133 Nev., Advance Opinion 76
IN THE SUPREME COURT OF THE STATE OF NEVADA
ROBERT L. MENDENHALL, AN No. 68053
INDIVIDUAL; AND SUNRIDGE
CORPORATION, A NEVADA
CORPORATION,
Appellants,
FILED
vs. OCT 0 5 2017
RONALD TASSINARI, AN
INDIVIDUAL; AND AMERICAN
VANTAGE BROWNSTONE, LLC, A
NEVADA LIMITED LIABILITY
COMPANY,
Respondents.
Appeal from a district court order dismissing a tort action.
Eighth Judicial District Court, Clark County; Rob Bare, Judge.
Affirmed.
Marquis Aurbach Coffing and Micah S. Echols, Avece M. Higbee, and
Adele V. Karoum, Las Vegas; Howard & Howard Attorneys PLLC and
Gwen Rutar Mullins and Wade B. Gochnour, Las Vegas,
for Appellants.
Santoro Whitmire and Nicholas J. Santoro and Oliver J. Pancheri, Las
Vegas; Harry Paul Marquis, Chtd., and Harry Paul Marquis, Las Vegas;
Legal Offices of James J. Lee and James J. Lee, Las Vegas,
for Respondents.
BEFORE DOUGLAS, GIBBONS and PICKERING, JJ.
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OPINION
By the Court, DOUGLAS, J.:
This case addresses the tension in the law that arises where a
party that served an NRCP 68 offer of judgment discovers facts, during
the ten-day irrevocable period for acceptance of NRCP 68 offers, that
would otherwise impact the offering party's decision to serve an NRCP 68
offer in the first instance. Specifically, we must determine whether claims
that are brought by the offering party in a second action, and arise out of
these facts that were discovered after serving the NRCP 68 offer, are
barred by general principles of claim preclusion or by the very terms of the
NRCP 68 offer.
We hold that both the general principles of claim preclusion
and the terms in an NRCP 68 offer are implicated where a party seeks to
relitigate claims after entry of a final judgment pursuant to the NRCP 68
offer, even when they arise out of facts discovered during the NRCP 68
offer's ten-day irrevocable period for acceptance. We further hold that
these subsequent claims are barred where principles of claim preclusion
apply or, in the alternative, where the terms of the offer of judgment
indicate that such claims are barred. Because appellants' claims are
barred by both the doctrine of claim preclusion and by the terms of the
offer of judgment, we affirm the district court's decision.
FACTUAL AND PROCEDURAL HISTORY
This appeal involves two distinct cases. The first case was
dismissed after payment of an accepted offer of judgment (district court
case no. A653822, the First Action), and the second case was dismissed
under the doctrine of claim preclusion because it raised claims that were
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or could have been raised in the First Action (district court case no.
A708281, the Second Action).
In the First Action, Brownstone Gold Town, LLC, and
Brownstone Gold Town CV, LLC (collectively, the Brownstone Entities),
sued appellants Robert Mendenhall and Sunridge Corporation for
allegedly breaching an agreement entered into by the parties (the Term
Sheet).' Pursuant to the Term Sheet, appellants agreed to contribute real
property for the development of a 300-room hotel with casino and
convention space. In exchange for the contribution of the property,
appellants agreed to receive a 27 percent membership interest. The Term
Sheet further provided that the Brownstone Entities would contribute
$1,500,000 for a 2.7 percent membership interest, while other unnamed,
nonparty investors (the Other Investors) would contribute $7,000,000
for a 12.6 percent membership interest. Additionally, the Term Sheet
included signature blocks for the following four parties: (1) respondent
American Vantage Brownstone, LLC (AVB), (2) the Brownstone Entities,
(3) appellants, and (4) the Other Investors.
Relying on the Term Sheet, the Brownstone Entities invested
considerable time and expense in acquiring plans, surveys, approvals, and
land use entitlements. However, in spite of their assurances that they
would contribute the property, appellants failed to fulfill this obligation.
Alleging that appellants had breached the Term Sheet, the Brownstone
Entities brought suit.
