                                                    131 Nev., Advance Opinion          IS
                         IN THE SUPREME COURT OF THE STATE OF NEVADA


                  THE CADLE COMPANY, AN OHIO                           No. 63382
                  CORPORATION,
                  Appellant,
                  vs.
                                                                                   FILED
                  WOODS & ERICKSON, LLP, A                                         MAR 2 6 2015
                  NEVADA LIMITED LIABILITY                                               IE K. LINDEMAN
                                                                                  ra                EME,C.QURT
                  PARTNERSHIP,                                               BY
                  Respondent.                                                               H.4#4




                  THE CADLE COMPANY, AN OHIO                           No. 63790
                  CORPORATION,
                  Appellant,
                  vs.
                  WOODS & ERICKSON, LLP, A
                  NEVADA LIMITED LIABILITY
                  PARTNERSHIP,
                  Respondent.



                             Consolidated appeals from a district court judgment in a
                  collection and fraudulent transfer action and from a post-judgment order
                  awarding attorney fees and costs. Eighth Judicial District Court, Clark
                  County; Elizabeth Goff Gonzalez, Judge.

                             Affirmed in part as modified and reversed in part.


                  Adams Law Group and James R. Adams and Assly Sayyar, Las Vegas,
                  for Appellant.

                  Royal & Miles, LLP, and Gregory A. Miles, Henderson,
                  for Respondent.




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                BEFORE THE COURT EN BANC.

                                                 OPINION
                By the Court, CHERRY, J.:
                            In this case, we consider whether, under Nevada's fraudulent
                transfer law, a nontransferee law firm may be held liable for its client's
                fraudulent transfers under the accessory liability theories of conspiracy,
                aiding and abetting, or concert of action. We hold that Nevada, like most
                other jurisdictions, does not recognize accessory liability for fraudulent
                transfers. We therefore affirm the district court's judgment in favor of the
                law firm. We further hold, however, that the district court abused its
                discretion by awarding costs to the law firm without sufficient evidence
                showing that each cost was reasonable, necessary, and actually incurred.
                Thus, we reverse, in part, the district court's post-judgment order
                awarding costs.
                                  FACTS AND PROCEDURAL HISTORY
                            In 2004, Robert Krause retained respondent law firm Woods &
                Erickson, LLP, for estate planning services. The following year, Woods &
                Erickson created for Krause various legal entities, including an asset
                protection trust, into which Krause eventually transferred his assets.
                Meanwhile, appellant The Cadle Company (Cadle) was attempting to
                collect on a California judgment against Krause. After learning of the
                transferred assets, Cadle sued Krause and Woods & Erickson in the
                underlying action, alleging that Krause had fraudulently transferred
                assets in order to escape execution of the judgment and that Woods &
                Erickson had unlawfully facilitated the fraudulent transfers.




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                             The district court dismissed Cadle's claims against Woods &
                 Erickson without prejudice. Cadle later filed a second amended complaint
                 asserting claims for conspiracy, aiding and abetting, and concert of action
                 against Woods & Erickson, all arising from the fraudulent transfers. After
                 the district court denied Woods & Erickson's motion to dismiss the second
                 amended complaint or for summary judgment, Woods & Erickson offered
                 Cadle $8,000 to settle the claims, which Cadle refused. The case went to
                 trial.
                             During the bench trial, Cadle called Robert Woods of Woods &
                 Erickson to testify as a witness. Woods testified that, at the time Woods &
                 Erickson performed Krause's estate planning, the firm was not aware of
                 Cadle's judgment against Krause. Woods further testified that he
                 discussed Cadle's judgment with Krause after he learned of it. Krause
                 told Woods that the judgment was not valid and that Krause was going to
                 take care of it. Woods testified that he informed Krause that transfers of
                 assets into Krause's trust could be set aside by a creditor. After hearing
                 the evidence, the district court found in favor of Cadle against Krause.
                 Concluding, however, that Cadle had not shown clear and convincing
                 evidence of Woods & Erickson's intent to defraud or deceive, the district
                 court entered judgment in favor of Woods & Erickson on all claims.
                             After trial, Woods & Erickson filed a memorandum of costs.
                 Cadle moved to retax costs, arguing that Woods & Erickson did not
                 sufficiently document the purported costs. Woods & Erickson opposed the
                 motion to retax, attaching additional documentation to support its request
                 for costs. The documentation consisted of an affidavit stating the
                 approximate number and cost of photocopies, a process server bill, bills for



