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Iliescu v. Schleining

United States District Court, D. Nevada

November 1, 2019

JOHN ILIESCU JR. AND SONNIA SANTEE ILIESCU, as Trustees of the JOHN ILIESCU JR. AND SONNIA ILIESCU 1992 FAMILY TRUST AGREEMENT; JOHN ILIESCU, JR., individually, SONNIA SANTEE ILIESCU, individually, Plaintiffs,
v.
JOHN SCHLEINING; and DOES 1 thru XX, Defendants.

          ORDER

          LARRY R. HICKS UNITED STATES DISTRICT JUDGE.

         Before the court is defendant John Schleining's motion to dismiss the complaint arguing that the action is barred by the two-dismissal rule. ECF No. 9; Errata, ECF No. 11. Plaintiffs, John Iliescu Jr. and Sonnia Santee Iliescu, individually and as Trustees of the John Iliescu Jr. and Sonnia Iliescu 1992 Family Trust Agreement (collectively “plaintiffs” or “Iliescu”) opposed the motion (ECF No. 17), and defendant replied (ECF No. 30). In conjunction with defendant's motion, he filed a request for judicial notice (ECF No. 8), to which plaintiffs responded (ECF No. 16), and defendant replied (ECF No. 29). Plaintiffs likewise filed a request for judicial notice (ECF No. 21), to which defendant filed a non-opposition (ECF No. 28). Because the two-discovery rule does not bar plaintiffs from bringing this action, the court denies defendant's motion to dismiss.

         I. BACKGROUND

         The facts pertaining to this motion stem from two legal actions filed in the Second Judicial District Court of the State of Nevada. Numerous documents were filed in both actions, and one action progressed to and was decided by the Nevada Supreme Court. Given the aforementioned, the court relies on those publicly recorded court documents in compiling a full procedural history leading up to the instant action, [1] as well as the facts as alleged by plaintiffs in their complaint.

In July 2005, [plaintiffs] John Iliescu, Jr., individually, and Sonnia Iliescu and John Iliescu, Jr., as trustees of the John Iliescu, Jr., and Sonnia Iliescu 1992 Family Trust Agreement (collectively, Iliescu) entered into a Land Purchase Agreement to sell four unimproved parcels in downtown Reno to Consolidated Pacific Development (CPD) for development of a high-rise, mixed use project to be known as Wingfield Towers. The original agreement was amended several times and, as finally amended, entitled Iliescu to over $7 million, a condominium in the development, and several other inducements.

Iliescu v. Steppan, 394 P.3d 930, 932 (Nev. 2017). In September 2005, plaintiffs retained the Hale, Lane, Peek, Dennison and Howard law firm (“Hale Lane”) to “review, fine tune, clarify, and in all respects, advise the Iliescus” regarding the Purchase Agreement. ECF No. 1 ¶ 25. Plaintiffs allege that one addendum to the Purchase Agreement, prepared by Hale Lane, provided that “CPD was to indemnify, defend, and hold harmless the [plaintiffs] from any lien claims against the Property, or costs and expenses incurred by the sellers, due to any work Buyer caused to be performed.” Id. ¶ 27.

         “During escrow, CPD assigned the Land Purchase Agreement to an affiliate, BSC Investments, LLC (BSC). BSC negotiated with a California architectural firm, Fisher Friedman Associates, to design the Wingfield Towers. . . . Mark Steppan, a Fisher Friedman employee who is an architect licensed in Nevada, served as the architect of record for Fisher Friedman.” Iliescu, 394 P.3d at 932. Plaintiffs allege that an additional indemnity agreement was signed by defendant Schleining on December 8, 2006, which provided that he, jointly and severally with others listed, [2]would “indemnify, defend, protect and hold Iliescu harmless against all damages, losses, expenses, costs, liabilities . . .” and “pay all attorney's fees and costs incurred to contest and discharge the Mechanic's Lien.” ECF No. 1 ¶ 41. “Financing for the Wingfield Towers project was never obtained, escrow never closed, and no on site improvements were ever performed on the property. When the escrow was canceled, Iliescu's unimproved property was subject to Steppan's multimillion dollar lien claim for the unpaid invoices submitted to BSC.” Iliescu, 394 P.3d at 932.

