Strategies, Challenges, and Answers

New Jurisdictional Limits In Nevada’s Courts

In 2005, the monetary jurisdictional limits of the Justice Courts were increased.  Many civil cases that were previously heard in District Court will now fall under the jurisdictional umbrella of the Justice Court.  This change may provide strategic opportunities that have not previously been available.  Let’s take a look.

I.  The Jurisdictional Limit For Civil Cases In Justice Court Was Raised From $7,500 to $10,000

Nevada has three different levels of court that have jurisdiction over civil cases:  the Justice of the Peace Courts (Justice Court); the District Courts; and, the Nevada Supreme Court.

875412_balance Article 6, section 6 of the Nevada Constitution states that “[t]he District Courts in the several Judicial Districts of this State have original jurisdiction in all cases excluded by law from the original jurisdiction of justice’s courts.” (Emphasis added.)  Thus, in situations where the Justice Courts have jurisdiction, the District Courts’ jurisdiction is limited to appeal of cases from the Justice Court. (Id.)

N.R.S. 4.370 (b) dictates the civil jurisdictional limit of Nevada’s Justice Courts.  The statute says:

(b) In actions for damages for injury to the person, or for taking, detaining or injuring personal property, or for injury to real property where no issue is raised by the verified answer of the defendant involving the title to or boundaries of the real property, if the damage claimed does not exceed $10,000.  (Emphasis added).

Prior to 2005, the jurisdictional limit of the Justice Court had been $7,500.  For cases filed in 2005 and later, the jurisdictional limit was increased to $10,000.

In the case of Royal Ins. v. Eagle Valley Construction, Inc., 110 Nev. 119, 867 P.2d 1146 (1994), the Nevada Supreme Court said that the Justice Court has exclusive jurisdiction when the damages claimed are less than the monetary limitation.  The Court also held that attorney’s fees and costs are not included in determining the jurisdictional limit.  Therefore, even if adding attorney’s fees and costs could potentially bring the amount in controversy over the $10,000.00 limit, the Justice Court would still have exclusive jurisdiction over the matter.

II.  The District Court Cannot Overlook This Jurisdictional Limitation

Lack of subject matter jurisdiction is the basis for a Motion to Dismiss the Complaint.  N.R.C.P. 12(b)(1) says that the defense of lack of subject matter jurisdiction can be raised by motion prior to an answer being filed.  In fact, N.R.C.P. 12(h)(3) says that “[w]henever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.”  (Emphasis added).

Where the issue of subject matter jurisdiction is raised, the District Court does not have the option of simply looking the other way.  The District Court must determine whether the case has a value of less than $10,000 and if so, the District Court must act.  The Nevada Supreme Court has said that subject matter jurisdiction is never waived.  Issues of subject matter jurisdiction can be raised at any time during the proceedings, and in almost any manner.  Meinhold v. Clark County School District, 89 Nev. 56, 59, 506 P.2d 420, 422 (1973); S. G. & R. Bank v. Milisich, 43 Nev. 373, 390, 233 P.41, 46 (1925); Phillips v. Welch, 11 Nev. 187 (1876).

Thus, even if the parties have begun the arbitration process, or even if the arbitration is complete, if the court determines that it lacks subject matter jurisdiction it has the option to dismiss the action.  In other word, it is never too late for a party to raise an objection related to jurisdiction and the amount in controversy.

III.  The District Court Now Has Another Option Besides Dismissal

In conjunction with the recent increase in the Justice Court’s jurisdictional limit, the legislature gave the District Court a new option, that of transferring a case of a value of less that $10,000 from the District Court to the Justice Court.  N.R.S. 3.221 was added to the Nevada Statutes which reads:

N.R.S. 3.221  Transfer of original jurisdiction to justice’s court.
If an action is filed in the district court and a district judge determines that the action is properly within the jurisdiction of the justice’s court pursuant to N.R.S. 4.370, the district judge may transfer original jurisdiction of the action to the justice’s court.

Prior to the addition of this new section, the only option available to the District Court was to dismiss the action and allow it to be refiled in the Justice Court.  N.R.C.P. 12(h)(3).  This new section allows the District Court to simply transfer the case out of its jurisdiction and into the appropriate Justice Court.

IV.  New Strategic Options

Many folks are traditionalists.  They believe that civil disputes are best resolved at a jury trial.  However, that option is often difficult and expensive to achieve within the District Court’s Mandatory Arbitration Program.  Before a jury trial can take place, disputes under $40,000 must first be heard by a District Court arbitrator, whose fees are paid by the parties.  Even after jumping through the arbitration hoop, the District Court again wants the parties to pay their own way and wants to route all post-arbitration requests for trial de novo to a Short Trial, where the Judge Pro Tempore’s fees are also paid by the parties.

Presently, the Justice Court has no Mandatory Arbitration or Short Trial Program.  Trial by jury in the Justice Court is guaranteed under the 2004 case of Aftercare Of Clark County v. The Justice Court Of Las Vegas Township,  120 Nev. 1, 82 P3d 931 (2004).  If the District Court judge can be persuaded that the case has a value of $10,000 or less, a case that might otherwise be bogged down in arbitration or short trial could obtain an Order Setting Jury Trial in the Justice Court.  Since the issue of subject matter jurisdiction is never waived, a motion to the District Court to Dismiss or Transfer could be made even after the Arbitration process had been completed.  In fact, depending on the outcome, the arbitration award may be additional evidence of that the case has a value of less than $10,000.
V.  Conclusion

In many cases and for many clients, the Mandatory Arbitration and or the Short Trial options that are available in the District Court are good choices.  However, there are now additional options for cases of a value of less than $10,000.  Under new laws, those cases can be transferred out of the District Court and over to the Justice Court.  For those clients who are looking for a trial in front of a jury rather than a presentation to an arbitrator, a Motion to Dismiss or Transfer a case of a value of less than $10,000 may be an appealing option.

About Michael Mills

Mr. Mills practices in the area of civil litigation and appeals, with particular experience in matters involving trucking liability, insurance defense, insurance coverage, premises liability, products liability and defense of personal injury. Mr. Mills is a member of the Trucking Insurance Defense Association, the Defense Research Institute Trucking Committee and the Nevada Motor Transport Association. Mr. Mills is licensed to practice before the Nevada Supreme Court and the Utah Supreme Court. He is also licensed to appear before the United States Supreme Court, the U.S. District Courts for the Districts of Nevada and Utah, as well as the U.S. Court of Appeals for the Ninth Circuit. Mr. Mills has created 3 Blogs for the benefit of the insurance industry. He serves as editor and publisher of the Nevada Insurance Law Blog, the Nevada Coverage and Bad Faith Blog and the Nevada Trucking Law Blog.

Find Mike Mills on Google+