Benchmark Insurance Co. v. Sparks, 127 Nev. 407

Sparks was involved in a fatal collision during a dealership test-drive; policy provided $30,000 liability limits.
Benchmark sought to deposit policy limits with the district court via interpleader to resolve potential excess claims.
Benchmark argued the policy's exhaustion clause ended its duty to defend once the funds were deposited, thus terminating defense duties.
Sparks faced a negligence action by victims; Benchmark continued defense during underlying tort litigation.
The district court allowed deposit and denied Benchmark’s summary judgment; it held Benchmark’s defense duty continued until limits were used to satisfy a judgment.
Universal Underwriters claimed no duty to defend or indemnify Sparks for permissive-user coverage; the district court denied that motion.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the exhaustion provision unambiguously ends defense duties.	Sparks argues the clause is ambiguous and defense continues until limits exhaust via settlement or judgment.	Benchmark contends deposit with court exhausts its liability and ends defense.	Ambiguity found; defense continues until settlement or judgment exhausts limits.
How to interpret an ambiguous exhaustion clause in context of insurer duties.	Sparks would reasonably expect continued defense.	Benchmark argues any reasonable interpretation allows termination after deposit.	Exhaustion clause interpreted in insured's favor to require defense until limits are used to settle or satisfy a judgment.
Impact of deposit on Universal’s duty to defend/permissive-user coverage.	If Benchmark maintains defense, no separate duty for Universal arises.	Universal had no duty when Benchmark retained defense; no indemnity potential.	Universal had no duty to defend where Benchmark had continuing defense obligation.

Brown v. Lumbermens Mutual Casualty Co., 326 S.E.2d 153 (N.C. 1990) (exhaustion interpreted to favor insured when ambiguity exists; settlement or defense contemplated by policy)
United Nat'l Ins. Co. v. Frontier Ins. Co., 99 P.3d 1153 (Nev. 2004) (duty to defend broader than indemnify; ambiguity in contract interpreted for insured)
National Union Fire Ins. v. Caesars Palace, 792 P.2d 1129 (Nev. 1990) (ambiguity resolved in favor of insured; contract interpretation standard)
Margrave v. Dermody Properties, 878 P.2d 291 (Nev. 1994) (policy ambiguity must be construed against insurer and in favor of insured)
Vitale v. Jefferson Ins. Co., 5 P.3d 1054 (Nev. 2000) (ambiguity principles in Nevada insurance contracts)
Farmers Ins. Exch. v. Neal, 64 P.3d 472 (Nev. 2003) (general rule and contract interpretation relating to insurer duties)