         In February 2007, plaintiffs sought release from Steppan's mechanic's lien in Nevada's Second Judicial District Court, case number CV07-00341. ECF No. 1 ¶ 43. Steppan then filed his own action before the state court to foreclose on his mechanic's lien, case number CV07-01021. Id. ¶ 45. These two cases, consolidated into case number CV07-00341, are referred to as the “Steppan Lien Litigation". Id. ¶ 45. When plaintiffs filed their answer to Steppan's complaint, Iliescu filed a third-party complaint against Schleining to enforce the indemnity agreement, and for malpractice and negligence against Hale Lane and individual lawyer defendants. ECF No. 8-4.[3] The Honorable District Court Judge Brent Adams initially presided over the litigation and did not require either Steppan or the Iliescus to file early case conference reports, as was required of a plaintiff under Nevada Rule of Civil Procedure (“NRCP”) 16.1 (pre March 2019 Amendments). See ECF No. 18, Ex. L. In 2011, Judge Adams recused himself, and the case was reassigned to the Honorable District Court Judge Steven Elliott. ECF No. 18, Ex. F; ECF No. 18, Ex. L.

         In July 2011, Hale Lane filed a supplement to a motion for summary judgment, arguing that because Iliescu had failed to file a case conference report within 30 days of each case conference in violation of NRCP 16.1(c), the claims against them should be dismissed pursuant to NRCP 16.1(e). ECF No. 18, Ex. G. Judge Elliott granted Hale Lane's motion in part because Iliescu had failed to file their NRCP 16.1(c) reports. ECF No. 18, Ex. H. Three days later, Iliescu filed their own motion to dismiss Steppan's complaint, arguing that Steppan had also failed to file the required case conference reports pursuant to NRCP 16.1(c). ECF No. 18, Ex. I. Similarly, Judge Elliott granted Iliescu's motion and Steppan's claims against Iliescu were dismissed without prejudice pursuant to NRCP 16.1(e)(2). ECF No. 18, Ex. J.

         Based on the same alleged failure to file the required NRCP 16.1(c) report, defendant Schleining filed his own motion to dismiss Iliescu's claims against him. ECF No. 8-5. Plaintiffs responded to Schleining's motion stating: “Iliescu has no substantive legal defense to the position of Third Party Defendant John Schleining and believes that in order to be consistent with prior rulings regarding NRCP 16.1, the Court should grant the Motion and dismiss Iliescus' claims against John Schleining, all without prejudice.” ECF No 8-6 at 4. Judge Elliott granted Schleining's motion to dismiss finding that Iliescu admitted it had “no substantive legal defense to the Motion, ” and that “Iliescu consents to the granting of the Motion and to the dismissal of Iliescu's claims against Schleining without prejudice.” ECF No. 8-7 at 7.

         Steppan motioned the court to reconsider its order dismissing his claims against Iliescu and attached an affidavit from Judge Adams in which he stated: “At all times, your undersigned District Court Judge and the lawyers practicing before me treated the case as one managed by the Court under Rule 16. The Court did not expect any party to file an early case conference report under Rule 16(e)(2).” ECF No. 18, Ex. K. Upon review, Judge Elliott granted Steppan's motion for reconsideration and denied Illiescu's motion to dismiss. ECF No. 18, Ex. L. While the parties did not provide the court with the court filings, Judge Elliott's order also granted a motion for reconsideration of Hale Lane's motion for summary judgment, and denied the underlying motion in its entirety. Id. Judge Elliott's order makes no mention of Schleining's motion to dismiss, and neither party provides any court filing that the decision was reversed-Schleining remained dismissed from the Steppan Lien Litigation following Judge Elliott's November 22, 2011 order. After 5 more years of litigation, in May 2017, the Nevada Supreme Court held that Steppan failed to “provide Iliescu with the required pre-lien notice, ” reversed “the district court's order foreclosing Steppan's mechanic's lien, ” and remanded “the matter to the district court for it to enter judgment in favor of Iliescu.” Iliescu, 394 P.3d at 936.

         Concurrently, in July 2015, the plaintiffs filed another complaint in the Second Judicial District Court against defendant Schleining, Holland & Hart, L.P., [4] and other individual lawyer defendants (the “second state court action”). ECF No. 8-8. On August 28, 2018, before Schleining filed his answer to the complaint, plaintiffs filed a notice of voluntary dismissal without prejudice, pursuant to NRCP 41(a)(1). ECF No. 8-18.

         Plaintiffs then filed the instant action in this court on December 26, 2018 against defendant Schleining, alleging claims for breach of contract and specific performance based on the alleged indemnity agreement. See ECF No. 1. Schleining filed a motion to dismiss based on the “two dismissal rule, ” Federal Rule of Civil Procedure 41(a)(1)(B) (“FRCP”), arguing that because Schleining was dismissed from the Steppan Lien Litigation in 2011 and then voluntarily dismissed by notice in August 2018 from the second state court action, plaintiffs are barred from litigating the same issue a third time before this court. ECF No. 9. Plaintiffs argue that because Schleining was not voluntarily dismissed from the Steppan Lien Litigation under FRCP 41(a)(1), it does not count toward the two-dismissals which would bar plaintiffs from bringing this action. ECF No. 17.

         II. ...


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