Torres v. Nev. Direct Ins. Co.

• Decision Date: 30 July 2015
• Docket Number: Nos. 61103,61640.,s. 61103
• Citation: 131 Nev. Adv. Op. 54,353 P.3d 1203
• Parties: Saundra TORRES, Appellant, v. NEVADA DIRECT INSURANCE COMPANY, Respondent. Saundra Torres, Appellant, v. Nevada Direct Insurance Company, Respondent.
• Court: Nevada Supreme Court

353 P.3d 1203

131 Nev. Adv. Op. 54

Saundra TORRES, Appellant

v.NEVADA DIRECT INSURANCE COMPANY, Respondent.

Saundra Torres, Appellant

v.Nevada Direct Insurance Company, Respondent.

Nos. 61103

61640.

Supreme Court of Nevada.

July 30, 2015.

Ganz & Hauf and Adam Ganz and Marjorie L. Hauf, Las Vegas, for Appellant.

Murchison & Cumming, LLC, and Michael J. Nunez, Douglas J. Duesman, and Dustun H. Holmes, Las Vegas, for Respondent.

Before the Court En Banc.

OPINION

By the Court, HARDESTY, C.J.:

Appellant sustained injuries in a car accident. After obtaining a default judgment against both the driver and the owner of the other vehicle, appellant sued the owner's insurer to recover upon the judgment under the insurance policy. In this appeal from the district court's take-nothing judgment, we consider whether an injured party like appellant may assert NRS 485.3091,¹ Nevada's absolute-liability statute, in order to sue the tortfeasor's insurer after obtaining a judgment against the tortfeasor, and whether an injured party can pursue a bad faith claim against the insurer. We also consider whether the insurer's actions established a valid promissory estoppel claim.

We conclude that an insurer cannot circumvent the state's absolute-liability statute. Accordingly, a statutory third-party claimant can sue the insurer to enforce compliance with NRS 485.3091, and we thus conclude that the district court erred in denying appellant relief under NRS 485.3091. However, we conclude nothing in the statute grants a third-party claimant an independent cause of action for bad faith against an insurer. We further conclude that the district court did not err in denying relief on appellant's promissory estoppel claim. Thus, we affirm in part and reverse in part.

FACTS AND PROCEDURAL HISTORY

In April 2006, Jario Perez–Castellano was driving a vehicle owned by Adiel Mollinedo–Cruz and insured by Nevada Direct Insurance Company (NDIC) when he crashed into appellant Saundra Torres's car, injuring Saundra. Neither Mollinedo–Cruz nor Perez–Castellano contacted NDIC. Torres filed a complaint against Mollinedo–Cruz and Perez–Castellano for negligence, negligent entrustment, and punitive damages stemming from the car accident. Mollinedo–Cruz and Perez–Castellano answered the complaint, denying all of the allegations and raising several affirmative defenses. Mollinedo–Cruz and Perez–Castellano then stopped participating in the action.

NDIC subsequently filed a complaint for declaratory relief against Mollinedo–Cruz, Perez–Castellano, and Torres. NDIC argued that because Mollinedo–Cruz violated the policy in failing to cooperate with the post-accident investigation, NDIC was not responsible for his defense or indemnification in Torres's suit against Mollinedo–Cruz.

NDIC made an offer of judgment for $1 more than Mollinedo–Cruz's policy limit to Torres, but she declined the offer. The district court entered default judgments against Mollinedo–Cruz and Perez–Castellano in the declaratory relief case and concluded that NDIC was not obligated to defend or indemnify either of them for the accident with Torres. But the district court concluded that the default judgments “[did] not apply to and are not binding” on Torres and she could “pursue any and all claims/defenses available to her under” Mollinedo–Cruz's insurance policy, Torres subsequently acquired a default judgment against Mollinedo–Cruz and Perez–Castellano in her original liability action.

Torres then filed a new complaint against NDIC. Torres claimed that NDIC breached the insurance policy when it failed to pay her claim, she was entitled to damages based on a theory of promissory estoppel, and NDIC breached the implied covenant of good faith and fair dealing. NDIC filed a motion to dismiss Torres's promissory estoppel and breach of the implied covenant of good faith and fair dealing claims for failure to state a claim. The district court denied NDIC's motion on Torres's promissory estoppel claim but granted the motion on Torres's claim that NDIC breached the implied covenant of good faith and fair dealing.

At the conclusion of a two-day bench trial, the district court entered judgment in favor of NDIC. The district court concluded that Torres was neither a named contracting party nor an intended third-party beneficiary of the insurance contract. The court further concluded that Torres was not a judgment creditor of NDIC because NDIC obtained its default judgment—“that it had no duty to defend or indemnify” anyone for the accident with Torres—before Torres obtained her default judgment against Mollinedo–Cruz and Perez–Castellano.² The court also concluded that NDIC fulfilled any obligations under the insurance contract because NDIC made an offer of judgment for the policy limit to Torres, which she rejected.

