NRCP 62 Motion for Stay in Nevada Pending Appeal
Posted by: Mark Albright on Fri, Oct 16, 2015Share this post
G. MARK ALBRIGHT, ESQ. # 001394
D. CHRIS ALBRIGHT, ESQ. #004904
ALBRIGHT, STODDARD, WARNICK & ALBRIGHT
801 South Rancho Drive, Suite D-4
Las Vegas, Nevada 89106
Tel: (702) 384-7111
Fax: (702) 384-0605
Attorneys for Movants/Defendants
IN THE SECOND JUDICIAL DISTRICT COURT OF THE STATE OF NEVADA
IN AND FOR THE COUNTY OF WASHOE
MARK B. STEPPAN,
JOHN ILIESCU, JR. and SONNIA ILIESCU, as Trustees of the JOHN ILIESCU, JR. AND SONNIA ILIESCU 1992 FAMILY TRUST AGREEMENT; JOHN ILIESCU, individually; DOES I-V, inclusive; and ROE CORPORATIONS VI-X, inclusive,
Defendants. CASE NO. CV07-00341
DEPT NO. 10
DEFENDANTS’ MOTION FOR STAY OF EXECUTION OF “JUDGMENT, DECREE, AND ORDER FOR FORECLOSURE OF MECHANIC’S LIEN” PENDING APPEAL, WITHOUT THE NECESSITY OF ANY BOND
And all original prior consolidated case(s).
COMES NOW, JOHN ILIESCU, JR., individually, and JOHN ILIESCU JR. and SONNIA ILIESCU as Trustees of the JOHN ILIESCU, JR. AND SONNIA ILIESCU 1992 FAMILY TRUST AGREEMENT (jointly hereinafter “Defendants” or “Movants” or “Iliescus”), as the Defendants in the second of these two consolidated cases, and hereby move, pursuant to NRCP 62, for an Order of this Court staying any execution by Plaintiff of this Court’s “Judgment, Decree, and Order for Foreclosure of Mechanic’s Lien” (hereinafter the “Judgment”) entered herein on February 26, 2015 (Transaction # 4836215) (attached as Exhibit “1” hereto), without the necessity of any security beyond the mechanic’s lien which already secures Plaintiff’s claims, and request that said stay remain in place pending an appeal which Movants intend to file at this time. This Motion is made and based upon the Points and Authorities and exhibits set forth hereinbelow, all of the pleadings and papers on file with this Court, and any arguments of counsel made at any hearing of this matter.
DATED this _____day of June, 2015.
G. MARK ALBRIGHT, ESQ. # 001394
D. CHRIS ALBRIGHT, ESQ. # 004904
ALBRIGHT, STODDARD, WARNICK & ALBRIGHT
801 South Rancho Drive, Suite D-4
Las Vegas, Nevada 89106
Tel: (702) 384-7111
Fax: (702) 384-0605
C. NICHOLAS PEREOS, ESQ. # 000013
1610 Meadow Wood Lane, Suite 202
Reno, Nevada 89502
Tel: (775) 329-0678
Attorneys for Applicants/Defendants
POINTS AND AUTHORITIES IN SUPPORT OF MOTION
I. STATEMENT OF FACTS
This suit was brought by Plaintiff Mark B. Steppan (“Steppan”) on May 4, 2007 via a Complaint (Exhibit “2” hereto) listing only a single cause of action, foreclosure of a mechanic’s lien (the “Mechanic’s Lien” or “Lien”) against real property owned by the Iliescu Defendants, as described therein (the “Property”). The trial was held in December 2013, and this Court is familiar with the facts, which involve Plaintiff seeking to foreclose on a Mechanic’s Lien brought in his name against the Defendants’ real Property, for off-site architectural work that was performed for a potential buyer of that Property, under a purchase agreement which never closed.
