[00:00:01] Speaker 04: Good morning, Your Honor. [00:00:02] Speaker 04: Good morning. [00:00:03] Speaker 04: My name is Andrew Peterson, and I represent the appellants, CNC Verde, LLC, and Chris Conforti. [00:00:12] Speaker 02: All right. [00:00:13] Speaker 04: Please proceed, counsel. [00:00:14] Speaker 04: May it please the court. [00:00:16] Speaker 04: This past weekend, I was reading one of Professor K. Sunstein's recent books. [00:00:22] Speaker 04: And something he said in there resonated with this case. [00:00:28] Speaker 04: He writes that fundamentally, [00:00:31] Speaker 04: Our legal system is there to prevent or take away unfair surprise. [00:00:39] Speaker 04: I don't always agree with Professor Sunstein, but unfair surprise is what we have faced here on multiple occasions. [00:00:48] Speaker 03: We're here asking for equitable relief. [00:00:51] Speaker 03: Can I just start with some sort of housekeeping issues? [00:00:54] Speaker 03: You didn't file an amended or second notice of appeal from the order [00:01:00] Speaker 03: denying reconsideration. [00:01:02] Speaker 03: Is that order before us? [00:01:04] Speaker 04: It is. [00:01:04] Speaker 04: It is. [00:01:05] Speaker 04: And we address that in our briefs. [00:01:08] Speaker 04: There is under the federal rule, if you move under certain rules, you have to file an amended notice of appeal. [00:01:14] Speaker 04: But the motion for reconsideration, as noted by the trial court and noted in our brief, [00:01:19] Speaker 04: We just filed under the local rule. [00:01:21] Speaker 03: Well, the district court itself, didn't it construe that as a motion under Rule 60, and it's in the nature of a motion under Rule 60, or under 50? [00:01:30] Speaker 03: Reconsiderations are like 59 motions. [00:01:33] Speaker 04: It's like that, but there is precedent that says it's not the same. [00:01:37] Speaker 04: It's not the same. [00:01:38] Speaker 02: What Ninth Circuit case is then? [00:01:40] Speaker 02: I'm sorry? [00:01:40] Speaker 04: What Ninth Circuit case says is not the same? [00:01:43] Speaker 04: We've cited the case in our brief. [00:01:45] Speaker 04: I don't, I believe it was a district court case that talks about that may have been out of Nevada, your honor. [00:01:50] Speaker 04: Yeah, but of course that's not binding on us. [00:01:53] Speaker 04: No, it's not. [00:01:54] Speaker 04: But we moved under the local rule. [00:01:57] Speaker 04: The court acknowledged it under the local rule. [00:02:00] Speaker 04: And if you want to take it and say, now, well, let's put it under some other rule and you should have filed a amendment and notice on the motion for reconsideration. [00:02:09] Speaker 04: I don't think that's fair. [00:02:10] Speaker 03: I think that's something to be unfair. [00:02:11] Speaker 03: The converse problem, these lines have to be really clear because the converse problem is a lot of people rely on those motions to delay doing the appeal from their original order and that's why we have bright line rules that we broadly construe all of these as being in the nature of reconsideration so they told the time [00:02:32] Speaker 03: But here you already filed a notice of appeal, and so if you wanted to bring up that order, you needed to file another one. [00:02:40] Speaker 04: No, that's the case we cited to the court. [00:02:42] Speaker 04: On a motion for reconsideration, just filed under the local rule, we do not have to file an amended notice of appeal. [00:02:49] Speaker 03: That's our position. [00:02:50] Speaker 03: One converse question I have is, once you filed the notice of appeal, did the district court have jurisdiction to rule on the motion for reconsideration? [00:03:00] Speaker 03: That's a good question as well, Your Honor. [00:03:02] Speaker 04: Usually the notice of appeal divests the court of jurisdiction. [00:03:09] Speaker 04: We brought the motion for reconsideration because the court had just issued another order in this case. [00:03:14] Speaker 04: That surprised us when he doesn't even address the relief requested under Rule 60D3. [00:03:23] Speaker 04: Just doesn't address it. [00:03:25] Speaker 04: And so we're saying, wait, we still haven't had the opportunity to be heard on this. [00:03:30] Speaker 01: What orders or parts of orders do you believe you have preserved? [00:03:36] Speaker 