St. Paul Fire & Marine Ins. Co. v. Nat'L Union Fire Ins. Co. Of Pittsburgh, Pa ( 2022 )

IN THE SUPREME COURT OF THE STATE OF NEVADA
ST. PAUL FIRE & MARINE No. 81344
INSURANCE COMPANY,
Appellant,
vs.
FRE
NATIONAL UNION FIRE INSURANCE DEC 8 2022
COMPANY OF PITTSBURGH, PA.;
IZAB A. BROWN
ROOF DECK ENTERTAINMENT, LLC, OF
D/B/A MARQUEE NIGHTCLUB, FU CLERK
Res ondents.
ORDER OF AFFIRMANCE
This is an appeal from two district court orders granting
summary judgment, certified as final under NRCP 54(b), in an insurance
subrogation matter. Eighth Judicial District Court, Clark County; Gloria
Sturman, Judge.
Respondent Roof Deck Entertainment, L.L.C., which does
business as Marquee Nightclub (collectively, Marquee), operates and
manages Marquee Nightclub for a subsidiary of nonparty The Cosmopolitan
Hotel & Casino (Cosmopolitan) pursuant to a management agreement.' In
2014, a patron of Marquee sued Cosmopolitan and Marquee for negligent
and intentional torts, seeking compensatory and punitive damages, after
security members employed by Marquee injured the patron when
attempting to oust him from the club. Marquee and Cosmopolitan tendered
the action to Aspen Specialty Insurance Cornpany (Aspen),2 a prirnary
insurer, and respondent National Union Fire Insurance Company of
1-We only recount the facts as necessary to our disposition.
2 Aspen is a party in this lawsuit but is not a party in this appeal.
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Pittsburgh, Pa. (National Union), an excess insurer, both of whom agreed
to jointly defend the parties. Both Aspen's and National Union's respective
policies narned Marquee as the insured and Cosmopolitan as an additional
insured. Around one month before trial, Cosmopolitan notified its primary
insurer, nonparty Zurich Insurance Company (Zurich), and its excess
insurer, appellant St. Paul Fire & Marine Insurance Company (St. Paul), of
its potential exposure from the lawsuit. The case ultimately proceeded to
trial, and the jury returned a verdict in favor of the patron for $160.5 million
in compensatory damages, for which Cosmopolitan and Marquee were
jointly and severally liable, and in favor of the patron's request for punitive
damages. However, before the punitive-damages stage, Aspen, National
Union, Zurich, and St. Paul collectively paid confidential amounts toward a
settlement with the patron. National Union's and St. Paul's equal
contributions exhausted their respective policy limits to resolve Marquee
and Cosmopolitan's liability.
Following the settlement, St. Paul brought this lawsuit and
asserted equitable and contractual subrogation claims on behalf of
Cosmopolitan against National Union for breach of the implied covenant of
good faith and fair dealing and breach of the insurance contract, as well as
a direct claim against National Union for equitable contribution, over
National Union's resolution of the patron's lawsuit. St. Paul also brought
statutory subrogation claims on behalf of Cosmopolitan against Marquee
for statutory contribution and contractual indemnification based on the
management agreement between Marquee and Cosmopolitan's subsidiary.
After National Union and Marquee separately moved for summary
judgment on all claims, the district court granted summary judgment based
on, among other reasons, its conclusion that Cosmopolitan did not suffer
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damages to subrogate. The district court certified the orders granting
summary judgment as final under NRCP 54(b). This appeal follows.
