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Recovering Reasonable Attorney's Fees after a Defense Verdict in Nevada


The prevailing defendants in Smith V. Crown Fin. Svcs of America, 890 P2d 767 (Nev. 1995) argued in the trial court that they should be awarded attorneys' fees because a defense verdict has a value of $20,000 or less. The defendants then asked for an award of attorney’s fees based upon NRS § 18.010(2)(a). 

This statute allows for  "attorneys fees to a prevailing party: (a) when the prevailing party has not recovered more than $20,000."  The general rule is Nevada is that attorney's fees are not recoverable by the successful party except pursuant to statute or where the written agreement entitles the prevailing party to an award of reasonable attorney's fees.

However, the Nevada Supreme Court held that a prevailing defendant may not use this statute as a basis for recovery of attorney’s fees in Nevada. In Smith v. Crown Fin. Svcs. Of America, 111 Nev. 277, 281, 890 P.2d 769, 771 (1995),  the Nevada Supreme Court

"Under the present formulation of the statute, eliminating the requirement of a
money judgment would afford some prevailing plaintiffs (those recovering no
more than $20,000) and all prevailing defendants the opportunity to recover
attorney fees. This over-inclusive result could deeply offend the policy
underlying the American Rule which seeks to provide less affluent people with
access to the courts. For example, a plaintiff in a personal injury or products
liability case would not only be required to pit his meager resources against
those of a large insurance company or manufacturer, he would also risk the
potentially devastating burden of paying for this marshalling of superior
resources should he lose.

By retaining the requirement of a money judgment, this court preserves the
right of some plaintiffs (and counterclaimants) to recover attorney fees while
subjecting defendants to the common law rule. Although this under-inclusive
rule gives plaintiffs an advantage, it does so only in cases involving $20,000
or less. This rule is faithful to the language of NRS 18.010(2)(a), it provides
a significant portion of the intended class of beneficiaries with the intended
benefit of being able to recover attorney fees, and it minimizes any harmful
impact upon the policies underlying the American Rule."

Thus, in cases involving no contractual attorneys' fees clause,  the only other way for a defendant to obtain an award of attorney’s fees is by making an Offer of Judgment and then obtaining a more favorable verdict.

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah.  Our firm’s practice includes a strong emphasis on construction law, contracts and litigation in the jurisdictions where we are licensed.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services.  Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation.  Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.


Implied Indemnity Claims in Nevada


Does an innocent defendant in a lawsuit have the right to try to compel its (wrongdoing)
co-defendant to provide it with a defense (or pay defense costs) and indemnity
prior to trial in the case. In other words, can a summary judgment be utilized to force an early defense or indemnity in the abscenceof an agreement? This does not appear to be a viable path procedurally in the abscence of a written indemnity and/or defense agreement. 

Perhaps sone of the best theories for receiving any monies from a co-defendant include
claims for apportionment, contribution and equitable indemnity.  Assuming there was no contractual provision in a contract between the two defendants requiring that one to provide
the other with a defense or indemnity, a defendant must rely on an equitable indemnity
theory (as opposed to an express, contractual indemnity provision, which would
be more ideal, if one had existed). 

An equitable indemnity theory is a judicially created
doctrine (not based on an express contractual provision the parties have agreed
upon), which is an equitable doctrine allowing a party to seek indemnity from
another party that actually, primarily caused the injured party’s damages. 

The theory is that an innocent defendant who is in privity with the plaintiff
should be able to seek redress for damages it is required
to pay because of the actions of the wrongdoing co-defendant.
However, in order to invoke this equitable theory, the claimant first
must plead and prove that: 

(1)    It has discharged a legal obligation owed to a third party;


(2)    The party from whom it seeks liability also was liable to
the third party; and


(3)    As between the claimant and the party from whom it seeks indemnity, the obligation ought to be discharged by the latter.


See,  Rodriguez v. Primadonna Co. LLC, 125 Nev. 578, 590 (2009).


Hence, it is a fundamental requirement that the claimant must
first discharge a legal obligation to the plaintiff before it can claim a right to
equitable indemnity from its co-defendant.  That typically will not
happen until a judgment has been entered in the case and a finding of liability
has been made against the defendant and discharged by it. 

At that point, the defendant may be able to make a claim to be
indemnified for damages paid out, as well as potentially some or all of its legal fees
and costs, but those matters are not guaranteed.   For
example, if a jury finds that the claimant is not liable to the plaintiff for a judgment, then it will never discharge a legal obligation, and, as a
result, would never be in a position to seek indemnity, including for its legal
fees and costs, from the co-defendant.  

The bottom line is that the applicable case law appears to
require a defendant/claimant to continue to defend the case through trial and then
litigate its indemnity, contribution and apportionment theories later on, after
a judgment has been issued.  

Further, the claimant should always make a demand early on for a defense
and indemnity against the co-defendant or third party defendant, in order to better preserve the right to subsequently argue that it is entitled to be indemnified for those fees and costs incurred after the demand was tendered to the co-defendant. 


About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah.  Our firm’s practice includes a strong emphasis on construction law, contracts and litigation in the jurisdictions where we are licensed.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services.  Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation.  Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.


Assignments of Bad Faith Claims, Stipulated Judgments and Covenants not to Execute


There are numerous cases involving an assignment of
the insured’s bad faith claim against the insurer to the plaintiff, which include a
stipulated judgment and covenant not to execute. Some insureds justifiably ask if they could potentially be liable for some type of collusion by the carrier.

 The following quotation from the California Supreme Court summarizes the general principles of law involved in analyzing these issues.  In the case of Samson v. Transamerica, quoted below, Transamerica claimed the entire procedure leading up to the stipulated settlement plan and covenant not to execute constituted a bad faith conspiracy by the insured and
the plaintiff.  The Supreme Court of California disagreed, and explained


“The problem with this contention is that Transamerica has
not shown that any of the parties (except Transamerica itself) breached any
duty or in any way acted improperly in the conduct of this lawsuit.  It is
true that the insurance contract imposes a duty of good faith and fair dealing
on the insured as well as the insurer (citations omitted) .  However, as
discussed above, Bagle’s duty to notify Transamerica of the lawsuit ceased when
the insurer denied coverage. (citations omitted). 

In addition, this court and the Court of Appeal have
frequently held than an insured breaches no duty to the insurance company when
he assigns his rights against the company to the injured plaintiffs in return
for a covenant not to execute.  “Where the insurer has repudiated its
obligation to defend, a defendant in the absence of fraud may, without
forfeiture of his right to indemnity, settle with the plaintiff upon the best
terms possible, taking a covenant not to execute.”  (citations omitted). 

When the insurer “exposes its policyholder to the sharp
thrust of personal liability” by breachings its obligations, the insured “need
not indulge in financial masochism….” (Citations omitted).  See Samson
v. Transamerican Insurance Company
30 Cal. 3d 220 (1981). 

These and other California cases illustrate that the conduct necessary
to permit an insurer to avoid liability for alleged fraud and collusion is very
extreme.  For example, in Lipson v. Jordache Enterprises, Inc. , 9
Cal. App. 4th 151 (1991), the parties amended the complaint just
four days before trial to include a cause of action for defamation in order to
bring the action within the insurer’s policy overage.  By the time the
insurer was given notice of the amended complaint and attempted to provide a
defense, judgment had already been rendered against its insured. 

Insureds should remember that until a written denial letter
arrives from the Insurance Carrier denying a particular claim, the insureds still have a duty to
provide the insurer with pertinent information about the status of the case,
including settlement offers.  Your attorneys will also have the carefully analyze the particular facts of your specific situation, and also consider the various applicable factors to weight the strength of the bad faith claim against the insurer.  

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah.  Our firm’s practice includes a strong emphasis on construction law, contracts and litigation in the jurisdictions where we are licensed.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services.  Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation.  Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.


Misconduct and Vicarious Liability under NRS 87.150





CASE NO. 2:14-cv-00111-JCM-NJK


 MEMORANDUM OF POINTS  AND AUTHORITIES                                             OPPOSITION TO FREDERICK HIPWELL’S MOTION TO DISMISS AMENDED COMPLAINT                                             


Plaintiff, W. A. Sokolowski (“Plaintiff”), by and through his
undersigned counsel, respectfully submits this Memorandum of Points and
Authorities in Opposition to the Motion to Dismiss the Amended Complaint (“Motion
to Dismiss” or “Motion”) filed by Defendant, Frederick Hipwell (“Hipwell”).  For the reasons stated below, Hipwell's Motion to Dismiss should be denied in its entirety.

  1. I.                

This shareholder’s action is brought by Plaintiff derivatively on behalf of Sands,
asserting claims of, inter alia, proxy fraud and the cover-up of criminal and other investigations of bribery, money laundering and other illegal activities, in violation of the Foreign
Corrupt Practices Act (“FCPA”), the Bank Secrecy Act, the Securities Exchange
Act, and applicable state and other laws, all with the knowledge or
acquiescence of Sands’ Board of Directors (the “Board”), its Audit Committee,
and the Company’s former auditor, Pricewaterhouse Coopers, LLP (“PWC”),
subjecting Sands and its shareholders to presently incalculable damages.

Sands and its subsidiaries have been the subject of long-running criminal and civil
investigations by the U.S. Department of Justice (“DOJ”), the Securities and
Exchange Commission (“SEC”), and various regulatory bodies in the U.S. and
China.  Any finding of violations of the FCPA could have a material adverse effect on the Company’s financial condition.  Such violations of law also
jeopardize Sands’ gaming license pursuant to rules of the Nevada Gaming Control
Board (“NGCB”). 

On June 10, 2011, the Board authorized its Audit Committee, composed of three Board
directors, Defendants Irwin Siegel, Jason Ader, and Jeffrey Schwartz, to
respond to an SEC subpoena and DOJ inquiry concerning the Company’s operations
in Macau.  Am. Complt. ¶¶ 67, 151.  The Audit Committee “retained” Richard Grimes
and Daniel Bookin, partners at O’Melveny & Myers, LLP (“O&M”), as its
counsel.  Am. Complt. ¶¶ 67, 148, 151. 

On July 26, 2011, the Board designated the Audit Committee as a “special litigation
committee” (“SLC”) and expanded its powers to include investigating the
allegations raised in Moradi v. Adelson et al., Case Nos. 2:11-cv-490.  Am. Complt.
146, 151.  Moradi, a shareholder action pending in this Court, is related to a pending state court action entitled, Kleinschmidt v. Adelson, et al., Case No. A-12-658749B;
both cases are currently stayed. 

In August 2012, the Audit Committee, with the aid of O&M, prepared a report for the NGCB
that stated the Company’s “controls and books and records were not sufficient.”  Am. Complt. ¶ 73.  On March 1, 2013, the Company disclosed that it informed the SEC in its December 31, 2012 filing, that an internal review found the Company “likely violated” the books and records and internal control provisions of the FCPA.  Am. Complt. ¶¶ 74, 147.  Despite substantial evidence of violations by Defendant Adelson and other Board members, steps were not taken to
remedy the wrongdoing.  Am. Complt. ¶ 155.  To the contrary, it is alleged that
the Board delayed the conclusion of the Audit Committee investigation and
refuses to produce its final report or act upon its recommendation due to the
request of Defendant Adelson and his interest to minimize sanctions that would
be imposed by the DOJ and/or the SEC against Sands or him.  Am. Complt. . ¶ 77.

As part of its annual audits of Sands’ financial statements,it was PWC's responsibility to
evaluate the Company’s internal controls, which it repeatedly failed to do,
before and throughout the period of Plaintiff's stock ownership.  Defendant Hipwell had supervisory and/or oversight responsibility for PWC's audits of Sands' year-end financial
statements.  Despite knowing otherwise, PWC repeatedly and falsely stated in its annual opinion letters that the Company maintained effective internal controls. 
Am. Complt. ¶¶ 125, 128, 129.   Defendant Hipwell knew or should have known
that these "clean" opinion letters were false and misleading.  Am. Complt. ¶ 126, 130.  Had PWC conducted its year-end audits of Sands' financial statements in conformity with Generally Accepted Auditing Standards (“GAAS”), as it was contractually obligated to do, and as an expert in auditing of casino businesses, it and Hipwell would have known that the
Company's internal controls were materially deficient.  Am. Complt. ¶ 126.

Additionally, Hipwell and PWC failed to provide to the Company the independent auditing services it was well-compensated to provide.  Am. Complt.
¶ 132.  For approximately 25 years, PWC was beholden to Defendant Adelson, providing him and entities he controlled, with auditing, consulting and other services. 
At times when it was providing non-audit services to Sands and or entities
controlled by Defendant Adelson, PWC was not independent insofar as Sands,
despite its false representations otherwise.  Id.  For example, PWC was
paid more than $200,000 in 2008 for consulting services on the Richard Suen
lawsuit.  This payment was made while PWC served as Sands' outside auditor.  As
Hipwell and PWC undoubtedly were aware, it is a violation of the auditor
independence rule to advocate for an audit client in court while opining on the
client's books and records.  Am. Complt.
¶ 81.  

It is alleged that PWC resigned as Sands' auditor due to its concerns about potential
exposure from the re-trial of the Suen case, as well as the Company's public disclosure
of likely FCPA violations.  Am. Complt. ¶¶
 79-81.  Such known facts compromised PWC and was evidence that its audits of
Sands financial statements, including the one completed on or about February
29, 2012, after Plaintiff became a Sands stockholder, were not carried out in
conformity with GAAS.[1]  Am. Complt. ¶ 81.

In an April 2013 SEC filing, Sands reported that PWC resigned as the Company’s auditor
after working for Defendant Adelson and companies he controlled for 25
years.  Am. Complt. ¶¶ 79, 134.  Even after the resignation, PWC and Defendant
Hipwell allowed the Individual Defendants to cover up their wrongdoing.  Complt. ¶ 135.

Plaintiff made a pre-suit demand on the Board, pursuant to Federal Rule 23.1, on January 22,
2013 (“Demand Letter”), prior to PWC's resignation as auditor.  Am. Complt. ¶ 142.  Richard Sauber, Esq., counsel for defendants in Moradi, responded in the guise of acting for Sands' Board, that the Demand Letter was referred to the Audit Committee, despite the fact that the
wrongdoing described in the Demand Letter involved fundamental failures and
legal culpability of the members of the Audit Committee.  Am. Complt. ¶¶ 149, 150. 

The Board has been disingenuous as to its actual response to Plaintiff's pre-suit Demand
Letter.  In fact, most of Plaintiff's claims therein have been completely ignored. 
Only Plaintiff's FCPA allegations have been explored in the context of
the already pending Audit Committee investigation.  Am. Complt. ¶¶ 146, 149, 153, 156.  Given that these claims deal with the entire accounting and controls at Sands, they presumably encompass the wrongdoing of PWC and Hipwell.  However, the details
about this claimed investigation into Sands’ practices and violations of the
FCPA have been closely guarded and not disclosed to shareholders, to the SEC or
otherwise.  Am. Complt. ¶ 76, 161.  Plaintiff’s counsel repeatedly sought to
learn from  Daniel Bookin, Esq. , counsel
to the Audit Committee as well as his colleague, Richard Sauber, Esq., counsel
for all defendants, material facts relating to the purported investigation of
Plaintiff’s demands by the SLC, and he was repeatedly stonewalled.  Am. Complt. ¶ 163. 

The Company spent years representing in court that the claimed Audit Committee
investigation into the Company’s FCPA violations was purportedly ongoing.  As of March 2014, the Company announced that the investigation had been completed. 
Am. Complt. ¶ 75.  Nevertheless, notwithstanding its materiality, no report by the SLC, the Audit Committee or the Board has been made public or communicated to Sands' shareholders.    Am. Complt. ¶¶ 76, 161, 164.  It is believed that the timing of the
conclusion of the investigation and issuance of a final report has been delayed
at the request of Defendant Adelson or counsel representing his interests in negotiations
with the SEC and DOJ investigators.  Am.
Complt. ¶ 77. 

The Board acted in bad faith by refusing to investigate most of Plaintiff's claims, other
than the FCPA allegations which already were part of the Audit Committee
investigation. Am. Complt. ¶ 156.  Despite the years spent investigating Plaintiff's FCPA allegations, there is no indication that the SLC ever made a determination or recommendation
to the Board as to any of Plaintiff's demands.  Am. Complt. ¶ 77. Certainly, none was ever communicated to Plaintiff or his counsel.

This action exposes the Board's bad faith handling of shareholder complaints about and
government investigations into the Company's FCPA violation and other very
serious wrongdoing.  Plaintiff sheds light on the Board's waste of corporate funds, by, inter alia,
designating the Audit Committee as a SLC and directing its purported investigation solely to benefit the Individual Defendants who are exposed to serious
personal liability for operating Sands without adequate controls and in
violation of laws fundamental to the responsible conduct of the Company’s

It is undisputed that the Board refused to disclose to Sands' shareholders the Audit
Committee report and has provided no formal response to Plaintiff's Demand
Letter. The only action taken by the Board in response to Plaintiff's Demand
has been to file a motion to dismiss this litigation including the claims
against Hipwell.  Such motion provides further evidence that Plaintiff's demands have been de facto rejected, and that a specific demand for Sands to sue Hipwell would have been futile.


In attacking Plaintiff’s claims against Defendant Hipwell, two basic arguments are asserted,
neither of which are persuasive.  At the outset, Plaintiff asserts that the claims asserted against Hipwell are based upon numerous examples of wrongful conduct which occurred after he became a Sands shareholder, including the false and misleading "clean" opinion
issued in February 2012, and the participation, before and after PWC's
resignation in April 2013, in the cover-up of the Individual Defendants'
wrongdoing.   Thus, any objection
to Plaintiff's allegations based on Rule 23.1's contemporaneous and continuous
ownership requirement fails.

  1. A.    Defendant Hipwell is Not Shielded by the Nevada Statute

Defendant Hipwell incorrectly asserts that he is shielded from liability by virtue of the
Nevada statute, NRS 87.150.  While limited partners in a foreign registered limited liability partnership, such as PWC, are partially shielded from personal liability, Defendant Hipwell, as the managing partner of PWC, loses his limited liability protection, as discussed
more fully below.

Generally, partners are jointly and severally liable for all obligations of the
partnership.  The Nevada statute provides that all partners are liable "Jointly and severally for everything chargeable to the partnership" and "Jointly for all other debts and
obligations of the partnership."  NRS 87.150 (1)(a) and (b).

In a registered limited liability partnership ("LLP"), such as PWC, the Nevada
statute affords a partial shield to partners, protecting them from personal
liability for debts of the entity or wrongful conduct of other partners.  Specifically, the statute states as follows: 

[A] partner in a registered limited-liability partnership is not liable directly or
indirectly, by way of indemnification, contribution, assessment or otherwise,
for debts, obligations or liabilities of or chargeable to the partnership,
whether in contract, tort or otherwise, arising from omissions, negligence,
wrongful acts, misconduct or malpractice committed while the partnership is a
registered limited-liability partnership and in the course of the partnership
business by another partner or an employee, agent or representative of the
partnership."  NRS 87.150(2).


 Notwithstanding the general rule of limited liability, the partners of an LLP remain responsible for commercial and other general business obligations of the partnership, as well as for their own misconduct and for the misconduct of those partners and employees under their supervision.  The Nevada statute contains an express provision to that effect:

Subsection 2 does not affect the liability of a partner in a registered limited-liability partnership for his or her own omissions, negligence, wrongful acts, misconduct or malpractice or that of any person under his or her direct supervision and control. NRS 87.150 (3).


   It is undisputed that Hipwell serves as one of PWC's managing partners.  In this capacity, he exercises supervisory authority over all the partnership activity, is active in the daily management of PWC's Las Vegas office, and oversees the operation of professional services
rendered to the gaming industry.  Undoubtedly,
as alleged in the Complaint, he directly participated or directly supervised
those who participated in the audit of Sands’ financial statements, which
generated so much lucrative business for PWC.   However, the exact nature of Hipwell's
involvement in the Sands' audit, as well as his knowledge about the account,
are factual questions which should not be resolved on a motion to dismiss.  Lynch v. Rawls, 429 Fed. Appx. 641, 644 (9th Cir. 2011) (overturning derivative action dismissal where the district
court “drew inferences in favor of defendants rather than plaintiffs, resolved
factual inconsistencies without discovery, and analyzed plaintiffs’ allegations
individually rather than collectively”). 

As such, Defendant Hipwell is directly liable for his own misconduct and
vicariously liable for the misconduct of the partners and employees under his
supervision, as well as for any failure on his part to exercise appropriate
supervision or to take appropriate actions once he was apprised of the issuance
by PWC of false and misleading audit opinions regarding Sands' financial statements
and financial controls for fiscal years 2011 and 2012, issued after Plaintiff
became a stock owner.[2]

  None of the cases cited by Hipwell support a different result.  Indeed, Hipwell does not cite to one case involving a Nevada corporation.  The
cases cited invoke New York and California law, whereby the LLP statutes
contain language that is different than that which is contained in the Nevada
statute, and which are, in any event, inapplicable here. 

B.        Plaintiff Adequately Pleads Demand Futility

Under Delaware law, there are two types of tests applied to claims of demand futility under
Rule 23.1.  The two-prong test articulated in Aronson v. Lewis, 473 A.2d ___, 814-815 (             ), applies to the majority of actions.  As the Delaware court explained
in Kaplan v. Peat, Marwick, Mitchell & Co., 540 A.2d 726, __ (Del.
1988), a case cited by Hipwell, "[t]he application of the demand futility
test articulated in Aronson presupposes that the corporation has taken a
hostile position regarding the derivative litigation."  Likewise, in this case, motions to dismiss
have been brought by Hipwell, a third party, as well as by Sands and the
Individual Defendants.

Nonetheless, Hipwell argues that this case falls outside the scope of the demand futility
test enumerated in Aronson.  According to Hipwell, Rales v. Blasband, 834 A.2d 927 (Del. 1992) governs since the challenged transaction(s) at issue here involves the actions
of a third party in fulfilling his duties to the subject corporation. 

In the case at bar, it does not matter whether Aronson or Rales applies.  Under either approach, demand is excused if Plaintiff's particularized allegations create a reasonable doubt as to whether a majority of the Board faces a substantial likelihood of personal liability
for breaching the duty of loyalty by acting in bad faith. See, e.g., In re
SAIC Inc. Derivative Litig
., 948 F. Supp. 2d 366, 382 (S.D.N.Y. 2013)
("[T]he difference between Rales and Aronson may blur in
cases like this one, since the particularized allegations essential to creating
reasonable doubt as to a substantial likelihood of personal liability for
breach of fiduciary duties may also implicate the question whether the Board
can avail itself of business judgment protections."),  aff'd sub nom. Welch v. Havenstein,
553 F. App'x 54 (2d Cir. 2014). 

While Hipwell is correct that many cases involving demand futility analyze each individual director to determine whether demand is excused, it is appropriate for this Court to
evaluate the Board as a whole.  See,
e.g., Pfizer
v. _________, 722 F. Supp. 2d at 461 (                           ).

