nevada supreme court decisions

Summer 2013 HigHligHts Affidavit of Merit Not Required for Claims Based on Alleged Professional Negligence In overruling a previous decision, the Nevada Supreme Court held that the plain language of NRS 41A.071 does not require an affidavit of merit in support of claims based on professional negligence. The statute only requires an affidavit for claims based on medical malpractice or dental malpractice. Motor Vehicle Collision Results in Verdict in Excess of $2.7 Million A Nevada jury recently awarded a plaintiff more than $2.7 million for injuries allegedly sustained in a motor vehicle accident. The plaintiff allegedly suffered a closed head injury with residual brain damage and cognitive deficits. A Proposed Amendment to the Nevada Constitution May Create an Intermediate Appellate Court The Nevada Constitution currently provides for only one appellate court the Nevada Supreme Court which was recently noted to have one of the heaviest caseloads in the nation. Senate Joint Resolution 14, which was recently passed by the Nevada Legislature, would create an intermediate appellate court to address specific issues and appeals from the state s district courts. nevada supreme court decisions Professional negligence Nevada Supreme Court Clarifies that the Affidavit-of-Merit Requirement Does Not Apply to Claims for Professional Negligence In 2007, Tammy Egan was referred to Gary Chambers, a doctor of podiatric medicine, after she visited a physician complaining of continuous pain and discomfort in her left foot. At that time, Dr. Chambers was employed by Southwest Medical Associates, Inc. (SMA). Dr. Chambers performed several surgical procedures on Ms. Egan s left foot and ankle, beginning in July 2007. Sometime after the procedures, Dr. Chambers discovered gangrene in Ms. Egan s left foot during one of several follow up visits. Ms. Egan had initially complained of darkened skin and blisters surrounding the areas of the leg where the procedures had been performed. Following the discovery of gangrene, Dr. Chambers referred Ms. Egan to another podiatric physician. That physician ultimately performed three additional surgical procedures on the infected foot in August and September 2007, including the amputation of her left great toe and part of the left foot. The podiatric physician eventually concluded that Ms. Egan would not be able to return to her previous employment as a waitress and would suffer permanent disability. In July 2008, Ms. Egan filed a complaint for professional negligence against Dr. Chambers and SMA alleging that Dr. Chambers medical treatment fell below the standard of care expected of a practicing podiatric physician. Because podiatrists are not considered physicians under NRS Chapter 41A for medical malpractice claim purposes, Ms. Egan filed the complaint without a supporting NRS 41A.071 affidavit of merit. While Ms. Egan s case was pending before the district court, the Nevada Supreme Court issued its decision in Fierle v. Perez, 125 Nev. 728 (2009), holding that an affidavit of merit was required under NRS 41A.071 for both medical malpractice and professional negligence complaints. This included claims based on medical malpractice and professional negligence asserted against in this issue NEVADA SUPREME COURT Professional Negligence.... Page 1 Contracts... Page 2 NEVADA JURY VERDICTS Personal Injury.... Page 3 Breach of Contract... Page 4 Premises Liability.... Page 5 Medical Malpractice... Page 5 Construction Defect... Page 5 COMMENTS... Page 5

Page 2 a professional medical corporation. The Nevada Supreme Court concluded that both medical malpractice and professional negligence complaints filed without a supporting affidavit of merit were void ab initio and must be dismissed. Dr. Chambers and SMA, relying on the decision in Fierle, moved to dismiss Ms. Egan s complaint in February 2010. The district court granted the motion and the complaint was dismissed. Ms. Egan was unable to file a new complaint because the statute of limitations for her claims had expired. She therefore filed an appeal to the Nevada Supreme Court. In addressing the district court s decision, the Nevada Supreme Court emphasized that NRS 41A.071 provided that the district court shall dismiss, without prejudice, actions for medical malpractice or dental malpractice filed without an affidavit of merit. The Court concluded that the plain language of NRS 41A.071 made no mention of professional negligence. NRS 41A.071 referred expressly to medical malpractice, which was defined as pertaining to physicians, hospitals, and hospital employees. The court also noted that physician was defined as a person licensed under NRS Chapters 630 or 633. Podiatrists were not licensed pursuant to those chapters of the Nevada Revised Statutes; rather, they were licensed pursuant to NRS Chapter 635. As such, NRS 41A.071 did not, by its plain terms, apply to Ms. Egan s claims against her podiatrist. The Court noted that applying Fierle to professional negligence claims would be substantially inequitable and contrary to the plain language of the statute. The plain language of NRS 41A.071 indicated that professional negligence actions were not subject to its affidavit-of-merit requirement and to the extent Fierle v. Perez conflicted with this holding, that decision was overruled. Accordingly, the district court erred when it dismissed Ms. Egan s professional negligence claim against Dr. Chambers and