We review de novo a district court's grant of summary
judgment. Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029
(2005). "Summary judgment is appropriate under NRCP 56 when.. . no
genuine issue of material fact exists, and the moving party is entitled to
judgment as a matter of law." Id. at 731, 121 P.3d at 1031. This court views
"the evidence, and any reasonable inferences drawn from [the
evidence] . . . in a light most favorable to the nonmoving party." Id. at 729,
121 P.3d at 1029.
St. Paul's equitable and contractual subrogation claims against National
Union are not cognizable because Cosmopolitan suffered no damages
St. Paul asks us to recognize equitable and contractual
subrogation between equal-level excess insurers.3 Subrogation applies
when one party, the subrogee, involuntarily pays the obligation or loss of
another, the subrogor, for which a third party, wrongdoer, or otherwise is
eventually found to bear responsibility. See AT & T Techs., Inc. v. Reid, 109
Nev. 592, 595-96, 855 P.2d 533, 535 (1993). Equitable and contractual
subrogation "exist[] independently of' each other, insofar as equitable
subrogation derives from equity and contractual subrogation arises out of
an agreement. See id. at 596, 855 P.2d at 535. However, in either situation,
the subrogee acquires no greater rights than the subrogor. See Houston v.
Bank of Am. Fed. Say. Bank, 119 Nev. 485, 488, 78 P.3d 71, 73 (2003)
(describing how, in the context of mortgages, subrogation permits a
subrogee to "assume the same ... position" as the subrogor (internal
3By "equal-level insurers," we mean insurers that provide the same
type of coverage to a mutual insured, such as two excess insurers.
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quotation marks omitted) (quoting Mort v. United States, 86 F.3d 890, 893
(9th Cir. 1996))). Subrogation creates derivative rights and requires an
underlying independent basis upon which the subrogor could have
recovered the payment as if the subrogee had never stepped in to assume
the loss. See Arguello v. Sunset Station, Inc., 127 Nev. 365, 368, 252 P.3d
206, 208 (2011) (stating that under the principle of subrogation "an insurer
that has paid a loss under an insurance policy is entitled to all the rights
and remedies belonging to the insured against a third party" (internal
quotations omitted) (quoting Subrogation, Black's Law Dictionary (9th ed.
2009))).
We do not need to reach the scope of equitable or contractual
subrogation here because Cosmopolitan lacks an underlying claim to
subrogate. See Bierman v. Hunter, 988 A.2d 530, 543 (2010) (explaining
that the subrogee's right to recover a payment via subrogation requires an
actionable underlying claim to assert). The implied covenant of good faith
and fair dealing in every insurance contract imposes on the insurer the duty
to defend and the duty to indemnify every insured. Allstate Ins. Co. v.
Miller, 125 Nev. 300, 309, 212 P.3d 318, 324 (2009). An insurer's breach of
these duties gives rise to tort and contract liability. Id. at 308, 212 P.3d at
324; Century Sur. Co. v. Andrew, 134 Nev. 819, 821, 432 P.3d 180, 183
(2018). While the insurer has a "right to control settlement discussions
and . . . litigation against the insured, the duty to defend includes the duty
to act reasonably "during negotiations." Miller, 125 Nev. at 309, 212 P.3d
at 324-25. This "duty to settle" requires the insurer to protect the insured
from "unreasonable exposure to a judgment in excess of the" insured's
liability coverage limit to the extent an opportunity to settle arises.
Restatement of Liability Insurance § 24 cmt. b (Am. Law Inst. 2019). Breach
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of this duty may render the insurer liable for the entire amount of the excess
judgment, regardless of the policy's actual coverage limits. See Miller, 125
Nev. at 313-14, 212 P.3d at 327-28; Andrew, 134 Nev. at 826, 432 P.3d at
186. However, exhaustion of the policy limits prior to an excess judgment
necessarily protects the insured from the harm that the duties purport to
avoid. See Safeco Ins. Co. of Am. v. Superior Court of Contra Costa Cty., 84
Cal. Rptr. 2d 43, 46 (Ct. App. 1999) (concluding that the "cause of action for
bad faith refusal to settle arises only after a judgment has been rendered in
excess of the policy limits"). Here, National Union, along with Aspen,
Zurich, and St. Paul, guaranteed Cosmopolitan financial "security,
protection, and peace of mind" when they settled Cosmopolitan's liability
before excess-judgment exposure. See Ainsworth v. Combined Ins. Co. of
Arn., 104 Nev. 587, 592, 763 P.2d 673, 676 (1988). Therefore, Cosmopolitan
did not suffer damages which would give rise to either a bad-faith claim or
a breach-of-contract claim. St. Paul thus lacks any claim to assert on behalf
of Cosmopolitan against National Union.
