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Winter 2007
NEVADA CASE SUMMARIES

Workers Compensation; Pest Control Employee Not Homeowner’s “Employee”

Seput v. Lacoyo, 134 P.3d 733 (May 25, 2006): Lacayo contracted with Pestaway to provide monthly pest extermination services at his residence. One of Pestaway’s employees, Seput, was performing pest control services when he fell through a hole at Lacayo’s residence and was seriously injured. Seput sued Lacayo for negligent maintenance of the premises and failure to warn. Lacayo moved to dismiss the lawsuit based upon the Nevada Industrial Insurance Act’s exclusive remedy provision. The trial court granted the motion and Seput appealed.

Supreme Court Opinion. Reversed and remanded. Under NRS 616A.110(4), Nevada workers compensation scheme, persons providing domestic services are exempt from the definition of employee. Monthly home pest control services fall within the definition of domestic service. Therefore, Seput, a pest control company employee, was not Lacayo’s employee for purposes of applying the exclusive remedy provision.

Personal Jurisdiction Over Out-of-State Automobile Insurer

Arbella Mut. Ins. Co. v. Eighth Jud. Dist. Ct., 134 P.3d 710 (May 25, 2006): Mendes purchased an automobile insurance policy while living in Massachusetts. The policy was issued by Arbella, a Massachusetts corporation with its principal place of business in Massachusetts. Mendes’ policy listed his home in Massachusetts. The policy required his vehicle to be “garaged” in that state. The policy also contained a territory clause which provided coverage for bodily injury to others was limited to accidents in Massachusetts, but all other parts of the policy provided coverage for accidents and losses that occurred anywhere in the U.S.

Mendes temporarily moved to Las Vegas. Before the move, Mendes’ insurance agent told him no changes to the policy would be necessary since he was maintaining his Massachusetts residence. Three months after the move, Mendes was involved in an automobile accident in which he was injured. Mendes made a demand to Arbella for underinsured motorist and medical payment coverage under the policy. Arbella paid the med pay coverage, but denied the underinsured motorist claim on the basis that Mendes’ vehicle was garaged in Nevada, not Massachusetts. Mendez filed suit in Nevada for breach of contract and bad faith. Arbella moved to dismiss the lawsuit for lack of personal jurisdiction, which was denied by the trial court. The insurer filed a petition for writ of prohibition to the Nevada Supreme Court challenging the trial court’s exercise of personal jurisdiction.

Supreme Court Opinion. Petition denied. A Nevada court has specific personal jurisdiction over an out-of-state automobile insurer in a breach of contract and bad faith action where: the insurer purposefully avails itself of Nevada’s forum by contracting with its insureds to provide coverage in Nevada pursuant to the insurer’s territory clause, which stated that coverage was nationwide; the insureds’ claim arose directly from the insurer’s refusal to pay policy benefits; the burden of requiring the insurer to defend a lawsuit in Nevada is minimal; and Nevada’s interest in adjudicating the dispute is significant (the accident occurred in Nevada).

Defamation; Surgeon Not Limited-Purpose Public Figure

Bongiovi v. Sullivan, 138 P.3d 433 (July 13, 2006): Jones sought cosmetic surgery and consulted various plastic surgeons, including Bongiovi and Sullivan. On two occasions, while Jones was consulting with Bongiovi, Bongiovi told Jones that Sullivan had recently killed a patient while performing the same surgery Jones was seeking to have. Sullivan sued Bongiovi for defamation arguing the Bongiovi’s statements were slander per se. At trial, the jury found in favor of Sullivan. Bongiovi appealed arguing that the trial court erred by concluding that Sullivan was not a limited-purpose public figure.

Supreme Court Opinion. Affirmed. In defamation acclaims brought by limited-purpose public figures, the plaintiff must prove that the defamatory statement was made with actual malice, rather than mere negligence. A plastic surgeon, such as Sullivan, is not a limited-purpose public figure for speech concerning his medical expertise where the plaintiff’s professional achievements were insufficient to render him a limited-purpose public figure. Sullivan did not thrust himself into a public controversy, and Bongiovi’s statements did not concern public controversy or issues and were made solely in individual interest.

Proper Rate of Prejudgment Interest on Attorney’s Fees Award For Breach of Real Estate Contract

Kerala Properties v. Familian, 137 P.3d 1146 (July 13, 2006): Familian contracted with Kerala to purchase a parcel of Kerala’s land. Karala breached the contract and Familian sued for specific performance. At trial, Familian did not obtain specific performance, but was awarded money damages instead, which included attorney’s fees, costs, property development expenses, and real estate taxes Familian paid on the property. The court also awarded Familian pre and post-judgment interest. The trial court determined that the prejudgment interest rate was based upon the rate in effect on the date the parties signed the contract. Kerala appealed arguing that the trial court should have used the interest rate in effect at the time the individual expenses were incurred, rather than the time the contract was signed.

