Nurenberger Hercules-Werke GMBH v. Virostek

• Decision Date: 06 December 1991
• Docket Number: HERCULES-WERKE,No. 21110,21110
• Citation: 822 P.2d 1100,107 Nev. 873
• Parties: NURENBERGERGMBH, a foreign corporation, Appellant, v. Frank VIROSTEK, Respondent.
• Court: Nevada Supreme Court

Page 1100

822 P.2d 1100

107 Nev. 873

NURENBERGER HERCULES-WERKE GMBH, a foreign corporation, Appellant, v. Frank VIROSTEK, Respondent.

No. 21110.

Supreme Court of Nevada.

Dec. 6, 1991.

Rehearing Denied Feb. 21, 1992.

Vargas & Bartlett and Nicholas F. Frey, Reno, for appellant.

Peter Chase Neumann, Reno, for respondent.

Bradley & Drendel and Thomas E. Drendel, Reno, for amicus curiae Nevada Trial Lawyers Ass'n.

OPINION

STEFFEN, Justice:

Respondent, Frank Virostek, suffered permanent brain damage as a result of injuries sustained on May 24, 1983, in an accident that occurred while riding his Sachs moped. The two primary issues on appeal concern the effect of NRCP 10(a) ¹ on the substitution of accurately identified parties for defendants bearing fictitious names after the applicable statute of limitations has run, and the propriety of the award of $300,000 in attorney's fees to Virostek. We are persuaded that existing case law concerning the first issue is unsound or in need of clarification; we accordingly affirm the district court's ruling on that issue against the position asserted by the appellant, Nurenberger Hercules-Werke GMBH (Nurenberger). However, the district court erred in its award of attorney's fees, thus necessitating a remand as to that issue.

FACTUAL AND PROCEDURAL BACKGROUND

Virostek was riding his Sachs moped at a normal rate of speed when the front wheel started to wobble, causing Virostek to lose control, crash and strike his head on the surface of the road. Two eye-witnesses observed Virostek riding the moped on the flat, smooth road at an estimated speed of between 15 and 25 mph when the front wheel started to wobble or shake violently. The witnesses saw Virostek unsuccessfully attempting to cope with the problem, noting that he did so with both hands on the handlebars. As the moped crashed, Virostek was thrown to the ground, suffering serious head injuries.

Virostek filed a complaint against various identified and fictitious defendants based upon a theory of strict products liability. Nurenberger, the actual manufacturer of the moped, was not named as a defendant until after the statute of limitations had run. Over objection, the district court granted Virostek's motion to substitute Nurenberger as a party defendant.

Thirteen days prior to trial, Virostek offered to accept a judgment against Nurenberger in the amount of $999,999.99. Nurenberger rejected the offer and the case proceeded to trial. The jury awarded Virostek damages in the total sum of $1,100,869.79. The district court thereafter granted Virostek's motion for attorney's fees, pursuant to NRS 17.115 and NRCP 68, in the amount of $300,000. Nurenberger filed motions for judgment notwithstanding the verdict or in the alternative, for a new trial, both of which were denied.

DISCUSSION

On appeal, Nurenberger contends that reversal is warranted because of prejudicial error involving the following issues.

1. The substitution of Nurenberger as a party defendant after the expiration of the period of limitations. On March 27, 1985, Virostek filed his complaint against the retailer of the moped, Arnold Wratschko, d/b/a AMS Moped & Scooter Factory Various motions were filed by the parties which need not be identified or chronicled in this opinion. Suffice it to note that the district court ultimately granted Virostek's motion to substitute Nurenberger as a party defendant in the place of one of the corporate doe defendants, effective as of the date of the original complaint. Nurenberger filed an unsuccessful motion to dismiss based upon a statute of limitations defense.

                and AMS Import/Export. 2  He also named as defendants, Sachs Manufacturing Company, Does I-V, A-B partnerships VI-X, and XYZ Corporations XI-XV.  The complaint specified the intent to later substitute for the fictitious defendants those entities that "designed, manufactured, assembled and marketed, advertised and otherwise supplied into the stream of commerce" the specifically identified, defective moped.  Sachs Manufacturing Company was never served with the complaint, and it is questionable whether such an entity exists. 3
                

Nurenberger supports its position by invoking the rule announced by this court in Servatius v. United Resort Hotels, 85 Nev. 371, 455 P.2d 621 (1969), and expanded under Lunn v. American Maintenance, 96 Nev. 787, 618 P.2d 343 (1980), and Driscoll v. Collins Home Mfg. Corp., 103 Nev. 608, 747 P.2d 888 (1987), contending that Virostek failed the test mandated by those decisions. We need not determine whether the requirements of Servatius and other cases adhering to the Servatius rule were satisfied in the instant case, as we have concluded that Servatius has been misapplied to cases governed by NRCP 10(a).

