Federal court asks Nevada Supreme Court to interpret law

Friday, Oct. 10, 2008 | 2:19 p.m.

Supreme Court of Nevada

CARSON CITY – The Nevada Supreme Court has been asked by a federal court to determine whether two companies, whose state charters were revoked, can still sue to collect a civil judgment of several million dollars.

The 9th U.S. Circuit Court of Appeals said the law is unclear what these two firms can do after their state charter was pulled for non-payment of fees to the Secretary of State’s Office.

The case involves American Sports Radio Network and Sound Money Investors, which sued financier Garrett K. Krause, who filed for bankruptcy in central California. The two firms say they have an unsatisfied civil judgment in Nevada against Krause for "several million dollars."

The Nevada Secretary of State’s Office revoked the charter of the two firms in 2002 for failing to pay their annual fees and failing to file their annual list of corporate officers. The two reinstated their charters in 2006.

Several months before they reinstated their charters, they filed suit against Krause. But a bankruptcy court and a federal district court in California dismissed the suits saying the two firms did not have standing because their charters had been revoked.

The Nevada law prohibits companies whose charters are revoked to transact business. But the 9th Circuit Court said the law is not clear whether the two companies can still continue suing Krause.

American Sports and Sound Money were in the business of creating and distributing radio programming.

The 9th Circuit said, "It appears to this court that there is no controlling precedent of the Nevada Supreme Court with regard to the determination of issues of Nevada law." It is asking the Supreme Court to interpret the law and then send the case back to federal jurisdiction.