Supreme Court Opinion. Affirmed. Under NRS 99.040(1), the proper prejudgment interest rate is the single rate in effect on the date of the transaction, which is the date the original contract was signed. Therefore, prejudgment interest on an award of attorney’s fees and other expenses in favor of purchaser of real property was the rate in effect at the time of the contract between the parties was signed, rather than the rate in effect when the purchaser’s individual expenses became due.

Extinguishment of Claims Against Short Term Lessor of Automobile When Claimant Accepts Lessee’s Offer of Judgment

Hall v. Enterprise Leasing Co.-West, 137 P.3d 1104 (July 13, 2006): Ono leased a car from Enterprise on a short term basis. While he was driving the leased car, he was involved in an accident with Hall, who was injured. Ono carried personal automobile liability insurance with limits of $100,000. Enterprise provided statutory-required minimum coverage for short-term leases in the amount of $15,000 per person and $30,000 per accident. Hall sued Enterprise and Ono. Hall dismissed his lawsuit against Enterprise without prejudice. Thereafter, Hall accepted an Offer of Judgment from Ono in the amount of $100,000. Claiming his injuries were worth more the $100,000, Hall filed another suit against Enterprise. The trial court dismissed Hall’s lawsuit against Enterprise based upon failure to bring the second suit within the applicable statute of limitation. Hall appealed.

The Nevada Supreme Court found that the trial court erred in resolving the case on statute of limitations grounds, but asked the parties to brief the question of whether Hall’s acceptance of Ono’s offer of judgment barred the second lawsuit against Enterprise because it extinguished Ono’s legal liability to Hall, thereby ending any obligation Enterprise had to pay Hall third-party benefits on Ono’s behalf.

Supreme Court Opinion. Affirmed. A tort claimant’s acceptance of a rental car lessee’s offer of judgment, representing the lessee claimant’s personal automobile liability policy, extinguished the lessee’s legal liability to the claimant. Hall had no standing to bring an action against Enterprise (the rental car lessor) for damages in excess of Ono’s (the lessee) policy limits under the short term liability coverage provided by Enterprise or to seek indemnity from the Enterprise for any damages in excess of Ono’s policy limits.

Damages Offset: Amount Paid in Settlement By Co-Defendants

Western Technologies v. All-American Golf Center, 139 P.3d 858 (Aug. 17, 2006): All American (AA) constructed a golf course. After construction was completed, several construction defects were discovered. It sued Bentar, the general contractor, Swisher the architect, and Western Technologies (WT) the project’s engineer and soils tester for breach of contract, breach of express warranty, and unjust enrichment. Bentar filed a third-party complaint for indemnity/contribution against certain third-party defendants. Bentar, Swisher and the third-party defendants reached a settlement before trial. The settling parties’ motion for good faith settlement was granted by the trial court. However, the settlement amount was not allocated among the various construction defects.

AA proceeded to trial against WT for breach of contract and breach of warranties. The jury found in favor of AA on the breach of warranty claim, but found in favor of WT on the breach of contract claim, and awarded AA damages. WT moved to offset the jury verdict by the amount of AA’s settlement with the other defendants. The motion was denied. WT appealed, challenging the offset denial.

Supreme Court Opinion. Affirmed in part, reversed in part, and remanded. The trial court erred in denying WT’s motion for offset. Under the Uniform Joint Obligations Act, NRS 101.040 (section governing payments credited to co-obligors), a defendant is entitled to offset damages awarded to a plaintiff in breach of contract and breach of express warranty action by the amount of settlement between the co-defendants and the plaintiff that was attributable to same elements of claimed damages. This rule prevents excess recovery by the plaintiff.

Offset of Workers Compensation Insurer’s Benefits From Underinsured Motorist Benefits

St. Paul Fire & Marine Ins. Co. v. Employers Ins. Co. of Nevada, 146 P.3d 258 (Nov. 9, 2006): Wessman was involved in a work-related automobile accident with a hit-and-run driver. Wessman received workers compensation benefits from her employer’s workers compensation insurer, EICON. Wessman was driving a vehicle owned by her employer that was insured through St. Paul. The policy included UM/UIM coverage. EICN sought reimbursement under the St. Paul policy for the workers compensation benefits it paid to Wessman. St. Paul denied the claim.