SMA for lack of a supporting affidavit of merit. The district court s dismissal order was reversed and the case remanded. Egan v. Chambers, April 25, 2013. contracts Nevada Supreme Court Clarifies Trade Usage and Industry Custom in Interpreting an Unambiguous Option Contract A written option contract provided Naples Polaris the right to acquire the option rights to purchase real property from Jack Galardi and Birdie, LLC (together, Galardi) for $8 million cash. These option rights were acquired by Naples Polaris from Galardi s lessee, French Quarter. The property that was to be purchased was subject to a deed of trust securing approximately $1.3 million in debt which predated the option. French Quarter was operating a topless club on the property but had been losing a significant amount of money and subsequently filed for bankruptcy. The bankruptcy trustee then aligned a fourth party to acquire the property as well as Naples Polaris option. The price that was offered was sufficient to resolve the $1.3 million encumbrance, give Galardi the full $8 million option price he demanded, and would generate surplus funds for both Naples Polaris and French Quarter s creditors. Neither Naples Polaris nor Galardi opposed the Bankruptcy court sale. An issue arose, however, over which party should be burdened with the $1.3 million needed to retire the preexisting encumbrance against the property. The parties stipulated to allow the sale to close, with Galardi receiving the full $8 million and leaving Naples Polaris the right to sue Galardi in state court for the $1.3 million. The lawsuit would be based on interpretation of the option contract including a written integration Nevada Legal Update clause, which was silent as to preexisting encumbrances in general and the $1.3 million debt in particular. That clause provided that Naples had an option to purchase the real estate for the sum of $8,000,000 cash and Naples Polaris was to pay all costs of transfer and closing whereby Seller [Galardi] shall receive full purchase price. In competing motions for summary judgment, both parties focused on the phrase, Buyer shall pay all costs of transfer and closing whereby Seller shall receive full purchase price, arguing that the option contract, as written, unambiguously favored its respective position. Galardi argued that he should receive the $8 million full purchase price because costs of transfer and closing encompassed preexisting indebtedness. Naples Polaris maintained that the phrase costs of transfer and closing was associated with transaction costs such as recording fees and transfer taxes, rather than encumbrances. Naples Polaris further asserted that if Galardi intended for Naples Polaris to take title subject to preexisting encumbrances, it should have been written specifically into the contract. In support of its position, Naples Polaris offered an expert affidavit from a past president and current certification chair for the Nevada Escrow Association. The expert opined that closing costs were separate and apart from the purchase price and normally consist of the title policy fee, escrow fee, real property transfer tax, recording fees, etc. She further stated that, based on her experience in the industry, whenever real property Nevada Legal Update is published quarterly by Alverson, Taylor, Mortensen & Sanders 7401 W. Charleston Blvd. Las Vegas, Nevada 89117 (702) 384-7000 Fax (702) 385-7000 www.alversontaylor.com

Nevada Legal Update Page 3 is transferred, it is always given to the purchaser free and clear of any encumbrances or liens, unless the agreement specifically states that it is to be acquired subject to the existing encumbrance, and the buyer specifically agrees to take over the payments of the existing loan. Galardi did not dispute the real estate industry usages and customs, but argued that the district court could only consider the expert affidavit if the court deemed the contract ambiguous and that, if the contract were ambiguous, it would take a trial to resolve the ambiguity. The district court disagreed and granted summary judgment in favor of Naples Polaris. The court deemed the contract unambiguous in light of the trade usages describe in the affidavit. On appeal, Galardi argued that because the district court did not first declare the option contract ambiguous, there was an error in considering Naples Polaris expert evidence of trade usage and industry custom. He further asserted that if no ambiguity exists, the words of the contract must be taken in their usual and ordinary signification. The Nevada Supreme Court addressed the absence of ambiguity or other factual complexities within a contract, concluding that whether or not a contract is ambiguous or unambiguous, is a question of law. The Court stated that a contract is ambiguous if its terms may reasonably be interpreted in more than one way, but ambiguity does not arise simply because the parties disagree on how to interpret the contract, rather, an ambiguous contract is an agreement obscure in meaning, through indefiniteness of expression, or having a double meaning. The Court also clarified the relevance of trade usage and industry custom, noting that this argument parallels the former common-law rule that trade usage and industry custom can only supply incidents to a contract when the contract is ambiguous on the point to which the party seeks to apply the custom. More recently, courts tend to consult trade usage and custom