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Rawson v. Ninth Judicial District Court of State

Supreme Court of Nevada

June 29, 2017

MARGARET RAWSON, Petitioner,
v.
THE NINTH JUDICIAL DISTRICT COURT OF THE STATE OF NEVADA, IN AND FOR THE COUNTY OF DOUGLAS; AND THE HONORABLE MICHAEL P. GIBBONS, DISTRICT JUDGE, Respondents, and PEGGY CAIN; JEFFREY CAIN; AND HELI OPS INTERNATIONAL, LLC, Real Parties in Interest.

         Original petition for writ of mandamus or prohibition challenging a district court order adding petitioner to a prior judgment in a judgment debtor action.

          Dubowsky Law Office, Chtd., and Peter Dubowsky, Las Vegas, for Petitioner.

          Matuska Law Offices, Ltd., and Michael L. Matuska, Carson City, for Real Parties in Interest.

          BEFORE PICKERING, HARDESTY and PARRAGUIRRE, JJ.

          OPINION

          HARDESTY, J.

         In this original petition for extraordinary relief, we examine whether proceedings under the judgment debtor statutes, NRS 17.030-.080, give rise to a final, appealable judgment that would preclude review of the judgment through a petition for extraordinary writ relief and, if so, whether we should nevertheless consider this writ petition because the underlying district court order is allegedly void. We conclude that a judgment debtor proceeding is a postjudgment action independent from the underlying action with its own statutory procedure allowing for notice and an opportunity to be heard and a resulting judgment. Thus, a final order adjudicating a judgment debtor proceeding is appealable under NRAP 3A(b)(1), and such an appeal is generally a plain, speedy, and adequate remedy that precludes extraordinary writ relief. Although petitioner asserts that the challenged order is void and may be challenged by writ petition on that basis, the principles governing extraordinary writ relief direct otherwise when the petitioner could have appealed the challenged order. Accordingly, we decline to consider petitioner's arguments concerning whether the challenged order is void and deny this petition for extraordinary writ relief.

         FACTS AND PROCEDURAL HISTORY

         Real parties in interest Peggy and Jeffery Cain are the principals of Heli Ops International, LLC (collectively Heli Ops). Heli Ops loaned C4 Worldwide, Inc., $1 million to invest in collateralized mortgage obligations (CMOs), and C4 was required to repay Heli Ops $20 million with 9 percent interest. Instead of investing in CMOs, C4's principals, among them Chairman and CEO D.R. Rawson, allegedly diverted the $1 million for their personal use. C4 defaulted on the loan, and D.R. Rawson signed a settlement agreement acknowledging the $20 million debt. D.R. Rawson defaulted on the settlement agreement, and Heli Ops sued, naming D.R. Rawson, C4, and five other defendants, but not naming petitioner Margaret Rawson, who is the wife of D.R. Rawson and was listed as C4's treasurer. D.R. Rawson, C4, and two of the other defendants failed to defend the lawsuit, and Heli Ops obtained a $20 million default judgment against them, plus interest, costs, and attorney fees, for a total judgment in excess of $29 million.

         In the collection process on the default judgment, Heli Ops traced some loan proceeds to Margaret's accounts and instituted garnishment and joint debtor proceedings against her. The district court issued an NRS 17.040 summons directing "Margaret Rawson to appear and show cause why she should not be bound by the Default Judgment, " and the summons was served on her. Margaret requested garnishment exemptions and moved to quash the summons, challenging the legal bases for Heli Ops' institution of judgment debtor proceedings against her under NRS 17.030. Heli Ops opposed the motion. After the district court asked the parties if they wanted a hearing on the motion to quash and neither party responded, the motion was submitted on the briefs, evidence, and previous testimony. In a February 2014 order, the district court denied Margaret's request for garnishment exemptions and her motion to quash, finding that she failed to present "a credible defense to the wrongful diversion of funds from [C4] to her bank accounts" and "failed to show cause why she should not be added to the [default] judgment and be bound by its terms." See NRS 17.030, The order concluded that Margaret "shall be bound by the Default Judgment in all respects and as if she had been named in the original complaint and the Default Judgment." Heli Ops served notice of the order in February 2014.

         Margaret filed a bankruptcy petition in February 2015, staying enforcement of the judgment. The Bankruptcy Court denied Margaret discharge of the judgment debt in August 2016, and Heli Ops has since sought to enforce the judgment. In October 2016, Margaret filed this writ petition challenging the portion of the district court's order that added her to the default judgment as a joint debtor.[1] Thereafter, we directed Margaret to show cause why the petition should not be denied because the challenged order was a final judgment, from which she had an adequate remedy in the form of an appeal. Margaret responded, and Heli Ops filed a reply.

         DISCUSSION

         In general, this court declines to consider petitions for extraordinary writ relief when the petitioner has a plain, speedy, and adequate remedy in the ordinary course of the law, such as an appeal that will encompass the challenged order. NRS 34.170; NRS 34.330; Int'l Game Tech., Inc. v. Second Judicial Dist Court, 124 Nev. 193, 197, 179 P.3d 556, 558 (2008); Pan v. Eighth Judicial Dist Court, 120 Nev. 222, 224-25, 88 P.3d 840, 841 (2004) (explaining that writ relief is not available to correct an untimely notice of appeal). In addressing whether the challenged order is a final judgment from which she could have appealed, Margaret argues that the order was interlocutory and, regardless, she was not a party to the underlying litigation and thus did not have the right to appeal the order. She further argues that writ relief is appropriate because this court has never explained the judgment debtor statutes and the order adding her to the default judgment is void on due process grounds. In determining whether to consider Margaret's writ petition, we must examine the joint debtor statutes to determine whether an order resolving a joint debtor proceeding is a final, appealable order. See Int'l Game Tech., 124 Nev. at 197, 179 P.3d at 558; cf Meritage Homes of Nev., Inc. v. FDIC, 753 F.3d 819, 825-26 (9th Cir. 2014) (commenting that Nevada has no caselaw on the statutes governing joint debtor proceedings).

         An order resolving a joint debtor proceeding is a final, appealable order, rendering extraordinary writ relief unavailable

         At common law, a creditor could sue joint debtor defendants together, but if all of them could not be found, then the creditor could elect to serve those defendants that could be found and served. See Tay, Brooks & Backus v. Hawley,39 Cal. 93, 98 (1870); Meller & Snyder v. R & T Props., Inc.,73 Cal.Rptr.2d 740, 744 (Ct. App. 1998). If a creditor did elect to so proceed, then he forfeited his right to proceed against the non-served joint debtors because the joint obligation was deemed to merge into the judgment ...


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