To what extent is a member of an LLC protected in a negligence claim against the LLC?

LLC protection

Gardner vs. Henderson Water Park, LLC (Nev. Supreme Ct. – Aug. 3, 2017)

The issue is to what extent is a member of a limited liability company (LLC) protected in a negligence-based tort action against the LLC.

After their son, L.G., suffered severe injuries in a near drowning in the wave pool at Cowabunga Bay, the Gardners brought suit against Henderson Water Park, LLC, which does business as Cowabunga Bay Water Park (the Water Park), and its two managing members, West Coast Water Parks, LLC, and Double Ott Water Holdings, LLC (the member-LLCs). Among other allegations, the Gardners alleged that the negligence of the Water Park and member- LLCs contributed to L.G.’s injuries because of the Water Park’s inadequate staffing of lifeguards.

The member-LLCs eventually moved for summary judgment, which the district court granted. Specifically, the district court dismissed the member-LLCs as improper parties pursuant to NRS 86.381. The district court certified its order as final under NRCP 54(b), and the Gardners appealed.

On appeal, the Gardners argued the district court erred in concluding that NRS 86.371 and NRS 86.381 shield the member-LLCs from suit because the Gardners sought to pursue a direct claim against the member-LLCs for the member-LLCs’ own tortious conduct in negligently operating the Water Park.

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Nevada Appellate Courts Advance Opinions for August 3, 2017

Nevada Appellate Courts Advance Opinions for August 3, 2017

CITY OF SPARKS VS. RENO NEWSPAPERS, INC.

  • Did the respondent properly seek the disclosure of public records by means of a writ of mandamus even though the regulation at issue and Nevada Administrative Procedure Act, NRS Chapter 233B, provide that the validity of a regulation may be determined in a proceeding for a declaratory judgment?
  • Does NAC 453A.714(1), which governs the confidentiality of information concerning persons who facilitate or deliver medical marijuana services, exempt such information from disclosure under the Nevada Public Records Act, NRS Chapter 239, when the information is contained in medical marijuana establishment business licenses?

LN MGMT. LLC SER. 5105 PORTRAITS PLACE VS. GREEN TREE LOAN SERV., LLC

  • What is the effect of a sale of real property situated in Nevada in violation of an automatic stay from the homeowners’ bankruptcy proceedings commenced in Texas?

GARDNER VS. HENDERSON WATER PARK, LLC

  • To what extent is a member of a limited liability company (LLC) protected in a negligence based tort action against the LLC?

RURAL TELEPHONE CO. VS. PUB. UTIL. COMM’N. OF NEV.

  • Under NRS 703.373(6) or any inherent authority, can the district court extend the deadline for filing the opening brief in a petition for judicial review of a public utilities commission decision?

Can a defendant be convicted of aiding and abetting a negligent or reckless crime?

aid and abet

Desai (Dipak) vs. State (Nev. Supreme Ct. – Jul. 27, 2017)

A jury convicted Desai of, among other things, seven counts of performance of an act in reckless disregard of persons or property resulting in substantial bodily harm pursuant to NRS 202.595(2), and seven counts of criminal neglect of patients resulting in substantial bodily harm pursuant to NRS 200.495(1), collectively characterized as the endangerment crimes. The issue is whether a defendant can aid and abet a negligent or reckless crime, such as the endangerment crimes at issue here.

Desai was the original founding member and managing partner of the Endoscopy Center of Southern Nevada and other ambulatory surgical centers (collectively, the clinic) in Las Vegas. Desai made all decisions regarding the clinic, including the ordering and use of supplies and scheduling of patients. He was also in charge of the certified registered nurse anesthetists.

On July 25, 2007, the clinic’s first patient of the day informed Desai that he had hepatitis C before his procedure began. Later that day, Washington had a procedure performed at the clinic. Washington was later diagnosed with hepatitis C. On September 21, 2007, the clinic’s first patient of the day informed a nurse that he had hepatitis C before his procedure began. Later that day, Rivera, Martin, Aspinwall, Hutchinson, and Meana had procedures performed at the clinic. All five patients were later diagnose with hepatitis C. Meana received some treatment following his diagnosis, but failed to adequately complete any treatment and eventually died as a result of the disease.

