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Chandra v. Schulte

Supreme Court of Nevada

December 26, 2019

SHARATH CHANDRA, ADMINISTRATOR, NEVADA REAL ESTATE DIVISION, Appellant,
v.
MELANI SCHULTE; AND WILLIAM R. SCHULTE, Respondents.

          Appeal from district court orders directing payment from the Real Estate Education, Research and Recovery Fund. Eighth. Judicial District Court, Family Court Division, Clark County; Cheryl B. Moss, Judge.

          Aaron D. Ford, Attorney General, David J. Pope, Chief Deputy Attorney General, and Donald J. Bordelove, Deputy Attorney General, Carson City, for Appellant.

          Law Office of Amberlea Davis and Amberlea S. Davis, Las Vegas, for Respondent Melani Schulte.

         William R. Schulte, in Pro Se.

          BEFORE HARDESTY, STIGLICH and SILVER, JJ.

          OPINION

          STIGLICH, J.

         The Nevada Real Estate Education, Research and Recovery Fund (the Fund) compensates victims of real estate fraud whose judgment against a fraudulent real estate licensee is uncollectable. In this appeal, the Administrator of the Nevada Real Estate Division challenges nine orders directing payment from the Fund, one to Melani Schulte individually and eight to various LLCs in her control. The orders stem from Melani's then-husband William Schulte's fraudulent management of properties, all but one of which were jointly owned by the Schultes. Because Melani and William were married at the time of the fraud, we conclude that the spousal exception to Fund recovery in NRS 645.844(4)(a) prohibits Melani's individual recovery and the district court erred in granting her an award from the Fund. Further, because transactions involving one's own properties do not require a real estate license, the district court erred in granting awards to the eight LLCs under NRS 645.844(1). Accordingly, we reverse the nine district court orders directing payment from the Fund.

         BACKGROUND

         Respondents William and Melani Schulte jointly owned numerous properties during their marriage. William, who at the time was a real estate licensee, managed these properties, among others, while working for his and Melani's real estate management business. In 2013, the Nevada Real Estate Commission found that William committed real estate misconduct by defrauding both third-party clients and also fraudulently managing his and Melani's jointly owned properties. Melani was uninvolved in the misconduct.

         Also in 2013, the district court granted a divorce between William and Melani. In the divorce decree, the district court awarded numerous properties that William fraudulently managed to Melani. These properties are currently held by distinct LLCs with Melani as the successor in interest.

         As part of the divorce proceeding, the district court granted 21 individual judgments against William resulting from his real estate misconduct. One judgment was in favor of Melani for a payment she made to a third-party client to satisfy an outstanding judgment due to William's fraud. Twenty judgments were in favor of Melani's distinct LLCs. These judgments compensated the LLCs for William's failure to remit rent and security deposits while managing the LLCs properties that, at the time, he and Melani jointly owned.

         After failing to collect on the judgments from William, Melani filed nine verified petitions for orders directing payment from the Fund, one requesting payment to Melani as an individual and eight to her LLCs, Appellant Sharath Chandra, as the Administrator of the Nevada Real Estate Division, opposed these petitions. The district court granted the petitions in nine nearly identical orders. Chandra appealed.[1]

         DISCUSSION

         The Fund is a special revenue fund that aids victims of real estate fraud whose judgments against real estate licensees have proven to be uncollectable.[2] See NRS 645.842; Colello v. Adm'r of Real Estate Div. of State of Nev., 100 Nev. 344, 347, 683 P.2d 15, 16 (1984). In this appeal, we consider whether the district court properly granted Melani's petitions for recovery from the Fund under NRS 645.844 for both herself individually and for the eight LLCs under her control. In doing so, we must determine whether the spousal exception to recovery under NRS 645.844(4)(a) applies to Melani, who was married to William at the time of his misconduct but was no longer married at the time she sought recovery from the Fund. We also ...


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