EICON filed suit seeking a judicial declaration that it had a right to subrogate against the employer’s UM/UIM coverage regardless of whether Wessman sought or received workers comp benefits. The trial court granted EICON’s motion for summary judgment, concluding that Nevada law grants workers compensation insurers an independent right of subrogation against an employer’s UM/UIM coverage. St. Paul appealed.

Supreme Court Opinion. Affirmed in part, reversed in part. NRS 616C.215(3) allows workers compensation insurers like EICON an independent right to seek subrogation against UM/UIM coverage purchased by an insured’s employer. That right, however, may be restricted by the UM/UIM carrier through the use of limitations and exclusions in the policy, i.e., the insurer may offset workers compensation benefits from UM/UIM benefits.

Workers Compensation Insurer Does Not Have Absolute Right to Intervene

American Home Assurance Co. v. Eighth Jud. Dist. Ct., 2006 W.L. 3742742 (Nev.) (Dec. 21, 2006): Timet hired Guardsmark to provide onsite security services. Madison, an employee of Guardsmark, worked as a security guard on the assignment and was injured when he fell into an abandoned furnace pit on Timet’s property. Madison received workers compensation from Guardsmark’s insurer, American Home Assurance Co. (AHAC). Madison filed a personal injury action against Timet. Over two years after the accident AHAC filed a motion to intervene in Madison’s personal injury action for purposes of recovering past and future workers compensation benefits paid to Madison. Madison and Timet opposed the motion. The trial court denied the request for intervention and AHAC filed a petition for writ of mandamus.

Supreme Court Opinion. Writ denied. A workers compensation insurer does not have an absolute right to intervene in the injured worker’s third-party tort action pursuant to NRCP 24(a)(1). The insurer only has such a right pursuant to NRCP 24(a)(2) when it can prove that the injured worker might not adequately represent its interest. Since AHAC waited until shortly before trial to seek to intervene and it failed to show that Madison’s representation was inadequate, the trial court did not error in denying AHAC’s application to intervene.

Workers Compensation Exclusive Remedy; Property Owner Immune From Suit

Richards v. Republic Silver State Disposal, Inc., 2006 W.L. 3742691 (Nev.)(Dec 21, 2006): Republic provides waste collection and disposal services. For several years, Republic contracted with Commercial to perform service and maintenance on Republic’s air conditioners. Commercial entered a contract with Republic to remove some existing swamp coolers from the roof of Republic’s building and to install new swamp coolers. Commercial provided its employees with workers compensation insurance for the project. While working on part of the contracted job, one of Commercial’s employees, Richards, fell off an affixed ladder located on Republic’s property and was injured. He recovered workers compensation benefits from Commercial. Thereafter, Richards sued Republic for negligence.

Republic moved for summary judgment arguing that it was immune from suit under the Nevada Industrial Insurance Act’s (NIIA) exclusive remedy provision. The trial court granted the motion finding that Richards suit happened on a construction site and was barred by the principles set forth in Harris v. Rio Hotel & Casino, 117 Nev. 482 (2001), which grants property owners who hire licensed principal contractors to complete construction projects immunity from suit. Richards appealed.

Supreme Court Opinion. Affirmed. Immunity to property owners under Harris operates to bar claims that arise out of risks associated with the work for which the property owner hired the licensed contractor. As the installation of the swamp cooler was performed by a company that held a Nevada contractor’s license, the employee alleged that his injury resulted from a risk directly associated with working on the installation project, Republic, the property owner, is entitled to immunity. Overruling Tucker v. Action Equip., 951 P.2d 1024.

Medical Malpractice; Dismissal of Complaint for Lack of Supporting Medical Expert’s Affidavit; No Amendment Allowed

Washoe Med. Center v. Second Jud. Dist. Ct., 2006 W.L. 3804873 (Nev.)(Dec. 28, 2006): One day before the statute of limitations expired, Barker filed a complaint against Washoe Medical Center and Dr. Glenn for alleged negligence during a surgical procedure. The Complaint did not include an affidavit (from a medical expert) with it as is required by NRS 41A.071.

Washoe Medical Center moved to dismiss the Complaint because it failed to include the required medical affidavit. While the motion was pending and after the statute of limitations had expired, Barker filed an amended complaint that included the required affidavit. Washoe Medical Center moved to strike Barker’s amended complaint. The trial court concluded that Barker’s amendment was permissible under NRCP 15(a) since a motion to dismiss is not a responsive pleading. The trial court also denied Washoe Medical center’s motion to dismiss and to strike. Washoe Medical Center filed a petition for writ of mandamus seeking to compel the trial court to dismiss Barker’s original complaint and to strike the amended complaint.

