ROBERT G. REYNOLDS, AN INDIVIDUAL; AND DIAMANTI FINE JEWELERS, LLC, A NEVADA LIMITED LIABILITY COMPANY, Appellants, vs. RAFFI TUFENKJIAN, AN INDIVIDUAL; AND LUXURY HOLDINGS LV, LLC, A NEVADA LIMITED LIABILITY COMPANY, Respondents.
No. 78187
IN THE SUPREME COURT OF THE STATE OF NEVADA
APR 09 2020
136 Nev., Advance Opinion 19
Mark R. Denton, Judge
Eighth Judicial District Court, Clark County
Motion to substitute in as real parties in interest and dismiss appeal from a district court order granting summary judgment in a tort and breach of contract action. Eighth Judicial District Court, Clark County; Mark R. Denton, Judge.
Motion granted in part; appeal dismissed in part.
Marx Law Firm PLLC and Bradley M. Marx, Las Vegas, for Appellants.
Marquis Aurbach Coffing and Terry A. Moore and Christian T. Balducci, Las Vegas, for Respondents.
BEFORE HARDESTY, STIGLICH and SILVER, JJ.
By the Court, SILVER, J.:
A pending motion in this case provides us the opportunity to address the extent to which a judgment debtor‘s rights of action are subject to execution to satisfy a judgment. Respondents have filed a motion to substitute themselves in place of appellants and to voluntarily dismiss this appeal because they purchased appellants’ rights and interests in the underlying district court action at a judgment execution sale. We agree with respondents in part. Although Nevada‘s judgment execution statutes permit a judgment creditor (respondents) to execute on a debtor‘s (appellants) personal property, including the right to recover a debt, money, or thing in action, those statutes limit the title the sheriff can convey at an execution sale to only that title which the debtor could convey himself. Nevada law, in turn, restricts the right to convey certain claims by making them unassignable. Accordingly, we hold that a judgment debtor‘s claims that are unassignable similarly cannot be purchased at an execution sale. As such, respondents did not purchase the rights to appellants’ unassignable claims. Thus, we grant in part respondents’ motion and dismiss this appeal as to appellants’ assignable claims—negligent misrepresentation and breach of contract.
FACTS AND PROCEDURAL HISTORY
Appellants Robert G. Reynolds and Diamanti Fine Jewelers, LLC, brought the underlying action against respondents Raffi Tufenkjian and Luxury Holdings LV, LLC. Appellants alleged breach of contract, fraud, and tort claims related to their purchase of a jewelry store from respondents, arguing that they relied on respondents’ false representations of the store‘s value to their detriment. The district court entered summary judgment for respondents, finding no genuine issues of material fact regarding respondents’ alleged misrepresentations or appellants’ justifiable reliance upon any of respondents’ statements. The district court also awarded respondents $57,941.92 in attorney fees and costs pursuant to a provision in the parties’ contract.
Appellants appealed the judgment but did not obtain a stay of execution on the
At the sheriff‘s sale, respondents purchased, for $100, “all the rights, title and interest of” appellants in the district court action. Respondents now move to substitute themselves in place of appellants pursuant to
This court ordered the parties to submit supplemental briefing on the issue of whether each of appellants’ claims were properly assigned to respondents as a result of the execution sale. See Reynolds v. Tufenkjian, Docket No. 78187 (Order for Supplemental Briefing, Nov. 1, 2019). Respondents argue that all of the claims were properly assigned based on statutory law, while appellants argue that, because the claims were personal to Reynolds, they were not assignable, and that this court should void the execution sale on public policy grounds.
Only assignable things in action are subject to execution under Nevada law
Nevada‘s general policy is that a statute specifying property that is liable to execution “must be liberally construed for the benefit of creditors.” Sportsco Enters. v. Morris, 112 Nev. 625, 630, 917 P.2d 934, 937 (1996) (citing 33 C.J.S. Executions § 18 (1942)). Referencing that general policy and the definition of a “thing in action” as “a right to bring an action to recover a debt, money, or thing,” Gallegos v. Malco Enters. of Nev., Inc., 127 Nev. 579, 582, 255 P.3d 1287, 1289 (2011) (quoting Chose in Action, Black‘s Law Dictionary (9th ed. 2009)), this court has concluded that “rights of action held by a judgment debtor are personal property subject to execution in satisfaction of a judgment,” id. at 582, 255 P.3d at 1289. But in Butwinick v. Hepner, this court determined that “a ‘thing in action’ subject to execution . . . does not include a party‘s defenses to an action,” 128 Nev. 718, 723, 291 P.3d 119, 121-22 (2012), because a party‘s defensive rights do not constitute a “right to bring an action to recover a debt, money, or thing,” id. at 722, 291 P.3d at 122 (quoting Chose in Action, Black‘s Law Dictionary (9th ed. 2009)).