Performing such an analysis, it cannot be disputed that the Amended Complaint asserts a
multitude of specific factual allegations which create a reasonable doubt that,
at the time of filing, the Board could have properly exercised its independent
disinterested business judgment in responding to a demand.  Contrary to Hipwell's assertion, the fact that PWC resigned (under circumstances that reflected negatively on its
purported independence) does not contravene the fact that the Board could not
impartially evaluate potential claims against PWC.  Such is the case especially in light of the
allegations that PWC continued to cover-up the wrongdoing of Individual Defendants

Rich ex rel. Fuqi Int'l, Inc. v. Yu Kwai Chong, 66 A.3d 963 (Del. Ct. of Ch. Apr. 25, 2013) is instructive.   There, the plaintiff alleged that the company
took steps to begin an investigation into his demands but did not act on information
uncovered regarding some amount of corporate mismanagement.  The special committee appointed by the Board to investigate the demand became defunct before making a recommendation.  The company deliberated abandoned the
investigation, and took no formal action.  The court found that these allegations were sufficient to raise a reasonable doubt whether the Board acted in good faith.

Likewise, the Board's refusal to investigate most of
Plaintiff's demands, along with the delay tactics with respect to Plaintiff's
FCPA allegations have been so egregious that they can only be characterized as
bad faith.  After years of claiming the
Audit Committee investigation of FCPA violations, as raised by the SEC and DOJ,
was still ongoing, Sands finally admitted the investigation was complete in
March 2014.  Am. Complt. ¶ 161.  Despite the completion of the investigation, any
report generated was not made public, provided to Sands’ shareholders or
submitted to the SEC. 

The Board provides no rational excuse for not making
public the highly material Audit Committee report and the results of its
investigation.  If, presumably, the Audit
Committee's investigation was thorough and proper, and the Board adopted the
recommendations of the Audit Committee to improve the Company's financial
controls and books and records, then the Company would face no risk in
disclosing the details of the internal investigation.  The very fact that the Board is wary of
providing this highly material information in the face of the still pending
government investigations, and in light of Plaintiff’s allegations that the
Board has been “stonewalling” the government investigations, is further
evidence of bad faith.

As such, not only did the Board know the Company had
insufficient controls, at the time of the filling of the Amended Complaint, but
the Board intentionally refused to fix the problem, and instead, acted in bad
faith in "stonewalling" government investigations and shareholder derivative
litigation.  Under these circumstances,
it would have been futile for Plaintiff to submit an additional demand on the
Board to sue Hipwell for wrongdoing, which is inherently encompassed by the
internal investigation already conducted by the Audit Committee, and for which
the Board in bad faith refused to act upon.


For the
reasons stated above, and based on the authority cited, Plaintiff respectfully submits
that Hipwell's Motion to Dismiss the Complaint should be denied.

Dated: November __, 2014                                        __________________________________

G. Mark Albright

Bar No. 1394

H. Stoddard, Jr.

Bar No. 8679

Stoddard, Warnick and Albright

S. Rancho Dr. D4,

Las Vegas, NV



F. Brookler 

D. Greenfield 

R. Goodman

& Goodman, LLC

Hudson Street, 8th Floor

York, NY 10013



R. Shepherd


35 E.
State Street

            Media, PA 19063                                           



F. Luzon


West A Street, Suite 2350

Diego, CA 92101



Attorneys for Plaintiff, W.A.


About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah.  Our firm’s practice includes a strong emphasis on construction law, contracts and litigation in the jurisdictions where we are licensed.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services.  Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation.  Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.





[1] Hipwell argues that Plaintiff's allegations regarding PWC audits being compromised by consulting services performed in 2008 is irrelevant due to the fact that these services
were performed prior to Plaintiff' become a shareholder.  Such argument misses the point of these allegations.  The key to these allegations, as made clear by the Amended Complaint, was the fact that PWC, even after its resignation, when Plaintiff surely was a shareholder, continued
to cover-up the wrongdoing of the Individual Defendants, in part to protect its
own misconduct, which it feared was about to be exposed.

[2]Additionally, Hipwell may have liability in accordance with any partnership agreement he maintains with PWC.  Nevada courts respect the provisions of partnership agreements. NRS 87.4316.

Privileges and the Torts of Defamation, Interference and Malicious Prosecution


           Privileges with respect to the Torts of Slander and Defamation


Nevada recognizes a long-standing common law rule that communications uttered or published in the course of judicial proceedings are absolutely privileged so long as they are in some way
pertinent to the subject of controversy.  [Citations omitted.]  The absolute
privilege precludes liability even where the defamatory statements are
published with knowledge of their falsity and personal ill will toward the
plaintiff.  [Citations omitted.]  Circus-Circus Hotels, Inc. V. Witherspoon,
99 Nev. 56, 657 P.2d 101, 104 (1983).  The policy underlying the privilege is
that in certain situations the public interest in having people speak freely
outweighs the risk that individuals will occasionally abuse the privilege by
making false and malicious statements. 
[Citations omitted.] 

On the basis of this policy, the absolute privilege attached to judicial proceedings has
been extended to quasi-judicial proceedings before execute officers, boards,
and commissions, including proceedings in which the administrative body is
considering an employee's claim for unemployment compensation.  Id.

Nevada also recognizes that certain communications relating to law enforcement and
litigation enjoy an absolute privilege such that they may not be utilized as
support for slander, libel, defamation, or similar claims against the party who
made the statement.  For example, the Nevada Supreme Court in Fink v. Oshins, 49 P.3d 640, 118 Nev. 428 (Nev. 2002), explained that an absolute privilege applies not only to communications made during the actual judicial proceedings, but also to communications
preliminary to a proposed judicial proceeding.  Id. at 644.  The court
noted that if, at the time a defamatory communication is made, a legal
proceeding is contemplated in good faith and under serious consideration, the
communication will be absolutely privileged and within these limits the court
should apply the absolute privilege liberally, resolving any doubt in favor of
its relevancy or pertinency.  Id. at

 The court reiterated that the absolute privilege precludes liability even where the defamatory statements are published with knowledge of the falsity and persona ill will toward the plaintiff.  Id. at 643. 

The Nevada Supreme Court in Hampe v. Foote, 47 P.2d 438, 118 Nev. 405 (Nev.
2002) also held that the absolute privilege was applicable to a letter of
complaint written to the Nevada Gaming Commission, thus barring any civil
action by the licensee for libel or defamation, malicious prosecution and
intentional infliction of emotion distress arising from the communication even
though the licensee alleged that the letter was made with malice and contained
fraudulent accusations. 

In the case of Clark County School District v. Virtual Education Software,
125 Nev. 374, 213 P.3d 496 (Nev. 2009), the Nevada Supreme Court
extended the absolute privilege to communications made by non-lawyers where
civil or criminal judicial proceedings have commenced or are under serious
consideration.  The court explained the rationale for its decision as follows:

"The purpose of the absolute privilege is to afford all persons
freedom to access the courts and freedom from liability for defamation where
civil or criminal proceedings are seriously considered
.  Restatement (Second) of Torts 587 comment a and e (1977).  Therefore, the absolute privilege affords
parties the same protection from liability as those protections afforded to an
attorney for defamatory statements made during, or in anticipation of, judicial
proceedings.  Restatement (Second) of Torts 587, comment (1977)."  Id.
at 502. (Emphasis added).

Because this was a matter of first impression in Nevada, the court went on to explain
as follows:

"Consequently we extend the protections of the absolute
privilege to instances where a non-lawyer asserts an alleged defamatory
communication in response to threatened litigation or during a judicial
proceeding.  Thus, just as we announced in Fink, for the privilege to apply (1) a judicial proceeding must be contemplated in good faith and under serious consideration, and (2) the
communication must be related to the litigation." Id. at 503, citing
Fink v. Oshins, 49 P.3d 640 (Nev. 2002).

The court noted that because the scope of the absolute privilege is broad, a court determining whether a privilege applies is to resolve any doubt in favor of a broad application.
Id. at 502, citing Fink, 118 Nev. at 433-34, 49 P.3d at 644.  The court then extended this absolute privilege to statements made prior to threatened and pending litigation.  On that basis, the Court reversed a lower court's judgment arising out of a letter and three email communications to individual teachers, holding that these communications 
were absolutely privileged.

In the case at bar, where R had just filed a Nevada civil suit for the monies due and owing on a Promissory Note, an absolute privilege was clearly afforded and applicable to
all of the communications which form the basis of the counterclaim such as
communications made to third parties related to the suit, such as asset checks
for potential funds that could be available to satisfy any judgment. 

Nevada also recognizes the conditional common interest privilege which exists when allegedly a defamatory statement is made in good faith on any subject matter in which the person communicating has an interest or in reference to which he has a right or a duty, if it is made to a person with a corresponding interest or duty.  Leuben v. Kunin, 17 P.3d 422, 117 Nev. 107 (Nev. 2001).  The Court has noted that whether the common interest privilege applies in defamation actions is a question of law for the
court to determine.  Id. at 425.  If the action is privileged under the common
interest privilege, such as where both of the parties discussing the matter
have an interest in it, then there is no cause of action for defamation.  Leuben v. Kunin, at 428.

For purposes of determining whether defamation has been established under Nevada law, a publication is privileged where a defamatory statement is made in good faith on any subject matter in which the person communicating has an interest or in reference to which he has a right or a duty if it is made to a person with a corresponding interest or duty. 
Id. at 428.

Here,  R Group as a re-insurer of Driverz Edge administration and as a consultant to the insurance company Assurant, had a duty and an obligation and a common interest to determine if Driverz Edge and its president Robert William Roback were involved in theft of insurance premiums for automobile warranty insurance coverage.  The only way to confirm the answer to this question before turning the matter over to the police was to speak with several
customers and dealers to confirm whether the theft was in fact occurring.  When confronted by the police and the detectives with the information obtained through this process, Roback quickly admitted to the theft of some $775,000.

Counterdefendant also had the right to conduct an asset check regarding their pending civil suit. As a matter of law, summary judgment is appropriate here inasmuch as the communications were not only protected by the absolute privilege, and subject to the common
interest privilege, but the allegations were all true as admitted by Defendant
Roback upon his arrest.  Here there is not one but two related judicial proceedings generating the absolute privilege shield, the Nevada civil case and the Henderson Justice Court criminal


2.         Interference with Contractual Relations.

With respect to the Second Cause of Action for Interference with Contractual
Relationships, Paragraph 22 of the Counterclaim alleges that:

Before and after filing the instant lawsuit COUNTERDEFENDANTS, through RON ,
contacted several of the third party clients with an intention to disrupt the
contractual relationship and have the third party hold or divert funs to

In the case of J. J. Industries LLC v. Bennett, 119 Nev. 269, 721 P.3d 1264 (Nev. 2003), the
Nevada Supreme Court outlined the elements of a clam for interference with contractual
relations as follows:

In an action for intentional interference with contractual relations, a plaintiff must establish :


1.         A valid and existing contract;

2.         The defendant"s knowledge of the contract;

3.         Intentional acts intended or designed to disrupt the contractual relationship;

4.         Actual disruption of the contract; and

5.         Resulting damage.

The court noted that the Restatement (Second)) of Torts 766, at i
(1979) provides that the defendant must have knowledge of the contract with
which he is interfering and of the fact that he is interfering with the
performance of the contract.  The court went on to note that because interference with contractual relations is an intentional tort, the plaintiff must demonstrate that the
defendant knew of the existing contract or at the very least, established facts
from which the existence of the contract could be inferred.

The court noted that at the
heart of an intentional interference claim is whether the plaintiff has proved
intentional acts by the defendant intended or designed to disrupt plaintiff's contractual relations.  The United States District Court of Nevada,
interpreting Nevada law, explained that the plaintiff must establish that the
defendant had a motive to induce breach of the contract with the third party as

The fact of a general intent to interfere under a definition that includes imputed knowledge of consequences, does not alone suffice to impose liability. Inquiry into the motive or purpose
of the actor is necessary.  The inducement of a breach therefore does not always vest third or incidental persons with a tort action against the one who interfered. 
Where the actor'sconduct is not criminal or fraudulent and absent some other aggravating
circumstances, it is necessary to identify those whom the actor had a specific
motive or purpose to injure by his interference and to limit liability
accordingly.  See, National Life to Life PA Comm., 741 F.Supp. 807, at 814 (D.Nev 1990), quoting from Devoto v. Pacific Fidelity Life Ins. Co., 618 F.2d 1340, 1347 (9th Cir.

The Nevada Supreme Court went on to explain that mere knowledge of the contract is
insufficient to establish intent or design to disrupt.  Rather, the plaintiff
must demonstrate that the defendant intended the other party to breach the
contract with the plaintiff.  J. J. Industries v. Bennett, at 276.

Applying the foregoing principles of law to the facts in the instant case, it is readily
apparent as a matter of law that there was no intent to disrupt the contract, and
all communications were privileged.  Indeed, there was actually no disruption of the contract that is still in place.  Rather, the only purpose of
the inquiry was to determine whether there adequate funds were available to
help satisfy any eventual judgment obtained by R against Driverz Edge in
the case already filed in Nevada.  The conversation with general counsel for Dealers A Company (ADCA)  indicated that there would be some monies
available if a judgment was obtained in the Nevada proceedings..

While there is no Nevada law expressly applying absolute privilege to tortious interference
with existing contracts, there is clearly precedent for applying absolute
privilege to torts beyond defamation when those torts arise from the same
conduct as the defamation claim.

In Walker v. D=Alesandro, the Court of Appeals of Maryland stated that privilege was not limited to immunity from liability for defamation. 
212 Md. 163, 169 (1957). The Court of Appeals reiterated this position
in Carr v. Watkins, when it examined whether privilege could act as a
shield for torts such as invasion of privacy and malicious interference with
contract rights.  227 Md. 578, 582
(1961).  Carr concluded that Aif there was immunity from liability
for defamation, there was immunity from liability for the other alleged torts
claimed by the [plaintiff] to have been committed.  Id. at 583.

The U.S. Supreme Court also recognizes that privilege is not confined to defamation
torts when the same behavior is the subject of other torts.  In Barr v. Matteo, the Supreme Court discussed the law of privilege as an absolute defense for federal officers in
civil suits for defamation and kindred torts.  360 U.S. 564, 569 (1959).  Moreover, in Hustler Magazine, Inc. v. Falwell, the Supreme Court held that the First Amendment privilege applies
equally to libel and intentional infliction of emotional distress.  485 U.S. 46, 56 (1988).  The Court's rationale for applying the First Amendment privilege equally to libel and
intentional infliction of emotional distress suggests that absolute privilege
would apply equally to those claims as well. 
See, Mixter v. Farmer, 81 A.3d 631 (App Md. 2013).  The Supreme Court recognized that in order to protect the important freedoms of the First Amendment, it was necessary to
expand the privilege beyond libel to intentional infliction of emotional
distress.  Hustler Magazine, Inc. v. Falwell, 485 U.S. 46, 56 (1988). 
Similarly, in order to protect the free access to the courts, it is necessary to expand the absolute judicial privilege beyond defamation to other torts.

Other courts also have used privilege to protect defendants from claims other than
defamation that originated from the same acts.  See, Sullivan v. Birmingham, 416 N.E.2d 528, 533 (Mass. App. Ct. 1981) (holding that absolute privilege was a complete defense to
intentional infliction of emotional distress, see also Rainier's Dairies v. Raritan Val. Farms,
117 A.2d 889, 895 (N.J. 1955) (holding that absolute privilege was a complete
defense to interference with business claims.) 
See, also Pelagatti v. Cohen, 536 A.2d 1337 (Penn. 1987)
(the contractual interference counts dismissed due to absolute privilege
afforded to judicial communications.  Id. at pg 1344).

A broad reading of absolute privilege makes sense from a policy perspective.  The Sullivan v. Birmingham court noted that the policy behind the privilege Awould
be severely undercut if the absolute privilege were to be regarded as less than
a bar to all actions arising out of the conduct of parties and/or witnesses in connection with a judicial proceeding.
416 N.E.2d at 534 (quoting Devlin v. Greiner, 371 A.2d 380, 38 (N.J.
Super Ct. Law Div. 1977)).  The court in Thornton
v. Rhoden
agreed that the policy reasons behind the absolute privilege
would be defeated if claims beyond defamation were not protected.  245 Cal. App.,2d 80, 99 (Cal. Dist. Ct. App. 1966).  Thornton stated, A[i]f it is desirable to create an
absolute privilege in defamation ... we should not remove one concern and
saddle him with another for doing precisely the same thing. Id.

One court explained the policy of expanding the absolute privilege to a variety of
related torts:  It is obvious that except
for the post-filing publicity everything done by Rhoden or caused to be
done by him was an integral part of the deposition proceedings he had imitated
by notice.  We have held these facts to
be absolutely privileged in a defamation  action.  The salutary purpose of the privilege
should not be frustrated by putting a new label on the complaint If it is
desirable t6o crate an absolute privilege in defamation, not
because we desire to protect the shady practitioner, but because we do not want
the honest one to have to be concerned with libel or slander actions while
acting for his client, we should not remove one concern and saddle him with
another for doing precisely the same thing. . . .  If an action for liable or slander cannot be
maintained, now can such an action as I have mentioned be maintained, it being
in truth an action for defamation in an altered form?  Every objection and every reason which can be urged against an action for libel or slander will equally apply against the
suggested form of action.  (Thornton at
pp.. 601-602)).

3.         Malicious Prosecution.

The most important difference for the court to note between malicious prosecution and
abuse of process is that the former requires a previous criminal proceeding,
which (obviously) has been terminated (in favor of the party charged).  To establish malicious prosecution, a plaintiff must establish the following in Nevada law:  (1) want of probable cause to initiate the prior criminal proceeding; (2) malice; (3) termination of the prior criminal
; and (4) damages.  See LaMantia v. Redisi 38 P.3d 877 (Nev. 2002).  (Emphasis added).

The third element is critical, which requires that the criminal proceeding has been
terminated prior to the commencement of any civil claim alleging malicious
prosecution.  This requirement avoids the possibility of a plaintiff being awarded money damages for malicious prosecution of a pending criminal matter, but then later being convicted for the same exact crime.  To avoid such an
absurd possibility, the Nevada Supreme Court recognized the requirement that
there must be some type of a termination of the underlying criminal proceedings
before a malicious prosecution claim will stand.  In this case, as shown on the attached docket
sheet from the Henderson Justice Court (Exhibit AJ@
hereto), the bail was posted by Roback and set on January 16, 2014 for the
following charges: (1) theft in the amount in excess of $3,500.00; (2) theft in
an amount in excess of $3,500.00; and (3) theft of an amount in excess of $3,500.00.  No dismissal the charges has occurred.  The District Attorney has not yet filed a
criminal complaint since its investigators are still conducting an audit.  Hence, there has been no termination of the
underlying criminal proceedings.

In discussing the favorable termination element of a
malicious prosecution cause of action, a leading treatise states that Athe termination must not only be favorable to the defendant in the underlying proceeding but must also reflect
the merits and not merely a procedural victory.
W. Page Keeton et al.
, Prosser and Keeton on The Law of Torts, ' 119 (5th ed. 1984).  The rationale for requiring a plaintiff in a malicious prosecution action to establish that the favorable termination and the underlying proceeding was not simply based on mere technical or procedural grounds is that tends to indicate the innocence of the accused and coupled with
the other elements of lack of probably cause and malice establishes the tort of
malicious prosecution.

It is not essential to maintain an action for malicious prosecution that the prior
proceeding was favorably terminated following a full trial on the merits.  However, the termination must reflect on the
merits of the underlying criminal action. 
See, Annotation, Nature of Termination of Civil Action Required
to Satisfy Element of Favorable Termination to Support Action for Malicious
Prosecution, 30 A.L.R. 4th 572 (1984 & Supp.2005).  In determining whether a specific result was a favorable termination, the court must examine the circumstances of the
underlying proceeding.  See Restatement (Second) of Torts '
, cmt. j (1977). 

Here, the counter-claimant has failed to establish the favorable termination element of
his malicious prosecution claim.  The
underlying criminal action is still pending in the Clark County court system,
is still being investigated, audits are still being conducted, and the District
Attorney's Office has not yet filed a criminal complaint. 
It appears likely that the District Attorney's
Office will prosecute this matter in as much as the declaration of arrest
attached hereto as Exhibit K indicates that when Detective
Brent Wagner along with Detective J. Dixon and Nevada Insurance Commission
Investigator Nixon Medina contacted the suspect, Robert Roback, at his place of
business, Roback agreed to discuss the matter and invited the investigator and
detectives into his office, at which time he admitted the allegations.  Id. page 3.

The details of the probable cause report explain the confession made by Roback as follows:


When asked to explain what had happened to the money,
Roback confessed that he had used the money to pay for his company=s overhead, including payroll for his employees. He claimed his company had become financially strapped and that he
had explained this to A Solutions owner Ron .  I asked him if Mr.  In the had given him permission to take this $772,749.77 for his own purpose.  He stated that he had not, however claimed that Mr.  had not said anything to him about the money not being sent.  I then advised Roback that I knew
that he had been contacted numerous times about the money, at which time he
claimed that he, Roback, was entitled to over a million dollars, which would go
to the R and A Company once all the vehicle service contracts
reached their full terms, and was going to pay back the $772,749.77 then.  It should be noted that Woodruff had advised
me earlier that Roback would probably claim this, however Roback never was and
never would be entitle to this money.  I
confronted Roback with this, at which time he admitted that he misappropriated
the money, then added, it's not like I just took the money and
ran off with it.


For three separate months Robert Roback misappropriated money (in excess of $650,000)
which belonged to the R Group LLC and A Solutions.  Consequently, Roback was taken into custody and transported to the Henderson Detention Center for booking for felony violations of NRS 205.0832.  Consequently the third claim for relief alleging malicious prosecution must be summarily
dismissed as a matter of law.


For the reasons set forth above, the counterclaim filed in this matter should be
dismissed with prejudice.

DATED this
_____day of August, 2014.








Nevada Bar
No. 001394


Nevada Bar
No. 004904

801 South
Rancho Drive, Suite D-4

Las Vegas,
Nevada 89106


for Plaintiff/Counterdefendants


About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah.  Our firm’s practice includes a strong emphasis on construction law, contracts and litigation in the jurisdictions where we are licensed.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services.  Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation.  Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

Nevada Law on Late Claims Submitted to Insurance Company


 Nevada Law on How an Insurance Company Must
Treat a Late Notice of Claim under Applicable Insurance Policy


The former Nevada rule on this issue, which was recently overturned – is based on a 1950
Nevada Supreme Court case which followed what was then the majority rule,
but which rule has since become very much the minority rule.  In State
Farm Mutual Auto Ins. Co. v. Cassinelli
, 67 Nev. 227, 247, 216 P.2d 606,
616 (1950), the Court held that:


By reason of the overwhelming weight of authority of the courts of last resort within the United
States, we are compelled to hold that on account of the respondent’s failure to
perform the condition precedent, stipulated in the policy as such, of giving
notice of the suit and forwarding summons and complaint within a reasonable
time, no action on his part lay against the company.  Lack of prejudice,
under the terms of the policy, was immaterial.   Id.  In other words,
where the notice was provided after the time period required by the policy, the
Court deemed this to be a failure of a condition precedent to the insurer’s
duty to provide coverage.  This rule is deemed to be the “traditional
view” or the “no prejudice required” rule, which has since been overruled in
most every other jurisdiction except for a small handful of states.  The
Nevada Supreme Court has apparently never revisited the issue since Cassinelli


Strong Arguments Made in 2007 Local Bar Journal and Supported by Compelling
Case Law that Nevada Will Almost Certainly Overrule Cassinelli the Next
Time it Considers the Issue


In a 2007 Nevada Lawyer article entitled “Special Feature: The Status of the Notice/Prejudice
Rule for Liability Insurance Claims in Nevada”, Professor Jeffrey W. Stempel
and attorney Timothy S. Menter point out that:

 "Even when Cassinelli was authored, the traditional, strict late notice defense was under
attack.  In the half-century since Cassinelli, almost all states
have adopted the view that late notice defeats insurance coverage only when the
insurer is significantly prejudiced by the late notice in terms of its ability
to investigate a loss or defend a claim.  Further, the clear majority of
states require that the insurer bear the burden to establish prejudice from
late notice, with a handful of states requiring the policyholder to prove lack
of prejudice."