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                deposition transcripts, filing fee invoices, and parking receipts. After a
                hearing, the district court awarded Woods & Erickson the costs it
                requested, reducing only the runner service costs.
                            Woods & Erickson also filed a motion for attorney fees,
                arguing that it was entitled to them because Cadle rejected its $8,000 offer
                of judgment. After argument, the district court found that Woods &
                Erickson's offer of judgment was reasonable in amount and timing, that
                Cadle was unreasonable in rejecting the offer, and that the amount of
                attorney fees sought by Woods & Erickson was reasonable. The court thus
                awarded Woods & Erickson attorney fees.
                             Cadle separately appealed the judgment and the award of
                costs and attorney fees. We consolidated the appeals.
                                               DISCUSSION
                Accessory liability for fraudulent transfers
                            Cadle argues that the district court erred because it required
                Cadle to show actual intent to defraud or deceive in order to establish its
                accessory liability claims. Woods & Erickson asserts that, regardless of
                intent, Nevada does not recognize common-law civil conspiracy, aiding and
                abetting, or concert of action in the context of fraudulent transfers. 1 We


                      1 Cadle contends that this court does not have jurisdiction to address
                Woods & Erickson's argument because Cadle did not raise it on appeal
                and Woods & Erickson did not cross-appeal. "A respondent may, however,
                without cross-appealing, advance any argument in support of the
                judgment even if the district court rejected or did not consider the
                argument." Ford v. Showboat Operating Co., 110 Nev. 752, 755, 877 P.2d
                546, 548 (1994). And this court will affirm a correct decision even if it was
                decided for the wrong reasons. Id. at 756, 877 P.2d at 549. Thus, we may
                consider whether such claims exist in Nevada.


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                agree with Woods & Erickson that nontransferees, i.e., those who have not
                received or benefited from the fraudulently transferred property, are not
                subject to accessory liability for fraudulent transfer claims.
                              A majority of jurisdictions appear to agree that there is no
                accessory liability for fraudulent transfers, albeit for different reasons.
                See GATX Corp. v. Addington, 879 F. Supp. 2d 633, 648-50 (E.D. Ky. 2012)
                (discussing the majority of courts' interpretation of accessory liability in
                the context of fraudulent transfers). Some courts reason that fraudulent
                transfers are not independent torts to which accessory liability can attach.
                See FDIC v. S. Prawer & Co., 829 F. Supp. 453, 455-57 (D. Me. 1993). 2 In
                Nevada, however, civil conspiracy liability may attach where two or more
                persons undertake some concerted action with the intent to commit an
                unlawful objective, not necessarily a tort. See Consol. Generator-Nevada,
                Inc. v. Cummins Engine Co., 114 Nev. 1304, 1311, 971 P.2d 1251, 1256
                (1998). Hence, this reasoning is not applicable to Nevada law.
                              Other courts have rejected accessory liability because their
                respective state's fraudulent transfer statutes do not recognize claims
                against a nontransferee.    See FDIC v. Porco, 552 N.E.2d 158, 160 (N.Y.
                1990) (holding that the New York debtor and creditor statute did not


                      2 See also Wortley v. Camplin, No. 01-122-P-H, 2001 WL 1568368, at
                *9 (D. Me. Dec. 10, 2001) (stating that "violation of Maine's Uniform
                Fraudulent Transfers Act. . . does not constitute a tort for purposes of
                liability for civil conspiracy" or aiding and abetting); cf. Arena Dev. Grp.,
                LLC v. Naegele Commc'ns, Inc., No. 06-2806 ADM/AJB, 2007 WL 2506431,
                at *5 (D. Minn. Aug. 30, 2007) ("[W]hether a fraudulent transfer under the
                UFTA is a tort is uncertain. Accordingly, [the defendant] can not be held
                personally liable for aiding and abetting or conspiring to commit a
                violation of the UFTA.").