Before trial commenced in the First Action, appellants
presented the Brownstone Entities with an offer of judgment (the Offer) in
1 AVB was the parent company of the Brownstone Entities.
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the amount of $1,200,000. The Offer was "in settlement of all claims
between and among ROBERT L. MENDENHALL, SUNRIDGE
CORPORATION, BROWNSTONE GOLD TOWN, LLC and
BROWNSTONE GOLD TOWN CV, LLC or those asserted or that could
have been asserted on behalf of each of them against one another."
(Emphasis added.) The Offer further stated:
Acceptance of this Offer of Judgment would
fully discharge and release any and all claims as
alleged, or that could have been alleged, in this
action by ROBERT L. MENDENHALL,
SUNRIDGE CORPORATION, BROWNSTONE
GOLD TOWN, LLC, and BROWNSTONE GOLD
TOWN CV, LLC, including, but not limited to,
those asserted in the Complaint as well as any
related or potential claims that could be asserted
in this action against one another.
(Emphases added.)
Near the end of discovery, and during the Offer's ten-day
irrevocable period, appellants learned that respondent Ronald Tassinari, a
corporate officer of AVB, allegedly committed fraud concerning the Term
Sheet. In particular, Tassinari testified during his deposition that he
signed the Term Sheet on behalf of the Other Investors, even though prior
representations were made that there were nonparty investors who would
contribute the required amount of capital. Thus, appellants filed for leave
to amend their answer to add a third-party complaint against respondents
and assert counterclaims against the Brownstone Entities. The proposed
amended pleading included allegations that Tassinari was a principal of
the Brownstone Entities and AVB and that Tassinari, individually and in
his role with the Brownstone Entities and AVB, misled appellants into
believing there were other third-party investors. Appellants' motion
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argued that the claims arose out of the same set of facts and transactions
as those set forth in the complaint.
The Brownstone Entities accepted the offer of judgment and
the First Action was dismissed with prejudice, however, rendering
appellants' motion moot. A few months after the Offer was accepted,
appellants initiated the Second Action by filing a complaint that alleged
fraud against respondents. Respondents subsequently filed a motion to
dismiss appellants' complaint, which the district court granted.
Ultimately, the district court determined that the doctrine of claim
preclusion barred the Second Action. The court found that (1) the order of
dismissal from the First Action was a final, valid judgment; (2) the claims
asserted by appellants in the Second Action were based upon the same
claims asserted in the First Action, or they could have been brought in the
First Action; and (3) respondents were privies of the Brownstone Entities.
This appeal followed.
DISCUSSION
The crux of appellants' argument is that the district court
misinterpreted the doctrine of claim preclusion when it granted
respondents' motion to dismiss. In particular, appellants argue that
(1) respondents are not privies of the Brownstone Entities; (2) claim
preclusion does not apply because the claims in the Second Action were
not based on the same cause of action and were not "brought in the first
case" because the district court did not consider them; (3) the fraud claims
they asserted in the Second Action were not compulsory claims, but
merely permissive claims, and thus the doctrine of claim preclusion does
not apply; and (4) the fraud claims they asserted in the Second Action
could not have been asserted in the First Action because they discovered
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respondents' alleged fraud during the Offer's ten-day irrevocable period,
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and thus, a formal barrier existed to their ability to bring the claims
brought forth in the Second Action.
In deciding a motion to dismiss, if the district court considers
matters outside the pleadings—as was the case here—the motion "shall be
treated as one for summary judgment and disposed of as provided in Rule
56." NRCP 12(b); Thompson v. City of N. Las Vegas, 108 Nev. 435, 438,
833 P.2d 1132, 1134 (1992). Pursuant to NRCP 56(c), summary judgment
is proper when no genuine issue of material fact remains and the movant
is entitled to a judgment as a matter of law. Wood u. Safeway, Inc., 121
Nev. 724, 729,
121 P.3d 1026, 1029 (2005).
Claim preclusion applies
This court has established a three-part test for determining
whether claim preclusion applies. See Five Star Capital Corp. v. Ruby,
124 Nev. 1048, 1054,
194 P.3d 709, 713 (2008), holding modified on other
grounds by Weddell v. Sharp, 131 Nev., Adv. Op. 28, 350 P.3d 80 (2015).
