Firm Helps Nevada Army National Guard

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It is with great pride and pleasure that Thorndal Armstrong Delk Balkenbush & Eisinger attorneys and staff members recently collected 80 pounds/8 large boxes of various snacks, magazines, and personal hygiene items to be shipped to the firm’s long-time friend and vendor Sergeant Lee Fuller as a care package for him and his Nevada Army National Guard unit who were recently deployed to Kuwait.

JoAnn Ozanic, an Administrative Assistant, who has worked closely with Lee over the course of her 26-year tenure with the firm, sought suggestions from Lee’s wife as to items most needed and appreciated by the troops. Ms. Ozanic, with the assistance of the firm’s Receptionist Diana Daniels and Office Services personnel Joshua Kephart and Edgar Ramirez, organized and coordinated collection of donations, packing, shipping, and completing customs requirements.

Thorndal Armstrong proudly supports our troops, and sincerely appreciate their sacrifices, keep them in our thoughts, and look forward to their safe return home.

Firm Helps Denim Recycling Charity

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Thorndal Armstrong Delk Balkenbush & Eisinger is happy to announce it recently completed a denim drive for a charitable recycling program, Blue Jeans Go Green. The drive collected more than 50 pairs of jeans that may have otherwise been sent to a landfill.

Blue Jeans Go Green started in 2006 and strives to collects denim to recycle it into natural cotton fiber, an environmentally-friendly insulation. In addition to helping the environment, the program claims the up cycled insulation has about a 30% better sound absorption than traditional fiberglass insulation. To date Blue Jean Go Green states it has recycled more than 600 tons of denim, generating more than 2,000,000 square feet of insulation. This insulation was provided to over 30 Habitat for Humanity affiliates around the country.

Eisinger & Parks Win Subsidiary Liability Case

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Earlier today a Nevada federal judge granted summary judgment in a case against a resort company that sought to hold it liable for alleged negligence of its subsidiary in Aruba. A Canadian citizen traveled to a resort on Aruba owned by a subsidiary. While there she tripped, fell and asserted an injury. Rather than suing the subsidiary in Aruba, the guest returned home, and then filed suit in Nevada against the subsidiary’s parent company. She claimed the parent and subsidiary were alter egos, meaning the parent could be liable for the subsidiary’s negligence.

Paul Eisinger and Kathy Parks represented the resort parent company. They repeatedly noted throughout the case that the wrong company was sued, that Nevada lacked jurisdiction over the Aruba subsidiary, and that Dutch personal injury law would likely apply. The guest ignored these warnings and proceeded with the lawsuit. At the end of discovery, Mr. Eisinger and Ms. Parks argued to the court that there was no evidence of anything but a typical corporate parent-subsidiary relationship. There was no basis to find the parent was an alter ego of the subsidiary or to hold the parent liable if the subsidiary had actually been negligent.

The court agreed and dismissed the case. First, the court noted that the guest’s alter ego argument was based upon an incorrect reading of the company’s form 10-K filings about its corporate structure. Second, the fact that the two companies had two directors in common was insufficient. Finally, there was no evidence that corporate formalities to establish and maintain separation had been breached.

Diamond Helps Kids in Pro Bono Case

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Shareholder Kevin Diamond accepted a pro bono case to represent three children in a trial seeking to terminate their parents’ parental rights. Sadly, the children’s mother had fallen victim to drug abuse and the father was incarcerated for numerous offenses. Nevada’s Department of Family Services concluded the children were at risk in this environment and would be best served if they were removed from their parents. The Department went to court to accomplish this and Mr. Diamond was appointed to separately represent the children.

Before trial, Mr. Diamond successfully terminated the mother’s rights. The father insisted upon trial. At trial, Mr. Diamond was assisted by law clerk Matthew Winters. Mr. Winters volunteered to help and was permitted to participate in trial by Nevada’s program encouraging law students to gain experience by participating in pro bono work. The trial was a success for the children as the father capitulated and agreed to terminate his rights shortly before Mr. Winters was to cross-examine him. All three children may now be formally adopted by a loving family member in the near future.

“Assisting children as clients is a difficult situation,” says Winters. “Here they were too young to understand what was happening other than that they might go to live with a family member. Our goal was to provide these children a better opportunity in the future by providing them stability in their home life they never had before.” Diamond added, “here, stability is exactly what was achieved as the children will all be adopted by a family member and continue to grow up together as opposed to living in split foster homes. Pro bono cases like these are exactly what makes practicing law very rewarding, especially right before the holidays.”

Practical Guidance for Nevada Insurers post-Hansen

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At the end of last month, the Supreme Court of Nevada ruled an insured is entitled to independent counsel in situations where there is an actual conflict of interest between the insurer and the insured. State Farm Mut. Auto. Ins. Co. v. Hansen, 131 Nev. Adv. Op. 74 (2015) creates new conundrums and requirements for Nevada insurers.

