Otak Nev., LLC v. Eighth Judicial Dist. Court of State, 59050.

• Decision Date: 07 November 2013
• Docket Number: No. 59050.,59050.
• Citation: 129 Nev. Adv. Op. 86,312 P.3d 491
• Parties: OTAK NEVADA, LLC, Petitioner, v. The EIGHTH JUDICIAL DISTRICT COURT OF the STATE of Nevada, in and for the COUNTY OF CLARK; and the Honorable Doug Smith, District Judge, Respondents, and Pacificap Construction Services, LLC; Pacificap Properties Group, LLC; Pacificap Holdings XXIX, LLC; Chad I. Rennaker; Jason Q. Rennaker; Cheyenne Apartments PPG, LP; and Christopher Watkins, Real Parties in Interest.
• Court: Nevada Supreme Court

312 P.3d 491

129 Nev. Adv. Op. 86

OTAK NEVADA, LLC, Petitioner,

v.The EIGHTH JUDICIAL DISTRICT COURT OF the STATE of Nevada, in and for the COUNTY OF CLARK; and the Honorable Doug Smith, District Judge, Respondents,andPacificap Construction Services, LLC; Pacificap Properties Group, LLC; Pacificap Holdings XXIX, LLC; Chad I. Rennaker; Jason Q. Rennaker; Cheyenne Apartments PPG, LP; and Christopher Watkins, Real Parties in Interest.

No. 59050.

Supreme Court of Nevada.

Nov. 7, 2013.

Morris Polich & Purdy, LLP, and Nicholas M. Wieczorek, Las Vegas, for Petitioner Otak Nevada, LLC.

Bauman Loewe Witt & Maxwell, PLLC, and Whitney C. Wilcher, Las Vegas, for Real Parties in Interest Chad I. Rennaker and Jason Q. Rennaker.

Christiansen Law Offices and Peter S. Christiansen, Richard E. Tanasi, and Kristina Weller, Las Vegas; Law Office of Daniel S. Simon and Daniel S. Simon, Las Vegas; Lewis & Roca, LLP, and Daniel F. Polsenberg and Joel D. Henriod, Las Vegas, for Real Party in Interest Christopher Watkins.

Lewis Brisbois Bisgaard & Smith, LLP, and Josh C. Aicklen, Mark J. Brown, and Stephanie J. Smith, Las Vegas; Sterling Law, LLC, and Beau Sterling, Las Vegas, for Real Parties in Interest Cheyenne Apartments PPG, LP; Pacificap Holdings XXIX, LLC; Pacificap Properties Group, LLC; Chad I. Rennaker; and Jason Q. Rennaker.

Thagard, Reiss & Brown, LLP, and Thomas Friedman, Las Vegas, for Real Party in Interest Pacificap Construction Services, LLC.

BEFORE THE COURT EN BANC.

OPINION

By the Court, HARDESTY, J.:

Under NRS 17.245(1)(b), a defendant who enters into “a release or a covenant not to sue or not to enforce judgment ... in good faith” is “discharge [d] ... from all liability for contribution and for equitable indemnity to any other [defendant].” The questions we are asked to decide in this original writ proceeding are: (1) If a defendant settles in good faith, does NRS 17.245(1)(b) bar “de facto” claims for contribution and/or equitable indemnity?; and (2) Are the contractor's third-party claims in this matter considered “de facto” contribution and/or equitable indemnity claims that may be barred under NRS 17.245(1)(b)? We conclude that, regardless of the claim's title, NRS 17.245(1)(b) bars all claims that seek contribution and/or equitable indemnity when the settlement is determined to be in good faith. Because we conclude that the contractor's remaining third-party claims in this matter are “de facto” contribution claims, and are thus barred by NRS 17.245(1)(b), we grant this petition for writ of mandamus.

FACTS AND PROCEDURAL HISTORY

This petition arises from underlying litigation concerning a fatal automobile accident that occurred at a construction site in Las Vegas, Nevada. Real parties in interest Cheyenne Apartments PPG, LP; Pacificap Holdings XXIX, LCC; Pacificap Properties Group, LLC; Chad I. Rennaker; and Jason Q. Rennaker (collectively, P & R) are the owners and developers of the site; and real party in interest Pacificap Construction Services, LLC (PCS), was the general contractor.¹ Petitioner Otak Nevada, LLC, an architecture firm, entered into an agreement with P & R to design a multifamily housing project. Otak hired subcontractor Orion Engineering and Surveying to design and implement necessary off-site road construction. Pursuant to the agreement, Orion was to design four traffic medians to be installed in the intersection adjoining the construction site and to replace traffic markers to alter the flow of traffic. However, one median was not installed, and the traffic markers were not replaced. These omissions allegedly caused the fatal automobile accident.

Following the accident, the plaintiffs and/or their estates filed complaints against, among others, PCS and P & R. After the plaintiffs amended their complaints to add Otak as a defendant, Otak and the plaintiffs reached a settlement agreement in which the plaintiffs agreed to dismiss all of their claims against Otak in exchange for $45,000, and assignment of Otak's experts. Otak filed in the district court a motion for approval of good-faith settlement based on NRS 17.245. The district court denied the motion because it found that a $45,000 settlement was not a fair settlement amount for the plaintiffs, and thus, was not in good faith. After additional settlement negotiations, Otak and the plaintiffs agreed to a new settlement in the amount of $210,000, plus the assignment of Otak's experts. Otak filed an amended motion for good-faith settlement, which was opposed by PCS and P & R on the basis that the proposed amount of the settlement was far less than Otak's potential liability or its insurance policy limits and would unfairly shift Otak's liability to the remaining defendants. The district court granted the motion.