These three factors include determining whether "(1) the parties or their
privies are the same, (2) the final judgment is valid, and (3) the
subsequent action is based on the same claims or any part of them that
were or could have been brought in the first case." Id. (footnote omitted).
The parties or their privies are the same
Nevada law previously limited the concept of privity to
situations where the individual "acquired an interest in the subject matter
affected by the judgment through. . . one of the parties, as by inheritance,
succession, or purchase." Bower v. Harrah's Laughlin, Inc., 125 Nev. 470,
481,
215 P.3d 709, 718 (2009) (internal quotation marks omitted),
modified on other grounds by Garcia v. Prudential Ins. Co. of Am., 129
Nev. 15,
293 P.3d 869 (2013). More recently, in Alcantara v. Wal-Mart
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Stores, Inc., this court adopted the Restatement (Second) of Judgments
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§ 41, which additionally recognizes privity under an "adequate
representation" analysis, but this applies only to persons who represent a
litigant's interests. 130 Nev. 252, 261,
321 P.3d 912, 917 (2014).
"However, privity may also be found in other circumstances,
beyond those categories noted in the Restatement . . . ." Rucker v.
Schmidt, 794 N.W.2d 114, 118 (Minn. 2011). Indeed, "[c]ontemporary
courts ... have broadly construed the concept of privity, far beyond its
literal and historic meaning, to include any situation in which the
relationship between the parties is sufficiently close to supply preclusion."
Vets North, Inc. v. Libutti, No. CV-01-7773-DRHETB, 2003 WL 21542554,
at *11 (E.D.N.Y. Jan. 24, 2003) (internal quotation marks omitted). The
United States Court of Appeals for the Ninth Circuit, for example, has
stated that although the concept of privity was traditionally limited to
certain "legal relationships in which two parties have identical or
transferred rights with respect to a particular legal interest," such as coowners of property, decedents and heirs, joint obligees, etc., Headwaters
Inc. v. U.S. Forest Serv., 399 F.3d 1047, 1053 (9th Cir. 2005), it now
encompass a relationship in which "there is substantial identity between
parties, that is, when there is sufficient commonality of interest." Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l Planning Agency, 322 F.3d 1064,
1081-82 (9th Cir. 2003) (internal quotation marks omitted). This
expansion has been, at least in part, dictated by the reality that privity is
not susceptible to a clear definition. See Rucker, 794 N.W.2d at 118;
Clemmer v. Hartford Ins. Co., 587 P.2d 1098, 1102 (Cal. 1978), overruled
on other grounds by Ryan v. Rosenfeld, 395 P.3d 689 (Cal. 2017).
We recognize that privity does not lend itself to a neat
definition, thus determining privity for preclusion purposes requires a
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close examination of the facts and circumstances of each case. Rucker, 794
N.W.2d at 118; Citizens for Open Access to Sand & Tide, Inc. v. Seadrift
Ass'n, 71 Cal. Rptr. 2d 77, 88 (Ct. App. 1998); see also Weddell v. Sharp,
131 Nev., Adv. Op. 28, 350 P.3d 80 (2015) (modifying the Five Star test to
include claims that fall under a theory of nonmutual claim preclusion).
Here, the record demonstrates a substantial identity between
the parties. Appellants were parties to both the First Action and the
Second Action. Although respondents were not parties to the First Action,
the district court found that they were privies of the Brownstone Entities,
plaintiffs in the First Action. In particular, AVB was the Brownstone
Entities' parent company and a party to the Term Sheet. Furthermore,
Tassinari, in his capacity as a corporate officer of AVB, signed the Term
Sheet. Appellants acknowledged this close relationship by alleging that
Tassinari acted both individually and on behalf of the Brownstone Entities
and AVB in making representations to appellants in order to induce them
to execute the Term Sheet. Additionally, both respondents and the
Brownstone Entities obtained a legal right under the Term Sheet, which
appellants breached by failing to provide the property for development of
the casino and convention space. More importantly, fraud in the
inducement is an affirmative defense to a breach of contract claim, and
respondents would have had the same interest in defending against fraud
committed by the Brownstone Entities. Indeed, appellants seemed to
recognize this when filing the motion to amend the pleadings in the First
Action to include claims against respondents and the Brownstone Entities.