01: So that we can go back and look at the record. [00:03:38] Speaker 01: What orders or parts of orders do you believe have been preserved for appeal? [00:03:44] Speaker 04: I believe all the orders have been preserved for appeal. [00:03:48] Speaker 04: appeal and on all issues because all these issues were raised from the get-go. [00:03:53] Speaker 04: You've got to understand, in December of 2021, we're surprised when a constable shows up and says he has a judgment that he wants to collect from 2019. [00:04:04] Speaker 04: That was our first notice. [00:04:07] Speaker 04: When we get that notice, I'm contacted for the first time [00:04:11] Speaker 04: alarms have gone off. [00:04:14] Speaker 04: What happened? [00:04:15] Speaker 04: What happened? [00:04:16] Speaker 04: And so we started looking. [00:04:17] Speaker 04: Was there service? [00:04:20] Speaker 04: We didn't even have a copy of the complaint at that point in time. [00:04:23] Speaker 04: Go back through the history of what the complaint said. [00:04:27] Speaker 04: We look at the lawsuit and we're unfairly surprised there too because in the lawsuit upon which the default is based, Mr. Castro claims that he was [00:04:38] Speaker 04: paid $18.18 an hour and that he wasn't paid overtime. [00:04:43] Speaker 04: Mr. Castro was never paid those amounts. [00:04:47] Speaker 04: His hourly rate was significantly less than that and we were able to locate records going back three years to try to find the ADP records that are independent records as to when he worked, when he clocked in, when he clocked out. [00:05:01] Speaker 04: We provide those records and what do we find out? [00:05:04] Speaker 04: He was actually overpaid by about 65 hours. [00:05:08] Speaker 01: So what do you maintain is the standard of review, and if it's abuse of discretion, what's the abuse of discretion? [00:05:14] Speaker 04: I think there are so many issues here, and you have to look at the standard on each issue. [00:05:20] Speaker 04: Abuse of discretion, I think, comes into play when not considering our fraud on the court argument. [00:05:30] Speaker 04: And it's kind of a legal issue, too. [00:05:34] Speaker 04: as to that type of equitable relief, what does it mean to have fraud on the court? [00:05:40] Speaker 04: I think it's a legal issue as to what they did after we get the default judgment set aside and then what they do is dismiss one of the parties and then ask for the court to reinstate the judgment. [00:05:56] Speaker 04: I think that's a legal error and an abuse of discretion. [00:06:01] Speaker 04: So that's another unfair surprise. [00:06:04] Speaker 04: So we get the default judgment set aside, great. [00:06:07] Speaker 04: We're going to have a case on the merits. [00:06:09] Speaker 04: We're going to decide this case not based on what we believe is a false affidavit filed on a default hearing, but we're going to get to present our case. [00:06:18] Speaker 04: And that's the equitable relief we're seeking here. [00:06:21] Speaker 04: We're not asking you to strike their complaint. [00:06:23] Speaker 04: We're asking you to let us have our day in court where we can present our evidence as to whether he was [00:06:31] Speaker 04: how much he was paid, and whether he was underpaid. [00:06:35] Speaker 04: That is glossed over in all of this, including a response brief that doesn't even address it. [00:06:44] Speaker 02: We were surprised. [00:06:46] Speaker 02: In order to do that, we'd have to set aside the default judgment and the default, correct? [00:06:51] Speaker 02: Correct. [00:06:53] Speaker 02: And that's what the Rule 60D says, right? [00:06:56] Speaker 02: Well, but you said you didn't file under Rule 60B. [00:06:59] Speaker 02: I'm sorry? [00:07:00] Speaker 02: I thought you said you didn't file under Rule 60B. [00:07:03] Speaker 02: D. E. D as in? [00:07:06] Speaker 02: Yeah, but did you file under Rule 60E? [00:07:08] Speaker 02: I thought you said you filed under the local rule. [00:07:10] Speaker 04: 60D is we raised that argument from the beginning. [00:07:15] Speaker 04: We raised under 55, Rule 55, we raised it asking for equitable relief. [00:07:21] Speaker 04: Under Rule 60, we raised it. [00:07:25] Speaker 04: And D as in dog. [00:07:26] Speaker 04: We raised those issues from the beginning. [00:07:29] Speaker 02: And that's why we were surprised when the court did not... So I'm a little bit confused by your position then. [00:07:34] Speaker 02: When Judge Collins asked you whether or not you had filed a separate notice of appeal for the motion for reconsideration, you said you didn't have to because you filed it under the local rule. [00:07:44] Speaker 02: So... Right, but that 60... I'm sorry. [00:07:48] Speaker 04: Go ahead. [00:07:49] Speaker 04: That 60-D relief was requested early on. [00:07:52] Speaker 04: It wasn't just asked for the first time on a motion for reconsideration. [00:07:55] Speaker 02: But was a motion under that rule filed? [00:07:59] Speaker 04: No, the rule that is the procedural rule that brings us in back into court on the motion for consideration is our local rule here on motions for reconsideration. [00:08:09] Speaker 04: And that's what we cited. [00:08:10] Speaker 04: And that's what the court referred to. [00:08:17] Speaker 04: We're also surprised in this case that the so-called culpability under rule 55, that somehow overwhelms everything else. [00:08:28] Speaker 04: any consideration of meritorious defense, any consideration of whether there's prejudice. [00:08:36] Speaker 04: And the court found that our clients were sophisticated. [00:08:40] Speaker 04: I represent a mechanic shop. [00:08:42] Speaker 04: He's anything but sophisticated. [00:08:45] Speaker 04: And there's really nothing in the record that shows he was sophisticated. [00:08:48] Speaker 04: He says he never got a copy of the lawsuit at all. [00:08:51] Speaker 04: They say they dropped it off at his house, at the end of a driveway, [00:08:57] Speaker 04: at a gate, a closed gate, and left it there. [00:09:00] Speaker 04: Drop served it on Chris Conforti's wife. [00:09:07] Speaker 04: Chris never got it. [00:09:10] Speaker 04: And that's why it came to such a surprise in 2021 then that the sheriff shows up wanting to take equipment from this mechanic shop to execute on a judgment that we knew nothing about that had been entered [00:09:26] Speaker 04: two and a half years earlier. [00:09:29] Speaker 04: And think about that. [00:09:30] Speaker 04: Why would somebody wait that long? [00:09:32] Speaker 04: Unless you're waiting for time to pass so we don't get all those defenses that were otherwise available to us under Rule 55, push it beyond that and then seek to collect. [00:09:46] Speaker 04: We were surprised that the judge on the reconsideration request said that [00:09:54] Speaker 04: Well, the 60D3 was implied, was implicitly ruled upon in the prior rulings. [00:10:02] Speaker 04: How do you implied or implicitly rule on a 60D motion? [00:10:08] Speaker 04: That was a surprise. [00:10:10] Speaker 04: We were surprised to see that there are actually duplicate of cost in the judgment and the separate judgment for attorneys fees and costs. [00:10:18] Speaker 04: They claim the same cost twice and they were awarded those costs twice. [00:10:24] Speaker 02: All right, counsel, you've exceeded your time. [00:10:26] Speaker 02: I've got 20 seconds. [00:10:27] Speaker 02: No, you don't. [00:10:27] Speaker 02: When it's in the red, you've exceeded your time. [00:10:30] Speaker 02: Oh, OK. [00:10:30] Speaker 02: Thank you, counsel. [00:10:30] Speaker 02: All right. [00:10:31] Speaker 02: Thank you. [00:10:31] Speaker 02: We'll give you a minute for rebuttal. [00:10:32] Speaker 02: All right. [00:10:32] Speaker 02: Thank you. [00:10:40] Speaker 00: Good morning, and may it please the court. [00:10:43] Speaker 00: My name is James Weiler. [00:10:44] Speaker 00: I represent the plaintiff, Patrick Castro, in this matter. [00:10:48] Speaker 01: Would you mind starting by addressing the argument your opposing counsel just made about duplicate costs and are there $5,108 in excess costs that need to be revisited? [00:11:03] Speaker 00: No. [00:11:04] Speaker 00: The error that came up, there was a duplication of $686. [00:11:08] Speaker 00: So in the initial motion for default judgment, there was an inclusion of both the estimate of his [00:11:17] Speaker 00: hours worked and failure to pay overtime, as well as a court cost that was included in that, which was awarded in the initial default judgment and admitted error when we went to file our attorney's fee application shortly thereafter. [00:11:34] Speaker 00: We