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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When must a summons be served in a child protective custody proceeding?

Child Protective Custody Proceeding

Joanna T. v. Eighth Jud. Dist. Ct. (Nev. Supreme Ct. – Sep. 24, 2015)

The issue is whether NRCP 4(i)’s requirement that a summons be served within 120 days applies in NRS Chapter 432B proceedings.

Joanna T.’s daughter was removed from the care of Joanna’s mother, Sheila T., in December 2012 while Joanna was in jail. An abuse-and-neglect petition was filed alleging that the child was in need of protection and naming both Joanna and Sheila, but no summons was issued as to Joanna and she did not appear at the adjudicatory hearing. The abuse-and-neglect petition was orally sustained by a domestic master and both Joanna and Sheila were provided with case plans. Sheila complied with her case plan, and the child was returned to her custody in June 2013. In the order returning the child to Sheila, Joanna was allowed supervised visitation with the child until she complied with her case plan or until further order of the court.

Then, in March 2014, Joanna filed a motion to set aside the master’s oral recommendation to sustain the abuse-and-neglect petition because Joanna had never received a summons notifying her of the adjudicatory hearing. The juvenile court granted the motion, directed the State of Nevada to issue a summons, and set a new adjudicatory hearing. A summons was thereafter served on Joanna on April 24, 2014, 486 days after the abuse-and-neglect petition was filed. Joanna moved to dismiss the petition asserting that the summons was untimely under NRCP 4(i) because it was issued more than 120 days after the abuse-and-neglect petition was filed. The juvenile court denied the motion.

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Must a medical expert’s affidavit accompany a medical malpractice complaint at the time of filing?

Medical Malpractice 1

Baxter v. Dignity Health (Nev. Supreme Ct. – Sep. 24, 2015)

This case arises from an order dismissing a medical malpractice action under NRS 41A.071. Adopted in 2002 to curb baseless malpractice litigation, NRS 41A.071 provides that a district court shall dismiss a medical malpractice action if the action is filed without an affidavit or declaration from a medical expert supporting the allegations of malpractice. In this case, the plaintiff consulted with a medical expert, from whom he obtained the supporting declaration required, before filing suit. For reasons unclear, the plaintiff did not attach the declaration to the complaint. Instead, he filed the complaint by itself, then filed the separately captioned declaration the next morning. The complaint incorporated the declaration by reference, and vice versa, and the two documents were served together on the defendants before the statute of limitations ran. The issue is whether NRS 41A.071 required dismissal of the complaint.

Baxter is a type 1 diabetic who presented to the emergency room in August 2012 with an acute infection. He alleged that the respondent hospital and doctors committed medical malpractice by misdiagnosing his infection as viral, not bacterial. Baxter further alleged that, had the correct diagnosis been timely made, his cervical spine abscess should and could have been successfully treated with antibiotics. The delay in proper diagnosis and treatment has allegedly left him a ventilator-dependent tetraplegic who will require 24-hour nursing care for the rest of his life.

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When can a court appoint a general guardian for a child?

General Guardian

In re Guardianship of N.M. (Nev. Supreme Ct. – Sep. 24, 2015)

NRS 125A.335 establishes a district court’s temporary emergency jurisdiction to protect a child in Nevada from mistreatment or abuse. The issues are whether a district court exercising temporary emergency jurisdiction may appoint a general guardian pursuant to NRS 125A.335(2) when (1) no court in another jurisdiction has entered an applicable custody order or commenced custody proceedings, and (2) Nevada has become the child’s home state.

Appellant, a Mexican citizen, gave birth to N.M. in California in 2007. Later that year, appellant and N.M. moved to Mexico. In 2008, appellant left N.M. in the care of N.M.’s maternal grandparents, who were also in Mexico. N.M.’s grandmother and two agents from Mexico’s National System for Integral Family Development (DIF) executed a document stating that the grandparents had custody of N.M. (the 2008 DIF document).