The final judgment is valid
Although we have never addressed whether an accepted offer
of judgment and subsequent order under NRCP 68 constitutes a final
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judgment for purposes of claim preclusion, other courts have held that
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they do. See Arizona v. California, 530 U.S. 392, 414 ("In most
circumstances, it is recognized that consent agreements ordinarily are
intended to preclude any further litigation on the claim. . .
supplemented, 531 U.S. 1 (2000); Mallory v. Eyrich,
922 F.2d 1273, 1280
(6th Cir. 1991) (stating that a Rule 68 judgment is a particular type of
consent judgment); see also 18A Charles Alan Wright, Arthur R. Miller &
Edward H. Cooper, Federal Practice and Procedure § 4443 (2d ed. 2002).
We agree and hold that an order based on an accepted offer of judgment
under NRCP 68 constitutes a final judgment for purposes of claim
preclusion.
The Second Action is based on the same claims or any part of them
that were or could have been brought in the First Action
Regarding the issue of commonality between the initial and
subsequent claims, this court had previously articulated that "the first and
second complaint" needed to be "based on the same set of common facts"
and had to seek the same relief. Edwards v. Ghandour, 123 Nev. 105, 118,
159 P.3d 1086, 1094-95 (2007), abrogated by Five Star,
124 Nev. 1048,
194
P.3d 709. In addition, the court looked to "whether an identity of causes of
action exist[ed] between the two complaints." Id. at 118, 159 P.3d at 1095.
Five Star, however, signaled a departure from this "overly rigid" test for
applying claim preclusion. See 124 Nev. at 1054,
194 P.3d at 712. The
Five Star court rejected the test set forth in Edwards and applied claim
preclusion where "the subsequent action is based on the same claims or
any part of them that were or could have been brought in the first case."
Id. at 1054,
194 P.3d at 713. The test for determining whether the claims,
or any part of them, are barred in a subsequent action is if they are "based
on the same set of facts and circumstances as the [initial action]." Id. at
1055,
194 P.3d at 714.
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Here, both claims are based on the facts underlying the Term
Sheet. The Brownstone Entities alleged a breach of contract based on
appellants' failure to contribute the property upon which the 300-room
hotel and casino with convention space would be built, as reflected in the
Term Sheet. Appellants' claims in the Second Action are clearly based on
the same circumstances as those in the First Action, as appellants allege
that they were fraudulently induced into signing the Term Sheet by
making it appear that other investors were contributing funds. These
claims could clearly have been raised in the First Action as an affirmative
defense. Furthermore, appellants' motion to amend the pleadings in the
First Action reflects the reality that these claims could have been brought
in the First Action. Accordingly, the third Five Star factor is met. 2
The claims were not permissive counterclaims
Appellants also argue that claim preclusion does not apply
because the claims brought in the Second Action were permissive in
nature, as they had not matured at the time of the responsive pleading.
We disagree. Under NRCP 13(a), a claim is compulsory "if it arises out of
the transaction or occurrence that is the subject matter of the opposing
party's claim." NRCP 13(a) further instructs that "[a] pleading shall state
[any compulsory claim] which at the time of serving the pleading the
2 Appellants argue that for claim preclusion to apply in Nevada, the
two sets of claims must be based on the same "cause of action" and that
the test for identical causes of action is whether the sets of facts essential
to maintain the two suits are the same. However, the cases that
appellants cite in support of their contention all predate Edwards, 123
Nev. 105,
159 P.3d 1086, which, as we recognized in Five Star, was the
first claim preclusion test espoused by this court. 124 Nev. at 1054,
194
P.3d at 712. Neither Five Star nor Weddell requires such a limited
interpretation of claim preclusion.
