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In Construction Defect (CD) cases, Plaintiff attorneys regularly bring big damage claims. Thus Plaintiff CD attorneys, like many other Plaintiff attorneys, instinctively look for as much liability insurance as they can find. Just as intuitively, CD Defense attorneys know that insurance policies should have nothing to do the amount of a demand.
In 2013, these differences of viewpoint gave rise to a dispute between the CD attorneys for Defendant Vanguard Piping Systems, Inc. and the attorneys for Plaintiff Aventine-Tramonti Homeowners Association. The Defense attorneys felt that they had complied with NRCP 16.1(a)(1)(D) by disclosing some of their primary insurance policies, that production was burdensome and that some of excess policies were not relevant.
NRCP 16.1(a)(1)(D) is Nevada’s equivalent to FRCP 26(a)(1)(A)(iv). Just like the federal rule, Nevada’s rule requires disclosures of the insurance documents, without a request from the opposing party. However, Nevada’s disclosure rule is broader than the federal rule in that in addition to disclosure of the insurance agreement, it requires the disclosing party to also provide “any disclaimer or limitation of coverage or reservation of rights.”
At the time, Rule 16.1(a)(1)(D) provided:
any insurance agreement under which any person carrying on an insurance business may be liable to satisfy part or all of a judgment which may be entered in the action or to indemnify or reimburse for payments made to satisfy the judgment and any disclaimer or limitation of coverage or reservation of rights under any such insurance agreement.
However, the Plaintiff’s attorneys believed that the Defense had not made a full disclosure. Plaintiff’s attorneys argued that Rule 16.1(a)(1)(D) required the Defendants to disclose every liability insurance policy held by the Defendants that could answer for any judgment. When the issue was brought before the special master, he decided in favor of Plaintiff. The Defense filed a writ to the Nevada Supreme Court challenging the ruling. Vanguard Piping Systems, Inc. v. Eighth Judicial Dist. Ct., 129 Nev. Adv. Op. 63, 309 P.3d 1017 (2013).
Like its federal equivalent, Nevada’s Rule 16.1(a)(1)(D) includes mandatory language saying that the defense “must” disclosure of “any” policies. The Nevada Supreme Court points out in its opinion that the defense cannot decide which policies are relevant and which are not. The court said that the Defendants must disclose all implicated liability policies. The court said that this interpretation of the rule was consistent with the interpretation given to the federal counterpart. Sierrapine v. Refiner Prods. Mfg., Inc., 275 F.R.D. 604, 613 (E.D. Cal. 2011), In re ML-Lee Acquisition Fund II, L.P., 151 F.R.D. 37, 41 (D. Del. 1993) and U.S. Fire Ins. Co. v. Bunge N. Am., Inc., 244 F.R.D. 638, 641 (D. Kan. 2007). .
It is interesting to note that before litigation begins, an insurance company does not have disclose any insurance coverage. See HERE. However, in sharp contrast, after litigation begins, the defense has an obligation to disclose all implicated policies. If you have questions about the discovery process in Nevada litigation, please feel free to contact Mike Mills at 702-240-6060 or send him an email at mike@mcmillslaw.com. He will gladly respond.