In this case, respondents contend that, by purchasing appellants’ “things in action” at the sheriff‘s sale, they are entitled to substitute themselves for appellants in this appeal as the now-owners of the claims being appealed. This would only be true, however, if “things in action” encompasses all of appellants’ underlying claims. In this vein, appellants argue that claims that are personal in nature are not included in “things in action” and, therefore, respondents do not own appellants’ personal claims and this court should deny the motion to substitute. They further argue that allowing the purchase of their claims improperly impedes on their appellate rights and therefore violates public policy.
Some jurisdictions that permit execution upon a debtor‘s “things in action” narrowly interpret the term to only include claims that, under that jurisdiction‘s law, the debtor could otherwise assign to another party. See, e.g., Holt v. Stollenwerck, 56 So. 912, 913 (Ala. 1911) (holding that “things in action” only includes assignable rights of action); Wittenauer v. Kaelin, 15 S.W.2d 461, 462-63 (Ky. Ct. App. 1929) (concluding that the term “chose in action” does not include any right of action that may not be assigned). Other jurisdictions apply a broader interpretation of “things in action” to include any claim for damages, without concern for the claim‘s assignability otherwise. See, e.g., O‘Grady v. Potts, 396 P.2d 285, 289 (Kan. 1964) (characterizing a tort claim as a chose in action and therefore personal property); Chi., Burlington & Quincy R.R. Co. v. Dunn, 52 Ill. 260, 264 (1869) (“A right to sue for an injury, is a right of action—it is a thing in action, and is property . . . .“). For the reasons set forth below, we agree with the former approach and hold that “things in action” only includes those claims that the judgment debtor has the power to assign.
Nevada is one of several jurisdictions that prohibits the assignability of certain causes of action, regardless of how the assignment is accomplished.1 See, e.g., Chaffee v. Smith, 98 Nev. 222, 223-24, 645 P.2d 966, 966 (1982) (generally prohibiting the assignment of unasserted legal malpractice claims on public policy grounds); Gruber v. Baker, 20 Nev. 453, 469, 23 P. 858, 862 (1890) (voiding the assignment of a right to bring a claim in action for fraud as being contrary to public policy because a fraud claim is personal to the one defrauded); accord Miller v. Jackson Hosp. & Clinic, 776 So. 2d 122, 125 (Ala. 2000) (acknowledging the general rule that “purely personal” tort claims are not assignable); Webb v. Gittlen, 174 P.3d 275, 278 (Ariz. 2008) (holding that most claims are generally assignable “except those involving personal injury“). For example, in Prosky v. Clark, this court held that fraud claims are not assignable because they “are personal to the one defrauded.” 32 Nev. 441, 445, 109 P. 793, 794 (1910). And in
Maxwell v. Allstate Insurance Co., we held that subrogation clauses allowing the assignment of claims in insurance contracts violated public policy due to the potential that only the insurer would receive payments from a personal injury action. 102 Nev. 502, 506-07, 728 P.2d 812, 815 (1986) (holding that such a result would deprive the injured party of “his actual damages [and] the benefit of the premiums he has paid“). Such public policy concerns do not arise, however, when an injured party assigns away the right to proceeds from a personal injury action, rather than the claim itself. See Achrem v. Expressway Plaza Ltd., 112 Nev. 737, 739-41, 917 P.2d 447, 448-49 (1996) (observing that there is a distinction “between assigning the rights to a tort action and assigning the proceeds from such an action“). This is because the assignment of the proceeds from a tort action still permits the injured party to retain control of his lawsuit “without any interference” from a third-party assignee. Id. Other claims, such as contract claims, are generally assignable unless they are personal in nature. See, e.g., Ruiz v. City of N. Las Vegas, 127 Nev. 254, 261-62, 255 P.3d 216, 221 (2011) (recognizing that contracts are freely assignable, subject to certain limitations); 6 Am. Jur. 2d Assignments § 46 (2018) (explaining that claims based on “contracts of a purely personal nature” are an exception to the rule that “choses in action are generally assignable“).
Nevada‘s statutory scheme governing the enforcement of judgments requires the sheriff‘s office to carry out a writ of execution by “collecting [and] selling the [debtor‘s] things in action and selling the other property.”