On May 28, 2014, this Court entered its “Findings of Fact, Conclusions of Law and Decision” (hereinafter its “Decision”) making various rulings, and upholding the validity of the Mechanic’s Lien against the Property. The Court ordered in its Decision that the parties engage in subsequent proceedings in order to establish the final amount of the Lien, after which the Court entered its Judgment, ordering a foreclosure sale of the Property to satisfy the Mechanic’s Lien. Post-trial motions brought by the Defendants both before and after entry of the Judgment were denied by the Court. The most recent such ruling was this honorable Court’s May 27, 2015, “Order Denying Defendants’ Motion for Court to Alter or Amend Its Judgment and Related Prior Orders” (Transaction # 4971032). Defendants intend to timely appeal this Court’s Judgment, and certain of its other related orders and decisions, within thirty days of this Court’s aforementioned May 27, 2015, Order.
II. OVERVIEW OF ARGUMENTS AND DISPUTES AT ISSUE
The present motion is similar to an earlier motion for stay which was filed herein on July 16, 2014 (Transaction # 4518824), prior to the Defendants’ first post-trial motion for relief from the Decision, which earlier motion was vacated by an August 7, 2014 stipulation and order (Transaction # 4552148), attached as Exhibit “3” hereto, which was entered into by the parties in contemplation of the future filing of the instant motion, with both parties recognizing in that stipulation that the arguments in the vacated motion could be reasserted by Defendants after this Court’s rulings on any post-trial motions, pending appeal.
Defendants are entitled to a stay of execution pending appeal, without the necessity of posting any further security, including any supersedeas bond, for the following reasons: (1) this Court’s Judgment should not be construed as a money judgment against the Defendants individually, but is a judgment recognizing that Plaintiff has a Mechanic’s Lien, establishing the amount of that Lien, and allowing him to satisfy that Lien by foreclosing upon and selling the Defendants’ liened Property; (2) since Plaintiff’s right to a Lien on real Property is, by definition, secured, the Plaintiff has no basis for objecting to a stay while an appeal of this matter is fully and finally adjudicated. Thus, there is no reason why Defendants should have to post any further security including in the form of any supersedeas bond, pending the adjudication of the Appeal, since the Defendants are not personally liable for any of the Judgment which is unable to be satisfied from the proceeds of the foreclosure, but, rather, only their Property is subject to the Mechanic’s Lien, solely up to the full value of that Property, and given the Lien against that Property, no need exists for further security in any form.
More particularly, this Court ruled, in pertinent part, as follows, in its Decision:
1. Iliescu owned four parcels of land in downtown Reno, Washoe County, Nevada . . . .
4. Johnson [acting as an agent for the Iliescu sellers] was in contact with Sam Caniglia (“Caniglia”) regarding the purchase of the property. Caniglia represented Consolidated Pacific Development, Inc. (“CPD”). CPD wanted to purchase the property and develop it by placing mixed-use structures on the land. The property would be both commercial and residential.
5. Johnson received a letter from Caniglia on behalf of CPD proposing a purchase of the property . . . . The parties agreed on a purchase price of $7,500,000.00 and . . . . other inducements. Iliescu and CPD executed numerous addendums to the land purchase agreement . . . .
7. The sale of the property never came to pass. . . . CPD and/or its assigns were never able to secure funding for the purchase . . . .
10. Steppan entered into an AIA Document B141 Agreement (“the contract”) with [a successor in interest to CPD] BSC to design Wingfield Towers [the proposed development at the Property]…. The contract was signed by Steppan and BSC. Iliescu is not a party to the contract. [Emphasis added.] . . . .
16. Steppan was not paid for his services as contemplated by the contract. . . . On November 7, 2006, Steppan filed a mechanic’s lien against the property. . . .
Decision at pp. 1-6 [emphasis added].
On the basis of these and other findings, this Court also issued its conclusions of law, including that the architect had “established that he is entitled to a mechanic’s lien” for the work performed on the Iliescus’ Property, under the contract to which the Iliescus were not a party. Id. at page 11, lines 12-23. This Court’s Judgment, entered thereafter, provided that the Property would be sold, via the applicable methods for foreclosure of a mechanic’s lien, in order to satisfy a judgment amount of $4,536,263.45. Judgment at ¶ 1. The Judgment went on to indicate that, if the net proceeds (gross proceeds minus the costs of sale) from the sale value of the Property are adequate to satisfy the entirety of the Lienable Amount, then the entirety of the Lienable Amount shall be provided to Plaintiff Steppan, with any excess to be distributed to the Iliescus. Judgment at ¶¶ 3-5.
