Nevada Yellow Cab Corp. v. Dist. Ct.
| Decision Date | 08 March 2007 |
| Docket Number | No. 46579.,46579. |
| Citation | 152 P.3d 737 |
| Parties | NEVADA YELLOW CAB CORPORATION; Robert D. Vannah; and Vannah Costello Vannah & Ganz, Petitioners, v. The EIGHTH JUDICIAL DISTRICT COURT of the State of Nevada, in and for the COUNTY OF CLARK, and the Honorable Valerie Adair, District Judge, Respondents, and Insurance Company of the West, Real Party in Interest. |
| Court | Nevada Supreme Court |
Vannah & Vannah and Kristina R. Americo and Robert D. Vannah, Las Vegas, for Petitioners.
Phillips, Spallas & Angstadt, LLC, and John W. Kirk, Las Vegas; Hayes, Davis, Ellingson, McLay & Scott, LLP, and Steven Hayes, Robert McLay, and Cherie Sutherland, Sacramento, California, for Real Party in Interest.
Before the Court En Banc.1
This original petition for a writ of mandamus challenges a district court order disqualifying counsel for petitioner Nevada Yellow Cab Corporation in an insurance bad faith action against Insurance Company of the West (ICW). ICW had previously retained the firm Vannah Costello Canepa Riedy & Rubino (VCCRR) to represent its insureds in tort actions brought by third parties. In one such case, VCCRR was retained by ICW to represent Yellow Cab. VCCRR was subsequently replaced by new counsel, and the case settled in the middle of trial for more than double the policy limits, with Yellow Cab required to contribute a substantial amount toward the settlement.
Petitioner Robert Vannah was a VCCRR partner at the time that VCCRR represented Yellow Cab, although he did not personally work on the case. After ICW terminated VCCRR, the firm dissolved. Vannah and others formed a new firm, and an associate who had performed substantial work on Yellow Cab's representation in the tort action joined Vannah at his new firm.
Yellow Cab subsequently hired Vannah and his new firm, petitioner Vannah Costello Vannah & Ganz (VCVG),2 to sue ICW for bad faith based on ICW's pretrial rejection of a policy-limits offer. ICW moved to disqualify Vannah and his new firm, and the district court granted its motion.
In concluding that writ relief is not warranted in this case, we expressly adopt the majority rule that counsel retained by an insurer to represent its insured represents both the insurer and the insured in the absence of a conflict. Thus, an attorney-client relationship existed between ICW and the associate who had previously defended Yellow Cab, who was now employed by Vannah's new firm. As the district court did not manifestly abuse its discretion in determining that disqualification was warranted, based upon this former representation, the substantial relationship between the two representations, and the adversity of Yellow Cab's and ICW's positions in the bad faith case, we deny this petition.
From 1998 to 2001, the law firm of Vannah Costello Canepa Riedy & Rubino (VCCRR) was one of the Southern Nevada firms retained by real party in interest Insurance Company of the West (ICW), primarily to defend its insureds in civil lawsuits filed by third parties. Almost all of VCCRR's work on these matters was performed by partner Michael Rubino and associate Denise Cooper Osmond. VCCRR also apparently represented ICW in two first-party matters, one an underinsured motorist coverage claim by an insured, handled by Rubino and Osmond, and one an uninsured motorist coverage claim that later generated a bad faith claim, handled only by Rubino. Notably, after the bad faith allegation was made in the latter case, ICW reassigned the case to new counsel.
In 1999, ICW retained VCCRR to defend its insured, Yellow Cab, in a personal injury lawsuit stemming from an accident between one of Yellow Cab's drivers and the plaintiff, Heather Nash. Yellow Cab had an ICW liability policy with limits of $500,000 and a self-insured reserve of $50,000. From January 1999 to November 2002, Rubino and Osmond defended Yellow Cab in the matter and regularly updated ICW on the litigation's status. Apparently, during this time period, the complaint and an answer were filed, the NRCP 16.1 conference was held, and some discovery, including document production and several depositions, occurred.