Virostek and the Nevada Trial Lawyers Association, participating in the briefing of this case as amicus curiae, urge this court to reinvigorate the concept advanced in previous decisions that have focused on the subtle but discrete difference between "adding" a party under NRCP 15, and "substituting" a party under NRCP 10(a). We are advised that in so doing, Servatius would be inapplicable to the instant case and Lunn would have to be clarified or overruled for having confused the two rules. Although we agree that the application of Servatius needs to be limited, and its expansion retrenched, we are not persuaded that the "substitution-addition" distinction is particularly useful in providing clarity and guidance in this area of the law.

As a prelude to our analysis, we observe that our rules of civil procedure are to be construed "to secure the just, speedy, and inexpensive determination of every action." NRCP 1. We commence with the premise that meritorious causes of action should not be frustrated where, despite reasonable diligence, the true identity of culpable parties is uncertain or unknown to plaintiff or plaintiff's counsel. Indeed, our entire system of civil justice is designed to provide an avenue of redress to parties injured by the actions of others who in law and equity should be held accountable. Heretofore, unwary plaintiffs have been subject to the loss of their remedies under pitfalls created by an unwarranted application of the Servatius factors to situations involving the procedure contemplated by NRCP 10(a).

Servatius neither involved nor addressed the substitution of parties pursuant to NRCP 10(a). In Servatius the plaintiff was under the mistaken impression that she had named as party defendant the entity legally responsible for her injuries. There was no indication that uncertainty of identity had prompted the plaintiff to utilize the procedure provided by NRCP 10(a). Nevertheless, despite the mistake and the running of the statute of limitations, this court crafted a rule that allowed for an amendment striking or dropping the wrong party defendant and "correctly identif[ying] a party defendant already before the court." Servatius, 85 Nev. at 374, 455 P.2d at 623. Because the Servatius court determined that the true defendant was, in effect, "already before the court," NRCP Unfortunately, subsequent to Servatius, we engrafted the Servatius factors onto certain cases that concerned issues involving the substitution of parties under NRCP 10(a). Thus, in Lunn v. American Maintenance Corp., 96 Nev. 787, 618 P.2d 343 (1980), where the plaintiff sought to replace fictitious names with specifically identified parties pursuant to Rule 10(a), we concluded that the criteria established in Servatius had not been satisfied. Similarly, in Driscoll v. Collins Home Mfg. Corp., 103 Nev. 608, 747 P.2d 888 (1987), we observed, citing Lunn, that "certain restrictions have been placed on the use of doe pleadings." Id. at 609, 747 P.2d at 889. Continuing, the Driscoll court stated that "Lunn held that the test used in Servatius v. United Resort Hotels, 85 Nev. 371, 455 P.2d 621 (1969), was also the proper test for evaluating the substitution of named defendants for doe defendants." Id., 103 Nev. at 609-10, 747 P.2d at 889. Although we denied relief to Driscoll under the Servatius criteria despite the fact that his memory loss and inability to recall the name of the tortfeasor's company were the direct result of his injuries, we also observed that in an appropriate future case we might be disposed to reconsider the narrow constraints we have placed on the availability of relief under Rule 10(a). Id. at 610, 747 P.2d at 890.

21, addressing the dropping and adding of parties, was never implicated in the court's decision. Servatius was, in every sense, an opinion of limited application crafted to supply a basis for achieving equity and justice where the true defendant, although unnamed, had actual knowledge of the institution of the action, knew that it was the proper defendant, and was not in any way misled to its prejudice. We therefore reaffirm Servatius in those limited situations typified by the facts in that case.

Turning again to the efficacy of an analysis of whether parties have been added or substituted as a source of discerning the appropriate rule of law, we are persuaded that distinguishing between the two is often tenuous, imprecise, and conducive to result-oriented determinations. For example, the amicus brief strains to validate the result in Driscoll by concluding that "the record contained nothing to show that plaintiff had an intent to sue any particular defendant or class of defendants when he included the Doe allegations," therefore, "it is clear the attempt was to add a party, not substitute one." We find the argument teleologically understandable but otherwise disingenuous. Obviously, Driscoll intended to sue the party who owned the truck carrying the winch that was dislodged, causing him injury. Driscoll's uncertainty concerning the identity of the responsible party prompted his resort to the pleading latitude accorded by NRCP 10(a). In the instant case, it is equally obvious that Virostek...