Tort claims for personal injury are generally not assignable
As stated above, Nevada generally prohibits the assignment of tort claims on public policy grounds, as many tort claims are personal in nature and meant to recompense the injured party. See, e.g., Maxwell, 102 Nev. at 506, 728 P.2d at 815 (rejecting the subrogation of tort claims via an insurance contract on public policy grounds); Prosky, 32 Nev. at 445, 109 P. at 794 (recognizing that fraud claims are not assignable due to their personal nature). But see Achrem, 112 Nev. at 740-41, 917 P.2d at 449 (allowing the assignment of proceeds from a tort action). Two of appellants’ claims fall into this category. The first, fraud/intentional misrepresentation, has already been held to be personal in nature and unassignable. See Prosky, 32 Nev. at 445, 109 P. at 794. The second, elder exploitation, presents a question of first impression as to whether it is assignable.
The elder exploitation statute‘s plain language clearly provides that only the older person can bring the claim. See Beazer Homes Nev., Inc. v. Eighth Judicial Dist. Court, 120 Nev. 575, 579-80, 97 P.3d 1132, 1135 (2004) (explaining that this court “will not go beyond the language of [a] statute” where “the plain meaning of [the] statute is clear on its face“). Indeed,
Here, permitting respondents to purchase appellants’ fraud and elder exploitation claims implicates the same policy concerns addressed in Maxwell and Achrem: it strips appellants of their right to pursue their personal injury claims by essentially “plac[ing] the right to appeal on an auction block.” RMA Ventures Cal. v. SunAmerica Life Ins. Co., 576 F.3d 1070, 1077 (10th Cir. 2009) (Lucero, J., concurring).3 See also Villanueva v. First Am. Title Ins. Co., 740 S.E.2d 108, 110 (Ga. 2013) (noting that Georgia has codified the common-law principle that personal injury claims cannot be assigned); N. Chi. St. Ry. Co. v. Ackley, 49 N.E. 222, 225 (Ill. 1897) (voiding the sale or assignment of personal injury claims on public policy grounds so that personal injury claims would not become a “commodity of sale“); MP Med. Inc. v. Wegman, 213 P.3d 931, 936 (Wash. Ct. App. 2009) (disapproving of the purchase of appealed claims at an execution sale because “allowing one party to destroy the opposing party‘s appeal by becoming its owner through enforcement of the very judgment under review is fundamentally
fraud and elder exploitation are personal to Reynolds, those claims are not assignable and thus were not subject to execution. Respondents therefore did not acquire those claims at the sheriff‘s sale, and as a result, we deny respondents’ motion to substitute in as appellants and dismiss these claims.
Tort claims for injury to property are generally assignable
This court also has not yet considered whether a claim for negligent misrepresentation is assignable. “A determination of whether a cause of action is assignable should be based upon an analysis of the nature of the claim to be assigned and on an examination of the public policy considerations that would be implicated if assignment were permitted.” 6A C.J.S. Assignments § 42 (2016) (recognizing that, aside from claims to recover personal damages or claims involving personal or confidential relationships, claims are generally, but not always, assignable); see also Christison v. Jones, 405 N.E.2d 8, 10 (Ill. App. Ct. 1980) (examining “the nature of the cause of action . . . and . . . public policy considerations” as part of its analysis to determine whether certain claims are assignable), superseded by statute on different grounds as stated in Hoth v. Stogsdill, 569 N.E.2d 34, 38 (Ill. App. Ct. 1991); Webb, 174 P.3d at 278 (providing that, “absent legislative direction, public policy considerations should” be weighed when considering whether a claim is assignable).
In Bill Stremmel Motors, Inc. v. First National Bank of Nevada, 94 Nev. 131, 134, 575 P.2d 938, 940 (1978), this court adopted section 552 of the Second Restatement of Torts and limited claims for negligent misrepresentation to only those claims resulting in pecuniary loss. See Restatement (Second) of Torts § 552 (Am. Law Inst. 1977); see also Goodrich & Pennington Mortg. Fund, Inc. v. J.R. Woolard, Inc., 120 Nev. 777, 782, 101 P.3d 792, 795-96 (2004) (limiting damages for negligent misrepresentation to the “out-of-pocket damages” suffered). In so doing, Nevada rejected the “somewhat broader liability” that other jurisdictions recognize that allows negligent misrepresentation claims to proceed when the alleged damage is the risk of physical harm rather than pecuniary loss. See id.; Restatement (Second) of Torts § 311 cmt. a (Am. Law Inst. 1965) (recognizing the contrast between jurisdictions that allow negligent misrepresentation claims for risk of physical harm and those that only allow such claims for pecuniary loss). Under this more limited approach, Nevada law only recognizes negligent misrepresentation claims in the context of business transactions. Barmettler v. Reno Air, Inc., 114 Nev. 441, 449, 956 P.2d 1382, 1387 (1998) (stating that negligent misrepresentation “only applies to business transactions“). Given that negligent misrepresentation claims in Nevada only arise out of pecuniary loss, it is clear that the nature of such a claim is not to recover for a personal injury, but instead is more akin to a claim seeking recovery for a loss of property. Cf. Stalk v. Mushkin, 125 Nev. 21, 26-27, 199 P.3d 838, 841-42 (2009) (acknowledging a difference between torts that cause injury to property and torts that cause injury to a person). Claims alleging damages to property, rather than personal damages, are generally assignable. See, e.g., TMJ Haw., Inc. v. Nippon Tr. Bank, 153 P.3d 444, 452 (Haw. 2007) (recognizing that property tort claims, “i.e., those that arise out of an injury to the claimant‘s property or estate,” are generally assignable); Gremminger v. Mo. Labor & Indus. Relations Comm‘n, 129 S.W.3d 399, 403 (Mo. Ct. App. 2004) (stating that Missouri allows the assignment of tort claims, including misrepresentation claims, when an estate “has been injured, diminished or damaged” (quoting State ex rel. Park Nat‘l Bank v. Globe Indem. Co., 61 S.W.2d 733, 736 (Mo. 1933))); 6A C.J.S. Assignments § 50 (2016) (explaining that rights of action in tort involving damage to property are generally assignable).
