Nevada Insurance Law

LexisNexis NAMES NEVADA INSURANCE LAW AS A TOP INSURANCE LAW BLOG FOR 2011

The Advisory Board of the LexisNexis Insurance Law Community has selected Mills & Associates' Nevada Insurance Law as one of the nation’s Top Insurance Law Blogs for 2011.  The Advisory Board described what it saw in the winning blogs.

The Top Blogs contain some of the best writing out there on insurance law.  They contain a wealth of information for the insurance law community with timely news items, practical information, expert analysis, practice tips, frequent postings, and helpful links to other sites.  These blogsites demonstrate how bloggers can impact the world of insurance law. 

Mills & Associates is proud to be among that group of great bloggers.  In the Nevada Insurance Law blog, Mills & Associates strives to provide its readers with concise, informative posts on Nevada’s most current insurance law developments and trends. 

We thank the Board for recognizing the Mills & Associates Nevada Insurance Law Blog as one of the best in the country.

MY INSURED CRASHED A RENTAL CAR IN VEGAS. WHO CAN ANSWER MY COVERAGE QUESTIONS?

Apparently, people aren’t following the advice of the politicians.  Las Vegas visitors are still arriving despite warnings of unprecedented economic upheaval that will occur when people “blow their money” in Vegas.  During the first quarter of 2011, McCarran International Airport reported that 4.5 million people got off of a plane in Vegas.  See http://www.mccarran.com/04_04_stats_01.aspx.  These stats don’t even try to account for the number of visitors arriving by car.  Anyone driving from Las Vegas to SoCal on the Monday afternoon following a three day weekend can tell you just how many folks they believe are in that group. 

And the visits aren’t stopping either.  The individual Vegas conventions that are planned for the next few months anticipate attendees ranging from the single digits to tens of thousands.  Those small and large conventions combine to bring hundreds of thousands visitors to town each and every month.  Some of the upcoming Conventions will involve truck drivers, physicians, woodworkers, laundry / dry cleaner owners, hardware sales and kitchen & bath suppliers just to name a few.  See http://www.lasvegastourism.com/conventions_jun.htm 

People from all over the country and the world visit Las Vegas to participate in a variety of activities.  Not all of these visitors rent cars.  But many do.  Some of the people driving up from LA have rented a car just for that trip. Others have rented cars from the local agencies.  With all of those rentals happening, a certain number of accidents are inevitable.  And with accidents come insurance claims issues regarding coverage, choice of laws and damages, all of which may need to be answered. 

Many of the big insurance companies have in house counsel or relationships with Nevada firms who can advise them regarding what to do when an out of state driver causes a Nevada accident in a rental car.  But there are any number of insurance companies that don’t write insurance in Nevada.  Their insureds sometimes cause accidents as well.  Where do those carriers turn when they have questions?  Mills & Associates is available to help.  If we have no conflict, we will be glad to give you advice relative to the complex Nevada law surrounding rental cars and auto accidents involving them.  We have advised companies that write insurance in the United States and internationally about how Nevada law pertains to their insureds when involved in an accident in a Las Vegas rental car.  Please contact us with your questions.  We will do our best to discuss your situation so that you can determine if you need to retain counsel on a particular issue. 

We look forward to assisting you and your policy holders.

COMPUTATION OF DAMAGES

Nevada’s Rule of Civil Procedure 16.1(a)(1)(C) and Federal Rule of Civil Procedure 26(a)(1)(C) require the claimant to serve a “computation of any category of damages claimed by the disclosing party”.  This Computation of Damages is supposed to be served with the initial disclosures and must be provided “without awaiting a discovery request.”

In the case of Design Strategy, Inc. v. Davis, 469 F3d 284 (2d Cir. 2006), the court had to decide whether a Plaintiff, who had failed to disclose a certain category of damages (lost profits) would be allowed to add that claim at the last minute.  The court explained the three-fold purpose behind the rule.  It said that the rule was intended to:

(1)     accelerate the exchange of basic information needed to prepare for trial;
(2)     focus and prioritize discovery; and,
(3)     aid the parties in making informed decisions about settlement.

The court found that in order to avoid the sanction of striking that line item of damages, that Plaintiff would have the burden of demonstrating that its late produced computation would not prejudice the Defendant.  Id  at 298.
 
There have been a number of other cases where the courts have refused to allow evidence to be introduced where there has been a failure to comply with the Computation of Damages rule.  See Gilvin v. Fire, 2002 U.S. Dist. Lexis 15249 (D.D.C.2002), American Realty Trust, Inc. v. Matisse Partners, L.L.C., 2002 WL 1489543 (N.D.Tx.2002), Midwest Grain Products, Inc. v. Envirofuels Marketing, Inc., 1996 WL 445070 (D.Kan.1996) and Colombini v. Members of the Board of Dirs. of the Empire College School of Law, 2001 WL 1006785, 2001 U.S. Dist. Lexis 13405 (N.D.Cal.2001).

In Nevada’s District Courts, the benefits that could be had by enforcing the rule are rarely realized.  At the outset of litigation, Plaintiffs generally disclose only the past special damages such as medical bills, property damage and lost wages.  Usually, they omit calculations of future damages in the same categories, and they never include calculations as to general damages.  It is our experience that District Courts are rarely willing to enforce the rule and chop out a section of Plaintiff’s damages that were withheld until the last minute.  That fact is regretful because if that sanction were imposed even once, Plaintiffs attorneys would learn quickly to be more forthcoming with a full Computation of Damages.
 
At Mills and Associates we have found that although the Courts are unwilling to sanction the Plaintiffs for their delays in setting out the damages, some of them will push the Plaintiffs to provide a complete Computation of Damages.  Having at least a list of the categories of damages early in the litigation may be helpful to open the doors to discuss settlement.  Mills and Associates believes that the more you know about the Plaintiff’s claims the better you can talk settlement or if necessary defend the case.  We will continue to advocate for full disclosure of a Computation of Damages relative to each claimed category of damages as early in the litigation as possible. 

THE FUTILITY OF SUMMARY DISPOSITION OF CASES IN CLARK COUNTY, NEVADA

“Why Should I Even Try?”

I don’t know how many times during my first meeting with the client, I have heard recitations about how unjust it is that the client has to defend against facially unsupportable allegations.  “Why don’t you just file a Motion and get us out of this case?” they ask.  My answer has always been “If only it were that easy!” 

When giving that answer, I wasn’t trying to be inconsiderate.  I was just passing on to the client what I had learned by experience; in Nevada State District Courts dismissals of a case on a motion is a rare occurrence. 

Well now, the data has been coming in to back up what has now only been anecdotal.  In 2009 the Clark County Clerk started tracking the likelihood that Motions for Summary Judgment would be granted.  The emerging data backs up what we the attorneys have known for some time.  Summary Judgments are as rare as hen’s teeth. 

From July 2009, to Oct. 2010, Clark County reports that it filed 3008 Motions for Summary Judgment.  Of those Motions, only 318 were granted.  That is a dispositive result in only 10% of the filings.  Obviously, this expected rate of outcome would not be considered a real incentive to people to ask for summary disposition of their case. 