St. Paul's equitable contribution claim against National Union is not
cognizable because each insurer exhausted their policy limits
St. Paul asks this court to recognize an equitable contribution
claim between equal-level insurers. Contribution allows one party "to
extinguish joint liabilities through payment to the injured party, and then
seek partial reimbursement" from a co-obligor "for sums paid in excess of'
the party's "equitable share of the common liability." Doctors Co. v. Vincent,
120 Nev. 644, 650-51, 98 P.3d 681, 686 (2004). Equitable contribution, as
opposed to statutory or contractual contribution, applies anytime two or
more parties "hav[e] a common obligation, either in contract or tort,"
regardless of whether parties "signed separate" agreements. 18 Am. Jur.
2d Contribution § 6.
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We have previously suggested that Nevada permits
contribution claims between insurers. See Ardmore Leasing Corp. v. State
Farm Mut. Auto. Ins, Co., 106 Nev. 513, 514-15, 796 P.2d 232, 232-33 (1990)
(concluding that insurer was "not entitled to judgment as a matter of law"
on its contribution and indemnity claims against other insurer because
"Menuine issues of fact still exist[ed] as to the extent of coverage provided"
in the insurers' policies). But we do not need to reach whether to recognize
equitable contribution between equal-level insurers here, as St. Paul did not
contribute a disproportionate share. Equitable contribution only allows
reimbursement to the extent that an insurer "paid over its proportionate
share of the obligation" compared to the other insurers, because all the
insurers collectively and "equally" share in "their respective coverage of the
risk." Fireman's Fund Ins. Co. v. Md. Cos. Co., 77 Cal. Rptr. 2d 296, 303
(Ct. App. 1998) (emphasis omitted). Here, National Union and St. Paul
undisputedly contributed their full policy limits to the settlement of the
patron's lawsuit. St. Paul's contribution claim would effectively permit it to
recover full reimbursement from National Union. However, contribution
operates on the principle that the parties share equal obligation to pay the
loss. See Doctors Co., 120 Nev. at 651, 98 P.3d at 686; see also 18 Am. Jur.
2d Contribution § 3 (observing that contribution works to distribute a
common burden or liability proportionate to each actor's share of
responsibility). Thus, St. Paul cannot seek equitable contribution from
National Union.
The subrogation waiver in the management agreement between Marquee
and Cosmopolitan's subsidiary binds Cosmopolitan and prevents St. Paul's
contractual subrogation claim against Marquee
St. Paul argues that a subrogation waiver in a management
agreement between Marquee and Cosmopolitan's subsidiary does not
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trigger an endorsement in St. Paul's excess policy with Cosmopolitan that
waives St. Paul's right to recover via subrogation to the extent that its
insured also waives its right to recover via subrogation. We review issues
of contract interpretation de novo. Bielar v. Washoe Health Sys., Inc., 129
Nev. 459, 465, 306 P.3d 360, 364 (2013). Generally, only parties who
Ctagree[ ] . . . to submit" to a contract remain bound by its provisions. See
Truck Ins. Exch. v. Palmer J. Swanson, Inc., 124 Nev. 629, 634, 189 P.3d
656, 660 (2008) (discussing enforceability of arbitration agreement against
g`nonsignatory"). However, a nonparty who qualifies as "an intended third-
party beneficiary" is empowered to enforce a contract against a contracting
party. Canfora v. Coast Hotels & Casinos, Inc., 121 Nev.771, 779, 121 P.3d
599, 604 (2005). A third-party beneficiary is a party whom the contracting
parties "clearly" intended "to benefit" and foreseeably relies on the
agreement. Lipshie v. Tracy Inv. Co., 93 Nev. 370, 379, 566 P.2d 819, 824-
25 (1977).