Supreme Court Opinion. Petition granted. As a matter of first impression, when a plaintiff in a medical malpractice case fails to meet NRS 41A.071, requiring a plaintiff’s complaint be supported by an affidavit from a medical expert setting forth averments of medical malpractice, the complaint is void ab inito, and must be dismissed without prejudice. No amendment to cure a NRS 41A.071 defect is allowed. Therefore, the trial court erred by denying Washoe Medical Center’s motions to dismiss and to strike.

Standard for New Trial Based Upon Attorney Misconduct

Lioce v. Cohen, 2006 W.L. 3804866 (Nev.)(Dec. 28, 2006): Attorney Emerson was hired in four different cases, by four separate defendants, to represent them in personal injury lawsuits. During the closing arguments of each trial, Emerson made statements that the plaintiffs’ lawsuits were “frivolous,” that the plaintiffs had “wasted the jurors’ time and the taxpayers’ money,” and that the plaintiffs’ case was the reason that people were “skeptical and distrustful of lawyers and their clients who bring these types of lawsuits.” Some of the attorneys for the plaintiffs objected to these remarks, but some did not. Emerson was successful at obtaining defense verdicts in favor of each of his clients. All of the plaintiffs in these four cases filed motions for new trials. Two were granted and two were denied. The trial court’s decisions on the motions for new trials were appealed to the Nevada Supreme Court.

Supreme Court Opinion. Orders granting new trials affirmed and remanded; orders denying new trials vacated and remanded; attorney referred to State Bar. The standard for a new trial differs and is decided by whether the misconduct was objected to or not. For objected to and admonished attorney misconduct, the party moving for a new trial has the burden of showing that the misconduct is so extreme that the objection and admonishment could not remove the misconduct’s effect. For unobjected to attorney misconduct, plain error review applies. Attorney Emerson engaged in three types of misconduct during closing arguments: (1) jury nullification; (2) statements of personal opinion; and (3) “golden rule” arguments. All of his closing arguments were improper; thus Emerson is reported to the State Bar for discipline.

Construction Defect; Comparative Negligence Jury Instruction; Special Verdict Forms

Skender v. Brunsonbuilt Const. and Development Co., 2006 W.L. 3804835 (Nev.)(Dec. 28, 2006): Skender and Brunsenbuilt entered into a contract wherein Brunsenbuilt would construct a single-family residence for Skender according to plans provided by Skender. The contract also provided indemnity in favor of Brunsenbuilt for all claims and causes of action arising from Skender’s negligence or Skender’s designs and specifications. Brunsenbuilt filed a complaint against Skender for breach of contract, alleging that Skender failed to pay for written change orders under the contract. Skender filed an answer and counter-claim alleging claims for breach of contract and negligence based upon 40 separate construction defects.

Toward the end of trial, the trial court agreed to instruct the jury on both parties’ breach of contract claims, as well as Skender’s negligence claim. With regard to comparative negligence, the court used an instruction that read “comparative negligence is negligence on the part of [Skender] which, cooperating to some degree with negligence of another helps in proximately causing an injury to [Skender].” In light of Nevada’s construction defect statutory scheme, NRS Chapter 40, the Court also decided to use a general verdict form, rather than a special verdict form separating the negligence claim from the breach of contract claim.

The jury returned two verdicts. Under the Brunsenbuilt verdict, the jury found that Skender had breached the contract and assessed damages at $34,000. Under the Skender verdict, the jury found for Skender and assessed damages at $452,734, without reduction for comparative negligence of Skender. However, the jury found Skender was 55% comparatively negligence. Thus, the total amount of the Skender verdict was $49,000. The trial court denied Skender’s motion for a new trial and judgment notwithstanding the verdict. Skender appealed arguing that the trial court erred by applying comparative negligence in a construction defect case and refusing to use the special verdict form.

Supreme Court Opinion. Reversed and remanded. In construction defect cases comparative negligence jury instructions must address claims subject to comparative negligence, including the expanded role of the homeowner in planning, design or construction of the residence, as well as those defects that occur later because of homeowner conduct. The trial court erred because it did not distinguish between these defects in the comparative negligence instruction it gave to the jury. The trial court also erred by using a general verdict form. A special verdict form in construction defect cases is appropriate when multiple potential theories of liability are asserted and a party asserts a comparative negligence defense. In that case, the trial court must specifically instruct on those aspects of the case to which the negligence claim applies, being mindful of the limitations on the comparative negligence defense, and use a special verdict form that makes clear under which theory damages are awarded and the theory of liability which the defenses apply.