An even greater disincentive is the fact that the Clark County Clerk now imposes a fee every time a party files a Motion for Summary Judgment.  They charge you $200.00 just to slide the Motion through the clerk’s window.  I would guess that these two factors working together would all but shut down the Summary Judgment filings in the county.  And what is even more ironic is that the Judges continue to complain about how their exceptionally high caseloads cause them to be so overworked. 

With that said, I don’t see this situation changing anytime soon.  Once you are in a case, plan on being in it for the long haul, in spite of the Rule of Nevada Civil Procedure that says that Summary Judgment is a remedy that is available in this state. 

GOT QUESTIONS?

These posts on the Mills & Associates Nevada Insurance Law blog are published to provide useful insights on Nevada insurance law to our clients and other subscribers. Many times the topics are suggested by recent case law, or issues raised by litigation. 

As part of our ongoing effort to provide both timely and helpful information, we invite all our readers to submit issues which they would like to see addressed in future blog posts. 

Likewise, please submit questions concerning prior posts.  We will do our best to provide additional information or updates on those topics. 

If you would like to submit a question, or a suggestion for a future blog post, please contact us at Mail@MCMillsLaw.com.

 

MORE SUBROGATION?

During these economically troubled times, this office is seeing an upswing in cases that we defend where our opponent is an insurance company seeking subrogation.  In the past, these defense cases were few and far between.  With intercompany arbitrations resolving many of these disputes, it appears to us that where such agreements are not controlling, more and more carriers are opting to file small property damage claims that previously may have just gone uncollected. 

In addition, we have found that the insurance companies in such cases are far less willing than they were in the past to negotiate based upon the simple vagaries of litigation.  Without some specific defense to which the defendant can point, many of these insurance companies will not negotiate for some automatically discounted recovery.

 This change in circumstances obligates us as defense attorneys to remind the subrogation plaintiffs about the exigencies of the burden of proof.  Many of these subrogation cases are brought in Nevada Justice Courts, where the jurisdictional limits are lower.  While it is true that if these cases have been brought in small claims the rules of evidence would be relaxed, in a regular civil trial in justice court, the rules of evidence still apply.  Many subrogation attorneys rely simply on the fact that the cost of defense will possibly bring them a resolution.  They do forget that the burden is on them to prove their case. 

We find that many of these attorneys don’t follow the Rules of Civil Procedure, discovery, and evidence sufficiently to make proof at their trials.  We are hoping that the courts will enforce the rules sufficiently to obligate those plaintiffs to satisfy the rules before cases can move forward.  Time will tell regarding the success of this practice.  Stay tuned to the Mills and Associates blog to find out how these strategies play out in such cases.  We will keep you up to date on the many things that we are doing at Mills and Associates to respond to the needs of our clients.

 

DEFAULT IS NOT NECESSARILY DEFEAT

It’s bound to happen eventually.  A lawsuit gets filed.  The insured is served with a summons and complaint.  But rather than notifying the carrier, the insured defendant does NOTHING.  Under Nevada law, if a defendant does not file an appearance within 20 days after service, the non-answering defendant is in default.  See N.R.C.P. 12(a)(1).  Fortunately all is not lost.

Defaults are governed by N.R.C.P. 55 which reads:

RULE 55.  DEFAULT

(a) Entry.  When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules and that fact is made to appear by affidavit or otherwise, the clerk shall enter the party's default.

Between the time when 20 days have passed until the time when the clerk takes action to enter default, the exact status of the case is vague.  Keep in mind that there is no valid default until the clerk actually signs and files the form entitled “Default”.  Opaco Lumber & Realty Co. v. Phipps, 75 Nev. 312, 340 P.2d 95 (1959).  A party in technical default has a couple of choices.  That party could simply appear and file a tardy Answer.  But the tardy Answer would be subject to Plaintiff’s Motion to Strike because of the technical violation of the rule.  Perhaps the better solution would be to appear and file a Motion to Enlarge Time to Plead and to Set Aside Technical Default on an Order Shortening Time and attach thereto a proposed Answer.  Either way you go, if you do it in a timely fashion, it is unlikely that the court would take the drastic step of entering a formal Default since it is in effect an “admission by the defending party of all material claims made in the complaint . . . resolv[ing] the issues of liability and causation and leav[ing]open only the extent of damages.”  Lamastro v. Am Family Ins. Group, 124 Nev. Adv. Op. 89, 194 P.3d 339, 345 (2008).  This technical default is generally the simplest type of default to cure.

MAY I CUT IN? INTERVENING IN NEVADA

There are times when an insurance company may find it necessary to jump into the fray.  If a lawsuit is ongoing and the insurance company is not party to that suit, the carrier can try to intervene in the suit that’s already filed, rather than rather than file a separate action.  Intervention is allowed under Rule 24 of the Nevada Rules of Civil Procedure and under N.R.S. 12.130. 

Intervention may be appropriate in several situations.  A common situation is where an injured Plaintiff sues an uninsured motorist.  The uninsured Defendant may have no interest in defending the action because he is judgment proof.  However, if the Plaintiff had uninsured motorists coverage, that carrier may well have an interest in defending that suit to assert defenses that would not otherwise be asserted by the uninsured tortfeasor.  In order to get the defenses presented, the uninsured motorist carrier will need to intervene in the suit filed by the Plaintiff against that uninsured motorist. 

In the case of American Home Assurance Co. v. Dist. Ct., 122  Nev. 1229, 147 P.3d 1120 (2006), the Nevada Supreme Court said that there is no intervention as of right.  In that case, the worker’s compensation carrier wanted to intervene in an action brought by an injured worker.  The worker’s comp carrier was seeking subrogation directly from the alleged tortfeasor for the expenses paid and yet to be paid to be paid in compensation to the injured worker. 

AVOIDING THE PITFALLS OF POLICY LIMIT DEMAND LETTERS

How many times a week do busy insurance adjusters receive demands to settle a claim for the amount of the insured’s policy limits?  It doesn’t matter that the damage to the Plaintiff’s car is valued under $500.00 and the chiropractic treatment is less than $1,500.  The Plaintiffs are still asking for the entire per person limit.  And that is not all!  The Plaintiffs want the money on exceptionally short notice, providing the adjuster little or no supporting information.  This Nevada Insurance Law Blog post explains why the Plaintiffs’ attorneys submit such unreasonable demands.  We will also explore a strategy on how to address these policy limits demands, no matter how outrageous they may seem. 

I.  WHAT MOTIVATES THE PLAINTIFF’S ATTORNEY TO SEND YOU THAT POLICY LIMIT DEMAND LETTER?

THEY ARE LOOKING FOR DAMAGES IN EXCESS OF THE POLICY LIMITS!

Plaintiffs’ attorneys are constantly searching for ways to maximize a recovery for their clients.  Plaintiff’s attorneys do not want to collect damages from the actual tortfeasor.  That can be difficult and time consuming.  Instead, they like to collect directly from the insurance companies. 

All adjusters know that insurance policies are written with limitations.  Under the policy, the amount of the premium will dictate how much the carrier will have to pay out. 