The question of law which the Judgment explicitly did not address, but left open for further determination, is what to do in the event that the proceeds from the sale of the Property, do not fully satisfy the Lienable Amount. This question has been addressed to this Court in certain prior filings, but has not yet been directly addressed or ultimately reached by the Court heretofore, which has instead deferred the question for a subsequent ruling. The Judgment, for example, indicates in Paragraph 6 that this question may still be adjudicated in the future, and that the Plaintiff retains its right to pursue its theories on the same (which Plaintiff derives from his interpretation of NRS 108.239(12)), and with the Defendants’ rights to raise their contrary arguments (including on the basis of arguments raised in certain of their prior filings) also being protected and preserved.
In order to rule on the instant motion, these previously deferred questions must now be ruled upon. The answer to these questions are settled under Nevada law, and not open to any genuine question, and, as a matter of law, Plaintiff is not entitled to seek any moneys from the Iliescus, beyond the proceeds recovered at the sale, since the Iliescus are not personally liable for any portion of the Judgment, but, rather, their Property is subject to being sold to satisfy the same, with no remaining claims to seek a further deficiency, if any, from the Property’s owners. Steppan is entitled to the only relief affordable to him by law under the sole cause of action set forth in his Complaint, namely, recognition that he has a mechanic’s lien in the amount which has now been determined by this Court, and the right to foreclose thereon, to satisfy as much of that judgment as may be recoverable from the proceeds of such a sale.
Allowing Steppan to foreclose on the mechanic’s lien without waiting to determine the fate of Defendants’ appeal would prejudice Defendants, who would thereby lose their Property, the very res at issue in this matter sought to be preserved via a planned appeal. On the other hand, there will be no prejudice to Steppan if a stay issues and he later prevails on appeal, as he will have remained secure in his mechanic’s lien rights against the Property during the appeal. Therefore, it is respectfully requested that this Court enter an Order staying any execution by Plaintiff on the Judgment and preventing Plaintiff from taking any steps to foreclose on his Mechanic’s Lien or cause a foreclosure sale of the liened Property to take place, pending the outcome of the Defendants’ appeal, and without the necessity of Defendants posting a supersedeas bond.
III. LEGAL ANALYSIS
A. Standard of Adjudication
NRCP 62(d) governs the issuance of a stay upon appeal, and contemplates the issuance of a supersedeas bond in order to allow such a stay to come into effect as a matter of right. However, it has long been recognized that district courts have the authority to waive, or allow for alternative security, while still issuing a stay, when circumstances so warrant. McCullough v. Jenkins, 99 Nev. 122, 659 P.2d 302 (1983). For example, the Nevada Supreme Court has expressly recognized that where adequate collateral already exists to protect a Judgment, a stay may issue without the need for the party protected by the stay to issue a bond. Ries v. Olympian, Inc., 103 Nev. 709, 747 P.2d 910 (1987). In the present case, alternative collateral does exist, including by virtue of the very nature of the relief which has been obtained by Plaintiff Steppan, pursuant to which he is already in possession of all the security he needs and all the security he is entitled to in order to be protected pending the appeal of this matter, during which appeal, his mechanic’s lien will remain of record.
