Centex Homes v. Financial Pacific Insurance Company
2:19-cv-01284-JCM-VCF
| D. Nev. | Apr 14, 2021Background
- Centex Homes sued 11 insurers to recover roughly $690,000 in defense fees and costs from an underlying action.
- Centex and AXIS Surplus Lines Insurance Company agreed to a settlement: AXIS to pay Centex $75,000, contingent on a judicial finding that the settlement was made in good faith.
- AXIS moved for a judicial determination that the settlement is in good faith under NRS 17.245.
- AXIS argued Centex might not have been an additional insured under the AXIS policy and that the additional-insured endorsement limited coverage to property damage caused by Sunworld’s work; AXIS had paid $10,000 to settle Sunworld’s exposure.
- The $75,000 settlement exceeds a straight 1/11 share of Centex’s claimed fees (about $63,000) and would avoid further litigation expenses.
- The court reviewed the record and granted AXIS’s motion, finding the Centex–AXIS settlement was made in good faith.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Centex–AXIS settlement is a "good faith" settlement under NRS 17.245 | Settlement is reasonable and exceeds a 1/11 share of claimed fees; it conserves resources and resolves exposure | Settlement is supported: amount exceeds pro rata share; AXIS had defensible coverage positions (additional-insured burden, endorsement limits); settlement avoids further fees | Court found the settlement was made in good faith and granted AXIS’s motion |
| Whether the court must limit analysis to In re MGM factors or hold a hearing before finding good faith | (implicit) non-settling parties may seek broader review or a hearing | Nevada law gives the trial court broad discretion; In re MGM factors are among relevant considerations but not exhaustive; no hearing required | Court applied the discretionary standard, considered relevant factors, and did not require a hearing before granting the motion |
Key Cases Cited
- Velsicol Chemical Corp. v. Davidson, 811 P.2d 561 (Nev. 1991) (trial court has discretion to determine good-faith settlements under NRS 17.245)
- In re MGM Grand Hotel Fire Litigation, 570 F. Supp. 913 (D. Nev. 1983) (identifies factors relevant to good-faith settlement determinations)
- The Doctors Co. v. Vincent, 98 P.3d 681 (Nev. 2004) (recognizes trial court’s considerable discretion and use of In re MGM factors)
- Commercial Union Ins. Co. v. Ford Motor Co., 640 F.2d 210 (9th Cir. 1981) (source for factors used in assessing good-faith settlements)