Plaintiffs’ attorneys know of these limitations and are always looking for ways to get around them.  Plaintiffs’ attorneys and insurance companies both know that if the carrier acts in bad faith, it can be called upon to pay more than the policy limit.  Bad faith claims are a concern for every insurance carrier.  Not only do they damage the carrier’s public image, they also place an insurance carrier at risk to pay damages in excess of the policy limit.  Along with that, there is also the risk that the carrier will have to pay a claim for punitive damages.

Plaintiffs’ attorneys have devised a number of strategies that they believe will automatically put the carrier in bad faith and thereby “open the policy”.  One very common threat made by Plaintiffs’ attorneys is that the policy is immediately opened if the defendant’s carrier fails to accept a settlement demand made at or below the policy limit.  Plaintiffs’ attorneys claim that they are entitled to an “extra-contractual” recovery if the carrier doesn’t pay them the entire policy limit within the time they have prescribed. 

Let’s examine the background behind this common threat and consider the misunderstandings held by many regarding a failure to satisfy a policy limits demand.  Finally, although the threats can never be eliminated, we will discuss strategies that the carrier may adopt to mitigate the possibility that policy will ever be opened due to by bad faith.

II.  DO NOT LET FEAR OF A POLICY LIMIT DEMAND LETTER CAUSE YOU TO FREEZE UP.

INSTEAD, IMPLEMENT YOUR PLAN!

When the policy demand letter arrives, it may or may not include a threat of bad faith.  Just know that the policy limit demand is the foundation for a possible bad faith claim in the future.  Therefore, you have to take the letter seriously.  Do not ignore it.  But don’t let the demand letter cause you to freeze up either.

At the moment when a demand letter is sent and received, any threat of bad faith is just that, a threat.  The impact of any alleged bad faith is a long way off.  When a plaintiff’s attorney claims that the carrier’s bad faith "opened" the policy, the attorney is arguing that the carrier has breached the duty it owes to its insured. 

In fact, the carrier owes a duty to its insured to act reasonably in its negotiations with the claimant as it decides whether it will accept a demand.  If the insurance carrier fails to reasonably consider the interests of the insured, it can be argued that the carrier has acted in bad faith. 

A circumstance that regularly presents itself for the carrier's consideration is whether the plaintiff’s demand is meritorious and whether payment of the insured’s minimum policy limit would in fact settle the case.  If the carrier unreasonably rejects or fails to respond to the plaintiff’s demand, the insured may have grounds to argue later that the carrier has committed bad faith. 

However, bad faith against the carrier is not mature until the insured sustains some damage.  The insured will not be considered damaged unless and until the plaintiff has obtained a judgment against the insured.  In other words, the carrier does not automatically commit bad faith by rejecting the policy limit demand or by making a counter offer. 

Thus, keep in mind, it is not the demand letter that puts the company in bad faith.  Instead, it is how the company reacts (or fails to react) that can cause a bad faith claim to arise.  Therefore, having a response plan in place and executing that response plan will reduce the possible exposure to a bad faith suit.

III.  THE PLAN YOU NEED TO FOLLOW TO AVOID POLICY LIMIT DEMAND PITFALLS

1. Send a written response to every time limit demand in advance of its deadline.

We recommend every response to a time limit policy limit demand be made in writing.  If there is ever a question of timeliness, the writing is evidence of the date of your response to the demand.  Furthermore, the written response documents how the carrier intends to respond to the demand.  If the response is written carefully, there will be no question about the carrier’s intentions toward Plaintiff’s demand.

2. In the carrier’s written response, describe several of the steps that the company has taken to complete its investigation of the claim.

By describing in writing some of the steps the company has taken on the claim, it will demonstrate that the carrier is attending to its duty to investigate.  If the claim were to go on to an extra contractual phase, the letter will be evidence that the carrier did not ignore the file. 

3. Ask the Plaintiff’s attorneys to send you everything that they have in their files that will support their demand

This item may be self evident but it seems to be an alarming trend that Plaintiffs’ attorneys are sending demand letter with little or nothing attached.  In your written response, always point out the fact that the demand included no or few supporting documents.  Tell the Plaintiff’s attorney that you cannot evaluate the claim without access to any evidence of injury or bills.  It is not unreasonable to ask the Plaintiff’s attorney to send you copies of the documents (i.e. medical bills and records) that would support their client’s claim for damages. 

If the Plaintiffs attorney sends authorizations and expects the carrier to send them to the providers and those authorizations do not comply with the HIPAA law, respond in writing that the authorizations will do the company no good because they will not be honored by the Plaintiff’s medical providers. 

Always remind the Plaintiffs attorney in writing that if you cannot evaluate the claim without the medical records and that if you have to go out and get them that that is going to take additional time. 

4. Always detail additional steps that must be taken to complete the evaluation of the claim.

This is a critical step in the response process.  Sometimes counsel will present a time limit demand with an exceptionally short response time fuse.  If the response time is so short (i.e., one to two days) that no legitimate response can be formulated, the written response should say that. 

In particular, the letter should describe steps that still have not been completed.  Perhaps medical records need to be collected.  Maybe witnesses need to be interviewed.  It is possible that photos are needed or measurements taken or experts consulted.  The response should also state all of the additional steps that need to be taken to complete the carrier’s investigation.  In addition, the letter should say that further investigation may be needed based upon completion of the listed steps.  Don’t forget to say that the additional investigation will require additional time to be completed and the company will need time to consider the findings of the investigation.

5. If evidence/information in the claimant’s control is now unavailable for review, mention that fact.

In many investigations, the evidence and information that had been available at one time is no longer available.  For example, a car that once may have been available for thorough evaluation by the company’s engineer may have been repaired and therefore, no longer be available for such an evaluation.  Sometimes photographs taken by the Plaintiff are lost or cannot be developed. 

There are times when parts have been lost, statements have been bungled, or other situations where critical information has been either intentionally or inadvertently destroyed by the Plaintiff or his counsel.  If there is evidence in the case that you would have liked to have seen but that is no longer available, it is always good to mention the loss of that information and document how it is no longer available and how the lack of the information is going to hinder the company’s further investigation of the case. 

6. Recite any authority that grants or insinuates that the carrier may have additional time to respond. 

In many states, fair claims practice regulations obligate the carrier to respond to any particular claim within a certain time frame.  In first party cases, Nevada identifies 30 days as being the appropriate period in which to respond. Nevada Administrative Code 686A.675(3) specifically states that in regard to insurance claims:

If the insurer needs more time to determine whether a claim of a first-party claimant should be accepted or denied, it must so notify the claimant within 30 working days after receipt of the proof of loss giving reasons that more time is needed. If the investigation remains incomplete, the insurer shall, 30 days after the date of the initial notification and every 30 days thereafter, send to the claimant a letter setting forth the reasons that additional time is needed for investigation.

In virtually any letter, it would be appropriate to cite this section of the regulations and would provide for and could argue that the Department of Insurance has indicated that an appropriate response time is 30 days and not the 2 or 3 days that the Plaintiff’s attorney has given you.

IV.  CONCLUSION

By following this plan an insurance carrier can discourage claimants from attempting to take their claims to an extra contractual level.  Although this plan may not always prevent all extra-contractual cases, it has worked well for many of our clients in southern Nevada.