In Nelson v. Heer, 121 Nev. 832, 122 P.3d 1252 (2005), the Nevada Supreme Court updated its prior McCullough analysis on this issue, and identified new factors which a district court should now consider when determining whether to issue a stay pending appeal, without requiring a supersedeas bond, which factors were taken from Seventh Circuit federal case law analyzing the federal equivalent to NRCP 62(d). The Court explained the reasoning behind the new test as follows: “The purpose of security for a stay pending appeal is to protect the judgment creditor’s ability to collect the judgment if it is affirmed by preserving the status quo and preventing prejudice to the creditor arising from the stay. However, a supersedeas bond should not be the judgment debtor’s sole remedy, particularly where other appropriate, reliable alternatives exist. Thus, the focus is properly on what security will maintain the status quo and protect the judgment creditor pending an appeal.” Heer, 121 Nev. at 835; 122 P.3d at 1252 [emphasis added]. Based thereon, the Court adopted the Seventh Circuit’s analysis, which calls for a district court to review the following factors:
(1) the complexity of the collection process; (2) the amount of time required to obtain a judgment after it is affirmed on appeal; (3) the degree of confidence that the district court has in the availability of funds to pay the judgment; (4) whether the defendant’s ability to pay the judgment is so plain that the cost of a bond would be a waste of money; and (5) whether the defendant is in such a precarious financial situation that the requirement to post a bond would place other creditors of the defendant in an insecure position.
Id. 121 Nev. at 836, 122 P.3d at 1252.
The Court need not review all five of these factors. Rather, as Heer, and other similar cases relying on the same Seventh Circuit authority, indicate, a Court may rely on any one or more of the factors to allow a stay without posting a bond. See e.g., Ground Improvement Techniques, Inc. v. Morrison Knudsen Corp., 2007 U.S. Dist. LEXIS 30836, at 7 (D. Colo. Apr. 25, 2007) (waiving bond based on factors 1, 2, and 4); In re Oil Spill by the “Amoco Cadiz,” 744 F. Supp. 848, 850 (N. D. Ill. 1990)(waiving bond based on only factor), Hurley v. Atlantic City Police Dept., 944 F. Supp. 371, 375 (D. N.J. 1996) (waiving bond based on factors 3 and 5).
In the present matter, as a prerequisite to this Court’s review of these factors, this Court needs to decide whether Plaintiff or Defendants are correct in their assertions regarding Nevada law. If Defendants’ position, that the Judgment is not properly treated as a personal judgment but only establishes the amount of the Lien which can be satisfied up to the value of the Property, is accurate, then many of these foregoing factors would have no application. Rather, in that event, since the Plaintiff is not entitled to collect any post-foreclosure deficiency or residue as a personal claim against the Defendants, beyond the value of the Property, the Lien against the Property is, by definition, adequate collateral for the entire Lien foreclosure Judgment. Thus, the best way to “maintain the status quo” is to simply allow a stay to be issued, with the Property to remain subject to the Mechanic’s Lien (as well as to the Judgment allowing foreclosure thereon) until such time as the Appeal is determined. Otherwise, given the large amount of the Judgment, the status quo will not be maintained, but, rather, the Defendants will either have to allow the sale of their Property (losing the very res which they seek to protect by appealing), or will be forced to try to find some way to procure a bond, if even available, for this extremely large ($4.5 million) Judgment, which would for many reasons not be feasible.
The factors from the Heer decision which do directly apply, clearly indicate that no bond should be necessary in this matter. For example, “the cost of a bond would be a waste of money” as this Court should not only have a high “degree of confidence” that the lien will still be in place should Plaintiff prevail on appeal, but this Court knows that to be the case as a matter of law, and the “collection process” will not be “complex” but will simply involve the Plaintiff going forward to foreclose on his Lien thereafter, under the methods set forth in the statute and reiterated in the Judgment (per NRS 108.239(10), in the manner provided for sales on execution of real property). Further, the Property remains undeveloped vacant commercial property in downtown Reno, such that there is no danger of accidental destruction of any valuable improvements at the site during the stay, nor is the Property a mine, or land containing valuable timber, upon which waste could be committed.
Additional guidance may also be found under NRAP 8(c) which sets forth the analysis the Nevada Supreme Court will follow upon its review of any motion for stay to be filed under NRAP 8, which must be preceded by a motion (i.e., the instant motion) in front of the district court. NRAP 8(c) lists the factors to be considered at that stage in determining whether to issue a stay, which include “whether the object of the appeal . . . will be defeated if the stay . . . is denied” and “whether” this would lead to “irreparable or serious injury” to the appellant, versus whether any such injury would accrue to the respondent. These factors also favor issuance of the stay in this case, since the object of the appeal (preserving the Defendants’ Property and avoiding having it sold off at a foreclosure of Plaintiff’s Mechanic’s Lien) will, indeed, be defeated if the stay is denied. Thus, a denial of the stay, rather than maintaining the status quo, as Heer indicates should be the goal, will cause prejudicial and irreparable injury to Defendants. On the other hand, no injury or prejudice will inure to Plaintiff, whose Mechanic’s Lien will remain in place pending the appeal, upon which he can readily go forward with foreclosure sale proceedings in the event of the Defendants losing on appeal.