not only to determine the meaning of an ambiguous provision, but also to determine whether a contract provision is ambiguous in the first place. The Nevada Supreme Court concluded, as many other courts have, that ambiguity is not required before evidence of trade usage can be used to ascertain or illuminate contract terms and that the district court correctly granted summary judgment in favor of Naples Polaris. The Court further agreed with the district court that the contract placed responsibility for the $1.3 million debt on Galardi. Galardi v. Naples Polaris, LLC, May 16, 2013. nevada jury verdicts Personal injury Jury Awards Plaintiff $2,750,978.00 for Motor Vehicle Collision The plaintiff, a 48 year-old waitress, alleged that the defendant, a 21 yearold nutritionist, struck a non-party on Interstate 15, causing the non-party s vehicle to cross over the center median wall, bounce into oncoming traffic, and land directly on top of the plaintiff s vehicle. The plaintiff alleged that as a result of the collision, she sustained a closed head injury with residual brain damage and cognitive deficits; lacerations and an avulsion of the scalp, with residual scarring; an injury to the cervical spine; left-sided paralysis; and foot drop. At trial, the plaintiff called several of her treating physicians who testified regarding the injuries she sustained. Her physicians included a psychologist who was of the opinion that the plaintiff was permanently disabled from employment. An economist also testified regarding plaintiff s past and future lost wages, lost household services, medical expenses, and hedonic damages. The defendant called a neuropsychologist who testified that the plaintiff had been improperly treated for depression and, if properly treated, she could return to normal levels of cognitive function. The defendant also called an economist who opined that there was no medical evidence proving that the plaintiff would be unable to engage in competitive employment, no evidence of past or future lost household services, and no evidence of the need for a life care plan. The defendant s expert also asserted that there was no scientific basis for awarding hedonic damages and/or damages for loss of enjoyment of life. The plaintiff made a pretrial demand of $6,500,000.00. The defendant refused to make an offer. During closing arguments, the plaintiff s counsel asked the jury to award $13,352,691.43, which included $4 million for past pain and suffering and $5 million for future pain and suffering. Defense counsel suggested $1,799,478.43 was adequate compensation. The jury eventually awarded the plaintiff $2,750,978.43 in compensatory damages, which represented past and future medical expenses, past and future lost wages, past and future lost household services, and past and future pain and suffering. The jury also awarded the plaintiff s spouse $40,000.00 for loss of consortium. Dogra v. Liles, December 3, 2012. Plaintiff Recovers $500,000.00 in Personal Injury Trial Regarding Sexual Abuse of a Minor The plaintiff alleged that he was sexually abused by the defendant s priest when he was in his early teens and that he suffered physical and psychological injuries and damages.

Page 4 The defendant denied liability for the priest, advancing the defense that the statute of limitations had run. At trial, the defendant called a canon law expert to testify that the perpetrator priest was not under the defendant s supervision and/ or control while he was serving the Diocese of Reno Las Vegas. The plaintiff called a psychologist specializing in childhood sexual abuse who testified that the sexual abuse caused and/or exacerbated a number of psychological symptoms. This caused the plaintiff to utilize a number of coping mechanisms, including substance abuse. A family therapist also addressed the extent of the psychological symptoms, testifying that the plaintiff s symptoms were exacerbated as a result of the abuse he experienced at the hand of the perpetrator priest. The defendant called a psychologist who testified that the plaintiff was predisposed to his psychological problems and that any sexual abuse he may have suffered as a child was not a significant stressor in his life. Prior to the trial, the plaintiff demanded $10,000.00 in compensatory damages and $340,000.00 for future medical expenses. The jury returned a verdict for the plaintiff, awarding him $500,000.00 in compensatory damages. Doe 119 v. Catholic Diocese of Green Bay, November 1, 2012. The Jury Finds for Plaintiff in the Amount of $53,399.98 Following a Motorcycle Collision The plaintiff, a valet attendant, was operating a 2001 Suzuki motorcycle on Sahara Avenue in Las Vegas. According to the plaintiff, the defendant was operating a Chrysler minivan and pulled into the plaintiff s path of travel. The plaintiff steered sharply to the left to avoid a collision and was forced to lay down his motorcycle. At trial the plaintiff showed a video re-enactment of the accident. The defendant admitted that he was negligent, but argued that his negligence did not cause the plaintiff to undergo shoulder surgery. Defendant maintained that, at most, the plaintiff sustained a soft tissue shoulder sprain. The plaintiff demanded more than $74,999.00 prior to trial and the defendant offered $60,000.00. The jury found for the plaintiff in the amount of $53,399.98. Mengisteab v. Callens, December 11, 2012. Plaintiff Fails to Recover in Comparative Negligence