included the attorney's fees and those approximately $600 in court costs, and that was the duplicative error that we [00:11:44] Speaker 00: We acknowledge and would certainly, if the court would like to issue a revision to that order to remove that, we would have no objection. [00:11:54] Speaker 02: What's your response to opposing counsel's response to the question of the motion for reconsideration and whether or not that's properly before us? [00:12:04] Speaker 00: Yeah, our position is that it's not. [00:12:07] Speaker 00: That he filed this notice of appeal before that order was issued. [00:12:12] Speaker 00: and didn't amend or change the notice of appeal and based upon federal rules of appellate procedure, we believe that he needed to amend that notice in order to properly bring that before the court. [00:12:26] Speaker 03: Did the district court have jurisdiction to rule on the motion or once the notice of appeal did he lose jurisdiction? [00:12:36] Speaker 00: And just for clarification, referring to the [00:12:39] Speaker 00: the motion for reconsideration. [00:12:40] Speaker 03: The motion to reconsider is a motion to take another look at the things that have been decided. [00:12:46] Speaker 03: He then files a notice of appeal from the judgment that decided everything. [00:12:51] Speaker 03: Doesn't that sort of take up the substance of everything and divest the district court of jurisdiction and do anything and at that point you just should have denied it on the grounds that the notice of appeal had been filed. [00:13:02] Speaker 00: I guess I wouldn't disagree with that interpretation. [00:13:05] Speaker 00: I was asking for a clarification because there were two back-to-back motions for reconsideration, just to make sure we were talking about the same one. [00:13:11] Speaker 03: Right, but the prior motion for reconsideration led to the entry of a judgment. [00:13:17] Speaker 03: Correct. [00:13:18] Speaker 03: And that, then, was the subject of a further motion for reconsideration, and then there was a notice of appeal directed at the judgment. [00:13:25] Speaker 00: That's correct. [00:13:26] Speaker 03: Which takes the whole case up, and at that point, [00:13:31] Speaker 03: he lost authority to do anything on the merits, which was what was in the motion for reconsideration. [00:13:38] Speaker 00: Correct. [00:13:38] Speaker 00: On the second motion for reconsideration where he denied the... Correct. [00:13:42] Speaker 00: The post-reinstated judgment motion for reconsideration. [00:13:45] Speaker 00: Yes. [00:13:45] Speaker 00: And so, yes, our position would be that, yeah, he wouldn't have had the authority to rule on that with an appeal pending, and also that this appellate court shouldn't be [00:13:57] Speaker 00: addressing that second motion. [00:14:00] Speaker 03: So then the question is the reinstated judgment and the orders that merged into that judgment. [00:14:06] Speaker 03: So why don't you address whether that judgment was properly entered? [00:14:10] Speaker 00: Yes, and it is Appellee's position that the judges did not abuse their discretion in coming to those decisions. [00:14:20] Speaker 00: Appellant has tried to make this what was once a meritorious defense argument. [00:14:27] Speaker 00: When that wasn't successful, evolved it into a fraud on the court type of argument. [00:14:33] Speaker 00: But if the meritorious defense wasn't persuasive, they're certainly not going to prevail on an even heightened burden of a fraud on the court. [00:14:40] Speaker 00: Because plaintiff made an estimate of hours without having all of his pay stubs, without having his clock in or clock out. [00:14:50] Speaker 00: under his understanding of his hours worked, he was getting paid $1,000 for 50 hours. [00:14:56] Speaker 03: But the reinstatement was due to the voluntary dismissal of the remaining defendant who had not defaulted. [00:15:04] Speaker 03: Is that correct? [00:15:06] Speaker 00: That is correct. [00:15:07] Speaker 03: So why isn't that just a gaming of the system in a way that evades our precedent that says when you've sued multiple defendants and only a subset have defaulted, [00:15:19] Speaker 03: You don't get a default judgment because there's others as to whom the merits can be litigated. [00:15:25] Speaker 03: You then forfeited the merits against those