B. There is No Personal Liability, Beyond the Foreclosure Sale Value of the Liened Property, For Which any Further Security or Supersedeas Bond, Is Needed.
Based on prior filings, it is known that, in an effort to overcome the foregoing analysis, Plaintiff Steppan will aver that a supersedeas bond should issue in case the amount recovered upon any foreclosure sale of the Property subject to the mechanic’s lien is insufficient to pay his Judgment. However, Plaintiff has NO RIGHT to any personal judgment against Defendants, beyond his right (if this Court’s Judgment is upheld on appeal) to foreclose on his Mechanic’s Lien. Plaintiff has mischaracterized Nevada law on this question, and has argued that “[if] the proceeds from the [Mechanic’s Lien foreclosure] sale do not satisfy the amount of the judgment, then the judgment creditor is entitled to personal judgment against the property owner for the deficiency (or ‘residue’) if the property owner has been personally summoned or appeared in the action.” See, Plaintiff’s December 4, 2013 Trial Statement, at p. 14, ll. 16-21.
This is simply untrue. No Nevada case law or statute supports the assertion that the lien claimant “is entitled to personal judgment against the property owner” against whose property a lien is claimed “for the deficiency (or residue)” of the lien amount, after a sale which fails to satisfy that amount, where the lien exists because some other third-party customer failed to pay the lien claimant. Indeed, Nevada law has long refuted that assertion.
(i) Plaintiff’s Theory Misreads the Statute on Which His Theory Is Based.
This Plaintiff theory of personal liability on the part of these Iliescu Defendants, beyond the amount recoverable through foreclosure of the Mechanic’s Lien, as well as Plaintiff’s claimed basis for the same, are both inaccurate statements which misconstrue the clear, unambiguous, and controlling law of the State of Nevada, and must be rejected in their entirety. There is no basis, as Plaintiff Steppan claims, for him to “apply to the court for a personal judgment against Iliescu” hereafter, if “the net sale proceeds [from the mechanic’s lien foreclosure sale] are less than the monetary amount of the judgment.” (Id., at 14, lines 21-24.) It must be remembered that the judgment amount is based on the failure of a party (the architectural customer) other than these Defendants, to pay the Plaintiff. Plaintiff is not entitled to any personal deficiency against Movants (even were no appeal to be taken, or if this Court’s Judgment is upheld on appeal), just because the Property is not of sufficient value to satisfy the amount of the Lien, as adjudicated, based on Plaintiff having not been paid by another third party who signed the contract (the underlying developer BSC / Consolidated) who Plaintiff chose not to sue herein.
Plaintiff’s characterization of the law is purportedly premised on NRS 108.239(12) which Plaintiff’s Trial Statement misconstrued by omitting its key passage. That statute actually reads, in full, as follows: “12. Each party whose claim is not satisfied in the manner provided in this section is entitled to personal judgment for the residue against the party legally liable for it [i.e., the defaulting customer of the lien claimant] if that person has been personally summoned or has appeared in the action.” [Emphasis and bracketed language added.] The obvious meaning of this statutory language is clear. A mechanic’s lien against real property provides additional security and protection to a contractor who has performed work under contract for which the contractor has not been paid by his customer, or someone else legally liable to pay him. The fact that a mechanic’s lien proves insufficient to pay the contractor does not, however, prevent the contractor from nevertheless seeking personal judgment for any post-foreclosure residue or deficiency still owed, as against the party with whom he contracted, as the person who is and has always been “legally liable for” payment to the contractor, or against any other party (such as the contractor’s customer’s guarantor) who would otherwise have been “legally liable for” paying the contractor, even where no mechanic’s lien existed, or any mechanic’s lien that did exist proved insufficient.
