Masonry and Tile Contractors Ass'n of Southern Nevada v. Jolley, Urga & Wirth, Ltd.

Citation113 Nev. 737,941 P.2d 486
Decision Date01 July 1997
Docket NumberNo. 26426,26426
PartiesMASONRY AND TILE CONTRACTORS ASSOCIATION OF SOUTHERN NEVADA, Anthony Marnell, George Marnell, Carmine Catello, Bill Daley, Jim Carollo, Bob Allyn Masonry, Inc., Catello Tile and Marble Contractors, Inc., Jim Carollo Masonry, Inc., Bill Daley Masonry, Inc., and Marnell Masonry, Appellants/Cross Respondents, v. JOLLEY, URGA & WIRTH, LTD., A Nevada Corporation, Roger Wirth, An Individual, and Jolley, Urga, Wirth & Woodbury, A Partnership, Respondents/Cross-Appellants.
CourtSupreme Court of Nevada
OPINION

SHEARING, Chief Justice.

This is an action for legal malpractice. Appellants are several masonry and tile contractors in Las Vegas ("contractors") and their multi-employer bargaining association, the Masonry & Tile Contractors Association of Southern Nevada ("MTCA"). Respondents are the attorneys who defended appellants in a 1981 federal court action under the Labor-Management Relations Act § 301, 29 U.S.C. § 185(a) (1988), entitled Bricklayers & Allied Craftsmen, Local Union No. 3 v. Masonry and Tile Contractors Association of Southern Nevada, No. CV-S-81-726-RDF (D. Nev., filed October 21, 1981) ("the Promotion Fund case"). In that case, the union plaintiffs pleaded causes of action against appellants alleging, inter alia, that appellants had violated the parties' trust agreement by spending promotion fund monies improperly. Appellants eventually settled with the union plaintiffs in 1990.

Appellants brought this malpractice action in 1989 in the Eighth Judicial District Court, Clark County. Appellants alleged, inter alia, that respondents negligently failed to plead the affirmative defense of mandatory exhaustion of contractual arbitration remedies in the Promotion Fund case, and that timely assertion of that defense would have resulted in the dismissal of that case with prejudice, saving appellants years of expensive litigation. 1 Appellants also allege now that failure to timely plead the affirmative defense forced appellants to enter into a costly settlement.

The key issue of causation in the malpractice action is whether exhaustion of contractual arbitration remedies would have been a valid defense in the Promotion Fund lawsuit. Because that issue raises a pure question of law, the parties filed cross-motions for summary judgment in early 1991. 2 Those cross-motions principally focused on the narrow question of whether the underlying Promotion Fund dispute was subject to mandatory contractual arbitration.

After all of the Las Vegas trial judges recused themselves, 3 the case was assigned to Visiting Judge Mark Handelsman from the Second Judicial District in Reno. In his written decision regarding the motions for summary judgment, Judge Handelsman concluded, after a detailed review of the applicable federal court precedent, that the subject matter of the underlying Promotion Fund dispute was arbitrable as a matter of law, unless the right to compel arbitration was waived, pursuant either to the integrated collective bargaining and trust agreements or to the trust agreement alone as a "labor contract." Judge Handelsman rested his analysis on the presumption of arbitrability under federal labor law.

Several months later, Judge Handelsman removed himself from the case for personal reasons, and the case was assigned to Senior Judge Llewellyn Young. Several months after Judge Handelsman's decision, respondents filed a motion asking Judge Young to reconsider the arbitrability issue. Judge Young eventually denied respondents' motion for reconsideration.

Judge Young passed away, and several months later the case was assigned to Visiting Judge Peter Breen. Respondents then filed a motion for summary judgment. Respondents maintained that the Promotion Fund dispute was not arbitrable, contrary to Judge Handelsman's conclusion. Respondents also set forth three new affirmative defenses in which they alleged that appellants had improperly "assigned" their malpractice claim to the union in settling the Promotion Fund litigation. 4

This time, respondents' motion was successful. Judge Breen ruled that the underlying Promotion Fund dispute was not arbitrable, and that respondents were therefore entitled to summary judgment. In addition, Judge Breen accepted respondents' argument that the Promotion Fund settlement agreement violated Nevada's public policy against assignment of legal malpractice claims, thus requiring dismissal of the entire action. Respondents moved for costs and fees. However, Judge Breen only awarded $22,041.20 in costs to respondents and denied respondents' request for attorney fees. This appeal and cross-appeal followed.