In November 2002, without Yellow Cab's consent, ICW terminated VCCRR and retained a different law firm to assume Yellow Cab's representation. Shortly before trial, the plaintiff offered to settle for the policy limits; ICW instructed counsel to reject the offer. In March 2003, after the first few days of trial went poorly for Yellow Cab, the case settled for $1.3 million, $800,000 more than Yellow Cab's $500,000 policy limit. Yellow Cab was required to pay $500,000 toward the settlement.
In 2003, VCCRR split into two firms, Vannah Costello Vannah & Ganz (VCVG), and Canepa Riedy & Rubino; Vannah and Osmond stayed with the former firm, and Rubino went with the latter firm. Also, in June 2003, Yellow Cab retained Vannah to file a bad faith action against ICW based on the Nash lawsuit, particularly its failure to accept the plaintiff's policy-limits offer shortly before trial and its subsequent settlement for more than double the policy limits after trial commenced. Since the firm split, VCVG represents Yellow Cab on a regular basis in all of its legal matters.
After ICW retained counsel to defend the bad faith action, its counsel notified Vannah of a perceived conflict of interest. ICW's counsel asked Vannah to research the issue and requested that Vannah's firm withdraw. About a month later, ICW's counsel spoke with Vannah, who explained that he did not believe a conflict existed and that he would not withdraw unless ordered to do so.
Shortly thereafter, ICW and Yellow Cab discussed mediation and agreed in principle to the idea. In its correspondence on this matter, ICW reiterated its belief that a conflict existed and specifically stated that its consent to mediation did not waive its right to seek disqualification of Vannah's firm if mediation failed. Deciding on a mediator and scheduling took almost a year, and the mediation was not held until July 2005.
After the mediation failed, ICW filed the underlying motion to disqualify Vannah and VCVG. Yellow Cab, Vannah, and the firm opposed the motion. At the hearing, the district court judge concluded that the "potential conflict" was too great and granted the motion. This writ petition followed. An answer was ordered and has been timely filed, and oral argument was held.
In deciding this petition, we first resolve the threshold issue of whether ICW waived any conflict by waiting until two years after the complaint was filed to seek disqualification. We then consider whether the district court appropriately determined that a conflict existed under the applicable ethical rule's three-part analysis: first, whether ICW is a former client; second, if so, whether the former representation of ICW is substantially related to VCVG's current representation of Yellow Cab; and third, whether the two representations are adverse. Finally, we determine whether the district court manifestly abused its discretion in concluding that disqualification was warranted. Because ICW did not waive any conflict and the district court's disqualification decision was well within its discretion, we deny the petition in this case.
Standard for writ relief
A writ of mandamus is available to compel the performance of an act that the law requires or to control an arbitrary or capricious exercise of discretion.3 But mandamus is an extraordinary remedy, and a petition for a writ of mandamus is addressed to this court's sole discretion.4 This court has consistently held that mandamus is the appropriate vehicle for challenging orders that disqualify counsel.5 Accordingly, this writ petition is properly before us.
A threshold issue that must be addressed is whether ICW waived any conflict by waiting over two years into the litigation before filing its motion to disqualify counsel. Waiver requires the intentional relinquishment of a known right.6 If intent is to be inferred from conduct, the conduct must clearly indicate the party's intention.7 Thus, the waiver of a right may be inferred when a party engages in conduct so inconsistent with an intent to enforce the right as to induce a reasonable belief that the right has been relinquished.8 However, delay alone is insufficient to establish a waiver.9
Here, ICW identified VCVG's potential conflict almost immediately and asked Vannah to withdraw. He refused. When ICW and Yellow Cab decided to try mediation, ICW postponed any motion for disqualification, while stating that it reserved its right to file such a motion if mediation failed. When mediation failed, ICW promptly filed its motion. Thus, ICW's conduct does not demonstrate, as required for waiver, a clear intent to relinquish its right to challenge Vannah and his firm. The district court therefore properly determined that a waiver was not shown. Accordingly, we turn to the district court's disposition of ICW's disqualification motion.