Additionally, because a claim for negligent misrepresentation in Nevada can only be based on pecuniary loss, assigning such claims does not implicate the same public policy concerns this court observed in Prosky, 32 Nev. at 445, 109 P. at 794, and Maxwell, 102 Nev. at 506-07, 728 P.2d at 815,
Based on the foregoing, we hold that while claims for personal injury torts are not assignable, when a tort claim alleges purely pecuniary loss, as is the case with appellants’ negligent misrepresentation claim, the claim may be assigned. And, because the claim may be assigned, it is subject to execution in satisfaction of a judgment. Compare Gallegos, 127 Nev. at 582, 255 P.3d at 1289 (allowing assignment and execution of contract-based rights of action), with Chaffee, 98 Nev. at 223-24, 645 P.2d at 966 (disallowing execution on a claim for legal malpractice because it was not assignable). Other jurisdictions have come to similar conclusions and allowed the assignment of tort claims affecting property while prohibiting the assignment of personal injury tort claims. See, e.g., St. Luke‘s Magic Valley Reg‘l Med. Ctr. v. Luciani, 293 P.3d 661, 665 (Idaho 2013) (explaining that personal injury torts are generally not assignable, but distinguishing tort claims that result in property damage); Scottsdale Ins. Co. v. Addison Ins. Co., 448 S.W.3d 818, 829 (Mo. 2014) (explaining that causes of action for torts that cause injury to property are assignable, but personal injury torts are not). Because appellants’ claim for negligent misrepresentation is a property tort, we conclude that this claim was properly assigned to respondents at the sheriff‘s execution sale. Respondents’ motion to substitute in place of appellants and to dismiss this appeal as to the negligent misrepresentation claim is therefore granted.
Contract-based claims are generally assignable
Appellants’ final claim is for breach of contract. Under Nevada law, contract-based claims in action are generally assignable and thus “subject to execution in satisfaction of a judgment,” unless personal in nature. Gallegos, 127 Nev. at 582, 255 P.3d at 1289; see also 6 Am. Jur. 2d Assignments § 15 (2018) (explaining the general rule that “unless an assignment would add to or materially alter the obligor‘s duty of risk,” the contract itself restricts assignability, or the assignment would violate a statute, “most rights under contracts are freely assignable“). But see HD Supply Facilities Maint., Ltd. v. Bymoen, 125 Nev. 200, 204-05, 210 P.3d 183, 185-86 (2009) (providing an exception to the general rule that breach of contract claims are generally assignable for personal service contracts); Traffic Control Servs., Inc. v. United Rentals Nw., Inc., 120 Nev. 168, 176, 87 P.3d 1054, 1060 (2004) (observing that noncompete agreements are “personal in nature and therefore are not assignable absent the employee‘s express consent“). Appellants present no argument to depart from this general rule, and we find no reason to do so as the contract at issue is not a personal service contract. Therefore, respondents’ motion to substitute themselves for appellants and to dismiss this appeal as to appellants’ breach-of-contract claim is granted.
CONCLUSION
Because appellants’ claims for fraud and elder exploitation are personal in nature, they are not assignable and thus were not subject to execution at the sheriff‘s sale. Therefore, respondents did not acquire these claims at the execution sale, and we deny their motion to substitute themselves for appellants and to dismiss this appeal as to the fraud and elder exploitation claims. Having further concluded that appellants’ claims for negligent misrepresentation and breach of contract are assignable and subject to execution, we grant respondents’ motion to substitute themselves for appellants as to those claims and to voluntarily dismiss this appeal as to those claims. Accordingly, we reinstate
Silver, J.
We concur:
Hardesty, J.
Stiglich, J.