ACCIDENTS OR OCCURRENCES
be inferred as a matter of law in cases of sexual assault. State
Farm Fire & Cas. Co. v. Smith, 907 F.2d 900 (9th Cir. 1990) and Allstate
Ins. Co. v. Foster, 693 F.Supp. 886 (D. Nev. 1988).
ALLOCATION AND SCOPE ISSUES
A federal district court has ruled in Capital Indemnity Corporation v. Blazer, 51 F. Supp. 2d 1080 (D.Nev. 1999) that where an insurer has provided a defense to both covered and non-covered claims it may only recover the costs of defending the uncovered claims if there was an “understanding” between it and the insured that it would be reimbursed for such costs. It does not appear that actual consent is required so long as the insurer clearly enunciates its right to recover reimbursement through an express reservation of rights.
than one policy is potentially triggered by a claim, defense costs should
be apportioned in proportion to the amount of the insurer's indemnity obligation.
American Excess Ins. Co. v. MGM Grand Hotels, Inc., 102 Nev. 601, 729 P.2d
are heard directly by the Nevada Supreme Court.
Unfair or deceptive consumer practices are proscribed by Nev. Rev. Stat. §§ 598.360, 41.600 (1991). Unfair claims handling by insurers is regulated under Nev. Rev. Stat. § 686A.310 (1978).
A cause of action for bad faith was first recognized by the Nevada Supreme Court in USF&G v. Peterson, 540 P.2d 1070 (Nev. 1975). In the same year, the legislature enacted N.R.S. Sec. 686A.310 to govern Unfair Trade Practices in the insurance industry. In 1987, the Act was amended to clearly state that third parties had a private cause of action. However, a violation of the Act does not establish common law bad faith per se. In Hart v. Prudential Property & Cas. Ins. Co., No. CV-S-93-307 (D. Nev. April 11, 1994), the District Court distinguished common law and statutory claims for bad faith, holding that a single violation of the Act did not establish common law bad faith without proof that the insurer intended harm.
There is some suggestion that a bad faith claim may not be assigned to a third party. In Chaffee v. Smith, 649 P.2d 966 (Nev. 1982), the Nevada Supreme Court ruled that a claim for legal malpractice could not be assigned owning to the unique relationship between the attorney and client.
An insurer acts in bad faith when it denies a claim without any reasonable basis. American Excess Ins. Co. v. MGM, 102 Nev. 601, 729 P.2d 1352 (1986).
An insurer does not act in bad faith in denying the insured's claim where it had a reasonable basis for doing so even if its interpretation of the policy was ultimately deemed to be wrong. Pioneer Chlor Alkali Co. v. National Union Fire Ins. Co., 863 F.Supp. 1237 (D. Nev. 1994). The District Court noted that Nevada's unfair claims statute did not require proof that the insurer knew that it lacked a reasonable basis for disputing coverage, whereas this scienter element is a part of the common law tort of bad faith.
tort claimant has no right to assert bad faith claims against the tortfeasor’s
liability insurer. Gunny v. Allstate Insurance
Company, 830 P. 2d 1335 (Nev. 1992).
A tort claimant
lacks standing to sue a tortfeasor's liability insurer for declaratory
relief if a judgment has not yet entered in the underlying action establishing
the insured's liability to the claimant. Kinttle v. Progressive Casualty
Ins. Co., No. 26160 (Nev. January 4, 1996).
BREACH OF POLICY CONDITIONS
Nevada continues to adhere to the traditional rule that untimely notice defeats coverage without regard to whether it causes prejudice to the insured. Las Vegas Star Taxi, Inc. v. St. Paul Fire & Marine Ins. Co., 714 P.2d 562 (Nev. 1986); State Farm Mutual Auto Ins. Co. v. Cassinelli, 67 Nev. 227, 216 P.2d 606 (1950). See also S.B. Corp. v. Hartford Acc. & Ind. Co., 880 F.Supp. 751 (D. Nev. 1995)(notice condition was a condition precedent to coverage, whether expressly described as such or not; therefore, breach defeats coverage whether prejudicial or not).
that settles a claim or otherwise makes a "voluntary payment" without the
knowledge or consent of the insurer forfeits its rights under the policy
without regard to prejudice. Las Vegas Star Taxi, supra (insurer
not required to prove that the insured's settlement compromise was excessive
or that the insurance company would not under all of the contingencies
of the injured party's claim have had to pay the settlement sum or more).