What does Nevada consider a conflict of interest requiring independent counsel?

The Supreme Court rejected the idea that all reservations of rights created a conflict. Instead, the Court borrowed from California law and adopted Civil Code § 2860(b). In each case, if the three factor analysis below is satisfied, the insurer must pay for independent counsel selected by the insured.

1.Has a reservation of rights been issued?

2.Does the insurer-provided counsel havecontrol over an issue in the case that will also decide the coverage issue?

3.The perceived conflict must be significant, not merely theoretical, actual, not merely potential. Coverage issues that are only extrinsic or ancillary to the issues actually litigated in the underlying action do not create a conflict of interest.

Do punitive and excess damages create a conflict of interest in Nevada?

The Supreme Court did not answer this question. However, Hansen did borrow heavily from California Civil Code § 2860(b). If Nevada continues to follow California’s lead in this area, it may also adopt § 2860(b)’s statement that “[n]o conflict of interest shall be deemed to exist as to allegations of punitive damages or be deemed to exist solely because an insured is sued for an amount in excess of the insurance policy limits.”

Mere allegations of excess and/or punitive damages do not create an “either / or” scenario, where one argument benefits the insured and the other benefits the insurer. Both the insured and insurer want to argue for lower damages and no punitive damages. Where excess or punitive damages are sought, the insurer-assigned attorney is not placed in a position of benefiting either the insured or the insurer.

How much can independent counsel charge?

Hansen did not answer this question. The normal checks and balances in an attorney-client relationship are not present when independent counsel is involved. Normally, if a lawyer’s bill is too high, a client becomes unhappy and may terminate the relationship. But independent counsel has no such restraint because the party that pays him (the insurer) has no control over whether to retain him in the first place and cannot fire him later. Independent counsel also has little prospect of repeat business, which further reduces the incentive to restrain billing.

If Nevada continues to follow California’s lead, it may adopt two other provisions in California Civil Code § 2860. One limits independent counsel’s rate to that normally paid by the insurer for defense of similar matters in the same geographic area. The other requires binding arbitration to resolve billing disputes. The arbitration requirement is less likely to be adopted via a judicial ruling and may require legislative action to implement.

Can the insurer audit independent counsel’s bills?

Hansen did not answer this question. Normally, an insurer’s assigned counsel is subject to auditing and bill review. This means the insurer will meticulously review all bills to detect overbilling or inappropriate billing. This benefits the insurer and insured by ensuring defense costs are reasonable and appropriate.

Yet what can an insurer do with independent counsel? If an exorbitant rate is charged and the billing provided is insufficient to evaluate what work was done and how it benefited the insured, can a insurer refuse to pay the bill? This area is fraught with peril, however it seems reasonable to insist that independent counsel utilize the litigation code set issued by the ABA and others, as well as to follow the billing guidance these professional bodies have issued.

What qualifications must independent counsel have?

Hansen did not answer this question. Insurers are a wealth of experience in selecting appropriately qualified attorneys to defend their insureds. Insureds, especially in personal lines, typically have little, if any, experience with the legal process or experience in evaluating which attorney is qualified to represent them in a particular case. A legitimate fear exists that the insured may select an independent counsel with minimal, if any, qualifications to defend the case.

If Nevada continues to follow California’s lead, Civil Code § 2860 allows the insurer to require 1) at least five years experience; 2) substantial defense experience in the areas of law at issue in the suit against the insured; and 3) independent counsel have errors and omissions coverage. These requirements do not affect the independence of the lawyers retained by the policyholder. Instead, it creates a safety net for the insured.

Must independent counsel cooperate with assigned counsel?

Hansen did not answer this question. In California, independent counsel must share all information except privileged information relating to coverage and panel counsel may fully participate in the defense alongside independent counsel. Even if independent counsel is involved, the insurer still has a strong interest because ultimately the insured will want it to pay any settlement or verdict. Further, Hansen did not extinguish the insurer’s contractual right to control settlement. Nor did Hansen extinguish the insured’s duty to cooperate with the insurer’s defense. This means, at a minimum, that the insurer will need its own counsel to review materials as the case proceeds and be present at settlement discussions and mediation.

Supreme Court Upholds Medical-Malpractice Reform

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The Nevada Supreme Court has now reinforced the Legislature’s intent to limit recovery for medical malpractice damages to $350,000 and keep quality affordable healthcare in Nevada. In Tam v. Dist. Ct., 131 Nev. Adv. Op. 80 (2015) the Supreme Court evaluated various challenges to NRS 41A. $350,000 limit on noneconomic damages that a plaintiff can recover in a professional negligence action. The Court also addressed issues of whether it could apply to multiple plaintiffs and defendants in the same matter and if the statute violated the Equal Protection Clause.