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pleader has against any opposing party[4" The definition of transaction or
occurrence does not require an identity of factual backgrounds. See Moore
v. N.Y. Cotton Exch., 270 U.S. 593, 610 (1926). Instead, the relevant
consideration is whether the pertinent facts of the different claims are so
logically related that issues of judicial economy and fairness mandate that
all issues be tried in one suit. See United States v. Aquavella, 615 F.2d 12,
22 (2d Cir. 1979); see also Michelle S. Simon, Defining the Limits of
Supplemental Jurisdiction Under 28 US. C. § 1367: A Hearty Welcome to
Permissive Counterclaims, 9 Lewis & Clark L. Rev. 295, 301-02 (2005)
(stating that "[in the most common test, courts have held that the
requirement of 'same transaction or occurrence' is met when there is a
'logical relationship' between the counterclaim and the main claim").
Here, both claims are logically related because they both arise out of the
same transaction—the signing of the Term Sheet. The Brownstone
Entities alleged that appellants breached their duties under the Term
Sheet. On the other hand, appellants allege that they were fraudulently
induced into signing the Term Sheet, an affirmative defense. Indeed,
appellants' motion to amend the pleadings specifically states that the
claims arose out of the same set of facts and transactions as those set forth
in the complaint. Accordingly, we conclude that the claims set forth in the
Second Action are so logically related to those in the First Action that
issues of judicial economy and fairness mandate that they be tried in one
suit.
Nevertheless, appellants are correct in that there is a
maturity exception to compulsory claims. See Stone v. Dep't of Aviation,
453 F.3d 1271, 1276 (10th Cir. 2006) (stating that "a party need not assert
a counterclaim if it has not matured at the time of the pleading, even if it
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arises from the same transaction or occurrence") (internal quotation
marks omitted); Stoller Fisheries, Inc. v. Am. Title Ins. Co., 258 N.W.2d
336, 342 (Iowa 1977) (analyzing the maturity exception to compulsory
claims). "[A] claim matures when the holder thereof is entitled to a legal
remedy" or when it accrues. Stoller, 258 N.W.2d at 342; Harris Cty. v.
Luna-Prudencio, 294 S.W.3d 690, 698 (Tex. App. 2009). A legal remedy
exists where "the events giving rise to the cause of action develop." Sky
View Fin., Inc. v. Bellinger, 554 N.W.2d 694, 697 (Iowa 1996). A claim
"accrues when the wrong occurs and a party sustains injuries for which
relief could be sought." Petersen v. Bruen, 106 Nev. 271, 274,
792 P.2d 18,
20 (1990). Here, appellants were entitled to a legal remedy, and their
claims had accrued. Tassinari had signed in the line marked for "Other
Investor(s)" before the complaint was even filed. These signatures gave
rise to the cause of action of fraud in the inducement. Furthermore,
appellants sustained an injury when the Brownstone Entities filed a
breach of contract claim based on a contract that appellants were allegedly
induced into signing. Thus, appellants' claims had matured.
There is also an exception for claims acquired after the
responsive pleadings. See 6 Charles Alan Wright, Arthur R. Miller &
Mary Kay Kane, Federal Practice and Procedure § 1428 (2010) (noting
"Fain after-acquired claim, even if it arises out of the transaction or
occurrence that is the subject matter of the opposing party's claim, need
not be pleaded supplementally; the after-acquired claim is not considered
a compulsory counterclaim under Rule 13(a) and a failure to interpose it
will not bar its assertion in a later suit"). When a party does not know of a
claim until after its pleading, it constitutes an after-acquired claim. See
Loveland Essential Grp., LLC v. Grommon Farms, Inc., 318 P.3d 6, 11, 14
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(Colo. App. 2012). However, even if appellants did not know of the alleged
fraud until after the responsive pleading, their claim is not an "afterarising claim" if the lack of knowledge was due to their own negligence or
lack of reasonable diligence. Id. at 11, 14. Here, appellants had the Term
Sheet with Tassinari's signature on the signature blocks for both AVB and
"Other Investor(s)" for nearly seven years prior to the deposition. At the
very least, due diligence would have revealed what appeared to be
identical signatures on the signature blocks for AVE and the "Other
Investor(s)." Accordingly, the claims were compulsory and no exception
applied.