people precisely so that you could win the suit without litigating it by reinstating it. [00:15:32] Speaker 03: Why is that a gamesmanship that we should tolerate as being within the policy that's reflected in our case law here? [00:15:41] Speaker 00: I guess I would argue for efficiency sake. [00:15:45] Speaker 00: This is joint and several liability. [00:15:47] Speaker 00: It doesn't change the culpability of the defendants as a whole. [00:15:50] Speaker 00: There were three defendants, one the company itself and two of the owners. [00:15:57] Speaker 00: And one of the owners and the company were found to be culpable for evading service. [00:16:04] Speaker 00: And so when [00:16:06] Speaker 00: The third individual, which is a duplicative individual of the other owner and the company itself, is dismissed. [00:16:14] Speaker 00: It doesn't seem efficient. [00:16:16] Speaker 00: It doesn't seem fair to the plaintiff to then have to move forward to basically have a default judgment that's been vacated. [00:16:24] Speaker 00: They've spent a year and a half attempting to collect the judgment to now have what we would argue is gamesmanship on behalf of the appellants to try to set aside a default after a sheriff shows up to start the collections process. [00:16:36] Speaker 00: And so I don't think it is the type of gamesmanship that the law would preclude. [00:16:44] Speaker 03: It seems like the rule you're advocating would go broader and would render all of these bad facts you've just recounted irrelevant. [00:16:54] Speaker 03: So if you filed against, a plaintiff files against four defendants and one of them defaults and three of them don't, [00:17:02] Speaker 03: and the one of who defaults happens to have sufficient assets. [00:17:07] Speaker 03: Under your view, you can just dismiss with prejudice the other three and then collect everything on the default and the court should just go along with that. [00:17:17] Speaker 00: Essentially, yes, because they had the opportunity to respond to the complaint. [00:17:22] Speaker 03: Even though our case law says that in a multi-defending case where not everyone defaults, the case should proceed on the merits. [00:17:30] Speaker 00: And those are particularly in instances where there are defendants who understood, not just understood, but weren't evading service, weren't purposely not responding, so they're actively defending the case. [00:17:42] Speaker 03: I don't see why your view of the misconduct that led to the defaults or that makes them culpable is relevant to this rule of whether once it's all set aside under our rule that in a mixed defendant case you can't get the default. [00:17:58] Speaker 03: why you should then be allowed to reconfigure the case to sort of get back to a non-merits disposition? [00:18:05] Speaker 00: Because ultimately there's not a rule that would preclude that. [00:18:09] Speaker 00: The defendant had not filed an answer at that point. [00:18:12] Speaker 00: So under the rules, we were free to file a dismissal of that complaint. [00:18:16] Speaker 00: And then at that point, you look at the complaint as it is with the defendants that are currently in the action and the appropriate decision then, which was made by the district court, [00:18:25] Speaker 00: would be to reinstate the default judgment is there's no longer a threat of a potential inconsistent judgment. [00:18:31] Speaker 00: And I think that rule is there to prevent the harm that can be caused when there is an individual that is actively defending against the case who could potentially prevail and demonstrate that there was no merit to that case from having an inconsistent judgment from those that were defaulted. [00:18:49] Speaker 00: So here, in particularly this instance, there would be no risk of that. [00:18:54] Speaker 00: and the plaintiff as per the rules and as matter of rights. [00:18:58] Speaker 03: Part of what's recognized in the case was the policy that disputes should be decided on their merits. [00:19:05] Speaker 03: And, you know, that's the idea that if it's a mixed offending case, you're going to have to litigate it against one of the defendants, and we should find out in that litigation whether the claims have merit. [00:19:17] Speaker 03: But you just short-circuited that by dismissing that [00:19:21] Speaker 03: defending out and