The Mixed-Resident Exception to Nevada’s Cost Bond Rule

In Nevada, as in many other states, foreign plaintiffs are required, upon demand of the defendant, to provide a cost bond of up to $500.  Generally, this is done simply by depositing funds with the court clerk.  This money acts as security for the defendant in case the defendant receives an award for costs.  The theory is that collecting from a foreign plaintiff is more difficult, so foreign plaintiffs ¹⁾meaning plaintiffs that are not residents of Nevada must pay the cost bond.  According to NRS 18.130, if a defendant demands the cost bond and the plaintiff fails to provide it within 30 days of the demand, the plaintiff’s case can be dismissed.  Here is the language of NRS 18.130(1):

When a plaintiff in an action resides out of the State, or is a foreign corporation, security for the costs and charges which may be awarded against such plaintiff may be required by the defendant, by the filing and service on plaintiff of a written demand therefor within the time limited for answering the complaint. When so  required,  all  proceedings  in  the  action  shall  be  stayed  until  an  undertaking,  executed by two or more persons, be filed with the clerk,  to the effect that they  will  pay  such  costs  and  charges  as  may  be  awarded  against  the  plaintiff  by  judgment, or in the progress of the action, not exceeding the sum of $500; or in  lieu of such undertaking, the plaintiff may deposit $500, l awful money, with the  clerk of the court, subject to the same conditions as required for the undertaking.

How Supreme Court interprets the meaning of the cost bond statute

There is, however, an old doctrine that states that the requirement for a cost bond against foreign plaintiffs does not apply if the lawsuit also has resident plaintiff.  In 1951, the Nevada Supreme Court adopted that doctrine in light of the NRS 18.130. While interpreting the requirements of NRS 18.130(1), the Nevada Supreme Court in Fourchier has expressly held that “[W]here there are several plaintiffs in the action, one of whom is a resident, the rule requiring security for costs from nonresidents does not apply.”  ²⁾Fourchier v. McNeil Const. Co., 68 Nev. 109, 116, 227 P.2d 429, 432 (1951).  The Court even acknowledged the cost bond is not required even when the resident plaintiff is insolvent. ³⁾Id. When coming to this conclusion, the court examined the language of NRS  18.130(1) and recognized that the mixed-residency rule was not in its language, but the Court held that the mixed-resident rule applied nevertheless.⁴⁾Id (stating “we accept the general rule of law as thus enunciated).

The Supreme Court in Fourchier pointed out an important exception to the general mixed-resident rule. In Fourchier, 40 different plaintiffs with 40 wholly different contractual claims joined in a single suit for convenience purposes only. They filed a 160 page complaint with 240 causes of action.⁵⁾Id. at 113  Each plaintiff could have filed a separate suit, but chose not to. ⁶⁾(Id.) at 114.  Based on that situation, the Court held that when non-resident plaintiffs, for their own convenience, and having wholly separate causes of action, voluntarily join a resident plaintiff in a lawsuit, a court may require the non-resident plaintiffs to file an individual cost bond pursuant to NRS 18.130.⁷⁾Id. at 119 (citing and quoting Kearney v. Baptist, 159 A. 405, 406, 10 N.J. Misc. 431. 1932.

The purpose of the mixed-resident exception to NRS 18.130 is to prevent non-resident plaintiffs from having to pay a cost bond when a resident plaintiff is present.  The purpose of the exception to the mixed-resident rule is to prevent non-resident plaintiffs from abusing the system, as the plaintiffs in Fourchier did.

In the end, while Fourchier is old law, it seems to still be good law.  Thus, the non-resident bond requirement of NRS 18.130 does not seem to apply if there is a resident plaintiff.  The exception to the mixed-resident exception may apply if the non-resident plaintiffs have significant, or perhaps completely, unique claims.  That being said, the Supreme Court has not spoken on this matter in almost 65 years.  It is probably a good idea to ask the court for declaratory relief before ignoring a demand for a cost bond in a mixed-resident lawsuit.