Here, while Cosmopolitan is not a party to the management
agreement between Cosmopolitan's subsidiary and Marquee, Cosmopolitan
is a third-party beneficiary. Even though Cosmopolitan signed the
agreement and agreed to 20 specified provisions, a party only becomes
bound as a party to a contract if it agrees with the other party to the
essential terms and exchanges consideration. See Certified Fire Prot. Inc.
v. Precision Constr., Inc., 128 Nev. 371, 378, 283 P.3d 250, 255 (2012)
(explaining that the "meeting of the minds exists when the parties have
agreed upon the contract's essential terms"). National Union does not
identify any essential terms of the management agreement to which
Cosmopolitan agreed. However, the indemnification provision in the
management agreement, which St. Paul seeks to subrogate on behalf of
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Cosmopolitan, aims to protect or compensate a third party, here,
Cosmopolitan, for losses incurred because of Marquee's actions. Thus, the
contracting parties to the management agreement intended to benefit
Cosmopolitan. Moreover, the management agreement expressly identifies
Cosmopolitan as an intended third-party beneficiary with respect to any
rights or obligations assigned, delegated, or shared by its subsidiary.
Accordingly, Cosmopolitan is a third-party beneficiary to the management
agreement for purposes of the indemnification provision.
While a third-party beneficiary enjoys "the same rights and
remedies . . . as a promisee of the contract," 9 John E. Murray, Jr., Corbin
on Contracts § 46.1 (2022), it also takes those rights and remedies "subject
to any defense arising from the contract... assertible against the
promisee," Gibbs v. Giles, 96 Nev. 243, 246-47, 607 P.2d 118, 120 (1980).
This means that an intended third-party beneficiary's rights remain limited
by any conditions or burdens imposed in the contract. See, e.g., Mercury
Cas. Co. v. Maloney, 6 Cal. Rptr. 3d 647, 649 (Ct. App. 2003) (stating that a
"third party beneficiary takes the benefits subject to the conditions and
limitations set forth in the contract"); Mendez v. Hampton Court Nursing
Ctr., L.L.C., 203 So. 3d 146, 149 (Fla. 2016) (stating the court "will
ordinarily enforce an arbitration clause" against a third-party beneficiary);
Sanders v. Am. Cas. Co. of Reading, 74 Cal. Rptr. 634, 637 (Ct. App. 1969)
(applying one-year statute of limitations in contract to bar claim by third-
party beneficiary to enforce contract and explaining that "the third-party
[beneficiary] cannot select the parts favorable to him and reject those
unfavorable to him"). Here, Cosmopolitan obtains no greater right to
indemnification than its subsidiary and bears the same contractual burdens
of its subsidiary. These provisions in the management agreement
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collectively provide that any insurance maintained by Cosmopolitan's
subsidiary or by Cosmopolitan must contain a subrogation waiver against
Marquee. Indeed, Cosmopolitan's policy with St. Paul contains such a
waiver. St. Paul cannot enforce the benefits of the indemnification
provision beyond what the contract provides. The subrogation waiver in the
management agreement binds Cosmopolitan, as an intended third-party
beneficiary, and triggers the subrogation-waiver endorsement in St. Paul's
policy. That waiver bars subrogation of Cosmopolitan's contractual
indemnification claim.