No formal barriers existed that prevented appellants' claims in the
First Action
Appellants also argue that the Offer's ten-day irrevocable
period imposed a formal barrier for which an exception to claim preclusion
should be recognized. The Restatement (Second) of Judgments does
provide an exception to claim preclusion where "Mlle judgment in the first
action was plainly inconsistent with the fair and equitable implementation
of a statutory. . . scheme . ." Restatement (Second) of Judgments
§ 26(1)(d) (Am. Law Inst 1982). However, comment e, which elaborates
on this subsection, clarifies that this exception only applies where "Mlle
adjudication of a particular action . . . in retrospect appear [s] to create
such inequities in the context of a statutory scheme as a whole that a
second action to correct the inequity may be called for. . . ." Id.
As this court alluded to in Nava v. Second Judicial Dist.
Court, the statutory scheme provides parties in appellants' position with
the ability to seek relief by filing a motion under NRCP 60(b). 118 Nev.
396, 398 n.2,
46 P.3d 60, 61 n.2 (2002). In Nava, a civil suit was brought
against the defendant based on an accident where the defendant, under
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the influence of alcohol, rear-ended real party in interest's vehicle. Id. at
396-97,
46 P.3d at 60. The defendant was served with an offer of
judgment by the real party in interest in the amount of $100,000. Id. at
397,
46 P.3d at 60. Under NRCP 68 and former NRS 117.115, 3 the
defendant was required to accept or deny the offer within ten days of
service. Id. Five days after service of the offer, the defendant received
notice that the offer was being withdrawn. Id. The reason for the
withdrawal was that the real party in interest had elected to have back
surgery as a result of the accident, which would increase the damages to
more than the $100,000 that had been included in the offer. Id. The
defendant accepted the offer within the ten-day acceptance period and
ignored the notice of withdrawal. Id. This court concluded that the offer
was irrevocable during the ten-day acceptance period and that there was
no provision in the statute to withdraw before the ten days expired. Id. at
398,
46 P.3d at 61. However, this court also indicated that the real party
in interest could file a motion under NRCP 60(b) to be relieved from a final
judgment or order, and that the district court could then evaluate his
claims. Id. at 398 n.2,
46 P.3d at 61 n.2.
As was the case for the real party in interest in Nava,
appellants here allegedly discovered facts that would potentially affect the
offer of judgment they served on respondents during the irrevocable ten-day period. Furthermore, as was the case for the real party in interest in
Nava, NRCP 60(b) provides relief for appellants. Specifically, a party may
be relieved from a judgment or order where there has been newly
3 NRS 17.115 has since been repealed. See 2015 Nev. Stat., ch. 442,
§ 41, at 2569.
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discovered evidence, or where there has been fraud, misrepresentation, or
other misconduct by the opposing party. See NRCP 60(b). Thus, had
appellants filed an NRCP 60(b) motion, "the district court could [have]
evaluate[d] [their] claims." Nava, 118 Nev. at 398 n.2,
46 P.3d at 61 n.2.
Accordingly, appellants' case does not fall under § 26(1)(d) of the
Restatement (Second) of Judgments because the adjudication of their case
in retrospect does not "create such inequities in the context of a statutory
scheme as a whole that a second action to correct the inequity may be
called for . . . ." Restatement (Second) of Judgments § 26(1)(d) cmt. e (Am.
Law Inst. 1982). 4
Because the three Five Star factors are met and no exception
to claim preclusion applies, we hold that the claims brought in the Second
Action are barred.
