Where to turn?

The Nevada Supreme Court has recently added much needed clarity to the procedures for evicting commercial tenants. Eviction for nonpayment of rent is governed by Section 40.423 of the Nevada Revised Statutes. Generally speaking, the statute provides an expedited solution to landlords who seek to recover possession of the leased space after nonpayment of rent. NRS 40.423 provides that a landlord may seek eviction if a tenant is in default in the payment of rent. The eviction process is started by serving a notice on the tenant, known as a five-day notice to quit. If the tenant does not vacate the leased space within five days after service of the notice to quit, the landlord may file an affidavit of complaint for eviction to obtain a court order for the sheriff or constable of the county to remove the tenant from the leased premises. The summary eviction process results in a fairly quick repossession of leased property by a landlord.

Determining which court to file the complaint for eviction has been a source of confusion for landlords, lawyers and judges for many years. The eviction statute instructs the landlord to file the affidavit of complaint for eviction with the local "justice court ... or district court ... whichever has jurisdiction over the matter." So how is a sensible landlord to figure out which court "has jurisdiction?" That is the rub. NRS 40.423 does not specify which court has jurisdiction when reasonable minds have long thought that the "jurisdiction" of each court for eviction purposes must be tied to jurisdictional (i.e. monetary) limits of each court. Justice courts have authority to handle claims less than $10,000, and district courts have authority more than claims $10,000 or more. One of the required statements for the affidavit of complaint for eviction is the amount of rent claimed to be due and delinquent, so the conservative approach has been to file for eviction in justice court if the delinquent rent is less than $10,000, but to file in district court if the delinquent rent is $10,000 or more.

Nevada's justice courts are generally well prepared to handle eviction matters. Reno Justice Court, for instance, has an entire portion of its website dedicated to providing instructions for evictions, forms for eviction filings, and eviction hearings are even calendared on a daily basis. Unfortunately, the "summary" eviction process is anything but easy to navigate when filing an affidavit of complaint for eviction with district courts. Overdue rents of $10,000 or more are apparently far less common, because the district courts do not have the same level of infrastructure for dealing with summary eviction complaints on a timely basis.

In the very recent decision of G.C. Wallace, Inc. v. District Court (issued on Oct. 6, 2011), the Nevada Supreme Court turned conventional (my) wisdom on its head, but in a way that makes eviction a much more reasonable remedy for commercial landlords. In the Wallace case, the landlord brought an eviction action in justice court, and the tenant was evicted. Later, the landlord sued the tenant in district court for back rent in excess of $10,000. The tenant asserted the doctrine of claim preclusion, which prevents a party from asserting a claim in a later case that could have been asserted in a prior case. Essentially, the tenant argued that the landlord's damages claim was barred because the landlord should have brought the damages claim in the eviction proceeding.

The Supreme Court agreed with the tenant on the issue of claim preclusion, finding that all of the elements of the doctrine were met. Nevertheless, the Supreme Court went on to find an exception in this case, because of the confusing nature of Nevada's eviction statute. The Supreme Court found an implied option in the eviction statute which gives the landlord the choice to seek eviction and damages, or merely eviction alone. If a landlord does not seek damages along with eviction, then the issue of damages is safe to litigate another day. And if the landlord only seeks eviction, the "jurisdiction" issue is moot and the landlord is safe to file in justice court, whether or not the past due rent exceeds $10,000.

What's the practical result of all of this legal hair-splitting, you might ask? The Supreme Court has effectively clarified that every landlord may use the justice courts for evictions, whether or not the rental arrearages exceed $10,000. Because the justice courts are much more familiar with eviction proceedings and are generally better prepared to handle evictions, this ruling provides much needed certainty. Landlords may now resort to the courts with the most eviction expertise to obtain quick repossession of their property, whether the rent in arrears is $100 or $100,000.

In summary, landlords can now pick any of these four options:

* Eviction Only:

Past-due rent less than $10,000 = Justice Court

Past due rent more than $10,000 = Justice Court

* Eviction and Damages:

Past-due rent less than $10,000 = Justice Court

Past due rent more than $10,000 = District Court

If the "eviction only" option is chosen, landlords are now also free to bring a subsequent lawsuit for damages in the appropriate court - justice court for claims under $10,000 and district court for claims of $10,000 or more.

Shawn G. Pearson is a shareholder in the law firm of Woodburn and Wedge in Reno. Contact him at 688-3000 or SPearson@woodburnandwedge.com.