ORDER AFFIRMING IN PART,
REVERSING IN PART AND REMANDING
These are consolidated appeals from a default judgment in a
contract action and a post-judgment order denying a motion to set aside
that judgment. Third Judicial District Court, Lyon County; Department
One.
This matter arises from an action respondents filed against
various parties, including appellants.' In conjunction with the second
withdrawal of their counsel, the district court warned appellants of the
possibility that it would strike their answer and counterclaims and enter
default against them if they did not comply with certain requirements
imposed by the court, and the court later directed them to show cause why
their answer should not be struck. When appellants failed to respond to
these orders, the district court struck the answer and counterclaims and
entered their default. Appellants later moved to set aside the default, but
that motion was denied. The district court then held a prove-up hearing,
determined that appellants did not have standing to participate in that
hearing, and entered a default judgment in respondents' favor.
Appellants' motions to recuse the district court judge and set aside that
judgment were later denied. Appellants now challenge these
determinations on appeal.
Appellants initially challenge the district court's refusal to set
aside the default, arguing that they did not act in bad faith, that any delay
was excusable, and that there were no discovery violations. NRCP 55
authorizes the entry of judgment by default as a sanction when a party
"The appeal filed by Rotate Black, LLC and Rotate Black, Inc., was
dismissed without prejudice, following their bankruptcy filing.
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fails to defend a lawsuit against them. See Landreth v. Malik, 127 Nev.
251 P.3d 163, 171-72 (2011). This court reviews a district court's
refusal to set aside a default under NRCP 55 for an abuse of discretion.
Id. at , 251 P.3d at 171. Here, appellants repeatedly failed to appear at
hearings, to timely respond to pleadings or motions, or to heed the district
court's directives. We therefore affirm the refusal to set aside this default
as a proper exercise of the district court's discretion. Id.
Appellants next challenge the district court's entry of the
default judgment, arguing that the court improperly refused to allow them
to participate in the prove-up hearing. As noted in Foster v. Dingwall, 126
Nev. 227 P.3d 1042, 1049 (2010), generally, when a default
judgment is sought "for an uncertain or incalculable sum, the plaintiff
must prove up damages, supported by substantial evidence." When a
prove-up hearing is required, the district court has wide discretion to
determine how the hearing will be conducted and the extent to which the
defaulted party may participate. Id. at , 227 P.3d at 1050. But even in
the context of a discovery-sanction-based default, where the nondefaulted
party need only set forth a prima facie case to obtain a default judgment,
the district court must permit the defaulting party to identify fundamental
defects in the nonoffending party's case and to present evidence if
fundamental defects are identified. Id. at , 227 P.3d at 1049-50.
Here, far from providing even this opportunity to identify
defects in respondents' case, the district court simply determined that
appellants did not have standing to participate in that hearing, at which
time their attorneys left the courtroom and the district court conducted
the hearing with only respondents' counsel present. While respondents
argue that appellants' attorneys voluntarily left and that the absence of a
hearing transcript must be construed against them, the minutes from the
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prove-up hearing plainly reflect the district court's conclusion that
appellants lacked standing to participate in this hearing. 2 And because
we conclude that the decision to completely bar appellants from
participating in the prove-up hearing was an abuse of discretion, id., we
reverse the default judgment and remand this matter for further
proceedings. Accordingly, we
ORDER the judgment of the district court AFFIRMED IN
PART AND REVERSED IN PART AND REMAND this matter to the
district court for proceedings consistent with this order. 3
n
tAr risAi J.
Hardesty
Douglas
.7,1 Las
Cherry
J.
cc: Third Judicial District Court Dept. 1
David Wasick, Settlement Judge
Steven Donald Talbot
Belanger & Plimpton
Moore Law Group, PC
Law Offices of Michael B. Springer
Third District Court Clerk
2 The district court's default judgment itself is silent on this point.
3In light of our decision here, we need not address appellants'
challenge to the denial of their NRCP 60(b) motion to set aside the default
judgment. Further, we have considered appellants' other arguments on
appeal, including those regarding the denial of their motion for the district
court judge's recusal, and conclude that they are without merit.
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