After describing the sea change that has occurred in the various court’s decisions on this issue (i.e., requiring a showing of actual prejudice that resulted to the insurer as a
result of the late notice; aka the “notice-prejudice” rule), these commentators
conclude that:


"It . . . appears likely, if not certain, that if the same Nevada Supreme Court addressed
the facts of Cassinelli today, it would come to the opposite conclusion
based on the national shift in favor of a notice-prejudice rule and find that
prejudice on the part of the insurer is material and necessary for enforcement
of a notice condition."


While the foregoing commentators further note that while, in their view, Cassinelli
has already been implicitly overruled by “changes in the assumptions and facts
upon which Cassinelli was decided”, they also point out that there is a
further regulatory basis for attacking Cassinelli, which is based upon
the Nevada insurance regulations found at NAC 686A.600(4).  That
regulation provides:


  1. No insurer may, except where there is a time
    limit specified in the insurance contract or policy, require a claimant to give written notice of loss or proof of loss within a specified time or seek to relieve the insurer of the obligations if the requirement is not complied with, unless the failure to comply prejudices the insurer’s rights.


The Nevada Supreme
Court in 2011 follows the Majority Rule in Las
Vegas Metropolitan Police Dept. vs. Coregis Insurance Company



In Las Vegas Metroplitan Police Department v Coregis Insurance, 127 Nev.
Adv. Op 47, 256 P.3d 958 (2011), the police department urged the adoption of a
notice prejudice rule, which requires that in order for an insurer to deny a
claim based on late notice, it must have been prejudiced by the late
notice.  The Nevada Supreme Court agreed, and not only adopted the
notice-prejudice rule, but also placed the burden to show prejudice on the
insurance carrier.


  The court explained that it is more practical and equitable to
require the insurer to prove that it has been prejudiced than it would be to
place that burden on the insured party and require him or her to prove a
negative, namely, that the insured had not been prejudiced.  The court
also recognized that Cassinelli has since been abrogated by NAC 686A.660(4),
adopted in 1980, which states that “no insurer may, except where there is a
time limit specified in the insurance contract or policy, require a claimant to
give written notice of loss or proof of loss within a specified time or seek to
relieve the insurer of the obligations if the reauriement is not complied with,
unless the failure to comply prejudices the insurer’s rights.”



The Law in
Influential Neighboring States Follows the Modern-Majority Trend


It should be noted that some of Nevada’s influential neighbor states have long
adopted the modern notice-prejudice rule.  For example, California has
long held that:


[A] defense based on an insured’s failure to give timely notice [of a claim] requires the insurer to provide that it suffered actual prejudice.  Prejudice is not presumed from
delayed notice alone.  The insurer must show actual prejudice, not the
mere possibility of prejudice.  Shell Oil Co. v. Winterthur
Swiss Ins. Co.
, 12 Cal. App. 4th 715, 760-761, 15 Cal. Rptr. 2d
815, 845 (1st Dist. 1993).  Similarly, Arizona, another state
with a strong body of insurance law, has several cases wherein their courts
have held that:


It has long been the rule that an insurer cannot escape liability under an insurance contract due to the insured’s failure to give notice within the contract’s time limits unless
the insurer can show prejudice.


Salerno v. Atlantic Mut. Ins. Co., 198 Ariz. 54, 6 P.3d 758 (Ct. App. Ariz., Div. 1, 2000); citing,
inter alia,
Lindus v. Northern Ins. Co. 103 Aris. 160, 164, 438 P.2d 311, 315 (1968). 


By way of an example as to how Arizona might treat a case similar to ours, in Liberty
Mut. Fire. Ins. Co. v. Mandile
, 192 Ariz. 216, 222, 963 P.2d 295, 301 (App.
1997, the court held that the underinsured motorists coverage (UIM) was similar
to an excess policy (like NRM’s Frontier policy) because the “UIM claim ripens
only upon determination that the damages sustained exceed available [liability]
policy limits.”  In that case, the court found that the claim notice was
given five years and ten months after the accident.  In that case, where
the carrier argued late notice, the court held:


Liberty Mutual had the burden to demonstrate prejudice due to lack of notice.  Nevertheless,
Liberty Mutual did not present any evidence that, had it immediately been
informed of the accident by the insureds, it would have undertaken an
investigation of the accident.  No evidence demonstrates a policy or
practice by Liberty Mutual of conducting detailed claims investigations, hiring
accident reconstructionists, interviewing witnesses or requiring injured
claimants to submit to medical examinations in cases such as this.  Liberty
Mutual did not even subpoena the liability carrier’s investigation file.   Id. at 222-223. 


Recent Decisions
in other States Discussing the Development of this Area of Law


Finally, in some modern decisions considering the development of these legal
principles, the courts have been quick to point out the considerable change
that has been made in this area of the law.  In Prince George’s County,
Maryland v. Local Government Ins. Trust
, 388 Md. 162, 183, 879 A.2d 81, 93
(Md. App. 2005), the court cited the handful of cases that still held to the
traditional rule (citing, inter alia, the 1950 Cassinelli case),
and stated that “[i]n the four decades since we last considered the common law
rule, the majority “no-prejudice rule” (now “the traditional view”) that [the
prior Maryland precedent-setting case] relied upon became the minority
rule.”  (Citations omitted).  That court further noted that
“[t]hirty-eight states and two territories have adopted the “prejudice
rule”.  Id


Along these same lines, the court in Alcazar v. Hayes, et al., 982 S.W. 2d 845, 1998
Tenn. LEXIS 749 (Sup. Ct. Tenn. 1998), noted that:


[O]ur research indicates that only two states whose highest courts have considered the issue
within the last twenty years have continued to strictly adhere to the traditional approach. Id. at 852 (citing cases out of New York and Colorado). 


About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah.  Our firm’s practice includes a strong emphasis on construction law, contracts and litigation in the jurisdictions where we are licensed.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services.  Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation.  Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

NRCP 60(b) Motion for Relief


G. MARK ALBRIGHT, ESQ. (No. 001394)

D. CHRIS ALBRIGHT, ESQ. (No. 004904)


801 South Rancho Drive, Suite D-4

Las Vegas, Nevada  89106

Tel:      (702) 384-7111

Fax:     (702) 384-0605

Attorneys for Applicants/Defendants







  ILIESCU, JR., et al., Applicants,




  B. STEPPAN, Respondent.

CASE NO.           CV07-00341



DEPT NO.           10








  I-V, inclusive; and ROE CORPORATIONS VI-X, inclusive,







COMES NOW, John Iliescu,
Jr., individually, and, together with Sonnia Iliescu, as trustees of the John
Iliescu Jr. and Sonnia Iliescu 1992 Family Trust Agreement (sometimes jointly
hereinafter the “Iliescu Defendants” or “Movants” or “Iliescu”), as the
Defendants in the second of these two consolidated cases, and hereby move,
under NRCP 60(b), for relief from this Court’s May 28, 2014 Order setting forth
its “Findings of Fact, Conclusions of Law and Decision” (hereinafter “Decision”),
and for relief from this Court’s June 9, 2009 and May 9, 2013 summary judgment
orders which comprised part of the basis of that Decision, and for relief from
this Court’s September 5, 2014 Costs Order and September 8, 2014 Attorneys’
Fees Order, both of which also stem from the Decision.

This Motion is made and based on NRCP 60(b)(3),
on the grounds that this Court’s Decision (and the Orders on which it was in
part based, as well as the subsequent Orders based thereon) was and were
entered on the basis of misrepresentation, fraud, and other misconduct
committed by Plaintiff in conjunction with and at the direction of his former
employer such that the Decision and related Orders must be vacated and set
aside, and the Steppan lien upheld by that Decision invalidated on the grounds
set forth herein.  To the extent, if any,
necessary and applicable, this Motion is also based on NRCP 60(b)(1). This
Motion is also made and based upon all of the points and authorities set forth
herein, the exhibits referenced herein or filed herewith, all papers and
pleadings on file herein, and any argument which may be allowed at any hearing
on this Motion.

[The Points and Authorities set forth herein are
45 pages in length pursuant to this Court’s July 18, 2014 Order allowing a
post-trial brief to be filed not to exceed 45 pages.]


DATED this 
_____day of October, 2014.





G. MARK ALBRIGHT, ESQ. [NV Bar No. 001394]



801 South Rancho Drive, Suite D-4

Las Vegas, Nevada  89106

Tel:     (702)
384-7111 /  Fax:  (702) 384-0605



1610 Meadow Wood Lane, Suite 202

Reno, Nevada 89502

Tel:     (775)

for Applicants/Defendants





This Court has ruled, in its Decision, a copy of
which is Exhibit 1 hereto, that a mechanic’s lien will be recognized in
favor of Plaintiff Mark Steppan (“ Steppan”) against the “Property” of the
Movants as defined in the Decision. 
Movants are entitled to relief from that Decision pursuant to NRCP
60(b)(3) on the grounds that said Decision was obtained by Plaintiff through
fraud, misrepresentation and misconduct. 
Indeed, the Decision and the Pre-Decision Orders and Post-Decision
Orders also sought to be overturned herein, are the result and culmination of a
long series of wrongful and fraudulent acts engaged in by Plaintiff and his
former employer beginning long before this suit was initiated and continuing
through and until the end of trial.  The
effect of these fraudulent activities has recently been clarified by the Nevada
Supreme Court in a decision entered after the trial of this matter, DTJ
Design, Inc. v. First Republic Bank
, 318 P.3d 709, 130 Nev. Adv. Op. 5
(February 13, 2014) which forms part of the basis of this post-trial motion.

Based thereon, this Court should now enter new
Decision(s) and Orders invalidating the Steppan lien, setting aside all
pre-trial orders supporting the Steppan lien, and setting aside all post-trial
costs and fees Orders against Defendants and should issue a new Decision,
followed by a Judgment thereon, in the Movants’ favor.

The present Motion is supported by the following
facts and law: Plaintiff Steppan’s Complaint initiating this lien foreclosure
action (Exhibit 3 hereto ---- the use of Exhibit Number 2 is
intentionally omitted herein) alleged in paragraph 9 that he “did supply
the services” for which his lien was claimed, which allegation was a necessary
element of his claim under NRS 108.222(1)(a) and (b)(lien amount must be based
on value of services furnished “by or through the lien claimant”).  However, this allegation was false and
Steppan did not meet his burden of proving this most fundamental element of his
claim and failed to establish an even prima facie showing that his
purported lien was truly for his services furnished “by or
through” him (i.e., “by” him or “through” his employees or his
subproviders which he had hired). 
Rather, the lien was based on work performed “by” a foreign and
unlicensed architectural firm, Fisher Friedman Associates (“FFA”), “through”
its employees, including Steppan, and through its subproviders. 

Steppan, as the only FFA employee who was licensed
in Nevada, was fraudulently treated as the purported lien claimant for FFA’s
services in order to wrongfully circumvent Nevada statutes requiring in-state
licensure/registration to practice architecture or residential design in the
State of Nevada.  NRS 623.180(1);
623.349; 623.357; 623.360.  FFA did not
want to pay the registration fees or take the other steps necessary to register
itself as a Nevada architectural firm, so it pretended that Steppan, its sole
Nevada-licensed employee, was the contract architect.  However, Nevada’s lien statutes and
architectural licensing statutes, as well as the recent Nevada Supreme Court
decision of DTJ Design, Inc. v. First Republic Bank, 318 P.3d 709, 130
Nev. Adv. Op. 5 (2014), confirm that this blatant ploy should have been
rejected, and that Steppan had no ability to lien for services which were not
actually provided by him or through his hired employees or subproviders, but
which were instead actually provided “by” the unregistered FFA firm, “through”
its hired employees and subproviders. Based thereon, this entire case, and the
decisions entered to date herein, have been based on the fraudulent activities,
the misrepresentations, and the misconduct of FFA and Steppan, including false
statements made by Steppan or on his behalf in his lien notices and in his
Complaint initiating this action, and other misrepresentations as detailed


On November 7,
2006 a mechanic’s lien notice was recorded by Plaintiff Steppan against the
Property of the Iliescu Defendants. 
Trial Exhibit (“TE”) 1 (TE 1 and 2 and 3, consisting of the Plaintiff’s
original and two amended lien notices, are Exhibits 4 and 5 and 6 hereto.)  The Property was at that time the subject of
a pending purchase agreement with a potential buyer (hereinafter “BSC/Consolidated”)
who had ostensibly retained Steppan to provide architectural services for a
planned mixed use condominium development (Wingfield Towers) at the site.  Decision at &&
5, 9, 10, 19.[1]  The Property’s owners were not parties to the
architectural contract(s).  (Decision at & 10).  The sale to the prospective purchasers who
contracted for these services never closed (Decision at &
7) and no on-site work ever commenced.

Although in Steppan’s
name, the subject lien was based on work which had been performed and invoiced
directly to the purchaser, BSC/Consolidated, in violation of NRS 623.180(1) and
NRS 623.349, by California architectural firm, FFA, which was not registered to
perform either architectural or design services in Nevada, nor owned by 2/3
Nevada licensees, in order to be so registered. 
FFA therefore utilized Steppan, its only employee with a Nevada license,
to execute the contracts (including an initial hourly fee agreement, and a
later flat-fee AIA Agreement, executed after the work was completed, as well as
certain alleged add-on work agreements). 
However, this method for circumventing Nevada’s licensing statutes was
invalid where Steppan did not own 2/3 of FFA. 
DTJ Design, Inc. v. First Republic Bank, 318 P.3d 709, 711, 130
Nev. Adv. Op. 5 (2014).

For a time after
the work began, FFA’s employees pretended to be employees of Steppan.  Ultimately, however, FFA decided that a
better sham would be to claim to be a “design consultant” for the project, a
status it claimed on an AIA Contract Addendum prepared and signed after
the work was already performed.  It is
unclear whose “design consultant” FFA was claiming, after-the-fact, to
be:  Steppan’s or the customer’s.  If FFA was claiming to be the customer’s
alleged design consultant, then Steppan had no right to lien for FFA’s work
performed directly for FFA’s own customer. 
If FFA was claiming to have been hired by Steppan as his design
consultant, then this claim should have been backed up by trial evidence, which
it most definitively was not. 

The Iliescus, as
the Property owners, filed an Application for Release of Mechanic’s Lien on
February 14, 2007, initiating this case, arguing that the lien was invalid due
to the lien claimant’s failure to provide a 31 day notice of right to lien
required by NRS 108.245, or to provide a 15 day intent to lien notice required
by NRS 108.226(6).  A hearing on this
Application led to an order for the parties to conduct further discovery.  Steppan’s initial lien was then withdrawn at
the request of the potential purchasers (Decision at &
16) to then be succeeded by a subsequent “Amended Notice and Claim of Lien”
recorded May 3, 2007 (Exh. 5).  A
separate lawsuit was then filed in the name of Steppan, on May 4, 2007, via a
complaint (Exh. 3) which listed foreclosure of a mechanic’s lien as the
only cause of action, and named only the Property’s owners (the Iliescus), not
the architect’s customer, as Defendants. 
This new suit was consolidated into the earlier case, and no final
determination was ever issued by this Court on the Iliescu Application.  Instead, the Decision was later entered in
the second consolidated suit (with Steppan as the Plaintiff, and the Iliescus
as the Defendants).

On June 22, 2009
this Court, through Judge Brent Adams, issued an Order of Partial Summary
Judgment (Exhibit 7 hereto), which excused Steppan for his failure to
ever serve the Iliescus with a 31-day pre-lien notice, as normally required by
NRS 108.245(1), invoking an exception to that statute recognized by Fondren
v. K/L Complex Ltd.
, 106 Nev. 75, 800 P.2d 719 (1990), based on a ruling
that Dr. Iliescu had “actual notice” of architectural work being performed for
the site by Steppan and “his firm” even though Steppan had no firm of “his”
own, but was the employee of the subject foreign firm, which was not registered
in Nevada.

On May 9, 2013,
another Order of Partial Summary Judgment entered (Exhibit 8 hereto)
holding  that the amount of Steppan’s
lien would be based on the flat fee percentage-based AIA Contract executed by
Steppan and FFA’s customer, after the work had been completed, but with a
back-dated effective date.  After this
Order entered, Steppan filed a pre-trial “Second Amended Notice and Claim of
Lien” on November 8, 2013 (TE 3; Exh. 6), which admitted that the AIA
Agreement had been agreed upon long after its purported effective date, and had
been utilized to retroactively “change” and dramatically increase the amounts
already previously and originally invoiced by FFA under the earlier hourly fee

Trial was held
beginning on December 9, 2013, during which the Court declined to allow a full
presentation of evidence on the issues referenced in the two prior partial
summary judgment orders.  See, e.g.,
Trial Transcript (“TT”) at pp. 35, 722.

prove up a valid lien at trial, “lien claimant” and Plaintiff Steppan should
have demonstrated by a preponderance of evidence that the lien was for unpaid
amounts owed to Steppan for his services (as alleged in his
Complaint) “furnished by” him or “through” his employees or subproviders (as
required by NRS 108.222(1)(a) and (b)). 
Steppan failed to do so. 
Nevertheless, following trial this Court issued its Decision, which
upheld the lien, as this Court had apparently been misled into believing that
Steppan could be treated as though the services were performed “by” him as the
architect, “through” his design consultant, FFA.  For Steppan to meet his burden of proof under
such a theory (i.e., to show (I) that he was the true contract
architect, (II) who had retained FFA as his design consultant), Steppan
should, at minimum, have provided evidence of the following:  (I) (a) the existence of a contract between
Steppan and the customer, BSC/Consolidated, (b) negotiated by Steppan with the
customer, (c) treated as in existence in the parties’ course of dealings, such
as by having all invoices to the customer thereunder being sent by Steppan, (d)
and any payments from the customer being made to Steppan, as they would have
been to a real contract architect, (e) such that Steppan was the party owed any
past due payments claimed in his lien notices; as well as (f)
substantial material involvement by Steppan on the project, (g) including
regular communications with “his” customer, and Nevada entities, together with
(h) consistent treatment as the Nevada architect of record on Nevada
governmental submissions.  (II) Further,
the evidence which should have been expected regarding Steppan’s alleged
retention of FFA would have included: 
(i) FFA being identified as Steppan’s hired design consultant at the
location in the AIA contract where such designations are to be made ('; (j) consistent testimony
that FFA was Steppan’s design consultant, not the customer’s, (k) backed up by
a written design agreement between FFA and Steppan, on file with Nevada’s
Architectural Board (as required by NRS 623.325 and NRS 623.353), (l) invoices
from FFA to its purported customer, Steppan, (m) payments on these invoices
from Steppan to his designer, FFA (with 1099s), (n) or, if no such payments
were made, demands or suits by FFA to Steppan regarding the same, and (o) that
Steppan had, himself, chosen and hired not only FFA, but also the other
subproviders of project services, whose bills were included in FFA’s bills and “Steppan’s”

failed to meet this burden or even make a prima facie showing
thereon:  Other than (a) Steppan having
signed contracts with the customer as the nominal contract architect, no
evidence whatsoever as to items (b) through (o) was presented at trial!  Rather, the trial evidence overwhelmingly
showed that FFA was the true contract architect, by and through whose employees
the work was performed, which had negotiated the contract, improperly instructed
one of its employees to sign it as though he were the contract architect (even
though said employee would play no such actual role), invoiced and received
payments directly from the customer, with any project work done by Steppan
having been nominal and performed as an employee of FFA, with the amount of the
lien then being based entirely on amounts claimed as due and owing to FFA,
based on its invoices to the customer, and its advances to its
hired subproviders, and with no evidence showing that FFA ever entered into any
design consulting agreement with Steppan for its work or having ever acted as
though it had done so. 

FFA, not Steppan,
was the only potential claimant who could possibly have shown that it was the
party “by or through” whom the work was performed, so as to be a valid lien
claimant under NRS Chapter 108.  FFA
could not, however, bring such a lien claim due to the prohibitions of NRS
108.222(2), because FFA had not deigned to get itself licensed/registered in
Nevada to provide the services being liened for, believing itself to be above
Nevada’s laws (except when it came time to benefit from Nevada’s lien
laws).  Therefore, FFA hid the true
nature of its involvement by pretending that “Steppan” was the contract
architect, and the lien claimant. 
However, FFA had no right to engage in this subterfuge and have someone
else’s name used to pursue a lien on FFA’s behalf if that someone else was not
the party by or through whom the work was actually performed.

Plaintiff Steppan’s
failure to demonstrate that the lien was for work he performed, rather
than being based on services provided by FFA through its employees and
subproviders should have been fatal to Plaintiff’s case.  This is confirmed by DTJ Design Inc. v.
First Republic Bank
, 318 P.3d 709, 710-12, 130 Nev. Adv. Op. (2014), an
opinion issued after trial, ruling that Nevada work performed by the
foreign architectural firm DTJ Design was not lienable, because DTJ was not
registered to practice here, and its one Nevada licensed employee owned less
than two-thirds of DTJ.  This Court’s
Decision upholding the lien must therefore be corrected and the lien

III.   NRCP 60(b)

NRCP 60(b)(3)
allows relief from an order (or a judgment, which is not yet at issue herein)
where the same was obtained via “fraud (whether heretofore denominated
intrinsic or extrinsic), misrepresentation or other misconduct of an adverse
party.”  As this brief will demonstrate,
Steppan and his employer FFA entered into a series of sham transactions and
made a variety of misrepresentations and engaged in misconduct (including
violations of Nevada law) in order to deceive various Washoe County and Reno
entities, and this Court, culminating in this Court’s Decision, such that this
Motion is proper under NRCP 60(b)(3).  In
order to give this Court full discretion to reach a proper result herein, this
Motion is also based on NRCP 60(b)(1), for and to the extent of any excusable
inadvertence or neglect by Defendants’ counsel in failing to better assist the
Court in arriving at the proper outcome in this case, and see through the
Plaintiff’s fraud, heretofore.

An NRCP 60(b)(1)
or (3) Motion should be made within six (6) months of notice of entry of the
ruling from which relief is sought.  In
the present case, this Court’s Decision was entered less than six months ago,
on May 28, 2014.  The pretrial summary
judgment orders from which relief is sought herein were filed more than 6
months ago, but will only be rendered final and non-interlocutory by this Court’s
Decision and this Court’s final Judgment, once entered, and the post-Decision
costs and attorneys’ fees Orders were entered less than six months ago. 