4Appellants raise several other issues regarding claim preclusion,
including the arguments that (1) the district court intended to reserve the
claims that were in appellants' motion to amend the pleadings, and
(2) claim preclusion does not apply where the claims could not have been
brought earlier under NRCP 11. We disagree. First, the case cited by
appellants stands for the proposition that when a court fails to consider a
particular claim that was a part of an action, that claim can reasonably be
considered to be reserved. See Dodd v. Hood River Cty., 59 F.3d 852, 862
(9th Cir. 1995). That case does not extend to situations, like here, where
the district court fails to consider claims that were not part of the action.
See id. Second, the record suggests that appellants had the Term Sheet in
their possession for nearly seven years prior to filing the motion to amend
the pleadings. Even without Tassinari's deposition, it is difficult to say
that a court would have found that there was no good faith basis for
bringing a fraud claim based on the Term Sheet signatures alone, such
that NRCP 11 precluded the claim.
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).'''scR,..-V•ri .e.' IFP F it r4-1 .
The terms in the Offer foreclose the claims in the Second Action
In spite of the claims in the Second Action being barred by
general principles of claim preclusion, this court recognizes that a consent
judgment, such as one based on an NRCP 68 offer and acceptance, may
alter the preclusive effects of a judgment. See May v. Parker-Abbott
Transfer & Storage, Inc., 899 F.2d 1007, 1010 (10th Cir. 1990) ("This court
recognizes that consent decrees are of a contractual nature and, as such,
their terms may alter the preclusive effects of a judgment"); Mallory, 922
F.2d at 1280 (stating that an offer of judgment is a particular type of
consent judgment); 18A Charles Alan Wright, Arthur R. Miller & Edward
H. Cooper, Federal Practice and Procedure § 4443 (2d ed. 2002) (noting
that the nature of consent judgments allows for claim preclusion based on
the parties' intent). Therefore, it is also necessary to determine whether
the claims in the Second Action are precluded by the consent decree in this
case. 5 See Garcia v. Scoppetta, 289 F. Supp. 2d 343, 350 (E.D.N.Y. 2003)
("It would be a mistake to suggest that [offers of judgment] should be
accorded no preclusive effect.").
5We note that in May v. Anderson, this court stated that "once a case
has been filed in court, the bar to relitigating that case after an offer of
judgment has been accepted does not depend on the terms of a release but
rather on the claim preclusion effect of res judicata." 121 Nev. 668, 674,
119 P.3d 1254, 1258 (2005). In May, however, we were addressing
"whether the essential terms of a release are a material part of a
settlement agreement, without which the settlement agreement is never
formed, or whether the release's terms are inconsequential in determining
whether the parties have reached a settlement agreement." Id. at 670,
119 Nev. at 1256. The preclusive effect of an offer of judgment was not
squarely before this court, and, thus, these statements are not controlling.
See Kaldi v. Farmers Ins. Exch., 117 Nev. 273, 282,
21 P.3d 16, 22 (2001)
(stating that dicta is not controlling).
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sk","Zikiac.
As a consent decree is contractual in nature, it is interpreted
according to general principles governing the interpretation of contracts.
See Hertz v. State, Dep't of Corr., 230 P.3d 663, 669 (Alaska 2010);
Commonwealth v. UPMC, 129 A.3d 441, 463 (Pa. 2015); State, Dep't of
Ecology v. Tiger Oil Corp., 271 P.3d 331, 350 (Wash. Ct. App. 2012). "This
court initially determines whether the language of the contract is clear
and unambiguous; if it is, the contract will be enforced as written." Am.
First Fed. Credit Union v. Soro, 131 Nev., Adv. Op. 73, 359 P.3d 105, 106
(2015) (internal quotation marks omitted). In interpreting a contract, "the
court shall effectuate the intent of the parties, which may be determined
in light of the surrounding circumstances if not clear from the contract
itself." Anvui, LLC v. G.L. Dragon, LLC, 123 Nev. 212, 215,
163 P.3d 405,
407 (2007) (internal quotation marks omitted). Furthermore, "[a] court
should not interpret a contract so as to make meaningless its provisions,"