Even if the most persistent claimants are not discouraged by your response letter, the submission of the letter will become good evidence should the case later find itself in extra contractual litigation.

If you have any questions about other defense strategies to respond to Time Limit Demand Letters, please feel free to contact Mr. Mills by email or phone (702) 240-6060.

 

DON'T SABOTAGE YOUR OFFER OF JUDGMENT STRATEGY!

Smart adjusters have avoided paying a Plaintiff’s verdict and have recovered their own costs and attorney’s fees by properly using Offers of Judgment rules as a defense strategy, even where liability is adverse.  However, a Nevada Supreme Court case could cause an unwary adjuster to undervalue the Offer of Judgment and thereby miss out on the advantages that are available under those rules.  Don’t sabotage your position while using the Offer of Judgment strategy because you are unaware of this Supreme Court case.

Dugan vs. Gotsopoulos

A savvy adjuster will never overlook the issue of property damage when evaluating the case to decide on the right amount for an Offer of Judgment.  The seriousness of learning this lesson is demonstrated by the recent Nevada Supreme Court case of Dugan v. Gotsopoulos, 117 Nev. 285, 22 P.3d 203 (2001).

This case involved a 1995 auto accident.  The Plaintiff claimed personal injury and property damage.  A repair estimate for the Plaintiff’s car, a 1988 Pontiac Firebird, totaled $2,800.00.  The Plaintiff did not have the car repaired but continued to drive it in its post-accident condition.  Over time, the condition of the car deteriorated until Plaintiff could no longer drive it.

At trial, the Judge prevented the Plaintiff from introducing several pieces of evidence.  First, the Judge refused admission of testimony of the Plaintiff as to the value of her car and refused to allow the Plaintiff to submit information from the Kelly Blue Book to prove value.  Second, the Judge would not allow the Plaintiff to introduce evidence of rental car costs to establish the value of her loss of use, even though the Plaintiff had not rented a car. 

The Supreme Court overruled the trial court.  The Supreme Court said that Ms. Dugan could testify from her own experience as to the value of her car.  The Court also said that the Kelly Blue Book value was not inadmissible as hearsay.

The Supreme Court also said that an expert witness would not be necessary to prove loss of use damages.  Instead, the Court said that Plaintiff could recover damages for the inconvenience of loss of use even if she did not rent a car.  The Court said that if she had investigated the cost of renting a car, she could testify as to that amount and could recover loss of use for a reasonable period within which to repair the vehicle.

The Effect of the Dugan Case on Offers of Judgment

The Dugan case makes it much easier for Plaintiffs to introduce evidence about their property damage losses.  Plaintiffs will be allowed to testify about the value of their own property.  Plaintiffs will be allowed to introduce pages from the Kelly Blue Book about the value of a total loss.  Additionally, assuming that they have done their homework, Plaintiffs will be allowed to testify about how much it would have cost them to rent a car and to recover that amount in damages, even if they have not rented a car.

Imagine for an instant the effect that this type of testimony will have on the final verdict in the case.  If Plaintiff’s property damage claim has not been settled, Plaintiff will be able to testify that the car lost in the accident was valued at a certain amount.  Plaintiff will then be able to show the jury the Kelly Blue Book.  Finally, the Plaintiff will be allowed to quote the price of a rental car and argue that it would have been reasonable to have had a rental car for any number of days.
 
If the value of the personal injury portion of the case is small, the Dugan case gives the Plaintiff an opportunity to substantially effect the final verdict and thereby thwart the effect of the Defendant’s Offer of Judgment.  Here is how it would happen. 

As you know, in deciding whether the Defense has bettered its Offer of Judgment, the Judge will compare the Offer with the amount of the verdict.  The Judge will not be able to decide whether the Offer was made based on the value of the personal injuries or just the property damage.  The Judge will simply look at the Offer and compare it with the verdict.  If the jury agrees with the Plaintiff’s testimony about the value of the car or the Kelly Blue Book, or the loss of use, those damages will be added into the verdict.  If the adjuster’s Offer of Judgment is based on the amount of the personal injuries alone, the final verdict could potentially be much higher than the Offer of Judgment.

How to Avoid Sabotaging Your Offers of Judgment

The easy way to avoid sabotaging your own Offer of Judgment is to always consider the value the property damage in reaching the decision on how much to offer.

 

The first and easiest way to avoid a problem is to settle the property damage portion of the claim prior to determining how much you want to offer the Plaintiff by way of your Offer of Judgment.  The best practice will be to get a Property Damage Release for the amount paid.  That way, you can be readily assured that the matter is closed.  Make sure that the release forecloses claims for all property losses, including loss of use.

 

If you are unable to get a Property Damage Release, you must be sure to include the value the of property damage as part of the Offer of Judgment amount.  As you are deciding how much to offer by way of an Offer of Judgment, keep in mind that the Plaintiff will have almost free rein in telling the jury his or her opinion about the value of the property.  You will need to arm your defense counsel with evidence to overcome what Plaintiff might say. 

For example, you will want your attorney to have evidence to back up the arguments that you have made that loss is smaller than the Plaintiff believes.  That might require the defense attorney to call a property damage adjuster to give testimony.  The adjuster must also be prepared to testify about the price of comparable rental car.  The adjuster will also need to discuss what is a reasonable period of time in which the repairs could take place or the time it would take for Plaintiff to find an alternative vehicle if the auto was a total loss.  If the defense does not offer this type of evidence, the Plaintiff’s testimony will be the only evidence before the jury on the subject.

In Conclusion

Defendants and their carriers have done a good job of evaluating personal injury cases.  The valuations have allowed carriers to take advantage of the Offer of Judgment rules, by not only depriving Plaintiffs of any recovery, but also giving the Defendants a chance to recover their attorney’s fees and costs.  It would be a shame to let the time spent making these evaluations go to waste by not considering the value of the property loss before reaching a decision on how much to Offer. 

The best practice is to settle the property loss before going to trial to save the time and money of preparing a defense of a property damage trial.  If that can’t be done, make sure that you add in the value of the property damage to the Offer of Judgment.

Additional information on strategically implementing Offers of Judgment in Nevada litigation can be found by clicking HERE.  We also encourage you to explore the “Categories” listed in the right column for related topics. 

If you have any questions about the Offer of Judgment or any other litigation strategies, feel free to contact me at 702.240.6060 or by email.

--- Mike Mills

NOW WHERE ARE YOU GOING?

Nevada Jurisdiction Risks

Both Plaintiffs and Defendants take a serious risk when litigating in a court that lacks proper jurisdiction.  The Nevada Supreme Court has said that subject matter jurisdiction is never waived.  Issues of subject matter jurisdiction can be raised at any time during the proceedings, and in almost any manner.  Meinhold v. Clark County School District, 89 Nev. 56, 59, 506 P.2d 420, 422 (1973); S. G. & R. Bank v. Milisich, 43 Nev. 373, 390, 233 P.41, 46 (1925); Phillips v. Welch, 11 Nev. 187 (1876).

