight's quiet title claim. In light of this determination, we also reverse the district court's order denying the motion to set aside the trustee's sale.

FACTS

McKnight owned two properties in a housing community managed by TP HOA. TP HOA placed a lien on McKnight's properties under NRS 116.3116 after a dispute over allegedly unpaid assessments. In response, McKnight filed a complaint and an ex parte application for a temporary restraining order. McKnight alleged seven claims in its complaint, including one for injunctive relief. The district court granted the temporary restraining order and set a preliminary injunction hearing. However, the parties agreed to engage in settlement negotiations and signed a stipulation to halt all litigation and foreclosure proceedings for 30 days. As a result, the preliminary injunction hearing was taken off the court's calendar.

The settlement negotiations were unsuccessful, and TP HOA sold the properties at a trustee's sale. In response, McKnight filed an amended complaint alleging seven claims: (1) preliminary/permanent injunction, (2) negligence, (3) breach of contract, (4) violation of NAC 116.300, [1] (5) violation of NAC 116.341, [2] (6) violation of NRS 116.1113 and NRS 116.3103, and (7) slander of title/wrongful foreclosure/quiet title. All seven claims were alleged in the original complaint; the only difference in the amended complaint was McKnight's addition of Design 3.2, LLC, as a defendant because Design 3.2 purchased one of the properties at the trustee's sale.

The district court entered a default judgment against Design 3.2 for failing to timely answer McKnight's complaint but later set aside the judgment. The parties briefed and argued the default judgment issue at an evidentiary hearing. At the hearing, Design 3.2 argued that the district court should set aside the default judgment because McKnight did not properly serve it with the amended complaint. The district court determined it would set aside the default judgment due to the Nevada Supreme Court's "liberal" attitude regarding setting aside a default if the motion to set aside the default is brought within "the six-month time frame." The district ...


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