The indemnification provision in the management agreement precludes
alternative remedies by Cosmopolitan
St. Paul argues, alternatively, that it may assert, via
subrogation, a claim for contribution pursuant to NRS 17.225 against
Marquee. NRS 17.225(1) provides a right of contribution "where two or
more persons become jointly or severally liable in tort for the same injury
to person or property or for the same wrongful death." The right of
contribution "exists only in favor of a tortfeasor who has paid more than his
or her equitable share of the common liability," and remains "limited to the
amount paid by the tortfeasor in excess of his or her equitable share." NRS
17.225(2). However, statutory contribution does not "exist[] where
indemnity exists." Van Cleave v. Gamboni Constr. Co., 101 Nev. 524, 529,
706 P.2d 845, 848 (1985) (emphasis omitted); see also NRS 17.265. "When
the duty to indemnify arises from contractual language, it generally is not
subject to equitable considerations; 'rather, it is enforced in accordance with
the terms of the contracting parties' agreement.' Reyburn Lawn &
Landscape Designers, Inc. v. Plaster Dev. Co., 127 Nev. 331, 339, 255 P.3d
268, 274 (2011) (quoting Prince v. Pac. Gas & Elec. Co., 202 P.3d 1115, 1120
(Cal. 2009)). "Nevada has not adopted an anti-indemnity statute," thus
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Ftparties have great freedom in allocating indemnification responsibilities
between one another." Id. Accordingly, we enforce contractual-indemnity
provisions on their terms so long as they use sufficiently "clear and
unequivocal" language. Id. at 339-40, 255 P.3d at 274-75. As noted above,
Marquee, Cosmopolitan's subsidiary, and Cosmopolitan contracted for
Marquee to indemnify Cosmopolitan for certain losses. Neither of the
parties challenge the indemnification provision's language as unclear or
equivocal. It is thus enforceable and is mutually exclusive of a right to
contribution. Accordingly, Cosmopolitan lacks a contribution claim to
subrogate. See Bierman, 988 A.2d at 543 (explaining that the subrogee's
right to recover a payment via subrogation requires an actionable
underlying claim to assert).
Accordingly, we
ORDER the judgment of the district court AFFIRMED.4
tet—AA , C.J.
Parraguirre
J.
Hardesty
CALIZA
Pickering
J.
Herndon
4The Honorable Abbi Silver having retired, this matter was decided
by a six-justice court.
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CADISH, J., with whom, STIGLICH, J., agrees, concurring in part and
dissenting in part:
This case raises a question of first impression regarding the
circumstances under which an insurer may subrogate its insured's bad-faith
and breach-of-contract claims against another insurer. Rather than
address this question, the majority, in my view, misapplies basic precepts
of subrogation to dismiss St. Paul's equitable and contractual subrogation
claims against respondent National Union. The majority holds that
exhaustion of the policy limits by the four involved insurers avoided any
damages to St. Paul's insured, and therefore, precluded subrogation by St.
Paul. In so holding, the majority misconstrues the nature of St. Paul's
payment on behalf of its insured. Because the payment reflects the
insured's damages and subrogates St. Paul to its insured's claims against
National Union, I cannot agree with the majority's decision today. I
therefore dissent in part.5
As the majority correctly outlines, subrogation only creates
derivative rights: it permits the paying party, or subrogee, to step into the
shoes of the injured party, or subrogor, and pursue recovery from the
responsible third-party wrongdoer to the extent that the subrogor possesses
a cognizable claim against that third party. See Chubb Custom Ins. Co. v.
Space Sys./Loral, Inc., 710 F.3d 946, 957 (9th Cir. 2013). Thus, the
subrogee's recovery under subrogation principles requires that the
subrogor's loss remains independently recoverable from the third party
whose actions caused the loss, as if the subrogee had never stepped in to
51 concur with the rest of the majority's order affirming the district
court's dismissal of St. Paul's contribution claim against National Union
and dismissal of St. Paul's subrogation claims against Marquee.
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assume the loss. See id. (describing subrogation as "a purely derivative
right—meaning that the subrogee succeeds to rights no greater than those
of the subrogor"); see also Bierman v. Hunter, 988 A.2d 530, 543 (Md. Ct.
Spec. App. 2010) (explaining that because the subrogee "can exercise no
right[s]" greater than the subrogor, "subrogation 'requires an underlying
and independent legal basis upon which a party may assert its claims"
(internal alterations and emphasis omitted) (quoting Hill v. Cross Country
Settlements, L.L.C., 936 A.2d 343, 362, 363 (Md. 2007))), superseded on other
ground.s by Md. Rule 14-305 as discussed in Bates v. Cohn, 9 A.3d 846, 858
(Md. 2010).
In applying these principles, I believe the majority
misconstrues applicable law. The majority concludes that St. Paul lacks a
cognizable claim to which to subrogate because the insurers, including St.