This means that at any time in the litigation process, the other side can challenge the jurisdiction of the court and thereby pull the plug on whatever has been accomplished.  In fact, NRCP 12(h)(3) says that “[w]henever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.”  (Emphasis added).  Whether you are just beginning a case, or whether you have tried the case to a conclusion, if the court determines that it lacks subject matter jurisdiction, it must dismiss.  Imagine the disappointment of your client, after prevailing at trial, just to learn that things will have to start over due to a lack of jurisdiction. 

I haven’t had much success at getting cases dismissed due to lack of subject matter jurisdiction.  I have however had much more success getting an appropriate case transferred to the proper court.

If the case is in Justice Court (jurisdictional limit of $10,000) and it needs to be in District Court (for cases in excess of $10,000), the appropriate statute is N.R.S. 66.070  Transfer of Cases to District Court.  The statute prevents the parties from giving evidence on cases outside of the court’s jurisdiction and requires the court to suspend all proceedings.  Where discovery or other evidence establishes the case’s value is in excess of $10,000, the certified file is then sent to the District Court. 

On the other hand, if the case is in District Court but should be in Justice Court, then pursuant to N.R.S. 3.221, the District Court Judge should transfer the suit to the Justice Court. 

We have all seen the commercial where the announcer asks the football player.  “You have just won the greatest victory of all time.  Now what are you going to do?”    Don’t be the one who has to answer, “I’m going back to the beginning to start over because my court didn’t have jurisdiction.”

PUT UP OR SHUT UP! MAKING AN EFFECTIVE DEMAND FOR A NON-RESIDENT COST SECURITY

When Plaintiffs live outside the state of Nevada, the defense attorney can utter the litigation equivalent to these fighting words by filing a Demand for Security of Costs.  If the Demand is properly and timely filed, the Plaintiffs are forced to either post up the security or shut up by having their case dismissed.  The authority to demand that non-residents post a security for costs is found in N.R.S. 18.130. 

The statute provides that where a plaintiff resides out of the state or is a foreign corporation the Defendant may require Plaintiff to post security for costs and charges which may be awarded against that Plaintiff.  The Demand must be filed within the time allowed for the filing of the complaint.  Once the Demand is filed, the proceedings must cease until the Plaintiff secures the costs of the Defendant.  The security can be a cost bond or a cash deposit to the court for an amount not exceeding $500.00.  When the Plaintiff posts the security, he then must notify the Defendant, who has ten days from that notice to answer or otherwise plead to the complaint.

Plaintiff is allowed 30 days to post security.  If the Plaintiff hasn’t posted security 30 days from the date of service of the Demand, the court or judge may dismiss the action.  Although this Demand will not eliminate the claims of the persistent Plaintiffs, it will in fact buy the Defendants a little more time to prepare their defense.  

MUST / CAN / SHOULD THIS CASE BE REMOVED TO FEDERAL COURT?

In my experience, most Nevada plaintiffs’ attorneys would prefer litigating their client’s cases in the Nevada state court.  Each probably has his or her own reason to prefer state court over federal.  However, defendants may realize significant advantages by getting a case out of state court.  The process of getting a case out of state court and into the proper federal court is called “removal”. 

I don’t recall a plaintiff’s attorney ever consulting his defense opponent on which jurisdiction he or she should file in.  An old saying in the law is that a plaintiff is the “master of his complaint”, meaning that the plaintiff decides what causes of action should be pled, when the complaint will be filed, and where to file.  The defendant gets no choice in these matters.  Unless a defendant can find a legal basis to remove the case from the court that the plaintiff filed in, that case will remain in that court until it is concluded. 

Some cases MUST be litigated in federal court.  Those types of cases are known as “federal questions”.  These are the types of cases that the congress has said are reserved for the federal court system.  An example of a federal question is a civil rights case.  Most plaintiffs that allege a federal question will usually know to file in federal court.  However, if they make a mistake and file in state court, removal is a possible remedy.  Under these circumstances either party may remove the case from state to federal court.

There are other cases that CAN be removed to federal court, but need not be.  Nevertheless, Congress has set some very strict limits on the types of cases that can be taken out of state court and moved into the federal court system.  Normally, the cases that qualify for removal are called “diversity cases”.  There are two major requirements that a case must meet to qualify as a diversity case.  First there must be diversity of citizenship between all plaintiffs and all defendants.  In other words, none of the plaintiffs can live in the same state as any one of the defendants.  If a Nevada plaintiff sues a Nevada defendant, there is no diversity and there can be no removal.  The rule of diversity applies to corporations as well.  Normally, a corporation’s citizenship is deemed to be in the state where the corporation has filed its legal charter.  So if you have a Nevada Plaintiff, who wants to sue a Delaware corporation, then the diversity requirement is met.  That would be true even if the corporation has stores or offices in Nevada. 

The second requirement is that damages claimed must exceed $75,000.00.  Usually, the court will look at what the Plaintiff is alleging or what the demand has been prior to the filing of the case to decide whether this requirement is met. 

A party who wants to remove a case must act quickly.  Normally the removal petition must be filed within 30 days of the service of the complaint.  Sometimes there are special circumstances which allow removal up to one year after the case is filed.  Just one cautionary note:  if a petition to remove is filed and the court finds that it was unjustified, the party asking for removal may have to pay the fees and costs associated with the action as well as having all the federal proceedings deemed void.

The final question is SHOULD a qualified case be removed to federal court.  There are a number of differences between the two systems.  Depending on the case you are handling and the strategy you want to utilize, you will need keep these differences in mind:  1)  Usually you can get a case to trial faster in federal court;  2)  Federal court will have greater judicial scrutiny of the case during discovery;  3)  Federal judges are also more inclined to impose sanctions when warranted; and, 4)  continuances are not easily granted.

One reason that federal courts may approach litigation differently is that federal judges are appointed for life, after being fully vetted by Congress.  Since they don’t face re-election, federal judges are less likely to face what state judges do, namely the need to garner popular support and solicit campaign contributions.   Also since the geographic area of a federal district is usually much larger than that of state courts, thus there is much less inherent bias between local and non-local parties and Counsel.

Other distinctions you may want to consider in deciding whether a case should be removed from state to federal court also exist.  For instance, a federal jury verdict whether a 6, 8 or 12 person jury must be unanimous, unlike Nevada for example where a jury verdict of 2/3 majority is valid.  Nor does federal court allow peremptory challenges of judges.  Lastly, where out-of-state discovery is anticipated (witnesses, experts, etc) the procedures are much simpler under the federal rules. Also because discovery is quicker, and most motions are decided on written submissions, costs of litigation may be less expensive.

At Mills and Associates, we have removed a number of cases from state to federal court.  We are skilled in using the federal court system to our client’s advantages.  Please talk to us about whether removal is a viable and advantageous option. 

A FEE SHIFTING STRATEGY FOR NEVADA'S DISTRICT COURT: PART 1

WINNING A DEFENSE VERDICT IS NOT ENOUGH!
Why The Defense Needs To Use The Offer Of Judgment Strategy In Every District Court Case.

