Canfora v. Coast Hotels & Casinos, Inc., 41128.

• Decision Date: 20 October 2005
• Docket Number: No. 41128.,41128.
• Citation: 121 P.3d 599
• Parties: Alessandro CANFORA and Christine M. Canfora, Appellants, v. COAST HOTELS AND CASINOS, INC., Respondent.
• Court: Nevada Supreme Court

121 P.3d 599

Alessandro CANFORA and Christine M. Canfora, Appellants, v. COAST HOTELS AND CASINOS, INC., Respondent.

No. 41128.

Supreme Court of Nevada.

October 20, 2005.

COPYRIGHT MATERIAL OMITTED

Kravitz Schnitzer & Sloane, Chtd., and David J. Feldman and Martin J. Kravitz, Henderson, for Appellants.

Barry L. Lieberman, Las Vegas; Beckley Singleton, Chtd., and Daniel F. Polsenberg, Las Vegas, for Respondent.

Before the Court En Banc.¹

OPINION

PER CURIAM.

This is an appeal from a post-judgment district court order adjudicating the subrogation lien of respondent Coast Hotels and Casinos, Inc. Appellants Alessandro Canfora (Alex) and Christine M. Canfora (Chris) argue that (1) the subrogation agreement is ambiguous, (2) the district court erred by not allowing an offset of attorney fees and costs as established by this court in Breen v. Caesars Palace,² and (3) the district court erred by enforcing the subrogation agreement against a nonsignatory beneficiary. We conclude that the Canforas' arguments lack merit and, therefore, affirm the district court's order.

FACTS

On March 16, 1999, Alex and Chris, along with their daughter, Alexis, (collectively the Canforas) stopped to refuel the family's 1994 Chevrolet Camaro at the Mobil service station on Arroyo Grande Boulevard in Las Vegas. After stopping, Alexis asked Alex if she could refuel the car. While exiting the car, Alexis slid across the cloth upholstered seats of the Camaro, creating an electrostatic charge. As Alexis began refueling the car, this charge sparked, igniting the gas and engulfing her in flames. Seeing his daughter on fire, Alex attempted to extinguish the flames, but he too caught fire and was severely burned. Through the help of a bystander, the fire was put out, but not before "Alex suffered second degree burns to his hands and arms [and] Alexis suffered second and third degree burns over fifty percent (50%) of her body." Chris also aggravated a prior back injury while assisting Alexis.

At the time of the accident, Coast Hotels employed and provided medical insurance to Alex and his designated beneficiaries, Chris and Alexis.³ As a result of this incident, Coast Hotels paid approximately $227,000 of the Canforas' medical expenses. The group benefit plan sponsored by Coast Hotels contains a subrogation clause, which states:

If you receive benefits under this plan as a result of an injury caused by another party, the plan has the right to seek repayment of those benefits from the party that caused the injury. In other words, the plan subrogates or substitutes for you and assumes your right to seek recovery from the negligent party. If you bring a liability claim against that person, benefits payable under this plan must be included in the claim, and when the claim is settled, you must reimburse the plan for the benefits provided. You are obligated to avoid doing anything that would prejudice the plan's rights of subrogation and reimbursement, and you may be required to sign and deliver documents to evidence or secure those rights.

On May 18, 1999, in connection with requesting payment of medical benefits, Alex, on behalf of himself, Chris, and Alexis, also signed a reimbursement agreement. The reimbursement agreement states:

This agreement will certify that I have filed a claim with Coast Benefits for covered medical expenses on the basis of an injury ....

I have read and understand the paragraph "SUBROGATION OF BENEFITS" on page 47 in the Group Benefits Plan booklet (SUMMARY PLAN DESCRIPTION), and I acknowledge that I am not entitled to coverage for medical expenses under the Coast Resorts Plan where a third party payment is or will be made from another source for the same benefits.

I hereby request that Coast Benefits process and pay the medical benefits incurred from my injury with the full understanding that a third party may be liable for similar benefits. In consideration of this payment, I agree to reimburse Coast Benefits all amounts advanced toward my medical expenses from any proceeds resulting from another payment, settlement or judgment.

After executing the reimbursement agreement, the Canforas, through the law offices of Campbell & Williams, filed a personal injury complaint against several defendants. Ultimately, the Canforas settled their suit for $12 million. Of this $12 million, the Canforas paid over $5 million in attorney fees and costs. Following the settlement, Coast Hotels contacted Campbell & Williams to obtain reimbursement for the medical expenses it paid on behalf of the Canforas. In response to this request, the Canforas moved the district court to adjudicate Coast Hotels' lien rights. While the court considered that motion, Campbell & Williams paid Coast Hotels $100,000 and retained approximately $127,000 in a separate trust account.