In regard to Torres's promissory estoppel argument, the district court determined that letters sent from NDIC to Torres indicating that it was reviewing her medical records and it would “review the demand and contact [Torres's counsel] with an offer” did not amount to a promise to pay any amount, and that none of the correspondence between NDIC and Torres precluded Torres from taking action. Torres now appeals.

DISCUSSION

In resolving this appeal, we must first determine whether Torres has a statutory claim against NDIC under the so-called absolute-liability statute, NRS 485.3091. We then consider whether sufficient evidence supports the district court's promissory estoppel conclusions and whether the district court erred in dismissing Torres's breach of the implied covenant of good faith and fair dealing claim.

The district court erred in declining to apply NRS 485.3091

Torres argues that the district court erred when it failed to apply NRS 485.3091 to her action. Torres also argues that the district court erred when it considered the statutory offer of judgment made in the separate declaratory relief action and concluded it satisfied NDIC's obligations under NRS 485.3091. We agree.

On appeal, this court gives deference to the district court's factual findings but reviews its conclusions of law, including statutory interpretation issues, de novo. Ogawa v. Ogawa, 125 Nev. 660, 668, 221 P.3d 699, 704 (2009) ; Kay v. Nunez, 122 Nev. 1100, 1104, 146 P.3d 801, 804 (2006). When a statute's language is unambiguous, this court does not resort to the rules of construction and will give that language its plain meaning. Clark Cnty. v. S. Nev. Health Dist., ––– Nev. ––––, 289 P.3d 212, 215 (2012). But, “[i]f the statute is ambiguous, meaning that it is capable of two or more reasonable interpretations, this court ... ‘look[s] to the provision's legislative history and’ ... ‘the context and the spirit of the law or the causes which induced the [L]egislature to enact it.’ ” Id. (citations omitted) (quoting We the People Nev. v. Miller, 124 Nev. 874, 881, 192 P.3d 1166, 1171 (2008) ); Leven v. Frey, 123 Nev. 399, 405, 168 P.3d 712, 716 (2007).

In Nevada, all motor vehicles must be insured for at least $15,000 bodily injury or death liability per incident, and $10,000 in property damage liability. NRS 485.185 ; NRS 485.3091(1)(b)(1), (1)(b)(3). NRS 485.3091 also contains an absolute-liability provision that states that

[e]very motor vehicle liability policy is subject to the following provisions which need not be contained therein:

(a) The liability of the insurance carrier with respect to the insurance required by this chapter becomes absolute whenever injury or damage covered by the policy occurs. The policy may not be cancelled or annulled as to such liability by any agreement between the insurance carrier and the insured after the occurrence of the injury or damage. No statement made by the insured or on behalf of the insured and no violation of the policy defeats or voids the policy.

NRS 485.3091(5)(a). Accordingly, Torres argues that NDIC was required to pay her at least $15,000, the statutory minimum, for required liability insurance.

The language of NRS 485.3091 is unambiguous and specifically states that the terms of NDIC's insurance policy include that liability “becomes absolute whenever injury or damage covered by the policy occurs.” NRS 485.3091(5)(a). NRS 485.3091(5)(a) also clearly states that “no violation of the policy defeats or voids the policy.” See Midland Risk Mgmt. Co. v. Watford, 179 Ariz. 168, 876 P.2d 1203, 1206–07 (Ct.App.1994) (finding the language of the Arizona statute, worded the same as that of Nevada, was “straightforward”).

Despite the absolute-liability provision, NDIC argues that its indemnity obligation was previously determined in a prior declaratory relief action to which Torres was a party. There, the district court found that Mollinedo–Cruz and Perez–Castellano did not comply with NDIC's post-accident policy, and thus, NDIC did not have to defend or indemnify “any and all claims arising out of the April 2, 2006, automobile accident involving Saundra Torres.” In the instant case, the district court relied on this previous finding and determined that Torres was not a judgment creditor of NDIC based on this declaratory relief order.

However, the next paragraph of that declaratory relief order resolves this action in favor of Torres: “The Default Judgments taken against Defendants Mollinedo and Castellano do not apply to and are not binding upon Saundra Torres, who is still allowed to pursue any and all claims/defenses available to her under the terms and conditions of the subject insurance policy.” And thus, the district court erred when it did not consider the entire declaratory judgment order.

More importantly, we hold that no post-injury violation of a policy will release the insurer under the absolute-liability provision. This view is consistent with the many states that have adopted similar “frozen liability” statutes.³ At common law, the insurer was permitted to rescind an insurance policy for material misrepresentations made in acquisition of the policy or for breach of the insurance...