BROAD FORM COVERAGES
that the insured misappropriated trade secrets, including appropriation
of business strategy and pricing information, did not arise “in the course
of advertising” the insured’s goods and services. Associated Aviation
Underwriters, Inc. v. Vegas Jet, LLC, 2000 WL 1051941 (D. Nev. July 6,
CHOICE OF LAWS
adopted the Restatement (Second) of Conflict of Laws, Section 188 "most
significant relationship" test. Williams v. USAA, 849 P.2d 265, 266
(Nev. 1993); Sotirakis v. USAA, 849 P.2d 789 (Nev. 1990). In
general, it seems that Nevada looks to the state in which contract is executed.
Tweet v. Webster, 610 F.Supp. 104 (D. Nev. 1985).
DECLARATORY RELIEF ACTIONS
The Supreme Court of Nevada has ruled that a tort plaintiff lacks jurisdictional standing to bring a DJ against an insurer while its claims against the policyholder are still pending. In Knittle v. Progressive Cas. Ins. Co., No. 26160 (Nev. January 4, 1996), the court ruled that there was no present justiciable controversy inasmuch as the plaintiff's rights were contingent on the successful litigation of the pending tort suit against the policyholder.
may seek permissive intervention in the lawsuit against its policyholder
for the purpose of crafting special interrogatories to permit apportionment
of the damages between covered and non-covered claims. Fidelity Bankers
Life Insurance Company v. Wedco, Inc., 102 F.R.D. 41, 44 (D. Nev. 1984).
DUTY TO DEFEND
An insurer's duty to defend is determined by the language of its policy and the allegations in the complaint giving rise to the suit against its insured. Rockwood Ins. Co. v. Federated Capital Corp., 694 F.Supp. 772 (D. Nev. 1988); see also Continental Cas. Co. v. City of Richmond, 763 F.2d 1076 (9th Cir. 1985).
If facts are
alleged which, if proven, would give rise to the duty to indemnify, then
the insurer must defend. Rockwood Ins. Co. v. Federated Capital Corp.,
ESTOPPEL AND WAIVER
v. Jefferson Ins. Co., 116 Nev. Adv. Op. 70, 5 P.3d 1054 ( Nev. 2000),
the Nevada Supreme Court ruled that an insurer’s assertion of one exclusion
as its basis for denyig coverage did not waive the insurer’s right to later
raise additional bases for denying coverage absent evidence of affirmative
misconduct such as sandbagging, failure to investigate, or where the insured
relied on an insurer’s misrepresentation to his detriment.
Court ruled that excess insurers have an obligation to share defense costs
with primary carriers in proportion to the amount of indemnity that they
pay for any given loss. American Excess Ins. Co. v. MGM Grand Hotels,
Inc., 729 P.2d 1352 (Nev. 1986).
NUMBER OF OCCURRENCES
Supreme Court ruled in Ins. Corp. of America v. Rubin, 818 P.2d 389 (Nev. 1991) that each occasion on which insured physician negligently failed to diagnose a young girl's brain tumor involved a separate "occurrence." More recently, however, the court distinguished Rubin in a case involving a County's negligent failure to properly regulate a day care center where an employee had molested dozens of children, holding that it was the on-going failure to perform this duty that was the "cause" of the County's liability and therefore finding that the diverse claims only involved a single "occurrence." Washoe County v. Transcontinental Ins. Co., 878 P.2d 306 (Nev. 1994). It was perhaps not coincidental that the County's policy contained a $50,000 "per occurrence" retention.
insured ran over the plaintiff, put the car in reverse, and then ran her
over again, the claims involved a single "occurrence" despite the multiple
culpable acts of conduct. Bish v. Guaranty Nat. Ins. Co., 848 P.2d
1057 (Nev. 1993).
no case law. Federal district court suggested in Crystal Bay General
Improvement District v. Aetna Cas. & Surety Co., 713 F.Supp. 1371 (D.