In the event that
this Motion is rejected as insufficient to establish grounds for relief under
NRCP 60, no such ruling would have any effect upon the Defendants’ right to
also seek post-Judgment relief from this Court, once Judgment finally enters,
if in favor of Steppan, pursuant to NRCP 52(b) and NRCP 59(e).  Those rules allow Defendants to request that
this Court alter and amend its Judgment, and its Decision, or for a new trial,
in order to reject Steppan’s mechanic’s lien claim and his suit to foreclose
thereon as invalid, under standards which are distinct from those set forth in
NRCP 60, but such motions may not be pursued until after a judgment has
entered.  In the event that this Court
goes forward with the entry of Judgment in favor of Steppan, notwithstanding
the present motion, then nothing stated herein is intended as a waiver of the
Defendants’ rights to move for NRCP 52(b) and NRCP 59(e) relief, in a separate
motion which may include some of the same arguments set forth herein, but
presented on the grounds set forth in those rules, together with such
additional arguments or elaborations thereon as may then be appropriate.



A.        The Steppan Lien Was Based On FFA
Services and FFA Invoices, Not on Steppan’s  Services and Invoices.

owned” the subject Nevada property at issue herein, as defined in the parties’
pre-trial stipulation. (Decision at &
1).  A purchase agreement was entered
into between the Iliescus as sellers, through their real estate agent Richard
Johnson, and an entity known as Consolidated Pacific Development, as purchaser,  which purchase rights later came to be held by
an entity known as BSC (jointly herein “BSC/Consolidated”).  Decision at &&
2-8.  The “sale of the property” however,
“never came to pass” as the purchasers “were never able to secure funding for
the purchase or the contemplated development.” 
Id. at &
7.  Thus, not a single shovel of dirt was
ever turned on the entire project.

DESIGN SERVICES AGREEMENT” was executed by Steppan and BSC/Consolidated on
November 15, 2005 (TE 14; STEPPAN 4370-71; Exhibit 9 hereto) which
called for services to be performed on an hourly basis and billed monthly
(sometimes hereinafter the “original letter agreement”).  The invoices which were submitted and paid
under this original letter agreement were thereafter unilaterally and
retroactively “changed” and replaced with higher invoices from FFA (Exh. 6
at page 1, Section (1)(A)), under the purported authority of a later flat fee
percentage based AIA Agreement, which Steppan and BSC/Consolidated executed
later.  “Iliescu is not a party to the
” between the architect and the customer.  Decision at &
10.  (Emphasis added.)

Court recognized that, although Plaintiff “Steppan is, and at all times
relevant to these proceedings was, an architect licensed to practice in the
State of Nevada” he was also “employed at all times relevant to these
proceedings by the firm of Fisher Friedman Associates (‘FFA’)” whose “offices
were in California” and that “Steppan was the only architect at FFA licensed to
practice in Nevada.”  Decision at & 9. 
(Emphasis added.)[2]  This Court also recognized that “the
[schematic design] documents were >prepared’
by a firm [FFA] other than Steppan.”  Id.
at & 13.

the AIA Contract, though allegedly effective October 31, 2005 (Exhibit 10
at p. Steppan-004116) was not finally agreed upon and signed, as shown by an
Addendum included therewith, until April 21, 2006 (Exh. 10 at Steppan
4127-29), which was after all of the work allegedly performed under this
AIA Agreement was already complete.  See,
e.g., Exhibit 12 hereto (relevant pages from days two through
four of Steppan’s deposition testimony)[3]
at p. 255, lines 14-21. 

after-the-fact Addendum indicated that the after-the-fact AIA contract was “between
BSC Financial, LLC and Mark B. Steppan, AIA, and Fisher Friedman Associates,
Design Consultants.”  Exh. 10 at
Steppan 4127.  This language is at best
ambiguous with respect to whose “Design Consultants” FFA allegedly
claimed to be, but seems to indicate that the customer had nominally hired
Steppan as its architect and also directly hired FFA as its design consultant
(as opposed to having retained Steppan, who then, in turn, retained FFA as his
design consultant).  A conclusion that
FFA was working directly for the customer is supported by Steppan’s deposition
testimony that “the reality is that both of us [FFA and Steppan] were doing the
project for the client....” See, Exh. 12 at p. 257.  This interpretation is also supported by the
lack of any evidence (as discussed more fully below) supporting any claim that
Steppan retained FFA as his subprovider design consultant.  Thus, Steppan cannot pursue a lien for FFA’s
work on a theory that the work was furnished “by” Steppan acting “through” his
hired subprovider, FFA, since FFA was instead working directly for its own
direct customer BSC/Consolidated.

presumably hoped to be treated not as the customer’s consultant, but as Steppan’s
consultant, not only to overcome the foregoing problem, but so that FFA could
claim the benefits of NRS 623.330(1) for a person acting as “a consultant
retained by a registered architect” who is exempt from the licensing provisions
of NRS Chapter 623 requiring registration with Nevada’s architectural board
before providing architectural services in Nevada.  However, FFA was clearly engaged in the practice
of architecture, as defined by NRS 623.023. 
Deceptively calling itself something other than an architect does not
mean it really was something other than an architect.  AGO 19 (4-1-1963)(draftsman may not legally
practice architecture merely by calling himself something other than an
architect.)  Moreover, FFA was clearly
working directly for the customer, and had not been “retained” by Steppan as
his consultant.

evidence shows that Steppan’s services were not the basis for the lien claimed
in his name.

Steppan’s signatures on the subject agreements were a sham, used merely to
allow the real lienor in interest, FFA, whose owner’s and employees’ and
subproviders’ services comprise the basis for the lien, to improperly
circumvent several provisions of Nevada law, which prevent FFA, as a foreign
architectural firm, not registered with Nevada’s licensing Board of
Architecture (and which would not be able to be so registered as it was not
owned by at least 2/3 Nevada licensees) from performing architectural or design
services in Nevada (NRS 623.180; NRS 623.349), such that FFA could not pursue a
mechanic’s lien for those services.  NRS

counsel retained by FFA to prosecute this lawsuit in Steppan’s name needed to
demonstrate that Steppan really was the lien claimant whose services really
comprised the basis of the lien.  Simply
put, Plaintiff “Steppan” was required to show the truth of what was alleged in
Paragraph 9 of “his” Complaint: that the lien was being pursued for services
which he (not his employer) “did supply.”  This was a required element of Steppan’s
claim under NRS 108.222(1)(a) and (b) (only the value of work performed “by or
through the lien claimant” may form the basis for a lien, for moneys which
remain due and owing to the lien claimant, not to someone else).  Steppan did not meet his burden of proving
that the work for which he liened was performed “by or through” him (i.e.,
by him or through his hired employees or his hired subproviders) and Steppan
should therefore not have prevailed, having acted merely as a non-owner
employee of FFA, which had actually done all the work on which the lien is

the work which forms the basis of the lien was actually performed by FFA,
through its owner and its employees (including Steppan) and its subproviders,
as invoiced by FFA directly to its customer, BSC/Consolidated, all of whose
payments for the same were paid directly to FFA, not Steppan (TT at 670-71), it
was error to allow a mechanic’s lien to stand in the name of FFA’s sole
Nevada-licensed employee.  For example,
in Nevada National Bank v. Snyder, 108 Nev. 151, 157, 826 P.2d 560,
562-64 (1992) (partially abrogated on other grounds by Executive Mgmt. Ltd.
v. Ticor Title Ins. Co.
, 118 Nev. 46, 38 P.3d 872 (2002)) the Nevada
Supreme Court reversed a district court’s decision, in a mechanic’s lien case,
allowing an individual to substitute himself in as the Plaintiff on behalf of a
foreign architectural corporation.  The
Nevada Supreme Court criticized the district court’s willingness to allow an
individual to lien for a foreign architectural firm’s work, based on a number of factors, including: (a)
after a relevant point in time, the invoices were submitted on behalf of the corporation, not the individual named as plaintiff (b) the architectural drawings were prepared by the corporation, (c) the individuals who prepared
those drawings were employees of the corporation, not of the individual
acting as plaintiff, and (d) the
individual acting as plaintiff never became separately “authorized to do
business” in Nevada.  Id.  These factors are also all true here.  As will be demonstrated below, Steppan did
not prepare the drawings or design output, FFA and its employees did.  FFA sent all of those invoices which demonstrate
the calculation of the lien amount sought, on FFA letterhead, directly to its
underlying customer (not to Steppan). 
The prior payments from that customer credited in those invoices had
been made directly to FFA, not to Steppan.  Steppan never showed he held a business
license to perform work in Nevada as a sole proprietor; etc.  That Steppan did not meet his burden of
proving that the lien was based on his services, performed “by or
through” him, is established by the following facts and analysis:


(i)         FFA Was Solely Owned by Rodney
Friedman, and Steppan Did Not Own 2/3 of the Entity, as Required by Nevada Law,
but Owned 0%.

Plaintiff Steppan
was deposed over the course of four days and the transcripts of those
depositions were filed with this Court on December 11, 2013.  Relevant portions of those transcripts are
attached at Exhs. 11 and Exh. 12, hereto.  As Steppan is a party in this case, these
transcripts may be utilized for “any purpose” not merely for impeachment, under
NRCP 32(a)(2) such that these transcripts are relevant primary evidence, to be
considered by this Court in establishing its rulings.

Steppan admitted
in his deposition testimony that he (FFA’s only Nevada-licensed employee) did
not own any of FFA (let alone 2/3 as required by NRS 623.349 for FFA to
provide its services in

Nevada in association with
Steppan).  Instead, Steppan’s
Rodney Friedman, owned 100% of the corporate stock in FFA (with Mr. Fisher
having retired in 1997).  Exh. 12,
at pp. 7-13.  Friedman also himself
conceded that he was the only owner of FFA during the subject time period, such
that Steppan was merely an employee.  TT
at pp. 266, 346-347.


(ii)        FFA
Always Owned the Lien Claims, as Demonstrated by Who Provided the Lien Claims
to Friedman Prior to Trial.

After “Steppan’s” lien
was filed, but two years before trial, FFA’s sole owner, Friedman, sold the FFA
corporation to a third party.  As part of
that transfer, Friedman testified that he had retained from FFA,
ownership of the claims in this lawsuit (which contains one sole cause of
action: for lien foreclosure) such that he, as the only party known to
have “a financial interest in the outcome of this lawsuit” was therefore still “financing
this lawsuit” at the time of trial. TT at p. 348, ll.12-24.  That Friedman retained the lien foreclosure
claim at issue herein from FFA, upon the sale of FFA, not from
, conclusively demonstrates that this claim was always known by
Friedman to be FFA’s, not Steppan’s, to begin with, such that pursuing this
claim in the name of Steppan was a fraudulent misrepresentation from the
outset.  Friedman also knew that the
architectural work product (instruments of service) prepared for the project
belonged to FFA. TT at page 369.

Thus, the subject
lien foreclosure claim at issue herein was always treated and understood as
belonging to FFA, not Steppan, until, prior to trial, that claim was
taken back from FFA, by FFA’s prior sole owner, in conjunction with a
sale of FFA.  Accordingly, as of the time
of trial, the non-Nevada licensed architect, Rodney Friedman, was the real
lienor in interest, as a successor to the non-Nevada registered architectural
firm of FFA, the original real party in interest, whose services and invoices
form the basis of the “Steppan” lien. 
Steppan’s name was utilized as the contract architect and as the lien
claimant and as the plaintiff in a manner which was a fraudulent
misrepresentation from the outset, engaged in by FFA in order to circumvent
Nevada law, which prevented FFA from suing for its invoices, let alone pursuing
a lien.  NRS 623.180, 623.357, and NRS
108.222(2).  There was however no lawful
basis for these fraudulent ploys to have been countenanced by this Court.

(iii)       The
Proposal Letter and Original Letter Agreement Contained FFA’s Information, Not

The initial
contract proposal letter ostensibly sent from Steppan to BSC/Consolidated on
October 25, 2005 (TE 9) together with the November 15, 2005 original letter
agreement (Exh. 9 hereto) signed on the basis thereof indicate that FFA
initially planned on carrying out the con that Steppan was the contract
architect by pretending that FFA’s employees worked for and as employees of
Steppan, so as to claim to be exempt from the provisions of NRS Chapter 623
pursuant to NRS 623.330(1)(a), exempting the employees of a licensed architect
or registered architectural firm from in-State licensing requirements.  Both letters attached a “2005 Master Fee
Schedule” setting forth the hourly rates for 21 different types and categories
of staff members purportedly employed by Steppan, including a “Principal/Officer”
who would charge $220.00 per hour, as well as rates for the “Executive Vice
President” the “Senior Vice President” an “Architect III” “Graphic Designer”
etc., down to clerical office support. 
However, Steppan had NO employees, let alone 21 different categories
of employees,
and never produced any W2's at trial showing that anyone was
employed by him.  Rather, as this
Court found, he was himself a paid employee of FFA throughout the time the
contract was being performed.  Exh. 1,
at p.3, _9.  Whose employees and whose rates were then
actually being included as an attachment to the letter agreement?  FFA’s, of course, NOT Steppan’s!  This demonstrates that FFA was truly the
contract architect, not Steppan, although FFA tried to hide that fact via
various acts of subterfuge, such as the use of this attachment on a letter and
contract purportedly between Steppan and the customer.

It appears that
this sham was eventually abandoned in favor of a new subterfuge, that FFA was
acting as a design consultant, so as to claim the “consultant” exemption,
instead of the employee exemption, under NRS 623.330(1)(a). The evidence at
trial clearly undercut this exemption claim (and even had it applied, this
would not mean that Steppan could lien for work performed by FFA through its


(iv)       All
Payments from the Customer Were Made to FFA, Not to Steppan who Admitted the
Limited Nature of His Actual Role.

All payments made
by the customer under the original hourly fee agreements were made to FFA, not
Steppan.  TT p. 670 at l. 18 through p.
671 at l. 3, and TT 671 at ll. 21-24.

Steppan provided the following deposition testimony, reviewed at trial:  “Q. In distinguishing between required, sir,
and what you understood your role to be, was there anything, other than the
putting your stamp on documents, that was appropriate to be communicated to you
rather than someone else at Fisher-Friedman Associates? A. I’m not sure I can
think of anything in specifics, as we sit here. Q. So sitting here today, you
understanding of what was required of you with respect to the Reno project was
putting your stamp on documents? A. And signing of the contract. Q. Anything else?
A. Probably, but I can’t think of anything specifically.” TT at page 780.  Steppan’s counsel attempted to rehabilitate
him after introduction of this testimony, by averring that the context of the
earlier questions allegedly only had to do with communications with government
officials in Washoe County.  But even if
this were accurate, it would further emphasize the point: that Steppan, the only
FFA employee who was a Nevada licensee, was not even used to interact
with local Nevada officials, demonstrates that his name and license were
invoked merely for convenience, not in substance, and further demonstrates FFA’s
misconduct in acting as though it had the power to work in Nevada under the
guise of Steppan being the contract architect, when he clearly fulfilled no
such role.

Steppan never
performed the second half of his above-described two-part job (to stamp project
plans), since such stamping “would have occurred at submission for the building
permit at the end of the construction documents phase only” (TT at p. 785)
which never occurred.  Steppan also
averred that he had no personal liability on the project, but that FFA “would
protect me” from such liability  (Exh.
at p. 161), whereas an actual contract architect must alone bear “full
responsibility for the work performed” by any third party designer, not the
other way around, under NRS 623.353.


      Steppan Did Not Negotiate the
Terms of the Contracts, Nor Maintain His Own Files With Respect Thereto, Nor
Create the Work Product.

Steppan did not negotiate
the terms of the contract(s) which he signed. 
Rather, Rodney Friedman negotiated the payment terms, as admitted at
trial (TT at pg. 417-418), and as recognized by this Court’s Decision, noting
that Friedman, not Steppan, had the initial contact with the client, and that
the payment terms were negotiated from that inception.  Exh. 1 at Finding 12.  This preliminary negotiation by Friedman violated
NRS 623.182
requiring a temporary certificate of registration and a warning
letter (that registration may be denied) to the potential Nevada client before
any architectural proposal can be provided by a non-Nevada registered architect

this was the first time Steppan’s name had ever been used on behalf of FFA
while he was employed at FFA.  Exh. 12
at pages 72-73.  This was also the first
time Steppan had signed any architectural contract, other than for one
or two spec homes in California (such that he had never signed any previous
contracts in Nevada). Id. The project number used for this contract was
an FFA number, not a Steppan numbering system number.  Exh. 12 at page 67.  The fee schedule was based on the hierarchy
within the FFA firm.  Id. at 18.

Steppan maintained
no independent files with respect to “his” contracts.  Exh. 12 at p. 304.  Rather, the approximately 7,000 exhibits
supposedly produced by Plaintiff for this case were all produced by FFA, not
Steppan. “Q. Are all of the documents that have been produced with the Steppan,
what we call Bates Number, 17 through 7,000 period, are those from the files of
Fisher Friedman Associates? A. Yes. Do you, Mark Steppan, have any separate
file with respect to the Reno project? A. No.” 
Exh. 12 at p. 304.

Steppan did not
create the contract drawings (Exh. 12 at pg. 21).  Instead, Steppan conceded that Friedman and
FFA employee David Tritt were the principal sources of design output.  Exh. 12 at pp. 256-57. Steppan was
therefore reduced to claiming that his role was one of “oversight” (id.
at pp. 21-22) even though FFA already had a project manager, Ogle, and this
role would mean Steppan was supposedly overseeing the work of his own boss, FFA
owner Friedman.


     The Initial Use of Steppan
Letterhead and Cards in Support of the Sham that Steppan Was the Contract
Architect Was Eventually Discontinued Given That the Customer Understood Who
Was Truly to be Paid for Having Done the Work.

Steppan admitted
that letterhead with his name displayed at the top was created solely for this
project (Exh. 12 at p. 164) which was obviously done to create the
appearance that Steppan was acting in some independent role as the project
architect even though he actually remained an employee of FFA.  This letterhead was available for anyone at
FFA to use who was working on the project (Exh. 12 at p. 165) so they
could write letters as though they were Steppan’s employees.  The use of this letterhead to perpetuate the
sham was, however, not very carefully thought through, as the letterhead
contained the FFA California address and phone number at the bottom, not
a separate Steppan number or address, or any Nevada address. TE 6.  The email at the bottom of this letterhead
was “”  Steppan
business cards were also created in-house, at FFA  (Exh. 12 at p. 295) including, even,
for Rodney Friedman and Nathan Ogle, as though they were supposedly employed by
Steppan.  Id. 

The Steppan
letterhead was sometimes utilized by even Steppan’s father-in-law and boss,
sole FFA owner Rodney Friedman, as though he were working as an employee of
! See, Exh. 12 at p. 255-258; and see Exhibit 13
hereto (Steppan 3262-63).  Plaintiff
admits, though, that Friedman was actually writing on behalf of FFA (Exh. 12
at p.258, ll. 6-9).  FFA employee Nathan
Ogle, listed on the invoices as the project manager, also sometimes used the
bogus Steppan letterhead to communicate with BSC/Consolidated. See, e.g.,
TE 16, discussed at TT 718.  Taken
together with the above-referenced letter contract attachment listing all of “Steppan’s”
purported categories of employees, this letterhead demonstrates that the
initial FFA plan for circumventing Nevada laws requiring FFA to be registered
here, was to pretend that all of FFA’s employees working on this Nevada
high-rise residential project were employees of Steppan.  However, this was an open and obvious
farce.  No W2's from Steppan, to his
purported employees, Friedman, Ogle, et al., were, for obvious reasons, ever
produced.  Rather, Steppan, a 0% owner of
FFA, which, through its owner and its employees was truly doing
the work for which the lien is claimed, continued to be employed by FFA
throughout the project, not the other way around.  Exh. 1 at p. 3, ll. 18-19.  The idea that Friedman and Ogle would be
submitting communications on Steppan letterhead, as though they were somehow employees
of Steppan or members of his staff, should be seen as an offensive
insult to the intelligence of anyone asked to believe therein.  Ogle was an employee of FFA.  Friedman was its owner.  Steppan was an employee of FFA, who had no
employees or office of his own. 

In any event, the
ruse of the bogus letterhead soon evaporated (probably when FFA decided to
favor the sham of a “design consultant” role, pursuant to which, its employees’
use of this letterhead would have made no sense), and FFA and its employees
eventually reverted to primarily using the accurate FFA letterhead.  For example, FFA initially utilized the
Steppan letterhead for both Services Invoices and for Reimbursable Expense
Invoices (even though these expenses were incurred by FFA, with the
subproviders FFA, not Steppan, had hired) (TT 259-263; Exh. 12 at p.85)
sent to the customer (BSC/Consolidated) in late 2005 and the first month of
2006 (see, e.g., the first four invoices attached to TE 24 and the first
four reimbursable expense invoices attached to TE 26).  However, beginning in February 2006, and
continuing through the final, February 2007, invoices, all of the invoices were
sent on FFA letterhead directly to FFA’s customer (BSC/Consolidated, not
Steppan).  See, e.g., the
remainder of TE 24, all of TE 25, and the remainder of TE 26. This means that all
of the invoices which were sent after the April 21, 2006 designation of FFA
as someone’s design consultant (Exh. 10 hereto at pp. Steppan 4127 and
4129) were sent directly from FFA, indicating that any such purported designer
role was a direct relationship between FFA and BSC/Consolidated.

In summary, none
of the invoices were sent from FFA to 
Steppan, as would be the case if FFA were a subprovider to Steppan, i.e.,
his hired design consultant. 
Rather, all invoices were sent to BSC/Consolidated, and all of the
invoices sent to that customer after the designation of FFA as someone’s design
consultant were sent on FFA letterhead, and even the initial Steppan letterhead
invoices were sent from FFA’s address. 
Thus, FFA was performing work for a Nevada client as to a Nevada project
and invoicing and being paid directly by the client for the same, all in
violation of NRS 623.180(1), rendering FFA liable for civil penalties for
violations of law.  NRS 623.365 and

Steppan explained
that neither FFA nor its customer, BSC/Consolidated, were concerned about the
invoices suddenly being accurately sent on FFA letterhead, since they all
understood that in fact FFA, NOT Steppan, was to be paid directly for all
work.  Steppan explained that after the
FFA invoices started being sent on FFA letterhead:  “[W]e ended up having a phone conversation
with, I believe it was Sam [Caniglia, of BSC/Consolidated] . . . to discuss the
fact that he had obviously received some Fisher-Friedman invoicing versus
keeping it on Mark Steppan letterhead, was that acceptable to him, since all
parties knew the arrangement
of how I was overseeing the project as
architect of record for the purposes of license requirements in Nevada,
[but] that the payments were not coming into me directly, they were coming
into Fisher-Friedman Associates
.  So
was it acceptable to retain that way, or did he want us to change back. And it
was determined to just keep it the way it was, on Fisher-Friedman letterhead.”  TT at page 673.

Hence, the sham
pretense of acting as if the invoices were coming from Steppan, rather than
FFA, ultimately ceased because everyone knew that Steppan’s name was being
utilized solely because he was licensed in Nevada, but that FFA was truly the
party receiving direct payment for its services to Consolidated/BSC, and not
even Steppan claimed any right to receive the type of direct payments from the
customer to which an actual contract architect would be entitled
!  Just as no W2's from Steppan to Friedman or
Ogle or other FFA employees were ever produced to support the original sham
that they were Steppan’s employees, there were also never any 1099s presented
at trial from Steppan to FFA to support a claimed relationship in which Steppan
purportedly hired FFA as his design consultant.  This is because the work was not performed “by”
Steppan “through” his employees or through his consultant, but by
FFA through its employees, including Steppan, directly for the customer,
who was directly paying FFA for its services.

testimony that he was “overseeing the project” is also undercut by these
invoices, as all of the invoices (TE 24, 25, and 26) list Ogle, not
Steppan, as the Project Manager (demonstrating the clerical error in this Court’s
Decision at p. 3, lines 21-23, finding that Steppan was the Project Manager,
which clerical error is another ground for relief under NRCP 60(b)). 