Action In a short trial being heard on the defendant s appeal from an arbitration award of $42,500.00 for the plaintiff, the plaintiff alleged that he tripped and fell over a mechanic s tool in the defendant s driveway in an area that was not properly illuminated. The defendant denied liability, alleging that the condition was open and obvious. The plaintiff called an expert to support his alleged damages of a sprained ankle, which was exacerbated by his chronic diabetes. According to the plaintiff s expert, his diabetes slowed his healing process and resulted in permanent injury. The defendant denied liability for plaintiff s damage and made an $8,000.00 offer of judgment to the plaintiff. The jury found the plaintiff to be 60 percent at fault for his alleged trip and fall and the defendant to be 40 percent at fault. Therefore, the plaintiff was prohibited from any recovery. Ramsey v. Hibbard, December 13, 2012. BreacH of contract Plaintiffs Awarded $371,400.00 for Failure to Make Necessary Tenant Improvements in a Breach of Contract Action The plaintiffs alleged that defendant, Acadian Reality, breached their Nevada Legal Update contract by failing to sign necessary construction documents for tenant improvements required by the City of Las Vegas. The case was first tried in June 2008, and resulted in an $885,600.00 award to the plaintiffs. The defendant appealed and the Nevada Supreme Court remanded the case for retrial on the issue of damages. In September 2003, the plaintiffs agreed to lease real property for three years, with an option to purchase the property at the end of the lease term. The plaintiff s intent was to convert and operate the property as a childcare facility. Plaintiffs paid a $100,000.00 security deposit. In February 2004, the parties executed an addendum to the lease agreement, whereby the plaintiffs agreed to execute a promissory note in the amount of $100,000.00 secured by a Deed of Trust on a model home located in Yucca Valley, California, in favor of the defendant, for the nonrefundable option payment. The $100,000.00 payment, evidenced by the promissory note, was never paid. When plaintiffs began construction on the property they intended to exercise the option to purchase the property. Shortly after construction began, however, the plaintiffs discovered numerous problems including asbestos in the ceiling and electrical wiring that was not up to code. The property was also not connected to the Las Vegas valley water line. The plaintiffs filed suit and sought damages for rent, construction costs, and lost profits. The defendant argued that the plaintiffs misrepresented the title to the California property and counterclaimed for breach of contract, intentional misrepresentation, and abuse of process. After a five day trial the jury found for the plaintiffs, awarding $371,400.00 in compensatory damages, including $50,000.00 for the security deposit, $124,000.00 for rent, and $97,200.00 for other costs. Shack v. Hollier Trust, November 19, 2012

Nevada Legal Update Page 5 Premises liability Plaintiff Awarded $56,000.00 in Slip and Fall Case against Hotel A female plaintiff alleged that she injured her wrist while a patron of defendant s hotel after she slipped and fell on liquid on the floor of the hotel lobby. The plaintiff alleged that the defendant failed to maintain its premises in a reasonably safe condition. In response to the complaint, the defendant argued that the plaintiff was comparatively at fault. The jury awarded the plaintiff $56,000.00, representing $28,000.00 for medical expenses and $28,000.00 for pain and suffering. The jury also found the plaintiff to be 50 percent at fault and plaintiff s award was subsequently reduced to $28,000.00. Hurlburt v. Mirage Casino Hotel, December 14, 2012. medical malpractice Jury Finds for Defendant Urologist in Medical Malpractice Action After being diagnosed with bladder tumors in 2000, the decedent, a chronic smoker, began treating with the defendant doctor on July 5 2001. Following the diagnosis of bladder tumors, the decedent continued to smoke cigars. The decedent did not return to see the defendant until March 27, 2003, when he was seen for a regular surveillance cystoscopy. Over the next several days, the defendant followed the decedent performing other biopsies, which revealed a low grade carcinoma. The decedent was also known to be a diabetic with poor kidney function and a history of urinary tract infections. As such, the decedent was not a candidate for chemotherapy when he was first diagnosed with bladder cancer. On April 28, 2006, a third biopsy was performed, and a closed cup forceps was used to remove all visible bladder tumors. The pathology of the tumors removed revealed a high-grade carcinoma, and based upon this pathology, the defendant doctor recommended removal of the decedent s bladder. The decedent sought second opinions, but returned to the defendant for the recommended surgery, which was successful. The decedent continued to treat with the defendant until September 20, 2007. The decedent passed away on October 8, 2009. The decedent s surviving wife filed a wrongful death and medical malpractice action against the defendant doctor. The plaintiff argued that the defendant fell below the standard of care when diagnosing the decedent s bladder cancer. The plaintiff also alleged that the defendant failed to perform the adequate biopsies and unreasonably delayed the decedent s csystecomy. The