Harvey's Wagon Wheel, Inc. v. MacSween

Citation606 P.2d 1095,96 Nev. 215
Decision Date28 February 1980
Docket NumberNo. 11486,11486
PartiesHARVEY'S WAGON WHEEL, INC., a corporation, Appellant, v. Ian MacSWEEN, d/b/a MacSween Construction Co., et al., Respondents.
CourtSupreme Court of Nevada

Wait, Shamberger, Georgeson, McQuaid & Thompson, Reno, Cooley, Godward, Castro, Huddleston & Tatum, and James A. Richman, San Francisco, Cal., for appellant.

Fahrenkopf, Mortimer, Sourwine, Mousel & Sloane, Reno, for respondent Ian MacSween Const. Co.

Walther, Key, Maupin & Oats, Reno, and Matheny & Poidmore, Sacramento, Cal., for respondent Tom Johnson, Inc.

OPINION

BATJER, Justice:

Harvey's Wagon Wheel, Inc. appeals from the district court's order granting partial summary judgment in favor of Ian MacSween, dba MacSween Construction Co., and Tom Johnson, Inc., and dismissing the portion of Harvey's claim that is a subrogation claim of Fireman's Fund Insurance Company. Harvey's contends that the trial judge erred by granting motions for reconsideration and leave to renew motion for partial summary judgment proposed by MacSween and Johnson. Harvey's also argues that the trial judge erred by concluding that, as a matter of law, there can be no subrogation by Fireman's against MacSween and Johnson. We affirm.

In 1972, Harvey's decided to expand and remodel parts of its Stateline motel and casino. MacSween was hired as general contractor for the project. Johnson contracted with Harvey's to furnish labor, materials and equipment to paint the interior. On October 24, 1972, Harvey's amended its insurance policy with Fireman's to include as insureds, during the course of the construction,

Harvey's Wagon Wheel, Inc. and their subcontractors and materialmen As their interests may appear ; Ian MacSween, dba: MacSween Masonry, MacSween Concrete and Ian MacSween Construction, a Nevada corporation, its subcontractors and materialmen As their interests may appear. (Emphasis added.)

On May 15, 1973, Harvey's suffered over $1,000,000 in property loss and damage caused by a fire which swept through the structure under construction, as well as existing structures. Fireman's paid Harvey's approximately $1,160,000 pursuant to Policy No. MXP 160-27-64.

Harvey's filed suit against MacSween, Johnson and others on May 9, 1975, alleging that they negligently caused the fire on May 15, 1973. A portion of Harvey's claim for damages was Fireman's subrogation claim for approximately $1,160,000. The remainder of the damages sought were those not covered by insurance, such as business losses.

Motions for partial summary judgment brought by MacSween and Johnson on the subrogation claim were denied without prejudice on October 17, 1977. The district judge ruled that there was a material issue of fact concerning the extent of coverage in view of the different possible interpretations of the endorsement language "as their interests may appear".

On July 5, 1978, MacSween and Johnson moved for reconsideration of their motions for partial summary judgment, arguing that the sole issue was one of law. The district judge reconsidered the motions in light of persuasive authority cited by MacSween and Johnson. As a result, the district judge granted partial summary judgment and dismissed the portion of Harvey's cause of action that was Fireman's subrogation claim.

Harvey's argues that the district judge abused his discretion when he reconsidered MacSween's and Johnson's motions for partial summary judgment. Reconsideration of motions is proper if the district judge to whom the first motion was made consents to a rehearing. DCR 20(4), presently DCR 13(4); DCR 27, presently DCR 19. 1

In this case, the district judge expressly denied the first motion for partial summary judgment without prejudice. He concluded that the qualifying language was not so clear and unambiguous that summary judgment was warranted at that stage in the proceedings. The judge implicitly granted the respondents leave to renew their motions at a later date. Although the facts and the law were unchanged, the judge was more familiar with the case by the time the second motion was heard, and he was persuaded by the rationale of the newly cited authority. Under these circumstances, the district judge did not abuse his discretion by rehearing the motions for partial summary judgment. 2

Harvey's main contention is that the district judge erred by granting partial summary judgment on the ground that Fireman's subrogation claim is barred as a matter of law. Summary judgment is proper where the moving party is entitled to judgment as a matter of law. Short v. Hotel Riviera, Inc., 79 Nev. 94, 378 P.2d 979 (1963); NRCP 56(c). In this case, the controversy centers on the phrase "as their interests may appear". There is no issue concerning the status of MacSween and Johnson as coinsureds. 3

As a general rule, no right of subrogation can arise in favor of an insurer against its own insured. Subrogation arises only with respect to the rights of an insured against a third party to whom the insurer owes no duty. Turner Const. Co. v. John B. Kelley Co., 442 F.Supp. 551 (E.D.Penn.1976).

Harvey's asserts, however, that the phrase "as their interests may appear", which is included in the general purpose endorsement, limits the protection offered by the policy to MacSween and Johnson. It argues that MacSween and Johnson are limited insureds only to the extent that their property interests are damaged or destroyed. Therefore, according to Harvey's, Fireman's is precluded from subrogation only with respect to damages to property belonging to MacSween and Johnson. Courts are split on the question of the effect of the phrase "as their interests may appear" on the status of coinsureds for the purpose of subrogation.

In Turner Const. Co., the federal district court denied summary judgment for the subcontractors in an action brought by the fire insurance company, as subrogee of the general contractor, against the subcontractor whose negligence allegedly caused the fire. The policy provided coverage for subcontractors "as their interests may appear". The district judge reasoned that the purpose of the provision was to give the subcontractor an interest in the building, based upon the subcontractor's labor and material used. The provision, according to that court, did not make the subcontractor a coinsured for all purposes and did not relieve the subcontractor of liability to the general contractor, and its insurer as subrogee, for damage caused by the subcontractor's negligence. Id. at 554. Accord, Employers' Fire Insurance Co. v. Behunin, 275 F.Supp. 399 (D.Colo.1967); Public Service Co. of Okla. v. Black & Veatch, Consul. Eng., 328 F.Supp. 14 (N.D.Okl.1971).

On the other hand, some courts have denied the insurer a right to subrogate coinsureds in similar circumstances. In their motion for...

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    ...Kan. 413, 449 P.2d 477 (1969); Anderson v. Nationwide Life Ins. Co., 6 Kan.App.2d 163, 627 P.2d 344 (1981); Harvey's Wagon Wheel, Inc. v. MacSween, 96 Nev. 215, 606 P.2d 1095 (1980); ... [See also ] Farmers Ins. Group v. Sessions, 100 Idaho 914, 607 P.2d 422 (1980) (holding that an exclusio......
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    ...of insurance contract language. Under Nevada law, an insurance policy is a contract of adhesion. Harvey's Wagon Wheel v. MacSween, 96 Nev. 215, 219-20, 606 P.2d 1095, 1098 (1980). As such it should be interpreted broadly, affording the greatest possible coverage to the insured. Id. Ambiguit......
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    ...terms in an insurance policy will be construed in favor of the insured and against the insurer. See Harvey's Wagon Wheel, Inc. v. MacSween, 96 Nev. 215, 606 P.2d 1095, 1098 (1980). On the other hand, when contract language is clear and unambiguous, a court cannot, under the guise of interpr......
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    • University of Pennsylvania Law Review Vol. 171 No. 4, April 2023
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