McKnight Family, LLP v. Adept Management Services, Inc.
129 Nev. 610
Nev.2013Background
- McKnight Family, LLP owned two properties in a community managed by Torrey Pines Homeowners Association (TP HOA); TP HOA recorded liens under NRS 116.3116 for alleged unpaid assessments and sold the properties at trustee's sale after settlement talks failed.
- McKnight filed a complaint (later amended) asserting seven claims: injunctive relief, negligence, breach of contract, violations of NAC/NRS, NRS 116.3103, and slander of title/wrongful foreclosure/quiet title; Design 3.2 purchased one property and was added as a defendant.
- The district court initially entered, then later set aside, a default judgment against Design 3.2; the court denied McKnight’s motion to set aside the trustee’s sale, finding TP HOA gave proper certified-mail notice.
- The district court dismissed McKnight’s amended complaint under NRS 38.310 (mandatory ADR/mediation/arbitration for claims related to CC&Rs), concluding most claims were subject to ADR.
- On appeal, the Nevada Supreme Court affirmed dismissal of all claims except the quiet title claim, reversed denial of the motion to set aside the sale (as contingent on quiet title), vacated the order setting aside the default (insufficient findings on service), and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NRS 38.310 required dismissal/ADR before filing for: injunctive relief | McKnight: injunctive relief sought immediate harm and was exempt from ADR | TP HOA: injunction claim no longer implicated immediate irreparable harm after sale; ADR applies | Court: dismissal proper—no immediate threat after sale, claim subject to NRS 38.310 |
| Whether negligence, breach of contract, NAC/NRS claims were exempt from NRS 38.310 | McKnight: claims arise from HOA conduct and may be suited for court | TP HOA: claims require interpreting CC&Rs/statutes and seek money damages => ADR required | Court: these are civil actions under NRS 38.300(3) and must go to ADR; dismissal affirmed |
| Whether slander of title/wrongful foreclosure claims are exempt from NRS 38.310 | McKnight: slander/wrongful foreclosure affect title/use and may be exempt | TP HOA: slander exists separate from title; wrongful foreclosure requires CC&R interpretation => ADR required | Court: slander and wrongful foreclosure subject to NRS 38.310; dismissal affirmed |
| Whether quiet title claim is subject to NRS 38.310 | McKnight: quiet title determines superior title and is exempt from ADR | TP HOA: claim relates to HOA enforcement and CC&R issues so ADR applies | Court: quiet title is exempt (relates to right to possess/use property); dismissal reversed |
| Whether district court properly denied motion to set aside trustee’s sale | McKnight: sale should be set aside if quiet title succeeds or notice defective | TP HOA: provided certified-mail notices and affidavits showing compliance | Court: denial reversed because outcome depends on quiet title resolution; remand to reconsider |
| Whether court properly set aside default judgment against Design 3.2 for lack of service | Design 3.2: not properly served; entitled to relief | McKnight: process server affidavit shows proper service | Court: vacated order setting aside default and remanded—district court failed to make necessary factual findings on service |
Key Cases Cited
- Hamm v. Arrowcreek Homeowners' Ass'n, 124 Nev. 290, 183 P.3d 895 (Nev. 2008) (distinguishes liens from threats of foreclosure for NRS 38.310 immediacy/exemption analysis)
- Long v. Towne, 98 Nev. 11, 639 P.2d 528 (Nev. 1982) (wrongful foreclosure claims often require CC&R interpretation)
- Collins v. Union Fed. Say. & Loan, 99 Nev. 284, 662 P.2d 610 (Nev. 1983) (challenge to authority behind foreclosure involves covenant interpretation)
- Higgins v. Higgins, 103 Nev. 443, 744 P.2d 530 (Nev. 1987) (elements and nature of slander of title)
- Moseley v. Eighth Judicial District Court, 124 Nev. 654, 188 P.3d 1136 (Nev. 2008) (trial court must resolve factual issues like excusable neglect before appellate review)
- Minton v. Roliff, 86 Nev. 478, 471 P.2d 209 (Nev. 1970) (standard for reviewing trial court's decision on setting aside default)
- Round Hill Gen. Improvement Dist. v. Newman, 97 Nev. 601, 637 P.2d 534 (Nev. 1981) (appellate courts cannot resolve disputed factual questions)
- Las Vegas Network, Inc. v. B. Shawcross & Assocs., 80 Nev. 405, 395 P.2d 520 (Nev. 1964) (amended complaint supersedes prior pleadings)
- Bergmann v. Boyce, 109 Nev. 670, 856 P.2d 560 (Nev. 1993) (abuse-of-discretion standard and guiding legal principles)