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When is a document not discoverable because it was prepared in anticipation of litigation?

work product

Wynn Resorts, LTD. vs. Dist. Ct. (Okada) (Nev. Supreme Ct. – Jul. 27, 2017)

The issue is under what circumstances is work performed “in anticipation of litigation” so that it is protected by the work-product privilege and not discoverable.

Okada owned approximately half of Wynn Resorts’ stock through Aruze USA, Inc., of which he was the principal. Okada also served on Wynn Resorts’ board of directors (the Board). Wynn Resorts alleged that it developed concerns about the suitability of Aruze, Okada, and Aruze’s parent corporation, Universal Entertainment Corp. (collectively, the “Okada Parties”), as shareholders of Wynn Resorts after Okada began developing a casino resort in the Philippines. In particular, the Board asserted that it believed that Aruze’s continued ownership of its stock could put Wynn Resorts’ gaming licenses at risk.

The Board conducted an investigation over several years into the business climate in the Philippines and Okada’s involvement there. The Board alleged it ultimately determined that any involvement by Okada in the Philippines was ill advised; however, Okada advised the Board that he was proceeding with his project in the Philippines.

The Board hired former federal judge and FBI director Louis J. Freeh and his firm (the Freeh Group) to investigate and report on Okada’s business in the Philippines. The Freeh Group’s letter of engagement indicated that the Freeh Group was hired as legal counsel to investigate Okada and present its findings to the Board in order to determine if Okada’s activities violated Wynn Resorts’ policies and potentially placed Wynn Resorts’ gaming licenses in jeopardy.

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Courtroom Handbook on Nevada Evidence 2017 Edition

Courtroom Handbook on Nevada Evidence

New for 2017 – The Courtroom Handbook on Nevada Evidence

The Courtroom Handbook on Nevada Evidence is a compact, all-inclusive guide to the rules and laws of evidence in the State of Nevada. Though suitable for a desk reference, the Handbook’s primary role is for use while in the courtroom. By taking a practice-oriented approach, the Handbook is intended to help reduce the risk of wasting precious time or missing a potential argument. To provide a common reference point for all attorneys, Chapter 8 of this Handbook is organized by the Federal Rule Number with reference to the corresponding Nevada Revised Statutes. Chapter 8 is comprised of the annotated version of the Nevada Rules of Evidence. Attorneys can use this for quick access to relevant case law while engaged in argument. Also included are select Civil Rules of Procedure from various jurisdictions. Practicing attorneys can use this section to find the appropriate rules at a moment’s notice. The tables contain a summary of common objections and responses as well as evidentiary foundations. These tables are designed as checklists for use while in the courtroom. Each checklist provides a step-by-step script to assist with courtroom evidentiary procedures.

In addition, on November 12, 2015, the Nevada Supreme Court issued an order providing that a party may cite an unpublished disposition issued on or after January 1, 2016, by Nevada’s appellate courts, for its persuasive authority. As a result, beginning with the 2017 Edition, relevant Nevada appellate court unpublished opinions are included in the Handbook.

To read more about the Courtroom Handbook on Nevada Evidence or to purchase click here.

Visit the Nevada Appellate Report for more legal news.

 

When is an employer liable for an employee’s criminal conduct?

Employee Criminal Conduct

Anderson v. Mandalay Corp. (Nev. Supreme Ct. – Oct. 15, 2015)

NRS 41.745(1)(c) makes employers vicariously liable for employees’ intentional torts if a plaintiff can show the intentional conduct was reasonably foreseeable under the facts and circumstances of the case considering the nature and scope of the employee’s employment. The issue is whether it was reasonably foreseeable that an employee would rape a hotel guest.

