Aspiring stadium developer Chris Milam shouldn't have to pay a $1.1 million fraud judgment because he didn't understand the court proceedings that led to the decision against him, his lawyer told the Nevada Supreme Court in Carson City on Tuesday.
The day in court for Milam, who is seeking to purchase government land and has sought public incentives to build a major league sports venue in Henderson, is the result of a former business deal with former Hard Rock Hotel owner Peter Morton that went sour over accusations Milam was dishonest about the source of about $10 million he contributed to a proposed $1.2 billion expansion of the resort.
The dispute landed Milam and Morton in court for a case that dates back to 2006, generated thousands of pages of briefs and evidence and eventually led to a summary judgment ordering Milam to pay disgruntled investor Harry DeHaan, an Idaho attorney, $1.1 million.
In Milam's appeal he alleged DeHaan tricked him into signing an affidavit that contributed to the judgment by Clark County District Judge Mark Denton and that the court failed to give adequate warning before making the order.
"This appeal concerns the due process rights of all litigants," Milam attorney Megan Starich told the justices. "The District Court failed to respect those rights."
DeHaan, who argued his own case, said Milam chose to remain passive during the District Court proceedings and is only acting now because he doesn't like the result.
"To take the position Mr. Milam is somehow an innocent babe in the woods is ludicrous," DeHaan said, later adding, "He chose to play possum in hopes that Mr. Morton would be forced to pay the judgment. He wasn't."
The dispute dates back to 2005 when Milam and Morton agreed to work together to build a high-rise, luxury condominium expansion at the Hard Rock.
According to court documents, the agreement went bad after Morton accused Milam of saying he contributed his own money to the project when it actually came from outside investors, including DeHaan's group.
Morton ultimately decided to sell the Hard Rock to Morgan's Hotel Group, which finished the expansion without Morton or Milam.
In subsequent lawsuits, unhappy investors sought, mostly unsuccessfully, to recover losses from Morton and Milam.
The claims against Morton were eventually dismissed but DeHaan did succeed in getting Denton to approve a summary judgment against Milam, after Milam's attorneys had left the case because they hadn't been paid.
During oral arguments Starich said DeHaan deceived Milam into signing an affidavit that was later used to win the judgment by saying the document was an attempt to get money from Morton.
"Mr. Milam believed him," Starich said, later adding, "He had been manipulated by Mr. DeHaan into thinking he was out of the case."
Starich acknowledged Milam was in the courtroom when Denton made the order but said he didn't notify the court of an intention to participate nor was he addressed during the moments the judgment was being handed down.
She also said Denton didn't take any time to consider whether the judgment was justified, something Starich said is required even in the case of default judgments.
"The mere absence of an objection can't be sufficient to satisfy the summary judgment standard," Starich said.
Justices on Tuesday asked attorneys on each side several questions about their arguments.
At one point Justice Nancy M. Saitta suggested perhaps the reason Milam didn't immediately object to the motion for summary judgment was because, like Starich said, he didn't realize what was happening.
"Did he choose not to participate because he didn't think he had to," Saitta asked.
Justice Kristina Pickering, however, suggested vacating the judgment could reward litigants for neglecting the need to have adequate representation.
"It would incentivize pro per representation," Pickering said, referencing the term for representing oneself in court. "Sort of in a perverse way."
The oral arguments Tuesday were in addition to each side's written briefs. Justices hold oral arguments in about 100 cases per year when they want discussion of elements of the case beyond the written briefs, court spokesman Bill Gang said.
Decisions can come anytime from a few weeks to a few months after oral arguments, Gang said. The Milam case is Milam vs. Stealth Holdings, LLC.
Even as his appeal proceeds, Milam is continuing his separate work on the Henderson proposal. Last month he won the right to purchase for $10.5 million 480 acres of Bureau of Land Management property for construction.
He's told Henderson officials and the public he has an agreement to get $650 million in financing through the Chinese company CSST smart Cities International.
Milam gave the BLM a $2.1 million deposit and has until Dec. 3 to provide the remaining amount.
The Henderson proposal is one of several arena projects Milam has pitched but not completed. Others were in Las Vegas, on the Strip and near Interstate 15 at Russell Road.
Contact reporter Benjamin Spillman at firstname.lastname@example.org or 702-383-0285.