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                  create a remedy against nontransferees who have no control over the asset
                  or have not benefited from the conveyance). 3 And a subset of these courts
                  have reasoned that fraudulent transfer claims are traditionally claims for
                  equitable relief, noting that it makes little sense to impose an equitable
                  remedy against someone who never had possession of the property.        See,
                  e.g., Forum Ins. Co. v. Devere Ltd., 151 F. Supp. 2d 1145, 1148-49 (C.D.
                  Cal. 2001); GATX, 879 F. Supp. 2d at 648. Likewise, federal courts
                  making bankruptcy decisions have refused to create liability for
                  nontransferees when statutes do not.      See Robinson v. Watts Detective
                  Agency, Inc., 685 F. 2d 729, 737 (1st Cir. 1982); Mack v. Newton, 737 F.2d
                  1343, 1357-58, 1361 (5th Cir. 1984); Jackson v. Star Sprinkler Corp., 575
                  F.2d 1223, 1234 (8th Cir. 1978).


                         3 See also GAM 879 F. Supp. 2d at 648; In re Total Containment,
                  Inc., 335 RR. 589, 615-16 (Bankr E.D. Pa. 2005) (predicting that
                  Pennsylvania law does not hold nontransferees liable); Ernst & Young
                  LLP v. Baker O'Neal Holdings, Inc., No. 1:03-CV-0132-DFH, 2004 WL
                  771230, at *14 (S.D. Ind. Mar. 24, 2004) (holding that the Indiana
                  Uniform Fraudulent Transfer Act's savings clause (or "catch-all
                  provision") permits courts to creatively construct equitable remedies but
                  does not create a substantive right of action); Forum Ins. Co. v. Devere
                  Ltd., 151 F. Supp. 2d 1145, 1148 (C.D. Cal. 2001) (holding that a
                  nontransferee was not liable because California's Fraudulent Transfer Act
                  only creates equitable remedies, not liability for damages); FDIC v. White,
                  No. 3:96-CV-0560-P, 1998 WL 120298, at *2 (N.D. Tex. Mar. 5, 1998)
                  (holding that the Texas fraudulent conveyance statute does not create
                  liability for nontransferee coconspirator and it does not permit a court to
                  create new substantive rights of action); Warne Invs., Ltd. v. Higgins, 195
                  P.3d 645, 656 (Ariz. Ct. App. 2008) (holding that the Arizona catchall
                  provision does not create liability for aiding and abetting); Freeman v.
                  First Union Nat'l Bank, 865 So. 2d 1272, 1276 (Fla. 2004) (reasoning that
                  Florida's savings clause permitted the court to award other equitable relief
                  but did not create new causes of action).


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                            We find this second line of reasoning persuasive. Creditors do
                not possess legal claims for damages when they are the victims of
                fraudulent transfers. Instead, creditors have recourse in          equitable
                proceedings in order to recover the property, or payment for its value, by
                which they are returned to their pre-transfer position.   See NRS 112.210;
                NRS 112.220(2). Nevada law does not create a legal cause of action for
                damages in excess of the value of the property to be recovered.
                            As federal courts have recognized, the long-standing
                distinction between law and equity, though abolished in procedure,
                continues in substance. Coca-Cola Co. v. Dixi -ColaLabs., 155 F.2d 59, 63
                (4th Cir. 1946); 30A C.J.S. Equity § 8 (2007). A judgment for damages is a
                legal remedy, whereas other remedies, such as avoidance or attachment,
                are equitable remedies.    See 30A C.J.S. Equity § 1 (2007). Nevada's
                fraudulent transfer statute creates equitable remedies including
                avoidance, attachment, and, subject to principles of equity and the rules of
                civil procedure, injunction, receivership, or other relief. See NRS 112.210.
                This is in accord with the general rule that "the relief to which a
                defrauded creditor is entitled in an action to set aside a fraudulent
                conveyance is limited to setting aside the conveyance of the property." 37
                C.J.S. Fraudulent Conveyances § 203 (2008). 4 There is generally no


                      4 History also shows that avoidance was the proper remedy for
                fraudulent transfers. A 1377 enactment declared that, if a debtor colluded
                with friends to avoid collection by transferring assets to them and then
                fleeing to debtor sanctuary, the creditor may petition the king for a writ
                directing execution on the asset as if the transfers had never occurred.
                Melville Madison Bigelow, The Law of Fraudulent Conveyances 11-12 (rev.
                ed. 1911) (1890).