Anderson and her husband sued Mandalay Bay Resort and Casino (Mandalay) after Gonzalez, a Mandalay employee, raped Anderson in her hotel room at Mandalay. Anderson and her husband asserted claims against Mandalay for negligent hiring, vicarious liability, and loss of consortium. During discovery, Anderson asked for leave to amend her complaint to add claims for negligent security, retention, and supervision. Mandalay sought summary judgment, and at the summary judgment hearing, Anderson’s counsel abandoned all claims except the vicarious liability claim. The district court granted Mandalay’s motion for summary judgment, concluding Mandalay was not vicariously liable for Gonzalez’s criminal act. The district court also denied, as futile, Anderson’s motion to amend her complaint. Anderson appealed.

Anderson came to Las Vegas on September 8, 2008, to attend a trade show on behalf of her employer. She checked into room 8916 at Mandalay. After performing some work-related duties, she and her coworkers went out for dinner and drinks. Anderson became intoxicated and returned to Mandalay around 2 a.m. on September 9, 2008. Surveillance footage shows that she and Gonzalez shared an elevator; both exited on the eighth floor. Anderson entered her room, shut the door behind her, and went to sleep.

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When is the losing party entitled to a new trial because of attorney misconduct?

Attorney Misconduct

Michaels v. Pentair Water Pool & Spa (Nev. Ct. App. – Oct. 1, 2015)

This case arose from allegations of attorney misconduct in a products liability trial involving swimming pool filters. After the jury rendered a verdict in favor of the manufacturer, the plaintiff filed a post-trial motion seeking a new trial based upon alleged misconduct committed by the manufacturer’s attorney. The district court denied the motion, but failed to make the detailed findings required by the Supreme Court of Nevada.

The Supreme Court of Nevada recently issued two opinions clarifying how claims of attorney misconduct must be handled both by the district court and subsequently on appeal.  In this matter, the Court of Appeals of Nevada summarized those recent developments and provided guidance to district courts tasked with resolving claims of misconduct.

Pentair Water Pool and Spa, Inc. (Pentair), manufactures various models of swimming pool filters for both commercial and residential swimming pools, including the Nautilus FNS filter. In 2006, Michaels purchased a Nautilus FNS filter for use in his backyard swimming pool. Michaels had owned his swimming pool for 27 years, and when his previous filter canister malfunctioned, he integrated the FNS canister into his preexisting filter system. Like many other homeowners, Michaels connected his pool filter system to an automatic timer that could be programmed to turn the system off at night and on again during the day. On July 1, 2008, the filter system was turned off but Michaels manually turned it on in anticipation of guests arriving. The FNS filter canister exploded, and pieces struck Michaels in the left eye and ruptured his eyeball, which had to be removed and replaced with a prosthesis. Thereafter, Michaels initiated the underlying action and sought damages based on his injuries. While Michaels asserted several claims for relief, only the products liability claim was the subject of the appeal.

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Are limits on medical malpractice awards unconstitutional?

Medical Malpractice Caps

Tam v. Eighth Jud. Dist. Ct. (Nev. Supreme Ct. – Oct. 1, 2015)

NRS 41A.035 (2004) limits the recovery of a plaintiff’s noneconomic damages in a health-care provider’s professional negligence action to $350,000. The issues are whether the statute violates a plaintiff’s right to trial by jury, whether the cap applies separately to each cause of action, and whether the statute applies to medical malpractice actions.

After the death of Charles Thomas Cornell, Jr, Sherry Cornell, individually and as administrator of Charles’s estate, filed a complaint alleging, among other causes of actions, professional negligence and medical malpractice. The complaint named numerous defendants, including Stephen Tam, M.D.

Charles had several chronic medical conditions. However, Cornell alleged that Charles died after receiving care from the defendants, who discharged him without medications or prescriptions for essential medications, including insulin, to treat his diabetes. Consequently, the complaint alleged that Charles died because he did not have access to insulin.

The district court dismissed several of the defendants and numerous claims from the action, and the remaining claims for trial fell within the definition of medical malpractice as set forth in NRS 41A.009. Relevant to this matter is that Dr Tam filed an omnibus motion in limine requesting in part that the plaintiffs’ noneconomic damages be limited to $350,000 as a whole pursuant to NRS 41A.035 (2004).