   The Lien Was Ultimately Based
Entirely on Invoices From FFA to the 

invoicing system and department generated all invoices sent for this project
and maintained copies of the same in FFA’s files, and no separate or
independent department of Steppan’s was utilized for this task. TT
668-669.  Internal FFA decisions and
directives with respect to allocations of the time spent to various components
of the contract work, and the timing of those allocations were made by FFA, not
Steppan.  TT 669 at ll. 13-22 and TT 670
at ll. 8-17.

although some initial invoices were sent on sham Steppan letterhead, all of
the invoices in TE 25
are sent on FFA letterhead.  These invoices consist of much higher AIA
Contract re-billings for previously invoiced work completed under the original
hourly letter agreement, such that these invoices were sent to supersede the
earlier invoices.  The cover sheet of TE
25 demonstrates that the invoices attached to this exhibit were meant to
establish how much of the Schematic Design (ASD@) Phase of the project was complete,
for purposes of justifying a flat fee percentage amount claimed as owing based
upon that completion. The amount of the lien claim pursued at trial was based
(i) on a ruling that this SD phase had been completed (Decision at Finding 11
and Conclusion 12) and (ii) the Court’s Summary Judgment Order that the AIA
Contract controlled the calculation of the lien amount.  Thus, the lien amount ultimately sought is
based on the TE 25 invoices, which were all sent on FFA letterhead (and, like all
prior invoices, from FFA’s address, to BSC/Consolidated) based on the AIA
Agreement having been finalized before these billings were sent.  The correspondence  between the TE 25 invoices and the final lien
is demonstrated for example by a comparison of (i) the final invoice comprising
TE 25, at page Steppan-007614 (showing the total fees for “Professional
Services” earned standing at $2,070,000.00 before add-ons or payment
deductions), on the one hand, with (ii) TE 3 (the final amended lien upheld in
the Court’s Decision), on the other hand, which, at the top of page 4, likewise
shows the “Fee earned” before deductions for payments received, as
$2,070,000.00.  (The lien also claimed
additional amounts for allegedly separate add-on contracts, and reimbursable
expenses paid by FFA to its subproviders.)

This Court itself
recognized that “Steppan . . . established the billing system used by FFA
in support of his claims.  Exh. 1
at Finding 19.  All payments from Steppan’s
alleged customer for this Nevada project were paid to FFA, not to Steppan. Exh.
at pg. 85.  Despite such customer
payments being made and credited, not a single check was written
to Steppan by the customer.  Exh. 12
at p. 162.  The bookkeeping department at
FFA handled the billing and collections for the work of its employees, based on
the payment terms Friedman had negotiated. TT at page 417-418.  This Court’s Finding 16 indicates that “[t]here
were numerous emails sent to Caniglia and others detailing the failure to pay
the sums due.”  Notably, however, these
emails were sent, not by Steppan, but by FFA’s sole owner, Friedman. TT at pg.

Thus, the “Steppan”
lien was based on FFA’s invoices for fees earned and services provided by FFA
as shown by FFA invoices, on FFA letterhead (TE 25) sent by FFA, directly to FFA’s
customer for FFA’s employees’ work, with deductions for payments previously
received by FFA directly from that customer. 
Accordingly, the amount of the lien sought was based on amounts invoiced
by FFA for the work of FFA and its employees. 
Using Steppan’s name on the lien as the lien claimant was simply


(viii)     Steppan
Acted Solely as an FFA Employee and Thus Lied In His Lien Notices Regarding By
Whom He Was Employed; He Performed Only 4.1% of the Work For Which the Lien Is
Asserted, and He Did Not Supervise the Work.

NRS 108.226(2)(c)
requires a lien notice to indicate “by whom the lien claimant was employed” in
providing the lienable services.  This
statutory provision supports the same general principle being argued throughout
this brief: a lien claimant cannot lien for someone else’s services to that
other person’s client, but may only lien for the value of services which the
lien claimant was employed to and did provide to his customer or
employer, either by providing those services himself or through others he
hired.  Steppan claimed in each of his
three lien notices (Exhs. 4, 5, and 6 hereto) that he was employed by
BSC/Consolidated. This was a fraudulent misrepresentation.   

Rather, as this
Court found in its Decision, Exh. 1 at p. 3: “Steppan was employed at all times
relevant to these proceedings by the firm of Fisher Friedman Associates (>FFA’)).”  This finding is absolutely accurate and
supported by trial admissions.  Steppan
produced no evidence at trial that any of the payments made by
BSC/Consolidated for the project were sent to him, with accompanying 1099s, to
back up the statement on his lien notice(s) that BSC/Consolidated employed him
to perform this work.  All such payments
were made to FFA.  TT at 670-71. 

Further, in his
trial testimony, Friedman inaccurately claimed that Nathan Ogle “worked
directly under Mark [Steppan]” but admitted:  “and Mark [Steppan] worked for the firm.”
 TT at pg. 265-266 [emphasis added].  Steppan received only and solely his normal
salary and wages from FFA, with no revenue sharing or expectation of a bonus,
for any work he did on this project.  Exh.
at pp. 85-86.  Thus,
Steppan was merely an FFA employee during the time period he worked on this
project, which means that Steppan failed to meet his burden of proof that his
lien notices were accurate in identifying, as statutorily required, by whom he
was employed.  Failure to tell the truth
with respect to the statutorily required questions, on lien notices constitutes
a misdemeanor under NRS 108.226(4).

As the trial
testimony clearly revealed, the party who was, in fact, “employed by” customer
BSC/Consolidated and expected payment from that customer for its services, was
FFA.  Steppan had no economic interest in
this contract (Exh. 12 at pp. 85-86) such that he will not share in any
recovery in this case, and has no personal economic interest herein.  Steppan never testified that he was still
owed any salary from FFA and therefore also failed to meet his burden on yet
another fundamental element of a lien claim, namely that the lien claimant
is owed money, which is what he is liening for!

Time cards were
kept for all ten architectural FFA employees, including Steppan, who worked on
the project, which cards were produced by Steppan (Exh. 12 at pp.
232-233) and are Exhibit 14 hereto (Steppan 007122-7363).  Defendant’s counsel has, for the convenience
of the Court, reviewed these time cards and created a ledger of certain
relevant calculations based thereon, which is Exhibit 15 hereto. The ten
FFA employees generated 3,396 billable hours on this matter, almost all of it
prior to the end of April 2006.  FFA’s
sole owner, Rodney Friedman, spent 813 hours, Nathan Ogle, the designated
Project Manager spent 642 hours, and designer David Tritt, 610 hours. Quan
Chang spent 206 hours and Joe Preston spent 537 hours.  Steppan, by contrast, devoted a mere 141
hours to this project, or just 4.1% of the total hours billed by all FFA
, fewer than almost any other employee listed!  Exh. 14; Exh. 15.

Steppan claimed
that during this minimal hourly investment, he was involved in allegedly supervisory tasks (such
as “to walk around and talk to people. It was much easier and simple and fairly
consistent with action that I would walk around and talk to Nathan” the actual Project Manager, who billed roughly 5 times as many hours as did Steppan).
TT at p.756. However, Friedman let the truth slip out, and conceded that Steppan was not in fact supervising
the work, but would only have played a supervisory role on the project if
Friedman, FFA’s owner and the true supervisor, were to have become unavailable,
due to illness or vacation. TT 269-270.


(ix)       FFA
and Ogle, Not Steppan Were Listed as the Project’s Architectural Contact on
Nevada Documents, and Steppan’s Substantive Involvement, Including in Nevada,
Was Minimal.

Steppan has never
maintained an office in Nevada.  He has
never lived in Nevada and has never been a Nevada resident(as contemplated by
NRS 623.350(1)).  He has lived in
California for 26 years.  Exh. 12 at
5-6.  He admitted that he prepared no
architectural drawings for the project.  Exh.
at pg. 21.  Rather, the drawings
were prepared by FFA’s (not his) employees. 
Designated Project Manager Nathan Ogle (TE 24, 25, 26), who was licensed
only in California and was acting on behalf of non-Nevada registered FFA,
attended most of the Nevada meetings, worked with the government engineers and
planners, as well as with the client. 
Steppan did not create or form a Nevada business entity, but just used
his name as an individual, as though he were some sort of Nevada sole
proprietorship, to perpetuate the sham.  Exh.
at p.68.

Steppan’s role in
the project was so minor that his name is not even mentioned, including as the
project’s architectural contact person, in the 154 page January 17, 2006
Special Use Permit Application to the City of Reno (TE 35; TT 764,
183-84).  Instead, the Application
provides the name of the actual architectural firm:  “Person to Contact Regarding Application.
Name: Fisher Friedman Associates.  Contact:
Nathan Ogle, AIA.”  TE 35 at p. Steppan
2371.  Similarly, TE 36 (requesting an
increase in the condominium unit count) and TE 37 (for a further increase) also
list “Nathan Ogle AIA,” with FFA (not Steppan nor someone who is
with Steppan) as the architectural contact regarding the project, and do not
even mention Steppan. TT at pp. 763-764. 
The presence of FFA’s and Ogle’s names on these documents is
shocking:  What in the world was a
non-Nevada registered architectural firm and a non-Nevada licensed architect
doing putting their names as the architects of record to contact for this
Nevada project!?  This is akin to a
California lawyer, not licensed to practice law in Nevada, who doesn’t take the
steps necessary to be admitted pro hac vice, appearing on Nevada pleadings and
in Nevada courtrooms, and then claiming: “Oh, I’m not engaged in the
unauthorized practice of law in Nevada without a license, I’m just a ‘legal
consultant.’” Nevertheless, these submissions demonstrate that FFA, not
Steppan, was the true contract architect all along, and that FFA became
increasingly sloppy in trying to hide this truth.

an application to extend the deadline for final map submission was submitted by
the party then handling development approvals, in the name, not of Steppan, but
of Rodney Friedman.  TE 51 (at Steppan
7404); TT 320-21.  The $2,330 payment to
the City of Reno for this submission was even made by FFA/Rodney Friedman!  TE 52; TT 321-323.  This hardly seems like the act of a mere third-party
consultant to contract architect Steppan. 
Rather, as admitted by Friedman under direct examination by this Court,
Friedman did this in the hopes that he/FFA (not Steppan) could then be
paid the full contract value if the work was completed.  TT 323-325. 
This exchange between Friedman and the Court lays bare beyond any doubt
that Friedman and his company FFA were the real contract architect, and lien
claimant.  “Friedman:  I would get paid for the schematic
design, because in the terms of our agreement [i.e., the AIA
Contract which was supposedly with Steppan] if you read the abandonment clause,
I would be entitled to my compensation . . . . under contract. .
. . [p]lus the profit that I didn’t get had we[5]
completed the working drawings.” TT 325 at ll. 3-14.  (Emphasis supplied.)

admitted that there was no reason for him to have been listed as the
architectural contact person for the project on documents submitted to Nevada
governmental officials, since (non-Nevada licensed architect) Ogle was the
project manager conducting daily operations for non-Nevada registered FFA’s
architectural work (TT at 764) and Friedman was the designer (TT at 766).  Steppan also admitted that he did not
participate directly in the requested changes of the condo unit counts (TT at
page 765) did not participate in the conversations regarding changes to project
parking (id.) did not attend any of the hearings before the Reno City
Council (TT at 769) and did not personally make any of the revisions to the FFA
firm’s instruments of service (the ultimate basis of the lien amount referenced
by this Court).  (TT at 767.) 


(x)        Steppan
Has No Record of Communicating With “His” Purported Client, or with Nevada

Though there
were many emails during the course of this project from various FFA employees
to the customer BSC/Consolidated and to interested governmental entities,
Steppan could not find a single email that he had generated and sent to any
person external from FFA relating to this project. TT at 757-758.

FFA, Not Steppan, Chose and Hired the
Subcontractor Professionals.

Steppan had
no involvement in hiring other third party subproviders or lower tier
professionals to assist in the work. 
Rather, FFA did so, for example hiring the structural engineers and
bringing in Ron Klemencic from Seattle to assist with the structural design,
the floor to floor heights, and the column and bay spacing. TT 259-262. The
same thing occurred with the mechanical engineering, Mr. Friedman testifying
that his firm (i.e., FFA, not Steppan) hired C&B Engineers from San
Francisco, who FFA had worked with for decades, to assist with the mechanical,
electrical and plumbing. TT at pp. 262 -263. 
These entities, in turn, billed FFA (not Steppan) for their services (Exh.
at pg. 85) the advanced fees for which somehow nevertheless ended up as
part of “Steppan’s” lien.


(xii)      Any
Purported Contract Between Steppan and FFA Never Existed and Was Never Treated
By Them as Existing and Would Have Violated Nevada Law.

This Court’s Decision
found that “FFA was a design consultant on the . . . project.”  (Decision at &
12).  This Court did not indicate,
however, whose design consultant FFA purportedly was, which is a
critical question.  Nor did any
sufficient evidence support this designation.

If this Court
meant to find that FFA was hired directly by the customer, BSC/Consolidated, as
its design consultant then this Court’s Decision upholding the lien must be
quickly set aside as a matter of law, as Steppan can no more legally lien for
the work of FFA as a direct hire of the customer, than Steppan could lien for
any other third-party’s work (such as some future grader, for example, had the
sale closed and the work gone forward on-site) who was directly hired by the
customer.  If on the other hand, this
Court intended to find that FFA was Steppan’s design consultant, rather
than being hired directly by the customer, in order to justify this Court’s
ruling upholding Steppan’s lien (as though the work was done “by” Steppan “through”
Steppan’s hired design subprovider, FFA), then this Court’s Decision upholding
the lien must still be quickly set aside, both as a matter of fact and of law,
since any claim that FFA was acting in this capacity was wholly and completely
unsupported by any evidence whatsoever, and since FFA could not have so acted
without violating Nevada statutes.

First of all,
Nevada’s architecture and design licensing statutes (NRS Chapter 623) do not
even recognize the profession of “design consultant” as an existing
category.  The State Board may only issue
prescribed certificates, not make up its own. 
AGO 305 (11-24-1953).  Presumably,
foreign architectural firms also cannot make up their own bogus titles to claim
exemption from Nevada laws.  The closest
analogue to a “design consultant” which Nevada law does recognize is
a “residential designer” which may normally only provide services as to
single-family residences or multifamily construction of no more than two
stories (NRS 623.025) and may work on larger residential projects (such as
Wingfield Towers) only if under contract with a licensed Nevada architect who
is responsible for the work, which contract must be in writing, pursuant
to NRS 623.325
, and must also be on file with the Nevada Board of
, pursuant to NRS 623.353, neither of which were shown
here.  Even then, however, the
residential designer must also itself be registered in Nevada, as
a Nevada residential designer, under NRS 623.180(1)(rendering it illegal
to perform either architecture or residential design work in
Nevada without first being registered in Nevada as an architect or a
residential designer), which was also not shown here.

NRS 623.330(1)
does allow “a consultant retained by a registered architect” to be exempt from
the registration requirements of NRS Chapter 623.  However, there is no evidence that
Steppan “retained” FFA as his consultant.  He signed no contract with FFA hiring
FFA.  Rather, although Steppan and FFA
discussed drafting such a contract they ultimately “elected there was not a need
to do one.”  Exh. 12 at p.
158.  He also paid FFA no money, and
received no invoices from FFA.  Indeed,
there was also no unwritten verbal agreement reached regarding design
consultant fees to be paid by Steppan to his purported “design consultant” FFA.
Rather, Steppan admitted that in lieu of such an arrangement, any such alleged
relationship was actually “carried out through the nature of the fact that I’m
an employee of FFA
” (not the other way around).  Exh. 11. at p. 25.  In truth, FFA worked directly for and was
paid directly by BSC/Consolidated, and the exemption of NRS 623.330(1) does not

Furthermore, it is
overwhelmingly clear that FFA’s services on this project went far beyond
outside consulting, and instead involved the practice of architecture as
defined in NRS 623.023.  For example, FFA
engaged in “rendering services” directly to its customer (with its name as the
party rendering those services on invoices and on official submissions to
Nevada governmental agencies) “the scientific, esthetic and orderly
coordination” for the “production of a completed structure which has as its
principal purpose human habitation or occupancy” and which services included
producing “plans [and] specifications” together with other architectural “advice
and direction.”  NRS 623.023. A party “cannot
legally don the robe of an architect” free from the requirements of NRS Chapter
623 “merely by refraining from calling himself an architect, if he, in fact,
accepts work which falls within the purview” of the practice of
architecture.  AGO 19 (4-1-1963). 

Even the AIA
Agreement, the first document to assert that FFA played a “design consultant” role,
does not list FFA as Steppan’s design consultant. Section of the
agreement, which is where the “consultants retained at Architect’s expense” are
to be identified “by name” if “known,” is left blank and does not
identify FFA or any other “consultant.”  Rather, FFA first shows up as somebody’s
design consultant in the Addendum (Exh. 10 at p. Steppan4127) under language
which, as referenced above, at best indicates a direct relationship between the
customer on the one hand, and both Steppan (as the customer’s purported
architect) and FFA (as the customer’s purported design consultant) on the other
(rather than ever stating that Steppan had retained FFA). 

But the official
FFA story gets even more preposterous when one considers that this AIA
Agreement Addendum, first claiming the “design consultant” status for FFA, was
not even finalized, and signed as agreed upon until after all of the
work purportedly performed thereunder had already been completed, and the only
event relative to that work which happened thereafter was the issuance of new,
retroactive flat fee percentage based bills from FFA thereunder, intended to
supercede the original hourly based invoices which FFA had already been paid
directly under the original letter agreement. 
Exh. 12 at p. 255, lines 14-21. 
Exh. 6 at p. 1, _1(A).  Thus, FFA first did the work, and received
direct payments for the same, and only thereafter decided in what role or
capacity it should claim to have performed that work!  The true relationships, not the sham thought
up later, to circumvent Nevada law, is demonstrated by the actual course of
dealing, in which Steppan was not billed for FFA’s work, and made no payments
to FFA for the same, but rather, the underlying BSC/Consolidated customer was
billed directly by FFA, since that is the party (not Steppan) who hired
FFA and for whom FFA actually directly provided its services, which were
clearly architectural services under NRS 623.023, not mere consultant services.

Friedman testified
that for projects outside of California, “there is usually an architect of
record in that state
and then they engage us to do the
work. We are the consulting architect.” TT at page 275.  This testimony however describes an
arrangement which was never entered into with Steppan, and which, had it been
entered into, would not have been legally valid, both given the true nature of
the services provided by and payments made directly to FFA, but also as a
matter of law even had these other arrangements been properly performed.  Rather, as DTJ Design, Inc. v. First
Republic Bank
, 318 P.3d 709, 711, 130 Nev. Adv. Op. 5 (2014) recognized,
under NRS 623.349,  any association
between a foreign architectural firm and a Nevada architect to perform work
together in Nevada is only legal if the foreign firm is owned by 2/3 Nevada
(or some new entity with such ownership is formed), and having a
single Nevada licensed firm member is not enough to qualify if he owns less
than 2/3 of the firm.  Steppan was also not
an actually independent party with his own Nevada architectural business,
who could act as the Nevada architect of record and supposedly “hire” FFA as an
outside consultant, but was himself, throughout the project, a full time
employee of FFA (TT at pg. 266, Decision at p. 3, l. 17-18), holding no Washoe
County business license to act as a sole proprietorship here. 

Therefore, to the
extent that this Court’s finding was intended to conclude that FFA was Steppan’s
“design consultant” for the project, this finding was erroneously made, and
fraudulently induced given the utter and complete failure by Plaintiff to
provide any evidence whatsoever to support any such ruling, and given the law
on that subject, as recently clarified by the State Supreme Court.  Alternatively, if the Court’s finding was
meant to conclude that FFA was BSC/Consolidated’s direct design consultant then
the lien must also be set aside under that scenario, since Steppan cannot claim
a lien for work done by a party other than Steppan, directly for that other
party’s customer, who directly hired and directly paid that party to do that

B.        FFA and Steppan’s Misconduct Was
Deliberate and Intentional. 

FFA and Steppan
committed multiple illegal acts in working on this Nevada project under false
pretenses, including without limitation (i) FFA’s acts in negotiating for this
work without a temporary registration or warning letter in violation of NRS
623.182; (ii) FFA’s failure to register itself in Nevada as either an
architect or a residential designer, as mandated by NRS 623.180(1),
before providing services which clearly constituted the practice of
architecture under NRS 623.023, but which were claimed to be “design” services;
(iii) FFA’s acting as the purported designer on a multi-family residence of
more than two stories (skyscraper of 40 floors) in violation of NRS 623.025;
(iv) Steppan and FFA’s association with each other on this project without
first getting Friedman a Nevada license or giving 2/3 of the stock in FFA to
Steppan, or forming a new entity for the project in which Steppan or some other
Nevada licensee was provided 2/3 of the ownership, in violation of NRS 623.349;

These violations
of Nevada law were deliberate and premeditated. 
Steppan admitted he contacted the Nevada Architectural Board, and
discussed “making Fisher Friedman of record on this job” but “we elected not
to do so because it would have required that at a minimum Rodney [Friedman] be
licensed in Nevada
” ( Exh. 12 at p. 150) (which was the case because
NRS 623.349 requires that at least 2/3 ownership of any foreign firm seeking to
register in Nevada be held by Nevada licensees, whereas Friedman, the sole owner
of FFA was not so licensed).[6]  Instead of following Nevada’s laws by getting
Friedman licensed and paying the registration fees to register FFA as an
architectural firm qualified to render services in Nevada, FFA decided to
provide its services under the sham claim that its employees were Steppan’s
employees, and then, when it came time to increase the bill for those services
after the AIA was signed, under a new sham claim, thought up after-the-fact,
that the work which had been performed prior thereto was performed in the role
of a design consultant.  FFA then set out
to benefit from the very Nevada laws which it had flouted, by improperly
pursuing a Nevada mechanic’s lien against the Property, only available by
virtue of Nevada statutes, for services performed by FFA through
its employees, in someone else’s name. 

fraud continued when Steppan submitted his application to renew his Nevada
license, and, instead of admitting that he was an employee of foreign firm FFA,
falsely claimed thereon that he was practicing “independently.”  See, Exhibit 16 hereto, at
Steppan 4351, and Exh. 12 at p. 144-145. 
Ironically, despite this misrepresentation, the $150 renewal fee was not
paid by Steppan, but via an FFA check signed by Friedman, based on a form sent
to Steppan at FFA.  IdSee Exhibit 17 hereto, FFA’s
November 2, 2005 check, and Exhibit 18 (the Board cover letter).



A.        Because
“Steppan’s” Lien Claim Is Based Entirely on Services Performed By FFA Through
Its Employees and Subproviders It Is Invalid Under Nevada Law.


(i)     This Court Must Not Countenance Fraudulent
Form Over Substance Shams, Designed to Allow Their Perpetrators to Benefit From
Nevada Laws With Which They Are Not Willing to Comply.


