Capriati Constr. Corp. v. Yahyavi
| Decision Date | 10 November 2021 |
| Docket Number | No. 80821,No. 80107,80107 |
| Parties | CAPRIATI CONSTRUCTION CORP., INC., a Nevada Corporation, Appellant, v. Bahram YAHYAVI, an Individual, Respondent. Capriati Construction Corp., Inc., a Nevada Corporation, Appellant, v. Bahram Yahyavi, an Individual, Respondent. |
| Court | Nevada Supreme Court |
Hutchison & Steffen, PLLC, and Michael K. Wall, Las Vegas; Law Offices of Eric R. Larsen and Eric R. Larsen, Las Vegas; Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, and David S. Kahn and Mark Severino, Las Vegas, for Appellant.
Prince Law Group and Dennis M. Prince and Kevin T. Strong, Las Vegas, for Respondent.
BEFORE THE SUPREME COURT, EN BANC.
In this opinion, we clarity two points of law. First, evidence of a defendant's liability insurance is admissible under NRS 48.135(2) if the defendant first introduces evidence suggesting its inability to pay a judgment. Second, a plaintiff represented on a contingency-fee basis may recover the entirety of the contingency fee as post-offer attorney fees under NRCP 68. As the district court adhered to this law when rendering its decisions, we discern no error from these proceedings and affirm.
An employee of appellant Capriati Construction Corp., Inc., drove a forklift into a street travel lane and collided with respondent Bahram Yahyavi's vehicle, resulting in injury to Yahyavi. Yahyavi brought an action against Capriati alleging negligence, and in its answer, Capriati denied liability. Capriati then filed a petition for bankruptcy. Following the conclusion of Capriati's bankruptcy proceedings, the negligence case proceeded to trial. Prior to trial, Yahyavi served Capriati with an offer of judgment for $4 million, pursuant to NRCP 68, which Capriati rejected. In his opening statement at trial, Yahyavi told the jury that Capriati had discarded the forklift operator's employment file. Capriati did not object. Yahyavi called the forklift operator as a witness, who admitted fault. Because of conflicting schedules, two of Capriati's experts also testified during Yahyavi's case in chief. They explained that Yahyavi's damages were exaggerated.
After Yahyavi rested his case, Capriati elicited testimony that its business had filed for reorganization. Yahyavi objected and moved for sanctions on the ground that his recovery would be prejudiced by Capriati's intentional elicitation of inadmissible evidence suggesting to the jury that it was unable to pay a judgment. Capriati asserted that it was rebutting Yahyavi's allegations of spoliation. The district court agreed with Yahyavi and, as relevant here, (1) struck Capriati's answer as to liability and disallowed its remaining witnesses to testify, and (2) instructed the jury that Capriati had liability insurance to satisfy any verdict. The jury returned a $5.9 million verdict in favor of Yahyavi.
After trial, Yahyavi moved for $2.3 million in attorney fees—his contingency fee—under NRCP 68 on the ground that the jury's verdict of $5.9 million exceeded the $4 million offer of judgment that Capriati rejected nine months before trial. The district court weighed the appropriate factors and awarded Yahyavi $2.3 million in attorney fees.
Capriati appeals, arguing that the district court erroneously (1) imposed case-concluding sanctions, (2) instructed the jury that it could consider Capriati's liability insurance, and (3) awarded Yahyavi attorney fees that were incurred before the offer of judgment was rejected.
Capriati argues that the district court erroneously imposed case-concluding sanctions by striking its additional witnesses. It adds that this constituted an unduly harsh sanction because it barred Capriati from showing the jury evidence that Yahyavi's damages were exaggerated. However, Capriati concedes that striking its answer as to liability was supported by substantial evidence because its employee admitted fault at trial.
