521 P.3d 418
Nev.2022Background
- Marquee Nightclub (managed by Roof Deck Entertainment, LLC) operated Marquee under a management agreement with a Cosmopolitan subsidiary; that agreement contained an indemnity clause and a subrogation waiver.
- A patron sued Marquee and Cosmopolitan for injuries; a jury returned $160.5 million in compensatory damages and found punitive-damage issues but the parties settled before the punitive phase.
- Aspen (primary), National Union (excess for Marquee/Cosmopolitan), Zurich (Cosmopolitan's primary), and St. Paul (Cosmopolitan's excess) jointly funded a confidential settlement; National Union and St. Paul each exhausted their policy limits.
- St. Paul sued National Union (for contractual and equitable subrogation and equitable contribution) and Marquee (for contractual subrogation/indemnification and statutory contribution) after contributing to the settlement.
- The district court granted summary judgment for National Union and Marquee, concluding Cosmopolitan suffered no damages to support subrogation and related claims; the orders were certified under NRCP 54(b).
- The Nevada Supreme Court affirmed: it held Cosmopolitan had no cognizable damages for subrogation against National Union; rejected St. Paul’s contribution claim against National Union; and enforced the management-agreement waiver/indemnity against subrogation by St. Paul against Marquee.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an excess insurer (St. Paul) may subrogate an insured's bad-faith and breach-of-contract claims against an equal-level excess insurer (National Union) | St. Paul: St. Paul paid on behalf of Cosmopolitan and may subrogate Cosmopolitan's claims against National Union for bad faith/breach | National Union: Cosmopolitan suffered no damages because insurers collectively settled and exhausted limits, so no subrogable claim | Court: No subrogation — Cosmopolitan incurred no damages to subrogate against National Union; St. Paul lacks standing to assert those claims |
| Whether equitable contribution is available between equal-level insurers where each exhausted policy limits | St. Paul: seeks reimbursement from National Union for its payment share | National Union: both insurers paid full policy limits so no disproportionate overpayment to recoup | Court: No equitable contribution — contribution only reimburses payments in excess of an equitable share; here each insurer paid its full limits |
| Whether the management agreement's subrogation waiver binds Cosmopolitan (a non-signatory) and bars St. Paul's contractual subrogation against Marquee | St. Paul: waiver in management agreement doesn't trigger St. Paul's policy endorsement or bar subrogation | Marquee: Cosmopolitan is an intended third-party beneficiary and the agreement's waiver binds it and triggers St. Paul's subrogation-waiver endorsement | Court: Cosmopolitan is an intended third-party beneficiary; the management-agreement waiver binds Cosmopolitan and triggers the subrogation-waiver endorsement, barring subrogation against Marquee |
| Whether contractual indemnification in the management agreement precludes statutory contribution (NRS 17.225) | St. Paul: may pursue statutory contribution via subrogation against Marquee | Marquee: express contractual indemnity displaces statutory contribution | Court: The clear contractual indemnity controls and is mutually exclusive of a right to statutory contribution; Cosmopolitan (and thus St. Paul) cannot subrogate a contribution claim |
Key Cases Cited
- AT & T Techs., Inc. v. Reid, 855 P.2d 533 (1993) (describes equitable and contractual subrogation and that subrogee acquires only subrogor's rights)
- Allstate Ins. Co. v. Miller, 212 P.3d 318 (2009) (insurer's duties to defend/indemnify and duty to act reasonably in settlement negotiations)
- Century Sur. Co. v. Andrew, 432 P.3d 180 (2018) (insurer breach of duty to defend can give rise to contract/tort liability)
- Arguello v. Sunset Station, Inc., 252 P.3d 206 (2011) (payment by insurer subrogates insurer to insured's claims against third parties)
- Bierman v. Hunter, 988 A.2d 530 (2010) (subrogation requires an underlying actionable claim by the subrogor)
- Doctors Co. v. Vincent, 98 P.3d 681 (2004) (equitable contribution principles and proportional sharing of common liability)
- Ardmore Leasing Corp. v. State Farm Mut. Auto. Ins. Co., 796 P.2d 232 (1990) (suggests Nevada permits contribution claims between insurers)
- Houston v. Bank of Am., 78 P.3d 71 (2003) (subrogation rights are derivative and limited to subrogor's position)
- Fireman's Fund Ins. Co. v. Md. Cos. Co., 77 Cal. Rptr. 2d 296 (1998) (equitable contribution limited to payments in excess of proportionate share)
- Ainsworth v. Combined Ins. Co. of Am., 763 P.2d 673 (1988) (insurer payments can provide insured with financial protection and avoid excess exposure)