The foregoing
facts are fatal to the validity of the lien erroneously upheld by this Court,
as they overwhelmingly demonstrate beyond any doubt that the lien is based
entirely on services performed by FFA through its employees
(including Steppan) and its subproviders, was recorded for the benefit
of FFA, and is in an amount which corresponds to and is solely based upon FFA
invoices sent directly by FFA to its direct customer with any payments thereon
(as credited on the invoices) from that customer having been sent directly to
FFA.  However, as FFA is not registered
as a Nevada architectural or residential design firm, FFA had no legal right to
perform this work (NRS 623.180(1)) or even to bid for this work (NRS 623.182)
and now has no right to pursue this lien. 
NRS 108.222(2).

Rather than
complying with Nevada law, FFA deliberately chose to circumvent that law under
the false pretense that Steppan, who was licensed in Nevada, was the contract
architect.  However, in its arrogant
determination that it was above Nevada’s laws, FFA only supported this
fabrication with the thinnest gloss, by having Steppan sign the architectural
contracts, and by initially sending some communications on phonied-up Steppan
letterhead.  FFA did not however bother
to actually have Steppan fill the role of a contract architect, but continued
to utilize and pay him as FFA’s employee, who was not involved to any
substantive degree in the project.  FFA
then decided, after the fact, to call itself the “design consultant” without
clarifying for whom or entering into any contract to supposedly fill this role,
and without registering as a residential designer as mandated by NRS
623.180(1).  FFA, further, directly
incurred and billed for its own expenses with its own employees and its own
subproviders (now somehow magically included as part of “Steppan’s” lien) and
directly invoiced and received direct payment from its customer.

This Court should not
continue to allow this sham form to triumph over substance.  In Snodgrass v. Immler, 194 A.2d 103
(Md. Ct. App. 1963) the court rejected and refused to uphold the same exact
type of sham arrangement on behalf of a plaintiff, who was not licensed as an
architect, but who agreed with an owner to design a building for his property,
via the owner contracting with a licensed architect, who, in turn, purportedly
employed the plaintiff to design the building. 
Even though the forms of this arrangement were much more clearly adhered
to in that matter (with the purported contract architect actually signing a
contract with the “designer” and planning to actually receive direct payment
from the customer, with which to then pay the designer), the Court nevertheless
still refused to uphold any claims based on this bogus sham:


Considered alone,
the contract between Immler [the licensed architect] and Kolstad [the owner], .
. . would appear to be perfectly valid since Immler was a duly licensed
architect. But when the facts surrounding this contract and its companion
contract are examined, it is at once apparent that the contracts were a
subterfuge employed in an attempt to circumvent the licensing statute.  The evidence shows that in reality it was
Snodgrass that performed the functions of an architect, and that Immler was
used as a mere strawman to allow Snodgrass to do indirectly what he could not
do directly


Id. at 106 [emphasis added].

Because the
licensed architect was “acting as a >front’
for [the unlicensed party’s] activities” the Court refused to be gullible
enough to go along, and barred any recovery arising under this “sham contract devised
in order to allow [the unlicensed party] to perform architectural services
without a license.”  Id.  This Court should also refuse to be taken in
by so obvious a sham, and look beyond the not very persuasively attempted
appearance, at the surrounding actual facts of the strawman Steppan, to reach
the same conclusion here.  Indeed, the
correctness of this conclusion is even more obvious in this case, given that
the parties hereto did not even execute the contracts or follow the payment
chains which would have been expected under their purported relationships, as
the Snodgrass parties did.  See
, Dalton, Dalton, Little, Inc. v. Mirandi, 412 F.Supp. 1001,
1004 (D. N.J. 1976) (ruling that contract by Maryland architect to prepare
plans for a New Jersey building was illegal, under New Jersey's architect
licensure requirements, even though the plans were sealed and certified by the
contracting party's New Jersey licensed employee, and noting that if the New
Jersey client had contracted with the New Jersey architect directly this
arrangement would still be open to attack if there were any Aissue of subterfuge, pretense or
improper circumvention of the law sufficient to warrant penetration of the form
to reach the substance.@).

The principle that
courts must place substance over sham form, is especially applicable when the
sham is created to circumvent the very Nevada laws from which a claimant then
seeks to improperly benefit.  It is thus
especially outrageous in this case that the perpetrator of this sham, who was
not willing to comply with Nevada statutes, now wishes to nevertheless take
advantage of Nevada mechanic’s lien statutes, and the benefits reserved
thereunder for those who have complied with Nevada law!  See, e.g., John v. Douglas County School Dist.,
125 Nev. 746, 753, 219 P.3d 1276 (2009) (legal doctrines do not automatically
apply to “sham” cases where a person abuses the government process in order to
achieve a legal benefit meant for a legitimate claimant.)


(ii)        Steppan
Failed to Meet His Burden to Prove that His Lien in His Name Was
for His Services as “He” Alleged in “His” Complaint.

burden of proof in a mechanic’s lien case is obviously imposed on the
Plaintiff/lien claimant.  See, e.g.,
J.D. Constr. Inc. v. IBEX Int’l Group, LLC, 126 Nev. Adv. Op. 36, 240
P.3d 1033 (2010) (even where property owner brought the lien expungement suit,
lien claimant still had duty to establish amount of his lien by preponderance
of the evidence).  NRS 623.257 provides
that no architectural or design firm may sue in Nevada if it is not registered
with Nevada’s Architectural Board.  In
order to circumvent this requirement, which FFA would not have been able to
meet, strawman Steppan was treated as the purported lien claimant and Plaintiff
herein, in whose name the lien and the suit to foreclose thereon were
filed.  “Steppan’s” Complaint alleged in
Paragraph 9 that “Plaintiff did supply the services” to the customer, for which
the lien was asserted, as referenced in Paragraph 11.  These allegations were necessary elements of
Steppan’s claim, since only the value of unpaid work “furnished . . . by or
through the lien claimant” may be pursued via a mechanic’s lien.  NRS 108.222(1)(a) and (b).  The Iliescu Defendants denied Steppan’s
paragraph 9 and the other false allegations and Plaintiff had the burden to
prove these allegations, by a preponderance of the evidence.

Steppan’s burden
of proof to show that the lien was based on services provided by or through
him, as the named lien claimant, was not remotely satisfied. Indeed, he failed
to even establish a prima facie case thereon.  Although (a) the contracts with the customer,
Consolidated/BSC, were signed by Steppan, Steppan failed to show, (b) that
Steppan had negotiated those contracts with the customer, (c) that the post AIA
Contract invoices to the customer, equating to the amount of the lien, were
sent by Steppan, (d) that the payments from the customer, credited on those
invoices, had been made to Steppan, as they would have been to a real contract
architect, (e) that Steppan was himself owed any money or had any financial
stake in “his” lien claim, (f) that Steppan was actually materially involved in
the project, (g) including based on any recorded communications with his
purported customer or with the Nevada governmental entities from which
entitlement approvals were sought, even though the whole reason for his name
being on the contract was to pretend to use his Nevada license, or (h)
that he was consistently treated as the contract architect of record such as on
submissions to Nevada governmental entities. 
Nor, in order to show that FFA was Steppan’s hired design consultant, so
as to claim that the work was performed by Steppan, through his hired
subprovider, did Steppan present:  (i)
any indication that FFA was identified at the location required on the AIA
Contract form (section to list known consultants, (j) clear or
consistent testimony that FFA was Steppan’s design consultant, not the customer’s,
(k) any written design agreement between FFA and Steppan (as required by NRS
623.325), on file with the Nevada Architectural Board (as required by NRS
623.353), or (l) any other evidence that he had retained FFA as his consultant
as required by NRS 623.330(1), such as invoices from FFA to its purported
customer, Steppan, (m) payments on these invoices from Steppan to his alleged
designer, FFA (with appropriate 1099s), (n) or, if no payments were made,
demands or suits from FFA to Steppan requiring such payments, or (o) that
Steppan had, himself, chosen and hired not only FFA, but also any other
subproviders whose billings are now included in the “Steppan” lien.


(iii)       Nevada
Case Law Clearly Demonstrates the Invalidity of Foreign Entity FFA’s Attempts
to Claim and Prosecute an Architect’s Lien By Using One of Its Nevada Licensed
Employees as the Ostensible Lien Claimant.

FFA’s theory that
it could circumvent Nevada law by utilizing its employee Steppan as the
strawman lien claimant, to pursue a lien as to work performed by FFA through
its employees, in order to benefit FFA as the real lienor and real plaintiff in
interest, has already previously been rejected by the Nevada Supreme
Court.  In Nevada National Bank v.
, 108 Nev. 151, 157, 826 P.2d 560, 563-64 (1992) (partially abrogated
by Executive Mgmt. Ltd. v. Ticor Title Ins. Co., 118 Nev. 46, 38 P.3d
872 (2002)), the holder of an option agreement to purchase certain ranch land,
entered into a design agreement with an engineering firm to design a planned
project thereon, which engineering firm, in turn, retained “Depner Architects
& Planners, Inc.,” a foreign corporation not qualified or registered to do
business in Nevada, to provide architectural services.  When Depner Architects (the foreign
corporation) sought to pursue a lien claim against the property, and its
capacity to do so was challenged, it received district court permission to
amend its complaint to name one of the individual firm members (named Depner)
as the Plaintiff, to pursue the claim in his individual name, as though he had
performed the work as a sole proprietorship. 
The Nevada Supreme Court reversed the district court, criticized it for
having countenanced this ploy, and refused to recognize this sham, including
because “(1) after [the foreign corporation] incorporated in Washington, all
invoices were submitted . . . on behalf of the corporation; (2) the
construction drawings for the proposed project were prepared by the
corporation; (3) the individuals who worked on the drawings were employees of
the corporation” etc.  Snyder, 826
P.2d at 562.  Thus, “the district court
abused its discretion in allowing Depner [the individual] to substitute himself
as an individual for the corporate entity . . . .”  Id.

The initial issue
which prevented the foreign architectural firm from having capacity to sue in
the Snyder case was that it had failed to qualify to do business in
Nevada by registering with Nevada’s Secretary of State.  The Snyder Court did not reach the
question of whether Depner’s foreign firm was registered with the Nevada
Architectural Board, or the issues which would be raised if it were not.  The Court’s handling of the Secretary of
State qualification issue was later abrogated in Executive Mgmt. Ltd. v.
Ticor Title Ins. Co.
, 118 Nev. 46, 38 P.3d 872 (2002), which held that the
proper method for dealing with that issue is to stay cases until the
corporation complies with the requirement. 
Nevertheless, the Nevada Supreme Court’s answer to the more fundamental
question, whether a lien may be pursued by an individual for his employer’s
work has never been abrogated.  Nevada’s
licensing and registration requirements, which disqualify a foreign
architectural firm from providing services and pursuing compensation for the
same in Nevada if it is not registered with the State Architectural Board,
are separate and distinct from the process of merely qualifying a foreign
corporation to do business with Nevada’s Secretary of State.  Thus, although the barriers to FFA’s pursuit
of a lien in this case were not the same as those reached and addressed in the Snyder decision,
it was just as erroneous for this District Court, in this case, as it was for
the district court in Snyder, to allow a lien claim to be pursued in the
name of an individual employee of FFA when all the evidence demonstrated that
the foreign architectural firm was the entity whose employees had actually done
the work, and which had billed for the work and was the real lienor in
interest.  The Snyder Court’s
underlying analysis on that underlying question has not ever been altered or

For example, on
February 13, 2014, the Nevada Supreme Court issued its opinion in DTJ
Design, Inc. v. First Republic Bank, a Nevada Corp.
, 318 P.3d 709, 130 Nev.
Adv. Op. 5 (2014) (a copy of which is, for the Court’s convenience, attached as
Exhibit 19 hereto) in which the Court addressed other disqualifying
, beyond those referenced in Snyder, which prevent foreign
architectural firms from liening for services in Nevada if they have not
registered with the Nevada Architectural Board, which opinion therefore
clarifies the limited extent of the abrogation of Snyder.

DTJ Design examined,
among other provisions, NRS 623.349, which provides the methods which FFA should
have complied with
if it wanted to be eligible to perform architectural and
design work in Nevada, with the right to bill and lien for the same, instead of
attempting a fraud and sham upon this State and this Court.  The statute indicates in pertinent part as


NRS 623.349  Formation of business organizations or
associations with . . . unregistered or unlicensed persons: Conditions;


1.  Architects [such as Steppan], . . .
may join or form a partnership, corporation, limited‑liability company or other
business organization or association . . . with persons who are not
registered or licensed
[such as the claimed relationship between Steppan
and non-licensed entity FFA which was purportedly entered into here], if
control and two‑thirds ownership of the business organization or association is
held by persons registered or licensed in this State
pursuant to the
applicable provisions of this chapter, chapter 623A or 625 of NRS.


2.  If a partnership, corporation, limited‑liability
company or other form of business organization or association [such as FFA
or some joint venture entity or association it wished to form with Steppan]
wishes to practice pursuant to the provisions of this section, it must:

(a) Demonstrate to the
Board that it is in compliance with all provisions of this section.

(b) Pay the fee for a
certificate of registration pursuant to NRS 623.310.

Qualify to do business in this State.

If it is a corporation, register with the Board and furnish to the Board a
complete list of all stockholders when it first files with the Board and annually
thereafter within 30 days after the annual meeting of the stockholders of the
corporation, showing the number of shares held by each stockholder [i.e.,
to ensure the 2/3 ownership requirement is met.]

. . .


[Emphasis and bracketed explanatory language


The DTJ Design decision
concluded that regardless of whether a foreign architectural firm employs a
licensed Nevada architect, NRS 623.349(2) and NRS 623.357 still require
that the foreign architectural firm itself be registered in Nevada in
order for a mechanic’s lien action to be pursued on the firm’s behalf.  Id. at 711.

DTJ was a Colorado
architectural firm.  Thomas Thorpe was a
professional architect and one of DTJ’s three founding principals (but owned
less than 2/3 of the entity, just as Steppan owned 0% of FFA).  In 1998, Thorpe sought reciprocity to
practice in Nevada and submitted two applications to the state board of
architecture, one on his own individual behalf, and another on behalf of the
corporate entity, DTJ.  Only Thorpe’s
individual application was received and approved.  DTJ later recorded a notice of mechanic’s
lien against Nevada real property for unpaid architectural services, and sought
to establish that this lien had priority over an existing deed of trust
recorded by First Republic Bank.  After
an initial trial ruling had issued, upholding the validity of DTJ’s lien, but
before the value of the lien had been established, through a planned second
trial hearing, First Republic successfully moved for summary judgment, causing
the Court to reverse itself before issuing its final judgment.  The Court invalidated the lien, under NRS
623.357 which prohibited DTJ Design from maintaining its lien foreclosure
action as it had not registered with Nevada’s architectural board including
under NRS 623.349.  On appeal, the
Supreme Court upheld this ruling, noting that, under NRS 623.357 no person may
bring or maintain an action for compensation for architectural services without
first “alleging and proving that such plaintiff was duly registered under this
chapter at all times during the performance of such act or contract.”  Thus, DTJ was required to plead and prove
these required elements of a lien claim as its prima facie case, to
obtain compensation for its Nevada architectural services, regardless of the
nature of the affirmative defenses.

In reaching this decision, the DTJ Design
Court expressly ruled on and rejected many of the same arguments which FFA has
(through its surrogate Steppan) made herein. 
For example, the DTJ Court ruled that NRS 623.349(2) precluded
DTJ (as an unlicensed and unregistered firm) from foreclosing on a mechanic’s
lien for work that was allegedly performed by one of DTJ’s individual
architects, Thorpe, even though Thorpe was licensed in Nevada
.  In rejecting DTJ’s claim, the DTJ
Court pointed out that Thorpe (just like Steppan) was not a 2/3 owner of the
foreign corporation, as required by Nevada law for that entity to be allowed to
register here, in order to provide services here:


NRS 623.349(1) allows
registered architects to partner with unregistered architects and form a
business organization to practice in Nevada, so long as the registered
architects satisfy a two-thirds ownership requirement
.  In order for a foreign business to operate as
a separate entity in Nevada, it must satisfy the requirements found in NRS
623.349 by demonstrating to the board that registered architects within the
firm satisfy the two-thirds ownership provision
under NRS 623.349(1) and
that the business is qualified to do business in this state and has paid the
requisite registration fee under NRS 623.349(2)(a)-(c).


DTJ at 6.  (Emphasis added.)

Thus, even if the
Nevada Board had received DTJ’s application, it would have denied it “because
Thorpe did not satisfy the two-thirds ownership requirement” of NRS
623.349(1).  Id. Similarly, in the
present case, after Steppan contacted the Nevada Board of Architects to discuss
“making Fisher Friedman of record on this job”  FFA “elected not to do so” because “they
learned” this would require that “at a minimum Rodney [Friedman] be licensed in
Nevada” (Exh. 12 at p. 150) for the obvious reason that Friedman, as the
sole owner of FFA, would need to be individually licensed to meet the 2/3
ownership requirement.

Court also expressly rejected any claim that Thorpe should individually be
able to foreclose on the lien as a Nevada registered architect
: “to the
extent that DTJ argues that Thorpe should individually be able to foreclose on
the lien as a registered architect, we disagree” including because Thorpe was
not truly involved as a co-principal on the project for much of the time the
project was undertaken.  Id. at
6-7.  Steppan will no doubt argue that
this reasoning does not apply herein because Steppan, unlike Thorpe, signed the
architectural contracts.  However, this
distinction does not survive even the slightest scrutiny.  As was repeatedly admitted throughout the
trial, the actual course of dealing between the parties overwhelmingly
demonstrates that Steppan’s execution of the contract was a complete farce, and
Steppan was no more the actual contract architect in this case than Thorpe was
in the DTJ case.  Indeed, it would
be all but impossible for any reasonable and objective person to read the trial
transcript and come to any other conclusion, based on the numerous admissions
made by both Steppan and Friedman during the trial, demonstrating again and
again that the lien at issue herein was actually pursued “on behalf of” FFA.

Although Steppan,
unlike Thorpe, signed the ostensible contracts with the customer, Steppan’s
true involvement, just like Thorpe’s, was also never material, as the DTJ
court found to be the controlling question. 
Steppan spent far fewer hours on this project (only 4.1%) than did other
FFA employees, including David Tritt who produced most of the product in
conjunction with Friedman, and also including the actual project supervisor and
project manager, Friedman and Ogle. 
Steppan had no true material involvement, as any sort of principal,
therein.  Instead, the facts set forth
above clearly establish that, in reality, Steppan was no more a “contract
architect” in this case than Thorpe was in the DTJ case and any ruling
to the contrary would simply sanction FFA’s/Steppan’s fraudulent conduct.

In the present case,
FFA was not owned by any (let alone 2/3) Nevada licensees such that it would
not have been allowed to register to perform work in Nevada unless Friedman
were licensed.  He did not want to do so.  FFA therefore did not seek to become
registered with Nevada’s architectural board (either as an architect or as a
residential designer); it did not qualify itself as a foreign corporation in
Nevada; it did not execute a written contract with Steppan to provide services
as his designer as mandated by NRS 623.325 or have him file any such agreement
with the Nevada Board as mandated by NRS 623.353.  Instead, it pursued an illegal scheme which
has now been twice rejected at Nevada’s highest court, treating one of its
individual employees as though he were the lien claimant, even though multiple
facts clearly demonstrated that this was a sham, and that the foreign entity
actually performed the work, sent out direct invoices and collected fees, and
sought to benefit from foreclosing on the mechanic’s lien.

Even if the FFA
scheme were perfectly valid, it would still be the case that Steppan failed to
meet his burden of proof to show that the work which forms the basis of the
lien was performed “by or through” him. 
NRS 108.222(1)(a) and (b). 
Although his Complaint alleged that this was so, he failed to provide
evidence to support this claim.  Instead,
the evidence overwhelmingly demonstrated just the opposite: that the work was
performed “by” FFA, “through” its employees, including Steppan, who, despite
his signature on the contract(s), never acted as and was never treated as the
true contract architect, never received any of the customer’s payments, never
entered into a design agreement with FFA or filed that agreement with the
Board, never received or paid any invoices from FFA for its services, was
minimally involved in the project, and remained throughout the project as no
more and no less than FFA’s employee.

(iv)       FFA Must Not Benefit From Violating
Nevada Law.

The strategy
employed by FFA in this case is simply a less direct, more illicit and covert,
sham version, of the same strategy which DTJ employed and which Depner
employed, which the Nevada Supreme Court rejected in those two prior
cases.  Accordingly, FFA has, to date, succeeded
in getting away with violating Nevada’s architectural statutes, by being
dishonest in its pursuit of its claims, whereas DTJ and Depner were legally
prevented from having their lien claims honored, because they pursued the same
strategy as FFA, openly and honestly. 
Thus, the effect of this Court’s ruling, if it stands unaltered, will be
that dishonesty is the best policy in Nevada, and that a foreign architect who
uses a sham to circumvent Nevada’s statutes will be rewarded for taking this
false approach.   This Court must
therefore withdraw its Decision, and enter a new order to invalidate the lien,
in order to prevent this bizarre policy from being advanced, before an
erroneous judgment is entered herein. 
Doing so would be in keeping with the actions of the lower court in DTJ,
which initially upheld the validity of the DTJ lien, but then rethought this
decision, after a first trial but before subsequent proceedings and before
entering final judgment on the amount of the lien, which course reversal,
invalidating the lien for a foreign architectural firm’s services, was then the
decision which was upheld by the Nevada Supreme Court.

architectural licensing statutes are aimed at protecting the Nevada public from
the risks inherent from allowing foreign architectural firms, who are unwilling
or unable to demonstrate their competence in working with local building codes
and local site conditions (through the proscribed professional in-State
registration process) from designing Nevada buildings, and to thereby “safeguard
life, health and property.”  NRS
623.010.  See, e.g., Harrie
v. Kirkham, Michael & Associates
, 179 N.W.2d 413, 415 (N.D. 1970) (AWe can find no valid reason for holding
that the profession of architecture should be treated any differently from the
professions of medicine, dentistry, or law@).  This is particularly true in high rise

The Nevada
Legislature has stated its intent to only allow firms which are registered in
Nevada and are owned by at least 2/3 licensed Nevada architects, to perform
architectural services for Nevada projects. 
Even if a firm claims it is only providing “design” services, and even
if that claim were credible, it must still be registered to do such work. NRS
623.180(1).  FFA violated these laws by
bidding on, and then performing services for a Nevada project and a Nevada
customer and then billing the customer, directly, for that work, and receiving
direct payment from that customer.  The
subject lien is all based on work which FFA performed and invoiced in violation
of Nevada law.  This Court must therefore
set aside its Decision before entry of Judgment and replace the same with
rulings which conform with and uphold Nevada law.


B.        Steppan Failed to Abide by Nevada’s
Mechanic’s Lien Laws and “His” Lien Would Be Invalid, Even Were it Not a Sham.

This Court should
conform with Nevada Supreme Court mandatory precedent, and reject the example
of the Snyder district court, whose ruling, allowing an individual
member of a foreign architectural firm to act as the Plaintiff in a lien
foreclosure action for that firm’s services was reversed on appeal.  This Court should instead follow the example
of the district court in the DTJ Design case, which, after initially
upholding an invalid lien based upon a foreign architectural firm’s services,
subsequently corrected itself, and, before entry of judgment, invalidated the
subject lien, which subsequent decision was upheld on appeal to the Nevada
Supreme Court.

