Estate of Lomastro v. American Family Ins., 49125.
| Court | Supreme Court of Nevada |
| Citation | 195 P.3d 339 |
| Docket Number | No. 49125.,49125. |
| Parties | ESTATE OF Matthew LOMASTRO, Deceased, by and through Steven LOMASTRO and Colleen Morris, his Parents and Legal Guardians; Steven Lomastro, Individually; and Colleen Morris, Individually, Appellants/Cross-Respondents, v. AMERICAN FAMILY INSURANCE GROUP, A Foreign Corporation, Respondent/Cross-Appellant. |
| Decision Date | 30 October 2008 |
v.
AMERICAN FAMILY INSURANCE GROUP, A Foreign Corporation, Respondent/Cross-Appellant.
[195 P.3d 342]
Bowen Monson, LLC, Jerome R. Bowen, Las Vegas, for Appellants/Cross-Respondents.
Prince & Keating, LLP, Dennis M. Prince and Douglas J. Duesman, Las Vegas, for Respondent/Cross-Appellant.
BEFORE HARDESTY, PARRAGUIRRE and DOUGLAS, JJ.
By the Court, HARDESTY, J.:
This matter arises from a single-vehicle rollover accident that claimed the driver's life. The vehicle's owner, who was a passenger in the vehicle and who survived the accident, did not maintain automobile insurance on the vehicle. Thus, to recover insurance proceeds from the driver's death, the driver's parents made a claim with their insurance company, under the uninsured motorist provision of their policy. The parents' insurance company denied the claim, contending that, under Nevada law, uninsured motorist coverage does not apply to single-vehicle accidents.
During this time, the driver's parents also instituted an action against the vehicle's owner, seeking to recover damages from him for their son's death. The vehicle's owner did not make an appearance in the action, and consequently, a default was entered against him. Nevertheless, the parents' insurance company intervened, attempting to contest the driver's liability and by extension to prevent it from being liable for the vehicle's owner based on the driver's parents' uninsured motorist coverage. The district court ultimately refused to allow the insurance company to contest the driver's liability, given the insurer's belated intervention in relation to the entry of default against the driver. But the court nevertheless determined, as the insurer had asserted in denying the parents' insurance claim, that uninsured motorist coverage does not apply to single-vehicle accidents. Thus, regardless of the owner's liability, the insurance company was not responsible to compensate the driver's parents.
In this appeal, we consider whether an insurance company that has notice of a pending suit and the plaintiff's intent to seek entry of default is bound by the entry of default if it later intervenes. We conclude that entry of default binds an insurance company intervenor as to the liability of an uninsured motorist defendant if the insurance company had notice of the litigation and the plaintiff's intent to seek entry of default, but failed to intervene before a default was entered.
We also consider whether Nevada law requires physical contact between an uninsured motorist and the insured or the insured's vehicle. That is, we address whether uninsured motorist coverage may apply to single-vehicle accidents. We determine that uninsured motorist benefits are available when an insured person is legally entitled to recover from the owner or operator of a vehicle that meets one of NRS 690B.020(3)'s statutory definitions for uninsured motor vehicle. The "physical contact" requirement only applies to cases in which an unidentified or hit-and-run driver, as defined in NRS 690B.020(3)(f), is alleged to be negligent.
Matthew LoMastro died in an automobile accident in April 2005. On the night of Matthew's death, Matthew and two friends, Chad Leach and Daniel Sullivan, were drinking whiskey and beer while socializing outside of a 7-Eleven store in Las Vegas. When they left the 7-Eleven in Leach's car, Leach was driving. At some point, Leach allowed Matthew to drive his car. Matthew was driving the car between 40 and 50 miles per hour when the car drifted to the right, jumped the curb, rode up on the jersey barrier, and eventually rolled over and struck a concrete wall. When the car rolled over, Matthew was ejected from the car. Medical personnel pronounced Matthew dead at the scene. Leach and Sullivan suffered only moderate injuries.