I can’t count the number of times I have heard a defense client or an insurance adjuster say, “The plaintiff’s case is a dog.  Why should I offer anything to the plaintiff to settle the case?”    My response to that question has always been, “Only by serving an Offer of Judgment, can the defense best position itself to either settle the case or try it.”  This article will explain why the Plaintiff faces minimal risk in negotiations or at trial, where no Offer of Judgment is served.  The article will demonstrate how an Offer of Judgment significantly ratchets up the threat to the Plaintiff, even in cases where the defense has stipulated to liability.   Finally, this article will teach you how to use this simple Offer of Judgment strategy in every case, thereby improving the possibility of settlement and also creating the chance to turn a tough defense case into a winner post-trial.

I.  The Best Way To Intensify The Threat Is To Place The Plaintiff At Risk To Pay The Defense Attorney's Fees
 
Following a trial, a prevailing defendant can make a motion to force its opponent to pay its costs.  See N.R.S. § 18.020 and § 18.050.  However, the court has the discretion to award or deny any of the claimed costs.  My experience is that cases, tried after arbitration, may have a few thousand dollars in defense costs.  Most plaintiffs and their attorneys are not put off by the threat that plaintiff might have to pay the defendant’s costs, should the defendant prevail.  This is especially true in light of the fact that they can ask the judge to exercise discretion and deny an award of costs to the defense.  On the other hand, attorney’s fees can be very expensive.  The bill for a defense attorney fees can easily reach $10,000 or more in a district court trial.  Therefore, the best way to increase the threat to the Plaintiff is to put that Plaintiff at risk for attorney’s fees. 

Some have argued that many Plaintiffs do not feel threatened by the possibility of paying thousands of dollars in attorney’s fees.  They suggest that the Plaintiff will simply file bankruptcy and avoid the threat if it ever comes to pass.  Although that might happen in some cases, it is impossible to know the effect that this threat might have on this particular Plaintiff.  The only way to know is to make the threat real.

II.  Normally, Everyone Pays Their Own Attorney's Fees
 
In most circumstances, all Nevada litigants will pay the fees of their own attorney.  Nevada has always followed the American Rule which says that unless there are exceptional circumstances, such as a special court rule or a statute, each of the litigants will pay their own attorney’s fees.  In the case of Smith v. Crown Fin. Svcs. Of America, 111 Nev. 277, 281, 890 P.2d 769, 771 (1995), the Nevada Supreme Court quoted Stuart M. Spiser’s treatise on Attorney’s Fees, explaining the American Rule as follows:

It has been a consistent rule throughout the United States that a litigant has no inherent right to have his attorneys' fees paid by his opponent or opponents. Such an item is not recoverable in the ordinary case as damages, nor as costs, and hence is held not allowable in the absence of some provision for its allowance either in a statute or rule of court, or some contractual provision or stipulation. This sweeping general rule has been applied in legions of cases to preclude recovery of attorneys' fees, whether by the plaintiff or by the defendant, from one's opponent in a civil action. 

Some have advocated a full scale adoption of the English Rule which is the converse of the American Rule.  The English Rule requires the loser to always pay the attorney’s fees of the prevailing party.  The advocates of the change say that adoption of the English Rule would discourage frivolous litigation.

However, until that happens, let’s look for some statutes or rules that deviate from the American rule and which can obligate your opponent to pay for your attorney.
 
III.  A Defendant Cannot Use N.R.S. §18.010(2)(a) In District Court As The Basis For An Award Of Attorney's Fees Even With A Defense Verdict
 
In Nevada, a commonly used exception to the American Rule of attorney’s fees is N.R.S. §18.010 (2)(a) which says:

2. In addition to the cases where an allowance is authorized by specific statute, the court may make an allowance of attorney's fees to a prevailing party:
(a) When he has not recovered more than $20,000;

Those involved in Nevada litigation for any period of time have known a Plaintiff who has collected attorney’s fees from a Defendant based upon this statute.  Plaintiffs recovering even a few hundred dollars in damages can rely on this statute as a basis for a claim of thousands in attorney’s fees.

Initially, prevailing District Court defendants argued that they could claim this exception because a defense verdict has a value of $20,000 or less.  The defendants then asked for attorney’s fees based upon NRS § 18.010(2)(a).

However, the Nevada Supreme Court has specifically said that a prevailing defendant may not use this statute as a basis for recovery of attorney’s fees.  Smith v. Crown Fin. Svcs. Of America, 111 Nev. 277, 281, 890 P.2d 769, 771 (1995).  In that case, Nevada Supreme Court said:
Under the present formulation of the statute, eliminating the requirement of a money judgment would afford some prevailing plaintiffs (those recovering no more than $20,000) and all prevailing defendants the opportunity to recover attorney fees. This over-inclusive result could deeply offend the policy underlying the American Rule which seeks to provide less affluent people with access to the courts. For example, a plaintiff in a personal injury or products liability case would not only be required to pit his meager resources against those of a large insurance company or manufacturer, he would also risk the potentially devastating burden of paying for this marshalling of superior resources should he lose.  
By retaining the requirement of a money judgment, this court preserves the right of some plaintiffs (and counterclaimants) to recover attorney fees while subjecting defendants to the common law rule. Although this under-inclusive rule gives plaintiffs an advantage, it does so only in cases involving $20,000 or less. This rule is faithful to the language of NRS 18.010(2)(a), it provides a significant portion of the intended class of beneficiaries with the intended benefit of being able to recover attorney fees, and it minimizes any harmful impact upon the policies underlying the American Rule. 

In other words, the court told defendants that do not have a counterclaim to look elsewhere to find a basis on which claim attorney’s fees.  In many cases, the only other way for a defendant to get an award of attorney’s fees is by making an Offer of Judgment.

IV.  Offers Of Judgment Are The Best Way To Threaten Plaintiff With A Shift Of Attorney's Fees

As seen above, the risk of a defense verdict is not much of a threat to Plaintiff because, the verdict alone does not threaten Plaintiff with a shift of attorney’s fees.  The most effective way to threaten a shift of attorney’s fees is with an Offer of Judgment.  Offers of Judgment can be made under either Rule 68 of the Nevada Rules of Civil Procedure or N.R.S. § 17.115.  If the Offer that the defense makes is superior to the jury verdict, the Offer of Judgment does two things.  First, it prevents the Plaintiff from recovering costs and attorney’s fees.  Second, it allows the defense the opportunity to recover attorney’s fees and costs from the date of the Offer.  Thus the amount and timing of the Offer of Judgment are critical in properly using this strategy.  The timing and amounts of Offers will be discussed in a future issue.

V.  Conclusion
 
When a District Court defendant fails to serve a timely and valid Offer of Judgment, that defendant has missed out on a prime negotiating opportunity.  Absent an Offer of Judgment (or a counterclaim for money damages), plaintiff will rarely face the threat of having to pay the defendant’s attorney’s fees.  That threat can be enough to force over zealous plaintiffs to rethink their negotiating posture.  Additionally, it positions the defendant to recover attorney’s fees and costs should the case go to trial.  Even if the attorney’s fee award could never be enforced, a defense Offer of Judgment should be made in every case to best use this critical negotiating strategy.  Be sure to browse "Fee Shifting Part 2" which discusses when is the best time to serve an Offer and how to determine the value to make the Offer most effective.