Paul, collectively exhausted their policy limits towards a settlement of
Cosmopolitan's liability post-verdict, but prejudgment. The majority
reasons that, consequently, the insurers' settlement avoided any out-of-
pocket expenses or damages to Cosmopolitan. It is true that, in the literal
sense, Cosmopolitan never suffered damages because of St. Paul's
settlement contribution (and by extension, the fortuity that Cosmopolitan
obtained more than one applicable policy). However, such reasoning fails
to recognize that subrogation substitutes the parties as if the subrogee had
never assumed the subrogor's loss. See Arguello v. Sunset Station, Inc., 127
Nev. 365, 368-69, 252 P.3d 206, 208 (2011) (discussing that full payment
subrogates the insurer to the insured's claims against the third-party
wrongdoer that arose before the payment occurred); Wimer v. Pa. Emps.
Benefit Tr. Fund, 939 A.2d 843, 853 (Pa. 2007) (agreeing that because "a
subrogee must first tender payment... before a right to subrogation
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accrues, subrogation c, presupposes a payment by the subrogee to" or on
behalf of "the subrogor"). In the legal sense, "[p]ayment by the insurance
company does not change the fact a loss has occurred," and instead, reflects
the loss suffered by the insured. Troost v. Estate of DeBoer, 202 Cal. Rptr.
47, 50 (Ct. App. 1984). As the California Court of Appeals explained in
addressing an insurer's subrogation claim,
The only reason [the insured] had no out-of-pocket
expense was because its insurer, now seeking
subrogation, made the payment. Under [the] view
[that the insurer's payment obviated damages], no
insurer could ever state a cause of action for
subrogation in order to recover amounts it paid on
behalf of its insured, because of the very fact that it
had paid amounts on behalf of its insured. Not only
is this illogical, [but also] it contradicts decades of
cases consistently holding that an insurer may be
equitably subrogated to its insured's
indemnification claims.
Interstate Fire & Cas. Ins. Co. v. Cleveland Wrecking Co., 105 Cal. Rptr. 3d
606, 615 (Ct. App. 2010) (emphasis omitted).
Under this subrogation principle, Cosmopolitan, the subrogor,
would have unquestionably been subject to liability for the remaining
amount of the settlement if St. Paul, the subrogee, had not paid its
contribution towards the settlement in accordance with Cosmopolitan's
insurance policy. And assuming the truth of St. Paul's allegations, as we
must at the motion-to-dismiss stage, see Buzz Stew, LLC v. City of North
Las Vegas, 124 Nev. 224, 228, 181 P.3d 670, 672 (2008) (treating factual
allegations in a complaint "as true" and drawing inferences in the plaintiff s
favor on a motion to dismiss for failure to state a claim for relief), National
Union, the third party, caused the settlement to exceed its policy limits by
its breach of the contract- and tort-based duty to settle, see Hamada v. Far
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E. Nat'l Bank, 291 F.3d 645, 649 (9th Cir. 2002) (explaining that the
derivative claim lays against the third-party wrongdoer who caused the
subrogor's loss). According to the complaint, National Union took control of
the litigation against Cosmopolitan and rejected several offers to settle
liability below or at its policy limits, despite its own retained counsel's
assessment of the damages at over 10 times the amount of National Union's
policy limits. Only after the jury rendered an excess verdict six times the
policy limits did National Union finally orchestrate a settlement of
Cosmopolitan's liability in excess of its policy limits. Accepting these
allegations as true, had Cosmopolitan, rather than St. Paul, paid the
remaining portion of the settlement, Cosmopolitan could have
independently sued National Union to recover those damages under breach-
of-contract and bad-faith theories.° See Century Sur. Co. v. Andrew, 134
Nev, 819, 821, 432 P.3d 180, 183 (2018) (recognizing contract liability for
breach of the duty to defend); Allstate Ins. Co. v. Miller, 125 Nev. 300, 309,
212 P.3d 318, 324 (2009) (recognizing insurer's duty to act reasonably
during settlement negotiations as derived from insurer's duty to defend).