After determining that Otak's settlement with the plaintiffs was made in good faith, the district court granted P & R leave to file a third-party complaint against Otak.² P & R's third-party complaint against Otak asserted claims for breach of contract, express indemnity, express contribution, breach of the covenant of good faith and fair dealing, professional negligence, and punitive damages.³ Otak moved to dismiss the complaint on the ground that the claims were all barred by NRS 17.245. It argued that NRS 17.245 bars all claims that are “de facto” contribution and/or equitable indemnity claims. Although the district court declined to dismiss P & R's third-party complaint in its entirety, it did dismiss P & R's claim for professional negligence. This petition for a writ of mandamus followed.

DISCUSSION

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. NRS 34.160; Int'l Game Tech., Inc. v. Second Judicial Dist. Court, 124 Nev. 193, 197, 179 P.3d 556, 558 (2008). Whether a petition for extraordinary relief will be considered is purely discretionary with this court. Smith v. Eighth Judicial Dist. Court, 107 Nev. 674, 677, 818 P.2d 849, 851 (1991). Petitioner bears “the burden of demonstrating that extraordinary relief is warranted.” Pan v. Eighth Judicial Dist. Court, 120 Nev. 222, 228, 88 P.3d 840, 844 (2004).

Mandamus is not appropriate if the petitioner has “a plain, speedy and adequate remedy in the ordinary course of law.” NRS 34.170. Generally, an adequate legal remedy is afforded through the right to appeal. Pan, 120 Nev. at 224, 88 P.3d at 841. Thus, we “ ‘will not entertain a writ petition challenging the denial of a motion to dismiss [unless] ... the issue is not fact-bound and involves an unsettled and potentially significant recurring question of law.’ ” ⁴MountainView Hosp., Inc. v. Eighth Judicial Dist. Court, 128 Nev. ––––, ––––, 273 P.3d 861, 864–65 (2012) (second alteration in original) (quoting Buckwalter v. Eighth Judicial Dist. Court, 126 Nev. ––––, ––––, 234 P.3d 920, 921 (2010)). Here, whether P & R's remaining third-party claims should be dismissed depends on whether NRS 17.245 bars “de facto” claims for contribution and/or equitable indemnity, and whether P & R's claims constitute “de facto” claims. Because this issue of law is a matter of first impression and may be dispositive of the case, we exercise our discretion to entertain this writ petition.⁵

The district court did not abuse its discretion by granting Otak's motion for approval of good-faith settlement

Because our determination of whether P & R's third-party claims are barred by NRS 17.245 is contingent upon whether Otak settled in good faith with the plaintiffs in the underlying action, we first examine the district court's determination of good faith. We review the district court's determination of good faith for an abuse of discretion. Velsicol Chem. Corp. v. Davidson, 107 Nev. 356, 357, 811 P.2d 561, 561 (1991). An abuse of discretion occurs when the district court's decision is not supported by substantial evidence. Finkel v. Cashman Prof'l, Inc., 128 Nev. ––––, ––––, 270 P.3d 1259, 1262 (2012). “ ‘Substantial evidence has been defined as that which a reasonable mind might accept as adequate to support a conclusion.’ ” Id. (quoting McClanahan v. Raley's, Inc., 117 Nev. 921, 924, 34 P.3d 573, 576 (2001)).

Under NRS 17.245(1)(b), a defendant cannot be liable to co-defendants in a tort action for contribution or equitable indemnity if the defendant settles with the plaintiff in good faith. We have previously declined to define “good faith” under NRS 17.245(1)(b), and have left this determination “to the discretion of the trial court based upon all relevant facts available.” Velsicol Chem., 107 Nev. at 360, 811 P.2d at 563. But we have recognized the following factors as being relevant, though not exclusive, criteria for this determination: “ ‘[t]he amount paid in settlement, the allocation of the settlement proceeds among plaintiffs, the insurance policy limits of settling defendants, the financial condition of settling defendants, and the existence of collusion, fraud or tortious conduct aimed to injure the interests of non-settling defendants.’ ” Doctors Co. v. Vincent, 120 Nev. 644, 651–52, 98 P.3d 681, 686 (2004) (alteration in original) (quoting In re MGM Grand Hotel Fire Litig., 570 F.Supp. 913, 927 (D.Nev.1983)). In addition, the district court may consider the merits of any contribution or equitable indemnity claims against the settling defendant. Id. at 652, 98 P.3d at 687.

Relying on these factors, P & R argues that Otak's settlement was not in good faith because Otak paid less than its potential liability, and much less than the amounts paid by the other defendants. In Velsicol Chemical, however, we noted that a settlement is in good faith so long as it is not “disproportionately lower than [the settling defendant's] fair share of damages.” 107 Nev. at 361, 811 P.2d at 564. Thus, a settlement for less than what the other defendants paid will generally be in good faith when the settling defendant's potential liability is...