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Boca Park Martketplace Syndications Group, LLC v. Higco, Inc.

Supreme Court of Nevada

December 28, 2017

BOCA PARK MARTKETPLACE SYNDICATIONS GROUP, LLC, A NEVADA LIMITED LIABILITY COMPANY, Appellant,
v.
HIGCO, INC., A NEVADA CORPORATION, Respondent.

         Appeal from a district court judgment following a bench trial in a breach of contract action. Eighth Judicial District Court, Clark County; Elizabeth Goff Gonzalez, Judge.

          Hejmanowski & McCrea LLC and Charles H. McCrea, Las Vegas, for Appellant.

          Garman Turner Gordon and Eric R. Olsen and Dylan T. Ciciliano, Las Vegas, for Respondent.

          BEFORE DOUGLAS, GIBBONS and PICKERING, JJ.

          OPINION

          Pickering, J.

         This is a commercial dispute over an exclusive use clause in a lease for space in a shopping center. The question presented is whether the doctrine of claim preclusion prevents a tenant from suing its landlord for contract damages after having won an earlier suit against the landlord for declaratory judgment, where both suits concern the same underlying facts. Ordinarily, claim preclusion bars a second suit seeking to vindicate claims that were or could have been asserted in the first suit. But the claim-preclusion doctrine makes an exception for declaratory judgment actions, which are designed to give parties an efficient way to obtain a judicial declaration of their legal rights before positions become entrenched and irreversible damage to relationships occurs. While a party may join claims for declaratory relief and damages in a single suit, the law does not require it. So long as the first suit only sought declaratory relief, a second suit for contract damages may follow. Also, in a case involving a continuing or recurrent wrong, a party may sue separately for after-accruing damages. We therefore reject the landlord's argument that the doctrine of claim preclusion requires reversal of the judgment awarding contract damages to the tenant and affirm.

         I.

         Appellant Boca Park owns a Las Vegas shopping center. In 2002, Boca Park entered into a 20-year lease with respondent Higco, Inc. The lease allowed Higco to operate a tavern in its leased space and included an exclusive use clause, by which Boca Park granted Higco "an exclusive for Boca Park I for a tavern and gaming, except for any tenants currently located in the center which allow gaming (i.e. Vons, Longs)." Based on the lease, Higco opened a tavern and installed slot machines for its patrons' use.

         In late 2011 or early 2012, Higco learned that Boca Park had entered into a lease with a new tenant, Wahoo's Fish Tacos, and that Wahoo's had applied for a gaming license. On April 23, 2012, Higco sued Boca Park for declaratory relief. In its complaint, Higco alleged that Boca Park had leased space to Wahoo's, who had applied for a gaming license, and sought a judgment declaring that the Higco/Boca Park lease gave Higco the exclusive right to offer gaming in the shopping center.

         Shortly after Higco filed its declaratory judgment complaint, Wahoo's obtained its gaming license and opened for business, competing with Higco by also offering slot-machine gaming. Higco did not amend its complaint to seek damages or injunctive relief, and the case was submitted to the district court on cross-motions for summary judgment. The district court decided the cross-motions in Higco's favor and entered declaratory judgment for Higco. The judgment declared that the "controlling lease is unambiguous, and . . . Higco has a right to an exclusive use both for tavern and for gaming in Boca Park I, except for any tenants offering gaming in Boca Park I as of November 5, 2002." Neither side appealed, and the declaratory judgment became final in December of 2012, less than nine months after the action began.

         Despite the declaratory judgment, Boca Park continued to allow Wahoo's to offer slot-machine gaming. Higco protested that this breached the exclusive use clause in the lease, causing ongoing economic damages. The parties tried to settle their differences, to no avail, and in December 2014, two years after the declaratory judgment became final, Higco filed a second complaint against Boca Park. In this complaint, Higco sought damages from Boca Park for breach of contract and breach of the implied covenant of good faith and fair dealing.

         Boca Park moved to dismiss, arguing that the doctrine of claim preclusion barred Higco's claims for contract damages because those claims could and should have been made in the earlier declaratory judgment action. The district court denied Boca Park's motion. A bench trial followed, in which the district court awarded Higco $497, 000 in damages for Boca Park's breach of the exclusive use clause in Higco's lease. Boca Park appeals.

         II.

         Claim preclusion makes a valid final judgment conclusive on the parties and ordinarily bars a later action based on the claims that were or could have been asserted in the first case. See Five Star Capital Corp. v. Ruby, 124 Nev. 1048, 1055, 194 P.3d 709, 713 (2008). Whether claim preclusion operates to bar this action for contract damages based on the final judgment Higco obtained in its earlier declaratory relief action presents a question of law ...


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