defendant denied falling below the standard of care and argued that the decedent succumbed to a natural progression of the disease. The jury found for the defendant. Brooks v. Leo, December 3, 2012. insurance Bad faith Defendant Insurance Company Prevails in Insurance Bad Faith Action A 32 year old plaintiff was a passenger in a single motor vehicle rollover accident with the defendant s insured, who was intoxicated and operating the motor vehicle. As a result of the accident, the plaintiff was rendered a partial quadriplegic. In a prior personal injury action, the plaintiff was awarded a $7,000,000.00 verdict against the defendant s insured; however, the insured only had policy limits of $15,000.00. The policy limits were offered 51 days after the motor vehicle accident, but were rejected by the plaintiff. After the significant verdict for the plaintiff, the defendant s insured assigned his rights against his insurance company to the plaintiff. In a separate insurance bad faith action against the defendant insurance company, the plaintiff alleged that the defendant negligently exposed its insured to a large excess verdict when it failed to timely adjust the insured s claim and offer its policy limits. The plaintiff relied upon an insurance claims expert, who testified that the insured s policy limits should have been offered within two days of the subject accident. The defendant insurance company denied liability and argued that it was only obligated to perform a complete investigation of the claim, and that its insured was attempting to shift his liability for operating the motor vehicle while intoxicated to his insurance company. Prior to trial, the plaintiff served a settlement demand in the amount $4,999,999.00. The jury found for the defendant insurance company. Cromer v. Bristol West Insurance Group, December 6, 2012. comments Senate Joint Resolution 14 ( SJR 14 ), a proposed amendment to the Nevada Constitution which would create an intermediate appellate court, was introduced in the Nevada Senate on February 4, 2013, and was subsequently passed. SJR 14 is now before Governor Sandoval, and if signed will appear on the general election ballot for 2014. Currently, Article 6 of the Nevada Constitution provides for one appellate court the Nevada Supreme Court. Thus, all appeals from decisions rendered in Nevada s District Courts, including civil, family, and criminal cases, must be reviewed by the Nevada Supreme Court. This two-tier structure has resulted in staggering caseloads for the Nevada

Alverson Taylor Mortensen & Sanders 7401 W. Charleston Blvd. Las Vegas, Nevada 89117 If you would like to receive our Nevada Legal Update via email please visit: alversontaylor.com/subscribe The information included in this newsletter is not a substitute for consultation with an attorney. Specific circumstances require consultation with appropriate legal professionals. Supreme Court, and delays which can last years. In a recent Annual Report of the Nevada Judiciary, it was found that the Nevada Supreme Court has one of the heaviest caseloads in the nation, with seven justices addressing more than 2,200 matters annually. The number of cases each justice individually handles is likewise staggering. The American Bar Association s suggested caseload for an appellate judge is 100 cases. In fiscal year 2011 to 2012, however, the average caseload per justice of the Nevada Supreme Court was 357 cases. Of the reporting states with no intermediate appellate court, Nevada had the highest decided dispositions at 1,679. In most states with an intermediate appellate court, the court system is divided into at least three levels: the trial court, which initially hears cases and reviews evidence and testimony to determine the facts of the case; at least one intermediate appellate court; and a Supreme Court (or court of last resort), which primarily reviews the decisions of the intermediate appellate courts. Forty of the nation s 50 states have an intermediate appellate court. The ten states that currently do not are Delaware, Maine, Montana, Nevada, New Hampshire, Rhode Island, South Dakota, Vermont, West Virginia and Wyoming. Based on the business plan submitted by the Nevada Supreme Court, the cost for an intermediate appellate court would be approximately $1.5 million annually to cover the salaries of judges and staff. There would be, however, no facility costs because the new court would reside in the Regional Justice Center in Las Vegas within the existing Nevada Supreme Court space. The proposed Nevada Court of Appeals would be comprised of three judges and would be assigned appeals involving review of criminal and civil trial court decisions concerning existing law, and petitions for post-conviction relief, except death penalty cases. The Nevada Supreme Court would continue to oversee all cases involving the death penalty, constitutional claims, issues involving a change to Nevada common law, and issues of law that are a matter of first impression. The intermediate appellate court would also be assigned general appeals concerning existing case precedent, such as divorces, personal injury claims, and foreclosures, leaving the Nevada Supreme Court with greater opportunity to review those cases presenting constitutional issues and development of common law. It is anticipated that this structure of Nevada s intermediate appellate court will provide for greater and more efficient access to justice in Nevada.