On February 26, 2003, the district court held a hearing on this motion. After considering both parties' arguments, the district court upheld the subrogation clause and reimbursement agreement and ordered Campbell & Williams to pay the remaining $127,000 to Coast Hotels. Alex and Chris timely appealed the district court's order.

DISCUSSION

Standard of review

In the present case, the facts are not in dispute and the court is faced only with legal issues to consider. This court reviews questions of law de novo.⁴

Mootness

Coast Hotels argues that the offset issue is moot since Alex and Chris have fully reimbursed the plan for the medical benefits provided. We disagree.

Recently, in Wheeler Springs Plaza, LLC v. Beemon, we addressed the issue of whether payment of a monetary judgment renders an appeal moot.⁵ In Wheeler Springs, we held that "payment of a judgment only waives the right to appeal or renders the matter moot when the payment is intended to compromise or settle the matter."⁶ In other words, payments made under coercion do not eliminate the right to appeal, even if the party fails "to file a supersedeas bond or seek a stay of execution of a judgment."⁷

Here, after settlement of the underlying case, Coast Hotels contacted Campbell & Williams to obtain reimbursement for the medical expenses paid on behalf of the Canforas. In response to this request, the Canforas moved the district court to adjudicate Coast Hotels' lien rights. After considering the parties' arguments, the district court found that Coast Hotels was entitled to reimbursement and ordered Campbell & Williams to satisfy the lien. Nothing in the record indicates that the Canforas intended to settle or compromise this matter. The fact that the Canforas did not file a supersedeas bond or request a stay of execution of judgment is irrelevant.

In light of Wheeler Springs, we conclude that the Canforas did not waive their right to appeal the district court's order to satisfy Coast Hotels' subrogation lien. Therefore, their appeal is not moot.

Ambiguity

Alex and Chris argue that the subrogation clause and the reimbursement agreement are ambiguous. We disagree.

Generally, when a contract is clear on its face, it "will be construed from the written language and enforced as written."⁸ The court has no authority to alter the terms of an unambiguous contract.⁹

In this case, the language in the subrogation clause could not be more plain. The clause unequivocally provides that when an employee receives the same benefits from the plan and a negligent third party, the recipient "must reimburse the plan for the benefits provided." Since the subrogation clause is unambiguous, the Canforas are bound by the terms of the document. In addition, because the subrogation clause alone is sufficient to bind the Canforas to repayment, it is unnecessary to rely on the language in the reimbursement agreement.

Offset of attorney fees and costs

Alex and Chris argue that the district court erred by not allowing an offset of their attorney fees and costs as set forth by this court in Breen v. Caesars Palace.¹⁰ We disagree.

Breen analysis

In Breen, we held that, in the context of the workers' compensation statutes, "an employer may assert a subrogation interest in compensation paid to an employee by a third-party tortfeasor where a work-related injury was caused under circumstances creating a legal liability in a third party."¹¹ However, we were concerned about the ability of an employer or a subrogee to recover from an employee or subrogor, via subrogation lien, without proportionally sharing the cost of litigation.¹² With this in mind, we held that "`[i]t would be unduly burdensome on the claimant to pay all of the expenses and by the same token it would unjustly enhance the economic position of the carrier not to assess a portion of the costs against it."'¹³ Therefore, we set forth a formula by which a subrogee's recovery is offset by a portion of the litigation costs.

This court has only applied Breen to workers' compensation lien cases.¹⁴ We declined to extend the offset formula to situations where the employee's injury was not related to the workplace.¹⁵ Here, the district court correctly declined to apply Breen since the injuries had no causal connection to the parties' employment relationship, and therefore the principles behind the workers' compensation statutory scheme were not implicated. In addition, as discussed below, the make-whole doctrine of insurance law makes an offset of attorney fees and costs unwarranted in this case.¹⁶

Make-whole doctrine

The make-whole doctrine "is a general equitable principle of insurance law" that prevents an insurance company from enforcing its subrogation rights before the insured has been fully reimbursed for their losses.¹⁷ Under the doctrine, "an insured who has settled with a third-party tortfeasor is liable to the insurer-subrogee only for the excess received over the total amount of his loss."¹⁸ Unless it is explicitly excluded, the make-whole doctrine operates as a default rule that is read into insurance contracts.¹⁹ The make-whole doctrine limits "a plan's...