On appeal, appellants claim that Judge Breen erred in concluding that the Promotion Fund dispute was not arbitrable and in concluding that the 1990 Promotion Fund settlement agreement violated the public policy against assignment of malpractice claims. They assert, therefore, that summary judgment in favor of respondents was improper. On cross-appeal, respondents contend that Judge Breen erred in denying their request for attorney fees and in limiting their recoverable costs.

Summary judgment is appropriate only when no genuine issue of material fact remains for trial and the moving party is entitled to judgment as a matter of law. NRCP 56(c); Walker v. American Bankers Ins., 108 Nev. 533, 536, 836 P.2d 59, 61 (1992). "This court's review of an order granting summary judgment is de novo." Walker, 108 Nev. at 536, 836 P.2d at 61. Because no facts are in dispute regarding arbitrability, this court must simply determine if respondents were entitled to judgment as a matter of law on that issue.

Appellants contend that Judge Breen erred in granting summary judgment for respondents by concluding that the Promotion Fund dispute was not arbitrable because Judge Breen lacked authority to reconsider Judge Handelsman's prior ruling that the dispute was arbitrable.

A district court may reconsider a previously decided issue if substantially different evidence is subsequently introduced or the decision is clearly erroneous. See Little Earth of United Tribes v. Department of Housing, 807 F.2d 1433, 1441 (8th Cir.1986); see also Moore v. City of Las Vegas, 92 Nev. 402, 405, 551 P.2d 244, 246 (1976) ("Only in very rare instances in which new issues of fact or law are raised supporting a ruling contrary to the ruling already reached should a motion for rehearing be granted.") (Emphasis added). Judge Breen rested his reconsideration of Judge Handelsman's arbitrability analysis on the basis that it was "clearly erroneous," particularly in light of what he considered to be new clarifying case law.

We conclude that Judge Breen properly determined that Judge Handelsman's decision was "clearly erroneous." We hold that the Promotion Fund dispute was not arbitrable as a matter of law.

In September 1965, the MTCA entered into a collective bargaining agreement with the union. 5 That agreement, among other things, established and provided ongoing funding for the Masonry Contractors Industry Promotion Fund ("the promotion fund") and also contained an agreement between the MTCA and the union to submit to binding arbitration any grievance "with respect to the interpretation or application of any provisions of" the collective bargaining agreement. In 1966, the parties entered into a trust agreement pertaining to the promotion fund. The trust agreement contained no provision requiring arbitration.

The promotion fund was to be managed by employer trustees appointed by the MTCA president. By 1975, however, the MTCA had taken over control of all promotion fund decision-making, and the MTCA's contractor members began to administer the promotion fund by majority vote at their monthly MTCA meetings. In 1981, the union filed the Promotion Fund suit and made its claim that appellants were improperly administering the trust.

Respondents concede that there is a strong presumption of arbitrability in cases involving employee-employer disputes. Respondents contend, however, that the Promotion Fund dispute was one between employees and trustees, not employees and employers. Accordingly, respondents argue that the presumption did not apply.

The key case in this matter is Schneider Moving & Storage Co. v. Robbins, 466 U.S. 364, 104 S.Ct. 1844, 80 L.Ed.2d 366 (1984). In Schneider, various employers entered into collective bargaining agreements with a union that required them to participate in two multi-employer employee-benefit trust funds and incorporated the terms of two trust agreements by reference. Id. at 368-69, 104 S.Ct. at 1847. The trust agreements required the employers to contribute to the funds according to the applicable terms of their collective bargaining agreements. Id. at 369, 104 S.Ct. at 1847-48. The terms of the trust agreements authorized the trustees to initiate "any legal proceedings as the Trustees in their discretion deem in the best interest of the Fund to effectuate the collection or preservation of contributions." Id. The trustees filed complaints against the employers in federal court claiming that the employers failed to meet their contribution requirements, and requesting the court to order an accounting and immediate payment of all sums thereby determined to be due. Id. at 366, 104 S.Ct. at 1846. The employers argued that the complaints raised disputed interpretations under the collective bargaining agreements that should have been arbitrated. 6 Id. The case reached the United States Supreme Court, which held, inter alia, that the presumption of arbitrability applicable to disputes between a union and an employer is not applicable to...

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