298 P.3d 441
Nev.2013Background
- Judgment creditors obtained Florida judgments against Jeffrey Kirsch and related entities for failed mortgage-related deals.
- Kirsch formed Rock Bay and Maybourne; Rock Bay listed as doing business under a judgment debtor’s entity and was dissolved shortly after Nevada judgment entry.
- Judgment creditors subpoenaed McNair & Associates for records relating to the judgment debtors, Rock Bay, and Maybourne, and also sought Rock Bay’s bank records from U.S. Bank.
- District court denied motions to quash, finding a reasonable inference of a relationship between Rock Bay and the debtors and potential lack of good-faith asset transfers.
- Rock Bay and Maybourne sought writ relief; petition challenged post-judgment discovery of nonparties under NRCP 69(a).
- Court concludes NRCP 69(a) discovery of nonparties is permissible only in limited circumstances, such as showing reasonable suspicion of bad-faith transfers or alter ego relationships.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NRCP 69(a) allows nonparty asset discovery without special circumstances | Rock Bay argues limits apply; discovery should be restricted. | Judgment creditors contend broad post-judgment discovery is permissible. | Permissible only in limited circumstances. |
| Whether Rock Bay’s relationship with debtors supports discovery of Rock Bay’s assets | Evidence shows close ties and transfers; supports discovery. | No strong link to show bad faith or alter ego. | District court did not exceed authority; Rock Bay discovery upheld. |
| Whether Maybourne is the judgment debtors' alter ego justifying discovery of Maybourne’s assets | Maybourne participated in related activity; may be alter ego. | No evidence Maybourne held or transferred assets with debtors; no alter ego shown. | District court erred; quash appropriate as to Maybourne. |
| Whether the U.S. Bank subpoena for Rock Bay’s records was properly sustained | Records relevant to financial activity could reveal concealed assets. | Need for confidentiality and privacy heightened; records not showing alter ego. | Court upheld scope; not in excess of jurisdiction; confidentiality concerns weighed but not dispositive. |
| Remedy on writ relief as to Maybourne and Rock Bay | Writ should require quash as to Maybourne. | Writ should be denied in part; Rock Bay records may remain discoverable. | Grant writ as to Maybourne; deny as to Rock Bay. |
Key Cases Cited
- Caisson Corp. v. County West Building Corp., 62 F.R.D. 331 (E.D. Pa. 1974) (limit nonparty discovery to locate debtor's assets; avoid harassment)
- Burak v. Scott, 29 F. Supp. 775 (D.D.C. 1939) (judgment creditors cannot compel disclosure of nonparties' assets)
- Magnaleasing, Inc. v. Staten Island Mall, 76 F.R.D. 559 (S.D.N.Y. 1977) (post-judgment asset discovery limited when good-faith of transfers doubtful)
- Falicia v. Advanced Tenant Services, Inc., 235 F.R.D. 5 (D.D.C. 2006) (alter ego/related entities may justify nonparty discovery to find concealed assets)
- Executive Mgmt. v. Ticor Title Ins. Co., 118 Nev. 46 (Nev. 2002) (Nevada adopts federal FRCP guidance; apply nonmechanical interpretation)
- LFC Marketing Group, Inc. v. Loomis, 116 Nev. 896 (Nev. 2000) (alter ego standards for piercing corporate fiction)