Barozzi v. Benna

918 P.2d 301, 112 Nev. 635, 1996 Nev. LEXIS 91
CourtNevada Supreme Court
DecidedMay 30, 1996
Docket25659
StatusPublished
Cited by3 cases

This text of 918 P.2d 301 (Barozzi v. Benna) is published on Counsel Stack Legal Research, covering Nevada Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Barozzi v. Benna, 918 P.2d 301, 112 Nev. 635, 1996 Nev. LEXIS 91 (Neb. 1996).

Opinions

OPINION

Per Curiam:

Appellants Raymond and Ruth Barozzi filed a complaint against respondents Bruno Benna, Steve Benna and CB Concrete Company (“CBC”) to enforce, as third-party beneficiaries, an alleged oral agreement between Bruno and Bilt-Rite Concrete. The action was comprised of four claims relevant to this appeal: [637]*637(1) breach of contract; (2) breach of implied covenant of good faith and fair dealing; (3) breach of fiduciary duty by Bruno in his capacity as a director of First Interstate Bank (“FIB”); and (4) intentional infliction of emotional distress by Bruno in intentionally violating his fiduciary duty.

The district court granted respondents’ motion for summary judgment and awarded the Bennas $50,000 in attorney’s fees, finding the claims were not reasonably grounded. The Barozzis appeal the attorney’s fees award. We hold that the frivolousness of a claim is determined at the time the claim is filed, and conclude that the Barozzis’ first two claims were reasonably grounded at the time of filing. Therefore, we remand the case to the district court to apportion the attorney’s fees between the grounded and groundless claims.

FACTS

In September 1987, Max Barozzi and Red Taliaferro formed a concrete “placing” company named Bilt-Rite Concrete, Inc. (“Bilt-Rite”). Prior to that time, Max and Red worked many years for I. Christensen Co., which was owned by Bruno Benna.1 Sometime after Bilt-Rite was formed, Bruno stopped operating I. Christensen Co.

Max and Red eventually borrowed over $230,000 from FIB in order to operate Bilt-Rite. Initially, the loans were personally guaranteed by Max, Red, and Max’s parents, Raymond and Ruth Barozzi, but eventually, FIB also required a certificate of deposit of $100,000, which the Barozzis provided.

In 1989, Max and Red also obtained a $175,000 loan from Bruno to help meet payroll; this loan was paid in full. In 1990, Bruno refused to loan Max and Red an additional $250,000, because they owed him approximately $180,000 for concrete they had purchased on an open account. Around this time, Bruno began operating I. Christensen Co. again.

In February 1990, a meeting took place between Max, Red, Bruno, and Steve, in which the following was agreed upon: (1) Max and Red would stop operating Bilt-Rite; (2) Max and Red would return to work at I. Christensen Co.; (3) Bilt-Rite would transfer all of its equipment to CBC in consideration of their outstanding $180,000 debt; and (4) CBC would finish all Bilt-Rite projects at cost, and transfer any profit to Max and Red. During sworn deposition testimony, Max asserted that he told Bruno that the FIB notes must be part of any agreement, and that Bruno stated in response, “That’s fine,” and “Let’s get to work.” However, during that same deposition, Max conceded that Bruno [638]*638never agreed to assume the FIB debt. Moreover, Bruno, Steve, and Red all denied that the Bennas had committed to assume the FIB debt.2

In August 1990, FIB began demanding payment on the outstanding loans made to Bilt-Rite, since the loans were in default. FIB gave notice to the Barozzis that it was going to require payment on the guarantees. The Barozzis paid the notes which were thereafter assigned to them.3 Based upon Max’s assertion that the FIB loans were part of the agreement with Bruno and Steve, the Barozzis filed suit against the Bennas, claiming: (1) breach of contract; (2) breach of implied covenant of good faith and fair dealing; (3) breach of fiduciary duty by Bruno in his capacity as FIB director; and (4) intentional infliction of emotional distress by Bruno in intentionally violating his fiduciary duty.

On March 26, 1993, respondents filed a motion for summary judgment, which the district court granted. In January 1994, the Bennas filed a motion for attorney’s fees and sanctions, pursuant to NRS 18.010(2)(b) and NRCP 11. The district court acknowledged that the Barozzis were unfortunate “victims” of Max’s misrepresentations which triggered the filing of the lawsuit. The district court also noted, however, that in his deposition Max repudiated what he had told his parents, thus forcing respondents to defend against an action in which there was no credible evidence in support of the claims. Therefore, the district court awarded the Bennas $50,000 in attorney’s fees, and sanctioned Barozzis’ attorney. On appeal, the Barozzis challenge the award of attorney’s fees.

DISCUSSION

The decision to award attorney’s fees is within the sound discretion of the district court, but an award made in disregard of applicable legal principles may constitute an abuse of discretion. Allianz Ins. Co. v. Gagnon, 109 Nev. 990, 995, 860 P.2d 720, 724 (1993).

The Barozzis contend that NRS 18.010(2)(b)4 allows an assess[639]*639ment of attorney’s fees only if the grounds for the action are unreasonable at the time of filing. In Duff v. Foster, 110 Nev. 1306, 1308, 885 P.2d 589, 591 (1994), this court emphasized that the proper inquiry is whether the claim “was brought” without reasonable grounds. We also agreed that “ ‘[i]f an action is not frivolous when it is initiated, then the fact that it later becomes frivolous will not support an award of fees.’” Id. at 1309, 885 P.2d at 591 (quoting State of Florida, Dep’t of Health and Rehabilitative Servs. v. Thompson, 552 So. 2d 318, 319 (Fla. Dist. Ct. App. 1989)).

Respondents cite to Allianz in contending that ‘“[a] claim is groundless if the allegations in the complaint ... are not supported by any credible evidence at trial.’ ” 109 Nev. at 996, 860 P.2d at 724 (quoting Western United Realty, Inc. v. Isaacs, 679 P.2d 1063 (Colo. 1984)) (emphasis added). Although Allianz and Duff appear to differ concerning the relevant point in time when a claim is determined to be groundless, upon closer examination it is apparent that there is no conflict between the two cases.

In Allianz, the district court determined that the plaintiff’s claims were “grossly inflated and fraudulent,” based in part on false representations. But the district court rejected a request for attorney’s fees because it could find no authority for the proposition that fraudulent claims are also groundless. This court reversed, stating that a claim is groundless if not supported by any credible evidence at trial.

We nevertheless considered appellant’s argument that the claim was well grounded when initiated, but that the evidence had become stale in the years preceding trial. Although we rejected the argument as inconsistent with the lower court’s finding of fraud, we recognized that “[i]f factually true, this argument could have merit.” 109 Nev. at 996, 860 P.2d at 725.

Moreover, a review of the authorities upon which Allianz and Duff

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Barozzi v. Benna
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Bluebook (online)
918 P.2d 301, 112 Nev. 635, 1996 Nev. LEXIS 91, Counsel Stack Legal Research, https://law.counselstack.com/opinion/barozzi-v-benna-nev-1996.