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                 personal action against transferees unless specially authorized by statute.
                 Id. § 202.
                              As an exception to the general rule, NRS 112.220(2) permits
                 actions resulting in judgments against certain transferees. But such
                 judgments are only in the amount of either the creditor's claim or the
                 value of the transferred property, whichever is less.      Id.   The statutory
                 scheme does not allow a creditor to recover an amount in excess of the
                 transferred property's value, or to recover against a nontransferee. And
                 no similar exceptional authorization creates claims against
                 nontransferees.
                              Furthermore, it does not make sense to apply an equitable
                 remedy, voiding a transfer of property, against a party who never had
                 possession of the transferred property. First, the third party has no
                 control over the property and, therefore, cannot return it to the creditor.
                 Second, once a creditor is made whole by a successful action against the
                 transferor or transferee, he is no longer in need of an equitable remedy
                 against a third party. True, NRS 112.210(1) permits creditors to obtain
                 "any other relief the circumstances may require." But we agree with other
                 jurisdictions that this language, taken from the Uniform Fraudulent
                 Transfer Act, "was intended to codify an existing but imprecise system,"
                 not to create a new cause of action.       Freeman v. First Union Nat'l Bank,
                 865 So. 2d 1272, 1276 (Fla. 2004); see NRS 112.250 ("This chapter must be
                 applied and construed to effectuate its general purpose to make uniform
                 the law with respect to the subject of this chapter among states enacting
                 it."). Compare Unif. Fraudulent Transfer Act § 7, 7A U.L.A. 155-56 (2006),
                 with NRS 112.210.



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                            Thus, NRS 112.210(1) gives the creditor an equitable right to
                the property, not a claim for damages. The Legislature did not create a
                claim against nontransferees. And although NRS 112.240 incorporates
                the traditional rules of law and equity into the statutory fraudulent
                transfer law, we agree with other states that such savings clauses do not
                create entirely new causes of action, such as civil conspiracy.   See Forum
                Ins. Co., 151 F. Supp. 2d at 1148; Freeman, 865 So. 2d at 1276. We
                therefore conclude that Nevada law does not recognize claims against
                nontransferees under theories of accessory liability. Because we so
                conclude, we do not need to decide whether the district court properly
                analyzed the accessory liability issues or whether the district court's
                factual findings on these issues were supported by substantial evidence.
                We affirm the district court's judgment.
                Proper documentation of costs
                            The second contested order in these consolidated appeals
                concerns the district court's award of costs to Woods & Erickson. Cadle
                argues that the district court erred because the documentation was
                insufficient to justify some of the costs awarded. We agree.
                            NRS 18.020 and NRS 18.050 give district courts wide, but not
                unlimited, discretion to award costs to prevailing parties. Costs awarded
                must be reasonable, NRS 18.005; Bobby Berosini, Ltd. v. PETA, 114 Nev.
                1348, 1352, 971 P.2d 383, 385 (1998), but parties may not simply estimate
                a reasonable amount of costs.     See Gibellini v. Klindt, 110 Nev. 1201,
                1205-06, 885 P.2d 540, 543 (1994) (holding that a party may not estimate
                costs based on hours billed). Rather, NRS 18.110(1) requires a party to
                file and serve "a memorandum [of costs] . . . verified by the oath of the



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                party . . . stating that to the best of his or her knowledge and belief the
                items are correct, and that the costs have been necessarily incurred in the
                action or proceeding." Thus, costs must be reasonable, necessary, and
                actually incurred. We will reverse a district court decision awarding costs
                if the district court has abused its discretion in so determining.      Viii.
                Builders 96, L.P. v. U.S. Labs., Inc., 121 Nev. 261, 276, 112 P.3d 1082,
                1092 (2005).
                               In Bobby Berosini, Ltd., we explained that a party must
                "demonstrate how such [claimed costs] were necessary to and incurred in
                the present action." 114 Nev. at 1352-53, 971 P.2d at 386. Although cost
                memoranda were filed in that case, we were unsatisfied with the itemized
                memorandum and demanded further justifying documentation.          Id. It is
                clear, then, that "justifying documentation" must mean something more
                than a memorandum of costs. In order to retax and settle costs upon
                motion of the parties pursuant to NRS 18.110, a district court must have
                before it evidence that the costs were reasonable, necessary, and actually
                incurred.    See Gibellini, 110 Nev. at 1206, 885 P.2d at 543 (reversing
                award of costs and remanding for determination of actual reasonable costs
                incurred).
                             Without evidence to determine whether a cost was reasonable
                and necessary, a district court may not award costs.    PETA, 114 Nev. at
                1353, 971 P.2d at 386. Here, the district court lacked sufficient justifying
                documentation to support the award of costs for photocopies, runner
                service, and deposition transcripts.° Woods & Erickson did not present