Additional information on strategically implementing Offers of Judgment in Nevada litigation can be found by clicking HERE.  We also encourage you to explore the “Categories” listed in the right column for related topics. 

If you have any questions about the Offer of Judgment or any other litigation strategies, feel free to contact me at 702.240.6060 or by email.

--- Mike Mills

A FEE SHIFTING STRATEGY FOR NEVADA'S DISTRICT COURTS: PART 2

WHEN SERVING AN OFFER OF JUDGMENT, TIMING AND FORM ARE EVERYTHING

In Part I of this Post, I discussed an Offer of Judgment strategy and detailed the advantages of serving a defense Offer of Judgment in every civil case.

An obvious advantage of serving an Offer of Judgment is that if the opponent accepts the offer, you have put an end to the case.  The less obvious advantage is that if the Offer expires without having been accepted, you have placed your opponent at risk of having to pay your subsequent attorney’s fees and costs.  By putting the Offer in the right form and by making the Offer the at the most opportune time, you can increase the possibility that the Offer will be accepted.  If the Offer of Judgment is not accepted and if you have used the right form, you will have simplified the Trial Judge’s task of determining whether the penalties detailed by the Offer of Judgment rules should be imposed post-trial.  Let’s talk about each one of these issues. 

I.  ONCE YOU SERVE AN OFFER OF JUDGMENT, IT WILL REMAIN OPEN FOR TEN DAYS WHETHER YOU LIKE IT OR NOT
 
An Offer of Judgment that is not accepted will expire, if after 10 days from service, the Offer has not been accepted.  N.R.C.P. 68(d) and (e).  N.R.S. 17.115(3) and (4).  Even if the offer expires, the offeror is free to make any number of subsequent Offers under any new terms.  The Nevada Supreme Court has recently said that the offeror must hold every Offer open for the full 10 days.  The offeror is not free to withdraw the Offer, even if the offeror has second thoughts.

In the case of Nava v. Second Jud. Dist. Ct., 118 Nev. 396, 46 P.3d 60 (2002), the offeror tried to withdraw a valid offer during this 10 day offer period.  The Nevada Supreme Court held that the Offer cannot be withdrawn during the 10 day period, even if the offeror changes his mind.

The lesson to be learned is that an Offer must be well thought out and made in the proper form, because once the Offer is served, you face the risk that the Offer could be accepted within the 10 days.  Always remember that if the Offer is not accepted, you will be free to make any subsequent offer under any other terms that you choose.
 
II.  AS A GENERAL RULE, THE SOONER YOU FILE THE OFFER OF JUDGMENT THE BETTER
 
There are great reasons to serve a defense Offer of Judgment as soon as possible after the Answer is filed.  If the Offer is accepted, the amount spent on defense attorney’s fees will be reduced.  In the alternative, if the Offer expires without being accepted, the earlier possible penalties may come into play.  N.R.C.P. 68(f) and N.R.S. 17.115(4).  In a case that ultimately goes to trial, those penalties can become significant. 

If the defendant obtains a verdict that is better than what had been offered, the Plaintiff cannot collect attorney’s fees, interest or costs from the date of service of the Offer. Therefore, the sooner you make the offer, the sooner you qualify to reap those benefits.  

Furthermore, the sooner the defense serves its offer, the sooner the defense has a basis from which to argue that it should recover its costs and attorney’s fees.  Thus, the earlier the Offer is made, the larger the amount of defense attorney’s fees and costs are subject to being recaptured.  And always remember, if this Offer is not accepted, you can always make another Offer under any other terms you want.
 
III.  WHERE POSSIBLE, OFFER TO PAY THE OPPONENT'S COSTS AS WELL AS THE FACE AMOUNT OF THE OFFER
 
For many years, defense attorneys used an Offer of Judgment form which reads that the amount offered “includes” costs and that the offeror would not pay any costs in addition to stated amount.  However, changes made to the Offer of Judgment rules in 1998 have caused careful practitioners to reconsider the use of that old form in light of the treatment given such an Offer by the Trial Judge following a verdict. 

To understand this concept, one must remember that the Offer of Judgment penalties only come into play when the amount of the Offer of Judgment is more favorable than the verdict.  In other words, the Trial Judge must compare the amount of the Offer to the amount of the Verdict and determine which is more favorable to the offeror.

Under the new rules, if an Offer of Judgment uses the old wording, the Trial Judge must subtract the costs that the Plaintiff had incurred at the time that the offer was made and then reduce the face value of the Offer by the amount of those costs.  Only then will the Trial Judge compare the verdict with the reduced value of the Offer of Judgment to determine which one is more favorable.  N.R.C.P. 68(g), N.R.S. 17.115(5).  In other words, the Plaintiff’s costs will be used to reduce the face value of the Offer before the decision as to which if the two is more favorable is made.
 
If the defense has used the old form, and the face value of the defense offer is only a few dollars below the verdict, the Plaintiff will be extremely motivated to prove any costs that it can in order to avoid the penalty provisions of the Offer of Judgment rules.  Under this hypothetical scenario, if the Plaintiff’s attorney were able to find just a few dollars in costs and thereby reduce the face value of the Offer below the amount of the verdict, that attorney may be protecting the Plaintiff from having to pay the Defendant’s attorney’s fees and reestablishing Plaintiff’s right to pre-judgment interest during the pendency of the trial.  The proof of just a few dollars in costs has the potential to swing the final outcome of the case by thousands or even tens of thousands of dollars. 

The old Offer of Judgment form can still be used, but should only be used as a tactic in an overall negotiation strategy.  If the defendant is unwilling to pay more than an exactly stated amount, the stated amount should increased by the amount of the estimated costs.  To do otherwise, gives the Plaintiff’s attorney too much power to affect the bottom line after the jury has rendered its verdict.   Keep in mind however that if costs can be reasonably estimated, there is no reason why the new form of the Offer of Judgment (which says that that it contemplates payment of costs over and above the stated of the Offer) should not be used contemplating a challenge to unreasonable costs by way of a Motion to Retax, if the Offer of Judgment is accepted.

IV.  CONCLUSION
 
The Offer of Judgment is the least understood and most underutilized strategic tool available to the trial attorney.  Make your Offers of Judgment as soon as possible after the Answer if filed, even if it is for a nuisance amount, thereby encouraging the Plaintiff’s attorney to discuss with the Plaintiff the real risks of litigation (namely the possibility of Plaintiff having to pay the defense attorney’s fees and costs).  In virtually every case, make your Offers of Judgment with the understanding that you will add the Plaintiff’s costs to the Offer.  You will always have the opportunity to ask the court to reduce excessive alleged costs with a Motion to Retax.  And remember, the earlier you make your Offer, the lower the Plaintiff’s costs will be.  By properly utilizing this strategy, you will be using the Offer of Judgment rules to their full potential and to your full advantage.  This Offer of Judgment strategy will encourage settlement of the case or will best position you to invoke the penalties of the rule when the opportunity presents itself after the verdict.

Additional information on strategically implementing Offers of Judgment in Nevada litigation can be found by clicking HERE.  We also encourage you to explore the “Categories” listed in the right column for related topics. 