then saying, well, now I get the default again. [00:19:25] Speaker 00: I guess I would counter that argument by saying, at any point during any case, I would always, as a plaintiff, have the option to seek to remove, dismiss, or settle with someone based upon the strengths or weaknesses of the claims against that individual. [00:19:43] Speaker 00: And so the plaintiff has the ability to control up within the limits of civil procedure. [00:19:49] Speaker 00: to control who they're pursuing a claim against, and if they wish to seek a dismissal of those claims at any point. [00:19:58] Speaker 00: Obviously, pending approval of the court after an answer has been filed, but in this case, an answer has not been filed. [00:20:05] Speaker 00: And so therefore, under the rules, the plaintiff has the right to dismiss the defendant, and I think in the spirit of efficiency, [00:20:13] Speaker 00: And in attempting to avoid generating further costs and ongoing litigation, this would be the most prudent move to allow us to dismiss the defendant that was deemed to not have been served and reenter the default judgments against those that were found to be culpable. [00:20:32] Speaker 00: And whose wife called the police on the process server to then have that left on their doorstep [00:20:41] Speaker 00: not just randomly at a gate as suggested by the appellant. [00:20:46] Speaker 00: And I see my time has expired. [00:20:48] Speaker 02: Thank you. [00:20:48] Speaker 02: Thank you, counsel. [00:20:50] Speaker 02: We have one minute for rebuttal. [00:20:53] Speaker 04: Thank you. [00:20:55] Speaker 04: We didn't evade service. [00:20:57] Speaker 04: Chris Conforti wasn't even home when this allegedly served with it. [00:21:03] Speaker 02: Was his wife home? [00:21:04] Speaker 04: She was. [00:21:06] Speaker 04: Chris was not living there at the time. [00:21:08] Speaker 04: I mean, Chris was not there. [00:21:10] Speaker 02: Was the process server aware of that? [00:21:12] Speaker 04: His wife told him, told him that Nick Conforti didn't live there and also says, look at the affidavit, that Chris Conforti wasn't living there. [00:21:23] Speaker 04: Going back to the lack of jurisdiction, I think that's an issue here because they did not on this rule, 7.2G reconsideration, perhaps the court didn't even have jurisdiction to look at that. [00:21:38] Speaker 04: We asked it to do so under the local rule and it's not a Nevada case. [00:21:41] Speaker 02: Are you representing to the court that his wife never informed him that service was attempted? [00:21:47] Speaker 02: Correct. [00:21:50] Speaker 02: And I misspoke. [00:21:52] Speaker 02: So at what point did he become aware that his wife was served, that service attempt was made on his wife? [00:22:02] Speaker 02: At what point did he become aware of that? [00:22:04] Speaker 04: We became aware of that when the constable showed up asking to seize equipment. [00:22:09] Speaker 04: Then we figured out, what is this about? [00:22:11] Speaker 04: What is this complaint about? [00:22:12] Speaker 04: What happened? [00:22:14] Speaker 04: And that's when I got involved to have it set aside. [00:22:16] Speaker 02: And then you asked, who asked the wife? [00:22:18] Speaker 02: How did it get to the point where [00:22:20] Speaker 02: You found out that there was an attempted service? [00:22:22] Speaker 04: I asked to speak with the wife, and she does not respond to me. [00:22:25] Speaker 02: Well, so how did you find out that service was attempted on the wife? [00:22:29] Speaker 04: Because the attached certificate of service, that was attached at the time of the filing. [00:22:34] Speaker 02: Well, how do you know what the wife told the process service? [00:22:36] Speaker 04: It's in there. [00:22:37] Speaker 04: It's in there. [00:22:40] Speaker 04: I misspoke. [00:22:41] Speaker 04: It's not a Nevada case. [00:22:42] Speaker 04: It's a Kauffman v. Warner Brothers case that says that it's a district case here, that a motion under local rule 7.2G is not one of the enumerated motions in FRAP 4. [00:22:55] Speaker 02: All right. [00:22:56] Speaker 04: All right. [00:22:56] Speaker 04: Thank you. [00:22:56] Speaker 02: Thank you, counsel. [00:22:57] Speaker 02: Thank you to both counsels. [00:22:58] Speaker 02: The case just argued is submitted for a decision by the court.