This is a very simple principle of law, clarified by subsection 12 merely in order to avoid the possibility of any argument that might otherwise be made that mechanic’s lien rights entirely replace or supplant a contractor’s right to seek other more traditional remedies, such as a contractor merely obtaining a money judgment against his or her customer. This simple principle is also clarified by NRS 108.238 (“The provisions of [the mechanic’s lien statutes] must not be construed to impair or affect the right of a lien claimant to whom any debt may be due for work, material or equipment furnished to maintain a civil action to recover that debt against the person liable therefor . . . .”)[Emphasis added.] It should be noted that the clarification in subsection 12 of NRS 108.239 is not merely redundant of NRS 108.238, in that NRS 108.239(12) also provides procedural instruction, that the party legally liable to the lien claimant for the debt, such as the claimant’s customer, should also be made a party to the lien foreclosure suit, which Plaintiff chose not to do here.
The assertion that NRS 108.239(12) magically transforms the owner of liened real property into a defendant who is himself now legally and personally liable for any amounts owed, and unable to be satisfied from the Property’s sale, simply by being summoned and appearing in the lien foreclosure action, even where said owner had no contract with the lien claimant and no theory exists for such personal liability of the property’s owner, is patently absurd, and is simply not what the statute says, on its face, or by any reasonable construction. Rather, the statute merely provides that in order to seek a personal judgment for the residue, “the party” who would in any case be “legally liable for” the payment to the claimant, remains liable for that residue “if that person” (whoever it may be, typically the lien claimant’s contract customer) “has been personally summoned and appeared in the action” (a phrase and a condition which would make no sense whatsoever, if it were referring to the lien claimant defendant, who, of course, will of necessity have been served or have appeared, for a plaintiff to have reached the point where a foreclosure sale has occurred, leaving a residue deficiency).
Plaintiff in this case chose not to name the actual customer, BSC / Consolidated, for reasons which are unknown, as the Property owner is not privy to whatever arrangements were made between the architect and the developer. However, this case was very unusual in that regard. It is typically almost always the case that a mechanic’s lien foreclosure action will name the lien claimant’s customer, and include breach of contract causes of action against that customer, in addition to naming the owner of the property on a separate mechanic’s lien foreclosure cause of action.
Setting aside the serious due process concerns which Plaintiff’s construction of the statute would raise, if subsection 12 of NRS 108.239 were intended to render the owner legally liable for the residue of any mechanic’s lien claim unable to be satisfied from the value of the property subject to the lien, regardless of whether there were any other basis for that owner’s personal liability, it is respectfully suggested that if such a construction were intended, that is what the statute would have been written to say. However, it is not so written. For example, such an intention could have been expressed via the legislature indicating that any party whose claim is not satisfied from the foreclosure of the mechanic’s lien “is entitled to personal judgment for the residue against the owner of the property subject to the lien.” [period, no further conditional language, such as “if the owner has been summoned or has appeared” needed, since it would, in that event, go without saying that the owner had been summoned or appeared, as no mechanic’s lien foreclosure sale could otherwise have been ordered.] Why isn’t the statute written thus? Very simply: because that’s not what it means.
(ii) Plaintiff’s Theory Is Contrary to Longstanding Nevada Case Law Directly On Point and Directly to the Contrary of Plaintiff’s Argument.
Indeed, it has been the undisputed and repeatedly upheld law of the State of Nevada for over 80 years that the owner of real property subject to a statutory lien is not thereby made personally liable for any deficiency, merely because his land is subject to the lien as security for a claim, absent some other basis for the owner to be held personally liable, such as where the owner is also the party who contracted with the lien claimant for the work. As noted above, this Court has already ruled in this case that the Iliescus were not a party to the contract between the owner and the lien claimant.