 

A FEE SHIFTING STRATEGY FOR NEVADA'S DISTRICT COURTS: PART 3

AN OFFER OF JUDGMENT SUCCESS STORY

Over the course of the last few years, several Mills & Associates Newsletters have been devoted to the strategy of serving Offers of Judgment in defense litigation cases.  An exceptionally good example of how this Offer of Judgment strategy can make a difference presented itself in a wrongful death case that this office recently settled.  With the permission of the insurance carrier and the clients, please allow me to describe the circumstances related to the case and how the Offer of Judgment strategy managed to contribute to a good resolution of a case. 

I.  FACTS
 
This wrongful death case was brought by a young lady whose mother was killed in a drunk driving accident.  The mother was a passenger in a vehicle driven by a drunk driver.  The mother was also intoxicated with a blood alcohol content of .27. 

Mills & Associates represented the driver of a tractor trailer combination.  The accident occurred on a rural highway at night in Nevada with one lane going in each direction.  There were reports that the vehicle in which the decedent was riding had its taillights out.

The driver of the semi truck, approaching the other vehicle from the rear, began to pass the decedent’s vehicle.  Just as the tractor moved into the oncoming traffic lane to begin the pass, the driver of the decedents’ vehicle lost control and swerved directly into the path of the semi truck.  Both the driver and the passenger were instantly killed.

The investigating officers did not cite the semi truck driver.  Nevertheless, the daughter sued the semi driver and the owners of the semi truck.  The argument they made to the court was that the semi truck driver knew or should have known that the driver of the decedents’ vehicle was drunk and should not have tried to pass at the time and location where he did.

II.  PROCEDURAL BACKGROUND
 
In the lead up to trial, there were a number of decisions made by the court that persistently impacted the defense’s ability to put on its case.  As a result of discovery sanctions imposed as a result of delays from the semi truck driver, the judge ordered that the semi truck driver would not be allowed to testify at trial.  In addition, the court inexplicably ruled that the blood alcohol content of the passenger was not admissible at trial, stating that it is not illegal for a passenger to be drunk in a vehicle.  These two, and other less consequential rulings, meant that the defense was heading into trial with not only one but virtually both hands tied behind its back regarding how it would prove its case to the jury. 
 
III.  THE OFFER OF JUDGMENT
 
In Nevada, wrongful death cases are made up of two significant parts.  The first part of a wrongful death claim allows the estate of the decedent to recover for the final medical expenses leading up to the death of the decedent and the funeral expenses.  The second part, of a wrongful death claim deals with damages to the heir, including but not limited to the heirs grief and sorrow, as well as the loss of support, comfort, and consortium between the decedent and the heir.

Early in the case, the carrier offered to settle the claim of the heir for a nominal amount.  More importantly, however, the carrier served the estate with an Offer of Judgment to settle its claim for $5,000.  It was learned through discovery that there were no medical bills related to the treatment provided at the scene by the paramedics to the decedent.  Thus, the only special damage incurred by the estate was the funeral expense in the amount of $2,500.

IV.  HOW THE EFFECT OF THE OFFER OF JUDGMENT PLAYED ITSELF OUT IN THE DAYS BEFORE TRIAL
 
The Offer of Judgment that was served on the estate had a devastating effect from the plaintiff’s perspective.  Because the amount of the Offer of Judgment was twice what the estate could recover, even on its best day, it was clear that the Defense was going to obtain a result better that any result the estate could obtain at trial.  That meant that the estate was going to be subject to the effects allowed by the Offer of Judgment rules.  This gave the defense a great negotiating advantage.  This negotiating advantage overcame in part the rulings that the judge had made against the defense on issues of liability.  Even though the judge had ruled that our driver could not testify and had ruled that the blood alcohol content of the passenger was not relevant, it was obvious we were going to be able to better at trial the Offer of Judgment served on the estate. 

If the case had gone to trial, and assuming that the estate had recovered only  $2,500 as predicted, the defense would have been able to argue that it was entitled to recover all of its attorney’s fees and costs incurred since the time if served its Offer of Judgment very early on in the case.  Any award of attorney’s fees and costs against of the estate could have been offset against any verdict.  Furthermore, the only viable asset of the decedent was her home and it was an asset of the estate.  The daughter felt threatened that if the defense prevailed, that it might be able to take her mother’s home from her.

Just before trial, the daughter recognized this threat.  Her demands dropped from over a million dollars down to the hundreds of thousands.  Ultimately the settlement came at an amount well below $100,000. 

The plaintiff’s attorney admitted to me in discussions after the settlement had been reached that the Offer of Judgment made a huge effect in the settlement of the case.  His client realized that she could lose the house in which she was living and would never have the opportunity to regain it if the defense were to successfully obtain attorney’s fees and costs against the estate.
 
V.  CONCLUSION
 
Although the Offer of Judgment was not allowed to come to a full concluions following trial, it is clear that the Offer of Judgment had a moderating effect on the position advocated by the plaintiff.  I believe that it was one of the main factors in bringing this case to a resolution.  In light of the adverse evidentiary rulings by the court, the Offer of Judgment threat weighed heavily on their minds in making a decision as to how this matter should be resolved. 

This is just one very striking example of how Offers of Judgment can help bring cases to conclusion or in the alternative to obtain an advantage post trial.  The Offer of Judgment strategy is one that we advocate strongly.  If you have questions about it, please feel free to contact me to discuss how you can use that strategy in your case to your advantage.

Additional information on strategically implementing Offers of Judgment in Nevada litigation can be found by clicking HERE.  We also encourage you to explore the “Categories” listed in the right column for related topics. 

If you have any questions about the Offer of Judgment or any other litigation strategies, feel free to contact me at 702.240.6060 or by email.

--- Mike Mills

 

ATTORNEY'S FEES & COSTS

Costs are almost universally allowed to the prevailing party.  N.R.S. 18.005. 

Attorney's fees: Nevada follows the "American Rule" which is that each pays his own attorney's fees unless another statute of rule provides for the recovery of Attorney's fees.  Statutes and rules that provide for recovery of attorney's fees are more common for Plaintiffs than Defendants.

In District Court:
Under the right circumstances in District Court, Defendants can potentially recover their costs and attorney's fees if a case is forced to trial.   Unless the "Offer of Judgment Strategy" is followed, if the Defendant prevails, he or she is entitled to costs only.  However, if the Plaintiff prevails, he can recover attorney's fees if amount of recovery is $20,000 or less, plus costs.  N.R.S. 18.010.

If Defendants follow an "Offer of Judgment Strategy," they can recover attorney's fees as well as costs.  Recommended defense strategy: Make an Offer of Judgment as soon as possible when you enter litigation.  Make the Offer of Judgment for a set amount plus the costs.  That way, if you are forced to trial and you beat the Offer of Judgment, the judge's task of determining whether you qualify to recover attorney's fees will be made easier.

In Justice Court:
Attorney's fees are treated as "costs" and therefore the prevailing party, Plaintiff or Defendant, can get their attorney's fees, even if an offer of judgment is not filed.

In Small Claims Court:
Attorney's fees are not allowed.