Ultimately, St. Paul covered Cosmopolitan's exposure that exceeded
National Union's policy limits. But the very fact of St. Paul's payment does
°Contrary to the majority's position, we have said that exhaustion of
policy limits does not automatically foreclose an insured's damages under
breach-of-contract or bad-faith theories. See Andrew, 134 Nev. at 825-26,
432 P.3d at 185-86 (holding that, in the context of an excess judgment,
breach of the insurance contract subjects an insurer to liability for
expectation and consequential damages, which may exceed the policy
limits); cf. Miller, 125 Nev. at 314, 212 P.3d at 327-28 (explaining that, in
the context of an excess judgment, an insurer's breach of the duty to settle
subjects it to "all compensatory damages proximately caused by its breach,"
which may exceed the policy limits).
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not negate Cosmopolitan's loss; instead, St. Paul became subrogated to
Cosmopolitan's independently cognizable claims against National Union for
the amount of its payment on behalf of Cosmopolitan.
Because I believe a subrogatable loss exists, I would go one step
further and address whether to recognize subrogation between equal-level
insurers under the circumstances presented. While we have not previously
recognized subrogation in this context, we have consistently "balance[d] the
equities based on the facts and circumstances of each particular case" and
applied subrogation to the extent necessary to "grant an equitable result
between the parties." Am. Sterling Bank v. Johnny Mgmt. LV, Inc., 126
Nev. 423, 428, 245 P.3d 535, 538 (2010) (internal quotation marks omitted).
Moreover, many courts recognize equitable subrogation of the insured's bad-
faith and breach-of-contract claims between insurers, albeit between
primary and excess insurers. See, e.g., Hartford Acc. & Indem. Co. v. Aetna
Cas. & Sur. Co., 792 P.2d 749, 754 (Ariz. 1990) (permitting excess insurer
to subrogate to rights of insured against primary insurer for primary
insurer's bad-faith "failure to settle within policy limits"); Com. Union
Assurance Cos. v. Safeway Stores, Inc., 610 P.2d 1038, 1041 (Cal. 1980)
(same); Preferred Profl Ins. Co. v. Doctors Co., 419 P.3d 1020, 1028 (Colo.
App. 2018) (same); Home Ins. Co. v. N. River Ins. Co., 385 S.E.2d 736, 740
(Ga. Ct. App. 1989) (same); Com. Union Ins. Co. v. Med. Protective Co., 393
N.W.2d 479, 483 (Mich. 1986) (same); Cont'l Cas. Co. v. Reserve Ins. Co., 238
N.W.2d 862, 864 (Minn. 1976) (same); Me. Bonding & Cos. Co. v. Centennial
Ins. Co., 693 P.2d 1296, 1300 (Or. 1985) (same). While none of these
decisions, nor any of the decisions relied on by the parties, addressed
subrogation of an insured's bad-faith and breach-of-contract claims by one
excess insurer against another equal-level excess insurer, our case law
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directs courts to balance the equities before they decide or decline to apply
subrogation to a given circumstance. Because I see no sound reason to
depart from that principle here, I would recognize in appropriate situations
the availability of subrogation between two excess insurers, and I therefore
view the district court's decision foreclosing such a possibility as erroneous.
The majority, however, sidesteps the issue of subrogation
between two excess insurers and instead concludes that Cosmopolitan
suffered no damages based on the settlement payment by the insurers that
resolved its personal liability. I cannot agree that Cosmopolitan suffered
no damages by virtue of the insurers' exhaustion of their policy limits, as
such a conclusion misapplies a fundamental presupposition of subrogation
that the subrogee insurer's payment reflects the subrogor insured's loss. I
therefore dissent in part.
J.
Cadish
I concur:
Al;%,st.L.0 J.
Stiglich
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cc: Hon. Gloria Sturman, District Judge
Lansford W. Levitt, Settlement Judge
Hutchison & Steffen, LLC/Reno
Hutchison & Steffen, LLC/Las Vegas
Lewis Roca Rothgerber Christie LLP/Las Vegas
Herold & Sager/Las Vegas
Keller/Anderle LLP/Irvine
Eighth District Court Clerk
SUPREME COURT
OF
NEVADA
17
if)) 1947A