Nev. 1989) that it would not require coverage for gradual contamination.
ruled in Montana Refining Co. v. National Union Fire Ins. Co. of Pittsburgh,
918 F.Supp. 1395 (D. Nev. 1996) that a "Hazardous Substances Remedial Action
Exclusion" was clearly intended to bar coverage for Superfund claims against
a waste generator. Court rejected insured's "regulatory estoppel"
argument, suggesting that Nevada courts would take a "dim view" of drafting
history arguments generally.
are not insurable under Nevada law. Ace Truck & Equipment Rentals,
Inc. v. Kahn, 746 P.2d 132, 134 (Nev. 1987) and New Hampshire Ins. Co.
v. Gruhn, 670 P.2d 941 (Nev. 1983). The Nevada Supreme Court ruled
in Siggelkow v. Phoenix Ins. Co., 846 P.2d 303 (Nev. 1993) that permitting
indemnification for punitive damages would undercut the deterrent effect
of such awards and was therefore against public policy. In Lombardi
v. Maryland Casualty Co., 894 F.Supp. 369, 371 (D. Nev. 1995), the U.S.
District Court ruled that punitive awards are not "compensatory" and are
therefore not "damages" because of "bodily injury."
STANDARDS FOR POLICY INTERPRETATION
"Reasonable expectations" doctrine adopted in National Fire Ins. Co. v. Reno's Executive Air, Inc., 682 P.2d 1383, 1383 (Nev. 1984). Thus, "when an ambiguity exists in an insurance policy, the court should consider not merely the language, but also the intent of the parties, the subject matter of the policy, the circumstances surrounding its issuance, and the policy should be construed to effectuate the reasonable expectations of the insured." National Union Fire Ins. Co. v. Caesars Palace, 792 P.2d 1129 (Nev. 1990). If there is no ambiguity, words will be given their usual and ordinary meaning. Siggelkow v. Phoenix Ins. Co., 846 P.2d 303, 304 (Nev. 1993); Dickenson v. Nevada, 977 P.2d 1059, 1061 (Nev. 1982), cited in INA v. Hilton Hotels U.S.A., Inc., 908 F.Supp. 809 (D. Nev. 1995).
An insurance policy must be considered as a whole to determine what was meant to be covered. National Union Fire Ins. Co. v. Reno's Executive Air, 682 P.2d 1380, 1383 (Nev. 1984).
A policy will be deemed ambiguous if it is reasonably susceptible of two contrary interpretations. Farmers Ins. Exchange v. Young, 832 P.2d 376, 379 (Nev. 1992). However, Nevada courts will not look to extrinsic sources of intent to find ambiguity. Id. However, if the policy is ambiguous, a court should look to the intent of the parties, the subject matter of the policy and the circumstances surrounding its issuance before resolving the claimed ambiguity. National Union Fire Ins. Co. v. Caesar's Palace Hotel & Casino, 792 P.2d 1129, 1130 (Nev. 1990); Reno's Executive Air, 682 P.2d at 1383.
ambiguities will generally be resolved in favor of the insured, Nevada
courts will not rely on the rule of contra proferentum to create coverage
where it is beyond the reasonable expectations of the insured. Montana
Refining Co. v. National Union Fire Ins. Co. of Pittsburgh, 918 F.Supp.
1395 (D. Nev. 1996).
THEORIES OF ALTERNATIVE LIABILITY
TRIGGER OF COVERAGE
"Manifestation" trigger adopted for first party property claims in Jackson v. State Farm Fire & Cas. Co., 835 P.2d 786 (Nev. 1992).