Thereafter, in May 2005, Matthew's parents, appellants/cross-respondents Steven LoMastro and Colleen Morris (the LoMastros), discovered that Leach did not have automobile insurance and sought to recover for Matthew's death under the uninsured motorist
provision of the automobile insurance policy that they held with respondent/cross-appellant American Family Insurance Group. The LoMastros demanded their policy limits. After the LoMastros filed their claim, they exchanged correspondence with American Family for several months and cooperated with American Family's ongoing investigation of the matter.
Meanwhile, the LoMastros instituted a civil action against Leach claiming that he negligently entrusted his vehicle to Matthew and caused Matthew's death. Leach did not answer the LoMastros' complaint. Ultimately, American Family denied the LoMastros' insurance claim. Following American Family's denial of the claim, the LoMastros notified American Family of their action against Leach. Two months later, the LoMastros further informed American Family that they had served Leach with the complaint and intended to seek entry of default against him for his failure to respond to it.
The LoMastros eventually had default entered against Leach, and they informed American Family that default had been entered. American Family replied that it would not be bound by the default entered against Leach because it did not insure him and because of an exclusion in the LoMastros' policy that purported to prevent American Family from being bound by a judgment unless it consented to litigation.1 After receiving notice of a hearing for entry of default judgment against Leach, American Family moved to intervene in the LoMastros' action against Leach.
After entry of default but before default judgment was entered, the district court granted American Family's motion to intervene. American Family attached an answer in intervention to its motion to intervene alleging, among other things, defenses on behalf of Leach. The LoMastros moved to strike the answer in intervention as a fugitive document, arguing that no answer could be made after entry of default. The district court denied the motion to strike, finding that the answer was timely, but determined that American Family was precluded by the entry of default from contesting Leach's liability.
The LoMastros then filed an amended complaint and a second amended complaint, which did not alter the allegations against Leach but asserted new causes of action against American Family directly, including claims for breach of the implied covenant of good faith and fair dealing and violations of the Nevada Unfair Claims Practices Act. American Family answered the second amended complaint, denying the allegations against Leach and itself, and then moved for summary judgment in its favor on all of the causes of action in the complaint, arguing that uninsured motorist coverage does not apply to single-vehicle accidents because Nevada law requires physical contact between an uninsured motorist and the insured or insured's vehicle. The district court granted American Family's motion for summary judgment on all of the LoMastros' claims against it. The district court also entered default judgment against Leach in the amount of $3 million. Thereafter, the LoMastros moved to amend or set aside the summary judgment in favor of American Family under NRCP 59(e) and 60(b). The district court denied that motion, affirming its summary judgment. This appeal followed.2
This court reviews district court decisions granting summary judgment de novo.3 Summary judgment is appropriate if, after viewing the record before the district court in the light most favorable to the nonmoving party, "no genuine issue of material fact exists, and the moving party is entitled to judgment as a matter of law."4 Whether an issue of fact is material is controlled by the substantive law at issue in the case, and such a factual dispute is genuine if "the evidence is such that a rational trier of fact could return a verdict for the nonmoving party."5
In this opinion, we first address American Family's argument that the district court erred when it prevented American Family from contesting Leach's liability because American Family intervened after entry of default against Leach. We then address whether the district court erred when it granted summary judgment to American Family, concluding that uninsured motorist benefits are unavailable for single vehicle accidents.
Entry of default against Leach was sufficient to bind American Family
On cross-appeal, American Family asserts that the district court improperly prohibited it from arguing that Leach was not liable for Matthew's injuries. After American Family denied the LoMastros' claim for benefits, the LoMastros notified American Family of the suit pending against Leach, of his failure to answer the complaint, and their intent to seek entry of default. American Family took no action regarding the suit until nearly six months later—after default against Leach had been entered—when American Family moved to intervene. Although the district court allowed American Family to intervene, it determined that American Family was precluded by the entry of default from contesting Leach's liability. American Family never moved to set aside the default, but argues on cross-appeal that it should be allowed to contest Leach's liability. We disagree.
In Nevada, an insurance company "is bound by the result of an action between its insured and an uninsured motorist when the carrier has notice of the action but elects not to intervene."6 In this case, American Family intervened to argue that the LoMastros are not legally entitled to recover from Leach and therefore are not entitled to recover uninsured...
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