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By Jerry Carter.  How would you like to win a judgment against the guy who bought your business but defaulted on his payments, and then, when he appealed, execute on the judgment, buy his defenses, and dismiss the appeal?  That would be satisfying.  But the Nevada Supreme Court recently decided it cannot be done in Nevada.  The case is Butwinick v. Hepner, 128 Nev. Adv. Op. 65 (December 27, 2012).

It is permissible for a judgment creditor to execute on a judgment while it is on appeal if the judgment debtor does not post a supersedeas bond or otherwise qualify for a stay of execution.  And a judgment creditor can cause an execution sale of the judgment debtor’s “things in action,” which includes potential and actual lawsuits.  NRS 21.010.  This would even include the judgment debtor’s counterclaim against the judgment debtor.  But a judgment debtor’s defenses against a lawsuit cannot be sold as part of a judgment execution.  The Nevada Supreme Court held that a “‘thing in action’ does not include defenses.”  It then concluded as follows:

“Because a ‘thing in action’ subject to execution under NRS 21.080 and NRS 10.045 does not include a party’s defenses to an action, and allowing a creditor to execute against a debtor’s defenses as personal property would cut off the debtor’s defensive appellate rights, we deny respondents’ motion to substitute and to dismiss the appeal.”