We review a district court's sanctions order for an abuse of discretion. MEI-GSR Holdings, LLC v. Peppermill Casinos, Inc., 134 Nev. 235, 242, 416 P.3d 249, 256 (2018). We employ "a somewhat heightened standard of review for case-concluding sanctions." Id. (internal quotation marks omitted). Noncase-concluding sanctions, however, include those after which a party is still able "to defend on the amount of damages." Valley Health Sys., LLC v. Estate of Doe, 134 Nev. 634, 639, 427 P.3d 1021, 1027 (2018). We uphold noncase-concluding sanctions if substantial evidence supports the district court's sanction order. Id. "Substantial evidence is that which a reasonable mind could find adequate to support a conclusion." Kolnik v . Nev. Emp't Sec. Dep't, 112 Nev. 11, 16, 908 P.2d 726, 729 (1996).
The district court struck Capriati's answer as to liability. Because Capriati's employee admitted fault, the district court concluded that striking Capriati's answer as to liability alone would serve as a nominal sanction. Thus, the district court also struck Capriati's additional witnesses. Although Capriati argues that this was a case-concluding sanction, we disagree because it was still allowed to defend on the amount of damages. Specifically, Capriati presented testimony from two witnesses to show that Yahyavi's damages were exaggerated. Moreover, Capriati commented on Yahyavi's damages in its closing argument. Thus, we are unpersuaded that striking Capriati's additional witnesses amounted to a case-concluding sanction.
We further conclude that substantial evidence supported the district court's decision to strike Capriati's additional witnesses. The record shows that Capriati intentionally elicited inadmissible testimony describing its bankruptcy. See RPC 3.4(e) (); see also Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977) (). Moreover, the record supports the district court's conclusion that striking Capriati's answer as to liability alone would serve as a nominal sanction because Capriati's employee admitted fault. Because substantial evidence supported the district court's sanctions order, it imposed sanctions within its discretion.1
Jury instruction
Capriati argues that the district court erroneously instructed the jury, "[Capriati] has liability insurance to satisfy in whole or part any verdict you may reach in this case." It argues that this instruction was prejudicial because it informed the jury that it could reach any verdict, which violates NRS 48.135.2 Yahyavi argues that, once a defendant introduces evidence suggesting its inability to pay a judgment, NRS 48.135(2) allows the plaintiff to introduce evidence of the defendant's liability insurance to cure any resulting prejudice.
We review the district court's "decision to admit or refuse jury instructions for an abuse of discretion." MEI-GSR Holdings , 134 Nev. at 237, 416 P.3d at 253 (internal quotation marks omitted). We review whether the instruction "accurately states Nevada law" de novo. Id. at 238, 416 P.3d at 253 (internal quotation marks omitted).
NRS 48.135. We have explained that NRS 48.135(2) "use[s] ‘such as’ to introduce a nonexclusive list." Bigpond v. State, 128 Nev. 108, 115 n.5, 270 P.3d 1244, 1248 n.5 (2012). Thus, under the plain meaning of NRS 48.135(2), evidence of liability insurance may be admissible in situations other than those expressly listed in the statute.
Persuasive authorities lead us to conclude that evidence of a defendant's liability insurance is admissible under NRS 48.135(2) if the defendant first introduces evidence suggesting its inability to pay a judgment. See Wheeler v. Murphy, 192 W.Va. 325, 452 S.E.2d 416, 426 (1994) (); see also Younts v. Baldor Elec. Co., Inc., 310 Ark. 86, 832 S.W.2d 832, 834 (1992) ( the same).
Capriati first introduced evidence of its bankruptcy, thereby suggesting that it was unable to pay a judgment in favor of Yahyavi. Thus, to cure the resulting prejudice, the district court appropriately instructed the jury that Capriati had liability insurance to satisfy any judgment. This instruction accurately states Nevada law, and the district court therefore acted within its discretion.3
Attorney fees
Capriati argues that the district court erroneously awarded Yahyavi $2.3 million in attorney fees—the 40-percent contingency fee from the $5.9 million verdict—after Capriati rejected a $4 million offer of judgment nine months before trial. Capriati asserts that the plain meaning of NRCP 68 requires the district court to analyze which fees were incurred after the offer of judgment was rejected. It further argues that, when the plaintiff is represented on a contingency basis, district courts should apply the lodestar method to apportion NRCP 68 fees to those earned post-offer. Yahyavi argues that Nevada precedent interpreting NRCP 68 allows a party to collect the entire contingency fee...
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