In Didier v. Webster Mines Corp., 49 Nev. 5, 234 Pac. 520 (1925) the Nevada Supreme Court noted that a real property owner, whose land was subject to a statutory mechanic’s lien in favor of a miner, was not personally liable for any amount of the miner’s lien claim which could not be satisfied from the lien, in the absence of privity of contract between the real property owner and the lien claimant. This case is still valid Nevada law and has never been overturned. Likewise, in the more recent case of Nevada National Bank v. Snyder, 108 Nev. 151, 826 P.2d 560 (1992) (partially abrogated on other grounds by Executive Mgmt Ltd. v. Ticor Title Ins. Co., 118 Nev. 46, 38 P.3d 872 (2002)) the Court ruled against the very assertions which Steppan now repeats, and did so in reliance
on Nevada authority which had been in effect for decades.
The Snyder case included discussion of a claim by two mechanic’s lien claimants that a bank which was the owner of real property was thereby liable for any “residue” owed to the mechanic’s lien claimants, not able to be satisfied through the mechanic’s lien. The bank had not, however, been the party which had requested the lien claimant’s work, or which had failed to pay the lien claimants. The Nevada Supreme Court firmly rejected this contention, explaining as follows:
The district court judgment stated that C & R and Depner [the mechanic’s lien claimants] were entitled to a “personal judgment for the residue against the Bank [the property owner].” The [property owner] Bank asserts that the remedy to enforce a mechanic’s lien is to force a sale of the property and that it [as the property owner] is not liable for any deficiency if the monies from the sale do not cover the amount of C&R and Depner’s [the lien claimants’] liens. We agree.
In Milner et al. v. Shuey, 57 Nev. 159, 69 P.2d 771 (1937), this court stated that there must be a contractual relationship regarding the furnishing of labor and materials between the party foreclosing the lien and the party against whom personal liability is sought. This court stated: “[S]uch a relation is essential to establish personal liability against the owner of the property in addition to a judgment foreclosing a lien….” Id. at 179, 69 P.2d at 772. Further, the statutory language regarding deficiencies and personal actions is illuminating here. NRS 108.238 provides:
Right to maintain personal action for debt not impaired. Nothing contained in NRS 108.221 to 108.246, inclusive, shall be construed to impair or affect the right of any person to whom any debt may be due for work done or material furnished to maintain a personal action to recover such debt against the person liable therefor. (Emphasis added.)
It is unjust to hold the Bank [as property owner] personally liable for a deficiency when it was not a party to the [lien claimant/customer] contract, and because the Bank is not the person liable for the debt under NRS 108.238.
Snyder, 108 Nev. at 157, 826 P.2d at 563-64 (1992)(bolded and underlined emphasis and bracketed insertions added, italicized emphasis in original).
This precise analysis is equally applicable herein. This Court has already ruled, in Paragraph 10 of its Decision, that Iliescu was not a party to the contract with Steppan. As such, the claim that these Defendants can somehow be made liable for the residue owed to Plaintiff beyond the value of the liened Property, when they were not “the person liable for the debt” in the first instance, and did not contract for the work, must fail, as based on a legal argument which has already been presented to the Nevada Supreme Court and entirely rejected.
It should be noted that the Nevada legislature has revised and amended the Nevada lien statutes many times since the 1992 Snyder decision, including a substantial revision to the entire statutory scheme which took place effective October 1, 2003. Nevertheless, the Nevada legislature has never chosen to take any action which might mitigate against the effect of the Snyder case, or altered the meaning of who is a person “legally liable” for debts secured by a mechanic’s lien against property, in order to vacate the effect of the Snyder decision, or the earlier decisions on which it was based.
Nor can the Snyder decision be said to represent some unique aberration in mechanic’s lien law. Rather, it represents the correct understanding of the nature and purpose and limited extent of mechanic’s liens as understood for decades, including in other neighboring states. See, e.g., Reeder Lathing Co., Inc. v. Allen, 425 P.2d 785, 786 (Cal. 1967)(“The part of the judgment that defendant is personally liable to plaintiff is clearly erroneous. In the absence of a contract between a lien claimant and the property owner, the right to enforce a mechanic’s lien against real property does not give rise to personal liability of the owner.”) [Emphasis added.]