                      °The other costs awarded, however, service costs, parking fees, and
                filing fees, were supported by sufficient justifying documentation,
                                                               continued on next page . .
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                   the district court with evidence enabling the court to determine that those
                   costs were reasonable and necessary.
                         Photocopies
                                Woods & Erickson did not submit documentation about
                   photocopies other than an affidavit of counsel stating that each and every
                   copy made was reasonable and necessary. In PETA, we rejected a claim
                   for photocopy costs because only the date and cost of each copy were
                   provided. See PETA, 114 Nev. at 1353, 971 P.2d at 386. We have also
                   held that documentation substantiating the reason for each copy "is
                   precisely what is required under Nevada law." Viii. Builders 96, 121 Nev.
                   at 277-78, 112 P.3d at 1093.
                                Here, Woods & Erickson failed to show why the copying costs
                   were reasonable or necessary. The affidavit of counsel told the court that
                   the costs were reasonable and necessary, but it did not "demonstrate how
                   such fees were necessary to and incurred in the present action."     PETA,
                   114 Nev. at 1352-53, 971 P.2d at 386 (emphasis added). Because the
                   district court had no evidence on which to judge the reasonableness or
                   necessity of each photocopy charge, we conclude that the court lacked
                   justifying documentation to award photocopy costs.
                   Runner service
                                The district court concluded that it lacked documentation for
                   runner service costs. It awarded costs for runner service anyway, albeit



                   . . . continued

                   including receipts or court records, and we affirm the remainder of the
                   order awarding costs.


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                for the lower amount of $350, because $581.65 was "an odd number."
                Because the district court lacked documentation, there is no way that it
                could have determined whether the cost was reasonable or necessary. In
                addition, the $350 figure appears to be the kind of guesstimate of which
                we disapproved in Gibellini v. Klindt, 110 Nev. at 1206, 885 P.2d at 543
                (holding that a party may not estimate costs based on hours billed). The
                district court therefore erred by awarding runner service costs after
                concluding that it lacked sufficient justifying documentation.
                      Deposition transcripts
                            The district court awarded costs for deposition transcription in
                the amount of $1,921.25. Yet the record shows that Woods & Erickson
                only submitted transcription invoices totaling $1,116.75. In an affidavit,
                Woods & Erickson's counsel stated that counsel was "only able to track
                down invoices for certain of the transcript expenses." The affidavit does
                not provide any itemization of, or justification for, the transcripts without
                invoices. Cf. Vill, Builders, 121 Nev. at 277-78, 112 P.3d at 1093 (holding
                Nevada law requires justifying documentation to substantiate the reason
                for each photocopy). Because there was no documentation of costs
                exceeding $1,116.75, the district court lacked sufficient evidence to award
                $1,921.25, and the award for this item must be reduced to $1,116.75.
                                               CONCLUSION
                            We hold that Nevada law does not recognize accessory liability
                for fraudulent transfers. Therefore, we affirm the district court's
                judgment on the merits. We further hold that the district court erred by
                awarding photocopy costs, runner service costs, and deposition




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                     transcription costs above $1,116.75 because no evidence was presented
                     showing that those costs were reasonable, necessary, and actually
                     incurred. We thus reverse the portion of the district court's order
                     awarding costs for the photocopy and runner service expenses, and we
                     affirm as modified the award of costs for deposition transcripts. We have
                     considered Cadle's other arguments, including those concerning the
                     attorney fees award, and conclude that they lack merit. Accordingly, we
                     affirm in part and reverse in part, as specified above.


                                                             C
                                                           Cherry
                     We concur:




                     Parraguirre

                Hr
                                                      J.
                     Douglas




                                                  ,   J.
                     Gibbons



                      P rik0A u.t
                     Pickering
                                                      J.


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