In 2009 or 2010, N.M.’s maternal aunt (the Aunt) and respondent, her then-fiancé or boyfriend, began caring for N.M. Respondent is a United States citizen. In August 2011, appellant signed a document purportedly giving the Aunt and respondent custody of N.M.

In September 2012, respondent moved N.M. to Nevada after his relationship with the Aunt ended. Appellant’s half-sister then went to respondent’s home at night and attempted to remove N.M. In response, respondent filed a verified emergency petition in November 2012 for appointment as N.M.’s temporary general guardian. The district court appointed respondent as N.M.’s temporary general guardian.

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When is an insurer obligated to provide independent counsel for its insured?

Cumis Counsel 1

State Farm Mut. Auto. Ins. Co. v. Hansen (Nev. Supreme Ct. – Sep. 24, 2015)

The Federal District Court for the District of Nevada certified two questions to the Supreme Court of Nevada concerning Nevada’s conflict-of-interest rules in insurance litigation. The first question asked whether Nevada law requires an insurer to provide independent counsel for its insured when a conflict of interest arises between the insurer and the insured. The second asked whether, if the first question is answered affirmatively, the court would find that a reservation of rights letter creates a per se conflict of interest.

While leaving a house party, Hansen was injured in an altercation with other guests. The other party guests tried to prevent Hansen and his friends from leaving the party by sitting on or standing around their vehicle. Eventually Hansen and his friends were able to leave the party in their vehicle, but they later had to stop at the gated exit of the residential subdivision. While stopped at the gate, the vehicle of another party guest, Aguilar, struck the vehicle in which Hansen was riding. Hansen filed a complaint against Aguilar and others in Nevada state district court alleging both negligence and various intentional torts.

Aguilar was insured by State Farm Mutual Automobile Insurance Company. State Farm agreed to defend Aguilar under a reservation of rights. The reservation of rights letter reserved the right to deny coverage for liability resulting from intentional acts and punitive damages.

Aguilar admitted to negligently striking the other vehicle, and the district court granted summary judgment in favor of Hansen on the negligence claim. Aguilar then agreed to a settlement with Hansen, in which he assigned his rights against State Farm to Hansen.

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What determines if a contract’s forum selection clause is permissive or mandatory?

Forum Selection

Am. First Fed. Credit Union v. Soro (Nev. Supreme Ct. – Sep. 24, 2015)

The issue is whether a contract clause stating that the parties “submit themselves to the jurisdiction of” another state results in a mandatory forum selection clause requiring dismissal of a Nevada action.

In 2002, America First Federal Credit Union (the credit union) loaned $2 9 million, secured by real property in Mesquite, Nevada, to borrowers for the purchase of a liquor/mini- mart. The borrowers defaulted, and the credit union held a trustee’s sale, resulting in a deficiency on the loan balance of approximately $2.4 million. The Utah-based credit union sued the borrowers in Clark County to recover the deficiency.

The borrowers moved to dismiss the action under NRCP 12(b)(1), arguing that the credit union could not sue to recover the deficiency in Nevada and citing several clauses in the Commercial Promissory Note and Business Loan Agreement to support their argument. An Applicable Law clause in the loan agreement stated that “[t]his Agreement (and all loan documents in connection with this transaction) shall be governed by and construed in accordance with the laws of the State of Utah.” The loan agreement also contained the following: “Jurisdiction. The parties agree and submit themselves to the jurisdiction of the courts of the State of Utah with regard to the subject matter of this agreement.” A clause in the note stated: “If there is a lawsuit, Borrower(s) agrees to submit to the jurisdiction of the court in the county in which Lender is located.”

The district court agreed with the borrowers and granted the motion to dismiss. The district court found that the note and loan agreement contain language which clearly expressed the parties’ intent to submit litigation relating to the Agreement and the Note, to the jurisdiction of the State of Utah. The credit union appealed.

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