Existence of a conflict
The issue of whether Vannah and his firm have a conflict of interest in representing Yellow Cab in the bad faith action is primarily resolved by our rules of professional conduct governing conflicts with former clients and imputed disqualification of law firms. At the time of the underlying proceedings, these rules were identified as SCR 159 and 160; following comprehensive amendments to the rules of professional conduct after this petition was filed, they are now Nevada Rules of Professional Conduct 1.9 and 1.10. For ease of reference, and since the former version of the rules apply to this case,10 we use the older terminology.
Under SCR 159, which governs conflicts based on former representation, a lawyer may be disqualified from representing a client against a former client if the current representation is substantially related to the former representation. Thus, for a potentially disqualifying conflict to exist, the party seeking...
To continue reading
Request your trial
-
USF Ins. Co. v. Smith's Food & Drug Ctr., Inc.
...counsel when a conflict emerges. See Hansen, 2012 WL 6205722, at *8–9 (relying on Nev. Yellow Cab Corp. v. Eighth Judicial Distr. Court ex rel. Cnty. of Clark, 123 Nev. 44, 152 P.3d 737, 741–42 (2007)). Whether failure to adhere to this obligation constituted bad faith, however, is a questi......
-
Thompson v. Allstate Ins. Co.
...do so by conduct. "Waiver requires the intentional relinquishment of a known right." Nevada Yellow Cab Corp. v. Eighth Judicial Dist. Court ex rel. Cty. of Clark , 123 Nev. 44, 152 P.3d 737, 740 (2007) (citing Mahban v. MGM Grand Hotels, Inc. , 100 Nev. 593, 691 P.2d 421, 423 (1984) ). Howe......
-
Liapis v. Second Judicial Dist. Court of State
...appropriate means to challenge district court orders regarding attorney disqualification. Id.; see also Nevada Yellow Cab Corp. v. Dist. Ct., 123 Nev. 44, 49, 152 P.3d 737, 740 (2007). Thus, we exercise our discretion to consider this writ petition.Mark's representation of Theodore does not......
-
Hepworth Holzer, LLP v. Fourth Judicial Dist. of State (In re in Recreational Ass'n, Inc.)
...mandamus is the appropriate vehicle for challenging orders that disqualify counsel." Nevada Yellow Cab Corp. v. Eighth Jud. Dist. Ct. ex rel. Cnty. of Clark , 123 Nev. 44, 152 P.3d 737, 740 (2007) (stating that a district court's discretion in disqualifying counsel is broad and will not be ......
-
Nevada Supreme Court Holds That California Cumis Rule Applies In Nevada, But An Actual Conflict Is A Prerequisite For Independent Counsel
...In response, the Nevada Supreme Court discussed its earlier decision in Nev. Yellow Cab Corp. v. Eighth Judicial Dist. Ct., 123 Nev. 44, 152 P.3d 737 (2007), and noted that Nevada is a "dual-representation state: Insurer-appointed counsel represents both the insurer and the insured." Becaus......
-
TABLE OF CASES
...v. Tuccio, No. DBDCV075002831S, 2009 WL 2506357 (Conn. Super. Ct. July 17, 2009) 2-9 Nevada Yellow Cab Corp. v. Eighth Jud. Dist. Ct., 152 P.3d 737 (Nev. 2007) 1-8:7.5 New England Estates, LLC v. Branford, 294 Conn. 817 (2010) 1-2:2 New Falls Corp. v. Lerner, 579 F.2d 282 (D. Conn. 2008) 10......
-
CHAPTER 1 - 1-8 CONFLICTS OF INTEREST
...Lee v. Medical Protective Co., 2012 U.S. Dist. LEXIS 59778 (E.D. Ky. Apr. 30, 2012); Nevada Yellow Cab Corp. v. Eighth Jud. Dist. Ct., 152 P.3d 737 (Nev. 2007); Nationwide Mutual Fire Ins. Co. v. Bourlon, 617 S.E.2d 40 (N.C. App. 2005). See excellent compilation of cases on this topic by At......