However, if this
Court  ignores these two Nevada Supreme
Court precedents, then it should be understood that Plaintiff’s lien is also
invalid due to the many errors which the Plaintiff committed in his attempted
pursuit of the same, which errors prevented sufficiently substantial compliance
on his part, with the provisions of NRS Chapter 108, for perfecting a lien,
such that his lien must now be invalidated, even if it truly were “his” lien.  Because some of Steppan’s failures allowed
him to perpetuate his and FFA’s above-referenced fraudulent conduct (by for
example misstating the facts in his mechanic’s lien notices, and failing to
ever verify the same) these failures are appropriate for review as part of this
Motion, just as they will be appropriate for more extensive review in any
post-judgment filing.  Steppan committed
the following errors and failures in the pursuit of “his” lien:

Failure 1.  Plaintiff’s first error was failing to abide
by NRS 108.245 and never sending the Iliescus any 31-day right-to-lien notice,
so as to advise the Defendants of his purported potential lien rights. This Court
has ruled that no such notice was needed, because the Iliescu Defendants had
actual knowledge that an architect was performing work, under Fondren v. K/L
Complex Ltd.
, 106 Nev. 705, 800 P.2d 719 (1990). However, the Fondren
analysis was legally inapplicable herein, given the off-site nature of the
architectural work in question. 

As footnote 2 of
the Fondren decision notes, the reason a pre-lien notice is even
important, is because, within three days of an owner becoming aware of
construction work being performed upon her property, if she does not take steps
to protect herself by recording a notice of non-responsibility (under NRS
108.234(2)), then, under NRS 108.234(1) the “improvement constructed,
altered or repaired upon property
shall be deemed to have been
constructed, altered or repaired at the instance of each owner having or
claiming any interest therein.” This, in turn, matters, because work performed “at
the instance of the owner” is a prerequisite to lien rights under NRS
108.222(1).  However, the work at issue
in this case was off-site architectural work, which was not performed “upon”
the property.  (By contrast, in Fondren,
there was “construction on [owner Fondren’s] property” of which she was aware,
as it was regularly “inspected” on her behalf. 
Id. at 709, 721.)  Based
thereon, NRS 108.234(1) does not even apply to the facts of this case, and the Fondren
rationale collapses, since, even if Iliescu did have notice of
architectural services, those services did not involve on-site construction,
and therefore did not create a situation in which the services were statutorily
deemed to have been performed “at the instance” of Iliescu, unless timely
action was taken to avoid that result. 
Based thereon, Iliescu’s property did not suddenly become statutorily
subject to a lien upon his alleged awareness of the work being performed off
.  While it is true that
architects are able to lien in Nevada, that does not mean that they are always
treated equally with those whose work is performed on site, where the statutes
reference work “upon” the property.  See,
, J.E. Dunn Northwest, Inc. v. Corus Constr. Venture, 49 P.3d
501, 508, 127 Nev. Adv. Op. 5 (2011)(rejecting architect’s argument that its
lien’s priority vested, vis-a-vis a lender’s deed of trust, before on-site
construction work had occurred, even where, as was found to be the case herein
as to the Iliescus, the bank had actual knowledge of the architect’s offsite
work, and holding instead that such knowledge was irrelevant, given the lien
priority statute’s requirement that a lien’s priority vests upon commencement
of visible on-site construction.) 
Accordingly, given that the Fondren exception to the pre-lien
notice requirement of NRS 108.245, does not apply, NRS 108.245(3) does
apply, which indicates that “[n]o [mechanic’s] lien for . . . services
performed . . . may be perfected or enforced pursuant to [the mechanic’s lien
statutes] unless the [right to lien] notice has been given [by the potential
lien claimant].”

Failures 2-4.
Plaintiff recorded his mechanic’s lien on November 7, 2006 (Exh. “4”)
which falsely identified by whom Steppan was employed; erroneously asserted
that the claimant’s off-site work had been “actually used upon the . . .
project” and had been “incorporated” therein; and sought money which was not
due to Steppan, who had been paid in full by his employer, FFA.  

Failure 5.   Furthermore, this lien notice was recorded
without first sending the 15 day notice of intent to lien, as required by NRS
108.226(6) for a project, like this one, for “multifamily . . . residences.”  When this error was asserted in the
Application for Release of Mechanic’s Lien initiating this case, Steppan
attempted a correction, sending a late intent-to-lien notice, received on March
8, 2007 before then filing a subsequent “Amended Notice and Claim of Lien” on
May 3, 2007.  (Exh. “5”).  However, as a simple matter of logic, failure
to provide required prior notice, cannot be remedied after the fact.

Failure 6.
This Amended Lien filed on May 3, 2007 lacked any verification of its contents,
under oath, by the lien claimant, or on his behalf, as required by NRS
108.226(3) which provides that the “notice of lien must be verified by the oath
of the lien claimant.”  A comparison of
the lien form contained at NRS 108.226, which “must be substantially” followed,
with this amended lien, demonstrates this error.  The statutory form sets forth the language
which is to precede the lien claimant’s (second) verifying signature: “I have
read the foregoing Notice of Lien, know the contents thereof and state that the
same is true of my own personal knowledge . . . .” which language is no where
to be found in the amended lien.  The
form also provides that the lien claimant’s [second, verifying] signature under
this language is to be notarized via a “subscribed and sworn” notary jurat (i.e.,
“sworn” to comply with the Aunder
oath” requirement.)  However, the Jurat
on Steppan’s first  amended lien
indicates only that the lien was “acknowledged” not “sworn to.”  Because verification is required precisely in
order to prevent the kind of fraud which forms the basis for this motion, this
error is appropriate for review under this NRCP 50(b)(3) motion.  This mistake is fatal.  See, e.g., Home Plumbing and
Contracting Co. v. Pruitt
, 372 P.2d 378 (N.M. 1962) (rejecting lien not
containing “any words . . . designed to operate as a verification” or any
indication that it “was in any manner sworn to@);
H.A.M.S. Co. v. Electrical Contractors of Alaska, Inc., 563 P.2d 258,
262-264 (Alaska 1977)(invalidating mechanic’s lien which, although acknowledged
to authenticate the signature, was not verified under oath by a sworn statement
of the truth of the facts stated); Mickelsen v. Craigco, 767 P.2d 561
(Utah 1989) (for a lien to be properly verified under oath A(1) there must be a correct written
oath . . . , and (2) it must be signed by the affiant in the presence of a
notary or other person authorized to take oaths, and (3) the latter must affix
a proper jurat” such as “subscribed and sworn” not merely an acknowledgment of
signature in the notary’s presence).

Failure 7.
Plaintiff’s Complaint to foreclose the lien was filed on May 4, 2007.  The first lien notice had been withdrawn
before the first amended lien notice was filed. Exh. 1 at _16.  Thus this Complaint was to foreclose the
first amended notice, and was therefore filed prematurely, only one day
after that amended lien notice, in violation of NRS 108.244, which requires a
lien claimant to wait thirty (30) days after a lien notice is recorded before
filing a lien foreclosure suit.

Failure 8.
Although Plaintiff would later try to save his lien from the violation of the
31-day right to lien notice, by alleging that one of the Defendant property
owners had knowledge of his lien, Plaintiff failed to allege in his Complaint
that either Defendant had this knowledge, which is an “essential allegation” that
must be raised in the lien foreclosure Complaint as a prerequisite to asserting
such facts, unless the owner later concedes such knowledge.  Milner v. Shuey, 57 Nev. 159, 60 P.2d
604 (1936).

Failures 9-10. Furthermore,
the filing of the Complaint was also not accompanied by the recording of a Lis
Pendens, as required by NRS 108.239(2)(a), or by publication, for three weeks,
in a local newspaper, of a “notice of foreclosure” as required by NRS

Steppan later filed yet
another amendment to his prior, error-ridden, lien notices, via a “Second
Amended Notice and Claim of Lien” recorded on the eve of trial, on November 8,
2013, some 6 years after the Second Lien notice which had been under
review in all of the prior summary judgment dispositions.  NRS 108.229 does allow liens to be amended,
to “correct or clarify the lien” with respect to matters which do not consist
of “material” or “intentional” variances, such as the property description, or
the proper name of the owner, if no prejudice will result.  NRS 108.229(1) and (3).  Plaintiff’s second amended notice did not
involve any such simple clarification, however, but materially and
substantially rewrote the entire lien claim notice, utilizing a form which was
substantially longer and more complex than the earlier notices, and which
substantially varied from the same.

Moreover, this
notice repeated several of the errors of the earlier notices.  It again inaccurately and fraudulently
asserted that Steppan was the lien claimant; and again inaccurately asserted
that he was employed by BSC/Consolidated. 

although this Second Amended Lien Notice at least attempted to provide a
verification, it failed to substantially comply with the statutory requirements
for such a verification.  Instead, it
added unique terms, pursuant to which the signer, who was not Steppan but a new
attorney, not even involved years before when Steppan’s former attorney had
been originally pursuing the filings,  “verified”
the truthfulness of the lien, not on his own personal knowledge, as required,
but on the basis of his review of court pleadings from the many years since the
original lien was recorded, during a time period when the person now “verifying”
the lien would have had no first-hand knowledge whatsoever of any of the
information now supposedly being verified under his oath.  This is of obvious concern given how much of
that information, as set forth above, turned out to be inaccurate sham
information fraudulently presented, which Steppan, or someone who was in a
position to know the truth, should have been required to verify under oath, as
the statute contemplates.

          NRS 108.229 further
indicates that a lien may be amended only “before or during the trial of
any action to foreclose a lien.”  That is
to say: a party may not succeed at trial, and then amend its lien, after the
.  This rule of law and of due
process was undercut in this case by the Plaintiff’s inappropriate trick of first
obtaining summary judgment rulings upholding certain aspects of the validity of
his lien, which were treated by this Court as binding at trial, such
that they were in many ways equivalent to the type of rulings which would
normally be obtainable after trial, and were treated as substantive post-trial
and only thereafter creating the Second Amended Lien which this
Court’s Decision then treated as the valid final lien to be enforced under
those prior Orders
.  In other words,
the lien claimant was allowed to have its cake and eat it too, obtaining early
court orders which remained binding at trial, as to its earlier error-ridden
lien notices, and then amending its lien without prior order or permission
(pursuant to NRS 108.229(4)) as though it were still in the pre-trial period in
which amendments are allowed without an order, and then going to trial and
having its new lien upheld, on the basis of Orders issued before it even

This Court’s
orders, entered on June 22, 2009 (upholding Steppan’s lien against the pre-lien
notice challenge) and on May 9, 2013 (ruling that the later flat fee AIA
Contract would be applicable in determining the amount of the lien), were
entered, respectively, four years and six months before the lien claimant’s
lien notice was ultimately amended to create the version thereof which this
Court’s Decision upheld at page 11, lines 12-13 thereof.  This final version of the lien explained and
admitted that the AIA based-billings had “changed” earlier invoices that were
already paid, which facts were not clearly brought to the Court’s attention as
part of the record when the extremely concise summary judgment motion on that
question, referencing an earlier, much less detailed lien notice, was filed.

This was unjust,
and raises due process concerns.  When
this matter came to trial, in order to enforce NRS 108.229, which does not
contemplate that liens may be amended after trial decisions have been reached
either (i) the prior orders should have been set aside as no longer binding and
final given the existence of a subsequent version of the lien, or (ii) if those
earlier orders were to remain binding, then the Plaintiff’s Second Amended
Notice of Lien should have been disallowed, such that the error ridden earlier
liens needed to be defended at trial. 
Allowing the lien claimant to have it both ways, and obtain the benefit
of prior rulings at trial, as though a final post-trial adjudication had
already occurred, and nevertheless be able to file new amendments to the lien,
after those adjudications, violated the amendment timing provisions of NRS
108.229, as well as the Defendants’ due process rights to fully adjudicate and
defend the lien only in its final form.


For the reasons
set forth above, in order to comply with Nevada law, this Court’s Decision and
Judgment must be set aside, to invalidate the so-called “Steppan” lien, which
relief is appropriate on the grounds set forth herein.

DATED this 
_____day of October, 2014.




ALBRIGHT, ESQ. [NV Bar No. 001394]

ALBRIGHT, ESQ. [NV Bar No. 004904]


801 South
Rancho Drive, Suite D-4

Vegas, Nevada  89106

Tel:  (702) 384-7111 / Fax:  (702) 384-0605


otherwise noted, all paragraph references to this Court=s May 28, 2014 Decision are referring to the Findings
of Fact portion of that Decision.


was first licensed as an architect in California in 1987. He obtained his
Nevada license in 2004. TT at p. 632. He started working with FFA before
graduating in 1979 and then Astarted full time in January of 1980 with [FFA], and continued
there until the firm closed down in 2010.” TT
at page 631.  

3Because of non-sequential/duplicated page numbering in
the first and second days of Steppan=s
Deposition testimony transcripts, the relevant quoted portions of Steppan=s Deposition testimony from September 29, 2008 is made
Exhibit 11 hereto; whereas all relevant quoted portions from his
February 16, March 2, and March 3, 2010 deposition transcripts are provided as Exhibit

[4]See, Exh.
at pp. 12-13.

5When Friedman uses Awe” in the context of this project, he means AFFA@, see, e.g., Exh. 12 at p. 258, ll 6-9.

6The former senior owner of FFA, Robert Fisher, had
been licensed in Nevada.  Exh. 12
at 33.  When Fisher left the company,
Friedman apparently wanted to continue doing Nevada work even though the firm
was no longer owned by a Nevada licensee, so he decided to just do so

Personal Injury Complaint for Slip and Fall at Las Vegas Hotel




Nevada Bar No. 001394


Nevada Bar No. 008679


801South Rancho Drive, Suite D-4

LasVegas, NV  89106

Tel:     (702) 384-7111

Fax:    (702) 384-0605

for Plaintiff







  CONVILLE, an individual,






  a Nevada limited liability company d/b/a RED ROCK CASINO RESORT &
  SPA;  DOES I through X, and ROE
  CORPORATIONS I through X, inclusive,




DEPT. NO.:   








            COMES NOW, Plaintiff JACQUELINE
CONVILLE, an individual (hereinafter “Plaintiff”), by and through her attorneys
of record, ALBRIGHT, STODDARD, WARNICK & WARNICK, and as and for her
Complaint against Defendant NP RED ROCK LLC, a Nevada limited liability
company, d/b/a RED ROCK HOTEL & CASINO (hereinafter “Defendant”), DOES I
through X, and ROE CORPORATIONS I through XX, inclusive, allege and aver as


  1. At all times mentioned herein, the Plaintiff was
    and is a resident of Clark County, Nevada.

  2. Upon information and belief, at all times mentioned herein, Defendant NP RED ROCK LLC was and is a Domestic Limited Liability Company, doing business under the fictitious name RED ROCK CASINO RESORT
    & SPA (hereinafter sometimes collectively “Red Rock Casino”), and is duly authorized to conduct business in the State of Nevada.

            3.         The true names and capacities, whether individual, corporate, associate or otherwise, of Defendants DOES I through X and/or ROE CORPORATIONS I through XX, inclusive, are unknown to Plaintiffs, who therefore sue said Defendants by such fictitious names.  The Plaintiffs are informed, believe and thereupon allege that the Defendants designated herein as DOES I through X and/or ROE CORPORATIONS I through XX, inclusive, are any one of the following:

                        (a)        Parties responsible in some manner for the events and happenings herein referred to that caused injuries and damages proximately thereby to the Plaintiffs as herein alleged;

                        (b)        Parties that are the agents, servants,
employees and/or contractors of the Defendants, each of them acting within the
course and scope of their agency, employment or contract;

       Parties that own, lease, manage,
operate, secure and/or are responsible for the premises referred to
hereinafter; and/or

                        (d)       Parties that have assumed or retained the
liabilities of any of the Defendants by virtue of an agreement, sale, transfer
or otherwise.

The Plaintiff will ask leave of the Court to amend this
Complaint to insert the true names and capacities of said Defendants, DOES I-X
and ROE CORPORATIONS I-XX, inclusive, when the same have been ascertained by
the Plaintiff, together with appropriate charging allegations, and to join said
Defendants in the action.

            4.         The acts and omissions alleged hereafter
occurred within Clark County, State of Nevada.


            5.         Plaintiff repeats and realleges each
and every foregoing paragraph set forth above and incorporate the same by
reference as though fully set forth at length herein.

            6.         At all times mentioned herein,
particularly on or about September 11, 2013, the Defendants owned, operated,
possessed, controlled and/or maintained the property located at 11011 West
Charleston Boulevard, Las Vegas, Nevada 89135, commonly known as the Red Rock

7.         On
or about September 11, 2013, Plaintiff was lawfully on the premises of Red Rock

            8.         During the early afternoon of September
11, 2013, Plaintiff walked into the Red Rock Casino on the third level from the
East concrete parking garage of the Red Rock Casino.

            9.         As Plaintiff entered the casino, while
near the casino entrance door, Plaintiff slipped and fell on the exposed tile
elevation transition from the asphalt, landing on her elbow.

            10.       Plaintiff’s injuries included severe
injury to her elbow which shattered, back, neck and head injuries, and dental

      The injury sustained by Plaintiff
required emergency medical attention.

            12.       Plaintiff
was transported via ambulance from Red Rock Casino to Summerlin Hospital, where
she received treatment for her shattered elbow and for concern about a possible
neck injury.

            13.       Plaintiff has required surgery on her
elbow and teeth as a result of her fall.

      As a result of Plaintiff’s injuries,
she has sustained damages in excess of $10,000.00.

            15.       Plaintiffs have been required to retain
the services of a law firm to prosecute this action and are entitled to
reasonable attorneys’ fees.



            16.       Plaintiff repeats and realleges each and
every foregoing paragraph set forth above and incorporate the same by reference
as though fully set forth at length herein.

            17.       Defendants owed Plaintiff a duty to
maintain the premises in a reasonably safe condition for use, or in the
alternative, to warn Plaintiff of any unsafe conditions.

            18.       Defendants, including their agents and/or
employees, negligently created and/or allowed an unreasonably dangerous
condition to exist and further created an unreasonable risk of harm to
Plaintiff, as well as the general public.

            19.       Defendants negligently failed to warn
Plaintiff of the unreasonably dangerous condition on its premises.

            20.       Defendants negligently supervised their
agents and/or employees responsible for designing, inspecting and/or
maintaining the premises.

            21.       Defendants owed Plaintiff a duty of care
in designing, selecting, purchasing, installing, affixing and securing a safe
entrance to the casino, and in selecting those charged with the task of
maintaining and inspecting the same.

            22.       Defendants’ improper design and
maintenance of the entrance was the proximate cause of Plaintiff’s slip and
fall, which caused the injuries she sustained.

            23.       Defendants’ improper design and
maintenance of the entrance created an unreasonably dangerous condition which
caused injury to Plaintiff.

            24.       Defendants’
improper maintenance of the entrance was a defect, such that the entrance could
not be safely used in the manner and for the purpose for which it was intended.

            25.       Defendants
owed Plaintiff a duty to exercise due care in providing a safe place for
customers to enter the casino, including by ensuring that the facilities were
safe and that the entrances were properly designed, installed, maintained,
secured, and inspected and Defendants breached their duty of care.

            26.       As
a direct and proximate result of the negligence and carelessness of the
Defendants, Plaintiff has suffered severe and serious personal injuries.

The full nature and extent of Plaintiff’s injuries are still unknown and when
the same are ascertained, Plaintiff will assert them with particularity.

            28.       As
a direct and proximate result of Defendants’ breaches, and each of them,
Plaintiff  was seriously injured and
caused to suffer great pain of body and mind, some of which is permanent and
disabling, all to her general damages in an amount in excess of Ten Thousand
Dollars ($10,000.00).

            29.       As
a further direct and proximate result, Plaintiff incurred expenses for medical
care and treatment and will incur expenses for medical care and treatment in
the future in an amount to be proven at trial.  

            30.       As
a further direct and proximate result of the foregoing, Plaintiff has been
required to engage the services of various medical providers, including obtaining
emergency medical attention, and will continue to receive care in the

            31.       Plaintiff
is entitled to reimbursement for past and future medical bills incurred as a
result of the injuries that have caused Plaintiff’s pain and suffering.

            32.       Plaintiff
has, since the incident on September 11, 2013, experienced pain and suffering
in her elbow, and will continue to endure future pain and suffering all to her
general damages in an amount in excess of $10,000.00.

            33.       Plaintiff
has been forced to retain the services of an attorney for this action, and as
such are entitled to reasonable attorneys’ fees and litigation costs.

            WHEREFORE, Plaintiff prays for
relief and judgment against the Defendants as follows:

                                                A         General damages in an amount in excess
of Ten Thousand Dollars ($10,000.00);

                                                B.        Medical and incidental expenses incurred
and to be incurred;

                                                C.        Costs of suit, pre-judgment interest,
post-judgment interest, attorneys fees; and

                                                D.        For such other relief as is just and


                        DATED this _____day of
December, 2013.








Nevada Bar No. 001394


Nevada Bar No. 008679

801 South Rancho Drive, Suite D-4

Las Vegas, Nevada 89106

(702) 384-7111

Attorneys for Plaintiff

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah. The National Academy of Personal Injury Attorneys named Mark Albright as one of the Top 10 Personal Pnjury attorneys in Nevada in 2014. Our firm’s practice includes a strong emphasis on personal injury accidents. Call us at 702-384-7111.


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Sample Motion to Compel Arbitration and Stay Litigation



Motion to Stay Litigation and Compel Arbitration



A. The

alleged in the Complaint, herein, LLC is governed by an Operating Agreement
entered into by all of the parties hereto and members of the LLC in _____. See,
paragraph ____ of the Complaint. The Operating Agreement establishes, among
other things, procedures and agreed upon terms for the firm’s organization, its
governance, its officers and committees, its allocations of profits and losses
and its policies regarding records and accounting. See, Complaint at
paragraph ___. Although not mentioned in the Complaint, the Operating Agreement
also contains an all compassing, binding and enforceable Arbitration Clause at
§____ which provides in pertinent part as follows:

"Disputed Matters. Except as otherwise provided in this Agreement, any controversy
or dispute arising out of this Agreement, the interpretation of any of the
provisions hereof, or the action or inaction or any Member hereunder shall be
submitted to arbitration by a single, neutral arbitrator before the American
Arbitration Association in Las Vegas, Nevada under the commercial arbitration
rules of the American Arbitration Association then in effect. Any award or
decision obtained from any such arbitration proceeding shall be final and
binding on the parties, and judgment upon any award thus obtained may be
entered in any court having jurisdiction thereof. No action at law or in equity
based upon any event arising out of or related to this Agreement shall be
instituted in any court by any Member except (a) an action to compel
arbitration pursuant to this Section, or (b) an action to enforce an award
obtained in an arbitration proceeding in accordance with this Section."

The instant dispute is an attempt by some minority shareholders to takeover a
viable and thriving company which is on the brink of closing a multi-million
dollar financing deal to complete the research and development and marketing of
valuable patent rights held by the LLC and invented by Defendant , who is the
majority shareholder in the LLC. The dependency of this litigation is a severe
impediment to the closing of the much needed financing for the LLC. Indeed, one
of the term sheets or letters of intent signed by one of several lenders, has a
face value of $85,000,000.


