First Magnus Financial Corporation v. Rondeau et al

Filing 371

ORDER Denying 341 Motion for Attorney Fees and Costs. Signed by Judge James C. Mahan on 8/9/12. (Copies have been distributed pursuant to the NEF - MMM)

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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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FIRST MAGNUS FINANCIAL
CORPORATION,

2:07-CV-132- JCM (PAL)

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Plaintiff,

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v.

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TYSON RONDEAU and JANE DOE
RONDEAU, Husband and Wife, et al.,

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Defendants.

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ORDER

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Presently before the court is defendant Ace Appraisal’s motion for attorneys’ fees and costs.

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Doc. #341. Defendants Lawyers Title of Nevada, Inc. and Commonwealth Land Title Insurance

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Company have joined in the motion (doc. #341) and plaintiff Morris C. Aaron, trustee for First

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Magnus Liquidating Trust (real party in interest for First Magnus Financial Corporation) has filed

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an opposition (doc. #351).

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The defendants prevailed in a motion to dismiss and now seek to recovery attorneys’ fees
pursuant to NRS § 18.010(2). The statute provides:
In addition to the cases where an allowance is authorized by specific statute, the court may
make an allowance of attorney’s fees to a prevailing party:

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(a)

When the prevailing party has not recovered more than $20,000; or

(b)

Without regard to the recovery sought, when the court finds that the claim,
counterclaim, cross-claim or third-party complaint or defense of the opposing party
was brought or maintained without reasonable ground or to harass the prevailing

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James C. Mahan
U.S. District Judge

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party. The court shall liberally construe the provisions of this paragraph in favor of
awarding attorney’s fees in all appropriate situations. It is the intent of the
Legislature that the court award attorney’s fees pursuant to this paragraph and impose
sanctions pursuant to Rule 11 of the Nevada Rules of Civil Procedure in all
appropriate situations to punish and deter frivolous or vexatious claims and defenses
because such claims and defenses overburden limited judicial resources, hinder the
timely resolution of meritorious claims and increase the costs of engaging in business
and providing professional services to the public.

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In diversity cases, such as this case, federal courts apply the applicable state law with regard to the

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allowance of disallowance of fees. See Schulz v. Lamb, 591 F.2d 168, 173 (9th Cir. 1978).

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Defendants argue that plaintiff’s negligent misrepresentation claims were brought “without

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reasonable ground” because the court found that the claims were barred by the economic loss

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doctrine. Mot. at 4:26-28. While defendants are correct that they ultimately prevailed in dismissing

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the complaint on economic loss grounds, this does not necessarily mean the complaint was itself

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frivolous.

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To support a discretionary award of attorneys’ fees pursuant to NRS § 18.010(2), “‘there

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must be evidence in the record supporting the proposition that the complaint was brought without

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reasonable grounds or to harass the other party.’” Semenza v. Caughlin Crafted Homes, 111 Nev.

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1089, 1095 (1995 (quoting Chodhry v. NLVH, Inc., 109 Nev. 478, 486 (1993)). Further, where the

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relevant law is “not free from doubt” a court abuses its discretion by awarding discretionary fees

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under NRS § 18.010(2). See Key Bank v. Donnels, 106 Nev. 49, 53 (1990).

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Here, defendants have proffered no evidence or argument tending to indicate that the

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negligent misrepresentation claims were brought without reasonable ground. Rather, they include

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only a single, conclusory sentence stating as much. Contrary to defendants’ position, it seems more

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likely that they, and not plaintiff, have violated the standard set forth in NRS § 18.010(2).

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Moreover, the court does not find the law “free from doubt” regarding whether plaintiff’s

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claims are barred by the economic loss doctrine. The court has ruled on the issue and this court’s

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dismissal order is currently pending before the Ninth Circuit.

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...

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...

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James C. Mahan
U.S. District Judge

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, AND DECREED, that defendants’ motion for

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attorneys’ fees (doc. #341) be, and the same hereby is, DENIED.
DATED August 9, 2012.

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UNITED STATES DISTRICT JUDGE
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James C. Mahan
U.S. District Judge

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