The district court denied this motion finding that NRS 41A.035 was unconstitutional, as it violated a plaintiff’s constitutional right to trial by jury. The district court also found that the cap in NRS 41A.035 did not apply to the case as a whole but that a separate cap applied to each plaintiff for each of the defendants. In addition, the district court found that the cap in NRS 41A.035 did not apply to medical malpractice claims. Dr. Tam petitioned the Supreme Court of Nevada for a writ of mandamus compelling the district court to vacate its order denying his motion in limine.

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When is an attorney personally liable for the attorney fees and costs an opponent incurs?

attorney fees

Watson Rounds v. Eighth Jud. Dist. Ct. (Nev. Supreme Ct. – Sep. 24, 2015)

NRS 7.085 allows a district court to make an attorney personally liable for the attorney fees and costs an opponent incurs when the attorney files, maintains, or defends a civil action that is not well-grounded in fact or is not warranted by existing law or by a good-faith argument for changing the existing law. The issues are whether (1) Nevada Rule of Civil Procedure NRCP 11 supersedes NRS 7.085, and (2) the district court abused its discretion in sanctioning the law firm under NRS 7.085.

FortuNet, Inc., is a gaming company that leases bingo equipment to casinos. In 2011, FortuNet filed the initial version of its complaint in an action against former FortuNet employees and an entity they created; the claims centered on allegations that the employees breached various duties to FortuNet and improperly used FortuNet’s intellectual property. FortuNet later retained Watson Rounds, P.C. (Watson), as its new counsel, and Watson prepared a second amended complaint adding Bruce Himelfarbl and Himelfarb & Associates, LLC (collectively Himelfarb), as defendants. All claims against Himelfarb derived from an alleged kickback scheme and the alleged theft of FortuNet’s intellectual property.

Each of FortuNet’s claims against Himelfarb survived summary judgment. The parties proceeded to trial, but before the jury entered a verdict, the district court dismissed several of FortuNet’s claims against Himelfarb for lack of evidence under NRCP 50(a). FortuNet also voluntarily dismissed several other claims against Himelfarb. The remaining claims against Himelfarb made it to the jury, which had the option of finding that Himelfarb was involved in the kickback scheme, the theft of FortuNet’s intellectual property, both, or neither. The jury rejected FortuNet’s claims against Himelfarb, found for Himelfarb on its counterclaims, and specifically asked the district court if it could include Himelfarb’s attorney fees when calculating the damages Himelfarb suffered from FortuNet’s breach of the implied covenant of good faith and fair dealing. The district court instructed the jury that it could not add attorney fees because such fees, if any, would be assessed posttrial.

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Is the cancellation of a water permit subject to judicial review?

Water Permit

Benson v. State Engineer (Nev. Supreme Ct. – Sep. 24, 2015)

The issue is whether a party aggrieved by the cancellation of her water permit must exhaust administrative remedies with the State Engineer when the State Engineer is not statutorily authorized to provide the party’s preferred remedy.

Joseph Rand purchased property in Eureka County, which he used for farming. A water permit with an appropriation date of 1960 benefited the property. Rand died on October 17, 2008, survived by his wife, Ellen. That same month, the Joseph L. and Ellen M. Rand Revocable Living Trust was created, and the trust managed the farming property. An agent, presumably acting on behalf of the trust, applied for a water right permit at a new well head location with the State Engineer on December 10, 2008. According to the application, the agent intended to divert water from an underground source via a newly drilled well. The new water rights were necessary because the previous well did not produce sufficient water. The State Engineer conditionally authorized the new permit to appropriate 632 acre-feet annually for irrigation and domestic use from the Diamond Valley Hydrographic Basin. The permit required proof of completion of the new well, proof of beneficial use of the water, and a supporting map to be filed with the State Engineer within one year. The permit reflected the original appropriation date of 1960.

Due to financial constraints, the trust was unable to finish drilling the well by 2010. Consequently, Ellen, on behalf of the trust, sought an extension to complete the work and file the requisite proof with the State Engineer. The State Engineer granted the trust’s request and extended the time for completion by one year. The State Engineer granted the same request again in 2011 and 2012.

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