By carefully examining the Nevada legislature’s intent when drafting the statute, the Court determined that not only did the statute not violate any Equal Protection claims, but that it was the intent that the statutory cap be made to limit damages so that Nevadans could have access to quality affordable healthcare by keeping professional negligence claim payouts to a reasonable, yet fair, amount. In doing so, the Court also stated that this statute expressly limits the cap of any given action, “regardless of the number of plaintiffs, defendants or theories upon which liability may be based.”

Las Vegas shareholder CHRIS CURTIS has tried multiple medical malpractice cases to verdict and supported the Court’s interpretation. “By maintaining the intent behind the statute, the Nevada Supreme Court was able to reaffirm an aspect of fairness towards healthcare providers that will both provide for claimants that are wrongfully injured, and limit the recovery they can be awarded to keep adequate and affordable healthcare in the State of Nevada for years to come.”

Nevada Adopts Cumis-like Requirements

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Today the Supreme Court of Nevada decided it will follow the lead of other jurisdictions and require insurers to hire two different defense attorneys for the insured, in certain circumstances. State Farm Mut. Auto. Ins. Co. v. Hansen, 131 Nev. Adv. Op. 74 (2015) was unanimously decided to adopt this requirement after examining similar rules in other states.

We conclude that Nevada law requires an insurer to provide independent counsel for its insured when a conflict of interest arises between the insurer and the insured. Nevada recognizes that the insurer and the insured are dual clients of insurer-appointed counsel. When the insured and the insurer have opposing legal interests, Nevada law requires insurers to fulfill their contractual duty to defend their insureds by allowing insureds to select their own independent counsel and paying for such representation. We further conclude that an insurer is only obligated to provide independent counsel when the insured’s and the insurer’s legal interests actually conflict. A reservation of rights letter does not create a per se conflict of interest.

This is the first time the Supreme Court has applied this rule in Nevada and represents a shift in how some insurers may need to defend their insureds. We are examining the opinion’s implications and will be updating our website soon with a more in depth analysis.

Plaintiff Spoliates Evidence; Case Dismissed

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Today a local court dismissed a product liability case brought against a mobility device manufacturer. A person with disabilities was using a power scooter and was injured. The person asserted the injuries occurred because the power scooter was defective and notified the manufacturer. The manufacturer wrote the person and asked that he preserve the power scooter so it could be inspected.

The person later filed a lawsuit and the manufacturer hired shareholder Brian K. Terry to defend it. When Mr. Terry asked to inspect the power scooter, as had been anticipated, the person advised the power scooter had been discarded. No inspection was ever performed.

Mr. Terry asked the court to dismiss the case. The person alleged the power scooter was defective but the manufacturer was never given an opportunity to evaluate the power scooter and determine what happened. The person argued for an adverse inference or presumption in lieu of dismissal, which may be appropriate in mere negligence cases. The court agreed with Mr. Terry that such an analysis does not apply to product liability cases. The court then dismissed the case.

Court of Appeals Affirms Dismissal

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Legal malpractice claims can harm a lawyer’s public and private reputations. A strong defense is important to protecting those hard earned reputations. Shareholder Brian Terry routinely defends these cases and was retained to defend a local judge who was sued by a client arising from a conviction when the judge was in private practice. Mr. Terry successfully moved to dismiss the case, before discovery ever started, because the judge had been appointed to defend the criminal via a public defender program. The Supreme Court of Nevada has ruled attorneys functioning in that capacity are protected by sovereign immunity.

The plaintiff then appealed, arguing the case should be reinstated. The case was assigned to Nevada’s Court of Appeals that opened in 2015 to relieve the appellate backlog. After briefing from Mr. Terry, the Court unanimously concluded the client had either waived these arguments or, even if not, then the errors still did not overcome the various hurdles to reinstating the case.

“This was an extremely dubious claim, and the newly instituted Court of Appeals brought the appeal to resolution expeditiously,” said Mr. Terry.

City Vindicated Before EEOC

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In April 2012 a former City of West Wendover employee filed a discrimination claim against the City with the with the U.S. Equal Employment Opportunity Commission. The employee alleged the City discriminated against him due to his national origin and disabilities under the Americans with Disability Act. The EEOC investigated for three years and recently advised the City it will not proceed with any further investigation of the employees allegations.

Shareholder Philip Goodhart represented the City in this investigation. Although the EEOC’s investigation was lengthy, he was pleased that justice was eventually served. “Throughout this investigation the City complied with every EEOC request. City made every reasonable attempt to accommodate the employee’s physical restrictions and limitations,” said Mr. Goodhart.