The undersigned respectfully request that this Court compel arbitration per the agreement through the Amended Arbitration Association under its Commercial Arbitration Rules now
in effect, is appropriate as Nevada has established a policy of favoring
arbitration, the parties entered into a valid arbitration agreement, and the
arbitration clause contained in the Operating Agreement is clear and
unambiguous. Moreover, none of the parties have waived the opportunity to
arbitrate. As such, this Court should compel arbitration.

B. The Arbitration Clause is Valid and Enforceable.

Applying Nevada substantive law, the arbitration clause in the Operating Agreement is
valid and enforceable. Both the Nevada Legislature and Nevada Supreme Court
support the enforcement of arbitration provisions for alternative dispute
resolution in Nevada.The Nevada Arbitration Act recognizes that a written
provision in a contract to submit any existing controversy to arbitration is
valid, enforceable and irrevocable. NRS 38.219.1.

“On motion of a person showing an arbitration agreement and alleging another
person's refusal to arbitrate pursuant to the agreement... the court shall
proceed summarily to decide the issue and order the parties to arbitrate
unless it finds that there is no enforceable agreement to arbitrate.” NRS
38.221.1(b) (emphasis added).

Nevada courts have uniformly held that agreements to arbitrate are specifically
enforceable. Silverman v. Fireman's Fund Ins. Co., 96 Nev. 30, 604 P.2d 805 (1980). Any doubts concerning the arbitrability of the subject matter of the disputes are to be
resolved in favor of arbitration. Exber, Inc. v. Sletten Const. Co., 92 Nev. 721, 558 P.2d 517 (1976). In the absence of the most forceful evidence of the purpose to exclude a claim from
arbitration, the claim is properly submitted to arbitration. Clark County Public Employees v. Pierson, 106 Nev. 587, 798 P.2d 136 (1990).

The Nevada Supreme Court has further indicated that the parties are not to be
deprived by the Court of the benefit of Arbitration, and any doubt is to be
resolved in favor of arbitration. Exber, Inc. V. Sletten Construction Co.,
92 Nev. 721, 528 P.2d 517 (1976).

All doubts concerning the arbitrability of the subject matter of the dispute are to
be resolved in favor of arbitration. Once it is determined that
an arbitrable issue exists, the parties are not to be deprived by the courts of
the benefits of arbitration, for which they bargained - speed and the
resolution of the dispute and the employment of the specialized knowledge and
competence of the arbitrator. Id. At 729, 558 P.2d 517. (Emphasis

In this case, the parties entered into a Operating Agreement that clearly established
arbitration as the forum for dispute resolution. See Exhibit 1, §14.9.
Further, the parties agreed arbitration would “be final and binding.” See
Exhibit 1, §14.9. As such, the parties entered into a valid and enforceable
arbitration clause that should require the arbitration of the current dispute.

To gain exemption from arbitration, it must be specifically and expressly provided in
the Operating Agreement that a particular grievance is exempted from
arbitration. Clark County Public Employees v. Pierson, 106 Nev. 587,
591, 798 P.2d 136 (1990). In the absence of the most forceful evidence of the
purpose to exclude a claim from arbitration, the claim is properly
submitted to Arbitration.
Id. Therefore, both the Nevada
Legislature and the Nevada Supreme Court agree - agreements to arbitrate
should be specifically enforced

The clause in this case expressly covers “any controversy or dispute,” including
any dispute relating to or arising out of “the action or inaction of any
member.” The clause further bars litigation by stating that “no action at law
or in equity shall be instituted in any court by any member,” except to compel
arbitration or to enforce an arbitration award.

C. The Contract is Clear and Unambiguous.

The Operating Agreement between Plaintiffs and Defendants clearly and unambiguously
requires arbitration for all disputes. Nevada Courts consistently enforce unambiguous contracts according to their plain language. Renshaw v. Renshaw, 96 Nev. 541, 611 P.2d 1070 (1980). Courts are bound by language that is clear and free of ambiguity and cannot, using the guise of interpretation, distort the plain meaning of the agreement. Watson v. Watson, 95 Nev. 495, 496 P.2d 507 (1979).

In this case, there is no doubt the parties agreed to a clear and unambiguous
requirement to arbitrate. The arbitration provision is clearly marked in the
Operating Agreement. See Exhibit 1 at §14.9. Moreover, the language
clearly evidences an agreement to arbitrate disputes arising from the actions
or inactions of Members. Id. Finally, it is clear from the language of
the contract that the parties intended arbitration to be “final and binding.”
As such, the contract clearly and unambiguously requires that the parties
arbitrate this dispute and this Court should enforce the clear language of the
Operating Agreement between the parties. See, e.g., Southern
Trust Mortgage Co. V. Kay & Door Co., Inc
., 104 Nev. 564, 763 P.2d 353
(1988) (holding that where a document is clear and unambiguous, the court
must construe the document from its language
); see, e.g.,
Love v. Love, 114 Nev. 572, 959 P.2d 523 (1998) (concluding that a clear
and unambiguous document on its face must be construed according to its
plain language
); see, e.g., Ellison v. California State Automobile Association, 106 Nev. 601, 797 P.2d 975 (1990) (finding that Operating Agreements are construed from written language and enforced as written). Needless to say, the overwhelming authority
from the Nevada Supreme Court and elsewhere holds that unambiguous Operating
Agreements must be construed according to their plain language.

D. The Operating Agreement Clearly and Unambiguously Requires Arbitration.

The arbitration clause is clearly and unambiguously written. In particular, the
provision governing disputes of the Operating Agreement is wholly free of
ambiguity and clearly states that any dispute must be settled by
. Exhibit 1. Moreover, the Operating Agreement specifically
provides that the Arbitration should take place according to the rules of AAA. Id.
The Arbitration clause was fully negotiated and executed. Thus,
given the clear and unambiguous language of the Operating Agreement requiring
arbitration and Nevada’s presumption in favor of arbitration, the Operating
Agreement should be specifically enforced, requiring that this dispute be
submitted to binding arbitration and that this litigation is stayed in the

In the instant case, no discovery has taken place and there has not been significant
activity towards litigating either party's claims or defenses. No Answer has yet
been filed. No discovery has taken place. Therefore, no parties will suffer
prejudice from the change of forum from this honorable Court to arbitration. As
there is no prejudice, this Court should compel arbitration.

E. The Court is Not to Consider the Merits.

The United States Supreme Court prohibits consideration of the merits on a motion
to compel. The Supreme Court held that “there is a presumption of arbitrability
in the sense that ‘[a]n order to arbitrate the particular grievance should not
be denied unless it may be said with positive assurance that the arbitration
clause is not susceptible of an interpretation that covers the asserted
dispute.’” AT & T Tech., Inc. v. Communications Workers of Am., 475
U.S. 643, 650, 106 S.Ct. 1415, 1419, 89 L.Ed.2d 648 (1986) (quoting Steelworkers
v. Warrior & Gulf Navigation Co
., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 1353, 4 L.Ed.2d 1409 (1960)). In ruling on the arbitrability of a dispute, a court should not decide the merits of the underlying claims. See AT & T Tech., 475 U.S. at 649.

F. The Scope of the Broad Arbitration Clause.

Generally speaking, arbitration clauses are referred to as being “broad” or “narrow.”
Typically, broad arbitration clauses encompass all of the parties' disputes
arising out of their agreement, whereas narrow clauses are intended to limit
the disputes that are only specifically referred to arbitration. For instance,
in Parfi Holding AB v. Mirror Image Internet, Inc., 817 A.2d 149 (Del.
2002), the parties agreed to arbitrate any dispute “arising out of or in
connection with” their agreement, and like the case at bar. The Delaware
Supreme Court held that the parties had “signaled an intent to arbitrate all
possible claims that touch on the rights set forth in their contract.” Language
such as “all disputes arising out of the operating agreement are subject to
arbitration” or “any dispute or controversy arising under this operating
agreement shall be submitted to binding arbitration” is equally effective in evincing
the parties’ intent to submit all of their disputes to arbitration. See,
e.g., Drafting Arbitration Provisions for LLC Agreements, D. GaHuso, ABA
Business Law Today, Vol. 18, April 2009.

In the case at bar, LLC filed its Nevada Articles of Organization with the Secretary
of State on ___. Thereafter, in late November and early December, the various
members executed identical counterpart signature pages (attached to the
Operating Agreement, which is attached hereto as Exhibit “A”), which
provides as follows:

By signing this Agreement each member: (a) ratifies and confirms that the Company
was governed by and operated under the Operating Agreement as amended from time
to time by the Members; (b) from and after the date hereof agrees to adopt and
approve this Agreement as the Operating Agreement of LLC; and (c) confirms and
ratifies that his, or its membership interest is solely as set forth on Exhibit
A hereto, and that any certificate representing any membership interest issued
or outstanding prior to the effective date is null and void.”

NRS 86.286 provides as follows with respect to a situation as presented here where
the operating agreement is signed by the members after the articles of
organization are filed:

2. … If an operating agreement is adopted:

(a) Before the filing of the articles of organization or before the effective date
of formation specified in the articles of organization, the operating agreement
is not effective until the effective date of formation of the limited-liability

(b) After the filing of the articles of organization or after the effective date of
formation specified in the articles of organization, the operating agreement
binds the limited-liability company and may be enforced whether or not the
limited-liability company assents to the operating agreement
. (Emphasis

Hence as a matter of law it is abundantly clear that in Nevada both the LLC itself,
as well as the members and managers, are all bound by the Operating Agreement
signed by the parties shortly after the articles of organization were filed
with the Secretary of State. Hence the Arbitrator Clause is binding on every
entity and individual named in the caption of the Complaint.


The Federal Arbitration Act (the “FAA” or the “Act”) provides that written
arbitration agreements are “valid, irrevocable and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.” 9
U.S.C. § 2 (1999). The main purpose of the Arbitration Act is “to overcome
courts’ refusals to enforce agreements to arbitrate.” Allied-Bruce, 513
U.S. at 270. In passing the FAA, Congress was “motivated first and foremost by
a desire to change this [trend],... to enforce [arbitration] agreements into
which parties had entered, and to place such agreements ‘upon the same footing
as other contracts.’” Id. At 270-71 (citations omitted) (second
alteration in original).

To fulfill the purpose of enforcing arbitration clauses more uniformly throughout
the country, Congress established a broad principal of enforceability within
the provisions of the FAA. Doctor’s Assoc. V. Casarotto, 517 U.S. 681,
685 (quoting Southland Corp. v. Keating, 465 U.S. 1, 11 (1984)). The
Supreme Court has determined that “Congress would not have wanted state and
federal courts to reach different outcomes about the validity of arbitration in
similar cases.” Allied-Bruce, 513 U.S. at 72, citing Southland
., 465 U.S. at 15-16. Accordingly, the “the Court also concluded
that the Federal Arbitration Act preempts state law; and it held that state
courts cannot apply state statutes that invalidate arbitration agreements.” Id.
Hence, the outcome should be the same in state and federal court, applying
state or federal statutes.


Plaintiffs respectfully requests that this Court compel the arbitration of the dispute
between Plaintiffs and Defendants. The parties entered into a valid, clear and
unambiguous arbitration agreement requiring arbitration of claims concerning
the action or inaction of any party to the LLC. A dispute has now arisen
concerning Defendants’ actions as a member and manager of the LLC. As such, the
arbitration provision in the agreement between the parties should be given its
full force and effect and this case should proceed through final and binding
arbitration before the American Arbitration Association. Adequate time should
be provided to Defendants to file an appropriate Answer and Counterclaim
against Plaintiffs for intentionally interfering in the multi-million dollar transaction
currently pending.

This lawsuit should be stayed pending binding arbitration. Nevada law (as
articulated by both the Nevada Legislature and the Nevada Supreme Court), as
well as the Federal Arbitration Act, uniformly hold that the arbitrability of
disputes agreed upon in a written Contract or Agreement must be enforced.
Moreover, Nevada law consistently enforces the clear and unambiguous language
of contracts, particularly broad arbitration provisions such as that presented
here. In this case, the clear and unambiguous contractual provision requires
arbitration of “any disputes” arising out of or related to the Operating
Agreement. Pursuant to both the Nevada Arbitration Act and the Federal
Arbitration Act, this dispute should immediately be submitted to binding
arbitration and this litigation stayed in the interim.

this _____day of __________, ______.




Bar No. 001384


Bar No. 008679

South Rancho Drive, Suite D-4

Vegas, NV 89106

for Defendants

Wrongful Death Complaint; Motorcycle Accident; Vicarious Liability



G. MARK ALBRIGHT, ESQ           .

Nevada Bar No. 00394


Nevada Bar No.


801 South Rancho
Drive, Suite D-4

Las Vegas,
Nevada  89106

(702) 384-7111

fax: (702) 384-0605

Attorneys for








BECKY WOODRUFF, individually,                                                            )           Case
No.         A-14-708243-C

and BECKY WOODRUFF, as                                                                      )           Dept No.         XVIII

Administratrix of the Estate of                                   )

ROBERT MICHAEL BUCHANAN,                       )

Deceased,                                                        )


                                                                                                                        Plaintiffs,        )            COMPLAINT

                                                                                                                                                )           DEATH


v.                                                                                                                                             )           (Arbitration Exemption Claimed)

                                                                                                                                                )           (Probable Jury Verdict in Excess

ROY COZART, an individual;                                                                      )           of $50,000)    

TRI STATE LOGISTICS, LLC, a                             )

Nevada limited liability company; and           )

DOES I through X, inclusive; and ROE        )

BUSINESS ENTITIES I through X,             )

inclusive,                                                                                                         )


                                                Defendants..   )



            COMES NOW, Plaintiffs BECKY WOODRUFF, an individual, and as
Administratrix of the Estate of ROBERT MICHAEL BUCHANAN, by and through her
undersigned counsel, and for their causes of action against the Defendants, and
each of them, Plaintiffs allege as follows:


            1.         Plaintiff,
Becky Woodruff, is and at all times mentioned herein was a resident of the
County of Clark, State of Nevada.

            2.         Plaintiff,
Becky Woodruff, as Administratrix of the Estate of Robert Michael Buchanan,
deceased (“Buchanan”), appointed on September 26, 2014 in Case No.
P-14-082204-E as evidenced by the Order attached hereto as Exhibit “A,” is and
was, at all times relevant to these proceedings, a resident of the County of
Clark, State of Nevada.

            3.         At
all times relevant hereto, Defendant Roy Cozart (hereinafter”Cozart) is and was
a resident of the County of Clark, State of Nevada.

            4.         Defendant,
Tristate Logistics LLC (hereinafter “Tristate”) was and is a domestic limited
liability company duly organized and existing under the laws of the State of
Nevada, and at all relevant times hereto, was located at 71 North Pecos Road,
Las Vegas, Nevada 89101.   

            5.         The
true names and capacities, whether individual, corporate, associate, or
otherwise of DOES I through X, inclusive, and/or ROE BUSINESS ENTITIES I
through X, inclusive, are unknown to Plaintiffs, who therefore sue said
Defendants by such fictitious names. 
Plaintiffs are informed and believe and thereon allege that the
Defendants designated as DOE and/or ROE BUSINESS ENTITIES are any one of the

                        a.         A party responsible in some manner for
the events and happenings herein referred to, and which party in some manner
caused the injuries and damages proximately thereby to the Plaintiffs as herein

                        b.         Parties that were the agents, servants,
employees and contractors of the Defendants, and each of them, acting within
the course and scope of their agency, employment, or contract;

                        c.         Parties that owned, leased, managed,
operated, secured, inspected, repaired, maintained, entrusted and/or were
responsible for Defendants’ vehicles at the time of this incident;

                        d.         Parties that were responsible for the
supervision of one or more of the Defendants herein; and

                        e.         Parties that have assumed or retained
the liabilities of any of the Defendants’ vehicles by virtue of an agreement,
sale, transfer or otherwise.

            Plaintiffs specifically complain and
allege one or more causes of action against these parties, However, as of the
filing of this Complaint, Plaintiffs are not sure as to whether those entities
are individuals, partnerships, limited partnerships, corporations, associations
of individuals and businesses, or some other form of business ownership.  When the same has been ascertained by the
Plaintiffs, together with the appropriate charging allegations, Plaintiff will
ask leave of this Court to amend this Complaint to insert the true names and
capacities of said Defendants, DOES I through X and/or ROE BUSINESS ENTITIES I
through X, inclusive, and to join such in this action.

            6.         Upon
information and belief, at all times mentioned in this Complaint, Defendants,
and each of them, were the agents, servants, partners, employers, and employees
of each and every other Defendant, and were acting within the course and scope
of their agency, partnership and employment.

            7.         At
all times material to this Complaint, the acts and omissions giving rise to
this action occurred in Clark County, Nevada.

            8.         On
or about July 29, 2014, Buchanan was riding his Honda motorcycle and traveling
westbound on Spring Mountain Road between Decatur Boulevard and Lindell Road,
in Clark County, Nevada.

            9.         At
about the same time, Cozart, in the scope and course of his employment with
Tristate, driving an F150 Ford pickup truck belonging to his sister, pulled out
of a parking lot located at 5320 Spring Mountain Road, onto Spring Mountain
Road in front of a moving CAT bus, and failed to look left

for approaching
traffic in the second lane, thus colliding with Buchanan on his motorcycle, who
was traveling westbound on Spring Mountain Road in the second lane adjacent to
the CAT bus.

            10.       As
a result of Cozart’s extreme negligence and failure to yield the right-of-way,
Buchanan sustained serious bodily injury, eventually resulting in his untimely

            11.       As
a result of Cozart’s negligence, Plaintiff Woodruff lost her son.

            12.       As
a result of Cozart’s negligence, Buchanan suffered extreme pain and suffering,
damages, injuries and medical expenses.

            13.       As
a result of Cozart’s negligence, the Estate of Robert Michael Buchanan (who
suffered extreme pain, suffering and other personal injuries resulting in his
eventual death) has sustained damages and claims of creditors.

/ / /

/ / /


(Wrongful Death; Negligence - Against All Defendants)

            14.       Plaintiffs
hereby repeat and reallege each and every fact set forth in the preceding
paragraphs, as though set forth in full at this time,

            15.       It
was the duty of Cozart to drive in a safe manner, and not to negligently,
carelessly and/or recklessly cause injury or damage to other persons, including
the Plaintiffs and Buchanan.

            16.       Cozart
drove negligently and recklessly due to the following:

                        a.         Cozart failed to keep his vehicle under
proper control at all times;

                        b.         Cozart was inattentive and failed to
keep a proper lookout for other vehicles lawfully using the roadways;

                        c.         Cozart failed to stop his vehicle in
sufficient time to avoid colliding with Buchanan causing his death;

                        d.         Cozart failed to afford Buchanan proper
and sufficient notice and warning of the approach of Cozart’s vehicle
encroaching into Buchanan’s travel lane, sufficient for Buchanan to stop or
otherwise to properly protect himself, or avoid the collision;

                        e.         Cozart failed to use due care and to
yield the right of way to oncoming traffic while exiting a small parking lot,
which had the right of way on Spring Mountain Road, including Buchanan;

                        f.          Cozart made an intentional but
dangerous decision to cut in front of the moving CAT bus without being able to
see if vehicles were traveling next to the bus; and

                        g.         Cozart made the erroneous and dangerous
assumption that no other vehicles were traveling in the number 2 travel lane
next to the bus, which was the major cause of Buchanan’s death.

            17.       As
a direct and proximate result of the aforesaid negligence, carelessness and
recklessness of the Defendants, and each of them, Plaintiff Woodruff has
suffered the wrongful death of her son, Robert Michael Buchanan, and has
thereby suffered, and continues to suffer, grief, loss of guidance, sorrow, severe
emotional distress, mental pain, loss of companionship, society, and comfort
and also damages for pain and suffering and disfigurement of her son as
contemplated by law in NRS 41.085, all of which caused Plaintiff’s damages in
excess of $10,000.

            18.       As
a direct result of the negligence of the Defendants, and each of them,
Plaintiff Woodruff suffered personal injuries, including, but not limited to,
severe emotional distress, mental pain, loss of companionship, society, pain
and suffering medical bills past and future in excess of $10,000.

            19.       Plaintiffs
have been forced to retain the services of ALBRIGHT, STODDARD, WARNICK &
ALBRIGHT to prosecute this action, and Plaintiffs are entitled to recover the
reasonable attorneys’ fees and costs of those services.


(TRISTATE LOGISTICS LLC (Respondeat Superior);

Negligence and Wrongful Death)

            20.       Plaintiffs
incorporate by reference herein the foregoing paragraphs as though fully set
forth herein.

            21.       Plaintiffs
are informed and believe that at the time of the subject accident, Tristate was
the employer and/or had control of its agent Buchanan. 

            22.       Cozart
was acting within the course and scope of his duties for Tristate delivering
auto parts and other packages for and on behalf of Tristate at the time of the
collision with Buchanan.

            23.       Under
the doctrine of Resondeat Superior, Defendant Tristate is vicariously liable,
jointly and severally, for the damages suffered by Buchanan and Plaintiff as a
direct and proximate result of its employees and/or agents’ negligence while
driving in the course and scope of his employment as a delivery driver and/or
courier employee of Tristate.

Tristate, through its employees and/or agents, owed a duty to Buchanan and
Plaintiff to drive safely and to avoid dangerous and/or reckless conduct.

            25.       Tristate,
by and through its employees and/or agents, breached its duties of due care by
negligently, carelessly and recklessly failing to drive in a safe manner which
caused Buchanan’s death and damages to Plaintiffs.

            26.       As
the direct and proximate consequences of Tristate’s negligent, careless and
reckless breach of duty, Plaintiff Woodruff suffered the loss and wrongful
death of her son, Buchanan, all of which caused Plaintiff damages in excess of

            27.       As
the direct and proximate consequences of Tristate’s negligent, careless and
reckless breach of duty, Plaintiff Woodruff has suffered, and continues to
suffer, emotional damage, and pain and suffering to her general damage in
excess of $10,000.

            28.       Plaintiffs
have been forced to retain the services of ALBRIGHT, STODDARD, WARNICK &
ALBRIGHT to prosecute this action, and Plaintiffs are entitled to recover the
reasonable attorneys’ fees and costs of those services.

            WHEREFORE, Plaintiff Becky
Woodruff, expressly reserving her right to amend this Complaint to set forth
causes of action and/or items of damages not yet known, prays for judgment for
each of these causes of action as follows:

            1.         For
compensatory damages for medical expense in the amount in an amount in excess
of $10,000;

            2.         For
general damages for past, present and future pain and suffering, distress, loss
of life activities, and other damages in an amount in excess of $10,000;

            3.         For
past, present and future special and general damages, as set forth above,
including, but not limited to, bodily injury, medical expenses, loss of life,
other out-of-pocket expenses and consequential damages, physical pain and
suffering, loss of enjoyment of life in an amount in excess of $10,000; and

                        4.         For pre-judgment and post-judgment
interest, reasonable attorneys’ fees, costs of court, and such other and future
relief that the court may deem just and proper.


            DATED this _____ day of October, 2014.








Nevada Bar No. 01394


Nevada Bar No. 001573

801 South Rancho Drive, Suite D-4

Las Vegas, Nevada  89106

(702) 384-7111

Attorneys for Plaintiffs

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