and "[e]very word must be given effect if at all possible." Bielar v. Washoe
Health Sys., Inc., 129 Nev. 459, 465,
306 P.3d 360, 364 (2013) (second
alteration in original) (internal quotation marks omitted). Lastly, any
ambiguity is construed against the drafter. Anvui, 123 Nev. at 215-16,
163 P.3d at 407.
Here, the terms of the Offer evince an intent by the parties to
prevent a broad set of claims from being raised in a second action. The
Offer settled "all claims between and among" the parties "or those
asserted or that could have been asserted on behalf of each of them against
one another." (Emphases added.) These included, "but [were] not limited
to, those [claims] asserted in the [c]omplaint as well as any related or
potential claims that could [have] be [en] asserted in [the first] action
against one another." (Emphasis added.)
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At the outset, it must be noted that the Offer uses the phrase
"between and among" the parties. (Emphasis added.) Merriam-Webster's
defines "among" as "in company or association with." Merriam-Webster's
Collegiate Dictionary (11th ed. 2007). Thus, the very terms of the Offer
extends the preclusive effects to claims that are associated with the
parties. Appellants' claims against respondents are clearly in "association
with" both appellants and the Brownstone Entities, as they are based on
the duties arising under the Term Sheet and involve a subsidiary of AVB.
The intent of the parties to give preclusive effect to a broad set of claims is
further demonstrated by the Offer's terms that it was in settlement of the
claims brought in the First Action, "as well as any related or potential
claims that could [have] be [en] asserted in the [First] [A] ction." (Emphasis
added.)
This broad language also comports with the purpose behind
offers of judgment. The purpose of an offer of judgment under former NRS
17.115 and NRCP 68 is to facilitate and encourage a settlement by placing
a risk of loss on the offeree who fails to accept the offer, with no risk to the
offeror, thus encouraging both offers and acceptance of offers. Matthews v.
Collman, 110 Nev. 940, 950,
878 P.2d 971, 978 (1994); see also Marek v.
Chesny, 473 U.S. 1, 5 (1985) (noting that the primary purpose behind
offers of judgment is to encourage the compromise and settlement of
litigation and that they "prompt[ ] both parties to a suit to evaluate the
risks and costs of litigation, and to balance them against the likelihood of
success upon trial on the merits"); 12 Charles Alan Wright, Arthur R.
Miller & Richard L. Marcus, Federal Practice and Procedure §3001 (2014)
(stating that by encouraging compromise, offers of judgment discourage
both protracted litigation and vexatious law suits).
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The fact that the claims in the Second Action were related or
potential claims that could have been brought in the First Action, and that
they involved claims "between and among [the parties]," is further
reflected in the fact that appellants attempted to amend the pleadings in
the First Action to include these claims against respondents. As
appellants' proposed amended pleading states, this was based on the
assertion that Tassinari was acting on behalf of both the Brownstone
Entities, as well as AVB, when he allegedly committed fraud.
Furthermore, in their motion to amend the pleadings, appellants argued
that these additional claims "ar[o]se out of the same set of facts set forth
in the [c]omplaint," which conflicts with the position they now assert.
Lastly, to the extent that there is any ambiguity in the phrase "between
and among," this court construes the ambiguity against appellants, the
drafters of the Offer. Anvui, 123 Nev. at 215-16, 163 P.3d at 407.
We hold that the broad scope of the Offer, drafted by
appellants no less, evinces the parties' intent to preclude the types of
claims set forth in the Second Action. We reiterate that appellants had an
avenue for relief in order to clarify the terms of the Offer. We further
reiterate that appellants failed to pursue this avenue for relief. Thus, the
NRCP 68 order entered by the district court after acceptance of the Offer
stands. Accordingly, as was the case under claim preclusion principles, the
very terms of the Offer foreclose a different outcome.
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CONCLUSION
We hold that appellants' claims in the Second Action are barred
by claim preclusion. We further hold that the broad terms set forth in the
offer of judgment evince an intent by the parties to similarly bar these
claims. Accordingly, we affirm the district court's order dismissing the
Second Action.
J.
We concur:
Gibbons
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