The Nevada Supreme Court in Snyder also rejected the argument that the owner of real property subject to a mechanic’s lien could be held liable for the residue beyond the value of the property on an “unjust enrichment” theory, even where the work had benefitted the property, and therefore its owner. Snyder, 108 Nev. at 157, 826 P.2d at 563. Of course, in the present case, Steppan’s complaint contains but one cause of action, for the foreclosure of a mechanic’s lien against the Iliescu Property, and does not assert any unjust enrichment claim in any event, such that sneaking such a claim in at this late point would be a violation of due process.
Moreover, any claim for unjust enrichment would be especially weak in this case. The architectural plans which form the basis for the Lien did not involve or lead to any actual on-site work, or any actual on-site improvements, ever taking place, which benefitted the subject liened Property. That Property is now just as vacant and unimproved as it was the day it went into escrow, the only difference being that it came out of escrow subject to a seven figure Mechanic’s Lien claim.
C. No Supersedeas or other Bond Is Necessary.
Based on the foregoing, it is clear that the Plaintiff has no right to seek any deficiency against the Defendants for any residue remaining after a sale of the Property. Accordingly, under Heer, there is, by definition, no reason to require additional security pending appeal, because the one and only res of this single-cause-of-action lawsuit remains what it has always been throughout the lawsuit, the Property subject to the Mechanic’s Lien. That res will continue to remain subject to the Mechanic’s Lien throughout the appeal. Based thereon, there is no need to require a supersedeas bond as the full collectable extent of the Judgment is, by definition, secured by the Lien. See, e.g., Zoccole Construction, Inc. v. Goodemote, 2005 WL 5621619 (Ps. Com.Pl. 2005)(rejecting appellant from Stay Order’s argument that Stay Order should not have been granted without posting of bond, including because the stayed judgment “is and has been collateralized and secured in first lien position since the moment appellant filed its mechanic’s lien claim.”).
Accordingly, the Heer factors (as listed in Heer, 121 Nev. at 836, 122 P.3d at 1252, and quoted above) should be applied so as to maintain that same status quo through the appeal, without the need for a bond: (1) the collection process in this case will not be complex, but simple, as the Property will simply be sold as has been ordered, in the case of Plaintiff prevailing on appeal; (2) the amount of time required to obtain a judgment after it is affirmed on appeal is essentially no time, as the judgment which is now already in place will then remain in place upon remand; (3) this Court should have a great deal of confidence that the Property will remain in place and available to satisfy the foreclosure sale order, as it is bare commercial real property and therefore cannot be lost or depleted; (4) moreover, this fact is so plain that the cost of a bond would be a waste of money; (5) nor is there any reason to believe it would be feasible for the Defendants to secure and post such a large bond.
For the reasons set forth above, this Court should grant a stay of execution, such that Plaintiff may not go forward with any mechanic’s lien foreclosure sale, or take any steps to initiate such a foreclosure sale, while any appeal is pending (conditioned on the currently intended appeal being, in fact, timely filed).
Furthermore, no bond should be required as part of any such stay or stays to be maintained during any such time periods hereafter, given that the Plaintiff already has security, as the Mechanic’s Lien will remain in effect unless and until revoked by this Court or the Nevada Supreme Court. To the extent that any further security or supersedeas bond is argued as being necessary due to any theory of personal liability on the part of the Defendants, beyond the value of the Property, that contention must be rejected as based on a misreading of the statute on which it is based, as demonstrated by well established and long-standing contrary Nevada Supreme Court precedent.
G. MARK ALBRIGHT, ESQ., #001394
D. CHRIS ALBRIGHT, ESQ., #004904
ALBRIGHT, STODDARD, WARNICK & ALBRIGHT
801 South Rancho Drive, Suite D-4
Las Vegas, Nevada 89106
Tel: (702) 384-7111 / Fax: (702) 384-0605
C. NICHOLAS PEREOS, ESQ. #000013
1610 Meadow Wood Lane, Suite 202
Reno, Nevada 89502
Tel: (775) 329-0678
Attorneys for Defendants
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